XML 33 R14.htm IDEA: XBRL DOCUMENT
v3.22.4

Leases | 12 Months Ended
--- | ---
Dec. 31, 2022
Leases [Abstract] |
Leases | Leases Finance lease In May 2020 and January 2021, we entered into an agreement and the first amendment with Hovione, our third-party manufacturer, to increase our manufacturing of Captisol, respectively. The agreements are considered to include an embedded finance lease under ASC 842, Leases, as it provides the Company the right to use the underlying equipment to exclusively manufacture Captisol. As of December 31, 2021, we have fully paid consideration of $69.1 million for prepaid inventory and capacity ramp-up fee. We allocated consideration in the agreements between lease and non-lease components using relative standalone prices. Since the inception of the agreements, we have allocated $50.2 million of the consideration paid to the non-lease component which is accounted for as prepaid inventory and being amortized to cost of Captisol based on the usage. The remaining balance of $18.9 million was recognized as a right of use asset. Given the current COVID status, our forecast for COVID-related Captisol has been significantly reduced, which triggered an indicator of impairment of the right of use asset as of December 31, 2022. We performed a recoverability test at the asset group level by comparing the sum of the estimated undiscounted future cash flows attributable to the asset group to its carrying value and identified the asset was impaired. We recorded a $9.8 million of impairment charge based on the fair value of the right of use asset which has been recognized in cost of Captisol in our consolidated statement of operations for the year ended December 31, 2022. As of December 31, 2022 the remaining right of use asset balance is $4.0 million which will be amortized straight-line over the remaining 6 years lease term. Operating lease We lease certain office facilities and equipment primarily under various operating leases. Our operating leases have remaining contractual terms up to ten years, some of which include options to extend the leases for up to five years. Our lease agreements do not contain any material residual value guarantees, material restrictive covenants, or material termination options. Our operating lease costs are primarily related to facility leases for administration offices and research and development facilities. Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease assets also include any upfront lease payments made and lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. In addition to base rent, certain of our operating leases require variable payments, such as insurance and common area maintenance. These variable lease costs, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases and for operating leases is recognized on a straight-line basis over the lease term. The depreciable life of lease assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Operating and Finance Lease Assets and Liabilities (in thousands):
| December 31, 2022 |  | December 31, 2021(a)
Assets |  |  |
Operating lease assets | $ | 10,914 |  |  | $ | 3,210 |
Finance lease assets | 4,095 |  |  | 16,201 |
Total lease assets | $ | 15,009 |  |  | $ | 19,411 |
Liabilities |  |  |
Current operating lease liabilities | $ | 670 |  |  | $ | 1,368 |
Current finance lease liabilities | 45 |  |  | 45 |
| 715 |  |  | 1,413 |
Long-term operating lease liabilities | 10,336 |  |  | 2,256 |
Long-term finance lease liabilities | 5 |  |  | 58 |
Total lease liabilities | $ | 11,056 |  |  | $ | 3,727 |
(a) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation. Maturity of Operating and Finance Lease Liabilities as of December 31, 2022 (in thousands):
Maturity Dates |  | Operating Leases |  | Finance Leases
2023 |  | $ | 1,425 |  |  | $ | 49 |
2024 |  | 1,483 |  |  | 2 |
2025 |  | 1,576 |  |  | — |
2026 |  | 1,621 |  |  | — |
2027 |  | 1,667 |  |  | — |
Thereafter |  | 7,614 |  |  | — |
Total lease payments |  | 15,386 |  |  | 51 |
Less imputed interest |  | (4,380) |  |  | (1) |
Present value of lease liabilities |  | $ | 11,006 |  |  | $ | 50 |
As of December 31, 2022, our operating leases have a weighted-average remaining lease term of 9.3 years and a weighted-average discount rate of 7.1%. As of December 31, 2021, our operating leases have a weighted-average remaining lease term of 2.9 years and a weighted-average discount rate of 5.1%. Cash paid for amounts included in the measurement of operating lease liabilities was $1.7 million and $1.5 million for the twelve months ended December 31, 2022 and 2021, respectively. Operating lease expense was $0.7 million (net of sublease income of $0.7 million) and $1.0 million (net of sublease income of $0.4 million) for the twelve months ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our finance leases have a weighted-average remaining lease term of 1.1 years and a weighted-average discount rate of 4.1%. As of December 31, 2021, our finance leases have a weighted-average remaining lease term of 2.1 years and a weighted-average discount rate of 4.1%. We excluded the Hovione equipment lease in the calculation of weighted average remaining lease term and weighted average discount rate because the Hovione lease was fully paid off as of December 31, 2021. Cash paid for amounts included in the measurement of these finance lease liabilities was $0.05 million and $9.3 million for the twelve months ended December 31, 2022 and 2021, respectively. Finance lease expense was $2.3 million and $2.3 million for the twelve months ended December 31, 2022 and 2021, respectively.
Leases | Leases Finance lease In May 2020 and January 2021, we entered into an agreement and the first amendment with Hovione, our third-party manufacturer, to increase our manufacturing of Captisol, respectively. The agreements are considered to include an embedded finance lease under ASC 842, Leases, as it provides the Company the right to use the underlying equipment to exclusively manufacture Captisol. As of December 31, 2021, we have fully paid consideration of $69.1 million for prepaid inventory and capacity ramp-up fee. We allocated consideration in the agreements between lease and non-lease components using relative standalone prices. Since the inception of the agreements, we have allocated $50.2 million of the consideration paid to the non-lease component which is accounted for as prepaid inventory and being amortized to cost of Captisol based on the usage. The remaining balance of $18.9 million was recognized as a right of use asset. Given the current COVID status, our forecast for COVID-related Captisol has been significantly reduced, which triggered an indicator of impairment of the right of use asset as of December 31, 2022. We performed a recoverability test at the asset group level by comparing the sum of the estimated undiscounted future cash flows attributable to the asset group to its carrying value and identified the asset was impaired. We recorded a $9.8 million of impairment charge based on the fair value of the right of use asset which has been recognized in cost of Captisol in our consolidated statement of operations for the year ended December 31, 2022. As of December 31, 2022 the remaining right of use asset balance is $4.0 million which will be amortized straight-line over the remaining 6 years lease term. Operating lease We lease certain office facilities and equipment primarily under various operating leases. Our operating leases have remaining contractual terms up to ten years, some of which include options to extend the leases for up to five years. Our lease agreements do not contain any material residual value guarantees, material restrictive covenants, or material termination options. Our operating lease costs are primarily related to facility leases for administration offices and research and development facilities. Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease assets also include any upfront lease payments made and lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised. In addition to base rent, certain of our operating leases require variable payments, such as insurance and common area maintenance. These variable lease costs, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the expense for these short-term leases and for operating leases is recognized on a straight-line basis over the lease term. The depreciable life of lease assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Operating and Finance Lease Assets and Liabilities (in thousands):
| December 31, 2022 |  | December 31, 2021(a)
Assets |  |  |
Operating lease assets | $ | 10,914 |  |  | $ | 3,210 |
Finance lease assets | 4,095 |  |  | 16,201 |
Total lease assets | $ | 15,009 |  |  | $ | 19,411 |
Liabilities |  |  |
Current operating lease liabilities | $ | 670 |  |  | $ | 1,368 |
Current finance lease liabilities | 45 |  |  | 45 |
| 715 |  |  | 1,413 |
Long-term operating lease liabilities | 10,336 |  |  | 2,256 |
Long-term finance lease liabilities | 5 |  |  | 58 |
Total lease liabilities | $ | 11,056 |  |  | $ | 3,727 |
(a) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation. Maturity of Operating and Finance Lease Liabilities as of December 31, 2022 (in thousands):
Maturity Dates |  | Operating Leases |  | Finance Leases
2023 |  | $ | 1,425 |  |  | $ | 49 |
2024 |  | 1,483 |  |  | 2 |
2025 |  | 1,576 |  |  | — |
2026 |  | 1,621 |  |  | — |
2027 |  | 1,667 |  |  | — |
Thereafter |  | 7,614 |  |  | — |
Total lease payments |  | 15,386 |  |  | 51 |
Less imputed interest |  | (4,380) |  |  | (1) |
Present value of lease liabilities |  | $ | 11,006 |  |  | $ | 50 |
As of December 31, 2022, our operating leases have a weighted-average remaining lease term of 9.3 years and a weighted-average discount rate of 7.1%. As of December 31, 2021, our operating leases have a weighted-average remaining lease term of 2.9 years and a weighted-average discount rate of 5.1%. Cash paid for amounts included in the measurement of operating lease liabilities was $1.7 million and $1.5 million for the twelve months ended December 31, 2022 and 2021, respectively. Operating lease expense was $0.7 million (net of sublease income of $0.7 million) and $1.0 million (net of sublease income of $0.4 million) for the twelve months ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our finance leases have a weighted-average remaining lease term of 1.1 years and a weighted-average discount rate of 4.1%. As of December 31, 2021, our finance leases have a weighted-average remaining lease term of 2.1 years and a weighted-average discount rate of 4.1%. We excluded the Hovione equipment lease in the calculation of weighted average remaining lease term and weighted average discount rate because the Hovione lease was fully paid off as of December 31, 2021. Cash paid for amounts included in the measurement of these finance lease liabilities was $0.05 million and $9.3 million for the twelve months ended December 31, 2022 and 2021, respectively. Finance lease expense was $2.3 million and $2.3 million for the twelve months ended December 31, 2022 and 2021, respectively.

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration