| Total Operating Expenses | 11.
Total Operating Expenses
Research and development costs are comprised of allocated employee
costs, the costs of materials and laboratory consumables,
intellectual property and license costs and allocated other
costs.
A breakdown of total operating expenses is presented as
follows:
Three-month period ended June 30,
Six-month period ended June 30,
2018 2017 2018 2017
(euros in thousands)
Manufacturing costs 5,580 2,236 9,858 5,611
IP and license costs 492 603 844 968
Personnel related R&D 2,107 1,771 3,808 3,303
Other research and development costs 4,344 3,810 8,311 5,545
Total research and development costs 12,523 8,420 22,821 15,427
Management and administration costs 2,639 3,492 5,491 7,694
Litigation costs 552 104 849 394
Other operating expenses 2,745 2,173 5,134 3,726
Total other expenses 3,297 2,277 5,983 4,120
Total operating expenses 18,459 14,189 34,295 27,241
Research and development costs were €12.5 million and
€22.8 million for the three and six months ended
June 30, 2018, respectively, as compared to
€8.4 million and €15.4 million for the three-
and six-month MCLA-128, MCLA-117, MCLA-158 MCLA-145.The MCLA-128 MCLA-158
A breakdown of other research and development costs is presented as
follows:
Three-month period ended June 30,
Six-month period ended June 30,
2018 2017 2018 2017
(euros in thousands)
Discovery and pre-clinical 1,078 1,698 1,763 2,076
Clinical costs 1,850 1,292 4,248 2,002
Other research and development costs 1,416 820 2,300 1,467
Total other research and development costs 4,344 3,810 8,311 5,545
Other research and development costs consist mainly of laboratory
supplies and depreciation expense related to research and
development activities, which cannot be specifically allocated to a
research project.
Litigation costs
On March 11, 2014, Regeneron Pharmaceuticals, Inc.
(“Regeneron”) filed a complaint in the United States
District Court for the Southern District of New York (the
“Court”), alleging that the Company was infringing on
one or more claims in Regeneron’s U.S. Patent
No. 8,502,018, entitled “Methods of Modifying Eukaryotic
Cells” (the “018 Patent”). On July 3, 2014,
the Company filed a response to the complaint, denying
Regeneron’s allegations of infringement and raising
affirmative defenses, and filed counterclaims seeking, among other
things, a declaratory judgment that the Company did not infringe
the patent and that the patent was invalid. The Company
subsequently filed amended counterclaims during the period from
August to December 2014, seeking a declaratory judgment of
unenforceability of the patent due to Regeneron’s commission
of inequitable conduct.
On November 21, 2014, the Court found that there was clear and
convincing evidence that a claim term present in each of the patent
claims was indefinite and granted the Company’s proposed
claim constructions. On February 24, 2015, the Court entered
partial judgment in the proceeding, on the grounds that the Company
did not infringe each of the patent claims, and that each of the
patent claims were invalid due to indefiniteness. On
November 2, 2015, the Court found Regeneron had withheld
material information from the United States Patent and Trademark
Office during prosecution of the patent, and Regeneron had engaged
in inequitable conduct and affirmative egregious misconduct in
connection with the prosecution of the patent. On December 18,
2015, Regeneron filed an appeal of the Court’s decision. On
July 27, 2017, the U.S. Court of Appeals for the Federal
Circuit affirmed the trial court’s conclusion that Regeneron
had engaged in inequitable conduct before the United States Patent
and Trademark Office and affirmed that the ‘018 patent is
unenforceable. Regeneron petitioned for a panel rehearing and
rehearing en banc of this decision by the Federal Circuit on
September 12, 2017, which the Company responded to and opposed
on November 2, 2017. On December 26, 2017, the full
Federal Circuit denied Regeneron’s request to rehear the
matter.
The case returned to the District Court to adjudicate the
Company’s motion requesting that Regeneron pay the
Company’s attorneys’ fees and costs incurred as a
result of Regeneron filing suit. On March 26, 2018, the trial
court granted the Company’s motion for attorneys’ fees,
expert fees, and costs and ordered the parties to address the
amount of award. The Company provided a detailed explanation of its
attorneys’ fees, expert fees, and costs of such award, which
Regeneron responded to seeking a reduction of the amount. The
matter was fully briefed as of May 18, 2018, and the Court
issued an Order on June 25, 2018, which published on
July 10, 2018, granting the Company’s motion for
$8,332,453.46 in attorneys’ fees, $465,390.34 in expert fees,
and $1,717,100.69 in litigation expenses and costs, along with
interest. Regeneron has appealed the decision awarding
attorneys’ fees to the Company to the Federal Circuit. On
May 25, 2018, Regeneron filed a petition for writ of
certiorari seeking review by the Supreme Court of the United States
of the decision affirmed by the Federal Circuit. The
Company’s brief in opposition was filed on August 8,
2018.
On March 11, 2014, Regeneron served a writ in the Netherlands
alleging that the Company was infringing one or more claims of the
European patent EP 1 360 287 B1. The Company opposed the patent in
June 2014. On September 17, 2014, Regeneron’s patent EP
1 360 287 B1 was revoked in its entirety by the European Opposition
Division of the European Patent Office (the “EPO”). In
Europe, an appeal hearing occurred in October and November 2015 at
the Technical Board of Appeal for the EPO at which time the patent
was reinstated to Regeneron with amended claims. On May 25,
2018, at Regeneron’s request, a hearing before the Technical
Board of Appeals for the EPO was scheduled for September 13,
2018, to address whether the description of EP 1 360 287 B1 patent
having claims amended during the course of opposition complies with
Art. 84 EPC, Art. 123(2) EPC and Rule 80 EPC. The Company believes
that its current business operations do not infringe the patent
reinstated to Regeneron with amended claims because it believes it
has not used the technology or methods claimed under the amended
claims. The Dutch litigation procedure is stayed.
The costs incurred in the above litigation and opposition were
€0.6 million and €0.8 million for the three-
and six-month six-month
On July 15, 2014, Regeneron filed a notice of opposition
against the Company’s EP 2314629 patent (the “EP
’629 patent”), entitled “Recombinant Production
of Mixtures of Antibodies,” in the EPO. The notice asserted,
as applicable, added subject matter, lack of novelty, lack of
inventive step, and insufficiency. The Company responded on
February 24, 2015. Following an oral hearing before the
Opposition Division of the EPO on June 22, 2016, the
Opposition Division upheld the EP ’629 Patent with
amendments. Both Regeneron and the Company filed a notice of appeal
followed by grounds of appeal on December 1 and 4, 2017,
respectively, with further proceedings to follow.
On August 11, 2014, Regeneron filed a notice of opposition
against the Company’s EP 2147594 (the “EP ’594
patent”), entitled “Antibody
Producing Non-Human
On April 5, 2018, Regeneron and an unnamed third party filed
notices of opposition against the Company’s EP 2604625 patent
(the “EP ‘625 patent”), entitled
“Generation of Binding Molecules,” in the EPO. The
notices asserted, as applicable, added subject matter, lack of
novelty, lack of inventive step, and insufficiency. The Company
intends to timely respond to these submissions with proceedings to
be ongoing.
As each of these proceedings continues, the Company is not able to
predict the outcome of, or estimate a possible gain or a range of
possible loss, if any, related to the above actions. Based on the
current facts and circumstances, no provision has been recognized
under IAS 37 related to contingent liabilities. |
