12. Total Operating Expenses

R&D costs are comprised of allocated employee costs, the costs of materials and laboratory consumables, intellectual property and license costs and allocated other costs.

The following table presents a breakdown of operating expenses:

Three months ended
June 30,

Six months ended
June 30,

2019

2018

2019

2018

(euros in thousands)

Manufacturing costs

450

5,580

2,325

9,858

IP and license costs

585

492

876

844

Personnel related R&D

2,470

2,107

4,510

3,808

Other R&D costs

6,479

4,344

12,644

8,311

Total R&D costs

9,984

12,523

20,355

22,821

Management and administration costs

3,119

2,639

5,055

5,491

Litigation costs

552

123

849

Other operating expenses

3,684

2,745

7,624

5,134

Total other expenses

3,743

3,297

7,747

5,983

Total operating expenses

16,846

18,459

33,157

34,295

R&D costs were €9.9 million and €20.3 million for the three and six months ended June 30, 2019, respectively, as compared to €12.5 million and €22.8 million for the three and six months ended June 30, 2018, respectively. The decrease in R&D costs is primarily attributable to lower manufacturing costs, primarily for MCLA-128, and MCLA-145, partially offset by higher preclinical costs; and higher R&D headcount and related costs.

Other R&D costs consist mainly of laboratory supplies and depreciation expense related to R&D activities, which cannot be specifically allocated to a research project. A breakdown of other R&D costs is presented as follows:

Three months ended

June 30,

Six months ended

June 30,

2019

2018

2019

2018

(euros in thousands)

Discovery and preclinical costs

2,055

1,078

4,175

1,763

Clinical costs

3,156

1,850

6,041

4,248

Other R&D costs

1,268

1,416

2,428

2,300

Total other R&D costs

6,479

4,344

12,644

8,311

Management and administration costs

Management and administration costs were €3.1 million and €5.1 million for the three and six months ended June 30, 2019, respectively, as compared to €2.6 million and €5.5 million for the three and six months ended June 30, 2018, respectively. The increase in management and administration costs during the three months ended June 30, 2019 is primarily attributable to higher management and administration headcount and related costs, primarily offset by a decrease in share-based compensation expense. The decrease in management and administration costs during the six months ended June 30, 2019 is primarily attributable to a decrease in share-based compensation expense, partially offset by higher management and administration headcount and related costs.

Litigation costs

On April 5, 2018, an unnamed third party and Regeneron filed notices of opposition against the Company’s EP 2604625 patent, entitled “Generation of Binding Molecules,” in the European Patent Office. The notices asserted, as applicable, added subject matter, lack of novelty, lack of inventive step, and insufficiency. Regeneron withdrew from this proceeding in January 2019. On August 20, 2018, the Company timely responded to these submissions, and again in April 2019, with proceedings to be ongoing with respect to the unnamed third party. An opposition hearing was held June 2019 during which the patent was revoked. The Company intends to appeal this decision to the Technical Board of Appeals. As this opposition proceeding continues, the Company cannot be certain that the Company will ultimately prevail.

The litigation and opposition related costs were €59,000 and €0.1 for the three and six months ended June 30, 2019, respectively, as compared to litigation and opposition costs incurred of €0.6 million and €0.8 million for the three and six months ended June 30, 2018, respectively, and are included in the condensed consolidated statement of profit or loss and comprehensive loss for the period.

From time to time, the Company may be involved in various other claims and legal proceedings relating to claims arising out of the Company’s operations. The Company is not currently a party to any other material legal proceedings.

Other operating expenses

Other operating expenses were €3.6 million and €7.6 million for the three and six months ended June 30, 2019, respectively, as compared to €2.7 million and €5.1 million for the three and six months ended June 30, 2018, respectively. The increase in other operating expenses is primarily attributable to an increase in consultant costs to support accounting operations and facilities-related expenses for the Cambridge, MA facility.