Asset Held for Sale

12 Months Ended

Dec. 31, 2025

10. Asset Held for Sale

On November 6, 2025, the Company completed the sale of the intangible asset related to its Xepi product line, which was previously classified as held for sale.

Prior to the sale, the asset met the criteria to be classified as held for sale in the third quarter of 2024, as outlined in ASC 360, and was measured at the lower of its carrying amount or fair value less costs to sell. No further depreciation was recorded while the asset was classified as held for sale.

The consideration included fixed consideration of $3.0 million and up to $7.0 million of variable consideration contingent upon the buyer’s future activities. Variable consideration is accounted for in accordance with ASC 610-20 and is included in the transaction price only to the extent that it is probable that a significant reversal of a gain will not occur.

The variable consideration consists of:

	●	$1.0 million payable upon the buyer achieving commercial production and other terms and conditions of the APA, which was excluded from the transaction price as it was fully constrained at the sales date;
	●	$3.0 million payable upon the buyer achieving annual net sales of the product of $10.0 million, which was excluded from the transaction price as it was fully constrained at the sales date; and
	●	$3.0 million payable upon the buyer achieving annual net sales of the product of $15.0 million, which was excluded from the transaction price as it was fully constrained at the sales date.

The Company will recognize the constrained variable consideration in the period in which the associated uncertainty is resolved.

This divestiture does not represent a strategic shift that will have a major effect on our consolidated results of operations and therefore is not being reported as discontinued operations.

Upon completion of the sale, the asset was derecognized upon transfer of control to the buyer, and the Company recognized a gain of $0.7 million which is included in other income in the consolidated statements of operations for the year ended December 31, 2025. The gain recognized was measured as the difference between the transaction price of $3.0 million and the $2.3 million carrying amount of the asset at the date of sale.

Under the now terminated Xepi license and supply agreement we were obligated to make payments to Ferrer Internacional S.A upon the occurrence of certain milestones. Specifically, we were to pay (i) $2,000,000 upon the first occasion when annual net sales of Xepi under the Xepi LSA exceed $25,000,000, and (ii) $4,000,000 upon the first occasion annual net sales of Xepi under the Xepi LSA exceed $50,000,000. No payments or accruals for such payments were made during the years ended December 31, 2025 or 2024 related to Xepi® milestones.