Leases

12 Months Ended

Dec. 31, 2020

The Company currently has two building leases treated as finance leases.

In 2006, the Company entered into a long-term property lease with Alexandria for its corporate headquarters in San Francisco, California, with an initial term of 15 years, scheduled to expire in 2023. The Company has an option to extend the lease for an additional 10 years through 2033. The lease contract provides for a fixed annual rent, with scheduled increases of two percent that occur on each anniversary of the rent commencement date. This lease requires the Company to pay all costs of ownership, operation, and maintenance of the premises, including without limitation all operating costs, insurance costs, and taxes.

In 2013, the Company entered into a long-term property lease with Beijing Economic-Technological Development Area (“BDA”) Management Committee for a pilot plant located in Beijing Yizhuang Biomedical Park of BDA. The building is leased for an initial lease term of eight years, scheduled to expire in 2021. Renewal options are not specified within the lease contract. The lease contract provides for fixed quarterly rent payments, with scheduled increases that occur as detailed in the lease contract. This lease requires the Company to pay all operating and maintenance costs, and a fixed amount for property management fees.

The Company currently has six additional real estate leases for office spaces in Shanghai and Beijing, China, which are treated as operating leases. These leases have lease terms ranging from two to three years, expiring in 2023. These lease contracts provide for fixed quarterly rent payments, and require the Company to pay operating and maintenance costs, and a fixed amount for property management fees.

In addition, the Company has several immaterial lease arrangements in China and U.S. for office equipment, scientific devices and automobile leases, with contracted lease terms ranging from two to four years, treated as finance leases or operating leases, respectively.

The Company’s lease assets and related lease liabilities were as follows (in thousands):

		December 31,
	Balance Sheet Line Item	2020			2019
Assets
Finance:
Right-of-use assets - cost		$	50,477		$	49,909
Accumulated amortization			(20,871	)		(10,307	)
Finance lease right-of-use assets, net	Finance lease right-of-use assets		29,606			39,602
Operating:
Right-of-use assets - cost			3,934			2,736
Accumulated amortization			(1,891	)		(805	)
Operating lease right-of-use assets, net	Other assets		2,043			1,931
Total lease assets		$	31,649		$	41,533

Liabilities
Current:
Finance lease liabilities	Finance lease liabilities, current	$	12,330		$	12,351
Operating lease liabilities	Accrued and other current liabilities		1,188			983
Non-current:
Finance lease liabilities	Finance lease liabilities, non-current		25,391			37,610
Operating lease liabilities	Other long-term liabilities		853			942
Total lease liabilities		$	39,762		$	51,886

The components of lease expense were as follows (in thousands):

		Years Ended December 31,
	Statement of Operations Line Item	2020			2019
Finance lease cost:
Amortization of right-of-use assets	Cost of goods sold; Research and development; Selling, general and administrative expenses	$	10,369		$	10,307
Interest on lease liabilities	Interest expense		1,932			2,373
Operating lease cost	Cost of goods sold; Research and development; Selling, general and administrative expenses		1,151			891
Sublease income	Selling, general and administrative expenses		(1,201	)		(1,385	)
Total lease cost		$	12,251		$	12,186

Supplemental cash flow information related to leases were as follows (in thousands):

	Years Ended December 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	951	$	914
Operating cash flows from finance leases		1,896		2,196
Financing cash flows from finance leases		12,620		11,925
Right-of-use assets obtained in exchange for new lease liabilities:
Finance leases		662		49,909
Operating leases	$	1,072	$	2,736

Lease term and discount rate were as follows:

	December 31,
	2020			2019
Weighted-average remaining lease term (years):
Finance leases		2.9			3.6
Operating leases		1.8			2.1
Weighted-average discount rate:
Finance leases		4.39	%		4.42	%
Operating leases		4.74	%		4.75	%

Maturities of lease liabilities as of December 31, 2020 are as follows (in thousands):

Year Ending December 31,	Finance Leases			Operating Leases
2021	$	13,689		$	1,142
2022		13,886			839
2023		12,526			143
Total future lease payments		40,101			2,124
Less: Interest		(2,380	)		(83	)
Present value of lease liabilities	$	37,721		$	2,041