Quarterly report pursuant to Section 13 or 15(d)

COMMITMENTS AND CONTINGENCIES

v3.20.2
COMMITMENTS AND CONTINGENCIES
 6 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 7 – COMMITMENTS AND CONTINGENCIES

 

Operating Leases

 

We lease space under operating leases for manufacturing and laboratory facilities and administrative offices in Cleveland, Ohio, as well as administrative offices in New York, New York. We also lease office space in Madrid, Spain as well as certain office equipment under operating leases, which have a non-cancelable lease term of less than one year and, therefore, we have elected the practical expedient to exclude these short-term leases from our right-of-use assets and lease liabilities.

 

Components of lease cost are as follows:

 

 

    For the three
months ended
June 30,		     For the three
months ended
June 30,		     For the six
months ended
June 30,		     For the six
months ended
June 30,		  
    2020     2019     2020     2019  
Operating lease cost   $ 434,000     $ 434,000     $ 868,000     $ 723,000  
Variable lease cost   $ 92,000     $ 86,000     $ 175,000     $ 159,000  
Short-term lease cost   $ 6,000     $ 34,000     $ 24,000     $ 81,000  

 

The following table presents information about the amount and timing of cash flows arising from operating leases as of June 30, 2020:

 

 

Maturity of lease liabilities:      
2020, remainder   $ 851,000  
2021     1,713,000  
2022     1,727,000  
2023     1,741,000  
2024     1,781,000  
Thereafter     1,885,000  
Total undiscounted operating lease payments     9,698,000  
Less: imputed interest     2,224,000  
Present value of operating lease liabilities   $ 7,474,000  
         
Balance sheet classification:        
Current portion of lease liability   $ 1,706,000  
Long-term lease liability     5,768,000  
Total operating lease liabilities   $ 7,474,000  
         
Other information:        
Weighted-average remaining lease term for operating leases     67 months  
Weighted-average discount rate for operating leases     9.6%  

 

Commitment with contract manufacturer

 

We engaged a contract manufacturer to assist us with developing and defining the processes necessary to manufacture our RDEB product candidate and had a remaining commitment of $6.3 million at March 31, 2020. During the second quarter of 2020, we cancelled the remaining stages of work with the contract manufacturer. We have no remaining commitment at June 30, 2020.

 

Arbitration Proceeding

 

We are currently engaged in an arbitration proceeding with REGENXBIO regarding the former license agreement between the parties relating to use of the AAV9 capsid in our MPS IIIA, MPS IIIB, CLN1, and CLN3 programs. The license terminated on May 2, 2020, and on May 25, 2020, we filed an arbitration claim with the American Arbitration Association alleging that REGENXBIO materially breached the license agreement prior to termination and seeking, among other things, a declaration that as a result of REGENXBIO’s material breach, we are not responsible for payments totaling $28 million (which would otherwise have been due in 2020) plus accrued interest of $0.8 million as of June 30, 2020. REGENXBIO disputes our arbitration claim and has filed a counterclaim seeking payment of these amounts. No arbitration schedule has yet been set by the three-arbitrator panel.