Annual report pursuant to Section 13 and 15(d)

Related Party Transactions

v2.4.0.8
Related Party Transactions
12 Months Ended
Dec. 31, 2013
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]
5. Related Party Transactions
 
Prior to June 30, 2006, the Company’s founding stockholder and Chief Executive Officer, Dr. John Kovach, had periodically made advances to the Company to meet operating expenses. Such advances are non-interest-bearing and are due on demand. At December 31, 2013 and 2012, stockholder advances outstanding and due to Dr. Kovach totaled $92,717.
 
The Company’s office facilities have been provided without charge by Dr. Kovach. Such costs were not material to the financial statements and, accordingly, have not been reflected therein.
 
In view of the Company’s development stage status and limited resources, Dr. Kovach did not receive any compensation from the Company prior to 2011. However, on February 18, 2011, the Company’s Board of Directors approved a salary for Dr. Kovach of $5,000 per month beginning March 15, 2011.  Dr. Kovach was paid a salary of $60,000 for the years ended December 31, 2013 and 2012, and $167,500 for the period from August 9, 2005 (inception) to December 31, 2013 (cumulative), which amounts are included in general and administrative costs in the Company's 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, he 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.
 
On April 7, 2010, the Company entered into an agreement with Dr. Mel Sorensen, a member of the Company’s Board of Directors, for consultation and advice regarding the preparation and strategy for obtaining FDA allowance of a clinical trial of the lead compound of the LB-100 series. The initial term of the agreement was for one year and provided for an annual fee of $25,000, payable in two installments of $12,500 on April 15, 2010 and October 15, 2010. On February 18, 2011, the Company’s Board of Directors approved a one-year extension of the agreement for an additional annual fee of $25,000, payable in two installments of $12,500 on April 15, 2011 and October 15, 2011. On May 21, 2012, the Company entered into a new agreement with Dr. Mel Sorensen for continuing consultation and advice. The term of the new agreement was for the period from May 21, 2012 to May 31, 2013 and provided for a fee of $25,000, payable in two installments of $12,500 on May 21, 2012 and December 1, 2012. All installments have been paid as due. Consulting and advisory fees charged to operations pursuant to these agreements were $10,417 and $21,875 for the years ended December 31, 2013 and 2012, respectively, and $75,000 for the period from August 9, 2005 (inception) to December 31, 2013 (cumulative), and are included in research and development costs in the Company's consolidated statements of operations.
 
On September 21, 2012, the Company entered into a work order agreement with 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 nationally recognized comprehensive cancer centers, and is estimated to be completed within the next 12 to 21 months (sometime between March and December 2015).  The Phase 1 clinical trial is estimated to cost a total of 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’s 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 $278,721 for the year ended December 31, 2013. Costs pursuant to this agreement are included in research and development costs in the Company's 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 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 $14,964 and $163,661 for the years ended December 31, 2013 and 2012, respectively, and $194,551 for the period from August 9, 2005 (inception) to December 31, 2013 (cumulative), and are included in research and development costs in the Company's consolidated statements of operations.
 
On December 24, 2013, the Company entered into an agreement with NDA Consulting Corp. ("NDA") for consultation and advice in the field of oncology research and drug development. As part of the agreement, NDA agreed to cause its president, Dr. Daniel D. Von Hoff, M.D., to become a member of the Company's Scientific Advisory Committee. The term of the agreement was for one year and provides for a quarterly cash fee of $4,000. The first such quarterly cash payment was made on January 12, 2014. There were no consulting or advisory fees charged to operations pursuant to this quarterly cash fee prior to January 1, 2014. In connection with this agreement, NDA was granted stock options to purchase 100,000 shares of the Company’s common stock, vesting 25,000 shares on June 24, 2014, and 25,000 shares annually on June 24 thereafter 25,000 shares annually on June 24, 2015, 2016 and 2017, exercisable for a period of five years from the date of grant at $0.13 per share, which was the fair market value of the common stock on the grant date.
 
Effective January 1, 2014, the Company entered into an Advisory Agreement with Dr. Kathleen P. Mullinix, a member of the Company’s Board of Directors, as described at Note 9.
 
 Stock-based compensation arrangements involving members of the Company’s Board of Directors are described at Note 6. Total stock-based compensation expense relating to directors, officers and other related parties was $119,250 and $1,017,004 for the years ended December 31, 2013 and 2012, respectively, and $3,598,461 for the period from August 9, 2005 (inception) to December 31, 2013 (cumulative).