Note 7 — Contingencies and commitments

 

Leases

 

Future minimum lease payments under operating leases at March 31, 2016 are presented below (in thousands):

 

 

The Company leases property under operating leases expiring through 2027. Lease expenses amounted to $425,000 and $168,000 for the three months ended March 31, 2016 and March 31, 2015, respectively, which is included within Research and development and General and administrative expenses in the Company’s Consolidated statement of operations.

 

Capital commitments

 

At March 31, 2016 and December 31, 2015 the Company had commitments for capital expenditure totaling $19,579,000 and $20,651,000 respectively.

 

Clinical trials and contract manufacturing commitments

 

At March 31, 2016 and December 31, 2015 the Company had commitments to pay vendors for executing and administering clinical trials of $24,942,000 and $23,509,000, respectively, and for contract manufacturing of $19,472,000 and $16,612,000, respectively.

 

Universal Cells Research, Collaboration and License Agreement

 

On November 25, 2015, the Company entered into a Research, Collaboration and License Agreement relating to gene editing and HLA-engineering technology with Universal Cells, Inc. (“Universal Cells”). The Company paid an upfront license and start-up fee of $2.5 million to Universal Cells in November 2015 and a milestone payment of $3.0 million in February 2016.  Further milestone payments of up to $44 million are payable if certain development and product milestones are achieved. Universal Cells would also receive a profit-share payment for the first product, and royalties on sales of other products utilizing its technology.  The upfront and start-up fee has been expensed to research and development when incurred.

 

ThermoFisher License Agreement

 

In 2012, we entered into a series of license and sub-license agreements with Life Technologies Corporation, part of ThermoFisher Scientific, Inc. that provide the Company with a field-based exclusive license under certain intellectual property rights owned or controlled by ThermoFisher Scientific.  The Company paid upfront license fees of $1.0 million relating to the license and sublicense agreements and has an obligation to pay minimum annual royalties (in the tens of thousands of U.S. dollars prior to licensed product approval and thereafter at a level of 50% of running royalties in the previous year), milestone payments and a low single-digit running royalty payable on the net selling price of each licensed product. The upfront payment made in 2012 was expensed to research and development when incurred. Subsequent milestone payments have been recognized as an intangible asset due to the technology having alternative future use in research and development projects at the time of the payment.  The minimum annual royalties have been expensed as incurred. We are in the process of negotiating a new supply agreement with ThermoFisher Scientific which is anticipated to be executed during 2016.