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Commitments and Contingencies
12 Months Ended
Dec. 31, 2021
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

3. Commitments and Contingencies

Leases

In December 2016, the Company entered into an operating lease for office space in Solana Beach, California. The lease commenced on January 1, 2017, was extended in September 2018, December 2019, December 2020 and February 2022, and has an expiration date of October 31, 2022, subject to the landlord’s option to cancel upon 30 days written notice, but not sooner than July 31, 2022. According to ASU No. 2016-02, the Company recognized an operating lease ROU asset and liability based on the present value of the future minimum lease payments over the lease term at the commencement date, using the Company’s assumed incremental borrowing rate, and then amortizes the ROU assets over the lease term. The Company applies a discount rate to the minimum lease payments within the lease agreement to determine the value of right-of-use assets and lease liabilities. Unless the rate implicit in the lease is determinable, ASU No. 2016-02 requires the use of the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term for a similar amount to the lease payments in a similar economic environment. The Company noted that the implicit rate in the lease was not determinable and calculated its incremental borrowing rate primarily based on the Company’s assumed borrowing rate of 10% for the years ended December 31, 2021 and 2020. Upon adoption of ASU No. 2016-02 on January 1, 2019, the Company recorded an operating lease ROU asset and liability of approximately $136,000 based on the present value of the remaining minimum lease payments. As of December 31, 2021 and 2020, the Company had an operating lease ROU asset and liability of approximately $12,000 and $142,000, respectively, based on the present value of the remaining minimum lease payments. During the years ended December 31, 2021 and 2020, changes in operating lease ROU asset and payments of the lease liability were included in prepaid expenses and other assets and accounts payable and accrued expense, respectively, on the statement of cash flows.

Rent expense for the years ended December 31, 2021 and 2020 was approximately $136,000 and $151,000, respectively. The Company also pays pass through costs and utility costs, which are expensed as incurred.

As of December 31, 2021, the Company has future minimum lease payments under its existing facility lease of approximately $12,000 payable in 2022. The lease was amended in February 2022 resulting in approximately $112,000 future minimum lease payments under the amended facility lease in 2022. 

Legal Proceedings

On February 25, 2022, the Company received a letter dated February 24, 2022, notifying us that Teva submitted to the FDA an abbreviated new drug application, or ANDA, for a generic version of Gimoti (metoclopramide hydrochloride) nasal spray eq. 15 mg base/spray that contains Paragraph IV certifications with respect to two of our patents covering Gimoti, U.S. Patent Nos. 8,334,281, expiration date May 16, 2030; and 11,02,0361, expiration date December 22, 2029. These patents are listed in FDA’s list of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the Orange Book, for Gimoti. The certifications allege these patents are invalid or will not be infringed by the manufacture, use or sale of Teva’s metoclopramide hydrochloride nasal spray eq. 15 mg base/spray. The Company anticipates initiating litigation against Teva over the validity and infringement of the patents covering Gimoti.