| Commitments and Contingencies |
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16.
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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 December 31, 2011, the total estimated cost to be incurred under these agreements was approximately $19,406,124 and the Company had made payments totaling $15,103,318 under the terms of the agreements as of December 31, 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 $200,000, $350,000 and $250,000, 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 by 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 December 31, 2011, this milestone has not yet occurred.
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d)
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On June 29, 2009, the Company signed a five year lease for 5,466 square feet of office space in Rockville, Maryland commencing on June 29, 2009. The lease requires annual base rents of $76,524 with increases over the next five years. Under the leasing 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 years ended December 31, 2011, 2010 and 2009 was $148,593, $108,418 and $38,262, respectively.
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Future rental payments over the next three years are as follows:
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2012
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$ |
158,835 |
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2013
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162,806 |
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2014
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82,408 |
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$ |
404,049 |
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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 and July 1, 2011, the letter of credit was amended, and the commitment amount and restricted cash equivalent was reduced to $50,000 and $37,500, respectively.
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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. At December 31, 2011, the Company has proceeds remaining of $1,394,265 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 established a 401(k) plan for its employees where 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 $66,162, $65,019, and $49,519 for the years ended December 31, 2011, 2010 and 2009, 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, and on June 22, 2011, the Company extended the lease for an additional year. The lease requires monthly rental payments of $4,554. Rent paid under the Company's lease during the years ended December 31, 2011, 2010 and 2009 was $54,648, $54,648 and $13,662, respectively.
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h)
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On August 31, 2011, the Company entered into an agreement with a consultant for advisory services pertaining to the securing of grants or other funding sources for the Company. Per the terms of the agreement, the consultant will be compensated in shares of restricted common stock calculated by a formula of the funding received by the Company. As of December 31, 2011, the Company has not received funding or issued stock resulting from this agreement.
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