Commitments and Contingencies

Leases

On April 6, 2005, the Company entered into a non-cancellable operating lease (the “Lease”) for its office, warehouse and laboratory facilities in Exton, Pennsylvania. The lease agreement had a term of 8 years. On February 17, 2012, the Company entered into an amended and restated lease (the “Amended Lease”) for an additional term of 10 years through the year 2023. The Lease and the Amended Lease provide for rent payments escalating on an annual basis. In accordance with ASC 840-20 Operating Leases, the Company calculated the total minimum payments under the lease and divided them equally over the life of the lease to account for the lease on a straight-line basis. The Company has the option to renew the lease for an additional 5 years at fair market value. Rental expense totaled $1.6 million, $1.5 million and $1.4 million for the years ended December 31, 2014, 2013 and 2012, respectively.

License Agreements

On May 3, 2012, the Company entered into an exclusive license agreement with The Regents of the University of California, under which the Company acquired the rights to commercially apply discoveries resulting from the scientific collaboration between the University of California, Los Angeles (“UCLA”) and the Company. Under the terms of the license agreement, the Company agreed to pay UCLA a non-refundable initial license fee and to pay UCLA an annual license maintenance fee of a percentage of product royalties, and milestone payments based on the Company’s achievement of certain clinical and regulatory related milestones for these rights. The Company’s ability to meet the milestones is dependent on a number of factors including final approvals by regulatory agencies and the continued enforceability of patent claims.

On June 13, 2014 the Company entered into two exclusive license agreements with The Regents of the University of California. Pursuant to the first exclusive license agreement (the “BMP2 Agreement”), UCLA granted to the Company an exclusive, sublicensable right and license to use certain patent rights developed in collaboration between UCLA and the Company relating to the use of human skin cells to produce Bone Morphogenetic Protein (BMP2) for use in osteogenic therapies. In consideration of the license granted under the BMP2 Agreement, the Company will pay UCLA a license issue fee, certain one-time milestone payments, a license maintenance fee, earned royalties on net sales of all licensed products (including sales by sublicensees and affiliates) and a percentage of amounts received from sublicensing activities. The Company is subject to minimum annual royalty payments to UCLA beginning after first commercial sale of a licensed product.

Under the terms of the second of the exclusive license agreements (the “Genomic Stability Agreement”), UCLA granted to the Company an exclusive, sublicensable right and license to use certain patent rights developed in collaboration between UCLA and the Company relating to media that promotes genomic stability in induced pluripotent stem cell cultures for all research and commercialization purposes. In consideration of the license granted under the Genomic Stability Agreement, the Company will pay to UCLA a license issue fee, certain one-time milestone payments, a license maintenance fee, earned royalties on net sales of all licensed products (including sales by affiliates) and a percentage of amounts received from sublicensing activities. The Company is subject to minimum annual royalty payments to UCLA beginning after first commercial sale of a licensed product.

On May 3, 2012, the Company also entered into a sponsored research agreement with the Massachusetts Institute of Technology (“MIT”). Research is currently focused on mesenchymal stem cells derived from adult human skin. The agreement is currently scheduled to terminate in June 2015.

The amounts in the table below assume the foregoing agreements are continued through their respective terms. The agreements may be terminated at the option of either party. In such event, the Company’s obligation would be limited to costs through the date of such termination.

Contractual Obligations

The following table summarizes the Company’s contractual obligations as of December 31, 2014:



	Payments due by period
($ in thousands)	Total		2015		2016 and 2017		2018 and 2019		2020 and thereafter
License fee obligations(1)	$	950	$	483	$	308	$	106	$	53
Operating lease obligations(2)	$	11,168	$	1,211	$	2,508	$	2,670	$	4,779
Total	$	12,118	$	1,694	$	2,816	$	2,776	$	4,832

(1)Obligations for license agreement with the University of California, Los Angeles (UCLA) and sponsored research agreement with the Massachusetts Institute of Technology (MIT). The amounts in the table assume the foregoing agreements are continued through their respective terms. The agreements may be terminated at the option of either party. In such event, the Company’s obligation would be limited to costs through the date of such termination.

(2)Operating lease obligations are stated based on the Amended Lease agreement for the office, warehouse and laboratory facilities executed in February 2012.