Leases

6 Months Ended

Jun. 30, 2023

Leases

Leases

9. Leases

We have entered into one operating lease for real estate. This lease has a term of 78 months, and includes renewal terms which can extend the lease term by 60 months, which we include in the lease term when it is reasonably certain that we will exercise the option. As of June 30, 2023, our operating lease had a remaining lease term of 27 months. The right-of-use (ROU) asset is included in “Other assets” on our interim consolidated balance sheets as of June 30, 2023 and December 31, 2022, and represents our right to use the underlying asset for the lease term. Our obligations to make lease payments are included in both “Accrued expenses” and “Other long-term liabilities” on our interim consolidated balance sheets as of June 30, 2023 and December 31, 2022. The ROU asset was initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received. The ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received.  

As of June 30, 2023 and December 31, 2022, ROU assets were $1.1 million and $1.3 million, respectively, and operating lease liabilities were $1.7 million and $2.0 million, respectively. We have entered into various short-term operating leases, primarily for clinical trial equipment, with an initial term of twelve months or less. These leases are not recorded on our balance sheets. All operating lease expense is recognized on a straight-line basis over the lease term. During each of the three months ended June 30, 2023 and 2022, we recognized $0.1 million in total lease costs. During each of the six months ended June 30, 2023 and 2022, we recognized $0.3 million in total least costs. In all periods, we recognized less than $0.1 million in short-term lease costs related to short-term operating leases.

Because the rate implicit in each lease is not readily determinable, we use our incremental borrowing rate to determine the present value of the lease payments. The weighted average incremental borrowing rate used to determine the initial value of ROU assets and lease liabilities was 11.0%, derived from a corporate yield curve based on a synthetic credit rating model using a market signal analysis. We have certain contracts for real estate which may contain lease and non-lease components which we have elected to treat as a single lease component.

ROU assets for operating leases are periodically reduced by impairment losses. We use the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize.  As of June 30, 2023 and December 31, 2022, we have not recognized any impairment losses for our ROU assets.

Maturities of operating lease liabilities as of June 30, 2023 were as follows (in thousands):

Remaining six months of 2023	$	414
2024		840
2025		642
Thereafter		—
		1,896
Less: imputed interest		(225)
Total lease liabilities	$	1,671
Current operating lease liabilities	$	681
Non-current operating lease liabilities		990
Total lease liabilities	$	1,671