17.

Commitments and contingencies

Operating leases

The Company has operating leases for real estate and non-real estate in the United States, United Kingdom, China, Japan, Singapore, and South Korea. One such operating lease is a sublease for real estate. The Company does

not

have any material finance leases.

The Company leases office, storage/warehouse, laboratory and manufacturing space in Abingdon, U.K., which leases are due to expire at various dates from

December 31, 2020

June 18, 2033.

June 2018,

the Company entered into a lease for new space in Abingdon, U.K., which extends through

June 2033

that will allow it to combine its manufacturing, laboratory, storage and office operations into a single facility. The base rent on the facility over the lease term will range from

$39,000

per month to

$79,000

per month. With the exception of manufacturing and associated groups, the Company's U.K. operations are now located in this facility.

March

2013,

the Company signed a

five

year lease for its U.S. corporate headquarters in Marlborough, Massachusetts. In

August 2015,

the Company entered into a lease amendment for this location to extend the term of the lease by

two

years through

October 31, 2020.

In addition, the lease amendment expanded the Company’s office space at this location by

7,600

square feet to a new total of

22,100

square feet. The base rent for the combined space over the remaining lease term ranges from a low of

$38,000

per month, which includes

$13,000

per month for the expansion space, which commenced in early

2016,

to a high of

$39,000

per month.

In connection with the sale of the Company's U.S. Laboratory Services Business to Quest, the Company entered into a sublease with Quest for approximately

9,000

square feet of warehousing and office space in Norwood, Massachusetts. The sublease expires in

November 2020.

The base rent for the space subject to sublease is approximately

$17,000

per month.

Many of the Company’s leases contain options to renew and extend lease terms and options to terminate leases early. Reflected in the right-of-use asset and lease liability on the Company’s balance sheet are the periods provided by renewal and extension options that the Company is reasonably certain to exercise, as well as the periods provided by termination options that the Company is reasonably certain to

not

exercise.

The Company has existing leases that include non-lease components that are

not

included in the right-of-use asset and lease liability and are reflected as an expense in the periods incurred. Such payments primarily include common area maintenance charges.

In calculating the present value of future lease payments, the Company has elected to utilize its incremental borrowing rate based on the remaining lease term at the date of adoption. This will potentially result in the initial and subsequent measurement of the balances of the right-of-use asset and lease liability for leases being greater than if the policy election was

not

applied. The Company has existing net leases in which the non-lease components (

e.g.

, common area maintenance, maintenance, consumables, etc.) are paid separately from rent based on actual costs incurred and therefore are

not

included in the right-of-use asset and lease liability, but instead are reflected as an expense in the period incurred. As of

December 31, 2019

, an operating lease right-of-use asset of

$7.4

million and an operating lease liability of

$8.7

million are reflected on the consolidated balance sheet.

The elements of the lease expense were as follows:

($ amounts in thousands)	Year Ended December 31, 2019

Lease Cost
Operating lease cost	$	1,295
Short-term lease cost		751
Total lease cost	$	2,046

Other Information
Cash paid for amounts included in the measurement of lease liabilities	$	1,024
Operating lease liabilities arising from obtaining right-of-use assets		592

Operating Leases
Weighted average remaining lease term (in years)		12.3

Operating Leases
Weighted average discount rate estimated using the Company's incremental borrowing rate		7.8	%

Future lease payments required under non-cancelable operating leases in effect as of

December 31, 2019

were as follows:

	December 31,
(in thousands)	2019
2020	$	1,197
2021		1,153
2022		1,096
2023		1,065
2024		1,061
Thereafter		8,166
Total lease payments		13,738
Less: imputed interest		(5,044	)
Total operating lease liabilities	$	8,694

The Company adopted ASC

842,

Leases

January 1, 2019,

as noted above and, as required, the following disclosure is provided for periods prior to adoption. Future minimum lease payments required under non-cancelable operating leases in effect as of

December 31, 2018

were as follows:

	December 31,
(in thousands)	2018
2019	$	2,024
2020		1,848
2021		972
2022		855
2023		855
Thereafter		7,558
Total minimum lease payments	$	14,112

Rent expense under operating leases was

$2.3

million for the year ended

December 31, 2018,

which was prior to the adoption of ASC

842,

Leases.

Purchase commitments

The Company has license agreements with

third

parties that provide for minimum royalty, license, and exclusivity payments to be paid by the Company for access to certain technologies. In addition, the Company pays royalties as a percent of revenue as described in Note

15.

Intellectual property—license agreements

, to these consolidated financial statements. In addition, the Company has outstanding purchase obligations to its suppliers.

Future minimum payments required under license agreements and supplier purchase obligations in effect as of

December 31, 2019

are as follows:

(in thousands)	License agreements		Supplier purchase obligations		Total
2020	$	56	$	7,669	$	7,725
2021		56		1,200		1,256
2022		56		370		426
2023		56		370		426
2024		56		—		56
Thereafter		617		—		617
Total minimum payments	$	897	$	9,609	$	10,506

Legal contingencies

The Company is subject to claims and assessments from time to time in the ordinary course of business. The Company does

not

believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

Indemnification

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that

may

be made against the Company in the future, but that have

not

yet been made. To date, the Company has

not

paid any claims or been required to defend any action related to its indemnification obligations. However, the Company

may

record charges in the future as a result of these indemnification obligations.

In accordance with its articles of association, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. There have been

claims to date, and the Company has director and officer insurance that

may

enable it to recover a portion of any amounts paid for future potential claims.