Related Party Transactions
|6 Months Ended|
Jun. 30, 2015
|Related Party Transactions [Abstract]|
|Related Party Transactions||
6. Related Party Transactions
The Company had advances from its Chairman and major stockholder, Dr. John Kovach, aggregating $92,717, which were non-interest bearing, due on demand, and included in current liabilities in the Companys consolidated balance sheets through December 31, 2014. Effective March 17, 2015, such advances were converted into 92,717 shares of the Companys common stock, reflecting an effective price of $1.00 per share. On the effective date of the transaction, the closing price of the Companys common stock was $0.25 per share.
Dr. Kovach was paid a salary of $15,000 for the three months ended June 30, 2015 and 2014 and $30,000 for the six months ended June 30, 2015 and 2014, which amounts are included in general and administrative costs in the Companys condensed consolidated statements of operations.
Dr. Kovach is not involved in other business activities but could, in the future, become involved in other business opportunities that become available. Accordingly, Dr. Kovach may face a conflict in selecting between the Company and his other business interests. The Company has not yet formulated a policy for the resolution of such potential conflicts.
The Companys principal office facilities have been provided without charge by Dr. Kovach. Such costs were not material to the condensed consolidated financial statements and, accordingly, have not been reflected therein.
On June 18, 2014, the Company entered into a sub-lease agreement for shared office space in New York City with the Eric Forman Law Office, a party providing legal and consulting services to the Company. The sub-lease was for a term of six months at a base rate of $875 per month and was not renewed upon expiration. Eric Forman is the son-in-law of Gil Schwartzberg, a significant stockholder of and consultant to the Company. Legal and consulting fees charged to operations for services rendered by Eric Forman were $12,000 and $12,000 for the three months ended June 30, 2015 and 2014, respectively, and $24,000 and $26,000 for the six months ended June 30, 2015 and 2014, respectively.
On September 21, 2012, the Company entered into a work order agreement with Theradex, the CRO responsible for the clinical development of the Companys lead compound, LB-100, to manage and administer the Phase 1 clinical trial of LB-100. Dr. Robert B. Royds, the founder, Chairman of the Board of Directors and Medical Director of Theradex, had been previously appointed to the Companys Board of Directors on May 2, 2011 and died on March 23, 2013. 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 nationally recognized comprehensive cancer centers, and is estimated to be completed by September 30, 2016. The Phase 1 clinical trial is currently estimated to cost approximately $2,615,000, with such payments expected to be allocated approximately 60% for services provided by Theradex and approximately 40% for pass-through costs for clinical center laboratory costs and investigator costs. Total costs charged to operations through June 30, 2015 for services paid to or through Theradex pursuant to this arrangement, which were first incurred in 2013, totaled $1,202,536, of which $150,107 and $93,581 were incurred during the three months ended June 30, 2015 and 2014, respectively, and $500,708 and $173,233 were incurred during the six months ended June 30, 2015 and 2014, respectively. Costs pursuant to this agreement are included in research and development costs in the Companys condensed consolidated statements of operations.
In addition to the above described agreement with Theradex, the Company has also from time to time engaged Theradex to assist the Company in bringing LB-100 through the FDA approval process and to provide other regulatory services. These costs were not material for all periods presented.
Effective January 1, 2014, the Company entered into an Advisory Agreement with Dr. Kathleen P. Mullinix, a member of the Board of Directors of the Company, effective for an initial term of one year through December 31, 2014 to advise on business development matters. The Advisory Agreement provides for annual cash compensation of $25,000. The term of the Advisory Agreement is automatically extended for a term of one year annually unless a notice of intent to terminate is given by either party at least 90 days before the end of the applicable term. Accordingly, the Advisory Agreement was extended for an additional term of one year effective January 1, 2015. Consulting and advisory fees charged to operations pursuant to this agreement were $6,250 during the three months ended June 30, 2015 and 2014, and $12,500 during the six months ended June 30, 2015 and 2014. All such amounts are included in general and administrative costs in the Companys condensed consolidated statements of operations.
Stock-based compensation arrangements involving members of the Companys Board of Directors are described at Note 7. Total stock-based compensation expense relating to directors, officers and other related parties was $0 and $56,559 for the three months ended June 30, 2015 and 2014, respectively, and $74,901 and $437,187 for the six months ended June 30, 2015 and 2014, respectively.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://www.xbrl.org/2003/role/presentationRef