Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

5. Commitments and Contingencies

Facilities Lease

The Company has a non-cancelable facility lease agreement, or the Lease, for office and laboratory facilities in South San Francisco, California, with a remaining lease term of 2.1 years, through January 2024, and a two-year renewal option prior to expiration. The renewal option to extend the Lease was not considered in the determination of the right-of-use asset or the lease liability for the Lease as the Company did not consider it reasonably certain that it would exercise any such option. The Lease has rent escalation clauses through the lease term and provided for tenant improvement allowances up to $499,900, which were fully utilized by December 2017 and included in the calculation of the lease liability. The Lease provides that the Company is obligated to pay certain variable costs, including taxes and operating expenses. The Lease is classified as an operating lease. In addition, the Company had a non-cancelable sublease agreement for a portion of its facilities through February 2020. The sublease agreement provided that the subtenant was obligated to pay its share of the variable costs under the Lease. Through March 7, 2021, the Company measured the present value of its lease liability using an estimated incremental borrowing rate of 9%.

On March 8, 2021, the Company amended its lease to reduce its rentable area from approximately 54,000 square feet to approximately 34,000 square feet. The related reduction in rent was effective January 1, 2021. In connection with the amendment, the Company also reduced its existing letter of credit from $440,000 to $270,000 as a security deposit to the lease. Subsequent to the amendment, which was determined to be a modification of the lease, the Company remeasured the present value of its lease liability using an estimated incremental borrowing rate of 7.5%. The Company recognized a gain of $0.4 million, which is included in interest and other income, net in its consolidated statement of operations for the year ended December 31, 2021, which represents the difference between the reduced lease liability and the reduction in the operating lease right of use asset.

The components of net operating lease costs included in the consolidated statement of operations for the year December 31, 2021, 2020 and 2019, were as follows (in thousands):

	Year Ended December 31,
Operating Lease Costs:	2021		2020			2019
Straight-line rent expense related to    facility operating lease	$	1,461	$	2,177		$	2,177
Variable rent expense related to    operating lease		1,012		1,509			1,327
Sublease income		—		(187	)		(1,115	)
Variable sublease income		—		(93	)		(509	)
Net operating lease costs	$	2,473	$	3,406		$	1,880

Cash paid for amounts included in the measurement of the lease liabilities for the year ended December 31, 2021, 2020 and 2019, was $1.5 million, $2.1 million and $2.3 million, respectively, and was included in net cash used in operating activities in the Company’s consolidated statements of cash flows.

Supplemental balance sheet information related to the Company’s operating lease were as follows as of December 31 (in thousands):

	December 31,
Operating Lease Liability:	2021		2020
Current portion included in accrued and other liabilities	$	1,374	$	1,903
Noncurrent operating lease liability		1,666		4,815
Total operating lease liability	$	3,040	$	6,718

The maturities of the Company’s lease liability as of December 31, 2021, were as follows (in thousands):

Year ending December 31:
2022		1,546
2023		1,593
2024		136
Total lease payments		3,275
Less: interest		(235	)
Present value of lease liability	$	3,040

The Company had an existing letter of credit of $270,000 and $440,000 as a security deposit to the lease as of December 31, 2021 and 2020, respectively. The lessor shall be entitled to draw on the letter of credit in the event of any uncured default by the Company under the terms of the lease.

Indemnifications

The Company indemnifies each of its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity, as permitted under Delaware law and in accordance with its certificate of incorporation and bylaws. The term of the indemnification period lasts as long as an officer or a director may be subject to any proceeding arising out of acts or omissions of such officer or director in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director and officer liability insurance. This insurance allows the transfer of risk associated with the Company’s exposure and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, it has not recognized any liabilities relating to these obligations for any period presented.