STRATEGIC AGREEMENTS

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

STRATEGIC AGREEMENTS

STRATEGIC AGREEMENTS

Exclusive License and Development Agreement with Carna

On February 2, 2022, the Company entered into an Exclusive License Agreement (the “Carna License Agreement”) with Carna Biosciences, Inc. (“Carna”), pursuant to which the Company acquired exclusive, worldwide rights to research, develop, and commercialize Carna’s portfolio of novel STING inhibitors. In accordance with the terms of the Carna License Agreement, in exchange for the licensed rights, the Company made a one-time cash payment of $2.0 million, which was recorded as research and development expenses in the condensed consolidated statements of operations during the three months ended March 31, 2022.

The Carna License Agreement provides that the Company will make success-based payments to Carna of up to $258.0 million in the aggregate contingent upon achievement of specified development, regulatory, and commercial milestones. Further, the Carna License Agreement provides that the Company will pay Carna tiered royalty payments ranging from mid-single digits up to 10% of net sales. All of the contingent payments and royalties are payable in cash in U.S. Dollars. Under the terms of the Carna License Agreement, the Company will be responsible for, and bear the future costs of, all development and commercialization activities, including patenting, related to all the licensed compounds. As of March 31, 2022 and through the date of this Quarterly Report, the Company has not yet made any payments or recorded any liabilities related to the specified development, regulatory, and commercial milestones or royalties on net sales pursuant to the Carna License Agreement.

License and Development Agreement with Voronoi

On August 27, 2021, the Company entered into a License and Development Agreement (the “Voronoi License Agreement”) with Voronoi Inc. (“Voronoi”), pursuant to which the Company acquired exclusive, worldwide rights to research, develop, and commercialize BBI-02, a novel, Phase 1-ready, potential first-in-class DYRK1A inhibitor, and other next-generation therapeutics developed from Voronoi’s proprietary kinase inhibitor platform. In accordance with the terms of the Voronoi License Agreement, in exchange for the licensed rights, the Company made a one-time payment of $2.5 million in cash and issued $2.0 million, or 2,816,901 shares, of its common stock to Voronoi.

With respect to BBI-02, the Voronoi License Agreement provides that the Company will make payments to Voronoi of up to $211.0 million in the aggregate contingent upon achievement of specified development, regulatory, and commercial milestones. With respect to the next-generation compounds arising from the novel kinase inhibitor platform, the Company will make payments to Voronoi of up to $107.5 million in the aggregate contingent upon achievement of specified development, regulatory, and commercial milestones. Further, the

Voronoi License Agreement provides that the Company will pay Voronoi tiered royalty payments ranging from low-single digits up to 10% of net sales of products arising from the DYRK1A inhibitor programs and next-generation kinase inhibitor platform. All of the contingent payments and royalties are payable in cash in U.S. Dollars, except for $1.0 million of the development and regulatory milestone payments, which amount is payable in equivalent shares of the Company’s common stock. Under the terms of the Voronoi License Agreement, the Company will be responsible for, and bear the future costs of, all development and commercialization activities, including patenting, related to all the licensed compounds. As of March 31, 2022 and through the date of this Quarterly Report, the Company has not yet made any payments or recorded any liabilities related to the specified development, regulatory, and commercial milestones or royalties on net sales pursuant to the Voronoi License Agreement.

Amended and Restated License Agreement with Bodor

In February 2020, the Company, together with Brickell Subsidiary and Bodor Laboratories, Inc. (“Bodor”) and Dr. Nicholas S. Bodor entered into an amended and restated license agreement (the “Amended and Restated License Agreement”), pursuant to which Bodor and Dr. Bodor granted the Company a worldwide, exclusive license to develop, manufacture, market, sell, and sublicense products containing the proprietary compound sofpironium bromide based upon the patents referenced in the Amended and Restated License Agreement for a defined field of use. As of March 31, 2022, the Company had remaining obligations to pay Bodor (i) a royalty on sales of product outside of Japan and certain other Asian countries (the “Territory”), including a low single-digit royalty on sales of certain product not covered by the patent estate licensed from Bodor; (ii) approximately 50 to 55% of all royalties the Company receives from Kaken Pharmaceutical Co., Ltd. (“Kaken”) for sales of products within the Territory; (iii) a percentage of non-royalty sublicensing income the Company receives from Kaken or other sublicensees; (iv) cash payments of $0.3 million upon the submission of a new drug application for sofpironium bromide and $0.5 million upon its approval by the U.S. Food and Drug Administration (plus an additional $0.1 million for approvals of additional products); and (v) $1.0 million of shares of the Company’s common stock upon the achievement of certain regulatory milestones.

No research and development expenses associated with milestones were incurred during the three months ended March 31, 2022 and 2021, but the Company paid Bodor the applicable amounts under the Amended and Restated License Agreement with respect to the royalties it received from Kaken for sales of sofpironium bromide gel, 5% (ECCLOCK®) in Japan during those periods.

In May 2022, Botanix assumed the Amended and Restated License Agreement pursuant to the Asset Purchase Agreement among the Company, Brickell Subsidiary, Botanix and Botanix Pharmaceuticals Limited (the “Asset Purchase Agreement”). In addition, the Company, Brickell Subsidiary and Bodor entered into an agreement (the “Rights Agreement”), pursuant to which the Company agreed to pay Bodor (i) 18% of the amount of each payment actually received by the Company from Botanix for upfront and milestone payments under the Asset Purchase Agreement, as well as (ii) certain tiered payments, set as a percentage ranging from mid-single digits to low-teen digits, of the actual amount of each applicable earnout payment actually received by the Company from Botanix, as further described in Note 9. “Subsequent Events.”

License, Development, and Commercialization Agreement with Kaken

In March 2015, the Company entered into a license, development, and commercialization agreement (as amended in May 2018, the “Kaken Agreement”) with Kaken. Under the Kaken Agreement, the Company granted to Kaken an exclusive right to develop, manufacture, and commercialize sofpironium bromide in the Territory. In exchange, Kaken paid non-refundable upfront fees and funding of certain research and development activities. Pursuant to the Asset Purchase Agreement, the Kaken Agreement was assigned to Botanix, and Botanix will pay to the Company a portion of the sales-based milestone payments and royalties that Botanix receives from Kaken under the Kaken Agreement, as further described in Note 9. “Subsequent Events.”

In September 2020, Kaken received regulatory approval in Japan to manufacture and market ECCLOCK for the treatment of primary axillary hyperhidrosis, and as a result, the Company began recognizing royalty revenue earned on a percentage of net sales of ECCLOCK in Japan during the fourth quarter of 2020. During the three months ended March 31, 2022 and 2021, the Company recognized royalty revenue of $92 thousand and $17 thousand, respectively.