Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Summarized below are the matters previously described in Note 16 of the Notes to the Consolidated Financial Statements in the Company's Form 10-K for the year ended December 31, 2018, updated as applicable.

Lease Agreements

In August 2017, the Company entered into a lease agreement for office space and the related property for its United States ("US") headquarters in New Haven, Connecticut, which it began occupying during the fourth quarter of 2018. The lease commenced on January 1, 2018 and had a term of 85 months, with the ability to extend to 120 months. The Company had the option to purchase the property for $2,700 and executed that option in December 2018 and therefore has no remaining lease obligation related to its US headquarters building.

The Company recorded the following for the lease agreement for its US headquarters during the construction period:


	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Rent expense	$	4	$	40
Capitalized costs	$	1,114	$	2,493

In August 2019, the Company entered into a lease agreement for office space in Yardley, Pennsylvania to support expansion of the Company's commercial operations in anticipation of the rimegepant commercial launch. The lease will commence on March 1, 2020 and have a term of 88 months, with the ability to extend to 148 months. The Company has restricted cash of $1,000, as of September 30, 2019, included in other assets in the unaudited condensed consolidated financial statements, which represents collateral held by a bank for a letter of credit issued in connection with the lease. The restricted cash is invested in a non-interest bearing account.

The lessor has provided the Company a temporary space to occupy while leasehold improvements are completed prior to the lease commencement next year. With the exception of the first month's rent payment made on execution of the lease, the Company is not required to pay rent until August 2020. The Company determined there were two units of account for the lease, one for use of the temporary space, with a duration from the lease execution date to the lease commencement date and another for the use of the premises, with a duration from the lease commencement date to the lease termination date. The two units of account are being treated as two separate operating leases.

Since the Company expects to occupy the temporary space for less than 12 months, the Company did not record a right-of-use asset and lease liability on its balance sheet for the temporary space. The rent expense for the temporary space recognized for the three and nine months ended September 30, 2019 was $24 because there will be no cash payment for use of the temporary space, the rent expense recognized for the use of the temporary space is being treated as deferred rent payments.

The Company can begin occupying the premises after the landlord has substantially completed all agreed upon improvements to the office space. After substantial completion of the office space in the first half of 2020, the Company expects to record a right-of-use asset and operating lease liability on its balance sheet and straight-line the lease expense over the duration of the lease.

License Agreements

The Company has entered into license agreements with various parties under which it is obligated to make contingent and non-contingent payments. License agreements generally require the Company to pay annual maintenance fees and future payments upon the attainment of agreed upon development and/or commercial milestones. These agreements may also require minimum royalty payments based on sales of products developed from the applicable technologies, if any.

Administration of intranasal vazegepant in a Phase 1 clinical trial was initiated in October 2018 and has achieved targeted therapeutic exposures. The compound advanced into a Phase 2/3 trial to evaluate efficacy for the acute treatment of migraine in the first quarter of 2019. Pursuant to the BMS Agreement, the Company is required to pay $2,000 to BMS on commencement of a Phase 1 clinical trial, and $4,000 on commencement of a Phase 2 clinical trial, and accordingly, the Company has recognized these liabilities as of December 31, 2018 and September 30, 2019, respectively, in accrued expenses within the condensed consolidated balance sheets. The payment obligations under the agreement are deferred until the earlier of the first approval, or the discontinuation, of the development of rimegepant.

Pursuant to the BMS Agreement, the Company is required to pay $7,500 to BMS in relation to the NDA filing for rimegepant, and accordingly, the Company has recognized this liability as of September 30, 2019 in accrued expenses within the condensed consolidated balance sheet. The Company made the milestone payment in October 2019.

Research Commitments

The Company has entered into agreements with several contract research organizations to provide services in connection with its preclinical studies and clinical trials. The Company commits to minimum payments under these arrangements.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with certain executive officers and members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company’s amended and restated memorandum and

articles of association also provide for indemnification of directors and officers in specified circumstances. To date, the Company has not incurred any material costs as a result of such indemnification provisions. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of September 30, 2019 or December 31, 2018.

Legal Proceedings

From time to time, in the ordinary course of business, the Company is subject to litigation and regulatory examinations as well as information gathering requests, inquiries and investigations. As of September 30, 2019, there were no matters which would have a material impact on the Company’s financial results.