10. Commitments and Contingencies

Collaborative Agreements, Royalties and Milestone Payments

The Company has committed to make potential future milestone payments and legal fees to third parties as part of licensing and development programs. Payments under these agreements become due and payable only upon the achievement of certain developmental, regulatory and commercial milestones by the Company’s licensees. Because it is uncertain if and when these milestones will be achieved, such contingencies, aggregating up to $6.3 million (assuming one product per contract meets all milestone events) have not been recorded on the accompanying condensed consolidated balance sheets. The Company is unable to determine precisely when and if payment obligations under the agreements will become due as these obligations are based on milestone events, the achievement of which is subject to a significant number of risks and uncertainties. None of these milestones were assessed to be probable as of March 31, 2024.

Contingent Consideration

Pursuant to the Company’s agreements with Aronora, Kuros, Affitech and LadRx the Company has committed to pay the Aronora Royalty Milestones, the Kuros Sales Milestones, the Affitech Sales Milestones, and LadRx regulatory and commercial sales milestones.

As of December 31, 2023, the Company recorded $1.0 million for the LadRx contingent consideration that represented the estimated fair value of the potential future payments upon the achievement of regulatory milestones related to arimoclomol and aldoxorubicin at the inception of the LadRx Agreements. During the three months ended March 31, 2024, the contingent liability decreased to zero after the Company paid LadRx $1.0 million upon the FDA’s acceptance of the arimoclomol NDA resubmission (Note 5). As of March 31, 2024, the Company recorded zero for the LadRx contingent consideration as the estimated fair value of the potential future payment upon the achievement of regulatory milestones related to aldoxorubicin was negligible. Such contingent consideration related to regulatory milestones is remeasured at fair value at each reporting period, with changes in fair value recorded in other income (expense), net.

During the year ended December 31, 2023, certain sales milestones related to VABYSMO pursuant to the Affitech CPPA were assessed to be probable under ASC 450. As such, a $6.0 million liability was recorded in contingent consideration under RPAs, AAAs and CPPAs and a corresponding $6.0 million asset was recorded under long-term royalty and commercial payment receivables on the consolidated balance sheet. During the three months ended March 31, 2024, this contingent liability decreased to zero after the Company paid Affitech $6.0 million upon the achievement of the related commercial sales milestones (Note 5).

During the three months ended March 31, 2024, a sales milestone related to VABYSMO pursuant to the Affitech CPPA was assessed to be probable under ASC 450. As such, a $3.0 million liability was recorded in contingent consideration under RPAs, AAAs, and CPPAs and a corresponding $3.0 million asset was recorded under short-term royalty and commercial payment receivables on the condensed consolidated balance sheet.

The liability for future Aronora Royalty Milestones, Kuros Sales Milestones, remaining Affitech Sales Milestones and LadRx commercial sales milestone will be recorded when the amounts, by product, are estimable and probable.

As of March 31, 2024, none of the Aronora Royalty Milestones, Kuros Sales Milestones, remaining Affitech Sales Milestone and LadRx commercial sales milestone were assessed to be probable and as such, no liability was recorded on the condensed consolidated balance sheet.