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COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2021
Commitments And Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

15. COMMITMENTS AND CONTINGENCIES

Manufacturing Obligations

The following table summarizes the aggregate non-cancelable contractual obligations arising from the Company’s manufacturing obligations:

 

 

 

As of

March 31, 2021

(in thousands)

 

2021 (April - December)

 

$

523,673

 

2022

 

 

261,697

 

2023

 

 

224,980

 

2024

 

 

120,585

 

2025

 

 

114,531

 

Thereafter

 

 

207,325

 

Total manufacturing commitments*

 

$

1,452,791

 

 

*

Total manufacturing commitments include both the Catalent and Thermo manufacturing and supply agreements. Related to the embedded leases at Catalent and Thermo , the Company has an ROU asset and a lease liability recorded on the unaudited condensed consolidated balance sheets as of March 31, 2021. For more information, please read Note 19, Leases of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

 

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 leases embedded in two of its manufacturing and supply agreements as the Company determined that it controls the use of clean room suites and the related equipment therein. During the three months ended March 31, 2021, the Company modified the terms of its manufacturing and supply agreement with Catalent, Inc. The modification decreased the Company’s right of use of certain dedicated clean room suites and reduced the fixed and in-substance fixed payments due over the remaining term of the agreement. The modification was accounted for as a partial lease termination, resulting in: (i) the derecognition of right of use assets of $22.8 million, (ii) the derecognition of lease liabilities of $20.0 million, and (iii) the recognition of a loss of $2.8 million, which is included in research and development expense.

Litigation

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.

 

On September 15, 2020, REGENXBIO INC. (“RegenX”) and the Trustees of the University of Pennsylvania filed a lawsuit against the Company and Sarepta Therapeutics Three, LLC (together, “Sarepta”), in the U.S. District Court for the District of Delaware. The plaintiffs assert patent infringement of U.S. Patent No. 10,526,617 (“the ‘617 Patent”) under 35 U.S.C.§§ 271(a)-(c) based on Sarepta’s alleged direct or indirect manufacture and use of cultured host cell technology to make adeno-associated virus (“AAV”) gene therapy products, including SRP-9001. Specifically, the Complaint essentially includes the allegation that Sarepta’s use, and the use by its contract manufacturers on its behalf, of a host cell containing a recombinant acid molecule that encodes a capsid protein having at least 95% amino acid identity to AAVrh10 infringes upon the ‘617 Patent asserted by RegenX. Plaintiffs seek injunctive relief, a judgment of infringement, an unspecified amount of damages that is no less than a reasonable royalty, a judgment of willful infringement, attorneys’ fees and costs, and such other relief as the court deems just and proper. On September 30, 2020, the Court endorsed a stipulation filed by the parties extending Sarepta’s time to respond to the complaint to and including November 6,

2020. On November 4, 2020, Sarepta moved to dismiss the case pursuant to Federal Rule of Civil Procedure 12(b)(6) based on the Safe Harbor provision of non-infringement contained in 35 U.S.C. § 271(e)(1). On December 16, 2020, Sarepta and RegenX both filed requests for oral argument. The Court has not scheduled a date for the hearing. We are unable to provide an estimate of possible loss or range of possible loss.