Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2014 |
Commitments and Contingencies. | |
Commitments and Contingencies | |
11. Commitments and Contingencies |
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Significant Research Agreements |
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During 2012, the Company entered into research agreements with University of Texas MD Anderson Cancer Center (“MDACC”) to provide samples and evaluate methods used by the Company in identification of pancreatic cancer mutations, as well as to measure the degree of concordance between results of cell-free DNA mutations analysis from urine samples and tumor tissue. During 2013, the agreements were amended to increase the scope of the agreements. Under these agreements, the Company has committed to pay approximately $266,000 for the services performed by MDACC. As of December 31, 2014, the Company has incurred and recorded approximately $124,000 of research and development expenses related to these agreements. There were approximately $142,000 of research and development expenses incurred during the year ended December 31, 2013. |
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In June 2013, the Company entered into a Research Agreement with Illumina, Inc. (“Illumina”) pursuant to which the parties will work together to evaluate the potential for integrating the Company’s cell-free technology for isolating, extracting and genetic analysis of nucleic acids from urine with Illumina’s genetic analysis sequencing technology (the “Research Plan”). The parties have agreed that all results and reagents from the Research Plan will be shared between the parties. The Agreement will terminate upon the earlier of 30 days after completion of the Research Plan or the one year anniversary of the Agreement unless extended by mutual written agreement. In October 2014, the agreement was extended for an additional year to June 2015. |
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In August 2013, the Company entered into a Clinical Trial Agreement with the University of Southern California (“USC”), pursuant to which USC will provide the principal investigator and conduct the clinical trial related to the genetic characterization of metastatic colorectal cancers. Under the agreement, the Company is committed to pay USC approximately $232,000 for services provided. As of December 31, 2013 the Company had not incurred any expense related to this agreement. As of December 31, 2014, the Company had incurred approximately $38,000 of research and development expenses. |
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In December 2013, the Company entered into a Clinical Trial Agreement with US Oncology Research LLC (“USOR”), pursuant to which USOR will provide the principal investigator and conduct the clinical trial related to the examining the utility of cell-free quantitative KRAS testing in disease monitoring in patients with metastatic pancreatic cancer. Under the agreement, the Company is committed to pay USOR approximately $270,000 for services provided. As of December 31, 2014 and 2013, the Company has incurred and recorded approximately $16,000 and $29,000 of research and development expense related to this agreement. |
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In October 2014, the Company entered into a Research Agreement with Genomac International, Ltd., pursuant to which Genomac will conduct a research study of minimally invasive molecular monitoring of efficiency of targeted biological therapy in advanced non-small lung cancer. Under the agreement, the Company is committed to pay Genomac approximately $175,000 for services provided. As of December 31, 2014, the Company has incurred and recorded approximately $90,000 of research and development expenses. |
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License Agreements |
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In May 2006, the Company entered into a license agreement with Drs. Falini and Mecucci, wherein it obtained the exclusive rights for the genetic marker for AML and intends to utilize these rights for the development of new diagnostic tools. In connection with this agreement, the Company paid $70,000 to Drs. Falini and Mecucci. In August 2010 the Company signed amendment No. 1 to the license agreement with an obligation to payroyalties of 6% of royalty revenues and/or 10% of any sublicense income. During the years ended December 31, 2014, 2013 and 2012, the Company recorded royalty expenses of approximately $23,000, $30,000 and $24,000, respectively. |
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During August 2007, the Company signed a sublicensing agreement with IPSOGEN SAS, a leading molecular diagnostics company with operations in France and the United States for the co-exclusive rights to develop, manufacture and market, research and diagnostic products for the stratification and monitoring of patients with AML. Upon execution of this agreement, IPSOGEN paid an initial licensing fee of $120,000 and may make milestone payments upon the attainment of certain regulatory and commercial milestones. IPSOGEN will also pay the Company a royalty on any net revenues during the term of the agreement, subject to certain minimums. The term of the license ends on October 28, 2025 which is the date of expiration of the issued patent rights. In September 2010, the Company signed amendment No. 1 to the sublicensing agreement. The amendment asserts that the Compay may require a license from a third-party to perform laboratory testing services. During the years ended December 31, 2014, 2013 and 2012, the Company recorded royalty, milestone and license fee revenues of approximately $60,000, $60,000 and $180,000, respectively. During those same periods, the Company had no license fee expenses. |
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In October 2007, the Company signed a license agreement with ASURAGEN, Inc. for the co-exclusive rights to develop, manufacture and market, research and diagnostic products for the stratification and monitoring of patients with AML. ASURAGEN paid an initial licensing fee of $120,000 upon execution of the agreement and may make future payments to the Company upon the attainment of certain regulatory and commercial milestones. In June 2010, the Compay signed amendment No. 1 to the co-exclusive license agreement. The amendment asserts that the Company may require a license from a third-party to perform laboratory testing services. ASURAGEN will also pay the Company a royalty on any net revenues during the term of the agreement, subject to certain minimums. The term of the license ends on October 28, 2025 which is the date of expiration of the issued patent rights. In March 2013, we signed amendment No. 2 to the co-exclusive sublicense agreement with ASURAGEN. The amendment limited the field of use to research use only (RUO) kits. ASURAGEN was also granted a non-exclusive sublicense for NPMI laboratory testing services. During the years ended December 31, 2014, 2013 and 2012, the Company recorded royalty and license fee revenues of approximately $50,000, $50,000 and $50,000, respectively. During those same periods, the Company had no license fee expenses related to this agreement. |
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In August 2008, the Company signed a sublicensing agreement with LabCorp for the non-exclusive rights to develop and market lab testing services for NPM1, for the diagnosis and monitoring of patients with AML. LabCorp paid an initial licensing fee of $20,000 upon execution of the agreement. LabCorp will also pay the Company a royalty on any net revenues during the term of the agreement, subject to certain minimums. The term of the license ends August 25, 2018. During the years ended December 31, 2014, 2013 and 2012, the Company recorded royalty and license fee revenues of approximately $28,000, $20,000 and $5,000, respectively. During those same years, the Company has not recorded any license fee expenses. |
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In December 2008, the Company signed a sublicensing agreement with InVivoScribe Technologies, Inc. for the non-exclusive rights to develop and market lab testing services for NPM1 for the diagnosis and monitoring of patients with AML. InVivoScribe Technologies paid an initial licensing fee of $10,000 upon execution of the agreement. InVivoScribe Technologies will also pay the Company a royalty on any net revenues during the term of the agreement, subject to certain minimums. The term of the license ends on October 28, 2025 which is the date of expiration of the issued patent rights. During the years ended December 31, 2014, 2013, and 2012, the Company recorded royalty and license fee revenues of approximately $25,000, $25,000 and $27,000, respectively. During those same periods, the Company has not recorded any license fee expenses. |
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In June 2010, the Company signed a sublicensing agreement with Skyline Diagnostics BV for the non-exclusive rights to develop, commercialize and market, research and diagnostic laboratory services for the stratification and monitoring of patients with AML. Skyline Diagnostics BV paid an initial licensing fee of $10,000 upon execution of the agreement and may make future payments to the Company upon the attainment of certain regulatory and commercial milestones. Skyline Diagnostics BV will also pay the Company a royalty on any net revenues during the term of the agreement, subject to certain minimums. The term of the license ends on October 28, 2025 which is the date of expiration of the issued patent rights. During the years ended December 31, 2014, 2013 and 2012, the Company recorded royalty and license fee revenues of approximately $0, $0 and $0, respectively. During those same periods, the Company has not recorded any license fee expenses. |
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In January 2011, the Company entered into an asset purchase agreement with TTFactor S.r.l.for a hybridoma able to produce a monoclonal antibody targeting the NPM1 biomarker for $10,000. In addition the Company agreed to pay the seller of the hybridoma for a period of seven years commencing with the first sale of the antibody, annual royalties on a country by country basis. In addition, the Company agreed to pay a percentage of all cash consideration received from licensees as an upfront license fee pursuant to any licenses of the product and a percentage of all cash consideration received from licensees as milestone payments. The agreement was terminated in 2013. During the years ended December 31, 2014, 2013, and 2012, there were no royalty expense, license fee or milestone payments recorded related to this agreement. |
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In February 2011, the Company entered into a sublicense agreement with MLL Münchner Leukämielabor, or MLL for non-exclusive rights to develop and market laboratory testing services for NPM1 for the diagnosis and monitoring of patients with AML. MLL paid an initial license fee of $20,000 upon execution of the agreement and will also pay the Company a royalty on any net revenues during the term of the agreement, subject to certain minimums. MLL is obligated to pay a royalty with annual minimums of $15,000 for the first year and $20,000 thereafter. The term of the license ends on October 28, 2025 which is the date of expiration of the issued patent rights. During the years ended December 31, 2014, 2013 and 2012, the Company recorded royalty and license fee revenues of approximately $81,000, $85,000 and $71,000, respectively. |
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In July 2011, the Company entered into a sublicense agreement with Fairview Health Services (“Fairview”) for the non-exclusive rights to develop and market laboratory testing services for NPM1 for the diagnosis and monitoring of patients with AML. Fairview paid an initial license fee of $10,000 upon execution of the agreement and will also pay the Company a royalty on any net revenues during the term of the agreement, subject to certain minimums. Fairview is obligated to pay a royalty with annual minimums of $1,000 each year. During the years ended December 31, 2014, 2013, and 2012, the Company recorded royalty and license fee revenues of approximately $2,000, $1,000 and $2,000, respectively. |
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In October 2011, the Company entered into an exclusive license agreement with Gianluca Gaidano, Robert Foa and Davide Rossi for the patent rights to a specific gene mutation with respect to chronic lymphoblastic leukemia. In consideration of the license, the Company paid $1,000 as an upfront license fee and agreed to make royalty payments in the single digits on net sales if sales are made by the Company or a single digit royalty on sublicense income received by the Company if sales are made by sublicensees. The Company has an option to purchase the licensed patent rights in the event the licensor decides to sell such licensed patent rights. The license agreement shall continue until September 29, 2031 which is the date of the last to expire of the licensed patent rights covering the license product. The license agreement may also be terminated upon a material breach by any party or by the Company if it is determined that it is not commercially or scientifically appropriate to further develop the license product rights. During the years ended December 31, 2014, 2013 and 2012, no royalty expense has been recorded related to this agreement. |
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In December 2011, the Company entered into an exclusive license agreement with Columbia University to license the patent rights to hairy cell leukemia biomarkers. In consideration of the license, the Company paid $1,000 as an upfront license fee and agreed to make royalty payments in the single digits on net sales if sales are made by the Company or a single digit royalty on sublicense income received by the Company if sales are made by sublicensees. The license agreement shall continue until May 10, 2021 which is the date of the last to expire of the licensed patent rights covering the license product. The license agreement may also be terminated upon a material breach by any party or by the Company if we determine that it is not commercially or scientifically appropriate to further develop the license product rights. During the years ended December 31, 2014, 2013 and 2012, no royalty expense has been recorded related to this agreement. |
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In September 2012, the Company entered into a sublicense agreement with Quest Diagnostics for non-exclusive rights to develop and market laboratory testing services for NPM1 for the diagnosis and monitoring of patients with AML. Under this agreement, the Company has granted a license to certain NPM1 patents in exchange for a one time license fee of $20,000 due upon execution of the agreement and royalty payments on net sales of Quest Diagnostics and its affiliates. During the years ended December 31, 2014, 2013 and 2012, the Company recorded royalty and license fee revenues of approximately $26,000, $14,000 and $20,000, respectively. |
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In September 2012, the Company entered into a collaboration and license agreement with Strand Life Sciences (“Strand”) related to the validation and commercial launch of a urine based DNA test for Human Papillomavirus. Under this agreement, the Company has granted a license for use of its tests to Strand in exchange for royalty payments on net sales earned in the territory specified in the agreement. During the years ended December 31, 2014, 2013 and 2012, the Company has recorded no royalty and license fee revenues related to this agreement. |
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In November 2012, the Company entered into a sublicense agreement with Duke University and Duke University Health Systems for non-exclusive rights to develop and market laboratory testing services for NPM1 for diagnosis and monitoring of patients with AML. Under this agreement, the Company has granted a license to certain NPM1 patents in exchange for a one time license fee of $5,000 due upon execution of the agreement and royalty payments on net revenues. During the years ended December 31, 2014, 2013 and 2012, the Company has recorded $1,000, $0 and $5,000, respectively of royalty and license fee revenues related to this agreement. |
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In December 2012, the Company entered into a sublicense agreement with Genoptix, Inc. for non-exclusive worldwide rights to develop and market laboratory testing services for NPM1 for diagnosis and monitoring of patients with AML. Under this agreement, the Company has granted a license to certain NPM1 patents in exchange for a one time license fee of $100,000 due upon execution of the agreement and royalty payments on net revenues. During the years ended December 31, 2014, 2013 and 2012, the Company recorded royalty and license fee revenues of approximately $30,000, $10,000 and $100,000, respectively. |
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Litigation |
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Trovagene does not believe that the Company has legal liabilities that are probable or reasonably possible that require either accrual or disclosure. From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. |
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We are not currently a party to any material legal proceedings. |
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Employment and Consulting Agreements |
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During 2011, the Company entered into an executive agreement with Antonius Schuh, Ph.D. in which he agreed to serve as Chief Executive Officer. The term of the agreement is effective as of October 4, 2011 and continues until October 4, 2015 and is automatically renewed for successive one year periods at the end to each term. In the event that during the term of the agreement, for a period of 90 consecutive trading days, the market price of the common stock is $7.50 or more and the value of the common stock daily trading volume is $125,000 or more, the Company shall pay or issue Dr. Schuh a bonus in an amount of $3,466,466 in either cash or registered common stock or a combination thereof as mutually agreed by Dr. Schuh the Company; or in the event that during the term of the agreement, a change of control occurs where the per share enterprise value of our company equals or exceeds $7.50 per share, the Company shall pay Dr. Schuh a bonus in an amount determined by multiplying the enterprise value by 4.0%. In the event in a change of control the per share enterprise value exceeds a minimum of $14.40 per share, $22.80 per share or $30.00 per share, Dr. Schuh shall receive a bonus in an amount determined by multiplying the incremental enterprise value by 2.5%, 2.0% or 1.5%, respectively. |
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If the executive agreement is terminated for cause or as a result of Dr. Schuh’s death or permanent disability or if Dr. Schuh terminates his agreement voluntarily, Dr. Schuh shall receive a lump sum equal to (i) any portion of unpaid base compensation then due for periods prior to termination, (ii) any bonus or realization bonus earned but not yet paid through the date of termination and (iii) all expenses reasonably incurred by Dr. Schuh prior to date of termination. If the executive agreement is terminated without cause Dr. Schuh shall receive a severance payment equal to base compensation for three months if termination occurs ten months after the effective date of the agreement and six months if termination occurs subsequent to ten months from the effective date. If the executive agreement is terminated as a result of a change of control, Dr. Schuh shall receive a severance payment equal to base compensation for twelve months and all unvested stock options shall immediately vest and become fully exercisable for a period of six months following the date of termination. |
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During 2012, the Company entered into an executive agreement with Steve Zaniboni in which he agreed to serve as Chief Financial Officer. If the executive agreement is terminated by the Company for cause or as a result of Mr. Zaniboni’s death or permanent disability or if Mr. Zaniboni terminates his agreement voluntarily, Mr. Zaniboni shall receive a lump sum equal to (i) any portion of unpaid base compensation then due for periods prior to termination, (ii) any bonus or realization bonus earned but not yet paid through the date of termination and (iii) all expenses reasonably incurred by Mr. Zaniboni prior to date of termination. If the executive agreement is terminated by the Company without cause Mr. Zaniboni shall receive a severance payment equal to base compensation for three months if termination occurs ten months after the effective date of the agreement and six months if termination occurs subsequent to ten months from the effective date. If the executive agreement is terminated as a result of a change of control, Mr. Zaniboni shall receive a severance payment equal to base compensation for twelve months and all unvested stock options shall immediately vest and become fully exercisable for a period of six months following the date of termination. |
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Lease Agreements |
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The Company leases its facilities under a noncancelable operating lease that expires in 2017. Rent expense for the years ended December 31, 2014, 2013 and 2012 was $315,000, $294,000, and $270,000, and respectively. The Company is also a party to various operating lease agreements for office equipment. |
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Total annual commitments under current lease agreements for each of the years ended December 31, are as follows: |
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2015 | | 360,775 | |
2016 | | 371,324 | |
2017 | | 381,026 | |
2018 | | 6,380 | |
Total | | $ | 1,119,505 | |
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