Facility Lease

6 Months Ended

Jun. 30, 2020

Facility Lease

Facility lease

11. Facility Lease

In January 2015, the Company signed an initial operating lease, effective February 1, 2015 for 8,138 square feet of office and laboratory space with a one year term. Between January 2015 and October 2018, the Company entered into a series of lease amendments to increase the amount of leased space to 27,280 square feet and extend the expiration of the lease to February 2023. The lease agreement includes annual rent escalations. Under the lease and subsequent amendments, the landlord provided approximately $1.9 million in free rent and lease incentives. The Company records rent expense on a straight-line basis over the effective term of the lease, including any free rent periods and incentives. As the interest rate implicit in lease arrangements is typically not readily available, in calculating the present value of the lease payments, the Company has utilized its incremental borrowing rate, which is determined based on the prevailing market rates for collateralized debt with maturity dates commensurate with the term of its lease. The Company’s facility lease is a net lease, as the non-lease components (i.e. common area maintenance) are paid separately from rent based on actual costs incurred. Therefore, the non-lease components were not included in the right-of-use asset and liability and are reflected as an expense in the period incurred.

As of June 30, 2020 and December 31, 2019, the right-of-use asset under operating lease was $2.0 million and $2.3 million, respectively. The elements of lease expense for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):

		Three Months Ended				Six Months Ended
	Statements of operations and	June 30,				June 30,
	comprehensive loss location	2020		2019		2020		2019
Costs of operating lease
Operating lease costs	Research and development, General and administrative	$	239	$	233	$	478	$	481
Costs of non-lease components (previously common area maintenance)	Research and development, General and administrative		87		81		175		162
Total operating lease cost		$	326	$	314	$	653	$	643
Other Information
Operating cash flows used for operating lease		$	377	$	370	$	755	$	729
Remaining lease term			2.6 years		3.6 years		2.6 years		3.6 years
Discount rate			10.0%		10.0%		10.0%		10.0%

As of June 30, 2020, minimum rental commitments under this lease were as follows (in thousands):

Year Ended December 31 (in thousands)
2020*	$	579
2021		1,260
2022		1,299
Total lease payments		3,138
Less: imputed interest		(378)
Total	$	2,760

* Remainder of the year

As of December 31, 2019, minimum rental commitments under this lease were as follows (in thousands):

Year Ended December 31 (in thousands)
2020	$	1,159
2021		1,260
2022		1,299
Total lease payments		3,718
Less: imputed interest		(530)
Total	$	3,188