XML 26 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
Related Party Transactions
3 Months Ended
Mar. 31, 2018
Related Party Transactions [Abstract]  
Related Party Transactions
Related Party Transactions

The Company and Intrexon Corporation (Intrexon) are parties to two distinct exclusive channel collaboration agreements including the Exclusive Channel Collaboration Agreement entered into in October 2012 and amended in June 2013 and January 2014 (as amended, the 2012 ECC) and the Exclusive Channel Collaboration Agreement entered into in December 2015 (the 2015 ECC). Pursuant to these agreements, the Company engages Intrexon for support services for the research and development of product candidates covered under the respective agreements and reimburses Intrexon for its cost for time and materials for such work. Additionally, the Company’s future commitments pursuant to these agreements include potential cash royalties and various developmental milestone payments. No royalties or milestone payments have been incurred to date.

For the three months ended March 31, 2018, the Company incurred total expenses of approximately $0.2 million with Intrexon as compared to approximately $1.5 million, for the three months ended March 31, 2017, for work performed under the 2012 ECC. During the same periods, no expenses were incurred for work performed under the 2015 ECC. Of the $0.2 million incurred during the three months ended March 31, 2018, approximately $0.1 million related to direct expenses for work performed by Intrexon and approximately $0.1 million related to pass-through costs. In addition to these costs, the Company recorded an approximately $0.5 million reduction to pass through costs under the 2012 ECC, due to a reduction in the estimate of disputed amounts owed to an Intrexon vendor for pass though costs. Of the $1.5 million incurred in the three months ended March 31, 2017, approximately $0.3 million related to direct expenses for work performed by Intrexon and approximately $1.2 million related to pass-through costs. These costs are presented in the Company’s “Condensed Consolidated Statement of Operations” as research and development expenses - related party.
   
As of March 31, 2018 and December 31, 2017, the Company had outstanding payables to Intrexon of approximately $0.4 million and $2.3 million, respectively. These amounts are presented in the Company’s “Condensed Consolidated Balance Sheets” as related party payable.

    In the second quarter of 2017, Intrexon notified the Company that it had received invoices for approximately $1.1 million in charges from a vendor who provides services to Intrexon and which are passed-through to the Company under the 2012 ECC. Additional charges have been presented since the second quarter of 2017, and the total of disputed charges at March 31, 2018, was approximately $1.4 million. Intrexon is disputing the volume and nature of these charges and has not invoiced the Company for these charges as of March 31, 2018. The Company has recorded approximately $0.2 million of such charges as its best estimate of the amount owed, which is a reduction of approximately $0.5 million from the $0.7 million recorded at December 31, 2017.

Randal J. Kirk is the chairman of the board and chief executive officer of Intrexon and, together with his affiliates, owns more than 50% of Intrexon’s common stock. Affiliates of Randal J. Kirk (including Intrexon) own approximately 29% of the Company’s common stock. Additionally, two of the Company’s directors, Julian Kirk (who is the son of Randal J. Kirk) and Marcus Smith, are employees of Third Security, LLC, which is an affiliate of Randal J. Kirk.

Affiliates of Randal J. Kirk (including Intrexon) participated in the Company’s private placement of convertible debt securities in September 2016, more fully described in Note 4, and were issued an aggregate of $6,762,500 in principal of Notes and accompanying Warrants to purchase an aggregate of 2,254,168 shares of the Company’s common stock. Affiliates of Randal J. Kirk (including Intrexon) participated in the Company's 2017 Series A Preferred Stock Offering (as defined below), more fully described in Note 10, and were issued an aggregate of 3,016 shares of Series A Preferred Stock (as defined below) and accompanying Series A Warrants to purchase 1,295,875 shares of the Company’s common stock. Additionally, affiliates of Randal J. Kirk (including Intrexon) participated in the Company’s December 2017 public offering, and were issued an aggregate of 2,727,273 shares of the Company’s common stock and accompanying warrants to purchase 2,727,273 shares of the Company’s common stock.