Quarterly report pursuant to Section 13 or 15(d)

Research and Development

v3.10.0.1
Research and Development
9 Months Ended
Sep. 30, 2018
Research and Development [Abstract]  
Research and Development

Note 14 - Research and Development

 

Devicix Prototype Manufacturing Agreement

 

In November 2013, the Company accepted a proposal from Devicix, a Minneapolis, Minnesota based FDA registered contract designer and developer, to develop a commercially viable prototype of its product that could be used to receive regulatory approval from the FDA and other international agencies for use on humans to relieve pain associated with Facet Joint Syndrome. Through September 30, 2018, the Company has incurred approximately $1,947,000 in fees to Devicix, of which approximately $66,000 and $7,000, respectively, was included in accounts payable as of September 30, 2018 and December 31, 2017.

 

The development work commenced in December 2013. The total estimated cost of this work at contract signing was $960,000; however, the terms of the proposal allow either the Company or the designer and developer to cancel the development work with 10-days’ notice.

 

The Company incurred expenses of approximately $42,000 and $98,000, respectively, for the three and nine months ended September 30, 2018. The Company incurred expenses of approximately $34,000 and $273,000, respectively, for the three and nine months ended September 30, 2017.

 

Denervex Generator Manufacturing Agreement

 

The DenerveX device requires a custom electrocautery generator for power. As described in Note 8, in November 2014, the Company contracted with Bovie to customize one of their existing electrocautery generators for use with DenerveX Device, and then manufacture that unit on a commercial basis once regulatory approval for the DenerveX is obtained. The Bovie agreement required a base $295,000 development fee to customize the unit, plus additional amounts if further customization was necessary beyond predetermined estimates.

 

The Company did not incur any expenses to Bovie for the three and nine months ended September 30, 2018. The Company incurred approximately $3,000 and $33,000, respectively, for the three and nine months ended September 30, 2017. Through September 30, 2018, the Company has incurred approximately $422,000 to Bovie related to this agreement. The manufacturing agreement is complete as of September 30, 2018, and the Company does not expect to incur any more expenses related to the agreement.

 

Nortech Manufacturing Agreement

 

In November 2014, the Company selected Nortech Systems Inc. (“Nortech”), a Minneapolis, Minnesota based FDA registered contract manufacturer, to produce 315 DenerveX devices from the prototype supplied by Devicix for use in final development and clinical trials. The agreement with Nortech includes agreed upon per unit prices for delivery of the devices. Actual work on development of the final units began in November 2014.

 

The Company incurred fees of approximately $0 and $107,000, respectively, to Nortech for the three and nine months ended September 30, 2018 related to the manufacturing agreement. The Company incurred fees of approximately $7,400 and $147,000, respectively, to Nortech for the three and nine months ended September 30, 2017. Through September 30, 2018, the Company has incurred expenses of approximately $997,000 to Nortech related to the manufacturing agreement.