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Disposition
12 Months Ended
Dec. 31, 2015
Discontinued Operations and Disposal Groups [Abstract]  
Disposition

6.  Disposition

 

On October 1, 2015, the Company entered into and closed a Share Purchase Agreement (the “Purchase Agreement”) with Taro Pharmaceuticals Inc. (“Taro”) for the sale by the Company to Taro of all of the shares of Zalicus Pharmaceuticals Ltd., the Company’s Canadian subsidiary that holds the Company’s product candidate Z944 and certain related assets (collectively, the “Z944 Assets”) which the Company acquired as a result of its merger with Zalicus Inc. in July 2014 (the “Zalicus Ltd. Sale”). 

 

As a result of the Zalicus Ltd. Sale, the Company received from Taro payment comprised of Canadian Dollar (“CAD”) $5,000 in cash and a non-interest bearing, limited recourse promissory note in the amount of CAD $5,000 with a maturity date of July 1, 2017 (the “Promissory Note”).  The Promissory Note is repayable either in cash or through Taro’s transfer back of the Z944 Assets, including any further developments made by Taro to such assets, to the Company.  No repayment of the Promissory Note is required until such maturity date.  If Taro elects to repay the Promissory Note in cash and continue development of the Z944 Assets, the Company will also be entitled to additional payments of up to USD $7,500 upon achievement of certain development milestones for the Z944 Assets, up to USD $30,000 upon achievement of certain sales milestones for the Z944 Assets, and mid-single digit percentage royalty payments upon global commercial sales of products developed with the Z944 Assets, with such percentage to be reduced in the event of commercial sales of competing generic products under certain circumstances.  The Purchase Agreement further requires Taro to use customary commercially reasonable efforts to develop the Z944 Assets, subject to the Company’s reversion right to such assets for any material breach following standard notice and cure periods.

 

During the year ended December 31, 2015, the Company recognized a gain on the Zalicus Ltd. Sale of $1,016 representing the difference between the carrying value of the net assets of Zalicus Pharmaceuticals Ltd. and the initial cash payment received.

The Company will account for the Promissory Note, milestone payments and royalty payments from the Purchase Agreement as a contingent gain to be recorded when realizable.