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Commitments and Contingencies
 9 Months Ended
Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Milestone Payments
In November 2019, the Company entered into a Share Purchase Agreement with Avizorex (the “Avizorex Agreement”) under which the Company acquired Avizorex, including its lead product candidate AVX-012 (now known as AR-15512), for which Avizorex completed a Phase 2a study in dry eye subjects in 2019. The consideration for the Avizorex acquisition was $10.2 million. Additionally, contingent milestone payments of up to $69.0 million may be due, subject to achievement of certain product regulatory approvals using the in-process research and development (“IPR&D”) assets acquired, plus royalties on net sales of any approved products from Avizorex’s development pipeline. In the first quarter of 2022, the Company gained alignment with the FDA on the results of its Phase 2b clinical trial for AR-15512 and confirmed the design of the Phase 3 trials, which the Company initiated in the second quarter of 2022. This resulted in the achievement of a regulatory milestone in which the Company paid the former shareholders of Avizorex $8.0 million in the first quarter of 2022.
In October 2017, the Company entered into an Asset Purchase Agreement with Envisia Therapeutics (“Envisia”) (the “Envisia Agreement”) to acquire the rights to use PRINT® technology in ophthalmology, as well as rights relating to a preclinical dexamethasone steroid implant for the potential treatment of RVO and DME that utilizes the PRINT® technology, referred to as AR-1105. Under the terms of the Envisia Agreement, the Company (a) made an upfront cash payment of $10.5 million and issued 263,146 shares of Aerie’s common stock valued at approximately $14.3 million and (b) agreed to make potential milestone payments of up to an aggregate of $45.0 million, subject to achievement of certain product regulatory approvals using the IPR&D assets acquired, if achieved within the 15-year milestone period.
In July 2017, the Company entered into a collaborative research, development and licensing agreement with DSM Biomedical (“DSM”), which included an option to license DSM’s bio-erodible polymer implant technology for sustained delivery of certain Aerie compounds to treat ophthalmic diseases. This technology uses polyesteramide polymers to produce an injectable, thin fiber that is minute in size. On August 1, 2018, the Company entered into an Amended and Restated Collaborative Research, Development, and License Agreement with DSM (the “DSM Agreement”), which provides for (i) a worldwide exclusive license for all ophthalmic indications to DSM’s polyesteramide polymer technology, (ii) continuation of the collaborative research initiatives through the end of 2020, including the transfer of DSM’s formulation technology to Aerie during that time and (iii) access to a preclinical latanoprost implant. Aerie paid $6.0 million to DSM upon execution of the DSM Agreement, with an additional $9.0 million payable to DSM through the end of 2020. The DSM Agreement includes contingent payments of up to $75 million that may be due to DSM upon the achievement of certain development and regulatory milestones. In addition, pursuant to the DSM Agreement, a $3.0 million milestone payment was made during the year ended December 31, 2018 upon the completion of certain manufacturing technology transfer activities. Aerie would also pay royalties to DSM when products are commercialized under this DSM Agreement, if any.
These contingent milestone payments are recognized only when the contingency is resolved (the milestone is achieved) and the consideration is paid or becomes payable. As of September 30, 2022, there were no liabilities recorded relating to potential future milestone payments as the achievement of the related milestones were not met and the timing and likelihood of such milestone payments are not known.
Litigation
The Company may periodically become subject to legal proceedings and claims arising in connection with its business. The Company did not have contingency reserves established for any litigation liabilities as of September 30, 2022.
Legal Proceedings related to the Merger Agreement
Beginning on September 22, 2022, three purported stockholders of the Company filed separate lawsuits in the United States District Court for the Southern District of New York captioned Stein v. Aerie Pharmaceuticals, Inc., et al., Case No. 1:22-cv-08103; O’Dell v. Aerie Pharmaceuticals, Inc., et al., Case No. 1:22-cv-08261, and Weiss v. Aerie Pharmaceuticals, Inc., et al., Case No. 1:22-cv-09235. The complaints name Aerie and members of the Board of Directors as defendants and allege that the defendants made materially incomplete and misleading statements about the proposed acquisition of Aerie by Alcon. Specifically, the complaints allege that all defendants violated Section 14(a) of the Exchange Act and that each member of the Board of Directors violated Section 20(a) of the Exchange Act, on the basis of allegedly inadequate disclosures regarding Aerie’s financial projections and Goldman Sachs’s financial analysis in the preliminary proxy statement filed with the SEC on
September 21, 2022 and/or the definitive proxy statement filed with the SEC on October 7, 2022. In addition, Aerie has received from certain purported Aerie stockholders several demand letters alleging similar insufficiencies in the preliminary proxy statement and/or the definitive proxy statement as those noted in the complaints referenced above. The complaints seek, among other relief, (i) injunctive relief preventing the parties from proceeding with the Merger until the alleged disclosure deficiencies have been remedied, (ii) rescission in the event the Merger is consummated or alternatively rescissory damages, and (iii) an award of costs, including attorneys’ and experts’ fees. Aerie believes these lawsuits are without merit.
Additional lawsuits may be filed against Aerie, members of the Board of Directors or Aerie’s officers in connection with the Merger, which could prevent or delay completion of the Merger and result in substantial costs to Aerie, including any costs associated with indemnification.
Patent Infringement Lawsuits
On March 14, 2022, the Company filed patent infringement lawsuits in the U.S. District Court for the District of New Jersey against (i) Micro Labs Limited and Micro Labs USA, Inc. (collectively, “Micro Labs”), (ii) Gland Pharma Limited (“Gland Pharma”), and (iii) Orbicular Pharmaceutical Technologies (“Orbicular Pharma” and, together with Micro Labs and Gland Pharma, the “Defendants”). These lawsuits (the “Micro Labs Complaint,” the “Gland Pharma Complaint,” and the “Orbicular Pharma Complaint,” respectively, and collectively, the “Complaints”) were initiated within 45 days of receiving (i) Paragraph IV Certification Notices from Gland Pharma and Micro Labs under the Hatch-Waxman Act notifying the Company that Gland Pharma and Micro Labs have filed applications to the FDA seeking pre-patent expiry approval to sell generic versions of Rhopressa®, and (ii) Paragraph IV Certification Notices from Orbicular Pharma and Micro Labs under the Hatch-Waxman Act notifying the Company that Orbicular Pharma and Micro Labs have filed applications to the FDA seeking pre-patent expiry approval to sell generic versions of Rocklatan®. As a result of filing the Complaints, under applicable law, FDA approval of the Defendants’ ANDAs is stayed until June 18, 2025, unless modified by court order. However, regardless of any court decision in these proceedings, all patents that are not the subject of the proceedings are expected to remain in force until their expiration dates. A trial related to these Complaints is scheduled to commence in January 2025.