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Contractual Agreements

9 Months Ended

Sep. 30, 2024

Health Care Organizations [Abstract]

(7) Contractual Agreements

(a)

Verity Pharmaceuticals, Inc.

On January 12, 2024, the Company entered into the Verity License Agreement with GSL and Verity Pharma, pursuant to which the Company granted to GSL (an affiliate of Verity Pharma) an exclusive, royalty-bearing, sublicensable right and license to commercialize the Company’s TLANDO product with respect to testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone, as indicated in NDA No. 208088, treatment of Klinefelter syndrome, and pediatric indications relating to testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone (the “Field”), in each case within the United States and Canada (the “Licensed Verity Territory”). The Verity License Agreement also provides GSL with a license to develop and commercialize TLANDO XR (LPCN 1111), the Company’s potential once-daily oral product candidate for testosterone replacement therapy in the Licensed Verity Territory. Under the Verity License Agreement, the Company retains rights to TLANDO in applications outside of the Field and to the development and commercialization rights outside of the United States and Canada. The Company retains rights to TLANDO XR in applications outside of the Field and to development and commercialization rights in the field outside of the United States and Canada.

Upon execution of the Verity License Agreement, GSL agreed to pay the Company a license fee of $11.0 million consisting of an initial payment of $2.5 million which was received on signing of the Verity License Agreement, $5.0 million which was received on February 1, 2024, $2.5 million to be paid no later than January 1, 2025, and $1.0 million to be paid no later than January 1, 2026. The Company is also eligible to receive development and sales milestone payments of up to $259.0 million in the aggregate, depending primarily on the achievement of certain sales milestones in a single calendar year with respect to all products licensed by GSL under the Verity License Agreement. Under the Verity License Agreement, GSL is generally responsible for expenses relating to the development (including the conduct of any clinical trials) and commercialization of licensed products in the Field in the Licensed Verity Territory, while the Company is generally responsible for expenses relating to development activities outside of the Field and/or the Licensed Verity Territory.

The Company concluded that licensing revenue recognized in conjunction with the Verity License Agreement met the requirements under ASC 606, Revenue from Contracts with Customers. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. License revenue from payments to be received in the future will be recognized when it is probable that we will receive license payments under the terms of the Verity License Agreement.

Under the Verity License Agreement with Verity Pharma, during the three months ended September 30, 2024, the Company did not recognize any royalty revenue. During the nine months ended September 30, 2024, the Company recognized $7.5 million in licensing revenue and approximately $140,000 in royalty revenue.

(b)

Antares Pharma, Inc.

On October 14, 2021, the Company entered into the Antares License Agreement with Antares pursuant to which the Company granted to Antares an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize, upon final approval of TLANDO® from the U.S. Food and Drug Administration (“FDA”), the Company’s TLANDO product with respect to testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone, as indicated in NDA No. 208088, treatment of Klinefelter syndrome, and pediatric indications relating to testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone, in each case within the United States. TLANDO received FDA approval on March 29, 2022.

Upon execution of the Antares License Agreement, Antares paid the Company an initial payment of $11.0 million. Antares agreed to make additional payments of $5.0 million to the Company on each of January 1, 2025, and January 1, 2026, provided that certain conditions were satisfied. The Company was also eligible to receive milestone payments of up to $160.0 million in the aggregate, depending on the achievement of certain sales milestones in a single calendar year with respect to TLANDO, as licensed by Antares under the Antares License Agreement. In addition, the Company was to receive tiered royalty payments at rates ranging from percentages in the mid-teens up to 20% of net sales of TLANDO in the United States, subject to certain minimum royalty obligations. On October 2, 2023, the Company received notice from Antares of Antares’ termination of the Antares License Agreement. In accordance with the terms of the Antares License Agreement, the Antares License Agreement terminated effective January 31, 2024. On January 12, 2024, the Company entered into the Verity License Agreement with Verity Pharma. Upon termination of the Antares License Agreement, all rights and licenses granted by the Company to Antares under the Antares License Agreement terminated and all rights in TLANDO were transferred to the Company’s new licensing partner, Verity Pharma.

Under the Antares License Agreement, the Company did not recognize revenue during the three months ended September 30, 2024 and recognized a reversal of variable consideration for minimum guaranteed royalties of $3.1 million during the three months ended September 30, 2023. Under the Antares License Agreement, the Company recognized revenue of approximately $67,000 during the nine months ended September 30, 2024 and recognized a reversal of variable consideration for minimum guaranteed royalties of $3.1 million during the nine months ended September 30, 2023. The Company does not expect to receive any further royalties under the Antares License Agreement in the future.

(c)

Abbott Products, Inc.

On March 29, 2012, the Company terminated its collaborative agreement with Solvay Pharmaceuticals, Inc. (later acquired by Abbott Products, Inc. (“Abbott”) for TLANDO. As part of the termination, the Company reacquired the rights to the intellectual property from Abbott. All obligations under the prior license agreement have been completed except that Lipocine will owe Abbott a perpetual 1% royalty on net sales. Such royalties are limited to $1.0 million in the first two calendar years following product launch, after which period there is not a cap on royalties and no maximum aggregate amount. If generic versions of any such product are introduced, then royalties are reduced by 50%. TLANDO was commercially launched on June 7, 2022. The Company incurred royalty expense of approximately $0 and $9,000 during the three months ended September 30, 2024 and 2023, respectively, and approximately $16,000 and $22,000 during the nine months ended September 30, 2024 and 2023, respectively.

(d)

Contract Research and Development

The Company has entered into agreements with various contract organizations that conduct pre-clinical, clinical, analytical and manufacturing development work on behalf of the Company as well as a number of independent contractors and primarily clinical researchers who serve as advisors to the Company. The Company incurred expenses of $740,000 and $2.1 million, respectively, for the three months ended September 30, 2024 and 2023, respectively, and $3.7 million and $5.9 million for the nine months ended September 30, 2024 and 2023, respectively, under these agreements and has recorded these expenses in research and development expenses.