Commercial Services Agreement	3 Months Ended
Mar. 31, 2019
Commercial Services Agreement [Abstract]
Commercial Services Agreement	6. Commercial Services Agreement On January 5, 2019, the Company entered into a commercial services agreement with NGP (the “NGP Agreement”) for the commercialization of Gimoti. Pursuant to the NGP Agreement, NGP will manage the commercial operations for a dedicated sales team to market Gimoti, if approved by FDA, to gastroenterologists and other targeted health care providers. Under the terms of the NGP Agreement, the Company maintains ownership of the Gimoti NDA, as well as legal, regulatory, and manufacturing responsibilities for Gimoti. The Company will also retain a contract sales organization, which would be managed by NGP. The Company will record sales for Gimoti and retain more than 80% of product profits. NGP will receive a percentage of product profits in the mid-to-high teens as a service fee (such product profit amount, the “Contribution Profits”). Pursuant to the NGP Agreement, NGP has agreed to finance the Company’s working capital requirements for specified commercialization costs in an amount by which Contribution Profits are expected to fall (or do actually fall) below zero (as projected by sales forecasts and a commercialization budget) to be drawn by the Company on a monthly basis, as needed (“NGP Working Capital Loan”), pursuant to a credit agreement between the Company and NGP (“NGP Credit Agreement”). The NGP Working Capital Loan will be repaid by the Company, if at all, only out of positive Contribution Profits, unless the NGP Agreement is terminated (a) by NGP due to a material breach by the Company, or (b) by the Company other than due to the gross negligence or intentional misconduct of NGP. Termination of the NGP Agreement by NGP for any other reason (including, without limitation, minimum net sales thresholds and negative Contribution Profits, as described below) will cause the NGP Working Capital Loan to be forgiven in full. The interest rate and other terms of the NGP Working Capital Loan will be set forth in the NGP Credit Agreement. In addition, under the NGP Agreement, NGP has agreed to provide a line of credit of up to $5.0 million to the Company following NDA approval of Gimoti, if any, and for a period of up to nine months thereafter. The line of credit will be extended pursuant to a credit agreement between the parties. NGP will receive a low single digit percentage on net sales of Gimoti in lieu of any interest on the line of credit (the “NGP Credit Fee”); provided that in no event shall the cumulative NGP Credit Fee exceed twice the amount of the principal borrowed by the Company. The line of credit will mature on the earlier of 30 days following the date the NGP Credit Fee is twice the amount of the borrowed principal and the two-year anniversary of the date the principal is borrowed by the Company. In the event the Company secures financing from a third-party wholesale distributor for the purchase of Gimoti for launch in excess of $2.5 million dollars, NGP will no longer be required to offer the line of credit. The term of the NGP Agreement is five years from the date of commercial launch of Gimoti, if any, after which the Company will recapture 100% of product sales and assume all corresponding responsibilities. Within 30 days after each one-year anniversary of the NGP Agreement, either party may terminate the NGP Agreement if net sales of Gimoti do not meet certain annual thresholds. Either party may terminate the NGP Agreement for the material breach of the other party, subject to a 60-day cure period, or in the event an insolvency petition of the other party is pending for more than 60 days. Either party may also terminate the NGP Agreement upon 30-days written notice to the other party if Gimoti is subject to a safety recall, the parties are unable to agree to a commercialization plan and budget by a specified date, or if the Contribution Profit is negative for any calendar quarter beginning with the first full calendar quarter nine months following commercial launch. In addition, NGP may terminate the NGP Agreement if the Company withdraws Gimoti from the market for more than 180 days or if the Company is unable to provide product samples for use by the salesforce in a timely manner. NGP may also terminate the NGP Agreement since Gimoti was not approved by FDA by April 30, 2019, but, as of May 7, 2019, has not elected to do so. The Company may terminate the NGP Agreement upon a change of control of the Company, subject to a one-time payment equal to between four times and one times annualized service fees paid by the Company under the NGP Agreement, with such amount based on which year (between one and five years) after commercial launch the change of control occurs, provided if the change of control occurs within one year of commercial launch, such amount will be the greater of the specified annualized service fee amount and $5 million.

Commercial Services Agreement

3 Months Ended

Mar. 31, 2019

Commercial Services Agreement [Abstract]

6. Commercial Services Agreement

On January 5, 2019, the Company entered into a commercial services agreement with NGP (the “NGP Agreement”) for the commercialization of Gimoti. Pursuant to the NGP Agreement, NGP will manage the commercial operations for a dedicated sales team to market Gimoti, if approved by FDA, to gastroenterologists and other targeted health care providers.

Under the terms of the NGP Agreement, the Company maintains ownership of the Gimoti NDA, as well as legal, regulatory, and manufacturing responsibilities for Gimoti. The Company will also retain a contract sales organization, which would be managed by NGP. The Company will record sales for Gimoti and retain more than 80% of product profits. NGP will receive a percentage of product profits in the mid-to-high teens as a service fee (such product profit amount, the “Contribution Profits”).

Pursuant to the NGP Agreement, NGP has agreed to finance the Company’s working capital requirements for specified commercialization costs in an amount by which Contribution Profits are expected to fall (or do actually fall) below zero (as projected by sales forecasts and a commercialization budget) to be drawn by the Company on a monthly basis, as needed (“NGP Working Capital Loan”), pursuant to a credit agreement between the Company and NGP (“NGP Credit Agreement”). The NGP Working Capital Loan will be repaid by the Company, if at all, only out of positive Contribution Profits, unless the NGP Agreement is terminated (a) by NGP due to a material breach by the Company, or (b) by the Company other than due to the gross negligence or intentional misconduct of NGP. Termination of the NGP Agreement by NGP for any other reason (including, without limitation, minimum net sales thresholds and negative Contribution Profits, as described below) will cause the NGP Working Capital Loan to be forgiven in full. The interest rate and other terms of the NGP Working Capital Loan will be set forth in the NGP Credit Agreement.

In addition, under the NGP Agreement, NGP has agreed to provide a line of credit of up to $5.0 million to the Company following NDA approval of Gimoti, if any, and for a period of up to nine months thereafter. The line of credit will be extended pursuant to a credit agreement between the parties. NGP will receive a low single digit percentage on net sales of Gimoti in lieu of any interest on the line of credit (the “NGP Credit Fee”); provided that in no event shall the cumulative NGP Credit Fee exceed twice the amount of the principal borrowed by the Company. The line of credit will mature on the earlier of 30 days following the date the NGP Credit Fee is twice the amount of the borrowed principal and the two-year anniversary of the date the principal is borrowed by the Company. In the event the Company secures financing from a third-party wholesale distributor for the purchase of Gimoti for launch in excess of $2.5 million dollars, NGP will no longer be required to offer the line of credit.

The term of the NGP Agreement is five years from the date of commercial launch of Gimoti, if any, after which the Company will recapture 100% of product sales and assume all corresponding responsibilities. Within 30 days after each one-year anniversary of the NGP Agreement, either party may terminate the NGP Agreement if net sales of Gimoti do not meet certain annual thresholds. Either party may terminate the NGP Agreement for the material breach of the other party, subject to a 60-day cure period, or in the event an insolvency petition of the other party is pending for more than 60 days. Either party may also terminate the NGP Agreement upon
30-days written notice to the other party if Gimoti is subject to a safety recall, the parties are unable to agree to a commercialization plan and budget by a specified date, or if the Contribution Profit is negative for any calendar quarter beginning with the first full calendar quarter nine months following commercial launch. In addition, NGP may terminate the NGP Agreement if the Company withdraws Gimoti from the market for more than 180 days or if the Company is unable to provide product samples for use by the salesforce in a timely manner. NGP may also terminate the NGP Agreement since Gimoti was not approved by FDA by April 30, 2019, but, as of May 7, 2019, has not elected to do so. The Company may terminate the NGP Agreement upon a change of control of the Company, subject to a one-time payment equal to between four times and one times annualized service fees paid by the Company under the NGP Agreement, with such amount based on which year (between one and five years) after commercial launch the change of control occurs, provided if the change of control occurs within one year of commercial launch, such amount will be the greater of the specified annualized service fee amount and $5 million.