15.

Related Party Transactions:

Transition Services Agreement

Effective April 24, 2015, the Company entered into a transition services agreement (the “TSA”) with Kadmon, which owned 12.9% of the Company at December 31, 2018, whereby Kadmon would provide office and laboratory facilities as well as certain other personnel support activities to the Company. Under the agreement, the Company is charged for (i) rent based upon the square footage of the office and laboratory facilities used by the Company (ii) other personnel support activities based upon the hours of the personnel providing the support activities, and (iii) and other direct costs incurred by Kadmon on behalf of the Company, plus a 7% administrative fee. The TSA terminated on April 24, 2018 and the Company is currently leasing office space on a month to month basis from Kadmon.

During the years ended December 31, 2018 and 2017, the Company incurred the following charges in connection with the TSA which are included in loss from operations:


	2018		2017
Rent	$	557,698	$	548,229
Personnel		6,493		39,721
Other		6,334		5,983

Total charges incurred	$	570,525	$	593,933

During the year ended December 31, 2018 and 2017, the Company made cash payments totaling $1,431,555 and $275,941, respectively.

The amount due to Kadmon at December 31, 2018 and 2017 is $0 and $861,030, respectively, and is disclosed as Due to Kadmon on the Company’s consolidated balance sheets.

Research Agreement

Effective October 23, 2016, the Company entered into a four-year master services agreement with UCL Consultants Limited, an entity affiliated with University College of London (“UCL”), which is a shareholder of the Company. Pursuant to the agreement, UCL Consultants Limited provides pre-clinical research and development under the direction of the Company. In connection with the agreement, the Company issued several work orders during the years ended December 31, 2016 and 2017 in the aggregate amounts of £1,402,202, or approximately $1,885,000, based upon the average exchange rates during the years ended December 31, 2016 and 2017, respectively. Either party may terminate the agreement by giving 30 days written notice. Total research and development expenses under this agreement for the years ended December 31, 2018 and 2017 was approximately $636,000 and $538,000, respectively. Future obligations under the agreement equal £612,382, or approximately $779,685, through October 2020.

The amount due to UCL under the master services agreement at December 31, 2018 and 2017 is $389,101 and $775,315, respectively and is included in accounts payable and accrued expenses on the Company’s consolidated balance sheets.

Effective September 1, 2016, the Company entered into a manufacturing and drug supply agreement with UCL. Pursuant to the agreement, UCL manufactured materials for the Company’s clinical trials under the direction of the Company. The agreement was terminated in January 2018. Total research and development expenses under this agreement for the years ended December 31, 2018 and 2017 was approximately $0 and $1,904,352, respectively.

The amount due to UCL under the manufacturing and drug supply agreement at December 31, 2018 and 2017 is $0 and $2,466,142, respectively and is included in accrued expenses on the balance sheet.

Leases

July 2016 Lease

Effective July 1, 2016, the Company entered into a non-cancellable operating lease for laboratory and related office facilities in New York with ARE, an entity that is under common control by an entity that is a minority shareholder of the Company and whose executive chairman and founder is a director of the Company. The lease provides for monthly base rent and property management fees, including rent escalations and rent holidays, plus operating expenses during the lease term, which expires on December 31, 2021. The Company records monthly rent expense on a straight-line basis from July 1, 2016 through December 31, 2021. As of December 31, 2018 and 2017, the balance of deferred rent, representing the difference between cash rent paid and straight-line rent expense, was $201,264 and $231,276, respectively.

Total rent expense under this operating lease was $487,555 and $487,559 for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018, the aggregate future minimum rental payments under this lease are $1,663,952.

In connection with the signing of this lease, the Company entered into a standby letter of credit agreement for $122,866, which serves as a security deposit for the premises. The standby letter of credit expired on July 7, 2017 and was automatically renewed annually through July 7, 2021. This standby letter of credit is secured with restricted cash in a money market account (see Note 6).

December 2016 Lease

Effective December 15, 2016, the Company entered into another non-cancellable operating lease with ARE, expiring on October 31, 2032, for laboratory and office facilities in New York. The lease provided for monthly base rent, including rent escalations, property management fees and rent holidays, plus operating expenses during the lease term. The Company recorded monthly rent expense on a straight-line basis from December 15, 2016 through October 31, 2032. On October 26, 2017, the lease was amended, whereby the lease would terminate on March 31, 2018 and only base rent and management fees in the aggregate amount of $563,507 would be due from November 1, 2017 through March 31, 2018. Under the amendment, the Company issued a note to ARE in the amount of $1,442,009 (see Note 9), removed the balance of the deferred rent and accrued the future rent payments, all of which were recorded as rent expense at the time of the amendment, in accordance with ASC 420, Exit and Disposal Activities, as the Company had a cease use date as of the date of the amendment.

Total rent expense under this operating lease was $0 and $1,660,806 for the years ended December 31, 2018 and 2017, respectively.

Convertible Note Payable

On May 1, 2017, the Company issued a convertible note in the amount of $2,500,000 to ARE. The note had an interest rate of 10% per annum and was convertible into Preferred Shares at any time at the option of the holder or would automatically convert into Preferred Shares in the event of an equity investment by a mutually agreed upon institutional investor at a price per share equal to the lowest price paid per share by a purchaser of the Company’s Preferred Shares. On November 2, 2017 the note was converted to 238,579 Preferred Shares at $2.70 per share. In accordance with the terms of the convertible note, the accrued interest in the amount of $145,833 was cancelled.

As an inducement to convert the convertible note, the Company issued a warrant to purchase 900,000 Preferred Shares, at an exercise price of $2.70 per share, to the holder of the convertible note, which was expenses in accordance with ASC 470 (see Note 12).