Operating Leases

3 Months Ended

Mar. 31, 2016

6. Operating Leases

The Company leases office and research space in Rockville, Maryland under an eight-year operating lease (the Lease) that is subject to escalation clauses. The Company has the right to sublease or assign all or a portion of the premises, subject to the conditions set forth in the Lease. The Lease may be terminated early by either the landlord or the Company in certain circumstances. In connection with this lease arrangement, the Company received rent abatement as a lease incentive. The rent abatement has been recognized as deferred rent that is being adjusted on a straight-line basis over the term of the lease. Deferred rent related to the Lease was $250,143 and $243,647 at March 31, 2016 and December 31, 2015, respectively. Total rent expense under the Company’s operating leases was $158,371 and $96,399 for the three months ended March 31, 2016 and 2015, respectively.

In March 2016, the Company amended the Lease (the Lease Amendment) to lease additional space. The Company’s lease of the additional space commences on the earlier of June 1, 2016, the day the work described in the Lease Amendment is substantially complete or the day the Company commences operations in the additional space. The Lease Amendment provides for a rent abatement, a tenant improvement allowance and is subject to the escalation clause which will be recognized as deferred rent. The Company will also pay a security deposit of $52,320 to be held until the end of the expiration or termination of Company’s obligations under the Lease. The term of the Lease Amendment will continue through October 31, 2023, the same date as for the premises originally leased under the Lease, subject to the Company’s renewal option set forth in the Lease. The Company’s one-time option to terminate the Lease effective as of October 31, 2020 will also apply to the additional space.

Future minimum lease payments under the Lease, as amended by the Lease Amendment, as of March 31, 2016 are as follows:


YEAR	AMOUNT
2016	$	562,798
2017		941,822
2018		965,368
2019		989,502
2020		1,014,239
After 2020		3,011,849
Total	$	7,485,578