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Note 11 - Leases

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

Note 11 – Leases

Operating Leases

The Company had the following office and laboratory facility leases as of September 30, 2022:

•

In April 2016, UPL signed an addendum to its November 2014 lease agreement for the Company’s offices located in Israel, in order to increase the office space rented and to extend the rent period until 2019. In March 2019, UPL utilized the agreement extension option and extended the rent period for an additional three years until August 2022. In July 2022, the Company signed a lease extension agreement for the Company’s offices located in Israel, extending the term of the lease through September 2025. The Company's remaining contractual obligation under this lease is approximately $0.9 million as of September 30, 2022.

•

In September 2017, UPI entered into a new lease agreement for its office space in New York, which the Company previously used as its headquarters. The lease agreement commenced in October 2017 and terminated in February 2021.

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In April 2018, UPI entered into a new lease agreement for an office in Los Angeles, California. The lease commencement date was July 10, 2018 and terminates in March 2024. The landlord provided a tenant allowance for leasehold improvements of $0.2 million that was accounted for as a lease incentive. The Company’s remaining contractual obligation under this lease is approximately $0.4 million as of September 30, 2022. In November 2019, UPI entered into a sublease for this office space, with a lease commencement date of January 1, 2020 and continuing until the end of the lease term in March 2024. The subtenants exercised their early access clause and moved into the premises at the end of November 2019. The remaining rental payments to be received over the lease term is approximately $0.4 million as of September 30, 2022. The Company accounts for the sublease as an operating lease in accordance with ASC 842-10-25-2 and ASC 842-10-25-3. The main lease was considered for impairment and the amount was determined to be immaterial.

•

In November 2019, UPI entered into a new lease agreement for an office in Princeton, New Jersey, which the Company now uses as its headquarters. The lease commencement date was November 29, 2019, with an original lease term of 38 months, expiring January 31, 2023. In June 2022, the Company signed a lease extension for the Princeton office, extending the term of the lease through January 31, 2026. The Company’s remaining contractual obligation under this lease is approximately $1.9 million as of September 30, 2022.

In addition, the Company has other operating office equipment and vehicle leases. The Company’s operating leases may require minimum rent payments, contingent rent payments adjusted periodically for inflation, or rent payments equal to the greater of a minimum rent or contingent rent. The Company’s leases do not contain any residual value guarantees or material restrictive covenants. The Company’s leases expire at various dates from 2022 through 2026, with varying renewal and termination options.

The components of lease cost for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands):

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2022*			*2021*			*2022*			*2021*
Operating lease cost	$	219		$	259		$	735		$	786
Sublease income		(56	)		(56	)		(168	)		(168	)
Variable lease cost		16			15			52			51
	$	179		$	218		$	619		$	669

The amounts recognized as of September 30, 2022 and December 31, 2021 were as follows (in thousands):

	*September 30,*		*December 31,*
	*2022*		*2021*
Right of use assets	$	2,666	$	1,180
Long-term lease liabilities		1,856		398
Other current liabilities		940		1,089

As of September 30, 2022, no impairment losses have been recognized to date.

Supplemental information related to leases for the nine months ended September 30, 2022 and 2021 is as follows (in thousands):

	*Nine Months Ended*
	*September 30,*
	*2022*			*2021*
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		3,926			2,734
Right-of-use assets obtained in exchange for new operating lease liabilities		2,606			135
Weighted-average remaining lease term of operating leases (in years)		2.95			1.68
Weighted-average discount rate of operating leases		10.21	%		5.51	%

As of September 30, 2022, maturities of lease liabilities were as follows (in thousands):

	*Operating*
	*Leases*
Years ending December 31,
Remainder of 2022	$	300
2023		1,161
2024		918
2025		799
2026 and thereafter		49
Total future minimum lease payments	$	3,227
Less: Interest		(431	)
Present value of lease liabilities	$	2,796

Subleases

As of September 30, 2022, undiscounted cash flows to be received under the Company’s operating sublease on an annual basis were as follows (in thousands):

	*Operating Leases*
Years ending December 31,
Remainder of 2022	$	61
2023		251
2024		49
2025		—
2026 and thereafter		—
	$	361

Sublease income is recognized net within operating expenses. Sublease income for the three and nine months ended September 30, 2022 and 2021 was as follows (in thousands):

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
	*2022*		*2021*		*2022*		*2021*

Sublease income from fixed lease payments	$	56	$	56	$	168	$	168