Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Leases

Sangamo occupies approximately 87,700 square feet of office and research and development laboratory facilities in Brisbane, CA pursuant to a lease that expires in May 2029. Sangamo also leases approximately 37,900 square feet of office and laboratory space in Richmond, CA through August 2026. The Company leases approximately 7,700 square feet of additional research and office space located in Richmond, CA pursuant to a lease that expires in December 2019. In addition, the Company leases two properties in Valbonne, France. The first lease is for approximately 14,036 square feet of research and office space that expires in June 2025. The second lease, which commenced on April 1, 2019, is for approximately 6,800 square feet of office space and expires in March 2028.

Certain of these leases also include renewal options at the election of the Company to renew or extend the lease for an additional five to ten years. These optional periods have not been considered in the determination of the ROU assets or lease liabilities associated with these leases as the Company did not consider it reasonably certain it would exercise the options.

With respect to the Brisbane lease, the commencement date for approximately 35,080 square feet of the office space occurred in January 2019 while the commencement date for the remaining approximately 52,620 square feet occurred in June 2019. The Company has the right to make tenant improvements, including the addition of laboratory space, with a lease incentive allowance of $6.8 million on the first portion of the space occupied and $10.2 million on the portion of the lease that commenced in June 2019.

The Company performed evaluations of its contracts and determined each of its identified leases are operating leases. For the three and nine months ended September 30, 2019, the Company incurred $2.6 million and $5.3 million, respectively, of lease costs included in operating expenses in the Condensed Consolidated Statements of Operations in relation to these operating leases. Variable lease expense was $0.6 million and $1.2 million for the three and nine months ended September 30, 2019, respectively, and was not included in the measurement of the Company’s operating ROU assets and lease liabilities. The variable expense consists primarily of the Company’s proportionate share of operating expenses, property taxes and insurance and is classified as lease expense due to the Company’s election to not separate lease and non-lease components.

Cash paid for amounts included in the measurement of operating lease liabilities for the nine months ended September 30, 2019 was $2.0 million and was included in net cash used in operating activities in the Company’s Condensed Consolidated Statements of Cash Flow.

As of September 30, 2019, the maturities of the Company’s operating lease liabilities were as follows (in thousands):



	Total
Three months ending December 31, 2019	$	1,073
2020	6,055
2021	6,097
2022	6,165
2023	6,243
Thereafter	31,946
Total lease payments	57,579
Less:
Imputed interest	(13,976		)
Total	$	43,603

Reported as of September 30, 2019:
Operating lease liabilities - current (included in Accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheet)	$	2,994
Operating lease liabilities - long-term	40,609
Total	$	43,603

As of September 30, 2019, the weighted-average remaining lease term is 9.1 years and the weighted-average incremental borrowing rate used to determine the operating lease liability was 6.9% for the Company’s operating leases.

The Company does not have any financing leases.

Contingencies

Sangamo is not party to any material pending legal proceedings or contingencies. From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business.