| Commitments and Contingencies |
Note 7 – Commitments and Contingencies
License and Research Agreements
The Company has entered into license and research and development agreements with third parties under which the Company is obligated to make upfront payments as well as milestone and royalty payments. Notable inclusions in this category are:
| |
a. |
AbbVie Biotherapeutics Corp. (formerly Abbott Biotherapeutics Corp) – The Company entered into a Product Development and Patent License Agreement with AbbVie Biotherapeutics Corp. in 2003 to secure exclusive rights to a specific antibody when conjugated with alpha emitting radioisotopes. Upon execution of the agreement, the Company made a license fee payment of $3,000,000. |
The Company agreed to make milestone payments totaling $7,750,000 for the achievement of the following agreed to and contracted milestones:
| Milestones |
|
Payments |
|
| |
|
|
|
| (1) when Company
initiates a Phase I Clinical Trial of a licensed product |
|
$ |
750,000 |
|
| (2) when Company initiates a Phase II Clinical Trial of a licensed product |
|
|
750,000 |
|
| (3) when Company initiates a Phase III Clinical Trial of a licensed product |
|
|
1,500,000 |
|
| (4) Biological License Application filing with U.S. FDA |
|
|
1,750,000 |
|
| (5) First commercial sale |
|
|
1,500,000 |
|
| (6) after the first $10,000,000 in net sales |
|
|
1,500,000 |
|
Under the agreement, the Company shall pay to AbbVie Biotherapeutics Corp. on a country-by-country basis a royalty of 12% of net sales of all licensed products until the later of: (1) 12.5 years after the first commercial sale, or (2) when the patents expire.
The Company met its first milestone in 2012 and upon reaching the milestone the Company paid AbbVie Biotherapeutics Corp. a milestone payment of $750,000 on July 24, 2012. The milestone payment for the Phase 1 Clinical Trial was recorded as research and development expense. The Company has not initiated a Phase 2 Clinical Trial and no payment has been made to AbbVie Biotherapeutics Corp. since the July 24, 2012 payment.
| |
b. |
Memorial Sloan Kettering Cancer Center (MSKCC) – see Note 2 - Related Party Transactions. |
| |
c. |
AptivSolutions provides project management services for the study of the drug Ac-225-HuM195 (Actimab-A) used in the Company’s Phase 1 and Phase 2 clinical trials. The total project is estimated to cost approximately $1.9 million and requires a 12.5% down payment of the total estimated project
cost. The down payment totaling $239,000 was paid in 2007 and 2012. On August 6, 2012, October 22, 2012 and May 16, 2013, the agreement was amended to provide for additional services. The total project is estimated at approximately $2.7 million at December 31, 2014. AptivSolutions bills the Company when services are rendered and the Company records the related expense to research and development costs. For the years ended December 31, 2014 and 2013, the Company incurred expenses of $388,000, and $270,000, respectively, related to this agreement. |
| |
|
|
| |
d. |
On June 15, 2012, the Company entered into a license and sponsored research agreement with Fred Hutchinson Cancer Research Center (FHCRC) to build upon previous and ongoing clinical trials, with BC8 (licensed antibody). FHCRC has currently completed Phase 1 and Phase 2 of the clinical trial and the Company intends to start preparation for a pivotal trial leading to an FDA approval. The Company has been granted exclusive rights to the BC8 antibody and related master cell bank developed by FHCRC. The cost to develop the trial will range from $13.2 million to $23.5 million, depending on the trial design as required by the FDA. Under the terms of the sponsored research agreement, the Company will fund the FHCRC lab with $150,000 per year for the first two years and $250,000 thereafter. Payments made toward funding the lab will be credited toward royalty payments owed to FHCRC in the given year. A milestone payment of $1 million will be due to FHCRC upon FDA approval of the first drug. Upon commercial sale of the drug, royalty payments of 2% of net sales will be due to FHCRC.
During the years ended December 31, 2014 and 2013, the Company recorded and paid fees of approximately $222,000 and $75,000, respectively, related to this agreement.
|
| |
e. |
On August 28, 2012, the Company entered into a clinical trial agreement with The University of Texas M.D. Anderson Cancer Center. The total estimated cost of conducting the clinical trial is approximately $500,000, which includes a non- refundable institutional fee of $14,500. The estimated cost is based on treating 24 patients through 2013. Upon execution of the agreement, the Company paid $33,946. During 2013, there was one patient treated and the Company paid $34,383 in July 2013. During the year ended December 31, 2014, the Company recorded an expense of approximately $102,000. |
| |
f. |
On February 27, 2014, the Company entered into a manufacturing agreement with Goodwin Biotechnology Inc. (“Goodwin”). Goodwin will oversee the current Good Manufacturing Practices (cGMP) production of a monoclonal antibody anticipated to be used in an upcoming phase 3 clinical trial of Iomab-B. Total cost of the agreement is $3.3 million. The Company paid a non-refundable payment of $562,790 upon execution of the agreement. Periodic payments will be made upon reaching certain milestones. As of December 31, 2014, the remaining cost of the agreement is approximately $2.2 million. Goodwin bills the Company when services are rendered and the Company records the related expense to research and development costs. As of December 31, 2014, the Company has $662,239 payable to Goodwin. |
| |
g.
|
On June 20, 2014, the Company entered into a CRO agreement with Act Oncology. Act Oncology provides project management services for the study of Iomab-B used for the intended Phase 3 clinical trial. The total project is estimated to cost approximately $0.8 million. During 2014, the Company recorded expenses of approximately $0.7 million. Act Oncology bills the Company when services are rendered and the Company records the related expense to research and development costs.
|
| |
h. |
On September 30, 2014, the Company entered into a research agreement with the Albert Einstein College of Medicine of Yeshiva University (“Einstein”). According to the agreement, Einstein will use certain materials provided by the Company to complete a research project. The research project will explore the feasibility of using Actinium 225 to prepare patients with blood borne cancers to receive a hematopoietic stem cell transplant. Einstein will periodically provide the Company with reports showing project data or research. The total fixed price of the project is $183,391 which is payable to Einstein in three payments. A payment of approximately $92,000 was made in October 2014. |
Lease Agreements
On August 1, 2012, the Company entered into a rental agreement for office space at 501 Fifth Avenue, New York, NY. The agreement was terminated on May 31, 2013. On June 4, 2013 and amended on October 4, 2013, the Company entered into two rental agreements for office space at 546 Fifth Avenue, New York, NY. One of the agreements was terminated on July 6, 2014. The Company plans to maintain office space at 546 Fifth Avenue, New York, NY on a month to month basis. The Company paid a one month refundable deposit on the
space that it maintains in New York, NY. On April 22, 2014, the Company entered into a sublease agreement for office space located at 379 Thornall Street, Edison, NJ. This agreement expires on September 30, 2016. The Company issued a letter of credit for $34,733 to the existing tenant and maintained a $34,733 certified deposit as collateral for the letter of credit.
Future minimum obligations on the lease are:
| For the year ending December 31, |
|
|
|
| 2015 |
|
$ |
109,410 |
|
| 2016 |
|
|
84,011 |
|
| |
|
|
193,421 |
|
|