| 15. | Related Party Transactions |
Fraunhofer - Shared Employee
From July 1, 2011 through February 29, 2012, the Company employed an executive of Fraunhofer as its Chief Scientific Officer. During this time, the Company had the following contractual arrangements in place with Fraunhofer:
| ⋅ | The TTA, which requires the Company to make (1) semi-annual payments of $1 million for research and development services related to the commercialization of the Technology and (2) a minimum annual royalty payment, included in general and administrative expenses, of $200,000 to Fraunhofer. In addition, Fraunhofer is entitled to charge interest at the rate of prime plus 2% on certain unpaid balances. The interest expense for the year ended June 30, 2012 was approximately $0.1 million. The total expense recorded for the year ended June 30, 2012 was approximately $2.3 million. See Note 16 – Commitments and Contingencies for additional information. |
| ⋅ | In January 2011, the Company licensed its proprietary Technology to FioCruz/Bio-Manguinhos (“FioCruz”) of Brazil to develop, manufacture and sell certain vaccines. The Company engaged Fraunhofer as a contractor to provide the research and development services under license agreement to FioCruz on the Company’s behalf. The services are billed to FioCruz at Fraunhofer’s cost, so revenue is equivalent to expense and there is no profit. The revenue and expense for the year ended June 30, 2012 was approximately $1.3 million. |
| ⋅ | In December 2010, the Company and Fraunhofer entered into an approximately $1.7 million research services agreement to evaluate gene expression and protein production using the iBioLaunch platform. The expense recorded for the year ended June 30, 2012 was approximately $0.6 million. |
| ⋅ | In March 2011, the Company and Fraunhofer entered into an approximately $0.4 million research services agreement for the evaluation of the mechanism of immune-potentiating activity of lichenase (“LicKM”). The expense recorded for the year ended June 30, 2012 was approximately $0.3 million. |
| ⋅ | Pursuant to an agreement, Fraunhofer was required to reimburse the Company for certain costs incurred for patent protection of the Technology. The type and amount of costs to be reimbursed was an area of dispute between the parties. For the year ended June 30, 2012, the Company recorded a vendor concession of $0.1 million in general and administrative expenses to reduce the receivable to the agreed-upon settlement amount of approximately $0.2 million. |
Research and Development Services Vendor
In January 2012, the Company entered into an agreement with a vendor in which iBio’s President is a minority stockholder. The vendor performs laboratory feasibility analyses of gene expression, protein purification and preparation of research samples. The transaction has been conducted on an arm’s length basis at market terms. The accounts payable balance includes amounts due to this vendor of approximately $93,000 and $64,000 as of June 30, 2013 and 2012, respectively. Research and development expenses related to this vendor were approximately $424,000 and $225,000 for the years ended June 30, 2013 and 2012, respectively.
Consulting Services by Board Member
In February 2012, the Company entered into a business development consulting agreement with a member of the Board of Directors. The six month agreement included monthly payments of $15,000 and 60,000 stock options which vested in six equal monthly installments of 10,000 options per month. The options have an exercise price of $0.93 per share and will expire ten years from the date of grant. The consulting expense, included in general and administrative expenses, for the years ended June 30, 2013 and 2012 was $15,000 and $75,000, respectively. Additionally, members of the Board of Directors receive $10,000 per year of cash compensation for their service to the Company.