Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Leases

The Company has operating leases for corporate offices and operating and finance leases for vehicles. The Company determines if an arrangement is a lease at inception. The lease term includes options to extend or terminate the lease when it is reasonably certain that Biohaven will exercise that option. Real estate leases for facilities have an average remaining lease term of 3.82 years for which none include the optional extension. Vehicle leases are generally in effect for three years. The Company has made an accounting policy election not to record short-term leases (leases with an initial term of 12 months or less) on the balance sheet.

The following table is a summary of the components of total lease cost:


		Three Months Ended June 30,				Six Months Ended June 30,
	Statement of Operations Loss Location	2022		2021		2022		2021
Lease cost
Finance lease cost:
Amortization of right-of-use assets	Selling, general and administrative expense	$	1,274	$	1,374	$	2,618	$	2,670
Interest on lease liabilities	Interest expense	84		158		189		301
Operating lease cost	Selling, general and administrative expense	681		267		948		534



Total lease cost		$	2,039	$	1,799	$	3,755	$	3,505

The Company recognized no material short-term or variable lease costs for the three and six months ended June 30, 2022 and 2021.

The following table summarizes supplemental cash flow information:


	Six Months Ended June 30,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	657	$	334
Operating cash flows paid for interest portion of finance leases	$	200	$	335
Financing cash flows paid for principal portion of finance leases	$	2,576	$	2,514
Right-of-use assets obtained in exchange for new operating lease liabilities	$	7,863	$	478
Right-of-use assets obtained in exchange for new finance lease liabilities	$	54	$	186

Supplemental balance sheet information related to leases is as follows:


In thousands, except remaining lease term and discount rate	Balance Sheets Location	June 30, 2022		December 31, 2021
Operating leases:
Operating lease right-of-use assets	Other assets	$	12,293	$	5,222

Current portion of operating lease liabilities	Accrued expenses and other current liabilities	$	2,685	$	439
Noncurrent operating lease liabilities	Other long-term liabilities	7,833		2,797
Total operating lease liabilities		$	10,518	$	3,236

Finance leases:
Finance lease right-of-use assets		$	16,418	$	16,363
Accumulated amortization		(10,250)		(7,632)
Modifications affecting finance lease right-of-use assets		(1,446)		$	—
Total finance lease right-of-use assets	Other assets	$	4,722	$	8,731

Current portion of finance lease liabilities	Accrued expenses and other current liabilities	$	4,207	$	5,410
Noncurrent finance lease liabilities	Other long-term liabilities	794		3,728
Total finance lease liabilities		$	5,001	$	9,138

Weighted average remaining lease term (in years)
Operating leases		3.82		5.75
Finance leases		1.16		1.63

Weighted average discount rate
Operating leases		8.86%		9.07%
Finance lease		5.08%		5.15%

The following table summarize maturities of lease liabilities as of June 30, 2022:


	Finance leases		Operating leases		Total
2022 (remaining six months)	$	2,216	$	1,755	$	3,971
2023	2,902		3,408		6,310
2024	77		3,358		3,435
2025	6		2,039		2,045
2026	—		1,147		1,147
Thereafter	—		669		669
Total lease payments	5,201		12,376		17,577
Less: imputed interest	(200)		(1,858)		(2,058)
Total lease liabilities	$	5,001	$	10,518	$	15,519

Vehicle Exchange

During the second quarter of 2022, the Company exchanged approximately half of its commercial car fleet leases for new leases. The gains on termination of the old fleet leases were treated as lease incentives that reduced the lease payments for the new fleet leases. The Company has determined that the new fleet leases are operating leases and has recorded a modification to the finance lease right-of-use assets of $1,446 for the early termination of the old fleet leases. The Company expects to exchange the remaining vehicles in the second half of 2022.

Commercial Commitments

The Company's commercial commitments primarily relate to manufacturing preparation services that are enforceable and legally binding on us and that specify all significant terms, including applicable milestone payments and target completion dates, and its commercial car fleet.

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, 2022 or December 31, 2021.

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, 2022, there were no matters which would have a material impact on the Company’s financial results.