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License Agreement
12 Months Ended
Dec. 31, 2020
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
License Agreement

8. License Agreement

Effective March 31, 2020, the Company entered into a license and collaboration agreement (“License”) that provides Savara an exclusive, worldwide, royalty-bearing license to develop and sell or otherwise commercialize pharmaceutical preparations containing a type of inhaled ciprofloxacin (“Licensed Products”).

The Company paid the licensor (i) an upfront cash payment of approximately $3.2 million and (ii) an upfront payment of one million shares of the Company’s common stock valued at approximately $2.1 million on the date of issuance upon effectiveness of the License (collectively the “Upfront Payments”). The Company also agreed to pay the licensor (i) certain developmental milestone payments for the development of the Licensed Products upon regulatory approval for commercial sale and (ii) certain sales milestone payments upon the first achievement of defined annual global net sales (collectively, the “Contingent Consideration”). Additionally, the Company agreed to pay licensor low double-digit tiered royalties based on annual global net sales of all Licensed Products.

The Company has accounted for the License as an asset acquisition in accordance with ASU 2017-01 “Business Combinations (Topic 805) - Clarifying the Definition of a Business” and ASC 805 “Business Combinations.” Since the Licensed Product has not yet achieved regulatory approval and there is deemed to be no alternative future use, the Company has recorded research and development expense of approximately $5.4 million for the Upfront Payments.

The Company has formally announced the termination of any further development of the Licensed Product and, as such, determined that the Contingent Consideration is neither probable nor can the amount be reasonably estimated. Therefore, no related liability has been recorded.