Note 8 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

8

. Commitments and Contingencies

Operating Leases

At

December 31, 2018,

we leased corporate office space in New York City, pursuant to a lease agreement expiring in

September 2030 (

subject to an early termination right), and additional office space in Lund, Sweden, pursuant to a lease agreement expiring in

December 2021.

Rental payments are recognized as rent expense on a straight-line basis over the term of the lease. In addition to rents due under these agreements, we are obligated to pay additional facilities charges, including utilities, taxes and operating expenses.

As of

December 31, 2018,

future minimum annual payments under all operating lease agreements are as follows:

Years ending	Minimum Annual
December 31,	Payments
2019	$	1,935
2020		1,969
2021		2,003
2022		2,134
2023		2,173
Thereafter		16,375
Total	$	26,589

Rental expense totaled approximately

$1.9

million,

$1.9

million, and

$1.2

million for

2018,

2017,

and

2016,

respectively. For

2018,

2017

and

2016,

rent expense exceeded amounts paid by

$0.3

million,

$0.3

million and

$0.2

million, respectively. Additional facility charges, including utilities, taxes, and operating expenses, for

2018,

2017,

and

2016

were approximately

$0.1

million,

$0.1

million, and

$1.1

million, respectively.

Licensing

,

Service

,

and

Supply

Agreements

We have entered into intellectual property-based license and service agreements in connection with product development programs, and have incurred milestone, license and sublicense fees and supply costs, included in research and development expenses, totaling approximately

$471

thousand,

$343

thousand, and

$324

thousand during

2018,

2017,

and

2016,

respectively.

	Paid from inception/acquisition to December 31, 2018		Future Commitments (1)		Terms
Amgen Fremont, Inc. (formerly Abgenix)	$	1,350	$	5,750	Milestones and royalties to use XenoMouse ® technology for generating fully human antibodies to PSMA LLC’s PSMA antigen.
Former member of PSMA LLC	$	466	$	52,188	Annual minimum royalty payments and milestones to use technology related to PSMA.
Selexis Commercial License Agreement	$	125	$	1,799	Milestones and royalties to use Selexis technology related to PSMA Antibodies.
University of Zurich and the Paul Scherrer Institute	$	565	$	1,125	Annual maintenance and license fee payments, milestones and royalties in respect of licensed technology related to 1404.
University of Western Ontario 2003 Agreement	$	39	$	145	Annual minimum royalty, administration and milestone payments in respect of licensed technology related to AZEDRA.
Johns Hopkins University Technology	$	250	$	2,685	Annual minimum royalty payments and milestones to use technology related to PyL.

(

1

)

Amounts based on known contractual obligations as specified in the respective license agreements, which are dependent on the achievement or occurrence of future milestones or events and exclude amounts for royalties which are dependent on future sales and are unknown.

In addition, we are planning to out-license or terminate non-germane licenses and service agreements, as to which we have paid

$5.0

million through

December 31, 2018,

and have future commitments of

$28.5

million, subject to occurrence of future milestones or events.

Consulting Agreements

As part of our research and development efforts, we have from time to time entered into consulting agreements with external scientific specialists. These agreements contain various terms and provisions, including fees to be paid by us and royalties, in the event of future sales, and milestone payments, upon achievement of defined events, payable by us. Certain of these scientists are advisors to us, and some have purchased our common stock or received stock options which are subject to vesting provisions. We have recognized expenses with regard to the consulting agreements of

$300

thousand,

$326

thousand, and

$164

thousand for

2018,

2017,

and

2016,

respectively.

Legal Proceedings

On

January 4, 2017,

we settled all claims against us under a federal action brought in

2010

by a former employee, where such former employee had complained that we had violated the anti-retaliation provisions of the federal Sarbanes-Oxley law by terminating him. In connection with this settlement, we and the former employee exchanged mutual releases and we paid an aggregate sum of

$4.0

million to the former employee and his attorneys.

Abbreviated New Drug Application Litigation

s

RELISTOR Subcutaneous Injection - Mylan

Paragraph IV Certifications

On or about

October 6, 2015,

November 20, 2015,

December 22, 2015,

and

December 23, 2015,

Progenics, Salix Pharmaceuticals, Inc. (“Salix”) and Wyeth LLC (“Wyeth”) received

four

separate notifications of a Paragraph IV certification for RELISTOR (methylnaltrexone bromide) subcutaneous injection, for certain patents that are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, also known as “the Orange Book.” The certifications resulted from the filing by Mylan Pharmaceuticals Inc. of an Abbreviated New Drug Application (“ANDA”) with the FDA, challenging such patents for RELISTOR subcutaneous injection and seeking to obtain approval to market a generic version of RELISTOR subcutaneous injection before some or all of these patents expire.

 

District Court Actions

Progenics, Salix, Valeant (now Bausch Health Companies Inc., “Bausch”), and Wyeth filed suit against Mylan Pharmaceuticals, Inc. and Mylan Inc. in the District of New Jersey on

November 19, 2015 (

2:15

-cv-

8180

-SRC-CLW) seeking declaratory judgment of infringement of U.S. Patent Nos.

8,247,425,

8,420,663,

8,552,025,

and

8,822,490

based upon Mylan Pharmaceutical Inc.’s filing of its ANDA seeking to obtain approval to market a generic version of RELISTOR vials before some or all of these patents expire. On

February 4, 2016,

Progenics, Salix, Bausch, and Wyeth filed an amended complaint, identifying Mylan Laboratories Ltd. as an additional Defendant, and further seeking declaratory judgment of infringement of U.S. Patent

No.

9,180,125.

Progenics, Salix, Bausch, and Wyeth filed suit against Mylan Pharmaceuticals, Inc., Mylan Laboratories Ltd., and Mylan Inc. in the District of New Jersey on

January 4, 2016 (

2:16

-cv-

00035

-SRC-CLW) seeking declaratory judgment of infringement of U.S. Patent Nos.

8,247,425,

8,420,663,

8,552,025,

and

8,822,490

based upon Mylan Pharmaceutical Inc.’s filing of its ANDA seeking to obtain approval to market a generic version of RELISTOR prefilled syringes before some or all of these patents expire. On

January 25, 2016,

Progenics, Salix, Bausch, and Wyeth filed an amended complaint, further seeking declaratory judgment of infringement of U.S. Patent

No.

9,180,125.

Progenics, Salix, Bausch, and Wyeth filed suit against Mylan Pharmaceuticals, Inc., Mylan Laboratories Ltd., and Mylan Inc. in the District of New Jersey on

September 1, 2017 (

2:17

-cv-

06714

-SRC-CLW) seeking declaratory judgment of infringement of U.S. Patent

No.

9,669,096

based upon Mylan Pharmaceutical Inc.’s filing of ANDAs seeking to obtain approval to market generic versions of RELISTOR vials and prefilled syringes before the patents expires. On

September 18, 2017,

Progenics, Salix, Bausch, and Wyeth filed an amended complaint, further seeking declaratory judgment of infringement of U.S. Patent

No.

9,492,445.

The

2:15

-cv-

8180

-SRC-CLW,

2:16

-cv-

00035

-SRC-CLW,

2:15

-cv-

08353

-SRC-CLW, and

2:16

-cv-

00889

-SRC-CLW actions were consolidated into a single action in the District of New Jersey (

2:15

-cv-

08180

-SRC-CLW). On

May 1, 2018,

the Court granted Plaintiffs’ motion for partial summary judgment as to the validity of claim

8

of U.S. Patent

No.

8,552,025.

On

May 23, 2018,

the Court entered an order for final judgment under Fed. R. Civ. P.

54

(b) in favor of Plaintiffs and against Mylan as to claim

8

of the

’025

patent.

Litigation in the

2:17

-cv-

06714

-SRC-CLW action is underway. Fact discovery in this action has closed and expert discovery deadlines have

not

yet been set. This action has been consolidated for purposes of trial only with the

2:15

-cv-

8180

action.

Federal Circuit Appeal

On

May 25, 2018,

Mylan filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit. The matter is currently pending on appeal at the Federal Circuit.

On

July 9, 2018,

Bausch and Salix filed a motion to disqualify Katten Muchin Rosenman LLP as counsel for Mylan. On

July 17, 2018,

an order was issued stating the briefing on the merits of Mylan’s appeal pending the disposition of the motion to disqualify. Oral argument was held on

September 12, 2018.

A decision disqualifying Katten Muchin Rosenman LLP as counsel for Mylan was issued on

February 8, 2019,

by the Federal Circuit. Merits briefing is currently underway. The deadline for submission of Mylan’s opening brief is

April 9, 2019.

RELISTOR Tablets - Actavis

Paragraph IV Certifications

On or about

October 24, 2016

and

October 24, 2017,

Progenics, Salix, Bausch and Wyeth received

two

separate notifications of a Paragraph IV certification for RELISTOR (methylnaltrexone bromide) tablets, for certain patents that are listed in the FDA’s Orange Book. The certification resulted from the filing by Actavis Laboratories Fl., Inc. (“Actavis”) of an ANDA with the FDA, challenging such patents for RELISTOR tablets and seeking to obtain approval to market a generic version of RELISTOR tablets before some or all of these patents expire.

District Court Actions

Progenics, Salix, Bausch, and Wyeth filed suit against Actavis Laboratories FL, Inc., Actavis LLC, Teva Pharmaceuticals USA, Inc., and Teva Pharmaceuticals Industries Ltd. in the District of New Jersey on

December 6, 2016 (

2:16

-cv-

09038

-SRC-CLW) seeking declaratory judgment of infringement of U.S. Patent Nos.

8,420,663,

8,524,276,

8,956,651,

9,180,125,

and

9,314,461

based upon Actavis’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR tablets before some or all of these patents expire.

Progenics, Salix, Bausch, and Wyeth filed suit against Actavis Laboratories FL, Inc., Actavis LLC, Teva Pharmaceuticals USA, Inc., and Teva Pharmaceuticals Industries Ltd. in the District of New Jersey on

December 8, 2017 (

2:17

-cv-

12857

-SRC-CLW) seeking declaratory judgment of infringement of U.S. Patent Nos.

9,724,343

and

9,492,445

based upon Actavis’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR tablets before some or all of these patents expire.

The

2:16

-cv-

09038

-SRC-CLW and

2:17

-cv-

12857

-SRC-CLW actions were consolidated into a single action in the District of New Jersey (

2:16

-cv-

09038

-SRC-CLW). Litigation is underway and is currently in the expert discovery phase.

European Opposition Proceedings

In addition to the above described ANDA notifications, in

October 2015,

Progenics received notices of opposition to

three

European patents relating to methylnaltrexone. Notices of opposition against

EP1615646

were filed on

September 24, 2015

separately by each of Actavis Group PTC ehf and Fresenius Kabi Deutschland GmbH. Notices of opposition against

EP2368553

were filed on

September 29, 2015

and

September 30, 2015

by Fresenius Kabi Deutschland GmbH and Actavis Group PTC ehf, respectively. Notices of opposition against

EP2368554

were filed on

September 24, 2015

separately by each of Actavis Group PTC ehf and Fresenius Kabi Deutschland GmbH. On

May 11, 2017,

the opposition division provided notice that

EP2368553

will be revoked. On

June 28, 2017,

the opposition division provided notice that

EP1615646

will be revoked. On

July 4, 2017,

the opposition division provided notice that

EP2368554

will be revoked. Each of these matters are on appeal with the European Patent Office.

For each of the above-described proceedings, we and Bausch continue to cooperate closely to vigorously defend and enforce RELISTOR intellectual property rights. Pursuant to the RELISTOR license agreement between Progenics and Bausch, Bausch has the

first

right to enforce the intellectual property rights at issue and is responsible for the costs of such enforcement.

We are or

may

be from time to time involved in various other disputes, governmental and/or regulatory inspections, inquires, investigations and proceedings that could result in litigation, and other litigation matters that arise from time to time. The process of resolving matters through litigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters will adversely affect us, our results of operations, financial condition, and cash flows.

PSMA-

617

German District Court

Litigation

We announced a lawsuit and associated worldwide patent ownership dispute based on our claims to certain inventions related to PSMA-

617,

a PSMA-targeted radiopharmaceutical compound under development for the treatment of prostate cancer that is the subject of certain European Patent Applications filed by the University of Heidelberg (“the University”).

On

November 8, 2018,

MIP filed a complaint against the University in the District Court of Mannheim in Germany. In this Complaint, the Company claims that the discovery and development of PSMA-

617

was related to work performed under a research collaboration sponsored by MIP. MIP alleged that the University breached certain contracts with MIP and that MIP is the co-owner of inventions embodied in certain worldwide patent filings related to PSMA-

617,

currently pending in the Europe and the United States that were filed by the University in its own name. On

February 27, 2019,

Endocyte, Inc., a wholly owned subsidiary of Novartis AG, filed a motion to intervene in the German litigation. Endocyte is the exclusive licensee of the patent rights that are the subject of the German proceedings.

On

November 27, 2018,

MIP requested that the European Patent Office (“EPO”) stay the examination of European Patent (EP)

3

038

996

A1

(EP

14

799

340.6

) and of the Divisional Applications EP

18

172

716.5,

EP18

184

296.4,

and EP

18

203

547.7

pending a decision from the German District court on MIP’s Complaint. On

December 10, 2018,

the EPO granted MIP’s request and stayed the examination of the patent and patent applications effective

November 27, 2018.

Likewise, on

December 20, 2018,

MIP filed a Confirmation of Ownership with the United States Patent and Trademark Office (“USPTO”) in the corresponding US patent applications (US Serial Nos.

15/131,118;

16/038,729

and

16/114988

). MIP’s filing with the USPTO takes the position that, in light of the collaboration and contracts between MIP and the University, MIP is the co-owner of these pending U.S. patent applications.