The Company has entered into long-term contractual arrangements from time to time for the provision of goods and services.

The Company entered into a Development, Commercial Manufacturing and Supply Agreement (the “Brammer Manufacturing Agreement”) and, subsequently, entered into the first amendment (the “Amendment”) to the Brammer Manufacturing Agreement with Brammer in June 2018 and May 2019, respectively (collectively, “Brammer Supply Agreements”). Pursuant to the terms of the Brammer Supply Agreements, Brammer agreed to provide the Company with access to clinical and commercial manufacturing capacity for its gene therapy programs.

Under the Brammer Manufacturing Agreement, the Company will purchase product in batches from Brammer, subject to minimum and maximum annual purchase requirements. Further, the Company: (i) was required to make a $20.0 million advance payment to Brammer upon execution of the agreement in June 2018, (ii) was required to make two non-refundable payments of $5.0 million each to Brammer in the third and fourth quarter of 2018 to be used in the specification, selection, and procurement of the related process equipment to be utilized under the agreement, and (iii) was required to make a $10.0 million quarterly capacity access fee payment to Brammer throughout the term of the agreement.

As a result of the Amendment: (i) the Company now has access to substantially all of the related facility’s capacity, subject to certain minimum and maximum volume limitations, (ii) the Company was required to make a $6.0 million advance payment to Brammer upon execution of the Amendment, and (iii) the quarterly capacity access fee payments due to Brammer throughout the term of the agreement increased from $10.0 million to $13.3 million, starting January 1, 2020. However, through December 31, 2019, a reduced quarterly capacity access fee was in effect as Brammer worked towards achieving full capacity at its facility. In addition, the application of the advance payments will reduce the quarterly capacity access fees paid through 2021.

The term of the Brammer Supply Agreements will continue for a period of six years following the first regulatory approval of a product manufactured under the agreements. The term will automatically renew for successive two years unless the Company notifies Brammer of its intention not to renew (no less than twenty-four months prior to the expiration of the term). The Company also has the ability to terminate the agreement prior to expiration but would be required to continue remitting capacity access fees to Brammer for up to eight additional quarters.

Upon execution of the Amendment, the Company determined that the Brammer Supply Agreements contain an embedded lease because the Company now has the right to direct the use of the facility and related equipment therein. Further, the Company determined that it did not control the facility or related equipment during construction and, thus, the lease did not fall in the scope of “build-to-suit” accounting. The lease has not commenced as of December 31, 2019 because of the clean room suites at the Brammer facility are not yet available for use by the Company. Accordingly, total cumulative payments made to Brammer of $75.5 million have been recorded as an other non-current asset in the accompanying consolidated balance sheets and will be considered in the initial measurement of the cost of the right-of-use asset at the lease commencement date. This amount, along with any additional quarterly access fees payable prior to the lease commencement date, will be amortized on a straight-line basis as rent expense over the term of the embedded lease, beginning on the lease commencement date, currently anticipated to occur during the first half of 2020. Rent expense recognized prior to regulatory approval of the related product will be classified to research and development expense. Upon regulatory approval, rent expense will be classified to cost of inventory with the recognition in cost of sales as the sales of product occur.

The Company entered into a manufacturing collaboration agreement (the “Paragon Collaboration Agreement”) and, subsequently, entered into a manufacturing and supply agreement (the “Paragon Supply Agreement”) with Paragon in October 2018 and February 2019, respectively (collectively, the “Paragon Agreements”). Pursuant to the terms of the Paragon Agreements, Paragon agreed to provide the Company with two dedicated clean room suites and an option to reserve two additional clean room suites for its gene therapy programs. In September 2019, the Company exercised the option to gain access to the additional clean room suites. The Paragon Agreements will expire on December 31, 2024. The Company has the ability to terminate the Paragon Agreements prior to expiration, subject to potential additional financial consideration.

Under the Paragon Agreements, the Company will purchase product in batches from Paragon subject to minimum annual purchase requirements during two periods: the pre-launch period and the post-launch period. During the pre-launch period, the Company is obligated to purchase a minimum amount of $4.0 million of services per quarter per clean room. During the post-launch period, on an annual basis, the Company is obligated to purchase a minimum number of batches per clean room. Further, the Company is required to pay Paragon: (i) use fees of $1.0 million per year per clean room suite after the clean rooms are fully qualified and validated to manufacture the Company’s materials, and (ii) clean room reservation fees totaling $48.0 million. Additional use fees and reservation fees are required if the Company has equipment needs beyond the basic equipment package included in the initial clean room suites. In addition, Paragon will provide the Company with a credit of up to 100% of the clean room use fee if certain clean room capacity utilization thresholds are met.

The Company has concluded that the Paragon Agreements contain an embedded lease as the Company has the right to direct the use of the facility and related equipment therein. The Company also determined that it did not control the facility or related equipment during construction and, thus, the lease did not fall in the scope of “build-to-suit” accounting. The lease has not commenced as of December 31, 2019 because the clean room suites at the Paragon facility are not yet available for use by the Company. Accordingly, cumulative payments totaling $40.1 million made to Paragon have been recorded as an other non-current asset in the accompanying consolidated balance sheets and will be considered in the initial measurement of the cost of the right-of-use asset at the lease commencement date. This amount, along with any additional payments made prior to the lease commencement date, will be amortized on a straight-line basis as rent expense over the term of the embedded lease, beginning on the lease commencement date, currently anticipated to occur in the first quarter of 2020. Use fees associated with the clean room suites are considered contingent rental payments and will be charged to rent expense when (and if) incurred. Rent expense recognized prior to regulatory approval of the related product will be classified to research and development expense. Upon regulatory approval, rent expense will be classified to cost of inventory with the recognition in cost of sales as the sales of product occur.

In December 2018, the Company entered into a Clinical and Commercial Supply Agreement (the “CCSA”) with Aldevron LLC (“Aldevron”) for the supply of plasmid DNA to fulfill its needs for gene therapy clinical trials and commercial supply. Pursuant to the terms of the CCSA, Aldevron agreed to reserve a certain number of manufacturing slots (“Reserved Slots”) on a quarterly basis. The initial term of the CCSA expired on December 31, 2019. The Company exercised the option to extend the CCSA to December 31, 2020 (the “2020 Option”) and has another option to extend the term of the CCSA for an additional year to December 31, 2021 (the “2021 Renewal Right”).

The Company may be required to make an additional $20.0 million in prepayments associated with the CCSA should the Company exercise the 2021 Renewal Right. The prepayments will be credited back to Sarepta, until exhausted, for each batch of product delivered by Aldevron, in an amount equal to 50% of the batch invoice amount. The Company has determined that the CCSA does not contain an embedded lease because it does not convey the right to control the use of Aldevron’s facility or related equipment therein. As of December 31, 2019, the Company recorded $22.8 million in other current assets in the accompanying balance sheets related to the prepayments made to Aldevron under the CCSA. The gross cost of batches purchased from Aldevron since inception of the agreement have been classified as research and development expense. In the event the Company does not expect services under the CCSA to be rendered to fully exhaust any prepayments made to Aldevron, the applicable balance will be charged to expense at the time this determination is made.

The following table presents non-cancelable contractual obligations arising from long-term contractual arrangements:

	As of December 31, 2019 (in thousands)
2020	$	378,744
2021		183,661
2022		64,653
2023		58,319
2024		58,309
Thereafter		149,350
Total manufacturing commitments	$	893,036

Additionally, should the Company obtain regulatory approval for any drug product candidate produced as a part of the Company’s manufacturing obligations above, additional minimum batch requirements with the respective manufacturing parties would be required.

The Company has several on-going clinical trials in various clinical trial stages. Its most significant clinical trial expenditures are to contract research organizations (“CROs”). The CRO contracts are generally cancellable at the Company’s option. As of December 31, 2019, the Company has approximately $91.4 million in cancellable future commitments based on existing CRO contracts. For the years ended December 31, 2019, 2018 and 2017, the Company recognized approximately $31.6 million, $19.6 million and $13.9 million, respectively, for expenditures incurred by CROs.

In the normal course of business, the Company may from time to time be named as a party to various legal claims, actions and complaints, including matters involving securities, employment, intellectual property, effects from the use of therapeutics utilizing its technology, or others. For example, on August 30, 2019, Plaintiff Andrew Salinger filed a putative class action complaint against the Company and two of its current officers, Douglas S. Ingram and Sandesh Mahatme (collectively, the “Defendants”), in the United States District Court for the Southern District of New York. The complaint alleges that the Defendants violated Section 10(b) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and Rule 10b-5 promulgated thereunder, as well as Section 20(a) of the Exchange Act, in connection with the Company’s disclosures related to golodirsen. The proposed class consists of all persons or entities who acquired Company securities between September 6, 2017 and August 19, 2019. On December 17, 2019, the district court appointed Bernard Portnoy as lead plaintiff, and set a briefing schedule requiring the amended complaint to be filed on February 18, 2020 and requiring Defendants to answer or otherwise respond to the amended complaint on April 17, 2020. Defendants’ motion to transfer the case to the United States District Court for the District of Massachusetts is pending. On February 14, 2020, the lead plaintiff filed a Notice of Voluntary Dismissal of his claims against all Defendants and the clerk referred the Notice to the court for review and approval. The court has taken no further action. The Company is unable to provide an estimate of possible loss or range of possible loss.

On January 7, 2020, Plaintiff Al Lutzker filed a stockholder derivative complaint, purportedly on behalf of the Company, against two of the Company’s current officers, Douglas S. Ingram and Sandesh Mahatme, and six current members of Company’s Board of Directors, M. Kathleen Behrens, Richard J. Barry, Michael W. Bonney, Mary Ann Gray, Claude Nicaise, and Hans Wigzell (collectively, the “Defendants”), in the United States District Court for the District of Delaware. The complaint asserts claims for breach of fiduciary duty, insider selling, unjust enrichment, waste of corporate assets, and violations of Section 14(a) of the Securities Exchange Act of 1934, and Rule 14a-9 promulgated thereunder, in connection with the Company’s disclosures related to golodirsen. The Company is unable to provide an estimate of possible loss or range of possible loss.