Leases

In February 2016, the FASB issued Topic 842, which requires lessees to record most leases with a term greater than 12 months on their balance sheets, but recognize expenses on their statement of operations in a manner similar to current accounting practice. Under the guidance, lessees initially recognize a lease liability for the obligation to make lease payments and a ROU asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The ROU asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs.

We adopted ASU 2016-02, Leases ("Topic 842") effective January 1, 2019, using the modified retrospective transition option. The adoption of the standard resulted in the recording of ROU assets, primarily consisting of operating leases of facilities and minor equipment, and lease liabilities of $1.0 million as of the commencement date. The adoption did not have a material impact on our consolidated statements of operations and comprehensive loss or cash flows related to existing leases. As a result, there was no cumulative-effect adjustment.

We elected certain practical expedients as part of the adoption, which allow us to not reassess our prior conclusions about lease identification, lease classification and initial direct costs. We also elected the short-term lease recognition exemption for all leases that qualify and will not recognize ROU assets or lease liabilities for those leases. Lastly, we elected to separate lease and non-lease components only for contract manufacturing assets based on an assessment of the contract terms. We did not separate lease and non-lease components for all other existing asset classes. Most leases do not contain an implicit discount rate; therefore, we estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Our facilities leases contain one or more options to renew after the noncancellable term. The exercise of lease renewal options is not reasonably certain upon lease commencement and is at management's sole discretion. Our ROU assets are included within deposits and other in our consolidated balance sheet at December 31, 2019. Associated lease liabilities are included in accrued expenses and other, and other long-term liabilities in our consolidated balance sheet at December 31, 2019. Lease expense for lease payments is recognized on a straight-line basis over the lease term within loss from operations in the consolidated statements of operations and comprehensive loss. Payments for certain lease agreements are adjusted annually for changes in an index or rate. We had no finance leases, residual value guarantees, restrictive covenants, subleases or sale leasebacks at December 31, 2019.

As of December 31, 2019, ROU assets and lease liabilities were each $0.7 million. The weighted-average remaining term for lease contracts was 1.6 years at December 31, 2019, with maturities ranging from 15 months to 50 months. The weighted-average discount rate was 5.3% at December 31, 2019. We paid $0.5 million for operating leases included in the measurement of lease liabilities during the year ended December 31, 2019.

Aside from facilities and minor equipment, we have various supply agreements with third-party manufacturers, which involve the lease of manufacturing facilities and equipment, as defined in Topic 842. We have elected to separate lease and non-lease components for these arrangements. These manufacturing agreements have variable lease payments, which typically become binding once certain manufacturing milestones are achieved, and as such, are not included in ROU assets and liabilities until such payments are no longer variable.

Lease Costs

The table below presents certain information related to the lease costs (in thousands) for operating leases as of December 31, 2019:



	Twelve months ended December 31, 2019
Operating lease cost	$	487
Short-term lease cost	61
Variable lease cost ⁽¹⁾	205
Total lease cost	$	753

⁽¹⁾Includes lease components from our third-party manufacturing agreements.

Undiscounted Cash Flows

The following table summarizes future maturities (in thousands) for operating lease liabilities as of December 31, 2019:



2020	$	489
2021	198
2022	15
2023	12
2024	2
Total minimum lease payments	716
Less: amount of lease payments representing interest	30
Present value of operating lease liabilities	$	686