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 commercial feasibility and has no alternative future use. The licenses purchased by the Company require substantial completion of research and development, regulatory and marketing approval efforts in order to reach commercial feasibility and has no alternate use. As such, for the years ended December 31, 2021 and 2020, the total purchase price of licenses acquired, totaling approximately $15.6 million and $2.8 million, respectively, was classified as research and development-licenses acquired in the Consolidated Statements of Operations.

For the years ended December 31, 2021 and 2020, the Company’s research and development-licenses acquired are comprised of the following:

​

​

Journey

On June 29, 2021, Journey entered into a license, collaboration, and assignment agreement (the “DFD Agreement”) to obtain the global rights for the development and commercialization of  DFD-29 with DRL. Journey paid $10.0 million, of which $2.0 million was paid upon execution and $8.0 million was paid on September 29, 2021. Additional contingent regulatory and commercial milestone payments totaling up to $163.0 million are also payable. Royalties ranging from approximately 10% to approximately 15% are payable on net sales of the DFD-29 product. Additionally, Journey is required to fund and oversee the Phase 3 clinical trials at a cost approximating $24.0 million, based upon the current development plan and budget.

​

The DFD Agreement also included contingent payments to be made to DRL in the event of a Journey IPO or the sale of Journey, See Note 6.  The fair value of the contingent payment was deemed to be $3.8 million, and was recorded in research and development, licenses acquired expense for the year ended December 31, 2021. In connection with the closing of Journey’s IPO on November 16, 2021, Journey issued 545,131 unregistered shares of Journey Medical Inc. common stock to DRL to settle the obligation, calculated using a 15-day volume weighted average price (“VWAP”) of $9.1721 per share.

Mustang

For the years ended December 31, 2021 and 2020 Mustang recorded the following expense in research and development – licenses acquired:

​

​

​

Partner Companies

The Company’s partner companies have entered into various license agreements with other medical centers. These license agreements include upfront payments which are expensed and various developmental milestone payments due upon achievement of various milestones which in the aggregate are approximately $480.4 million, of which $335.4 million relates to Mustang agreements. The license agreements also have sales-based milestone payments that total approximately $226.1 million.  The agreements also include royalty payments on any future sales.