Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Leases

Sangamo occupies approximately 87,700 square feet of office and research and development laboratory facilities in Brisbane, California pursuant to a lease that expires in May 2029. Sangamo also occupies approximately 45,600 square feet of research and office space in Richmond, California pursuant to leases that expire in August 2026. In addition, the Company leases approximately 20,800 square feet of office and research space in Valbonne, France subject to leases that expire beginning in June 2025 through 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 and exercised that 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. As of December 31, 2019, these incentives have been received and used.

The Company performed evaluations of its contracts and determined each of its identified leases are operating leases. For the year ended December 31, 2019, the Company incurred $7.9 million of lease costs included in operating expenses in the Consolidated Statement of Operations in relation to these operating leases. Variable lease expense was $1.9 million for the year ended December 31, 2019 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 year ended December 31, 2019 was $3.5 million and was included in net cash used in operating activities in the Company’s Consolidated Statement of Cash Flow.

Rent expense related to lease agreements was $7.9 million, $2.3 million, and $1.1 million for 2019, 2018 and 2017, respectively. Future minimum payments under lease obligations at December 31, 2019 consist of the following (in thousands):


	Total
2020	$	5,870
2021	6,390
2022	6,468
2023	6,556
2024	6,694
Thereafter	26,141
Total lease payments	58,119
Less:
Imputed interest	(13,713)
Total	$	44,406

Reported as of December 31, 2019:
Operating lease liabilities - current (included in Accounts payable and accrued liabilities on the Consolidated Balance Sheet)	$	3,214
Operating lease liabilities - long-term	41,192
Total	$	44,406

As of December 31, 2019, the weighted-average remaining lease term is 8.8 years and the weighted-average incremental borrowing rate used to determine the operating lease liability was 6.2% for the Company’s operating leases.

Contractual Commitments

As of December 31, 2019, the Company has manufacturing obligations that include a fee of $6.3 million for dedicated capacity pursuant to the Development and Manufacturing Services Agreement with Brammer Bio MA, now a Thermo Fisher Scientific Inc. subsidiary ("Brammer"). The Company also has an Option Agreement ("Option") with Brammer, entered in April 2019, whereby Brammer granted the Company an option to secure dedicated capacity for manufacturing in Brammer’s facilities. The Company paid $3.0 million for the Option, which expires on December 31, 2021. In addition, the Company agreed to pay Brammer $2.0 million, $0.5 million of which was paid upon execution of the agreement, to assist it in establishing its manufacturing capabilities in Brisbane, California, which may increase Sangamo's contractual commitments in the future. Furthermore, the Company has non-cancelable contractual commitments under manufacturing-related supplier arrangements with Brammer, which requires minimum purchase commitments totaling approximately $2.5 million through December 2021, $0.5 million of which was paid upon execution of the agreement.

The Company also has $1.2 million of license obligations related to its intellectual property.

Contingencies

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