Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Leases

The Company leases its facilities under long-term operating leases that expire at various dates through 2026. The Company generally has options to renew lease terms on its facilities, which may be exercised at the Company's sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at the Company's discretion. The Company evaluates renewal and termination options at the lease commencement date to determine if it is reasonably certain to exercise the option and has concluded on all operating leases that it is not reasonably certain that any options will be exercised. The weighted-average remaining lease term for the Company's operating leases as of June 30, 2020 was 5.67 years.

Expense related to leases is recorded on a straight-line basis over the lease term. Lease expense under operating leases, including common area maintenance fees, totaled approximately $173,000 and $182,000, respectively, for the three months ended June 30, 2020 and 2019, and $366,000 and $376,000 for the six months ended June 30, 2020 and 2019, respectively.

The discount rate implicit within the Company's leases is generally not determinable and therefore the Company determines the discount rate based on its incremental borrowing rate based on the information available at commencement date. As of June 30, 2020, the operating lease liabilities reflect a weighted-average discount rate of 8.28%.

The following table sets forth the operating lease right-of-use assets and liabilities as of June 30, 2020 (in thousands):


Assets
Operating lease right-of-use assets	$	2,414

Liabilities
Operating lease short-term liabilities (recorded within Accrued liabilities)	$	189
Operating lease long-term liabilities (recorded within Lease-related obligations)	2,302
Total operating lease liabilities	$	2,491

Operating lease payments over the remainder of the lease terms are as follows (in thousands):


Years Ending December 31,	As of June 30, 2020
2020	$	362
2021 (1)	191
2022	546
2023	562
2024	580
All remaining years	955
Total future minimum rental payments	$	3,196
Less amount of lease payments representing interest	705
Total present value of lease payments	$	2,491

(1)The Company entered into the Ninth Amendment of its lease for the Company's headquarters in Durham, NC, which extended the term of the lease 65 months to July 31, 2026. As part of the amendment, the Company will receive a rent abatement of the first 5 months of the new lease term which begins on March 1, 2021. Additionally, the Ninth Amendment grants the Company a refurbishment allowance, which the Company expects to receive in 2021 after the refurbishment has been completed.

As of December 31, 2019, operating lease payments over the remainder of the lease terms were as follows (in thousands):


Years Ending December 31,	As of December 31, 2019

2020	$	719
2021	182


Total future minimum rental payments	$	901
Less amount of lease payments representing interest	66
Total present value of lease payments	$	835

For the three months ended June 30, 2020 and 2019, the Company made lease payments of approximately $180,000 and $194,000, respectively, and for the six months ended June 30, 2020 and 2019, the Company made lease payments of approximately $357,000 and $386,000, respectively, which are included in operating cash flows.

Sublease

The Company subleases 3,537 square feet of its office space under a non-cancelable operating lease that expires in February 2021. For the three and six months ended June 30, 2020 and 2019, the Company recognized approximately $18,000 and $35,000 of income in Interest income and other, net on the Consolidated Statement of Operations and Comprehensive Loss. Total future minimum rentals under the non-cancelable operating sublease are presented below (in thousands):


Years Ending December 31,	As of June 30, 2020

2020	$	41
2021	14


Total future minimum sublease rentals	$	55

Significance of Revenue Source

The Company is the recipient of federal research contract funds from BARDA, the sole source of the Company's contract revenue. Periodic audits are required under the Company’s BARDA agreement and certain costs may be questioned as appropriate under the BARDA agreement. Management believes that such amounts in the current year, if any, are not significant. Accordingly, no provision for refundable amounts under the BARDA agreement had been made as of June 30, 2020 and December 31, 2019.