XML 70 R18.htm IDEA: XBRL DOCUMENT v2.4.0.8
Research, Consulting and Supply Agreements
12 Months Ended
Dec. 31, 2013
Research and Development [Abstract]  
Research, Consulting and Supply Agreements
Research, Consulting and Supply Agreements
Since October 2005, the Company has engaged the Sage Group, Inc. (“Sage”), a health care, technology oriented, strategy and transaction advisory firm, to assist the Company in obtaining a strategic alliance in Japan for the use of Ampligen® in treating Chronic Fatigue Syndrome (“CFS”). On December 14, 2011, the Company agreed to a Second Amended Adviser’s Agreement for twenty-four months with Sage, effective June 15, 2011, that amends and supersedes all other agreements and arrangements between the parties. Further, this Agreement may be terminated by the Company for cause after the Company delivers written notice to Adviser of a failure to perform and such failure is not cured within fifteen (15) days. Sage will assist the Company to identify, qualify, negotiate and close one or more licensing, partnering, alliance or similar transactions pertaining to the Company’s products and technology including, but not limited to, any and all uses of Ampligen®, Alferon® and related intellectual property as well as acquisition of companies in whole or in part and the sale or the merger of Company (“Transactions”). In consideration for services performed or attributed to Sage resulting in Transactions, Sage is entitled to a monthly “Adviser’s Fee” of $20,000, a one-time distribution of 200,000 Options that vest proportionately over 18 months with an exercise price of 110% of the closing price of the Company Stock on the NYSE Amex on the closing price of the day preceding the execution date of the agreement plus preapproved expenses along with the potential for a “Success Fee” of five percent (5)% of all consideration that is capped at $5,000,000 per annum for Transactions introduced to the Company by Sage. However, it is the intention of the parties that Sage be an active participant in all material Transactions of the Company. A Transaction can occur during the Term of the agreement or 18 months thereafter. The Company incurred approximately $337,000, $545,000 and $314,000 in fees to Sage for the years ended December 31, 2013, 2012 and 2011, respectively, pursuant to this and earlier agreements. R. Douglas Hulse, the Company’s former President and Chief Operating Officer, is a member and an Executive Director of Sage.
 
On October 2, 2011, the Company finalized their Fourth Amendment to a Supply Agreement, effective through March 11, 2014, with Jubilant Hollister-Stier Laboratories LLC of Spokane, Washington (“Hollister-Stier”), pursuant to which Hollister-Stier would formulate and package Ampligen® from the key raw materials that Hemispherx would supply to them. The Company is working towards a long-term amendment to the existing Supply Agreement which may contain additional fees as part of entering into the extension. The Company incurred no fees for the years ended December 31, 2013, 2012 and 2011, respectively, pursuant to this agreement.
 
On September 6, 2011, the Company executed an amended agreement with Armada Healthcare, LLC (“Armada”) to undertake the marketing, education and sales of Alferon N Injection® throughout the United States. This agreement also provides start-up along with ongoing sales and marketing support to the Company. On August 14, 2012, it was mutually agreed upon to extend this agreement for one year subject to the same terms and conditions. On July 23, 2013, the agreement with Armada was again extended for a one year period through August 14, 2014 under the same terms and conditions. The Company incurred no fees for the years ended December 31, 2013, 2012 and 2011, pursuant to original and amended agreements.
 
On September 6, 2011, the Company executed a new agreement with specialty distributor, BioRidge Pharma, LLC (”BioRidge”) to warehouse, ship, and distribute Alferon N Injection® on an exclusive basis in support of U.S. sales. On August 14, 2012, it was mutually agreed upon to extend this agreement for one year subject to the same terms and conditions. On July 23, 2013, the agreement with BioRidge was again extended for a one year period through August 14, 2014 under the same terms and conditions. The Company incurred approximately fees of $21,000, $21,000 and $5,250 for the years ended December 31, 2013, 2012 and 2011, respectively, pursuant to the agreement.
 
The Company has entered into agreements for consulting services, which are performed at medical research institutions and by medical and clinical research individuals. The Company's obligation to fund these agreements can be terminated after the initial funding period, which generally ranges from one to three years or on an as-needed monthly basis. During the years ending December 31, 2013, 2012 and 2011, the Company incurred approximately $1,769,000, $1,561,000 and $1,580,000, respectively, of consulting service fees under these agreements. These costs are charged to research and development expense as incurred.