19.    Commitments and Contingencies

COVID-19

As a result of the impact of the COVID-19 pandemic crisis, the Company does not anticipate any significant threat to its operations at this point in time. Due to the general unknown nature surrounding the crisis, the Company cannot reasonably estimate the potential for any future impacts on operations or its liquidity. In recognition of the significant threat to the liquidity of the financial markets posed by COVID-19, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), was signed into law to provide emergency assistance to qualifying businesses and individuals. There can be no assurance that these interventions by the government will be successful, and the financial markets may experience significant contractions in available liquidity. On April 16, 2020, the Company received $600,000 related to its filing under the Paycheck Protection Program and CARES Act. It is not possible at this time to estimate the further need, availability, extent or impact of any additional such relief. Although the Company does not anticipate current operational difficulties, the risk exists that further COVID-19 developments may negatively impact the Company’s financial condition and restrict the availability of liquidity for its operational needs.

Agreements

Lease – Bryan, Texas

As discussed above, iBio CDMO is leasing its facility in Bryan, Texas from the Second Eastern Affiliate under the Sublease. See Note 13 – Finance Lease Obligations for more details of the Sublease.

Lawsuits

On March 17, 2015, the Company filed a Verified Complaint in the Court of Chancery of the State of Delaware against Fraunhofer and Vidadi Yusibov (“Yusibov”), Fraunhofer CMB’s Executive Director, seeking monetary damages and equitable relief based on Fraunhofer’s material and continuing breaches of their contracts with the Company. On September 16, 2015, the Company voluntarily dismissed its action against Yusibov, without prejudice, and thereafter on September 29, 2015, the Company filed a Verified Amended Complaint against Fraunhofer alleging material breaches of its agreements with the Company and seeking monetary damages and equitable relief against Fraunhofer. The Court bifurcated the action to first resolve the threshold question in the case – the scope of iBio’s ownership of the technology developed or held by Fraunhofer – before proceeding with the rest of the case and the parties stipulated their agreement to that approach. After considering the parties’ written submissions and oral argument, the Court resolved the threshold issue in favor of iBio on July 29, 2016, holding that iBio owns all proprietary rights of any kind to all plant-based technology of Fraunhofer developed or held as of December 31, 2014, including know-how, and was entitled to receive a technology transfer from Fraunhofer. Fraunhofer’s motion to dismiss iBio’s contract claims was denied by the Court on February 24, 2017. The Court at that time also granted, over Fraunhofer’s opposition, iBio’s motion to supplement and amend the Complaint to add additional state law claims against Fraunhofer. Fraunhofer filed an answer and counterclaims in March 2017, but in May 2017, Fraunhofer obtained new counsel, and with iBio’s agreement (as a matter of procedure), filed an amended answer and amended counterclaims in July 2017.  The Company replied to those counterclaims on August 9, 2017. In November 2017, the Company engaged new counsel to further lead its litigation efforts, and on November 3, 2017, the Company filed a separate Verified Complaint in the Court of Chancery of the State of Delaware against Fraunhofer-Gesellschaft, the European unit of Fraunhofer (the “Second Complaint”). The Second Complaint follows iBio’s pending litigation filed in March 2015, described above, against Fraunhofer USA, Inc., the U.S. unit of Fraunhofer. The complaint against Fraunhofer-Gesellschaft was dismissed by the Delaware Chancery Court on December 10, 2018 as untimely filed. The dismissal of this action has no effect on the action against the U.S. unit of Fraunhofer.

The case against Fraunhofer has proceeded and fact and expert discovery has now closed.

Fraunhofer filed a motion for summary judgment in November 2019, arguing that the Company’s claims should be dismissed as preempted or duplicative, and that certain claims should be time barred. Briefing was completed in January 2020, and a hearing on Fraunhofer’s motion was held on June 11, 2020. On September 25, 2020, the Court granted in part and denied in part Fraunhofer’s motion for summary judgment. The Court granted Fraunhofer’s motion for summary judgment as to iBio’s fraud, conversion, constructive trust, partial rescission, and unjust enrichment claims. The U.S. Court denied Fraunhofer’s motion for summary judgment as to iBio’s declaratory judgment, breach of contract, misappropriation of trade secrets, tortious interference, and deceptive trade practices claims, and ruled that those claims could proceed to trial.

On January 6, 2020, the Company filed a motion in the Court of Chancery of the State of Delaware to initiate new litigation against Fraunhofer-Gesellschaft through an amendment to its Verified Amended Complaint. The motion asserts that new evidence reveals that Fraunhofer-Gesellschaft exercised complete dominion and control over its US subsidiary to wrongfully access and direct use of iBio’s intellectual property on many occasions with new and different third parties. The Court denied the Company’s motion for leave to amend at a hearing on June 11, 2020, without prejudice and with leave to refile the complaint at a later date.

The case is set for trial on March 1 to 5, 2021. The Company is unable to predict the further outcome of this action at this time.