Contract Manufacturing Agreements

3 Months Ended

Mar. 31, 2020

Long-term Commitment (Excluding Unconditional Purchase Obligation) [Abstract]

Contract Manufacturing Agreements

Contract Manufacturing Agreements

Lonza Manufacturing Services Agreement

In August 2017, we executed a Manufacturing Services Agreement with Lonza AG ("Lonza") to develop a second manufacturing site and to continue to develop our Gen 2 manufacturing process for Andexxa bulk drug substance and to manufacture commercial supply. The manufacturing commitments included therein were contingent upon marketing approval by either the FDA or the EMA of Andexxa manufactured under the Gen 2 process and will remain in effect for a period of ten years. Additionally, the agreement provides Lonza with two separate rights to purchase shares of our common stock at a purchase price of $1.00 per share, contingent upon certain events.

The first purchase right was earned by Lonza upon the FDA approval of the Gen 2 process on December 31, 2018 and after Lonza commenced process transfer activities to an additional new facility in the first quarter of 2019. During the first quarter of 2019, Lonza exercised its right to purchase 500,000 shares of our common stock at $1.00 per share. We marked to market the liability-classified award up to the settlement date and recognized $5.8 million of non-employee stock based compensation expense classified as research and development expense during the first quarter of 2019.

The second purchase right will be earned by Lonza upon the approval of the drug substance manufactured at the new facility and the number of shares will be determined based on the achievement of specified performance metrics at the new facility. The number of shares subject to the second purchase right is capped at the lesser of either: (1) the number of shares with an aggregate market value of $15.0 million based on a 20 day trailing market value average from the date such purchase right is earned by Lonza, or (2) 500,000 shares. As of March 31, 2020, we have not recognized any expense for the second purchase right because the related performance conditions include a regulatory approval condition and regulatory approval is not considered probable until actually achieved.