5. LEASES

The Company entered into a three‑year lease agreement for its headquarters on September 30, 2013, with a commencement date of February 1, 2014. On June 30, 2016, the lease was amended to extend the term from January 31, 2017 to January 31, 2019. In connection with the lease agreement, the Company issued a letter of credit to the landlord for $84,000. The Company secured the letter of credit for the full amount of the letter with cash on deposit, which is reported as restricted cash. With the adoption of ASU 2016-02, the Company has recorded a right-of-use asset and corresponding lease liability.

On February 28, 2018, the Company entered into a lease agreement with 480 Arsenal Group LLC (the “Arsenal Group”) for the lease of a portion of the building located at 490 Arsenal Way Watertown, Massachusetts (the “Watertown Lease”). The initial term of the Watertown Lease is eight years with an option to extend for an additional five years. The Company expects to occupy the premises in early 2019. The Company plans to use the premises as its new corporate headquarters and for research and development. The Company has not yet occupied this space as it is being renovated for the Company’s use. The Company has concluded that it does not control the space as defined in ASU 2016-02 during the construction period and does not expect to gain control of the space until on or near construction completion and, as such, a right-of-use asset and corresponding lease liability have not been recorded.

In connection with the Watertown Lease, the Company issued a letter of credit to the Arsenal Group for $2.0 million. The Company secured the letter of credit for the full amount of the letter with cash on deposit, which is reported as restricted cash.

On March 15, 2018, the Company entered into a lease agreement with Duffy Associates, LLC for the lease of a portion of the building located at 465 Waverley Oaks Road, Suite 301, Waltham, Massachusetts (the “Waverley Oaks Lease”). The term of the Waverley Oaks Lease is one-year, and as such a right-of-use asset and corresponding lease liability has not been recorded. The Company plans to use this location for additional corporate offices before moving to its new corporate headquarters in Watertown, Massachusetts.

The components of lease expense and related cash flows were as follows (in thousands):


	For the three months ended September 30,
	2018		2017
Lease cost
Operating lease cost	$	99	$	99
Short-term lease cost		55		—
Total lease cost	$	154	$	99

Operating cash flows from operating leases	$	103	$	100


	For the nine months ended September 30,
	2018		2017
Lease cost
Operating lease cost	$	296	$	296
Short-term lease cost		117		—
Total lease cost	$	413	$	296

Operating cash flows from operating leases	$	307	$	296

As of September 30, 2018, and December 31, 2017, the remaining lease term on the operating lease was 0.33 years and 1.08 years, respectively. As of September 30, 2018, and December 31, 2017, the discount rate was 6.50%.

Future minimum commitments due under these lease agreements as of September 30, 2018 are as follows (in thousands):


Years Ending December 31,		Operating Lease Obligation (1)		Other Lease Obligations (2)		Total
2018 (remaining three months)	$	69	$	63	$	132
2019		34		52		86
2020		—		—		—
2021		—		—		—
2022		—		—		—
Present value adjustment		(2)		—		(2)
Total minimum lease payments	$	101	$	115	$	216

(1)

Future minimum lease payments under the Company’s operating lease for its current corporate headquarters and lab space in Waltham, Massachusetts.

(2)

Future minimum lease payments under the Company’s Waverley Oaks Lease. Excluded from the table above is the Watertown Lease because the Company has concluded that it does not control the space during the construction period and does not expect to gain control of the space until on or near construction completion.