On April 19, 2023, the Company entered into an asset purchase agreement (the “BWV Asset Purchase Agreement”) to sell substantially all of the assets related to ENTADFI® (finasteride and tadalafil) capsules for oral use, a new treatment for benign prostatic hyperplasia that was approved by the FDA in December 2021, with Blue Water Biotech Inc. formerly known as Blue Water Vaccines Inc. (“BWV”). The transaction closed on April 19, 2023. The purchase price for the transaction was $20.0 million, consisting of $6.0 million paid at closing, $4.0 million payable by September 30, 2023, $5.0 million payable 12 months after closing, and $5.0 million payable by September 30, 2024, plus up to $80.0 million based on BWV’s net revenues from ENTADFI after closing (the “Milestone Payments”). The Company cannot determine the likelihood of receiving any Milestone Payments at this time.

On September 29, 2023, the Company entered into an Amendment to the BWV Asset Purchase Agreement providing that the promissory note for the $4.0 million installment of the purchase price due September 30, 2023 would be deemed paid and fully satisfied upon (1) the payment to the Company of the sum of $1.0 million in immediately available funds on September 29, 2023 and (2) the issuance to the Company by October 3, 2023 of 3,000 shares of Series A Convertible Preferred Stock of BWV. The Company received payment of $1.0 million on September 29, 2023 and the 3,000 Series A Convertible Preferred Stock on October 3, 2023. There is no market for the Series A Convertible Preferred Stock and therefore, little likelihood of any liquidity in the Series A Preferred Stock.

The Company determined that it was not probable, at the time of the transaction and at September 30, 2023, that substantially all of the consideration promised under the BWV Asset Purchase Agreement would be collected. Therefore, the Company recognizes the difference between the nonrefundable consideration received and the carrying amount of the assets as a gain. The gain is recorded considering only the nonrefundable consideration of $7.0 million received by the Company as of September 30, 2023. Total assets sold, consisting primarily of inventory, had a net book value of approximately $1.3 million. The Company recorded a gain of approximately $5.7 million on the transaction during fiscal 2023. The gain calculation will be updated if additional consideration is received in future periods or when it is deemed probable that substantially all of the consideration promised will be collected. The Company will continue to evaluate the collectability of the notes receivable.