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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Leases The Company subleases certain office and laboratory space under a non-cancelable operating lease expiring in January 2025 for the initial leased space and December 2022 for expansion space leased pursuant to an amendment to the lease agreement entered into in August 2018. The sublease agreement included options to extend for the entire premises through October 2028. The options to extend must be exercised prior to the termination of the original lease agreement. The period covered by the options was not included in the non-cancellable lease term as it not was not determined to be reasonably certain to be executed. The lease agreement also includes a one-time termination option for the expansion space only whereby the Company can terminate the lease with advance written notice. The termination option was not determined to be reasonably certain to be executed. The lease is subject to charges for common area maintenance and other costs, and base rent is subject to an annual 3% increase each subsequent year. Costs determined to be variable and not based on an index or rate were not included in the measurement of the operating lease liabilities. In November 2019, the Company entered into an additional non-cancelable lease agreement for certain office and laboratory space (the “permanent space”) in San Diego, California, commencing on May 1, 2020 and expiring on December 31, 2021. The lease agreement includes a lease for temporary space commencing on January 1, 2020 and expiring on the commencement date of the lease of the permanent space. The monthly base rent for the permanent and temporary space is $63,425 and $28,745, respectively. The lease agreement included an option to extend the term of the permanent space for twelve months. The option to extend must be exercised nine months prior to the termination of the original lease agreement. The period covered by the option was not included in the non-cancellable lease term as it not was not determined to be reasonably certain to be executed. The lease is subject to charges for common area maintenance and other costs, and base rent is subject to an annual 3% increase each subsequent year. In June 2020, the Company entered into a sublease agreement for the permanent space with a third party. The sublease commenced on July 1, 2020 and expires on December 31, 2021. The sublessee pays the monthly base rent of $63,425, subject to an annual 3% increase, and is obligated to pay for common area maintenance and other costs. The sublessee received a 6 months base rent abatement. The Company determined that there was no impairment on the original right-of-use asset and will continue to account for the permanent space as it did before the commencement of the sublease. The Company recognized $0.1 million in sublease income for the three and nine months ended September 30, 2020. On July 29, 2020, the Company entered into a lease assignment agreement, whereby it became the assignee to a lease for certain office and laboratory space in Ann Arbor, Michigan. The lease term expires on December 31, 2026 and the Company has the option to extend the term of the lease by up to five years. The period covered by the option was not included in the non-cancellable lease term as it was not determined to be reasonably certain to be executed. The monthly base rent for the space is $28,495. The lease is subject to charges for common area maintenance and other costs, and base rent is subject to an annual 2.5% increase on January 1 of each year. Monthly rent expense is recognized on a straight-line basis over the term of the leases. The operating leases are included in the balance sheet at the present value of the lease payments at a weighted-average discount rate of 7% using the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment as the leases do not provide an implicit rate. The weighted average remaining lease term was 3.7 years. Lease costs were comprised of the following (in thousands):
| Three months ended September 30, 2020 |  | Nine months ended September 30, 2020
Operating lease cost | $ | 1,007 |  |  | $ | 2,577 |
Short-term lease cost | 16 |  |  | 54 |
Total lease cost | $ | 1,023 |  |  | $ | 2,631 |
Cash paid for amounts included in the measurement of operating lease liabilities for the three and nine months ended September 30, 2020 was $1.0 million and $2.6 million, respectively. Gross future minimum annual rental commitments as of September 30, 2020, were as follows (in thousands):
| Undiscounted Rent Payments
Year ending December 31 |
2020 (remaining 3 months) | $ | 1,043 |
2021 | 4,273 |
2022 | 3,579 |
2023 | 2,063 |
2024 | 2,123 |
2025 | 387 |
Thereafter | 397 |
Total undiscounted rent payments | $ | 13,865 |
Present value discount | (1,670) |
Present value | $ | 12,195 |
Current portion of operating lease liability (included as a component of accrued expenses) | 3,548 |
Noncurrent operating lease liabilities | 8,647 |
Total operating lease liability | $ | 12,195 |
For the three and nine months ended September 30, 2020 the Company recorded approximately $1.0 million and $2.9 million, respectively, in rent expense. Litigation Kuhne vs. Gossamer Bio, Inc., et. al. On April 3, 2020, Scott Kuhne, individually and on behalf of all others similarly situated, filed a putative class action lawsuit against the Company, certain of its executive officers and directors, and the underwriters of its IPO in the United States District Court for the Southern District of California (Case No. 3:20-cv-00649-DMS-MDD). The first amended complaint was filed on August 31, 2020. The complaint was filed on behalf of all persons who purchased or otherwise acquired the Company’s securities between February 8, 2019 and December 13, 2019. The first amended complaint alleges that the Company, certain of its executive officers and directors, and the underwriters of its IPO made false and/or misleading statements and failed to disclose material adverse facts about its business, operations and prospects in violation of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, and Sections 10(b) (and Rule 10b-5 promulgated thereunder) and 20(a) of the Securities Exchange Act of 1934, as amended. The plaintiff seeks damages, interest, costs, attorneys’ fees, and other unspecified equitable relief. Following meet and confer discussions amongst the parties to the litigation, Plaintiff was granted leave to further amend his complaint by no later than November 20, 2020. Thereafter, the Company’s deadline to move to dismiss or otherwise answer that complaint is January 19, 2021. The Company intends to vigorously defend this matter. Given the uncertainty of litigation, the preliminary stage of the case, and the legal standards that must be met for, among other things, class certification and success on the merits, the Company cannot estimate the reasonably possible loss or range of loss that may result from this action.

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