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Commitments and contingencies

9 Months Ended

Sep. 30, 2021

Commitments and contingencies

Commitments and contingencies

16. Commitments and contingencies

Lease agreements

In October 2013, the Company entered into an operating lease for office and manufacturing space in Lowell, Massachusetts, which expires in July 2026. The terms of the lease include options for early termination of the lease in July 2024 and a one-time, five-year extension of the lease following its expiration as well as a $0.7 million tenant improvement allowance, which was fully utilized as of September 30, 2021.

In June 2021, the Company entered into a Sublease agreement for office and manufacturing space in Lexington, Massachusetts, which expires in June 2029. The Sublease agreement includes an option to terminate the sublease in July 2026, subject to an early termination fee. The Company also has the right to use furniture and equipment specified in the Sublease agreement for $0.6 million in future payments over the term of the sublease with the option to purchase the

furniture and equipment at the end of the sublease term. Additionally, the Sublease requires the Company to return part of the leased space back to its original condition upon termination. As a result, the Company recognized an asset retirement obligation in the amount of $0.2 million which is classified in other long-term liabilities within the consolidated balance sheet. Concurrent with entering into the Sublease agreement, the Company executed an Option Agreement with the property owner which provides the Company the option to enter into a new direct lease for the Lexington facility for an additional five years following expiration of the sublease.

The Company recognizes rent expense on a straight-line basis over the respective lease period. The Company has recorded deferred rent for rent expense incurred but not yet paid. Rent expense was $0.2 million and $0.1 million for the three months ended September 30, 2021 and 2020, respectively, and rent expense was $0.4 million and $0.3 million for the nine months ended September 30, 2021 and 2020, respectively.

Future minimum lease commitments under operating leases as of September 30, 2021 are as follows (in thousands):


Year ending December 31,
2021		$	169
2022			1,139
2023			1,169
2024			1,199
2025			1,229
Thereafter			2,997
Total		$	7,902

Exit fee

In December 2016, in connection with the amendment of a then-outstanding loan agreement with the lender, the Company entered into an agreement under which it was obligated to pay the lender an exit fee in the amount of $0.8 million in the event of a qualifying exit event prior to December 31, 2026. A qualifying event was defined as any (i) liquidation, dissolution or winding up whether voluntary or involuntary; (ii) consolidation, merger or reverse merger; (iii) sale, lease, transfer, exclusive license, exchange, dividend or other disposition of all or substantially all of the Company’s assets; (iv) issuance and/or sale of the Company’s stock that is greater than 50% of the shares of common stock immediately following such issuance; (v) any other form of acquisition or business combination that results in a change of control at the Company; or (vi) the consummation of any public offering of shares of common stock. There were no amounts accrued for the exit fee at December 31, 2020, as the occurrence of a qualifying exit event was not deemed probable. The Company paid the exit fee following the IPO, which was considered a qualifying event. The exit fee expense is included in Other income (expense) on the condensed consolidated statements of operations for the three and nine months ended September 30, 2021.

Supply agreement

In March 2020, the Company entered into an agreement with a supplier to provide raw materials used in the manufacturing process. As of September 30, 2021, the Company had committed to minimum payments under these arrangements totaling $0.8 million through December 31, 2022. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. The Company had $0.3 million and $0.1 million accrued for the supply agreement as of September 30, 2021 and December 31, 2020. respectively.

Software subscription

During the year ended December 31, 2020, the Company entered into a non-cancelable agreement with a service provider for software as a service and cloud hosting services. As of September 30, 2021, the Company had committed to minimum payments under these arrangements totaling $1.1 million through January 31, 2026. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such

expenditures can be reasonably estimated. There were no amounts accrued for the software subscription as of September 30, 2021 and December 31, 2020.

Indemnification agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to customers, 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 board of directors and certain of its executive officers 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 condensed consolidated financial statements as of September 30, 2021 and December 31, 2020.

Legal proceedings

The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings.