Note 5 - Intangible Assets

9 Months Ended

Sep. 30, 2013

Disclosure Text Block [Abstract]

Intangible Assets Disclosure [Text Block]

5.      Intangible Assets

In April 2009, the Company entered into a license agreement with R-Tech, or the 2009 R-Tech Agreement, for all patents and other intellectual property rights related to RESCULA for its FDA-approved indication and any new indications for unoprostone isopropyl in the United States and Canada. The Company is commercializing RESCULA (unoprostone isopropyl ophthalmic solution) 0.15% in the United States for the lowering of IOP in patients with open-angle glaucoma or ocular hypertension.

Under the terms of the 2009 R-Tech Agreement, the Company made an upfront and development payments of $3.5 million and may be required to pay up to $5.0 million in additional milestone payments based on the achievement of specified development and commercialization goals. The Company allocated the acquisition cost between an intangible asset of $3.4 million and a non-current prepaid inventory of $85,000 as of September 30, 2013, which has been expensed during the three months ended September 30, 2013 as shown in the accompanying Condensed Consolidated Balance Sheets. Upon the February 2013 RESCULA re-launch, a $500,000 milestone payment was paid to R-Tech in May 2013. The cost is amortized over the 10-year life of the 2009 R-Tech Agreement, which the Company believes approximates the useful life of the underlying rights and data. Amortization expense was approximately $85,000 for each of the three months ended September 30, 2013 and 2012, and approximately $256,000 for each of the nine months ended September 30, 2013 and 2012. The annual amortization expense will be approximately $341,000 through April 2019. The unamortized amount included in intangible assets was $1.9 million and $2.1 million at September 30, 2013 and December 31, 2012, respectively.

On March 22, 2011, the Company entered into a license agreement with R-Tech for unoprostone isopropyl, or the 2011 R-Tech Agreement, expanding the Company’s development and commercialization rights as well as its territories beyond the previously agreed territory of the United States and Canada to the rest of the world, with the exception of Japan, Korea, Taiwan and the People’s Republic of China. The Company is now evaluating opportunities to obtain an appropriate label in the European Union and other European countries, and the timing for seeking reauthorization in those countries to commercialize unoprostone isopropyl.

Pursuant to the 2011 R-Tech Agreement, the Company has made payments to R-Tech of $6.0 million, which is reflected in other non-current assets in the accompanying Condensed Consolidated Balance Sheets, and may be required to pay up to $100.0 million in additional milestone payments to R-Tech based on the achievement of specified development and commercialization goals. The Company will be responsible for all development, regulatory, and commercialization activities. The Company is amortizing the $6.0 million over the 10-year life of the R-Tech Agreement, which the Company believes approximates the useful life of the underlying rights and data. Amortization expense was approximately $153,000 for each of the three months ended September 30, 2013 and 2012, and approximately $460,000 for each of the nine months ended September 30, 2013 and 2012. The annual amortization expense will be approximately $613,000 through March 2021. The unamortized amount included in intangible assets was $4.5 million and $4.9 million at September 30, 2013 and December 31, 2012, respectively.