5.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 on 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 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:


	Three Months Ended March 31,
Lease cost (In thousands)	2021		2020
Operating lease cost	$	91	$	91
Short-term lease cost		2		8
Variable lease cost		27		25
Total lease cost	$	120	$	124

Other information (In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from short term leases	$	2	$	8
Operating cash flows from operating leases		95		93
Total cash paid for leases	$	97	$	101
Weighted-average remaining lease term - operating leases		2.6 Years		3.6 Years
Weighted-average discount rate - operating leases		7.0%		7.0%

Maturities of lease liabilities due under the Cambridge Lease as of March 31, 2021 is as follows:


Leases (In thousands)	As of March 31, 2021
2021(excluding the 3 months ended March 31, 2021)	$	290
2022		398
2023		339
Total lease payments		1,027
Less: imputed interest		(86)
Present value of lease liabilities	$	941

Right-of-use lease assets and lease liabilities are reported in the Company’s consolidated balance sheets as follows:


Leases (In thousands)	Classification	March 31, 2021		December 31, 2020
Assets
Lease asset, net	Operating	$	853	$	928
Total lease assets		$	853	$	928

Liabilities
Current	Operating	$	336	$	327
Non-current	Operating		605		693
Total lease liabilities		$	941	$	1,020

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 March 31, approximately $4 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.