Leases

12 Months Ended

Dec. 31, 2023

Leases

Leases

6. Leases

We have entered into one operating lease for real estate and one operating lease for clinical site equipment. Our real estate operating lease has a term of 78 months and includes renewal terms that can extend the lease term by 60 months, which is included in the lease term when it is reasonably certain that we will exercise the option. As of December 31, 2023, our operating lease for real estate had a remaining term of 21 months. Our operating lease for clinical site equipment has a term of 18 months and includes renewal terms that can extend the lease term monthly at the end of the term. As of December 31, 2023, our operating lease for clinical site equipment had a remaining term of 17 months. We expect to enter into several similar operating leases for clinical site equipment for our RAISE II trial throughout the remainder of 2024. The right-of-use (ROU) assets are included in Other assets on our balance sheets as of December 31, 2023 and 2022, and represent our right to use the underlying assets for the lease term. Our obligations to make lease payments are included in Accrued expenses and Other long-term liabilities on our balance sheets as of December 31, 2023 and 2022. The ROU assets were initially measured at cost, which comprise 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 assets are 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 December 31, 2023 and 2022, we had $1.0 million and $1.3 million, respectively, of ROU assets and our operating lease liabilities were $1.4 million and $2.0 million, respectively. We have entered into other 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 years ended December 31, 2023 and 2022, we recognized an aggregate $0.6 million in total lease costs, which included less than $0.1 million in short-term lease costs related to short-term operating leases in each year.

Because the rate implicit in the 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 the ROU asset and lease liability related to the real estate operating lease was 11.0%. 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. The borrowing rate used to determine the initial value of the ROU asset and lease liability related to our operating lease for clinical site equipment was approximately 7.0%.

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 December 31, 2023 and 2022, we have not recognized any impairment losses for our ROU assets.

Maturities of operating lease liabilities as of December 31, 2023 were as follows (in thousands):

2024	$	889
2025		662
		1,551
Less: imputed interest		(144)
Total lease liabilities	$	1,407
Current operating lease liabilities	$	774
Non-current operating lease liabilities		633
Total lease liabilities	$	1,407