Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

See Note 15 for disclosures related to legal contingencies.

a. Leases

We conduct certain of our research, development, and administrative activities at leased facilities. We also lease certain warehouses and vehicles.

Operating leases

Amounts recognized in our Consolidated Balance Sheets and Statements of Operations included in this report associated with operating leases were not material. Operating lease right-of-use assets are included within Other noncurrent assets, and lease liabilities are included in Accrued expenses and other current liabilities and Other noncurrent liabilities.

Finance leases

In March 2017, we entered into a Participation Agreement with BA Leasing BSC, LLC, an affiliate of Banc of America Leasing & Capital LLC ("BAL"), as lessor, and a syndicate of lenders (collectively with BAL, the "Lease Participants"), which provided for $720.0 million of lease financing from the Lease Participants for the acquisition of laboratory and office facilities in Tarrytown, New York (the "Facility"). In March 2017, we also entered into a Lease and Remedies Agreement with BAL, pursuant to which we have leased the Facility from BAL for a five-year term ending in March 2022. The Participation Agreement, the Lease and Remedies Agreement, and certain other related agreements were amended and restated in May 2019, among other things, to revise certain covenants, representations and warranties, and events of default to be substantially similar to those set forth in our Credit Facility (as so amended and restated, the "Participation Agreement" and the "Lease," respectively). The Lease requires us to pay all maintenance, insurance, taxes, and other costs arising out of the use of the Facility. We are also required to make monthly payments of basic rent during the term of the Lease in an amount equal to a variable rate per annum based on the one-month LIBOR, plus an applicable margin that varies with our debt rating and total leverage ratio. The Participation Agreement and the Lease include an option for us to elect to extend the maturity date of the Participation Agreement and the term of the Lease for an additional five-year period, subject to the consent of all the Lease Participants and certain other conditions. We also have the option prior to the end of the term of the Lease to (a) purchase the Facility by paying an amount equal to the outstanding principal amount of the Lease Participants' advances under the Participation Agreement, all accrued and unpaid interest and yield thereon, and all other outstanding amounts under the Participation Agreement, the Lease, and certain related documents or (b) sell the Facility to a third party on behalf of BAL. The advances under the Participation Agreement mature, and all amounts outstanding thereunder will become due and payable in full, at the end of the term of the Lease.

In September 2021, we delivered a request to the Lease Participants to potentially exercise the option for a five-year extension of the term of the Lease and the maturity date under the Participation Agreement. In November 2021, the Lease Participants consented to such extension, subject to the satisfaction of certain conditions prior to the expiration of the existing term in March 2022, including the negotiation and execution of satisfactory definitive documentation setting forth the terms and conditions that would apply during such potential extended term. We are negotiating such documentation with the Lease Participants, but there can be no assurance that such extension will become effective.

The Lease is classified as a finance lease as we have the option to purchase the Facility under terms that make it reasonably certain to be exercised. The agreements governing the Lease financing contain financial and operating covenants. The Company was in compliance with all such covenants as of December 31, 2021.

Amounts recognized in the Consolidated Balance Sheet related to the Lease are included in the table below. Other than the Lease described above, we had no leases accounted for as finance leases as of December 31, 2021 and 2020.


		As of December 31,
(In millions)	Classification	2021		2020
Finance lease right-of-use assets	Property, plant, and equipment, net(1)	$	631.3	$	645.7
Finance lease liabilities	Finance lease liabilities	$	719.7	$	717.2

(1) Finance lease right-of-use assets were recorded net of accumulated amortization of $104.9 million and $90.5 million as of December 31, 2021 and 2020, respectively.

Finance lease costs consist of the following:


	Year Ended December 31,
(In millions)	2021		2020
Amortization of right-of-use assets	$	14.4	$	14.4
Interest on lease liabilities	11.9		15.7
	$	26.3	$	30.1

Other information related to our finance lease includes the following:


	As of December 31,
	2021	2020
Remaining lease term (in years)	0.2	1.2
Discount rate	1.68%	1.66%

Supplemental information

The following is a maturity analysis of our finance lease liabilities:


(In millions)	As of December 31, 2021
2022	$	723.0
2023	—
2024	—
2025	—
2026	—
Thereafter	—
Total undiscounted lease payments	723.0
Imputed interest	(2.9)
Debt financing costs	(0.4)
Total lease liabilities	$	719.7

b. Research Collaboration and Licensing Agreements

As part of our research and development efforts, we enter into research collaboration and licensing agreements with other companies, universities, and other organizations. These agreements contain varying terms and provisions which include fees to be paid by the Company, services to be provided, and license rights to certain proprietary technology developed under the agreements. Some of these agreements may require the Company to pay additional amounts contingent upon the occurrence of various future events (e.g., upon the achievement of various development and commercial milestones). Additionally, we have in-licensed patent and/or technology pursuant to agreements which contain provisions that require the Company to pay royalties, as defined, at rates that range from 0.5% to 10.0%, in the event the Company sells or licenses any proprietary products developed under the respective agreements. The Company also has contingent reimbursement obligations to its collaborators Sanofi and Bayer out of the respective collaboration's profits, if they are sufficient for that purpose. See Note 3 for a more detailed description of collaboration, license, and other agreements.

For the years ended December 31, 2021, 2020, and 2019, the Company recorded royalty expense (net of reimbursements from collaborators, as applicable) in Cost of goods sold and Cost of collaboration and contract manufacturing of $66.9 million, $56.5 million, and $47.0 million, respectively, based on product sales of commercial products under various licensing agreements.