Acquired product rights

9 Months Ended

Sep. 30, 2021

Acquired product rights:

On August 3, 2021, (the “Effective Date”), the Company and Dr. Reddy’s Laboratories Limited, a company incorporated under the laws of India (“DRL”), entered into an asset purchase agreement (the “Asset Purchase Agreement”) for the acquisition by the Company from DRL of certain patents, trademarks, regulatory approvals and other rights related to ELYXYB™ (celecoxib oral solution) (the “Product”) and its commercialization in the United States and Canada (the “Territory”). The closing of the transactions contemplated by the Asset Purchase Agreement occurred on September 9, 2021 (the "Closing").

Pursuant to the terms of the Asset Purchase Agreement, the Company paid DRL a $6 million up-front payment at the Closing. In addition, the Company will pay DRL $9 million on the twelve-month anniversary of the Effective Date and up to an additional $9 million upon achievement of certain regulatory milestones and quarterly earn-out payments on potential sales of the Product in the Territory that range from high single digits to the low double digits (subject to reduction in certain circumstances) of net sales based on volume of sales. DRL will also be entitled to one-time payments upon the achievement of six escalating sales milestones, which range from $4 million to be paid upon the achievement of $50 million in net sales in a calendar year to $100 million to be paid upon the achievement of $1 billion in net sales in a calendar year up to a total of $262 million.

The Company accounted for the ELYXYB purchase as an asset acquisition under ASC 805-10-55-5b, which provides guidance for asset acquisitions. Under the guidance, if substantially all the acquisition is made up of one asset or several similar assets, then the acquisition is an asset acquisition. The Company believes that the asset purchase agreement and other assets acquired from DRL are similar and considers them all to be intangible assets.

The total purchase price was allocated to the acquired asset based on their relative estimated fair values, as follows:


			ELYXYB acquired product rights			$15,000
			Transaction expenses			455
			Total value			$15,455

The $9 million twelve-month anniversary payment has been recorded in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheet.