7. Licenses Acquired

In accordance with ASC 730-10-25-1, Research and Development, costs incurred in obtaining technology licenses are charged to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future use. The licenses purchased by Fortress and its partner companies require substantial completion of research and development, and regulatory and marketing approval efforts, in order to reach technological feasibility. As such, for the three and six months ended June 30, 2022 and 2021, the purchase prices of licenses acquired were classified as research and development-licenses acquired in the unaudited condensed consolidated statement of operations. 

Journey

On June 29, 2021, Journey entered a license, collaboration, and assignment agreement (the “DFD Agreement”) to obtain the global rights for the development and commercialization of a late-stage development modified release oral minocycline for the treatment of rosacea (“DFD-29”) with DRL. Pursuant to the terms and conditions of the DFD Agreement, Journey paid $10.0 million upfront.  Additional contingent regulatory and commercial milestone payments totaling up to $163.0 million are also payable. Royalties ranging from approximately ten percent to twenty percent are payable on net sales of the DFD-29 product.  Journey also agreed to pay DRL additional consideration of approximately $5 million in cash or shares upon an IPO of Journey's Common Stock, which occurred in November 2021 and resulted in the issuance of  545,131 unregistered shares of Journey common stock to DRL. The restrictions on the unregistered shares of Common Stock are governed by the terms set forth in the DFD Agreement and applicable securities laws.

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Additionally, the DFD Agreement requires Journey to fund and oversee Phase 3 clinical trials approximating $24.0 million, based upon the current development plan and budget.  In March 2022, JMC dosed the first patient in the Phase 3 clinical program of DFD-29.  Journey’s expenses related to the DFD-29 Phase 3 clinical trials were approximately $0.8 million and $3.3 million for the three and six-month periods ended June 30, 2022, respectively.