Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

v2.4.0.6
Commitments and Contingencies
6 Months Ended
Jun. 30, 2012
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, as amended, with the NINDS of the NIH. The CRADA was for a term of 74 months from the effective date and can be unilaterally terminated by either party by providing written notice within 60 days. 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. An extension of the CRADA through December 31, 2012 is currently under review by the NIH.

 

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 June 30, 2012, no amounts were due pursuant to the PLA. The Company expects to pay a minimum annual royalty of $30,000 to the NIH beginning January 1, 2013 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.

 

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 three months ended June 30, 2012 and 2011, the Company paid Chem-Master $-0- and $1,500, respectively, for the costs of materials, labor and expenses related to such agreements. During the six months ended June 30, 2012 and 2011, payments to Chem-Master amounted to $-0- and $6,325, respectively.

 

At various times, the Company has entered into agreements with Ascentage Pharma Group to conduct various studies. As of June 30, 2012, contracts with a total estimated cost of $23,840, of which $14,304 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.

 

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 June 30, 2012, work orders for studies having a total estimated cost of $160,740 were in process under this agreement. As of June 30, 2012, the Company had paid $93,090 towards these work orders.

 

At various times, the Company has entered into agreements with Ash Stevens to conduct various studies. As of June 30, 2012, contracts with a total estimated cost of $62,000 were in process, of which $53,240 had been paid.

 

The following table sets forth the Company’s principal cash obligations and commitments for the next five fiscal years as of June 30, 2012 aggregating $385,163, of which $243,903 is included in current liabilities in the condensed consolidated balance sheet at June 30, 2012. Amounts included in the 2012 column represent amounts due at June 30, 2012 for the remainder of the 2012 fiscal year ending December 31, 2012. 

 

 

          Payments Due By Year  
    Total     2012     2013     2014     2015     2016  
Research and development contracts   $ 85,946     $ 85,946     $     $     $     $  
Patent License Agreement     120,000             30,000       30,000       30,000       30,000  
Advisory agreement     12,500       12,500                          
Liquidated damages payable under registration rights agreement     74,000       74,000                            
Due to stockholder     92,717       92,717                          
Total   $ 385,163     $ 265,163     $ 30,000     $ 30,000     $ 30,000     $ 30,000