Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Operating Leases

We have two non-cancellable office leases with remaining lease terms of approximately 1.5 years, each of which are classified as operating leases. Both leases expire in 2021. Only one of our leases has remaining renewal options, which includes three options to renew for one additional year. The exercise of lease renewal options is at our sole discretion, which we currently do not anticipate exercising and as such were not recognized as part of our ROU asset and lease liabilities. Our lease payments are fixed, and we recognize lease expense for these leases on a straight-line basis over the lease term. Operating lease ROU assets and lease liabilities are recorded based on the present value of the future minimum lease payments over the lease term at commencement date. As our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available at effective date of adoption in determining the present value of future payments. The weighted-average discount rate used was 8.59%.

Our balance sheet includes our ROU assets and lease liabilities as follows (in thousands):



Leases	Classification on the Balance Sheet	March 31, 2020		December 31, 2019
Operating ROU assets	Other long-term assets	$	1,213	$	1,402
Operating lease liabilities	Other current liabilities	898		871
Operating lease liabilities	Other long-term liabilities	419		654

The following costs are included in our cash flow statement (in thousands):



		Three Months Ended March 31,
Leases	Classification on the Cash Flow	2020		2019
Operating lease cost	Operating	$	220	$	220
Cash paid for amounts included in the measurement of lease liabilities	Operating	239		231

At March 31, 2020, the future minimum annual obligations under non-cancellable operating lease commitments in excess of one year are as follows (in thousands):



Years Ending December 31,
2020	$	729
2021	676
2022	—
2023	—
2024	—
Thereafter	—
Total minimum payments required	1,405
Less imputed interest	(88		)
Total	$	1,317

Shareholder Lawsuit

On March 25, 2020, a putative shareholder class action complaint was filed in the United States District Court for the Southern District of California against us and three of our current or former officers. The complaint purports to assert claims under Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 20(a) of the Exchange Act, on behalf of persons and entities who acquired our common stock between October 10, 2017 and November 7, 2019, or the Class Period. The complaint alleges that, during the Class Period, the defendants made material misrepresentations or omissions regarding our etokimab drug that artificially inflated our stock price. The plaintiff seeks, among other things, damages in an unspecified amount, as well as costs and expenses. We believe that the claims in the action are without merit.