5. Equity Method Investment

In connection with the execution of a stock purchase agreement with Syntone Ventures, LLC (“Syntone”), the United States-based affiliate of Syntone Technologies Group Co. Ltd. (“Syntone PRC”) on May 22, 2020, the Company and Syntone PRC entered into a joint venture agreement pursuant to which they agreed to form a People’s Republic of China (“PRC”) joint venture, Beijing Syntone Biopharma Ltd. (“Syntone JV”), that is 80% owned by Syntone PRC and 20% owned by the Company. As the Company can exert significant influence over, but does not control, Syntone JV’s operations through voting rights or representation on Syntone JV’s board of directors, the Company accounts for this investment using the equity method of accounting. Upon formation of Syntone JV in April 2021, the Company entered into a royalty-free license with Syntone JV for the development, commercialization and manufacture of LYTENAVA in the greater China market, which includes Hong Kong, Taiwan and Macau.

The Company made the initial investment of $900,000 in June 2020 and an additional capital contribution of approximately $2.1 million in June 2026, consistent with the development plan contemplated in the license agreement. Following the June 2026 contribution, the Company’s total capital contributions to Syntone JV were approximately $3.0 million, and no further capital contribution commitments remained outstanding under the development plan. The Company’s maximum exposure to a loss as a result of the Company’s involvement in Syntone JV is limited to the initial investment and its aggregate capital contributions of approximately $3,000,000.