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Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies.

Commitments and Contingencies

5. Commitments and Contingencies

Operating Leases

The maturities of operating lease liabilities as of June 30, 2023, were as follows (in thousands):



		JUNE 30,
		2023
2023		$	74
Total undiscounted lease payments			74
Less: imputed interest			1
Total operating lease liability			73
Less: current portion			73
Operating lease liability, net of current portion		$	—

Operating lease cost was $0.3 million and $0.3 million for the three months ended June 30, 2023 and 2022, respectively, including $0.2 million and $0.2 million short-term lease costs for the three months ended June 30, 2023 and 2022, respectively. Operating lease cost was $0.6 million and $0.6 million for the six months ended June 30, 2023 and 2022, respectively, including $0.4 million and $0.4 million short-term lease costs for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, the weighted average remaining lease term was 0.3 years, and the weighted average discount rate used to measure the lease liabilities for such operating leases upon recognition was 7.4%. During the six months ended June 30, 2023 and 2022, cash paid for amounts included in operating lease liabilities of $0.2 million and $0.2 million, respectively, was included in cash flows from operating activities on the condensed consolidated statements of cash flows.

In June 2023, Shanghai ShouTi Biotechnology Co., Ltd. (“Shanghai ShouTi”), the Company’s wholly owned subsidiary, entered into a lease agreement for approximately 22,500 square feet of office space in Shanghai, China, for its research and development operations office. The commencement date is expected to be January 1, 2024 and will expire on December 31, 2026. The annual base rent will be approximately $0.7 million based on the exchange rate as of June 30, 2023, and it will also be responsible for the payment of additional costs and fees related to its use of the premises. As of June 30, 2023, Shanghai ShouTi has not taken possession of the premises.

In June 2023, Shanghai ShouTi entered into another lease agreement for approximately 8,400 square feet of laboratory space located in Shanghai, China for its research and development activities. The commencement date is expected to be February 1, 2024 and will expire on January 31, 2027. The annual base rent will be approximately $0.3 million based on the exchange rate as of June 30, 2023, and it will also be responsible for the payment of additional costs and fees related to its use of the premises. As of June 30, 2023, Shanghai ShouTi has not taken possession of the premises.

In June 2023, Structure Therapeutics USA Inc. (“Structure USA”), the Company’s wholly owned subsidiary, entered into a sublease agreement for approximately 11,800 square feet of office space located in South San Francisco, California for its corporate headquarters. The commencement date is expected to be August 1, 2023 and will expire on August 31, 2027. The annual base rent will initially be approximately $0.5 million and will increase annually by 3%, and it will also be responsible for the payment of additional costs and fees related to its use of the premises. As of June 30, 2023, Structure USA has not taken possession of the premises.

Indemnification Agreements

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential number of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that 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 to the fullest extent permitted by the applicable law and the amended and restated memorandum and articles of association of the Company. The Company currently has directors’ and officers’ liability insurance. As of June 30, 2023 and December 31, 2022, the Company did not have any material indemnification claims that were probable or reasonably possible and consequently had not recorded related liabilities.

Legal Proceedings

The Company is subject to claims and assessments from time to time in the ordinary course of business but is not aware of any such matters, individually or in the aggregate, that will have a material adverse effect on the Company’s financial position, results of operations or cash flows.