Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

From time to time, the Company may become subject to legal proceedings and claims which arise in the ordinary course of its business. The Company records a liability in its condensed consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary to make the condensed consolidated financial statements not misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in its consolidated financial statements.

As of March 31, 2022, the Company was not party to any significant litigation.

Kindeva

The Company is a party to a Scale-Up and Commercial Supply Agreement (the “Supply Agreement”) with Kindeva, as successor to 3M Company and 3M Innovative Properties Company (collectively with 3M Company, “3M”), pursuant to which Kindeva has agreed to exclusively manufacture Phase 3 and global commercial supplies of an abaloparatide-coated transdermal system (“abaloparatide-TD”). Under the Supply Agreement, Kindeva will manufacture abaloparatide-TD for the Company according to agreed-upon specifications in sufficient quantities to meet the Company’s projected supply requirements. If abaloparatide-TD is commercialized, Kindeva would manufacture commercial supplies of abaloparatide-TD at unit prices that decrease with an increase in the quantity the Company orders. The Company would pay Kindeva a mid-to-low single-digit royalty on worldwide net sales of abaloparatide-TD and reimburse Kindeva for certain capital expenditures incurred to establish commercial supply of abaloparatide-TD. The Company is responsible for providing, at its expense, supplies of abaloparatide drug substance to be used in manufacturing abaloparatide-TD. During the term of the Supply Agreement, Kindeva and the Company have agreed to work exclusively with each other with respect to the delivery of abaloparatide, parathyroid hormone (“PTH”), and/or PTH related proteins via active transdermal, intradermal, or microneedle technology.

The initial term of the Supply Agreement began on its effective date, February 27, 2018 and will continue for five years after the first commercial sale of abaloparatide-TD. The Supply Agreement then automatically renews for successive three-year terms, unless earlier terminated pursuant to its terms or upon either party’s notice of termination to the other 24 months prior to the end of the then-current term. The Supply Agreement may be terminated by either party upon an uncured material breach of its terms by the other party, or due to the other party’s bankruptcy, insolvency, or dissolution. The Company may terminate the Supply Agreement upon the occurrence of certain events, including for certain clinical, technical, or commercial reasons impacting abaloparatide-TD, if it is unable to obtain U.S. regulatory approval for abaloparatide-TD within a certain time period, or if it ceases development or commercialization of abaloparatide-TD. Kindeva may terminate the Supply Agreement upon the occurrence of certain events, including if there are certain safety issues related to abaloparatide-TD, if the Company is unable to obtain U.S. regulatory approval for abaloparatide-TD within a certain time period, or if the Company fails to order abaloparatide-TD for a certain period of time after commercial launch of the abaloparatide-TD in the U.S. Upon certain events of termination, Kindeva is required to transfer the manufacturing processes for abaloparatide-TD to the Company or a mutually agreeable third party and continue supplying abaloparatide-TD for a period of time pursuant to the Company’s projected supply requirements. The Company has paid 3M and Kindeva approximately $63.0 million, in the aggregate, through March 31, 2022 with respect to performance under the Supply Agreement. In addition, there are cancellable purchase commitments in place to fund certain facility build out and future purchases of capital equipment.

In June 2009, the Company entered into a Development and Clinical Supplies Agreement with 3M, as amended (the “Development Agreement”), under which abaloparatide-TD development activities occur and 3M has manufactured phase 1 and 2 clinical trial supplies on an exclusive basis. The initial term of the Development Agreement remained in effect until June 2019, after which it automatically renews for successive one-year terms, unless earlier terminated, until the earliest of (i) the expiration or termination of the Supply Agreement, (ii) the mutual written agreement of the parties, or (iii) prior written notice by either party to the other party at least ninety days prior to the end of the then-current term of the Development Agreement that such party declines to extend the term. Either party may terminate the agreement in the event of an uncured material breach by the other party. The Company pays 3M for services delivered pursuant to the agreement on a fee-for-service or a fee-for-deliverable basis as specified in the agreement. The Company has paid 3M and Kindeva approximately $31.8 million, in the aggregate, through March 31, 2022 with respect to performance under the Development Agreement.

Manufacturing Agreements

The Company is a party to a Supply Agreement with Ypsomed AG (“Ypsomed”), as amended, pursuant to which Ypsomed has agreed to supply commercial and clinical supplies of a disposable pen injection device customized for subcutaneous injection of abaloparatide, the active pharmaceutical ingredient (“API”) for TYMLOS. The Company has agreed to purchase a minimum number of devices at prices per device that decrease with an increase in quantity supplied. In addition, the Company has made milestone payments for Ypsomed’s capital developments in connection with the initiation of the commercial supply of the

device and to pay a one-time capacity fee. All costs and payments under the agreement are delineated in Swiss Francs. The agreement had an initial term of three years, which began on June 1, 2017, after which it automatically renewed for a two-year term. Following its current term, the agreement automatically renews for additional two-year terms unless either party terminates the agreement upon 18 months’ notice prior to the end of the then-current term. During the two-year term beginning May 2020, the Company is required to purchase a minimum number of batches for CHF 1.9 million (approximately $2.1 million).

The Company is also a party to a Commercial Supply Agreement with Vetter Pharma International GmbH (“Vetter”), as amended, pursuant to which Vetter has agreed to formulate the finished abaloparatide-SC drug product containing abaloparatide, the API, to fill cartridges with the drug product, to assemble the pen delivery device, and to package the pen for commercial distribution. The Company has agreed to purchase the cartridges and pens in specified batch sizes at a price per unit. For labeling and packaging services, the Company has agreed to pay a per unit price dependent upon the number of pens loaded with cartridges that are labeled and packaged. These prices are subject to an annual price adjustment. The term of the agreement automatically renewed on January 1, 2021 for an additional two-year term and will automatically renew for additional two-year terms thereafter, unless either party notifies the other party two years before the end of the then-current term that it does not intend to renew.

The Company is also a party to a Manufacturing Services Agreement with Polypeptide Laboratories Holding AB (“PPL”), as amended, as successor-in-interest to Lonza Group Ltd., pursuant to which PPL has agreed to manufacture the commercial and clinical supplies of the API for abaloparatide. The Company has agreed to purchase the API in batches at a price per gram in euros, subject to an annual increase by PPL. The Company is also required to purchase a minimum number of batches annually, equal to €2.9 million (approximately $3.1 million) per year and $17.2 million in total through the year ended December 31, 2022. The agreement has an initial term of six years, which began on June 28, 2016, after which it automatically renews for three-year terms unless either party provides notice of non-renewal 24 months before the end of the then-current term.

Asset Purchase Agreement

In December 2020, the Company entered into an Asset Purchase Agreement with Fresh Cut Development, LLC and Benuvia Therapeutics Inc. for the acquisition of certain assets related to formulations of cannabidiol (“CBD”) related to the oral administration of a liquid formulation of CBD for therapeutic use in humans or animals (“RAD011”). Under the terms of the agreement, the Company may be obligated to make additional payments of up to $60.0 million in future periods, which would become due and payable only upon the achievement of certain development milestones. In addition, the Company may be obligated to pay up to $30.0 million in sales milestones contingent upon the realization of sales revenues and sublicense revenue. As of March 31, 2022, the Company recognized a liability of $2.5 million, which is recorded as accrued expenses and other current liabilities within the consolidated balance sheet for certain development milestones that were deemed probable of achievement.