Commitments and contingencies

9 Months Ended

Sep. 30, 2020

Commitments and contingencies

Commitments and contingencies

9. Commitments and contingencies

Operating leases

In May 2017, the Company entered into a 62-month office and laboratory space lease for approximately 11,000 square feet of space in Exton, Pennsylvania. The Company has an option to extend the lease for two additional five-year terms or to early terminate the lease at the end of the 38th month of the lease. The lease is subject to fixed rate escalation increases and the landlord waived the Company’s rent obligation for the first two months of the lease. Deferred rent is $11,000 and $18,000 as of September 30, 2020 and December 31, 2019, respectively, and is being amortized as a reduction in rent expense over the term of the lease. The Company recognizes rent expense on a straight-line basis over the expected lease term.

Future minimum lease payments for the Company’s facility are as follows as of September 30, 2020 (in thousands):

Years ending December 31,	Amount
2020 (represents three remaining months)	$	56
2021		225
2022		153
	$	434

Rent expense was $0.1 million and $0.1 million for the three months ended September 30, 2020 and 2019, respectively, and $0.2 million and $0.2 million for the nine months ended September 30, 2020 and 2019, respectively.

Capital leases

During 2016 and 2017, the Company entered into multiple capital leases for laboratory equipment. The leases provide for 36 to 38 monthly payments ranging from $2,000 to $32,000. Interest rates for the leases range from 9.43% to 11.35%. Interest expense related to the leases was $7,000 and $34,000 for the nine months ended September 30, 2020 and 2019, respectively. The leases ended in July 2020.

Employment agreements

The Company entered into employment offer letter agreements (the “Employment Agreements”) with key personnel providing for compensation and severance in certain circumstances, as defined in the respective Employment Agreements. The Employment Agreements may be terminated by either the Company or the employees in accordance with the Employment Agreements and provide for annual pay increases and bonuses at the discretion of the Board of Directors.

Employee benefit plan

The Company maintains a defined-contribution plan under Section 401(k) of the Internal Revenue Code (the 401(k) Plan). The 401(k) Plan covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. The Company assumes all administrative costs of the 401(k) Plan and makes matching contributions as defined in the 401(k) Plan document.