| Commitments and Contingencies |
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18.
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Commitments and Contingencies
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a)
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The Company has contracted with various vendors to provide research and development services. The terms of these agreements usually require an initial fee and monthly or periodic payments over the term of the agreement, ranging from 2 months to 36 months. The costs to be incurred are estimated and are subject to revision. As of June 30, 2011, the total estimated cost to be incurred under these agreements was approximately $18,285,424 and the Company had made payments totaling $9,257,703 under the terms of the agreements as of June 30, 2011. All of these agreements may be terminated by either party upon appropriate notice as stipulated in the respective agreements.
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b)
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The Company and three of its key executives entered into employment agreements. Each of these agreements was renewed on August 10, 2009 and expires on August 10, 2012. The agreements result in annual commitments for each key executive of $350,000, $250,000 and $200,000, respectively. The employment agreements were amended on September 9, 2010 and will expire on September 9, 2013.
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c)
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On June 22, 2009, the Company entered into a License Agreement with Korea Research Institute of Chemical Technology ("KRICT") to acquire the rights to all intellectual properties related to Quinoxaline-Piperazine derivatives that were synthesized under a Joint Research Agreement. The initial license fee was $100,000, all of which was paid as of December 31, 2009. The agreement with KRICT calls for a one-time milestone payment of $1,000,000 within 30 days after the first achievement of marketing approval of the first commercial product arising out of or in connection with the use of KRICT's intellectual properties. As of June 30, 2011, the milestone has not occurred.
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d)
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On June 29, 2009, the Company signed a five year commercial lease agreement for 5,466 square feet of office space in Rockville, Maryland commencing on June 29, 2009. The lease agreement requires annual base rent with increases over the next five years. Under the lease agreement, the Company pays its allocable portion of real estate taxes and common area operating charges. Rent paid under the Company's lease during the three months ended June 30, 2011 and 2010 was $35,078 and $19,131, respectively, and rent paid under the lease for the six months ended June 30, 2011 and 2010 was $70,156 and $38,262, respectively.
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Future rental payments over the next five years and thereafter are as follows:
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2011
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$ |
78,437 |
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2012
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158,835 |
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2013
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162,805 |
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2014
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82,408 |
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Total
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$ |
482,485 |
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In connection with the lease agreement, the Company issued a letter of credit of $100,000 in favor of the lessor. The Company has restricted cash equivalents of the same amount for the letter of credit. On August 2, 2010, the letter of credit was amended and reduced to $50,000.
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e)
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On September 21, 2009, the Company closed on a securities purchase agreement with Teva Pharmaceutical Industries Limited ("Teva"), under which Teva purchased 3,102,837 shares of our common stock for $3.5 million. Contemporaneous with the execution and delivery of this agreement, the parties executed a research and exclusive license option agreement ("RELO") pursuant to which the Company agreed to use $2,000,000 from the gross proceeds of the issuance and sale of shares to Teva to fund a research and development program for the pre-clinical development of RX-3117. On January 19, 2011, the Company entered into a second amendment to the securities purchase agreement (the "Second Amendment") in which Teva purchased 2,334,515 shares of the common stock of the Company for gross proceeds of $3,950,000, which the Company agreed to use for the further preclinical development of RX-3117. Currently, the Company has proceeds remaining of $3,127,901 and has included this amount in restricted cash equivalents. The Company will be eligible to receive royalties on net sales of RX-3117 worldwide.
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f)
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The Company has a 401(k) plan established for its employees. The Company elected to match 100% of the first 3% of the employee's compensation plus 50% of an additional 2% of the employee's deferral. Expense related to this matching contribution aggregated $16,846 and $16,499 for the three months ended June 30, 2011, and 2010, respectively, and $32,974 and $35,141 for the six months ended June 30, 2011 and 2010, respectively.
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g)
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On June 28, 2010, the Company signed a one year renewal to use lab space commencing on July 1, 2010. The lease requires monthly rental payments of $4,554. Rent paid under the Company's lease during the three and six months ended June 30, 2011 and 2010 was $13,662 and $27,324, respectively. On June 22, 2011, the Company extended the agreement for another year with monthly rental payments of $4,554.
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