SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

On October 23, 2019, Bodor Laboratories, Inc. (“Bodor”) notified the Company of its termination of the license agreement entered into between Bodor and the Company, dated December 15, 2012, as amended by Amendment No. 1 to License Agreement, effective as of October 21, 2013, and Amendment No. 2 to License Agreement, effective as of March 31, 2015 (the “License Agreement”). Bodor alleges that the Company materially breached the License Agreement resulting in its termination.

On October 23, 2019, Bodor and Nicholas S. Bodor (the “Plaintiffs”), filed a complaint (the “Bodor Complaint”) against the Company in the United States District Court for the Southern District of Florida. The complaint alleges damages incurred by the Plaintiffs in connection with the Company’s alleged breach of the License Agreement. The complaint seeks: (i) a declaratory judgment that the termination of the License Agreement by the Plaintiffs was valid and enforceable; (ii) an injunction requiring the Company to cease and desist use of the Plaintiffs’ intellectual property; and (iii) damages for breach of contract and breach of the covenant of good faith and fair dealing.

On October 25, 2019, NovaQuest provided written notice to the Company of its determination that a “Material Adverse Event” (as defined in Section 1.1 of the Funding Agreement) occurred as a result of the matters described above. As a result, NovaQuest exercised its right under Section 3.3(e) of the Funding Agreement to suspend further Development Payments (as defined in Section 3.1(a) of the Funding Agreement). Pursuant to the Funding Agreement, NovaQuest is obligated to resume Development Payments if the Material Adverse Event is resolved or cured by the Company to NovaQuest’s reasonable satisfaction by October 25, 2020. If the Material Adverse Event is not resolved or cured to NovaQuest’s reasonable satisfaction by such date, then NovaQuest may, in its sole discretion, terminate any future payment obligation under the Funding Agreement and Brickell may be obligated to make certain payments to NovaQuest.

On October 30, 2019, the Company initiated an arbitration proceeding pursuant to Article 9 of the License Agreement with the American Arbitration Association (“AAA”) in Florida against Bodor and Nicholas S. Bodor. This arbitration seeks a declaratory judgment that the purported termination of the License Agreement by Bodor and Nicholas S. Bodor was invalid and unenforceable and asserts (i) a claim for breach of the License Agreement against Bodor and Nicholas S. Bodor, in his individual capacity, and (ii) a claim against Bodor and Nicholas S. Bodor, in his individual capacity, for tortious interference with the Company’s business relations. The Company requested expedited treatment of the arbitration proceeding and concurrent mandatory mediation under the AAA rules. On October 30, 2019, the Company concurrently filed with the United States District Court for the Southern District of Florida a motion to dismiss the complaint brought against the Company by Bodor and Nicholas S. Bodor described above.

As a result of the matters described above, the timeline for the Company’s Phase 3 clinical trials in patients with primary axillary hyperhidrosis in the United States may be negatively impacted. Any potential impact to the financial statements with respect to loss contingencies for asserted legal and other claims is not estimable by the Company at this time.