Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

9.	Commitments and Contingencies

Lease Commitments

In January 2018, the Company entered into a lease agreement to rent a 63,761 square foot manufacturing facility in Marlborough, Massachusetts. This facility is currently being transitioned to take over production of SIUS TFF from our Shrewsbury, Massachusetts facility. We expect this transition to be fully completed by June 30, 2019. This lease expires on November 30, 2028 and the total obligations related to this lease are included in the table below.

In 2017, as a result of the Spectrum Acquisition, the Company retained the obligation related to manufacturing space in Rancho Dominguez, California, which expires on July 15, 2020. The space is an approximately 54,000 square foot manufacturing facility which includes manufacturing, quality control and inventory areas as well as clean room suites. This space was expanded by approximately 15,000 square feet in November 2018 when the Company leased space in an adjacent building. This additional lease expires on November 30, 2025.

In March 2014, the Company entered into an amendment of its existing

lease agreement

to expand the rented space from approximately 56,000 to approximately 76,000 square feet at 41 Seyon Street, Waltham, Massachusetts. Pursuant to the terms of the amended lease, Repligen leased an additional 19,900 square feet (the “Expansion Space”) for a period of eight years and one month, commencing on August 1, 2014. The amended lease provides for additional rent expense of $

0.4 million

on an annualized basis. The amended lease also required an increase to a letter of credit from $

0.2 million

to $

0.5 million

and continues to require the Company to pay a proportionate share of certain of the landlord’s annual operating costs and real estate taxes. In 2017, the issuing bank no longer required collateral to secure the letter of credit; as a result, the Company released the funds from restricted cash. Future minimum rental commitments under the amended lease as of December 31, 2018 are $

1.4

million for the years ending December 31, 2019, 2020 and 2021, respectively, $

1.3 million

for the year ended December 31, 2022 and $

0.4 million

for the year ending December 31, 2023 (until May 31, 2023, the expiration date of the lease).

The Company leases four adjacent buildings in Lund, Sweden totaling approximately 45,000 square feet of space used primarily for biologics manufacturing and administrative operations. The lease was renewed during 2016 and expires on December 31, 2021. Future minimum rental commitments under the amended lease as of December 31, 2018 are $

0.9

million for the years ending December 31, 2019, 2020 and 2021, respectively.

Obligations under

non-cancelable

operating leases, including the facility leases discussed above, as of December 31, 2018 are as follows (amounts in thousands):

For the Years Ended December 31,	Operating Leases
2019	$	4,021
2020		3,599
2021		3,263
2022		2,213
2023		1,316
2024 and thereafter		3,622
Minimum operating lease payments	$	18,034

Rent expense charged to operations under operating leases was $

4.4 million, $3.4 million

and $

2.6 million

for the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, 2017 and 2016, the Company had deferred rent liabilities of $

4.1 million, $1.7 million

and $

1.8 million,

respectively, related to the escalating rent provisions for the Waltham, Massachusetts headquarters and the Company’s facilities in Rancho Dominguez,

California and Marlborough, Massachusetts.

Licensing and Research Agreements

The Company licenses certain technologies that are, or may be, incorporated into its technology under several agreements and also has entered into several clinical research agreements which require the Company to fund certain research projects. Generally, the license agreements require the Company to pay annual maintenance fees and royalties on product sales once a product has been established using the technologies. Research and development expenses associated with license agreements were immaterial amounts for the years ended December 31, 2018, 2017 and 2016.

In September 2018, we entered into a collaboration agreement with Sartorius Stedim Biotech (“SSB”), a leading international supplier for the biopharmaceutical industry, to integrate XCell

™

ATF cell retention control technology into Sartorius’s BIOSTAT

STR large-scale, single-use bioreactors to create novel perfusion-enabled bioreactors. As a result of this collaboration, end-users will stand to benefit from a single control system for 50L to 2,000L bioreactors used in perfusion cell culture applications. The single interface is designed to control cell growth, fluid management and cell retention in continuous and intensified bioprocessing and, ultimately, simplify the development and manufacture of biotechnological drugs under current good manufacturing practices.

In June 2018, we secured an agreement with Navigo for the exclusive co-development of multiple affinity ligands for which Repligen holds commercialization rights. We are manufacturing and have agreed to supply the first of these ligands, NGL-Impact

™

A, exclusively to Purolite Life Sciences (“Purolite”), who will pair our high-performance ligand with Purolite’s agarose jetting base bead technology used in their Jetted A50 Protein A resin product. We also signed a long-term supply agreement with Purolite for NGL-Impact A and other potential additional affinity ligands that may advance from our Navigo collaboration. The Navigo and Purolite agreements are supportive of our strategy to secure and reinforce our proteins business. We made payments to Navigo of $2.4 million in the year ended December 31, 2018 in connection with this program, which are recorded to research and development expenses in our consolidated statement of operations and comprehensive income.

Purchase Orders, Supply Agreements and Other Contractual Obligations

In the normal course of business, the Company has entered into purchase orders and other agreement with manufacturers, distributors and others. Outstanding obligations at December 31, 2018 of $

29.0 million

are expected to be completed within one year.