Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

v2.4.0.8
Commitments and Contingencies
9 Months Ended
Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]
8.  Commitments and Contingencies
 
Cooperative Research and Development Agreement (CRADA)
 
Effective March 22, 2006, the Company entered into a CRADA with the NINDS of the NIH. The CRADA was extended through a series of amendments and remained in effect until April 1, 2013. The CRADA provided for the collaboration between the parties in the identification and evaluation of agents that target the Nuclear Receptor CoRepressor (N-CoR) pathway for glioma cell differentiation. The CRADA also provided that NINDS and the Company would conduct research to determine if expression of N-CoR correlates with prognosis in glioma patients. Pursuant to the CRADA, the Company initially agreed to provide funds under the CRADA in the amount of $200,000 per year to fund two technical assistants for the technical, statistical and administrative support for the research activities, as well as to pay for supplies and travel expenses. The first $200,000 was due within 180 days of the effective date and was paid in full on July 6, 2006. The second $200,000 was paid in full on June 29, 2007. In June 2008, the CRADA was extended to September 30, 2009, with no additional funding required for the period between July 1, 2008 and September 30, 2008. For the period from October 1, 2008 through September 30, 2009, the Company agreed to provide additional funding under the CRADA of $200,000, to be paid in four quarterly installments of $50,000, each commencing on October 1, 2008. The first and second quarterly installments of $50,000 were paid on September 29, 2008 and March 5, 2009, respectively. During August 2009, the Company entered into an amendment to the CRADA to extend its term from September 30, 2009 through September 30, 2011. Pursuant to such amendment, the Company agreed to aggregate payments of $100,000 in two installments of $50,000, payable on October 1, 2010 and January 5, 2011, inclusive of any prior unpaid commitments. The October 1, 2010 installment was paid on September 29, 2010 and the January 5, 2011 installment was paid on December 27, 2010. In September 2011, the CRADA was amended to extend its term to June 1, 2012 and to provide additional funding of $50,000, payable in two installments of $25,000 each on October 1, 2011 and February 5, 2012. The October 1, 2011 installment was paid on October 12, 2011, and by mutual agreement, the February 5, 2012 installment was paid on May 1, 2012. In August 2012, the CRADA was extended to April 1, 2013, with no additional funding requirement. The CRADA terminated as scheduled on April 1, 2013.
 
Patent License Agreement
 
Effective September 19, 2008, the Company entered into a Patent License Agreement (the “PLA”) with the NIH providing the Company with an exclusive license for all patents submitted jointly with the NIH under the CRADA. The PLA provided for an initial payment of $25,000 to the NIH within 60 days of September 19, 2008, and for a minimum annual royalty of $30,000 on January 1 of each calendar year following the year in which the CRADA is terminated. The PLA also provided for the Company to pay (i) specified royalties based on net sales by the Company and its sub-licensees, reduced by the amount of the minimum annual royalty for that year, (ii) certain benchmark royalties upon the achievement of certain clinical benchmarks, and (iii) sublicensing royalties for the granting of sublicenses, with respect to joint patents. The Company paid the initial $25,000 obligation on November 10, 2008, which was charged to general and administrative costs. As of September 30, 2013 and December 31, 2012, no amounts were due pursuant to the PLA. Due to the termination of the CRADA on April 1, 2013, the Company expects to pay a minimum annual royalty of $30,000 to the NIH beginning on January 1, 2014 and each year thereafter.
 
Research and Development Contracts
 
On February 5, 2007, the Company entered into a two-year agreement pursuant to which the Company engaged Chem-Master to synthesize a compound designated as LB-100, and any other compound synthesized by Chem-Master pursuant to the Company’s request, which have potential use in treating a disease, including, without limitation, cancers such as glioblastomas. Pursuant to the Chem-Master Agreement, the Company agreed to reimburse Chem-Master for the cost of materials, labor, and expenses for other items used in the synthesis process, and also agreed to grant Chem-Master a five-year option to purchase shares of the Company’s common stock. The Company has the right to terminate the Chem-Master Agreement at any time during its term upon sixty days prior written notice. On January 29, 2008, the Chem-Master Agreement was amended to extend its term to February 15, 2014, and to expressly provide for the design and synthesis of a new series of compounds designated as LB-300. The Company also periodically enters into other agreements with Chem-Master for other services. During the three months ended September 30, 2013 and 2012, the Company recorded charges to operations of $7,200 and $10,500, respectively, with respect to this agreement. During the nine months ended September 30, 2013 and 2012, the Company recorded charges to operations of $7,275 and $10,500, respectively, with respect to this agreement.
 
On September 21, 2012, the Company entered into a work order agreement with Theradex Systems, Inc. ("Theradex") to manage and administer the Phase 1 clinical trial of LB-100. Theradex is an international CRO that provides professional services for the clinical research and development of pharmaceutical compounds. The Phase 1 clinical trial of LB-100, which began during April 2013 with the entry of patients into the clinical trial, is being carried out by a nationally recognized comprehensive cancer center and is estimated to take from 18 to 30 months and cost approximately $2,000,000, with such payments expected to be divided approximately evenly between payments to Theradex for services rendered and payments for pass-through costs for the clinical center, laboratory costs and investigator costs. Total costs charged to operations for services paid to Theradex pursuant to this arrangement, which were first incurred in 2013, were $87,088 for the three months ended September 30, 2013 and $210,950 for the nine months ended September 30, 2013. Costs pursuant to this agreement are included in research and development costs in the Company's condensed consolidated statements of operations. On May 2, 2011, Dr. Robert B. Royds, the founder, Chairman of the Board and Medical Director of Theradex, was appointed to the Company’s Board of Directors. Dr. Royds died on March 23, 2013. The death of Dr. Royds is not expected to have any impact on the management and administration of the Phase 1 clinical trial.
 
In addition to the above described agreement with Theradex,  the Company has also from time to time to engaged Theradex to assist the Company in bringing LB-100 through the FDA approval process and to provide other services. Total fees charged to operations for services paid to Theradex pursuant to such engagements were $4,862 and $22,401 for the three months ended September 30, 2013 and 2012, respectively, $11,988 and $150,331 for the nine months ended September 30, 2013 and 2012, respectively, and $191,575 for the period from August 9, 2005 (inception) to September 30, 2013 (cumulative), and are included in research and development costs in the Company's condensed consolidated statements of operations
 
Periodically, the Company has entered into agreements with Ascentage Pharma Group to conduct various studies. As of September 30, 2013, contracts with a total estimated cost of $29,025, of which $4,410 had been paid, were in process. Ascentage Pharma Group is an offshoot of Ascenta Therapeutics, of which Dr. Mel Sorensen, a director of the Company, is the President and Chief Executive Officer and a director. Ascentage Pharma Group and Ascenta Therapeutics have a continuing business relationship and certain common shareholders. However, Dr. Sorensen does not have any direct business relationship with or ownership in Ascentage Pharma Group.
 
At various times, the Company has entered into agreements with other unrelated vendors to conduct certain required studies. As of September 30, 2013, contracts outstanding with such vendors and in currently process had a total estimated cost of $134,150, of which $71,570 had been paid to date.
 
The following table sets forth the Company’s principal cash obligations and commitments for the next five fiscal years as of September 30, 2013 aggregating $2,213,695, of which $227,659 is included in current liabilities in the condensed consolidated balance sheet at September 30, 2013. Amounts included in the 2013 column represent amounts due at September 30, 2013 for the remainder of the 2013 fiscal year ending December 31, 2013.
 
 
 
 
 
 
Payments Due By Year
 
 
 
Total
 
2013
 
2014
 
2015
 
2016
 
2017
 
Research and development contracts
 
$
97,300
 
$
97,300
 
$
—
 
$
—
 
$
—
 
$
—
 
Theradex work order agreement
 
 
1,829,678
 
 
429,678
 
 
1,000,000
 
 
400,000
 
 
—
 
 
—
 
Patent license agreement
 
 
120,000
 
 
—
 
 
30,000
 
 
30,000
 
 
30,000
 
 
30,000
 
Liquidated damages payable under registration
    rights agreement
 
 
74,000
 
 
74,000
 
 
 
 
 
—
 
 
—
 
 
—
 
Due to stockholder
 
 
92,717
 
 
92,717
 
 
—
 
 
—
 
 
—
 
 
—
 
Total
 
$
2,213,695
 
$
693,695
 
$
1,030,000
 
$
430,000
 
$
30,000
 
$
30,000