16.Commitments and Contingencies

a)The Company has contracted with various vendors for 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 two months to 36 months. The costs to be incurred are estimated and are subject to revision. As of September 30, 2013, the total estimated cost to be incurred under these agreements was approximately $21,511,134 and the Company had made payments totaling $19,482,775 since inception under the terms of the agreements.  All of these agreements may be terminated by either party upon appropriate notice as stipulated in the respective agreements.

b)The Company and four of its key executives currently have outstanding employment agreements,.  The agreements result in annual commitments for each key executive of $330,000, $285,000, $250,000, and $250,000, respectively.    

c)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 September 30, 2013, the milestone has not occurred.

d)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 required 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 September 30, 2013 and 2012, including the amendment terms described below, was $18,789 and $40,199, respectively. Rent paid under the Company’s lease during the nine months ended September 30, 2013 and 2012 was $99,187 and $118,636.

On June 7, 2013 the Company entered into the first amendment to the lease agreement. According to the terms of this amendment, the Company extended the lease term until June 30, 2019.  The amendment term began on July 1, 2013 with a base rent of $100,210 and requires annual base rent increases over the next six years. 

Future rental payments over the next five years and thereafter are as follows:

 

 

 

 

In connection with the lease agreement, the Company issued a letter of credit of $100,000 in favor of the lessor.  On August 2, 2010, and July 1, 2011 the letter of credit was amended and reduced to $50,000 and $37,500, respectively.  The Company has restricted cash equivalents of the same amount for the letter of credit. 

 

 

e)On September 21, 2009, the Company closed on the Purchase Agreement with Teva, and contemporaneous with the execution and delivery of this agreement, the parties executed the RELO Agreement, pursuant to which the Company agreed to use proceeds from the issuance and sale of shares to Teva to fund a research and development program for the pre-clinical development of RX-3117.  On December 27, 2012 the Company received $926,000 from Teva in accordance with a second amendment to the RELO Agreement, entered into on November 27, 2012 for the development of RX-3117.  The Company did not issue equity for this transaction.  On August 28, 2013, the Company announced that Teva had decided not to exercise its option to license RX-3117, and as a result the RELO Agreement was terminated.  The remaining proceeds of $471,679, which is included in restricted cash equivalents at September 30, 2013 either will be used to pay for unbilled expenses or will be returned to Teva.

f)The Company has established a 401(k) plan for its employees.  The Company has elected to match 100% of the first 3% of an employee’s compensation plus 50% of an additional 2% of the employee’s deferral. Expense related to this matching contribution aggregated to  $21,837 and $16,207 for the three months ended September 30, 2013, and 2012, respectively, and $60,084 and $52,545 for the nine months ended September 30, 2013 and 2012, respectively.

g)On June 24, 2013 and May 30, 2012, the Company signed a one year renewal to use lab space commencing on July 1, 2013 and 2012, respectively.  The lease requires monthly rental payments of $4,554.  Rent paid under the Company’s lease during the three and nine months ended September 30, 2013 and 2012 was $13,662 and $27,324.