SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

Asset Purchase Agreement with Botanix

On May 3, 2022 (the “Effective Date”), the Company and Brickell Subsidiary entered into the Asset Purchase Agreement with Botanix and Botanix Pharmaceuticals Limited, pursuant to which Botanix acquired all rights, title, and interests to assets primarily related to sofpironium bromide that were owned and/or licensed by the Company or Brickell Subsidiary (the “Assets”). In accordance with the terms of the Asset Purchase Agreement, in exchange for the Assets, the Company (i) received an upfront payment at closing in the amount of $3.0 million, (ii) is to be reimbursed for certain recent development expenditures in advancement of the Assets, and (iii) will receive contingent near-term milestone payments of up to $6.0 million (subject to, first, the submission of a new drug application (“NDA”) and, second, receipt of marketing approval in the U.S. for sofpironium bromide gel, 15%, both over the next 18 months) from Botanix. The Company also is eligible to receive additional success-based regulatory and sales milestone payments of up to $168 million. Further, the Company will receive tiered earnout payments ranging from high-single digits to mid-teen digits on net sales of sofpironium bromide gel (the “Earnout Payments”). Certain of these amounts are subject to payments by the Company to its former licensor, Bodor, as further described under “Rights Agreement with Bodor” below. All amounts due to the Company from Botanix in respect of the contingent payments are subject to certain reductions, credits, and offsets, as applicable, as described in the Asset Purchase Agreement. The sale of the Assets pursuant to the Asset Purchase Agreement closed on the Effective Date.

Botanix will be responsible for all further research, development, and commercialization of sofpironium bromide globally and will replace Brickell Subsidiary as the exclusive licensee of Bodor. Pursuant to the Asset Purchase Agreement, the Company has agreed to issue $1.0 million in shares of the Company’s common stock to Bodor if a certain contingent regulatory milestone is met, as required by the Amended and Restated License Agreement. The Asset Purchase Agreement contains customary representations, warranties, and covenants, and mutual indemnification provisions.

Pursuant to the Asset Purchase Agreement, the Kaken Agreement was also 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.

Transition Services Agreement with Botanix

In connection with the sale of the Assets, on the Effective Date, the Company and Botanix entered into a transition services agreement (the “TSA”) whereby the Company will provide consulting services as an independent contractor to Botanix in support of and through submission and potential approval of the U.S. NDA for sofpironium bromide gel, 15%. In accordance with the terms of the TSA, in exchange for providing these services, the Company will receive from Botanix, (i) prior to the filing of such NDA, a fixed monthly amount of $71 thousand, and (ii) after the filing of such NDA, a variable amount based upon actual hours worked, in each case plus related fees and expenses of the Company’s advisors (plus a 5% administrative fee) and the Company’s out-of-pocket expenses.

Rights Agreement with Bodor

In connection with the sale of the Assets, on the Effective Date, the Company, Brickell Subsidiary, and Bodor Labs entered into the Rights Agreement to clarify that the Company and Brickell Subsidiary have the power and authority under the Amended and Restated License Agreement to enter into the Asset Purchase Agreement and the TSA, and that Botanix will assume the Amended and Restated License Agreement pursuant to the Asset Purchase Agreement. The Rights Agreement includes a general release of claims and no admission of liability between the parties. Pursuant to such Rights Agreement, the Company has 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.