On June 4, 2018, the Company entered in an Agreement of Lease for 3,893 square feet for its new corporate headquarters in Florham Park, New Jersey. The lease commencement date was October 19, 2018 and terminates on February 29, 2024. The Company has an option to extend the term of the lease for one additional 60-month period.

 

During the year ended December 31, 2018, the landlord made certain improvements to the facility. As of December 31, 2018, the Company recorded a deferred lease liability of approximately $176,000 for the improvements funded by the landlord in deferred rent current and deferred rent, long-term on the consolidated balance sheet. The Company amortizes the deferred liability as a reduction to rent expense in the consolidated statement of operations over the term of the lease.

 

Under the terms of the lease, the Company paid a security deposit of $75,000 and the aggregate rent due over the term of the lease is approximately $828,000, which will be reduced to approximately $783,000 after certain rent abatements. The Company will also be required to pay its proportionate share of certain operating expenses and real estate taxes applicable to the leased premises. After certain rent abatements the rent is approximately $12,500 per month for the first year and then escalates thereafter by 2% per year for the duration of the term. Rent expense is recognized on a straight-line basis and accordingly the difference between the recorded rent expense and the actual cash payments has been recorded as deferred rent current and deferred rent, long-term of each balance sheet date on the consolidated balance sheet.

 

 

On September 5, 2007, the Company entered into a 36-month lease for office and manufacturing space, commencing September 15, 2007.  The lease provided for the option to extend the lease under its original terms for seven additional two-year terms.  Rent was $8,050 per month for the first year and then escalated thereafter by 3% per year for the duration of the term including any lease extension terms.  The lease also required the payment of monthly rent of $1,140 for approximately 3,400 square feet of expansion space.  The monthly rent for the expansion space was fixed until such time as the expansion space is occupied at which time the rent would increase to the current per square foot rate in effect under the original lease terms.  The Company is responsible for certain building-related costs such as property taxes, insurance, and repairs and maintenance.  Rent expense is recognized on a straight-line basis and accordingly the difference between the recorded rent expense and the actual cash payments has been recorded as deferred rent as of each balance sheet date. Due to the significant value of leasehold improvements purchased during the initial 3-year lease term and the economic penalty for not extending the building lease, straight-line rent expense and the associated deferred rent has been calculated over 17 years, which represents the full term of the lease, including all extensions.

 

The Company is required to remove certain alterations, additions and improvements upon termination of the lease that altered a portion of the rentable space.  In no event shall the cost of such removal, at commercially reasonable rates, paid by the Company exceed $55,000 (the “Capped Amount”). Any amount in excess of the Capped Amount shall be the obligation of the landlord.  The Company is required to maintain a certificate of deposit equal to the Capped Amount during the term of the lease, which amount is shown as restricted cash on the accompanying balance sheets.

 

This space was vacated in 2018 due to our decision to outsource our manufacturing. The company additionally extended the lease on a month by month basis through February 6, 2019 to accommodate certain alterations required under the lease agreement. As of December 31, 2018, the Company has recorded a liability of approximately $55,000, in connection with its remaining obligations under the lease.

 

The Company presently rents office space in Madison consists of approximately 300 square feet and is rented for approximately $3,300 per month under an agreement that expires on August 31, 2019.

 

Future minimum lease payments, excluding reimbursements under noncancelable operating leases at December 31, 2018 are as follows:

 

 

Total rent expense was approximately $29,000 and $130,000 for the years ended December 31, 2018 and 2017, respectively.

 

 

O

n August 7, 2018, the Company was informed by Centre for Probe Development and Commercialization (“CPDC”), its sole supplier of CLR 131, that CPDC is subject to an Import Alert 66-40 (the “Import Alert”) by the U.S.FDA. While the basis for the Import Alert was not related to CLR 131, or CPDC’s production facility associated with CLR 131, CPDC informed the Company on August 8, 2018 that CPDC would not be able to supply CLR 131 to it until the Import Alert is lifted or alternative agreements are reached with the FDA.

 

 

The Company awaits either the lifting of the Import Alert or the granting of an exemption from the FDA for any future shipments into the U.S. in connection with its Phase 1 study of pediatric patients with neuroblastoma, sarcomas, lymphomas (including Hodgkin’s lymphoma) and malignant brain tumors. As a result of the supply disruption, the Company is experiencing delays in initiation of this clinical study. At this time, the Company is sourcing clinical sites outside the U.S. which would allow it to begin enrollment of this clinical study.

 

 

The Company is involved in legal matters and disputes in the ordinary course of business. We do not anticipate that the outcome of such matters and disputes will materially affect the Company’s financial statements.