3. Braeburn License

Until its termination in May 2018, we were party to a license agreement (as amended, the “License Agreement”) pursuant to which we had granted Braeburn the exclusive commercialization rights to Probuphine in the United States and its territories and Canada. Under the License Agreement, we received certain milestone payments, as well as royalties on net sales of Probuphine. The License Agreement provided for us to be reimbursed by Braeburn for any development services and activities undertaken at Braeburn’s request. Under ASC 606, there was no change in the amount or timing of revenue recognized under the License Agreement. In February 2016, Braeburn sublicensed rights to develop and commercialize Probuphine in Canada to Knight.

On May 25, 2018, we entered into the Transition Agreement with Braeburn pursuant to which we regained all rights to the commercialization and clinical development of Probuphine in the United States and Canada. Braeburn paid us $1.0 million, transferred inventory to us with a value of approximately $1.1 million and agreed to provide support services through December 28, 2018. In addition, the Transition Agreement provided for the immediate transfer to us of all regulatory documentation and development data related to Probuphine. The estimated fair value of the inventory received was determined using available inputs such as existing supply agreements, prior selling prices and remaining life to expiration. We recognized approximately $2.1 million of license related revenue related to this transaction during the three month period ended June 30, 2018. The sublicense to Knight was assigned to Titan as part of the Transition Agreement.

As of December 31, 2018, we have recognized approximately $15.0 million in license revenue related to the up-front payment we received upon execution of the License Agreement. In addition, we received a $15.0 million milestone payment from Braeburn following the achievement of FDA approval of the product NDA. As such, upon receipt of FDA approval our obligation was fulfilled and we recognized the $15.0 million regulatory milestone payment from Braeburn in accordance with the milestone method of revenue recognition. We have recognized approximately $312,000 of royalty revenue on net sales of Probuphine prior to termination of the License Agreement. Internal and external research and development costs related to this product have been expensed in the period incurred.