Commitments and contingencies

3 Months Ended

Mar. 31, 2021

Commitments and contingencies

Commitments and contingencies

8. Commitments and contingencies

Operating leases

In May 2017, the Company entered into a 62 month office and laboratory space lease commencing on July 1, 2017 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. 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 $15,000 and $16,000 as of March 31, 2021 and December 31, 2020, 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 operating leases are as follows as of March 31, 2021 (in thousands):

Years ending December 31,	Amount
2021 (represents remaining nine months in 2021)	$	240
2022		153
	$	393

Rent expense was $0.1 million for each of the three months ended March 31, 2021 and 2020, respectively.

In August 2020, the Company entered into a one-year operating lease for laboratory equipment that expires in July 2021 and has fixed monthly payments of $18,000.

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 respective 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. The Company made matching contributions of $39,000 and $16,000 to the 401(k) Plan for the three months ended March 31, 2021 and 2020, respectively.

Legal proceedings

The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities. At each reporting date, the Company evaluates whether a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.