| Commitments and Contingencies |
Note 6 – Commitments and Contingencies
The Company has entered into license and research and development agreements with third parties under which the Company is obligated to make payments in the form of upfront payments as well as milestone and royalty payments. Notable inclusions in this category are:
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a.
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Abbott Biotherapeutics Corp. We entered into a Product Development and Patent License Agreement with Abbott Biotherapeutics Corp. (formerly Facet Biotech formerly known as Protein Design Labs) in 2003 to secure exclusive rights to a specific antibody when conjugated with alpha emitting radioisotopes. Upon execution of the agreement, we made a license fee payment of $3,000,000.
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We agreed to make milestone payments totaling $7,750,000 for the achievement of the following agreed to and contracted milestones:
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Milestones
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Payments
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(1) when Company initiates a Phase I Clinical Trial of a licensed product
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$
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750,000
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(2) when Company initiates a Phase II Clinical Trial of a licensed product
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750,000
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(3) when Company initiates a Phase III Clinical Trial of a licensed product
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1,500,000
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(4) Biological License Application filing with U.S. FDA
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1,750,000
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(5) First commercial sale
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1,500,000
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(6) after the first $10,000,000 in net sales
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1,500,000
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Under the agreement, we agreed to pay to Abbott Biotherapeutics Corp on a country-by-country basis a royalty of up to 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.
As of December 31, 2012, we met our first milestone and upon reaching the milestone we paid Abbott Biotherapeutics Corp. a milestone payment of $750,000 on July 24, 2012.
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b.
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Memorial Sloan Kettering Cancer Center (MSKCC). In February 2002, we entered into a license agreement with MSKCC that requires a technology access fee of $50,000 upon execution, an annual maintenance fee of $50,000 and an annual research funding of $50,000 for as long as the agreement is in force.
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Milestones
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Payments
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(1) filing of an New Drug Application (“NDA”) or regulatory approval
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for each licensed product
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$
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750,000
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(2) upon the receipt of regulatory approval from the U.S. FDA for each
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licensed product
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1,750,000
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Under the agreement, we agreed to pay to MSKCC on a country-by-country basis a royalty of 2% of net sales of all licensed products until the later of: (1) 10 years from the first commercial sale, or (2) when the patents expire. We expect to file the NDA for regulatory approval in 2015.
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c.
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Oak Ridge National Laboratory (ORNL) – We have contracted to purchase radioactive material to be used for research and development through December 2013. We contracted to purchase $ 337,500 of radioactive material to be used for research and development, with a renewal option at the contract end.
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d.
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AptivSolutions. AptivSolutions provides project management services for the study of the drug Ac-225-HuM195 (Actimab-A) used in our clinical trials, Phase I and Phase II. The total project is estimated to cost $1,859,333 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. The agreement was amended to provide for additional services on August 6, 2012, October 22, 2012 and May 16, 2013. The total project is now estimated at $ 2,173,955.
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e.
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Fred Hutchinson Cancer Research Center (FHCRC). On June 15, 2012, we entered into a license and sponsored research agreement with FHCRC. We will build upon previous and ongoing clinical trials, with BC8 (licensed antibody) and eventually develop a clinical trial with Actinium 225. FHCRC has currently completed Phase I and Phase II of the clinical trial and we intend to start preparation for a pivotal trial leading to an FDA approval. We have 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, we 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. On August 12, 2013, the Company paid $37,500 to FHCRC.
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f.
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MSKCC. On March 27, 2012, we entered into a clinical trial agreement with Memorial Sloan Kettering Cancer Center. The Company will pay $31,185 for each patient that has completed the clinical trial. Upon execution of the agreement, the Company is required to pay a start-up fee of $79,623. The amount due of $79,623 was paid on July 10, 2012.
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g.
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FHCRC. On July 19, 2012, we entered into a clinical trial agreement with FHCRC. We will pay $31,366 for each patient that has completed the clinical trial. Upon execution of the agreement, we are required to pay a start-up fee of $19,749.
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h.
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The University of Texas M.D. Anderson Cancer Center. On August 28, 2012, we 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 $481,204, 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, we were required to make a payment of $33,946.
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i.
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Johns Hopkins University. On September 26, 2012, we entered into a clinical trial agreement with Johns Hopkins University. The Phase I/II clinical trial will be conducted with Actinium 225. The clinical trial will be conducted under the protocols established by us and pursuant to an Investigational New Drug Exemption (IND 10807) held by us. We will pay $38,501 per patient, who has completed the clinical trial. We are required to pay a start-up fee of $22,847, an annual pharmacy fee of $2,025 and an amendment processing fee of $500, when applicable.
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j.
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University of Pennsylvania. On November 21, 2012, we entered into a clinical trial agreement with the University of Pennsylvania. The Phase I/II clinical trial will be conducted with Actinium 225. The clinical trial will be conducted under the protocols established by us and pursuant to an Investigational New Drug Exemption (IND 10807) held by us. We will pay $31,771 per patient, who has completed the clinical trial. We will be required to pay a start-up fee of $16,000 and additional administrative fees, when applicable.
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On August 1, 2012, the Company entered into a rental agreement for office space at 501 Fifth Avenue, 3rd Floor, New York, NY 10017. The agreement terminated May 31, 2013. On June 1, 2013The Company entered into a rental agreement for office space at 546 Fifth Avenue, 14th Floor, New York, NY 10036. The agreement terminates on December 31, 2013. Upon the expiration of the term, the agreement automatically renews on a month-to-month basis and requires a two month notice of termination. The Company paid a one month refundable deposit.
In February 28, 2013, the Company entered into a Separation and Settlement Agreement with its former CEO, Jack Talley. Pursuant to the agreement, the Company paid Mr. Talley $125,000 on March 8, 2013 and a second payment of $125,000 is due to be paid to Mr. Talley on September 1, 2013. The Company also paid Mr. Talley a performance bonus of $60,000 for his service from August 15, 2012 to December 31, 2012.
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