Research And Development Arrangements And Related Party Transactions

12 Months Ended

Dec. 31, 2011

Research And Development Arrangements And Related Party Transactions: [Abstract]

Research And Development Arrangements And Related Party Transactions:

3. Research and development arrangements and related party transactions:

The Company is a party to a collaborative research agreement with the University of Medicine and Dentistry of New Jersey ("UMDNJ"), an entity that is also a Company stockholder, under which the Company paid salary for a UMDNJ employee, laboratory supplies and employee parking costs. The agreement expired at the end of 2005. The Company also leased its Newark, New Jersey facility from UMDNJ under an operating lease agreement which expired on December 31, 2005 and was converted to a month-to-month lease. In September 2009, the Company shut-down, vacated and eliminated all activities performed at the Newark facility. The Company incurred approximately $0.1 million of research expense in connection with this agreement in the year ended December 31, 2009.

There was $0 due to UMDNJ at December 31, 2011 and 2010 for employee or laboratory expenses. However, in October 2010, the Company made royalty payments to both UMDNJ and Albany Medical College in the amount of $0.06 million each, which were related to a 2004 licensing arrangement. No further royalty payments are owed to either University at this time.

The Company rents office space for accounting and administrative staff in Tampa, Florida from Accentia Biopharmaceuticals, Inc., a related party ("Accentia"), and shares two employees, with personnel costs paid based on the approximate time spent on Company activities. Rent payments to Accentia were $0.06 million for years 2011, 2010 and 2009, respectively, and are included in general and administrative costs, related party. There were $0.005 million and $0.0 million in rent amounts due to Accentia at December 31, 2011 or 2010, respectively. This is shown in accounts payable and accrued liabilities in the condensed consolidated balance sheet.

On December 30, 2009, the Company entered into an Emezine™ Settlement Agreement (the "Settlement Agreement") with Accentia, Arius One and Accentia Pharmaceuticals, Inc. f/k/a TEAMM Pharmaceuticals Inc., a subsidiary of Accentia. Pursuant to the Settlement Agreement, the Company has received a warrant to purchase 2 million shares of common stock of Accentia's majority-owned subsidiary, Biovest International, Inc. ("Biovest"), from Accentia. Such warrant has an exercise price equal to 120% of the closing bid price of Biovest's common stock as of the date the bankruptcy court overseeing Accentia's Chapter 11 reorganization entered a final order authorizing Accentia to carry out the Settlement Agreement, which was $0.89 per share. The warrant was recorded at December 31, 2009 with a Black-Scholes value of $0.6 million. However, the warrant was not received by the Company until February 17, 2010 (the "Settlement Date"), the date which the bankruptcy court issued the final order authorizing the Settlement Agreement. At the settlement date, the warrant was valued using the Black-Scholes model, which resulted in a gain on settlement of $0.4 million for the year ended December 31, 2010, and is included in related party general and administrative in the accompanying condensed consolidated statement of operations. Subsequent to the Settlement Date and prior to the end of the year ended December 31, 2010, the stock price of Biovest's common stock increased, resulting in a derivative gain of $0.3 million and is included in derivative (loss) gain in the accompanying condensed consolidated statement of operations. During the year ended December 31, 2011, the stock price of Biovest's common stock declined, resulting in a derivative loss of $0.9 million. This derivative loss partially offsets the overall derivative gain that is in the accompanying condensed consolidated statement of operations.