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Commitments and contingencies

9 Months Ended

Sep. 30, 2021

Commitments and contingencies

Commitments and contingencies

11. Commitments and contingencies

COVID-19 Pandemic

In March 2020, the novel strain of coronavirus (“COVID-19”) was declared a pandemic by the World Health Organization. Efforts to contain the spread of COVID-19 intensified and the United States, Europe and Asia implemented severe travel restrictions, social distancing requirements, stay-at-home orders and delayed the commencement of non-COVID-19-related clinical trials, among other restrictions. The Company’s financial results for the three and nine months ended September 30, 2021 were not significantly impacted by COVID-19, however despite vaccination efforts, the Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 pandemic will have on its financial condition, operations, and business plans for the remainder of 2021 and into 2022, including the timing and enrollment of patients in its ongoing and future clinical trials and other expected milestones of its product candidate.

Operating lease

In February 2020, the Company entered into a seven-year agreement to occupy 6,647 square feet of office space in South San Francisco, California. The lease commenced on July 10, 2020 when the Company took occupancy of the leased space and the lease was determined to be operating classified. Under the agreement, the Company is required to make approximately $2,300 in total minimum payments during the term. The Company is also required to pay its proportionate share of building operating and tax costs after the first year under lease which are not included in the measurement of the lease and treated as variable lease cost and expensed when incurred.

As of September 30, 2021, maturities of the Company’s operating lease liability was as follows:


2021 (remaining)	$	77
2022		312
2023		321
2024		331
2025		341
2026 and thereafter		559
Total future minimum lease payments		1,941
Less imputed interest		(377)
Present value of operating lease liabilities	$	1,564

As of September 30, 2021, the total lease liability was $1,564, of which $1,365 was noncurrent and $199 was short-term and classified within “Accrued expenses and other current liabilities” on the condensed consolidated balance sheet.

For the three and nine months ended September 30, 2021 and 2020, the components of operating lease cost were as follows:


				Three Months Ended						Nine Months Ended
				September 30,						September 30,
				2021			2020			2021			2020
Lease cost:		Statement of Operations Classification:
Operating lease cost		General and administrative expense		$	81		$	73		$	243		$	186
Variable operating lease cost		General and administrative expense			—			—			—			43
Short-term lease cost		Research and development expense			—			8			—			32
Total operating lease cost				$	81		$	81		$	243		$	261

Other information:
Cash paid for amounts included in the measurement of operating lease liability				$	76		$	18		$	226		$	135
Weighted average remaining lease term, in years					5.8			6.8			5.8			6.8
Weighted average discount rate					7.6%			7.6%			7.6%			7.6%

Research and manufacturing commitments

The Company has entered into agreements with contract research organizations and contract manufacturing organizations to provide services in connection with its nonclinical studies and clinical trials and to manufacture clinical development materials. As of September 30, 2021, the Company had non-cancelable purchase commitments under these agreements totaling $11,123.

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 members of its board of directors and its executive officers 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. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not currently aware of any indemnification claims and has not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of September 30, 2021.

Legal proceedings

The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings.