NOTE

Leases

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

five

operating lease agreements,

one

of which has terminated and

one

of which has been subleased, and for equipment under

three

operating lease agreements with initial terms exceeding

one

year,

one

of which has terminated, 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 right of use of these premises was assessed as impaired as of

December 31, 2019 (

see Note

). The Company also obtained, via the Merger in

February 2018,

the right of use of facilities located in Alpharetta, Georgia, 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 terminated on

November 30, 2019,

with

extension options, and the right of use of equipment under

two

leases that terminate between

January 2020

and

September 2021

and

one

lease that terminated on

November 22, 2019.

As of

December 31, 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

3.72

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

December 31, 2019 (

in thousands):

Year Ending December 31,	Amount
2020	$	1,024
2021		620
2022		336
2023		348
2024		360
Thereafter		122
Undiscounted total		2,810
Less: imputed interest		(497	)
Present value of future minimum payments		2,313
Current portion of operating lease liability		(841	)
Operating lease liability, net of current portion	$	1,472

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 year ended

December 31, 2019,

are summarized as follows:

	Year Ended
	December 31, 2019
Lease cost	(in thousands)
Operating lease cost	$	959
Short-term lease cost		15
Variable lease cost		162
Sublease income		(217	)
Total lease cost	$	919

Net cash outflows associated with operating leases totaled

$983,000

in the year ended

December 31, 2019.

When the Company subleased its facilities located in Alpharetta, Georgia, for less than it is required to pay under the head lease, it recorded a lease loss charge of

$253,000

on the cease-use date in the

three

months ending

December 31, 2018,

which, along with the related impairment of property and equipment (see Note

), was recorded as a component of costs of exit from leased premises within operating expenses.

Liabilities related to costs of exit from leased premises are summarized as follows (in thousands):

Balance as of January 1, 2018	$	—
Costs of exit from leased premises		359
Deferred rent on cease-use date		19
Impairment of property and equipment		(106	)
Cash paid, net of receipts		(41	)
Accretion charges, included in rent expense		2
Balance as of December 31, 2018	$	233

Prior to

December 31, 2018,

rent expense was recognized on a straight-line basis over the noncancelable term of each operating lease and, accordingly, the Company recorded the difference between cash rent payments and the recognition of rent expense as a deferred rent liability, which was included within accrued expenses. Rent expense was

$875,000

for the year ended

December

31,

2018.

Future minimum payments and sublease income under operating leases as of

December

31,

2018,

were as follows:

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