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Commitments and Contingencies
12 Months Ended
Dec. 31, 2021
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

11. Commitments and contingencies

Manufacturing Services Agreement

As discussed in Note 3, the Company and Lonza entered into a Manufacturing Services Agreement which became effective on November 15, 2021. The Manufacturing Services Agreement outlines the terms and conditions under which Lonza will develop, manufacture and supply exosome products for development and clinical purposes. The parties will negotiate and execute an amendment to the Manufacturing Services Agreement to address the commercial manufacture of the Company’s exosome products. Each individual project to be completed under the Manufacturing Services Agreement is governed by an associated statement of work which sets forth the activities to be performed, timeline, charges and payment schedule applicable to such project. Pricing is established on a project-by-project basis. Statements of work are executed between the parties on an as-requested basis. No activities had commenced with respect to outstanding statements of work through December 31, 2021. The Company is subject to certain cancellation fees and/or other charges upon its termination of statements of work and in the event of a suspension or delay in the conduct of statements of work, including with respect to the reimbursement of non-cancelable costs incurred by Lonza. Through December 31, 2021, the Company has not incurred any cancellation fees or other charges relating to a termination, suspension or delay of outstanding statements of work.

Under the terms of the Manufacturing Services Agreement, the Company is obligated to purchase the entirety of its aggregate production needs from Lonza, subject to limited exceptions. Starting on June 1, 2022, the Company will provide to Lonza rolling forecasts of its anticipated manufacturing time requirements for the next 24 months from the date of the forecast which will be updated no less frequently than quarterly. The first 12 months of each forecast will be a binding commitment, while the remaining 12 months will be non-binding. Commencing on January 1, 2026, the Company is bound by a commitment to purchase from Lonza a minimum of a specified number of weeks of manufacturing time each year at a predetermined price throughout the term of the arrangement. The Company’s minimum purchase commitments under the Manufacturing Services Agreement may be relieved at its option upon the occurrence and during the pendency of certain liquidation events or clinical discontinuations. As of December 31, 2021, the Company did not have any minimum non-cancelable purchase obligations under the Manufacturing Services Agreement.

Pursuant to the terms of the Manufacturing Services Agreement, the Company is entitled to a specified number of weeks of manufacturing time and a defined number of technology transfers from Lonza at no cost, with the exception of any accompanying materials costs, external costs and a handling fee. Additionally, the terms of the Manufacturing Services Agreement provide the Company with a specified number of weeks of manufacturing time from Lonza at a discounted rate, subject to annual adjustment. The Company bears the expense associated with any materials costs, external costs and a handling fee related to the discounted manufacturing time. Manufacturing services in excess of the free and discounted time are priced at a fixed weekly rate, plus materials costs, external costs and a handling fee. The Company’s consumption of the free and discounted manufacturing time, including the associated technology transfer services, is subject to a contractually-specified apportionment by year commencing in 2022 and continuing through 2025. The Company’s failure to use the free and discounted manufacturing time within the assigned period results in its forfeiture unless such inability is not due to the Company or Lonza permits carryover to a subsequent period.

Unless earlier terminated or extended by the parties, the Manufacturing Services Agreement remains in effect until the earlier of: (i) Fifth anniversary of the first approval of a biologics license application by the U.S. Food and Drug Administration for any of the Company’s exosome products or (ii) Tenth anniversary of Lonza’s completion of the services associated with the free manufacturing time. The Manufacturing Services Agreement is subject to customary termination provisions. Additionally, Lonza may terminate the Manufacturing Services Agreement with 12 months advance notice for any or no reason at any time after November 15, 2023. To the extent the Manufacturing Services Agreement is terminated on or prior to December 31, 2025, certain aspects of the transactions consummated in connection with the Lonza Transfer Transaction will be reverted, including with respect to assets, properties and rights that transferred to Lonza effective on November 15, 2021.

Lonza has the right to cease manufacturing under the Manufacturing Services Agreement upon either: (i) The Company unreasonably withholding, conditioning or delaying its approval of certain price changes or (ii) The Company enduring certain liquidation events or clinical discontinuations. Any termination of the Manufacturing Services Agreement for any reason will be without prejudice to any rights that will have accrued to the benefit of a party prior to such termination.



Purchase commitments

Under the Company’s Sponsored Research Agreement with the University of Texas MD Anderson Cancer Center (MDACC), as amended (the MDACC Research Agreement), the Company was obligated to pay fixed quarterly cash payments to MDACC over the term of the agreement. The Company was also obligated to make additional quarterly payments pursuant to the MDACC Research Agreement, payable in the form of a fixed number of the Company’s Series B redeemable convertible preferred stock throughout the remainder of the agreement. Pursuant to the Third Amendment to the MDACC Research Agreement, the termination date was modified to be effective December 31, 2019. The Company made the final $1.2 million cash payment and issued the remaining shares of Series B redeemable convertible preferred stock to MDACC in January 2020. There are no further payments or share issuances owed to MDACC pursuant to the MDACC Research Agreement.

The Company also has a license agreement with MDACC under which the Company is obligated to pay milestone payments upon the achievement of development and regulatory milestones and payments upon the execution of sublicenses for qualifying products, in addition to potential royalty payments on commercial products.

Additionally, the Company has a license agreement with Kayla Therapeutics S.A.S. (Kayla) under which the Company is obligated to make milestone payments upon the achievement of clinical and regulatory milestones and payments upon the execution of sublicenses, in addition to potential royalty payments on commercial products. The first milestone was achieved upon the dosing of the first subject in the Company’s exoSTING Phase 1/2 clinical trial in September 2020. Upon achievement of the milestone, the Company was obligated to make a nonrefundable payment of $15.0 million in cash and issue 177,318 shares of common stock to Kayla. The common stock was issued as of the date of dosing, and the cash payment of $15.0 million was paid during 2020. The expense related to the milestone payment to Kayla was recorded as research and development expense in the year ended December 31, 2020 because the associated asset was in development at the time the contingency that triggered the milestone was resolved.

Purchase orders

The Company has agreements with third parties for various services, including services related to clinical and preclinical operations and support, for which the Company is not contractually able to terminate for convenience to avoid future obligations to the vendors. Certain agreements provide for termination rights subject to termination fees or wind down costs. Under such agreements, the Company is contractually obligated to make certain payments to vendors, primarily to reimburse them for their unrecoverable outlays incurred prior to cancelation. The actual amounts the Company could pay in the future to the vendors under such agreements may differ from the purchase order amounts due to cancellation provisions.

Indemnification agreements

The Company enters into standard indemnification agreements and/or indemnification sections in other agreements in the ordinary course of business. Pursuant to the agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. The Company does not believe that the outcome of any existing claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it had not accrued any liabilities related to such obligations in its condensed consolidated balance sheets as of December 31, 2021 or December 31, 2020.

Legal proceedings

The Company is not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of FASB ASC Topic 450, Contingencies. The Company expenses as incurred the costs related to its legal proceedings.