Note 4 – Accounts Payable

Accounts payable consisted of the following (in thousands):

Schedule of Accounts Payable 

The Company relies on a third-party contract manufacturing operation to produce and/or test our compounds used in our potential product candidates.

On October 5, 2020, the Company entered into a Master Services Agreement with a third-party product manufacturer to perform biologic development and manufacturing services on behalf of the Company. Associated with this, the Company has subsequently signed five Statements of Work (“SOWs”) for the research and development of products for use in clinical trials. The Company’s commitments in relation to these SOWs and any related Change Orders totaled approximately $15.6 million.

On August 24, 2022, the Company entered into a payment agreement with this third-party manufacturer and issued 40,743 shares of common stock with a fair value of $3.2 million as part of that agreement. The shares were valued at $79.80 per share based on the closing price of the Company’s common stock on the date of the agreement. As part of the agreement, the Company also paid this third-party manufacturer $1.3 million on September 1, 2022, $1.0 million on October 3, 2022, and $1.0 million in November 2022. In addition, the Company and the third-party manufacturer agreed that services to be rendered in future periods, as specified in the agreement, will be paid or settled at the Company’s discretion, in a combination of cash and issuance of the Company’s common stock. The agreement also amended certain agreements executed in prior years which eliminated future financial commitments of the Company.

During the year ended December 31, 2022, the Company recorded research and development expenses in the aggregate of $3.6 million for services rendered by this third-party product manufacturer and made additional payments of $900,000. As of December 31, 2022, the outstanding balance due to this third-party product manufacturer amounted to $2.3 million.

During the year ended December 31, 2023, the Company recorded research and development expenses in the aggregate of $4.6 million for services rendered by this third-party product manufacturer, made additional payments of $2.2 million, issued 57,436 additional shares of stock in settlement of $1.2 million of accounts payable with a fair value of $1.1 million, which resulted in a gain of $547,000 on that settlement. The common stock issued were valued at the respective date of their issuance. As of December 31, 2023, the outstanding balance due to this third-party product manufacturer amounted to $3.5 million.