Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

See Note 16 for disclosures related to legal contingencies.

a. Leases

The Company conducts certain of its research, development, and administrative activities at leased facilities. The Company also leases vehicles and other assets.

Operating leases

Amounts recognized in the Company's 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, the Company 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, the Company also entered into a Lease and Remedies Agreement with BAL, pursuant to which the Company leased the Facility from BAL for a five-year term which ended in March 2022.

In March 2022, the Company entered into a Second Amended and Restated Lease and Remedies Agreement (the "Restated Lease") with BAL, as lessor (the "Lessor"), which amends, restates, and extends its lease of the Facility. In March 2022, the Company also entered into a Second Amended and Restated Participation Agreement (the "Restated Participation Agreement") with Bank of America, N.A., as administrative agent, the Lessor, and a syndicate of financial institutions as rent assignees (collectively with the Lessor, the "Participants"), which amends and restates the original Participation Agreement entered into in March 2017.

The original Participation Agreement and certain related agreements were amended and restated in order to, among other things, (i) effect a five-year extension of the original March 2022 maturity date of the $720.0 million lease financing and the end of the term of the Company's lease of the Facility from the Lessor to March 2027, at which time all amounts outstanding thereunder will become due and payable in full, and (ii) modify the rate of the interest or yield that is payable to the Participants. In accordance with the terms of the Restated Lease, the Company continues to pay all maintenance, insurance, taxes, and other costs arising out of the use of the Facility. The Company is also required to make monthly payments of basic rent during the term of the Restated Lease in an amount equal to a variable rate per annum, which was modified in connection with the Restated Lease, to be an adjusted one-month forward-looking term rate based on the Secured Overnight Financing Rate ("SOFR"), plus an applicable margin that varies with the Company's debt rating and total leverage ratio.

The Restated Participation Agreement and Restated Lease include an option for the Company to elect to further extend the maturity date of the Restated Participation Agreement and the term of the Restated Lease for an additional five-year period, subject to the consent of all the Participants and certain other conditions. The Company also has the option prior to the end of the term of the Restated Lease to (a) purchase the Facility by paying an amount equal to the outstanding principal amount of the Participants' advances under the Restated Participation Agreement, all accrued and unpaid yield thereon, and all other outstanding amounts under the Restated Participation Agreement, Restated Lease, and certain related documents or (b) sell the Facility to a third party on behalf of the Lessor.

Consistent with the original lease, the Restated Lease continues to be classified as a finance lease as the Company has the option to purchase the Facility under terms that make it reasonably certain to be exercised. The agreements governing the Restated Lease financing contain financial and operating covenants. Such financial covenants and certain of the operating covenants are substantially similar to the covenants set forth in the Company's $750.0 million 2018 Credit Agreement. The Company was in compliance with all such covenants as of December 31, 2022.

Amounts recognized in the Consolidated Balance Sheet related to the Lease are included in the table below. Other than the Lease described above, the Company had no leases accounted for as finance leases as of December 31, 2022 and 2021.


		As of December 31,
(In millions)	Classification	2022		2021
Finance lease right-of-use assets	Property, plant, and equipment, net(a)	$	620.3	$	631.3
Finance lease liabilities	Finance lease liabilities	$	720.0	$	719.7

(a) Finance lease right-of-use assets were recorded net of accumulated amortization of $119.4 million and $104.9 million as of December 31, 2022 and 2021, respectively.

Finance lease costs consist of the following:


	Year Ended December 31,
(In millions)	2022		2021
Amortization of right-of-use assets	$	14.5	$	14.4
Interest on lease liabilities	21.6		11.9
	$	36.1	$	26.3

Other information related to the Company's finance lease includes the following:


	As of December 31,
	2022	2021
Remaining lease term (in years)	4.2	0.2
Discount rate	4.84%	1.68%

Supplemental information

The following is a maturity analysis of the Company's finance lease liability:


(In millions)	As of December 31, 2022
2023	$	44.9
2024	38.6
2025	31.3
2026	30.7
2027	727.9
Total undiscounted lease payments	873.4
Imputed interest	(153.4)
Total lease liability	$	720.0

b. Research Collaboration and Licensing Agreements

As part of the Company's research and development efforts, the Company enters 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, the Company has 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 12.0%, 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.

As described in Note 3, as a result of obtaining worldwide rights to Libtayo, the Company pays Sanofi a royalty on net product sales of Libtayo. In addition, in 2018, the Company and Sanofi entered into a license agreement with Bristol-Myers Squibb Company, E. R. Squibb & Sons, L.L.C., and Ono Pharmaceutical Co., Ltd. to obtain a license under certain patents owned and/or exclusively licensed by one or more of those parties that includes the right to develop and sell Libtayo. Under the agreement, the Company is obligated to pay royalties of 8.0% on worldwide sales of Libtayo through December 31, 2023, and royalties of 2.5% from January 1, 2024 through December 31, 2026. Prior to July 1, 2022, royalties on such sales were shared equally by the Company and Sanofi.

For the years ended December 31, 2022, 2021, and 2020, 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 $84.5 million, $66.9 million, and $56.5 million, respectively, based on product sales under various licensing agreements.