8 . Commitments and Contingencies Milestone Compensation Arrangements with Employees We have performance-based milestone compensation arrangements with certain employees, whose vesting is contingent upon meeting various regulatory and development milestones, with fixed monetary amounts known at inception that can be settled in the form of cash or equity at our sole election, upon achievement of each contingent milestone. We recognize such contingent compensation as stock-based compensation when the related milestone achievement is probable. As of September 30, 2020, the potential milestone compensation amount under these arrangements is up to $230.2 million. This amount includes the performance-based milestone awards that were granted as part of the 2020 Stock and Equity Award Exchange Program (the Exchange Program) further discussed in Note 14. We have recognized compensation expense of $0.4 million and $0.9 million for the three and nine months ended September 30, 2020, respectively, to be settled in cash. We have recognized compensation expense of $1.7 million for the three and nine months ended September 30, 2020 of performance-based milestone awards that were settled in cash due to achievement of regulatory milestones related to Investigational New Drug Application (IND) acceptance and New Drug Application filing that were completed during the three months ended September 30, 2020. We have recognized stock-based compensation expense of $1.9 million and $9.9 million for the three and nine months ended September 30, 2020, respectively, to be settled in equity, which primarily relate to the Exchange Program. We have recognized stock-based compensation expense of $0.3 million and $0.5 million for the three and nine months ended September 30, 2020, respectively, to be settled in either cash or equity at our sole election. There were no such expenses in the comparative periods in 2019. There was no compensation expense recognized for performance milestones assessed to be not probable of achievement. Other Research and Development Agreements We may also enter into contracts in the normal course of business with clinical research organizations for clinical trials, with contract manufacturing organizations for clinical supplies and with other vendors for preclinical studies, supplies and other services and products for operating purposes. These contracts generally provide for termination on notice with potential termination charges. As of September 30, 2020 and December 31, 2019, there were no amounts accrued related to termination charges. Indemnification In the ordinary course of business, we may provide indemnifications of varying scope and terms to vendors, lessors, business partners, board members, officers and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by us, our negligence or willful misconduct, violations of law, or intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees. No material demands have been made upon us to provide indemnification under such agreements, and thus, there are no claims that we are aware of that could have a material effect on our condensed consolidated balance sheets, statements of operations and comprehensive loss, or statements of cash flows. We also maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors. To date, we have not incurred any material costs and have not accrued any liabilities in the condensed consolidated financial statements as a result of these provisions.