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Commitments and Contingencies
6 Months Ended
Jun. 30, 2018
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

5. Commitments and Contingencies

Research Agreements and Manufacturing Agreements

The Company has engaged several research institutions and companies to identify new delivery strategies and applications of the CRISPR/Cas9 technology and has sponsored research programs. In association with these arrangements, the Company has remaining commitments for related research and development services of $0.8 million through 2020.

The Company is also a party to a number of research license agreements which require significant upfront payments, future royalty payments and potential milestone payments from time to time. In association with these agreements, the Company has committed to making payments for related research and development services of $1.2 million through 2020. In connection with these agreements, during the three and six months ended June 30, 2018, the Company has made payments of $0.8 million and of $1.2 million, respectively. In connection with these agreements, during the three and six months ended June 30, 2017, the Company has made payments of $0.8 million and of $1.7 million, respectively.

The Company is a party to a number of manufacturing agreements that require upfront payments for the future performance of services.  In connection with these agreements, the Company has made upfront payments and recorded $3.3 million as prepaid expenses on the condensed consolidated balance sheet as of June 30, 2018. The Company will amortize the prepaid balance as services are performed.

Litigation

The Company licenses a U.S. patent application from Emmanuelle Charpentier (as described in more detail in this Report) that is currently subject to interference proceedings declared by the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office. Following motions by the parties and other procedural matters, the PTAB concluded in February 2017 that the declared interference should be dismissed because the claim sets of the two parties were not directed to the same patentable invention in accordance with the PTAB’s two-way test for patent interferences. In April 2017, Dr. Charpentier, the regents of the University of California (“UC”), and the University of Vienna appealed the PTAB decision to the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”). In the appeal, California is seeking review and reversal of the PTAB’s February 2017 decision, which terminated the interference without determining which inventors actually invented the use of the CRISPR/Cas9 genome editing technology in eukaryotic cells. The Federal Circuit conducted a hearing on the appeal on April 30, 2018.

In February 2018, several parties filed oppositions in the European Patent Office to the grant of the Company’s in-licensed European patent.  Opposition proceedings can lead to the revocation of a patent in its entirety; the maintenance of the patent as granted, or the maintenance of a patent in amended form.  Opposition proceedings typically take years to resolve, including the time taken by appeals that can be filed by any of the parties.  The Company cannot guarantee the outcome of the oppositions to its in-licensed European patent, and an adverse result could preclude the Company from enforcing its rights in Europe against third parties.

On December 15, 2016, the Company entered into a Consent to Assignments, Licensing and Common Ownership and Invention Management Agreement (the “Invention Management Agreement”) with the University of California, University of Vienna, Dr. Emmanuelle Charpentier, Intellia Therapeutics, Inc. Caribou Biosciences, Inc., ERS Genomics Ltd. and TRACR Hematology Ltd.  Under the Invention Management Agreement, the Company is obligated to share costs related to patent maintenance, defense and prosecution. During the three and six months ended June 30, 2018, the Company incurred $0.6 million and $1.1 million, respectively, in shared costs. During the three and six months ended June 30, 2017, the Company incurred $0.5 million, and $1.0 million, respectively, in shared costs.  The Company recorded accrued legal costs from the cost sharing of $1.2 million and $0.4 million as of June 30, 2018 and December 31, 2017, respectively. The Company is unable to predict the outcome of these matters and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from an unfavorable outcome.