Note 8 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

8

. Commitments and Contingencies

Operating Leases

At

December 31, 2019,

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

September 2030 (

subject to an early termination right), (ii) radiopharmaceutical manufacturing facility located in Somerset, New Jersey under a sublease agreement expiring in

November 2028,

and (iii) additional office space in Lund, Sweden, pursuant to a lease agreement expiring in

December 2021.

We also lease certain office equipment under noncancelable operating leases.

Under ASU

2016

-

02,

adopted on

January 1, 2019,

we determine whether an arrangement is or contains a lease at its inception. We recognize lease liabilities based on the present value of the minimum lease payments

not

yet paid, by using the lease term and discount rate determined at lease commencement. As our leases do

not

provide an implicit rate, we use our incremental borrowing rate of

9.5%

commensurate with the underlying lease terms to determine the present value of our lease payments. Rental payments are recognized as rent expense on a straight-line basis over the term of the lease and for the year ended

December 31, 2019,

we recognized rent expense in the amount of

$2.3

million. Our leases have remaining lease terms of

one

year to

11

years,

one

of which includes an option to extend the lease for

five

years. For the year ended

December 31, 2019,

cash payments against operating lease liabilities totaled

$2.0

million.

The information related to our leases as of

December 31, 2019

is as follows (in thousands):

Operating leases	December 31, 2019
Operating ROU lease assets, noncurrent	$	13,493
Operating lease liabilities, current		599
Operating lease liabilities, noncurrent		15,005

As of

December 31, 2019,

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

Years ending December 31,	Minimum Annual Payments
2020	$	2,040
2021		2,076
2022		2,213
2023		2,255
2024		2,297
Thereafter		14,510
Total future minimum lease payments		25,391
Less imputed interest		(9,787	)
Total lease liabilities	$	15,604

Before the adoption of ASU

2016

-

02,

rental expense totaled approximately

$1.9

million and

$1.9

million for

2018

and

2017,

respectively. For

2018

and

2017,

rent expense exceeded amounts paid by

$0.3

million and

$0.3

million, respectively.

Additional facility charges, including utilities, taxes, and operating expenses, were approximately

$

0.1

million per year for

2019,

2018,

and

2017.

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

$0.4

million,

$0.5

million, and

$0.3

million during

2019,

2018,

and

2017,

respectively.

	Paid from inception/acquisition to December 31, 2019		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	$	504	$	52,188	Annual minimum royalty payments and milestones to use technology related to PSMA.
Selexis Commercial License Agreement	$	124	$	1,824	Milestones and royalties to use Selexis technology related to PSMA Antibodies.
University of Zurich and the Paul Scherrer Institute	$	590	$	925	Annual maintenance and license fee payments, milestones and royalties in respect of licensed technology related to 1404.
University of Western Ontario 2003 Agreement	$	41	$	151	Annual minimum royalty, administration and milestone payments in respect of licensed technology related to AZEDRA.
Johns Hopkins University Technology	$	435	$	2,500	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

$5.1

million through

December 31, 2019,

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

$0.2

million,

$0.3

million, and

$0.3

million for

2019,

2018,

and

2017,

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 Litigations

RELISTOR Subcutaneous Injection

Paragraph IV Certifications - Mylan

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.

Paragraph IV Certification – Actavis

On or about

October 27, 2015,

January 5, 2016,

and

January 8, 2016,

Progenics, Salix and Wyeth received

three

separate notifications of a Paragraph IV certification for certain patents for RELISTOR (methylnaltrexone bromide) subcutaneous injection, for certain patents that are listed in the FDA’s Orange Book. The certifications resulted from the filing by Actavis LLC of an 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.

Progenics, Salix, Bausch, and Wyeth filed suit against Actavis LLC, Actavis, Inc., Actavis Elizabeth LLC, and Allergan PLC fka Actavis PLC in the District of New Jersey on

November 30, 2015 (

2:15

-cv-

08353

-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 Actavis LLC’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR prefilled syringes before some or all of these patents expire. On

February 18, 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 Actavis LLC, Actavis, Inc., Actavis Elizabeth LLC, and Allergan PLC fka Actavis PLC in the District of New Jersey on

February 18, 2016 (

2:16

-cv-

00889

-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 Actavis LLC’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR vials before some or all of these patents expire. Progenics, Salix, Bausch, and Wyeth filed suit against Actavis LLC, Teva Pharmaceuticals USA, Inc., and Teva Pharmaceutical Industries Ltd. in the District of New Jersey on

August 18, 2017 (

2:17

-cv-

07206

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

9,669,096

and

9,492,445

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

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.

The

2:17

-cv-

06714

-SRC-CLW and

2:17

-cv-

07206

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

2:17

-cv-

06714

-SRC-CLW). 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.

Settlement Agreement - Actavis

On

May 25, 2018,

Progenics, Bausch, Salix, Wyeth (Progenics, Bausch and Salix, each “Plaintiff” and collectively “Plaintiffs”) and Actavis LLC (“Actavis”) entered into a Settlement and License Agreement (the “Actavis Agreement”) relating to Civil Action

No.

2:15

-cv-

08180

and Civil Action

No.

2:17

-cv-

06714.

The following is a summary of the material terms of the Actavis Agreement. The Actavis Agreement provides for a full settlement and release by both Plaintiffs and Actavis of all claims that were or could have been asserted in the district court cases and all resulting damages or other remedies. Plaintiffs and Actavis have agreed to and, in fact, filed a Stipulated Consent Judgment and Injunction after the execution of the Actavis Agreement. Plaintiffs and Actavis have further acknowledged and agreed that the

30

-month stay imposed by the FDA in relation to the approval of Actavis’ ANDAs for the Actavis Products (the “Actavis ANDAs”) should be terminated.

Under the Actavis Agreement, Plaintiffs grant Actavis a non-exclusive, royalty-free, non-transferable, non-sublicensable, limited license under the Patents-In-Suit to make, import, and sell each of the Actavis Products in the U.S. beginning on the earliest of (a)

January 1, 2028; (

b) for each of the Actavis Products, if Actavis is a “First Applicant” (as defined in

21.

U.S.C. §

355

(j)(

5

)(B)(iv)(II)) and has

not

forfeited, relinquished or otherwise waived its

180

-day exclusivity,

180

days prior to the date on which an entity

not

a First Applicant is permitted to commercially sell such Actavis Product in the U.S. under authorization from Plaintiffs; (c) for each of the Actavis Products, if Actavis either is

not

a First Applicant or otherwise has forfeited, relinquished or otherwise waived its

180

-day exclusivity, the earlier of (i)

181

days after any

third

party that is a First Applicant markets a corresponding single-dose vial or pre-filled syringe that has been FDA approved or submitted for approval under an ANDA as a generic version of RELISTOR

®

Injection for subcutaneous use (the “Generic Products”) in the U.S., or (ii) the date on which a

third

party that is either

not

a First Applicant or otherwise has waived its

180

-day exclusivity markets, or is

first

authorized by Plaintiffs to begin marketing, such Generic Product; (d) for each of the Actavis Products, the date on which a

third

party that has sought or received approval from the FDA under a “New Drug Application” (as defined in the US Federal Drug and Cosmetic Act and regulations promulgated thereunder) (“NDA”) for a corresponding single-dose vial or pre-filled syringe of methylnaltrexone bromide for subcutaneous use for which RELISTOR

®

Injection is the listed drug markets or is

first

authorized by Plaintiffs to begin marketing such corresponding product; (e) for each of the Actavis Products, the date on which a corresponding generic version of the single-dose vial or pre-filled syringe of methylnaltrexone bromide for subcutaneous use approved under NDA

No.

021964

for RELISTOR

®

Injection that is marketed or intended for marketing in the U.S. without the RELISTOR

®

trademark (an “Authorized Generic Product”) is

first

marketed in the U.S. by a

third

party; or (f) the earlier of (i) the date on which a final court decision is entered holding that each of the unexpired claims of the Patents-In-Suit are invalid and/or unenforceable, or (ii) the date on which the Patents-In-Suit have expired, been permanently abandoned, or delisted from the Orange Book. The Actavis Agreement also gives Actavis a limited right to grant sublicenses to its affiliates for certain pre-marketing activities.

Federal Circuit Appeal

On

May 25, 2018,

Mylan filed a Notice of Appeal to the United States Court of Appeals for the Federal Circuit (“CAFC”). 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 has concluded. Mylan submitted its opening brief on

April 9, 2019.

Plaintiffs filed their responsive brief on

July 2, 2019.

Mylan filed its reply brief on

August 6, 2019.

Oral argument was held

February 4, 2020.

We await the decision from the CAFC which we anticipate in a few months.

Paragraph IV Certification - Par

On or about

July 15, 2017,

Progenics, Salix and Wyeth received notification of a Paragraph IV certification for RELISTOR (methylnaltrexone bromide) subcutaneous injection, for certain patents that are listed in the FDA’s Orange Book. The certification resulted from the filing by Par Sterile Products, LLC (“Par Sterile”) of an 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, Bausch, and Wyeth filed suit against Par Sterile Products, Par Pharmaceutical, Inc. (“Par Pharmaceutical” and, together with Par Sterile, “Par”), and Endo International plc in the District of New Jersey on

August 25, 2017 (

2:17

-cv-

06449

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

8,247,425,

8,420,663,

8,552,025,

8,822,490,

9,180,125,

and

9,669,096

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

Progenics, Salix, Bausch, and Wyeth filed suit against Par Sterile Products, Par Pharmaceutical, and Endo International plc in the Southern District of New York on

August 25, 2017 (

1:17

-cv-

06557

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

8,247,425,

8,420,663,

8,552,025,

8,822,490,

9,180,125,

and

9,669,096

based upon Par Sterile Product’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR vials before some or all of these patents expire. This action was voluntarily dismissed on

November 30, 2017.

Settlement Agreement - Par

On

May 10, 2018,

Progenics, Bausch, Salix, Wyeth and Par entered into a Settlement and License Agreement (the “Par Agreement”) relating to Civil Action

No.

17

-

06449

-SRC-CLW. The following is a summary of the material terms of the Par Agreement.

The Par Agreement provides for a full settlement and release by both Plaintiffs and Par of all claims that were or could have been asserted in the district court case and all resulting damages or other remedies. Plaintiffs and Par have agreed to and, in fact, filed a Stipulated Consent Judgment and Injunction after the execution of the Par Agreement. Plaintiffs and Par have further acknowledged and agreed that the

30

-month stay imposed by the FDA in relation to the approval of Par’s ANDA for the Par Products (the “Par ANDA”) should be terminated.

Under the Par Agreement, Plaintiffs grant Par a non-exclusive, royalty-free, non-transferable, non-sublicensable, limited license under the Patents-In-Suit to make, import, and sell the Par Products in the U.S., or make outside the U.S. solely for importation into the U.S. (the “Par License”) beginning on the earliest of (i)

September 30, 2030; (

ii) for either of the Par Products,

one hundred eighty-one

(

181

) days after any

third

party who is the “First Applicant” (as defined in

21.

U.S.C. §

355

(j)(

5

)(B)(iv)(II)) markets a single-dose vial or pre-filled syringe that has been FDA approved or submitted for approval under an ANDA as a generic version of RELISTOR

®

Injection for subcutaneous use (the “Generic Products”); (iii) for either of the Par Products, the date on which a non-First Applicant

third

party markets an authorized generic (under the RELISTOR

®

NDA) but without the RELISTOR

®

trademark) single-dose vial or pre-filled syringe of methylnaltrexone bromide for subcutaneous use in the U.S.; (iv) for either of the Par Products, the date on which a

third

party who is

not

a First Applicant (or who is a First Applicant who has forfeited or otherwise waived its

180

-day exclusivity) markets or is

first

authorized by Plaintiffs to market the Generic Products in the U.S.; (v) the date on which a final court decision is entered holding that each of the asserted claims against Par in the district court case from the Patents-In-Suit are invalid and/or unenforceable, or

not

infringed by the single-dose vial Par Product; or (vi) the date on which the Patents-In-Suit have expired, been permanently abandoned or delisted from the FDA’s Orange Book. Plaintiffs have also granted to Par a limited pre-commercialization license to manufacture and/or import the Par Products into the U.S. starting

one hundred fifty

(

150

) days prior to the effective date of the Par License solely to the extent reasonably necessary to enable Par to market the Par Products in the U.S. on or after the effective date of the Par License.

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, 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, 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). A

four

day bench trial was held from

May 6, 2019

through

May 9, 2019.

On

July 17, 2019,

the Court issued an Order finding the asserted claims of U.S. Patent

No.

8,524,276

valid and infringed. The Court additionally ordered that the effective date of any approval of Actavis’s ANDA

No.

209615

may

not

be earlier than the expiration date of U.S. Patent

No.

8,524,276.

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

June 13, 2019 (

2:19

-cv-

13722

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

No.

10,307,417

based upon Actavis’s filing of an ANDA seeking to obtain approval to market a generic version of RELISTOR tablets before this patent expires. Litigation in the

2:19

-cv-

13722

-SRC-CLW action is

not

yet underway.

Federal Circuit Appeal

Actavis filed an appeal of the District Court decision with the Court of Appeals for the Federal Circuit on

August 13, 2019.

The matter is currently pending on appeal at the Federal Circuit and merits briefing is underway. Actavis’s opening brief was filed

February 6, 2020.

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. Oral proceedings for

EP1615646

are set to occur on

September 22, 2020.

Oral proceedings for

EP2368554

and

EP2368553,

scheduled for

March 9

and

March 10, 2020,

respectively were cancelled by the Board of Appeals on

March 9

th

due to health concerns. We await a communication from the EPO as to how they intend to proceed.

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 patent applications filed worldwide 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

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)

3038996

A1

(EP

14799340.6

) and of the Divisional Applications EP

18172716.5,

EP

18184296.4,

and EP

18203547.7

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.

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;

15/805,900;

16/038,729

and

16/114,988

). 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. On

November 12, 2019,

the University filed a statement with the USPTO to dispute the Confirmation of Ownership filed by MIP.

On

February 27, 2019,

the German District Court set

€416,000

as the amount MIP must deposit with the Court as security in the event of an unfavorable final decision on the merits of the dispute. On

February 28, 2019,

the Court set a hearing date of

August 6, 2019

at which time it held the

first

oral hearing in the case. The Court considered procedural matters and granted the parties the right to make further submissions. MIP’s further submission was timely filed by the

October 1, 2019

deadline. The University filed a reply brief on

January 31, 2020,

and the Court has scheduled a

second

oral hearing for

May 5, 2020.

Third Party Patents

Post-Grant Review of U.S. Patent

No.

10,112,974

On

July 29, 2019

we filed a petition for post-grant review (“PGR”) with the United States Patent and Trademark Office (“USPTO”) of U.S. Patent

No.

10,112,974

(“the

‘974

patent”), which is jointly owned by Max-Planck-Gesellschaft zur Foerderung der Wissenschaften and Universitat zu Koln (“the Patent Owners”). Certain claims of the

‘974

patent recite precursor compounds for preparing prostate-specific membrane antigen (PSMA) targeting conjugates. In our petition, we allege that such precursor compounds were previously disclosed in other publications, and that certain claims are therefore invalid.

On

August 13, 2019,

the USPTO mailed a Notice of Filing Date, setting a

three

(

3

)-month deadline for the Patent Owners to file a preliminary response. The Patent Owners did

not

file a response. On

January 29, 2020,

the Patent Trial & Appeal Board (PTAB) at the USPTO instituted post-grant review of the

‘974

patent, setting a deadline of

April 22, 2020

for the Patent Owners to file a response. A final written decision is expected by

January 29, 2021.