Commitments and Contingencies	12 Months Ended
Dec. 31, 2015
Commitments and Contingencies.
Commitments and Contingencies	10. Commitments and Contingencies Leases We lease office space and office equipment under operating leases. Rent expense under these operating leases was $390,126 and $461,466 in 2014 and 2015, respectively. As of December 31, 2015, we have commitments for $309,348 of future minimum lease payments to be made in 2016. Employee Benefit Plan We maintain a Section 401(k) retirement plan for all employees who are 21 years of age or older. Employees can contribute up to 90.0% of their eligible pay, subject to maximum amounts allowed under law. We may make discretionary profit sharing contributions, which vest over a period of four years from each employee’s commencement of employment with us. We have not made any discretionary contributions. License Agreement with Princeton University In November 2003, we entered into an exclusive license agreement with Princeton University, subsequently amended in June 2004, August 2006, and October 2006, which grants us the rights to certain U.S. patents controlled by the university relating to SMAC‑mimetic compounds, including birinapant, and a non‑exclusive right to certain know‑how and technology relating thereto. The agreement contains a right by us to sublicense. To date, we have paid an aggregate of $100,000 in license fees under the license agreement. As part of the consideration paid, we issued to Princeton University 9,734 shares of our common stock and agreed to pay Princeton University certain royalties. In particular, we are obligated to pay royalties as a percentage of net product sales of 2.0% for direct licensed products, such as birinapant, and 0.5% of derived licensed products, if such products are covered by the applicable Princeton University patent rights. We have the right to reduce the amount of royalties owed to Princeton University by the amount of any royalties paid to a third‑party in a pro rata manner, provided that the royalty rate may not be less than 1.0% of net sales for direct licensed products and 0.25% for derived licensed products. The obligation to pay royalties in the U.S. expires upon the expiration, lapse or abandonment of the last of the licensed patent rights that covers the manufacture, use or sale of the direct licensed products. The obligation to pay royalties outside the U.S. expires, on a country by country basis, 10 years from the first commercial sale of a licensed product in each country. The licensed patent rights were developed using federal funds from the National Institutes of Health and are subject to certain overriding rights and obligations of the federal government. This agreement expires upon expiration of the last of the licensed patent rights in 2023 (absent extensions). The agreement also requires that we pay to Princeton University 2.5% of the non‑royalty consideration that we receive from a sublicensee. Under the license agreement, we are obligated to use reasonable efforts to develop, test, obtain regulatory approval, manufacture, market and sell licensed products in all countries worldwide. License Agreement with Walter and Eliza Hall Institute In January 2014, we entered into a license agreement with the Walter and Eliza Hall Institute of Medical Research, or WEHI, in Melbourne, Australia for worldwide exclusive rights to a patent application and any patents issuing therefrom relating to a method of treating intracellular infections involving the administration of an IAP antagonist. WEHI will perform research and development services for which we will be making payments over the first 5 years of the agreement in the amount of $1.25 million, of which we have paid $1,000,000 to date. We are obligated to pay royalties as a percentage of net sales of 2% for products that are based either on the licensed patents or any patents arising from research performed by WEHI. We are also obligated to pay royalties as a percentage of net income of 15% received from sublicensing the licensed patents or any patents arising from research performed by WEHI to a third party. We may also be required to make milestone payments to WEHI of up to $3,750,000 for the first indication and up to $1,875,000 for each of the next two indications based on the commencement of certain clinical trials and the filing and approval of new drug applications. License Agreement with Harvard University and Dana-Farber Cancer Institute In October 2008, Shape Pharmaceuticals entered into a license agreement with Harvard University and Dana-Farber Cancer Institute, Inc. (the “Licensors”) to grant a license under its interest in certain patent rights as defined in the license agreement, which include claims covering the composition of the SHAPE molecule. The agreement contains a right by us to sublicense. The Licensors received 400,000 shares of common stock of Shape Pharmaceuticals in consideration for the grant of the license, for which they received a payment of $213,317 when we acquired Shape Pharmaceuticals in April 2014. We also paid the Licensors an annual maintenance fee of $100,000 in 2012 and will pay $50,000 on the fifth anniversary of the effective date of the agreement and on each subsequent anniversary date thereafter as long as the license agreement remains in full force and effect. The annual maintenance fee of $50,000 was paid in 2013, 2014 and 2015. As defined in the license agreement, we may be required to pay milestones on an indication-by-indication basis of up to $4,450,000 in the aggregate and/or royalties of net sales of developed products, if and when achieved. Annual maintenance fee payments can be used to offset milestone obligations. We paid a milestone payment of $100,000 during the year ended December 31, 2011. We have the right to terminate the agreement upon 60 days’ written notice. CTCL Trial with The Leukemia and Lymphoma Society In June 2010, we entered into a funding agreement with The Leukemia and Lymphoma Society, or LLS, to fund the development of SHAPE. Under the LLS funding agreement, we are obligated to use the funding received exclusively for the payment or reimbursement of the costs and expenses for clinical development activities for SHAPE. Under this agreement, we retain ownership and control of all intellectual property pertaining to works of authorship, inventions, know-how, information, data and proprietary material. Under the LLS funding agreement, as amended, we received funding of $2.695 million from LLS through 2014. We terminated the funding agreement effective as of February 2014. We are required to make specified payments to LLS, including payments payable upon execution of the first out-license; first filing of approval for marketing by a regulatory body; first approval for marketing by a regulatory body; and completion of the first commercial sale of SHAPE. The extent of these payments and our obligations will depend on whether we out-license rights to develop or commercialize SHAPE to a third party, we commercialize SHAPE on our own or we combine with or are sold to another company. In addition, we will pay to LLS a single-digit percentage royalty of our net sales of SHAPE, if any. The sum of our payments to LLS is capped at three times the total funding received from LLS, or $8.085 million. In addition, some of our obligations under the funding agreement will remain in effect until the completion of specified milestones and payments to LLS. Assuming the successful outcome of the development activities covered by the LLS funding agreement and our receipt of necessary regulatory approvals, we will be required to take commercially reasonable steps through 2019 to advance the development of SHAPE in clinical trials and to bring SHAPE to practical application for CTCL in a major market country, provided that we reasonably believe the product is safe and effective. We believe that we can satisfy our obligation by out-licensing SHAPE to, or partnering SHAPE with, a third party. We are required to report to LLS on our efforts and results with respect to continuing development of SHAPE. Our failure to perform these diligence obligations, even if we successfully achieve the specified development milestones, would require us to pay back to LLS the total amount of the funding we received from them, unless an exception applies. If LLS were to claim that such failure occurred and we disagreed with such claim, the dispute would be settled through binding arbitration. In connection with the accounting for the acquisition of Shape Pharmaceuticals, we estimated the fair value of this potential obligation to be $200,000, which is included in contingent consideration and other liabilities in our December 31, 2014 and December 31, 2015 balance sheet. Other Considerations In July 2015, we assigned our worldwide patents for birinapant and SHAPE to two wholly-owned subsidiaries domiciled in the United Kingdom (“UK”), in consideration for payments to be made over a 10 year period. Although the assignment of the intellectual property rights did not result in any gain or loss in our consolidated financial statements, the transaction did result in a taxable gain in the United States and we are utilizing available federal and state net operating loss carryforwards to offset this taxable gain. The UK subsidiaries will be responsible for the future development and commercialization of birinapant and SHAPE, and will recognize the net profits or losses generated from those activities.

10. Commitments and Contingencies

Leases

We lease office space and office equipment under operating leases. Rent expense under these operating leases was $390,126 and $461,466 in 2014 and 2015, respectively.

As of December 31, 2015, we have commitments for $309,348 of future minimum lease payments to be made in 2016.

Employee Benefit Plan

We maintain a Section 401(k) retirement plan for all employees who are 21 years of age or older. Employees can contribute up to 90.0% of their eligible pay, subject to maximum amounts allowed under law. We may make discretionary profit sharing contributions, which vest over a period of four years from each employee’s commencement of employment with us. We have not made any discretionary contributions.

License Agreement with Princeton University

In November 2003, we entered into an exclusive license agreement with Princeton University, subsequently amended in June 2004, August 2006, and October 2006, which grants us the rights to certain U.S. patents controlled by the university relating to SMAC‑mimetic compounds, including birinapant, and a non‑exclusive right to certain know‑how and technology relating thereto. The agreement contains a right by us to sublicense. To date, we have paid an aggregate of $100,000 in license fees under the license agreement. As part of the consideration paid, we issued to Princeton University 9,734 shares of our common stock and agreed to pay Princeton University certain royalties. In particular, we are obligated to pay royalties as a percentage of net product sales of 2.0% for direct licensed products, such as birinapant, and 0.5% of derived licensed products, if such products are covered by the applicable Princeton University patent rights. We have the right to reduce the amount of royalties owed to Princeton University by the amount of any royalties paid to a third‑party in a pro rata manner, provided that the royalty rate may not be less than 1.0% of net sales for direct licensed products and 0.25% for derived licensed products. The obligation to pay royalties in the U.S. expires upon the expiration, lapse or abandonment of the last of the licensed patent rights that covers the manufacture, use or sale of the direct licensed products. The obligation to pay royalties outside the U.S. expires, on a country by country basis, 10 years from the first commercial sale of a licensed product in each country. The licensed patent rights were developed using federal funds from the National Institutes of Health and are subject to certain overriding rights and obligations of the federal government. This agreement expires upon expiration of the last of the licensed patent rights in 2023 (absent extensions).

The agreement also requires that we pay to Princeton University 2.5% of the non‑royalty consideration that we receive from a sublicensee. Under the license agreement, we are obligated to use reasonable efforts to develop, test, obtain regulatory approval, manufacture, market and sell licensed products in all countries worldwide.

License Agreement with Walter and Eliza Hall Institute

In January 2014, we entered into a license agreement with the Walter and Eliza Hall Institute of Medical Research, or WEHI, in Melbourne, Australia for worldwide exclusive rights to a patent application and any patents issuing therefrom relating to a method of treating intracellular infections involving the administration of an IAP antagonist. WEHI will perform research and development services for which we will be making payments over the first 5 years of the agreement in the amount of $1.25 million, of which we have paid $1,000,000 to date. We are obligated to pay royalties as a percentage of net sales of 2% for products that are based either on the licensed patents or any patents arising from research performed by WEHI. We are also obligated to pay royalties as a percentage of net income of 15% received from sublicensing the licensed patents or any patents arising from research performed by WEHI to a third party. We may also be required to make milestone payments to WEHI of up to $3,750,000 for the first indication and up to $1,875,000 for each of the next two indications based on the commencement of certain clinical trials and the filing and approval of new drug applications.

License Agreement with Harvard University and Dana-Farber Cancer Institute

In October 2008, Shape Pharmaceuticals entered into a license agreement with Harvard University and Dana-Farber Cancer Institute, Inc. (the “Licensors”) to grant a license under its interest in certain patent rights as defined in the license agreement, which include claims covering the composition of the SHAPE molecule. The agreement contains a right by us to sublicense. The Licensors received 400,000 shares of common stock of Shape Pharmaceuticals in consideration for the grant of the license, for which they received a payment of $213,317 when we acquired Shape Pharmaceuticals in April 2014. We also paid the Licensors an annual maintenance fee of $100,000 in 2012 and will pay $50,000 on the fifth anniversary of the effective date of the agreement and on each subsequent anniversary date thereafter as long as the license agreement remains in full force and effect. The annual maintenance fee of $50,000 was paid in 2013, 2014 and 2015. As defined in the license agreement, we may be required to pay milestones on an indication-by-indication basis of up to $4,450,000 in the aggregate and/or royalties of net sales of developed products, if and when achieved. Annual maintenance fee payments can be used to offset milestone obligations. We paid a milestone payment of $100,000 during the year ended December 31, 2011. We have the right to terminate the agreement upon 60 days’ written notice.

CTCL Trial with The Leukemia and Lymphoma Society

In June 2010, we entered into a funding agreement with The Leukemia and Lymphoma Society, or LLS, to fund the development of SHAPE. Under the LLS funding agreement, we are obligated to use the funding received exclusively for the payment or reimbursement of the costs and expenses for clinical development activities for SHAPE. Under this agreement, we retain ownership and control of all intellectual property pertaining to works of authorship, inventions, know-how, information, data and proprietary material.

Under the LLS funding agreement, as amended, we received funding of $2.695 million from LLS through 2014. We terminated the funding agreement effective as of February 2014. We are required to make specified payments to LLS, including payments payable upon execution of the first out-license; first filing of approval for marketing by a regulatory body; first approval for marketing by a regulatory body; and completion of the first commercial sale of SHAPE. The extent of these payments and our obligations will depend on whether we out-license rights to develop or commercialize SHAPE to a third party, we commercialize SHAPE on our own or we combine with or are sold to another company. In addition, we will pay to LLS a single-digit percentage royalty of our net sales of SHAPE, if any. The sum of our payments to LLS is capped at three times the total funding received from LLS, or $8.085 million.

In addition, some of our obligations under the funding agreement will remain in effect until the completion of specified milestones and payments to LLS. Assuming the successful outcome of the development activities covered by the LLS funding agreement and our receipt of necessary regulatory approvals, we will be required to take commercially reasonable steps through 2019 to advance the development of SHAPE in clinical trials and to bring SHAPE to practical application for CTCL in a major market country, provided that we reasonably believe the product is safe and effective. We believe that we can satisfy our obligation by out-licensing SHAPE to, or partnering SHAPE with, a third party. We are required to report to LLS on our efforts and results with respect to continuing development of SHAPE. Our failure to perform these diligence obligations, even if we successfully achieve the specified development milestones, would require us to pay back to LLS the total amount of the funding we received from them, unless an exception applies. If LLS were to claim that such failure occurred and we disagreed with such claim, the dispute would be settled through binding arbitration. In connection with the accounting for the acquisition of Shape Pharmaceuticals, we estimated the fair value of this potential obligation to be $200,000, which is included in contingent consideration and other liabilities in our December 31, 2014 and December 31, 2015 balance sheet.

Other Considerations

In July 2015, we assigned our worldwide patents for birinapant and SHAPE to two wholly-owned subsidiaries domiciled in the United Kingdom (“UK”), in consideration for payments to be made over a 10 year period. Although the assignment of the intellectual property rights did not result in any gain or loss in our consolidated financial statements, the transaction did result in a taxable gain in the United States and we are utilizing available federal and state net operating loss carryforwards to offset this taxable gain. The UK subsidiaries will be responsible for the future development and commercialization of birinapant and SHAPE, and will recognize the net profits or losses generated from those activities.