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Related Party Transactions

6 Months Ended

Jun. 30, 2019

10.	Related Party Transactions

Caribou Biosciences

In July 2014, the Company licensed from Caribou certain IP (the “Caribou License”) and entered into an arrangement under which Caribou provided research and development services. In addition, under the license agreement the Company agreed to pay 30 percent of Caribou’s patent prosecution, filing and maintenance costs under its IP license agreement with Caribou. Caribou owned less than 5 percent of the Company’s voting interests as of June 30, 2019.

On October 17, 2018, the Company initiated an arbitration proceeding with JAMS against Caribou asserting that Caribou is violating the terms and conditions of the Caribou License, as well as other contractual and legal rights, by using and seeking to license to third parties technology covered by two patent families (described in, for instance, PCT No. PCT/US2016/015145 and PCT No. PCT/US2016/064860, and related patents and applications) relating to specific structural or chemical modifications of guide RNAs, that were purportedly invented or controlled by Caribou, in the Company’s exclusive human therapeutic field. Caribou asserted that the two families of IP are outside the scope of the Company’s field of use under the license rights granted to the Company under the Caribou License. In accordance with the Caribou License, the Company submitted a demand for arbitration seeking among other relief a declaration that the disputed IP was included within the scope of its field of use under the Caribou License. A decision from the arbitration panel is expected during the third quarter of 2019.

The Company recognized general and administrative expense of $0.7 million and $0.9 million during the three and six-month periods ended June 30, 2019 and $0.3 million and $0.5 million during the three and six-month periods ended June 30, 2018, respectively, related to the Company’s obligation to pay 30 percent of Caribou’s patent prosecution, filing and maintenance costs.

Novartis Institutes for BioMedical Research

In connection with its entry into the collaboration and license agreement and related equity transactions with Novartis, in 2015 the Company issued Novartis capital stock, and in May 2016, Novartis acquired 277,777 shares of the Company’s common stock in a private placement transaction concurrent with the Company’s IPO. Novartis owned less than 10 percent of the Company’s voting interests as of June 30, 2019.

The Company recognized collaboration revenue of $4.8 million and $9.5 million during the three and six months ended June 30, 2019 and $2.4 million and $4.7 million during the three and six months ended June 30, 2018, respectively, related to the Novartis Agreement. As of June 30, 2019 and December 31, 2018, the Company had recorded accounts receivable of $1.0 million and $6.0 million, respectively, and deferred revenue of $7.0 million and $14.5 million, respectively, related to this collaboration. Refer to Note 5, Collaborations, for additional information regarding this collaboration agreement.