NOTE

Leas

The Company has obtained the right of use for office and manufacturing facilities under

five

operating lease agreements,

one

of which has been subleased, and for equipment under

three

operating lease agreements with initial terms exceeding

one

year and under

three

operating lease agreements with initial terms of

one

year or less.

The Company obtained the right of use of real estate located in South San Francisco, California, in

June 2015

that was scheduled to terminate on

April 30, 2020,

with a

five

-year extension option that the Company exercised in

July 2019,

extending the lease until

April 30, 2025.

The Company also obtained, via the Merger, the right of use of facilities located in Alpharetta, Georgia, in

February 2018

that terminates on

February 28, 2021,

with

extension option. These facilities were subleased for the remainder of the lease term effective

November 30, 2018.

In addition, the Company obtained the right of use of

three

facilities located in South San Francisco, California, under

two

leases that terminate on

July 31, 2021

and

one

lease that terminates on

November 30, 2019,

with

extension options, and the right of use of equipment under

three

leases that terminate between

October 2019

and

September 2021.

As of

September 30, 2019

, the weighted average discount rate for operating leases with initial terms of more than

one

year was

10.53%

and the weighted average remaining term of these leases was

3.82

years. Discount rates were determined using the Company’s marginal rate of borrowing at the time each lease was executed or extended.

The following table summarizes the Company’s undiscounted cash payment obligations for its operating lease liabilities with initial terms of more than

twelve

months as of

September 30, 2019

(in thousands):

Year Ending December 31,
2019 (excluding the nine months ended September 30, 2019)	$	264
2020		1,024
2021		620
2022		336
2023		348
Thereafter		482
Undiscounted total		3,074
Less: imputed interest		(560	)
Present value of future minimum payments		2,514
Current portion of operating lease liability		(820	)
Operating lease liability, net of current portion	$	1,694

The Company presently has

finance leases and

future obligations under operating leases for equipment with initial terms of

one

year or less.

Certain operating lease agreements for facilities include non-lease costs, such as common area maintenance, which are recorded as variable lease costs. Operating lease expenses for the

three

and

nine

months ended

September 30,

2019

, are summarized as follows:

	Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019
Lease cost	(in thousands)
Operating lease cost	$	258		$	703
Short-term lease cost		4			11
Variable lease cost		44			132
Sublease income		(53	)		(162	)
Total lease cost	$	253		$	684

Net cash outflows associated with operating leases totaled

$253,000

and

$740,000

in the

three

and

nine

months ended

September 30,

2019

, respectively. Rent expense was and

$255,000

and

$623,000

for the

three

and

nine

months ended

September 30,

2018

, respectively.

Future minimum payments and sublease income under operating leases as of

December

31,

2018,

were as follows:

Year Ending December 31,	Lease Payments		Sublease Income
	(in thousands)
2019	$	859	$	213
2020		411		219
2021		56		38
Thereafter		—		—
Total	$	1,326	$	470