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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2020
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies |
7. | Commitments and Contingencies
Leases At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company calculates the associated lease liability and corresponding right-of-use asset upon lease commencement using a discount rate based on the rate implicit in the lease or an incremental borrowing rate commensurate with the term of the lease. The Company records lease liabilities within current liabilities or long-term liabilities based upon the length of time associated with the lease payments. The Company records its operating lease right-of-use assets as long-term assets. Right-of-use assets for financing leases are recorded within property and equipment, net in the Balance Sheet. Leases with an initial term of 12 months or less are not recorded on the Balance Sheet. Instead, the Company recognizes lease expense for these leases on a straight-line basis over the lease term. In connection with certain operating leases, the Company has security deposits recorded and maintained as restricted cash totaling $40 thousand as of December 31, 2019. There was no security deposit as of December 31, 2020. The Company leases laboratory, office and storage facilities in San Antonio, Texas, under operating lease agreements that expire in 2028. The Company also leases certain office space in Austin, Texas under a month-to-month operating lease agreement. In addition, the Company leases certain equipment under various operating and finance leases. The lease agreements generally provide for periodic rent increases, and renewal and termination options. The Company’s lease agreements do not contain any material variable lease payments, residual value guarantees or material restrictive covenants. Certain leases require the Company to pay taxes, insurance, and maintenance. Payments for the transfer of goods or services such as common area maintenance and utilities represent non-lease components. The Company elected the package of practical expedients and therefore does not separate non-lease components from lease components. The table below summarizes the Company’s lease liabilities and corresponding right-of-use assets (in thousands, except years and rates):
|  | 2020 |  |  | 2019 |
Assets |  |  |  |  |  |
Operating | $ | 636 |  | $ | 781 |
Financing |  | 7 |  |  | 134 |
Total leased assets | $ | 643 |  | $ | 915 |
Liabilities |  |  |  |  |  |
Current: |  |  |  |  |  |
Operating | $ | 123 |  | $ | 147 |
Financing | 10 |  | 120 |
Noncurrent: |  |  |  |  |  |
Operating | 528 |  | 646 |
Financing |  | — |  | 8 |
Total lease liabilities | $ | 661 |  | $ | 921 |
Weighted-average remaining lease term (years) - operating leases | 6.57 |  | 6.89 |
Weighted-average remaining lease term (years) - finance leases | 0.42 |  | 1.08 |
Weighted-average discount rate - operating leases |  | 7.79 | % |  | 7.93 | %
Weighted-average discount rate - finance leases |  | 5.00 | % |  | 5.00 | %
The table below summarizes the Company’s lease costs from its consolidated statements of operations, and cash payments from its consolidated statements of cash flows.
|  | Year Ended December 31, |
|  |  | 2020 |  |  | 2019 |
Lease expense: |  |  |  |  |  |  |
Operating lease expense |  | $ | 210 |  | $ | 225 |
Finance lease expense: |  |  |  |  |  |  |
Depreciation of right-of-use assets |  |  | 127 |  | 116 |
Interest expense on lease liabilities |  | 4 |  | 9 |
Total lease expense |  | $ | 341 |  | $ | 350 |
Cash payment information: |  |  |  |  |  |  |
Operating cash used for operating leases |  | $ | 204 |  | $ | 213 |
Financing cash used for financing leases |  | 117 |  | 131 |
Total cash paid for amounts included in the measurement of lease liabilities |  | $ | 321 |  | $ | 344 |
Total rent expenses for the years ended December 31, 2020 and 2019 was $0.2 million and $0.7 million, respectively, which includes leases in the table above, month-to-month operating leases, and common area maintenance charges. The Company’s future minimum annual lease payments under operating and financing leases at December 31, 2020 are as follows (in thousands):
|  | Financing Leases |  | Operating Leases |
2021 |  | $ | 10 |  | $ | 183 |
2022 |  |  | — |  | 123 |
2023 |  |  | — |  | 100 |
2024 |  |  | — |  | 106 |
2025 |  |  | — |  | 108 |
Thereafter |  |  | — |  |  | 233 |
Total minimum lease payments |  | $ | 10 |  | $ | 853 |
Less: amount representing interest |  |  | — |  |  | (202 | )
Present value of obligations under leases |  |  | 10 |  |  | 651 |
Less: current portion |  | $ | 10 |  | $ | (123 | )
Noncurrent lease obligations |  |  | — |  |  | 528 |
Other commitments The Company has entered into agreements with various research organizations for pre-clinical and clinical development studies, which have provisions for cancellation. Under the terms of these agreements, the vendors provide a variety of services including conducting research, recruiting and enrolling patients, monitoring studies and data analysis. Payments under these agreements typically include fees for services and reimbursement of expenses. The timing of payments due under these agreements is estimated based on current study progress. As of December 31, 2020, the Company did not have any clinical research study obligations. The Company is subject to various claims and contingencies related to legal proceedings. Due to their nature, such legal proceedings involve inherent uncertainties including, but not limited to, court rulings, negotiations between affected parties and governmental actions. Management assesses the probability of loss for such contingencies and accrues a liability and/or discloses the relevant circumstances, as appropriate. The Company is currently engaged in a dispute with a third party arising out of its sale of certain assets pursuant to an asset and equity purchase agreement entered into in 2019 (the "APA"). In October 2020, the Company received correspondence from such third party informing it of an alleged breach of certain representations and warranties in the APA and asserting indemnification claims. In December 2020, the Company responded to the third party and asserted that its improper use of the Company’s intellectual property constituted a breach of the APA and further asserted an indemnification claim against the third party for the Company’s losses in connection therewith. While management believe the claims asserted against the Company to be spurious and without merit, this dispute remains ongoing and there can be no assurance that it will not result in litigation. Resolution of this matter or any resulting litigation would be expensive and time-consuming and the outcome is uncertain. It is not possible to predict with certainty the outcome of these unresolved legal actions or the range of possible loss.

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