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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2019
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies | 7. Commitments and Contingencies Leases On February 12, 2019, the Company entered into a lease with Shigo Center Plaza Owners, LLC, for approximately 17,705 square feet of office space for a new headquarters located at 3 Center Plaza, Boston, Massachusetts. The lease has a term of 124 months with an option to extend the lease for 60 additional months. As part of the agreement the Company is required to maintain a letter of credit, which upon signing was $1.3 million and is classified as restricted cash within the condensed consolidated financial statements. Under the lease agreement, the Company will pay monthly rent beginning four months after the lease commencement, which was June 21, 2019, with total lease payments over the initial term of $10.7 million. The Company also had a lease for office space in Boston, Massachusetts, effective as of July 28, 2014, with a term expiring July 31, 2020. On June 28, 2019, the Company amended the lease to terminate the lease effective as of June 30, 2019. In March 2015, the Company entered into an operating lease for additional office space in Boston, Massachusetts, effective as of April 15, 2015, with a term expiring on July 31, 2020, and an option to extend this lease for three additional years. In addition, with the landlord’s consent, the Company has subleased 2,976 square feet of office space in Boston, Massachusetts to an unrelated third party beginning on January 1, 2017 and expiring on June 30, 2020, and the Company expects to receive approximately $0.1 million in sublease rental income from October 1, 2019 through the end of the sublease term. In October 2015, the Company entered into an operating lease for office space in San Diego, California, effective as of October 1, 2015, with a term extended to expire on December 31, 2024. The future minimum lease payments for the next five years and thereafter as of September 30, 2019, are as follows:
Year Ending December 31, |  | Operating |
(in thousands) | Leases |
2019 (October - December) |  |  | 193 |
2020 |  |  | 1,090 |
2021 |  |  | 1,120 |
2022 |  |  | 1,143 |
2023 |  |  | 1,165 |
Thereafter |  |  | 6,585 |
Total lease payments |  |  | 11,296 |
Less: imputed interest |  |  | (4,385 | )
Present value of lease liabilities |  | $ | 6,911 |
Under the prior lease guidance minimum rental commitments under non-cancelable leases for each of the next five years and thereafter as of December 31, 2018, were as follows:
Year Ending December 31, |  | Operating |
(in thousands) | Leases |
2019 |  | $ | 464 |
2020 |  |  | 226 |
2021 |  |  | — |
2022 |  |  | — |
2023 |  |  | — |
Thereafter |  |  | — |
Total lease payments |  | $ | 690 |
During the three months ended September 30, 2019 we incurred $0.2 million of lease expense associated with research and development and $0.2 million of lease expense associated with general and administrative activities. During the nine months ended September 30, 2019 we incurred $0.5 million of lease expense associated with research and development and $0.2 million of lease expense associated with general and administrative activities. The components of lease expense are as follows:
|  | Three Months |  |  | Nine Months |
|  | Ended September 30, |  |  | Ended September 30, |
| 2019 |  |  | 2019 |
|  | (in thousands) |
Operating lease cost |  | $ | 330 |  |  | $ | 577 |
Short-term lease cost |  |  | 72 |  |  |  | 185 |
Sublease income |  |  | (28 | ) |  |  | (83 | )
Total lease cost |  | $ | 374 |  |  | $ | 679 |
During the three and nine months ended September 30, 2018 the Company recognized $0.1million and $0.3 million of rental expense related to office space, respectively. The following table summarizes the presentation in our condensed consolidated balance sheet information related to our operating leases:
|  | As of September 30, |
| 2019 |
|  | (in thousands) |
Assets |  |  |  |
Operating lease right-of-use assets |  | $ | 7,172 |
Liabilities |  |  |  |
Operating lease liabilities, short-term |  |  | 409 |
Operating lease liabilities, long-term |  |  | 6,502 |
Total operating lease liabilities |  | $ | 6,911 |
The weighted average remaining lease term and weighted average discount rate of our operating leases are as follows:
|  | As of September 30, |
| 2019 |
Weighted average remaining lease term in years |  |  | 9.73 |
Weighted average discount rate |  |  | 11.1 | %
Supplemental cash flow information related to leases was as follow:
|  | Three Months |  |  | Nine Months |
|  | Ended September 30, |  |  | Ended September 30, |
| 2019 |  |  | 2019 |
|  | (in thousands) |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flows from operating leases |  | $ | 27 |  |  | $ | 216 |
Investing cash flows from operating leases |  |  | 287 |  |  |  | 586 |
Right-of-use assets obtained in exchange for lease obligations: |  |  |  |  |  |  |  |
Operating leases |  |  | — |  |  |  | 6,817 |
Intellectual Property Licenses The Company has acquired exclusive rights to develop patented compounds and related know-how for beloranib under two licensing agreements with two third parties in the course of its research and development activities. The licensing rights obligate the Company to make payments to the licensors for license fees, milestones, license maintenance fees and royalties. The Company is also responsible for patent prosecution costs. As of September 30, 2019, the Company is obligated to make additional milestone payments of up to $12.3 million upon reaching certain pre-commercialization milestones, such as clinical trials and government approvals (including the FDA approval of a New Drug application (“NDA”)), and up to $12.5 million upon reaching certain product commercialization milestones related to the development of beloranib. Under one of the license agreements, the Company is also obligated to pay up to $1.3 million with respect to each subsequent licensed product, if any, that is a new chemical entity. In addition, the Company will owe single-digit royalties on sales of commercial products developed using these licensed technologies, if any, and is also obligated to pay to the licensors a percentage of fees received if and when the Company sublicenses the technology. There were no milestones achieved during the three and nine months ended September 30, 2019 and 2018 and the development related to this technology is no longer active. As of September 30, 2019, the Company has not yet developed a commercial product using the licensed technologies and it has not entered into any sublicense agreements for the technologies. 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 management team and its board of directors 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 consolidated financial statements as of September 30, 2019 or December 31, 2018. Legal Proceedings The Company accrues a liability for legal contingencies when it believes that it is both probable that a liability has been incurred and that the Company can reasonably estimate the amount of the loss. The Company reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and the views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in the Company’s accrued liabilities would be recorded in the period in which such determination is made. In addition, in accordance with the relevant authoritative guidance, for any matters in which the likelihood of material loss is at least reasonably possible, the Company will provide disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, the Company will provide disclosure to that effect. The Company expenses legal costs as they are incurred. The Company may periodically become subject to other legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which the Company is focused. The Company is not aware of any material claims as of September 30, 2019.

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