TRANSACTIONS WITH RELATED PARTIES
AND INDEMNIFICATION
Related Person Transactions Policy
We have a written related person transactions policy referred to as the Policy,(the “Policy”) that governs the review and approval of related party transactions. Pursuant to the Policy and the charter of the Audit Committee, the Audit Committee will review and approve or disapprove all related person transactions that, under the rules of the Securities and Exchange Commission, referred to as the SEC, are required to be disclosed in our proxy statement. In its review, the Audit Committee will consider, among other factors it deems appropriate, whether the related person transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction. None of our agreements with Ironwood or its subsidiaries, nor any transactions contemplated thereby, was subject to the terms of such policy.
The Policy provides that no director will participate in any discussion or approval pursuant to the Policy of a related person transaction for which he or she (or an immediate family member, as defined in the Policy) is a related person, except that the director will provide all material information concerning the related person transaction to the Audit Committee.
The Policy also provides that if a related person transaction will be ongoing, the Audit Committee may establish guidelines for the Company’s management to follow in its ongoing dealings with the related person. Thereafter, the Audit Committee will periodically review and assess ongoing relationships with the related person to confirm that they are in compliance with the Audit Committee’s guidelines and that the related person transaction remains appropriate.
Certain Related-Party Transactions
The following includes a summary of transactions since January 1, 20192020 to which we have been a party, in which the amount involved in the transaction exceeded $120,000, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our voting securities or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest. Other than as described below, there have not been, nor are there currently any proposed, transactions or series of similar transactions to which we have been or will be a party other than compensation arrangements, which include equity and other compensation, termination, change in control and other arrangements, which are described under “Executive Compensation” and “Director Compensation.”
Transactions with Ironwood
As part of the Separation from Ironwood, the Company entered into Transition Services Agreements and a Development Agreement with Ironwood.
In May 2018,Under the Transition Services Agreements, the Company provides certain services to Ironwood, announced its plans to separate its sGC business from its commercial and gastrointestinal business. On April 1, 2019, we separated from Ironwood. PriorIronwood provides certain services to the completionCompany, each related to corporate functions such as finance, procurement, facilities and development for a period of up to two years from the date of the separation, all of our outstanding shares of common stock were ownedSeparation, unless earlier terminated or extended by Ironwood. Upon completion of the separation, Ironwood no longer owned any shares of our common stock.
Following the completion of the separation, wemutual agreement. These services are charged to and Ironwood have operated separately, each as an independent public company. In connection with the separation, we and Ironwood entered into certain agreements pursuant to which the separation of our business from Ironwood was effected and that govern our relationship with Ironwood going forward. The following is a summary of the terms of the material agreements that we entered into with Ironwood in connection with the separation.
Separation Agreement
We entered into a separation agreement with Ironwood dated March 30, 2019, which set forth our agreements with Ironwood regarding the principal actions taken in connection with the separation, including the distribution. The separation agreement identified the assets transferred, liabilities assumed and contracts assigned to each of us and Ironwoodare recorded as part of operating expenses. All services provided to and from the separation,Company under the Transition Services Agreements were completed as of March 31, 2020 and sets forth whenthe agreements were terminated. The net charge to operating expenses for the Transition Services Agreements was de minimis for the year ended December 31, 2020.
Under the Development Agreement, the Company provides certain research and how these transfers, assumptionsdevelopment services to Ironwood at mutually agreed upon rates and assignments occurred.
Transferthe amounts earned are recorded as revenue from related party. Such research and development activities are governed by a joint steering committee composed of Assets and Assumptionrepresentatives of Liabilities. The separation agreement identified the assets transferred, liabilities assumed, and contracts assigned to each ofboth Ironwood and us,the Company. Ironwood and the Company have agreed that the Development Agreement will not be renewed beyond its initial term which ends on March 31, 2021. The Company recorded approximately $2.3 million in revenue from related party for services provided under the Development Agreement for the transferyear ended December 31, 2020.
In accordance with the Separation Agreement, there were certain other transactions and adjustments post-Separation between the Company and Ironwood. For the year ended December 31, 2020, the Company recorded approximately $0.7 million in general and administrative expense for the reimbursement of such assets, assumption of such liabilities and assignment of such contracts. Followingcertain expenses to Ironwood in accordance with the completion of theSeparation Agreement.