Commitments and Contingencies

Research and Development and License Agreements

The Company has entered into a variety of collaborative research and specimen transfer agreements relating to its development efforts. Included in research and development expense, the Company has incurred and recorded approximately $2,535,000, $1,362,000, and $712,000 as of December 31, 2016, 2015 and 2014, respectively, relating to services provided by the collaborators in connection with these agreements.

The Company is a party to various agreements under which it licenses technology on an exclusive basis in the field of human diagnostics. License fees are generally calculated as a percentage of product revenues, with rates that vary by agreement. To date, payments have not been material.

Collaborative Arrangement

In November 2016, the Company entered into a collaborative arrangement with Boreal to co-develop urine and blood ctDNA assay kits and systems and to globally distribute assay kits for use on the Boreal OnTarget™ system in blood and exclusively urine. The Company is accounting for the joint development and commercialization activities with this third party as a joint risk sharing collaboration in accordance with ASC Topic 808, Collaborative Arrangements (“ASC Topic 808”). ASC Topic 808 defines a collaborative arrangement as an arrangement where the parties are active participants and have exposure to significant risks. Under the terms of an agreement with Boreal, the Company is committed to make two milestone payments totaling $1.0 million for licensing and distribution rights. The Company paid the first milestone payment of $500,000 in December 2016 and the second milestone payment will be made upon the achievement of certain research and development objectives but no later than January 1, 2018. As of December 31, 2016, the Company has incurred and recorded approximately $475,000 in research and development expenses in connection with this collaborative arrangement.

Litigation

Trovagene does not believe that the Company has legal liabilities that are probable or reasonably possible that require either accrual or disclosure, except for the following: On March 28, 2016 the Company filed a complaint in the Superior Court of the State of California for the County of San Diego against the Company’s former CEO and CFO, for, among other things, breach of fiduciary duty for failing to present a lucrative corporate opportunity to the Company concerning promising new therapeutics in the field of precision medicine and instead taking that opportunity for their own personal benefit. The complaint asks that these two former executives be required to turn over their interests in these new therapeutics to the Company. The former CEO and CFO filed a cross complaint in the Superior Court of the State of California for the County of San Diego against the Company on May 23, 2016 for, among other things, breach of contract. The parties are currently engaged in the discovery process. From time to time, the Company may become involved in various lawsuits and legal proceedings that 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 the Company’s business.

Employment and Consulting Agreements

The Company has longer-term contractual commitments with various consultants and employees. Certain employment agreements provide for severance payments.

Lease Agreements

The Company currently leases approximately 26,100 square feet facilities in San Diego under an operating lease that expires on December 31, 2021 at a monthly rental rate of approximately $68,000. The Company also leases certain lab and office space in Torino, Italy, of approximately 2,300 square feet at a monthly rental rate of approximately $3,100. The lease is for a period of three years and expires December 31, 2018. Rent expense for the years ended December 31, 2016, 2015, and 2014 was approximately $602,000, $471,000 and $315,000, respectively.

The Company is also a party to various non-cancelable operating lease agreements for office equipment.

Total annual commitments under non-cancelable lease agreements for each of the years ended December 31 are as follows:



2017	$	896,050
2018	918,751
2019	906,879
2020	931,457
2021	959,401
Thereafter	—
Total(1)	$	4,612,538

(1) This amount has not been reduced by sublease income of $306,066.

Public Offering and Controlled Equity Offering

On May 27, 2016 the Company filed a Form S-3 Registration Statement to offer and sell in one or more offerings, any combination of common stock, preferred stock, debt securities, warrants, or units having an aggregate initial offering price not exceeding $250,000,000. The preferred stock, debt securities, warrants, and units may be convertible or exercisable or exchangeable for common stock or preferred stock or other Trovagene securities. This form was declared effective on June 13, 2016. The Company has an agreement with the Agent on January 25, 2013 to issue and sell up to $30,000,000 of shares of common stock through the Agent. As payment for its services, the Agent is entitled to a 3% commission on gross proceeds. Gross proceeds of $2.4 million have been raised since the date of effectiveness of the Form S-3 on June 13, 2016.

Database Usage

In March 2016 the Company entered into an agreement with an outside vendor to develop an online database for test requisition and test results. Under the agreement, the Company is obligated to pay a fixed development fee, and a usage fee each time an external user completes and submits a test order form to the database. To date, the Company has paid the fixed development fee, but has incurred no costs in connection with the usage fees.