13. COMMITMENTS AND CONTINGENCIES

Operating Leases

On May 3, 2018, the Company entered into a sublease for 5,104 square feet of space for its corporate offices and laboratory space in Cambridge Massachusetts (the “Cambridge Lease”). The Cambridge Lease commenced on May 3, 2018 and expires October 31, 2023 with no renewal options. The Cambridge Lease contains rent holiday and rent escalation clauses.

In connection with the Cambridge Lease, a standby letter of credit was established for $40 thousand. On November 1, 2018, the standby letter of credit was increased to $60 thousand. Under the Cambridge Lease, the Company will be required to pay its proportionate share of certain operating costs and property taxes applicable to the leased premises in excess of new base year amounts. These costs are considered to be variable lease payments and are not included in the determination of the lease’s right-of-use asset or lease liability.

The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:

As the Company’s Cambridge Lease does not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments. The Company has estimated its incremental borrowing rate based on electing the remaining lease term as of the adoption date.

Since the Company elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the combined lease component.

The expected lease terms include noncancelable lease periods.

The elements of lease expense are as follows:


	Year Ended December 31,
Lease cost (In thousands)	2020		2019
Operating lease cost	$	364	$	364
Short-term lease cost		21		33
Variable lease cost		139		63
Total lease cost	$	524	$	460

Other information (In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from short term leases	$	21	$	33
Operating cash flows from operating leases		375		243
Total cash paid for leases	$	396	$	276
Weighted-average remaining lease term - operating leases		2.83 Years		3.84 Years
Weighted-average discount rate - operating leases		7.0%		7.0%

Maturities of lease liabilities due under the Company’s Cambridge Lease as of December 31, 2020 is as follows:


Leases (In thousands)	As of December 31, 2020
2021	$	386
2022		398
2023		339
Total lease payments		1,123
Less: imputed interest		(103)
Present value of lease liabilities	$	1,020


Leases (In thousands)	Classification	December 31, 2020		December 31, 2019
Assets
Lease asset, net	Operating	$	928	$	1,211
Total lease assets		$	928	$	1,211

Liabilities
Current	Operating	$	327	$	294
Non-current	Operating		693		1,020
Total lease liabilities		$	1,020	$	1,314

Clinical Trial Commitments

The Company has engaged and executed contracts with clinical research organizations (“CROs”) to assist with the administration of its ongoing INSPIRE 1.0 and INSPIRE 2.0 clinical trials. As of December 31, 2020, approximately $4.5 million remains to be paid on these contracts. The timelines and related costs necessary to complete these trials may vary depending on a number of factors including the rate of patient enrollment into our INSPIRE 2.0 trial. In the event the Company were to terminate the INSPIRE 2.0 trial, certain financial penalties would become payable to the CROs for costs to wind down the terminated trial.