Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

v2.4.0.6
Commitments and Contingencies
12 Months Ended
Dec. 31, 2011
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]

8. Commitments and Contingencies

 

CRADA

 

Effective March 22, 2006, the Company entered into a CRADA, as amended, with the NINDS of the NIH. The CRADA is for a term of 74 months from the effective date and can be unilaterally terminated by either party by providing written notice within sixty days. The CRADA provides 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 provides that NINDS and the Company will 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 deferred to May 1, 2012.

 

Effective as of September 19, 2008, the Company entered into an agreement with the NIH providing the Company with an exclusive license for all patents submitted jointly with the NIH under the CRADA. The agreement provided for an initial payment of $25,000 to 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 agreement also provides for the Company to pay specified royalties based on (i) net sales by the Company and its sub-licensees, (ii) the achievement of certain clinical benchmarks, and (iii) the granting of sublicenses. The Company paid the initial $25,000 obligation on November 10, 2008 and charged the amount to general and administrative costs during the year ended December 31, 2008. As of December 31, 2011, no additional amounts were due pursuant to this agreement.

 

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.

 

In addition to the above described Chem-Master Agreement, the Company from time-to-time also enters into other agreements with Chem-Master for other services. During the years ended December 31, 2011 and 2010, the Company paid Chem-Master $30,325 and $59,000, respectively, for the costs of materials, labor and expenses related to such agreements.

 

On March 17, 2010, the Company engaged Theradex Systems, Inc. to assist the Company in bringing LB-100 through the FDA approval process at a total estimated cost of $105,064, of which $15,925 had been incurred through December 31, 2011. As of December 31, 2011, work was proceeding under this contract. Dr. Robert B. Royds, the founder, Chairman of the Board and Medical Director of Theradex Systems, Inc., was appointed to the Company’s Board of Directors on May 2, 2011.

 

On January 7, 2011, the Company entered into a Master Laboratory Services Agreement with WIL Research Laboratories, LLC for a series of studies. As of December 31, 2011, work orders for studies having a total estimated cost of $355,980 were in process under this agreement. As of December 31, 2011, the Company had paid $264,020 towards these work orders.

 

At various times, the Company has entered into agreements with Ash Stevens to conduct various studies. As of December 31, 2011, contracts with a total estimated cost of $62,000 were in process, of which $31,850 had been paid.

 

On December 8, 2011, the Company entered into an agreement with the University of Iowa to conduct certain studies for a total estimated cost of $78,413. As of December 31, 2011, no work had been done under this contract and no payments had been made.

 

The following table sets forth the Company’s principal cash obligations and commitments for the next five fiscal years as of December 31, 2011 aggregating $481,379, of which $241,405 is included in current liabilities in the consolidated balance sheet at December 31, 2011. 

 

          Payments Due By Year  
    Total     2012     2013
and
Thereafter
 
CRADA   $ 25,000     $ 25,000     $  
Research and development contracts     291,062       291,062        
Liquidated damages payable under registration rights agreement     74,000       74,000        
Due to stockholder     92,717       92,717        
Total   $ 482,779     $ 482,779     $