Transactions with BioXcel LLC

9 Months Ended

Sep. 30, 2022

Transactions with BioXcel LLC

Transactions with BioXcel LLC

Note 5. Transactions with BioXcel LLC

The Company entered into a Separation and Shared Services Agreement with BioXcel LLC that took effect on September 30, 2017 (as amended and restated, the “Services Agreement”), pursuant to which services provided by BioXcel LLC, through its subsidiaries in India and the U.S., will continue indefinitely, as agreed upon by the parties. These services are primarily for drug discovery, chemical, manufacturing and controls (“CMC”) and administrative support.

Service charges recorded under the Services Agreement for the three and nine months ended September 30, 2022 and 2021 were as follows:

	Three Months Ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Research and development	$	287	$	269	$	892	$	899
Selling, general and administrative		55		72		184		166
Total	$	342	$	341	$	1,076	$	1,065

As of September 30, 2022, and December 31, 2021, $162 and $204, respectively, of these service charges are included in due to related parties in the Company’s Condensed Consolidated Balance Sheets.

Under a Second Amended and Restated Shared Services Agreement signed in April 2022, the Company has an option, exercisable until December 31, 2024, to enter into a collaborative services agreement with BioXcel LLC pursuant to which BioXcel LLC shall perform product identification and related services for us utilizing EvolverAI, its proprietary pharmaceutical discovery and development engine. The parties are obligated to negotiate the collaborative services agreement in good faith and to incorporate reasonable market-based terms, including consideration for BioXcel LLC reflecting a low, single-digit royalty on net sales and reasonable development and commercialization milestone payments, provided that (i) development milestone payments shall not exceed $10,000 in the aggregate and not be payable prior to proof of concept in humans and (ii) commercialization milestone payments shall be based on reaching annual net sales levels, be limited to 3% of the applicable net sales level, and not exceed $30,000 in the aggregate. In conjunction with the Second Amended and Restated Shared Services Agreement, the Company agreed to pay BioXcel LLC $18 per month to extend the option to December 31, 2024, from its prior expiration of March 13, 2023.