Initial lease term

[Table of Contents](#ie2ffba3ee5384c86becdb38ff117ca9a_7)Note 8. Property and Equipment, netProperty and equipment, net consists of the following (in thousands):

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|  | September 30,2022 |  | December 31,2021 |
| Office equipment | $ | 22,527  |  |  | $ | 22,554  |  |
| Laboratory equipment | 115,507  |  |  | 105,040  |  |
| Computer equipment | 88,239  |  |  | 79,871  |  |
| Land | 10,139  |  |  | 10,494  |  |
| Building and leasehold improvements | 432,748  |  |  | 434,321  |  |
| Operating lease right-of-use assets | 23,111  |  |  | 27,308  |  |
| Construction in progress | 225,442  |  |  | 220,052  |  |
|  | 917,713  |  |  | 899,640  |  |
| Less accumulated depreciation and amortization | (201,980) |  |  | (175,720) |  |
| Property and equipment, net | $ | 715,733  |  |  | $ | 723,920  |  |

In March 2017, we acquired additional adjacent buildings to our global headquarters in Wilmington, Delaware and in 2019, began demolition of these buildings and construction of a new laboratory and office building totaling approximately 200,000 square feet. The certificate of occupancy was received in December 2021 and we capitalized approximately $158.2 million in building and office equipment that was previously included in construction in progress as of December 31, 2021.In February 2018, we signed an agreement to rent a building in Morges, Switzerland for an initial term of 15 years plus one year of free rent, with multiple options to extend for an additional 20 years. The building serves as our new European headquarters and consists of approximately 100,000 square feet of office space. This building allowed for consolidation of our European operations that were located in Geneva and Lausanne, Switzerland. In June 2019, we obtained control of the Morges building to begin our construction activity, which was completed in 2020. At that time, we determined the lease to be a finance lease and recorded a lease liability of $31.1 million and a finance lease right-of-use asset of $29.1 million, net of a lease incentive from our landlord of $2.0 million. We have capitalized approximately $19.5 million in leasehold improvements as of September 30, 2022 relating to Morges.In July 2018, we signed an agreement to purchase land located in Yverdon, Switzerland. The land was purchased, in cash, for approximately $4.8 million. Upon this parcel, we are constructing a large molecule production facility. Construction activity commenced in July 2018, and as of September 30, 2022, we have capitalized approximately $190.5 million in costs for construction, ground preparation and architectural and engineering studies. Inspection from competent authorities was finalized in March 2022, and in June 2022 Swissmedic authorities granted the GMP drug manufacturing license for this facility.Note 9. Accrued and Other Current LiabilitiesAccrued and other current liabilities consisted of the following (in thousands):

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|  | September 30,2022 |  | December 31,2021 |
| Royalties | $ | 248,455 |  | $ | 168,412 |
| Clinical related costs | 152,764 |  | 109,486 |
| Sales allowances | 186,112 |  | 136,541 |
| Sales and marketing | 31,001 |  | 35,750 |
| Construction in progress | 8,836 |  | 27,098 |
| Operating lease liabilities | 8,492 |  | 10,554 |
| Other current liabilities | 64,154 |  | 45,754 |
| Total accrued and other current liabilities | $ | 699,814 |  | $ | 533,595 |

22
