ACQUISITIONS

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Sympazan License Acquisition

On October 27, 2022, the Company, through its wholly-owned subsidiary, Otter Pharmaceuticals, LLC, completed a transaction to acquire an exclusive license for Sympazan® (clobazam) oral film and product inventory from Aquestive Therapeutics, Inc. (“Aquestive”). The terms of the definitive agreement included an upfront payment of $9.0 million and a $6.0 million milestone payment contingent upon allowance of an existing patent application which, at the date of the transaction, Aquestive was prosecuting. The patent allowance was granted in the fourth quarter of 2022; accordingly, the Company has paid in full the $6.0 million milestone payment. The Company is required to pay Aquestive cash royalties on a quarterly basis equal to 10% of the gross margin (defined within the definitive agreement) from sales of Sympazan. The Company also entered into a long-term supply agreement with Aquestive for Sympazan, the terms of which the Company has concluded are at market.

The following table summarizes the aggregate amount paid for the assets acquired by the Company in connection with the acquisition of Sympazan (in thousands):


Cash paid to Aquestive at closing	$	9,000
Milestone payment	6,000
Transaction costs	850
Total purchase price of assets acquired	$	15,850

The Sympazan license transaction has been accounted for as an asset acquisition in accordance with ASC 805-50, as substantially all the fair value of the assets acquired is concentrated in a single identifiable asset, the Sympazan product rights. The Sympazan product rights acquired consist of the license for the Sympazan intellectual property, regulatory documentation, domain names, certain at-market contracts, and customers lists, and are considered a single asset as they are inextricably linked. The Company has concluded that the contingent milestone payment and contingent royalty payments are not required to be accounted for as derivatives pursuant to scope exceptions in ASC 815 and therefore has included the contingent milestone payment within, and excluded the contingent royalty payments from, the cost of the asset acquisition. As an asset acquisition, the cost to acquire the group of assets, including transaction costs, is allocated to the individual assets acquired or liabilities assumed based on their relative fair values. The relative fair values of identifiable assets from the acquisition of Sympazan are based on estimates of fair value using assumptions that the Company believes are reasonable.

The following table summarizes the fair value of assets acquired in the acquisition of Sympazan (in thousands):


Inventories	$	1,300
Intangible assets (Sympazan product rights)	14,550
Total assets acquired	$	15,850

The Sympazan product rights will be amortized over a 12-year period.

Otrexup Acquisition

On December 15, 2021, the Company, through a newly-formed subsidiary, Otter Pharmaceuticals, LLC, entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Antares Pharma, Inc. (“Antares”), and concurrently consummated the transaction. Pursuant to the terms of the Purchase Agreement, the Company acquired Antares’ rights, title and interest in and to Otrexup, including certain related assets, intellectual property, contracts, and product inventory for (i) $18.0 million in cash paid at closing, (ii) $16.0 million in cash paid on May 31, 2022 and (iii) and $10.0 million in cash paid on December 15, 2022.

The following table summarizes the aggregate amount paid for the assets acquired by the Company in connection with the acquisition of Otrexup (in thousands):


Cash paid to Antares at closing	$	18,000
Cash paid in May 2022	16,021
Cash paid in December 2022	10,000
Transaction costs	1,478
Total purchase price of assets acquired	$	45,499

The acquisition of Otrexup has been accounted for as an asset acquisition in accordance with ASC 805-50, as substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset, the Otrexup product rights. The Otrexup product rights consist of certain patents and trademarks, at-market contracts and regulatory approvals, customer lists, marketing assets, and other records, and are considered a single asset as they are inextricably linked. The relative fair values of identifiable assets from the acquisition of Otrexup are based on estimates of fair value using assumptions that the Company believes are reasonable.

The following table summarizes the fair value of assets acquired in the acquisition of Otrexup (in thousands):


Inventories	$	1,413
Intangible assets	44,086
Total assets acquired	$	45,499

The Otrexup product rights will be amortized over an eight year period. As of December 31, 2021, deferred cash payable to Antares was $26.0 million, and was recorded in Other current liabilities in the Company’s Consolidated Balance Sheets.