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INTANGIBLE ASSETS | 9 Months Ended
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Sep. 30, 2018
Intangible Assets, Net (Excluding Goodwill) [Abstract] |
INTANGIBLE ASSETS | NOTE 7 – INTANGIBLE ASSETS The following tables sets forth the gross carrying amount, accumulated amortization and net carrying amount of our intangible assets, (excluding licenses) as of September 30, 2018 and December 31, 2017:
|  | September 30, 2018 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Amount |  |  | Weighted- Average Remaining Amortization Period (yrs.) |
Amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
OPERA® software patent |  | $ | 31,951 |  |  | $ | (9,985 | ) |  | $ | 21,966 |  |  |  | 11 |
Development costs of corporate website |  |  | 91,743 |  |  |  | (91,743 | ) |  |  | — |  |  |  | n/a |
Approved hormone therapy drug candidate patents |  |  | 1,991,790 |  |  |  | (247,536 | ) |  |  | 1,744,254 |  |  |  | 14.25 |
Hormone therapy drug candidate patents (pending) |  |  | 1,749,561 |  |  |  | — |  |  |  | 1,749,561 |  |  |  | n/a |
Non-amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multiple trademarks |  |  | 255,749 |  |  |  | — |  |  |  | 255,749 |  |  |  | indefinite |
Total |  | $ | 4,120,794 |  |  | $ | (349,264 | ) |  | $ | 3,771,530 |  |  |  |  |
|  | December 31, 2017 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Amount |  |  | Weighted- Average Remaining Amortization Period (yrs.) |
Amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
OPERA® software patent |  | $ | 31,951 |  |  | $ | (8,487 | ) |  | $ | 23,464 |  |  |  | 11.75 |
Development costs of corporate website |  |  | 91,743 |  |  |  | (91,743 | ) |  |  | — |  |  |  | n/a |
Approved hormone therapy drug candidate patents |  |  | 1,293,614 |  |  |  | (171,911 | ) |  |  | 1,121,703 |  |  |  | 15 |
Hormone therapy drug candidate patents (pending) |  |  | 1,721,305 |  |  |  | — |  |  |  | 1,721,305 |  |  |  | n/a |
Non-amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Multiple trademarks |  |  | 233,275 |  |  |  | — |  |  |  | 233,275 |  |  |  | indefinite |
Total |  | $ | 3,371,888 |  |  | $ | (272,141 | ) |  | $ | 3,099,747 |  |  |  |  |
We capitalize external costs, consisting primarily of legal costs, related to securing our patents and trademarks. Once a patent is granted, we amortize the approved hormone therapy drug candidate patents using the straight-line method over the estimated useful life of approximately 20 years, which is the life of intellectual property patents. If the patent is not granted, we write-off any capitalized patent costs at that time. Trademarks are perpetual and are not amortized. During the three and nine months ended September 30, 2018 and year ended December 31, 2017, there was no impairment recognized related to intangible assets. We have numerous pending foreign and domestic patent applications. As of September 30, 2018, we had 22 issued foreign patents and 20 issued domestic, or U.S., patents including:
| ● | 14 domestic utility patents that relate to our combination progesterone and estradiol product candidates, which are owned by us. These domestic utility patents will expire in 2032. In addition, we have pending patent applications with respect to our combination progesterone and estradiol product candidates in the U.S., Argentina, Australia, Brazil, Canada, Europe, Israel, Japan, Mexico, Russia, South Africa, and South Korea;
| ● | Three domestic patents that relate to IMVEXXY™. These patents establish an important intellectual property foundation for IMVEXXY™ and are owned by us. These domestic patents will expire in 2032 or 2033. In addition, we have pending patent applications related to IMVEXXY™ in the U.S., Argentina, Australia, Brazil, Canada, Europe, Israel, Japan, Mexico, New Zealand, Russia, South Africa, and South Korea;
| ● | One domestic utility patent that relates to our pipeline transdermal patch technology, which is owned by us. The domestic utility patent will expire in 2032. We have pending patent applications with respect to this technology in the U.S., Australia, Brazil, Canada, Europe, Mexico, Japan, and South Africa;
| ● | One domestic utility patent that relates to our OPERA® information-technology platform, which is owned by us and will expire in 2029; and
| ● | One domestic utility patent that relates to TX-009HR, our progesterone and estradiol product candidate, which is owned by us and will expire in 2037.
Amortization expense was $31,100 and $18,433 for the three months ended September 30, 2018 and 2017, respectively and $77,123 and $52,321 for the nine months ended September 30, 2018 and 2017, respectively. Estimated amortization expense for the next five years for the patent cost currently being amortized is as follows:
Year Ending December 31, |  |  | Estimated Amortization |
| 2018 (3 months) |  |  | $ | 31,100 |
| 2019 |  |  | $ | 124,400 |
| 2020 |  |  | $ | 124,400 |
| 2021 |  |  | $ | 124,400 |
| 2022 |  |  | $ | 124,400 |
| Thereafter |  |  | $ | 1,237,520 |
License Agreement with the Population Council On July 30, 2018, we entered into an exclusive license agreement, or the Council License Agreement, with the Population Council to commercialize in the U.S. ANNOVERA™. We currently estimate that the ANNOVERA™ will be commercially available as early as the third quarter of 2019 with a planned commercial launch in the fourth quarter of 2019. Under the terms of the Council License Agreement, we paid the Population Council a milestone payment of $20,000,000 within 30 days following approval by the FDA of the New Drug Application, or NDA, for ANNOVERA™ and will be required to pay the Population Council $20,000,000 within 30 days following the release of the first commercial batch of ANNOVERA™. The Population Council is also eligible to receive milestone payments and royalties from commercial sales of ANNOVERA™. We will assume responsibility for marketing expenses related to the commercialization of ANNOVERA™. The milestone payment of $20,000,000 upon the FDA’s approval of ANNOVERA™ in the third quarter of 2018 was recorded as a finite-lived intangible asset in the consolidated balance sheet and will be amortized on a straight-line basis once it becomes available for use which is expected to be upon release of first commercial batch of ANNOVERA™. The Council License Agreement includes exclusive rights for us to negotiate co-development of two other investigational vaginal contraceptive systems in development by the Population Council. In addition, we are required to pay the Population Council, on a quarterly basis, step-based royalty payments based on annual net sales of ANNOVERA™ in the U.S. by the Company and its affiliates and permitted licensees as follows: (i) if annual net sales are less than or equal to $50,000,000, a royalty of 5% of net sales; (ii) for annual net sales greater than $50,000,000 and less than or equal to $150,000,000, a royalty of 10% of such net sales; and (iii) for net sales greater than $150,000,000, a royalty of 15% of such net sales. The annual royalty rate will be reduced to 50% of the initial rate during the six-month period beginning on the date of the first arms-length commercial sale of a generic equivalent of the one-year vaginal contraceptive system that is launched by a third party in the U.S., and thereafter will be reduced to 20% of the initial rate. The Population Council has agreed to perform and pay the costs and expenses associated with four post-approval studies required by the FDA for ANNOVERA™ and we have agreed to perform and pay the costs and expenses associated with a post approval study required by the FDA to measure risk for venous thromboembolism, provided that if the costs and expenses associated with such post-approval study exceed $20,000,000, half of such excess will be offset against royalties or other payments owed by us to the Population Council under the Council License Agreement. We and the Population Council have agreed to form a joint product committee responsible for overseeing activities under the Council License Agreement. We will be responsible for all aspects of promotion, product positioning, pricing, education programs, publications, sales messages and any additional desired clinical studies for the one-year vaginal contraceptive system, subject to oversight and decisions made by the joint product committee. We assess our intangible assets for impairment if indicators are present or changes in circumstance suggest that impairment may exist. If impairment indicators are present or changes in circumstance suggest that impairment may exist, we perform a recoverability test by comparing the sum of the estimated undiscounted cash flows of each intangible asset to its carrying value on the consolidated balance sheet. If the undiscounted cash flows used in the recoverability test are less than the carrying value, we would determine the fair value of the intangible asset and recognize an impairment loss if the carrying value of the intangible asset exceeds its fair value. We also evaluate the remaining useful life of intangible assets subject to amortization on a periodic basis to determine whether events and circumstances would indicate impairment or warrant a revision to the remaining useful life. If the estimate of an intangible asset’s remaining useful life is changed, we will amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. License Agreement with Knight Therapeutics Inc. On July 30, 2018, we entered into a license and supply agreement, or the Knight License Agreement, with Knight pursuant to which we granted Knight an exclusive license to commercialize IMVEXXY™ and BIJUVA™ in Canada and Israel. Pursuant to the terms of the Knight License Agreement, Knight will pay us a milestone fee upon first regulatory approval in Canada of each of IMVEXXY™ and BIJUVA™, sales milestone fees based upon certain aggregate annual sales in Canada and Israel of each of IMVEXXY™ and BIJUVA™ and royalties based on aggregate annual sales of each of IMVEXXY™ and BIJUVA™ in Canada and Israel. Knight will be responsible for all regulatory and commercial activities in Canada and Israel related to IMVEXXY™ and BIJUVA™. We may terminate the Knight License Agreement if Knight does not submit all regulatory applications, submissions and/or registrations required for regulatory approval to use and commercialize IMVEXXY™ and BIJUVA™ in Canada and Israel within certain specified time periods. We also may terminate the Knight License Agreement if Knight challenges our patents. Either party may terminate the Knight License Agreement for any material breach by the other party that is not cured within certain specified time periods or if the other party files for bankruptcy or other related matters. In connection with the Knight License Agreement, Knight entered into a subscription agreement with us pursuant to which Knight agreed to purchase from us $20,000,000 of shares of Common Stock concurrently with the closing of our first underwritten public offering of Common Stock to occur within 60 days following the date of the Knight License Agreement with gross proceeds to us of not less than $50,000,000, at a price per share equal to the price per share to the public in such underwritten public offering, which Knight purchased in connection with the August 2018 underwritten public offering described in Note 11.

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