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Actavis Transactions
6 Months Ended
Jun. 30, 2013
Business Combinations [Abstract]  
Actavis Transactions

(2) Actavis Transactions

Under a purchase agreement with Actavis, Inc. (“Actavis”, formerly Watson Pharmaceuticals, Inc.), Actavis has agreed to make royalty payments to Columbia of 10% to 20% of annual net sales of certain Progesterone Products provided, however, that royalty rates will be reduced by 50% in a particular country if a generic entry by a third party occurs in such country and certain other circumstances are fulfilled. In addition, if Actavis commercializes a progesterone product through a third party outside of the U.S., in lieu of royalties, Columbia will be entitled to 20% of gross profits associated with such commercialization. If Actavis or its affiliates effects a generic entry with respect to a Progesterone Product in a particular country in the circumstances permitted by the Purchase Agreement, in lieu of royalties payable in respect of net sales for such generic product, Columbia will be entitled to 20% of the gross profits associated with the commercialization of such generic product in such country.

Pursuant to the purchase agreement, Columbia and Actavis had also agreed to collaborate with respect to the development of Progesterone Products. Columbia was responsible for the costs of conducting the PREGNANT Study and the preparation, filing and approval process of the related new drug application (or the supplemental new drug application) up to a maximum of $7.0 million. All other development costs incurred in connection with the development collaboration were paid by Actavis. In the three months ended June 30, 2012, Columbia was reimbursed $3,100 by Actavis. In the six months ended June 30, 2012, Columbia was reimbursed $0.4 million from Actavis. There were no research and development expenses incurred for the three or six months ended June 30, 2013. The reimbursable costs were credited to research and development expense in the consolidated statements of operations.

As part of the purchase agreement, from the date of the closing of the Actavis Transactions until the second anniversary of the date on which Columbia and Actavis terminate their relationship with respect to the joint development of Progesterone Products, Columbia agreed not to manufacture, develop or commercialize products containing progesterone or any other products for the preterm birth indication, subject to certain exceptions. The joint development collaboration can be terminated by either party on or after July 2, 2015 (five years after the closing of the Actavis Transactions).