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LEASES
12 Months Ended
Dec. 31, 2022
LEASES  
LEASES

NOTE 7 LEASES

In October 2014, we entered into an agreement (the Office Agreement) with Fortress Biotech, Inc. (FBIO) to occupy approximately 45% of the 24,000 square feet of New York City office space leased by FBIO. The Office Agreement requires us to pay our respective share of the average annual rent and other costs of the 15-year lease. We approximate an average annual rental obligation of $1.8 million under the Office Agreement. We began to occupy this new space in April 2016, with rental payments beginning in the third quarter of 2016. At January 1, 2019, we recognized a lease liability and corresponding ROU asset of $9.5 million and $8.1 million, respectively, based on the present value of the remaining lease payments for all of our leased office spaces, the majority of which is comprised of our New York City office space. The present values of our lease liability and corresponding ROU asset are $11.9 million and $8.9 million, respectively, as of December 31, 2022. Our leases have remaining lease terms of approximately 2 years to 10 years. One lease has a renewal option to extend the lease for an additional term of five years.

Also, in connection with this lease, in October 2014 we pledged $0.6 million to secure a line of credit as a security deposit for the Office Agreement, which has been recorded as restricted cash in the accompanying consolidated balance sheets. Additional collateral of $0.6 million was pledged in April 2018 to increase the letter of credit for the office space.

In October 2019, we finalized a five-year lease for office space in New Jersey (the NJ Lease). We approximate an average annual rental obligation of $0.3 million under the NJ Lease.

In October 2021, we finalized a five-year lease for office space in North Carolina (the NC Lease). We approximate an average annual rental obligation of $0.2 million under the NC Lease. We took possession of this space in February 2022, with rental payments beginning in April 2022.

The following components of lease expense are included in the Company’s consolidated statements of operations for the years ended December 31, 2022, 2021, and 2020:

    

 

Year ended

 

December 31, 

(in thousands)

 

2022

    

2021

2020

Operating lease cost

$

2,671

$

2,154

$

2,656

Net lease cost

$

2,671

$

2,154

$

2,656

As of December 31, 2022, the weighted-average remaining operating lease term was 6.5 years and the weighted-average discount rate for operating leases was 9.97%. Cash paid for amounts included in the measurement of operating lease liabilities during the year ended December 31, 2022 was $2.3 million.

The balance sheet classification of lease liabilities was as follows:

    

December 31, 

    

December 31,

(in thousands)

 

2022

 

2021

Liabilities

 

  

 

  

Lease liability current portion

$

1,581

$

1,437

Lease liability non-current

 

10,344

 

9,847

Total lease liability

$

11,925

$

11,284

As of December 31, 2022, the maturities of lease liabilities were as follows:

    

Operating

(in thousands)

 

leases

2023

$

2,375

2024

2,388

2025

 

2,100

2026

 

2,080

2027

 

1,913

After 2027

 

6,541

Total lease payments

 

17,397

Less: interest

 

(5,472)

Present value of lease liabilities(*)

$

11,925

(*) As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date and considering the term of the lease to determine the present value of lease payments. We used the incremental borrowing rate of 10.25% on February 28, 2019, for leases that commenced prior to that date through December 31, 2021. We used an incremental borrowing rate of 5.65% for the NC lease.