Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

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, 2019, updated as applicable.

Lease Agreements

During the second quarter of 2020, the Company took occupancy of the premises associated with its Yardley office lease, which was determined to be an operating lease, and took delivery of a portion of its commercial fleet leases, which were determined to be finance leases. The Company had no active leases prior to the second quarter of 2020 other than the short-term lease of the temporary office space. The short-term lease of the temporary space terminated when the Company took occupancy of the premises. See "Real Estate Lease" below for additional details for the office lease. See "Commercial Fleet Leases" below for additional details for the commercial fleet leases.

The following table summarizes our lease assets and liabilities as of June 30, 2020:


	Balance Sheet Location	Financing		Operating
Right-of-use asset	Other assets	$	2,060	$	6,419

Lease liabilities (current)	Accrued expenses and other current liabilities	$	697	$	480

Lease liabilities (noncurrent)	Other long-term liabilities	$	1,364	$	3,234

The following table summarizes our lease related costs for the three and six months ended June 30, 2020:


	Statement of Operations and Comprehensive Loss Location	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Lease cost
Finance lease cost:
Amortization of right-of-use assets	Selling, general and administrative expense	$	32	$	—	$	32	$	—
Interest on lease liabilities	Interest expense	5		—		5		—
Operating lease cost	Selling, general and administrative expense	144		—		144		—
Short-term lease cost	Selling, general and administrative expense	21		—		64		—
Variable lease cost	Selling, general and administrative expense	27		—		32		—

Total lease cost		$	229	$	—	$	277	$	—

The following table summarizes supplemental cash flow information for the six months ended June 30, 2020:


	Six Months Ended June 30, 2020
Other information

Cash paid for amounts included in the measurement of lease liabilities:


Financing cash flows from finance leases	$	37
Right-of-use assets obtained in exchange for new finance lease liabilities	$	2,093
Right-of-use assets obtained in exchange for new operating lease liabilities (1)	$	3,674

(1) This figure excludes $2,850 of opening adjustments to the right-of-use operating asset due to leasehold improvements originally classified in other assets and transferred to the right-of-use operating asset at lease commencement.

The Company had no operating cash outflows from finance and operating leases during the six months ended June 30, 2020.

The following table summarize maturities of lease liabilities as of June 30, 2020:


Year	Financing		Operating		Total
2020 (remaining six months)	$	410	$	144	$	554
2021	752		675		1,427
2022	748		689		1,437
2023	310		703		1,013
2024	—		717		717
Thereafter	$	—	$	2,046	$	2,046

The following table is the reconciliation of lease liabilities as of June 30, 2020:


	Financing		Operating		Total
Total undiscounted lease liability	2,220		4,974		7,194
Imputed interest	159		1,260		1,419
Total discounted lease liability	2,061		3,714		5,775

Weighted-average remaining lease term (years)	2.92		7.25		5.70
Weighted-average discount rate	5.55	%	8.05	%	7.28	%

Real Estate Lease

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 NURTEC ODT commercial launch. The lease was originally expected to commence in the first quarter of 2020 but, due to complications from the COVID-19 pandemic, the lease commenced in the second quarter of 2020. It has a term of 88 months, with the ability to extend to 148 months. The Company continuously reassesses its strategic objectives and resulting capital deployment strategy. Therefore, at lease commencement the Company determined that the extension was not reasonably certain and did not include the extension in the lease term when calculating the right-of-use asset and lease liability. The Company has restricted cash of $1,000, as of June 30, 2020 and December 31, 2019, included in other assets in the condensed consolidated balance sheets, which represents collateral held by a bank for a letter of credit issued in connection with the lease. The restricted cash is deposited in a non-interest bearing account.

The lessor provided the Company a temporary space to occupy while leasehold improvements were completed prior to the lease commencement. 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 five months after lease commencement. 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 expected 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 Company recognized $21 and $64 in rent expense for the temporary space for the three and six months ended June 30, 2020, respectively. Since there were no cash payments for use of the temporary space, the rent expense recognized for the use of the temporary space is being treated as deferred rent liability in other long-term liabilities in the Company's condensed consolidated balance sheet. As the Company makes lease payments on the premises, a portion of the payment will be used to reduce the deferred rent liability.

During the second quarter of 2020, the Company began occupying the premises after the landlord substantially completed all agreed upon improvements to the office space. The Company determined the lease to be an operating lease and used an estimate of its incremental borrowing rate at lease commencement to discount the future lease commitments.

Commercial Fleet Leases

During the second quarter of 2020, the Company took delivery of a portion of its commercial car fleet. The remainder, and majority, of these vehicles will become available for use during the second half of 2020. Each commercial fleet lease has a term of 36 months, and the wholesale value of the vehicle at lease termination is guaranteed by the Company. In addition, the Company can terminate the vehicle leases at anytime without a significant penalty. For the discount rate, the Company used its incremental borrowing rate, which it believes approximates the rate implicit in the commercial fleet leases.

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 June 30, 2020 or December 31, 2019.

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 June 30, 2020, there were no matters which would have a material impact on the Company’s financial results.