Annual report pursuant to Section 13 and 15(d)

Lease

v3.20.1
Lease
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Lease

6. Lease

In August 2017, the Company entered into a lease agreement to lease 24,357 square feet of combination laboratory and office space in 4000 Shoreline Court, South San Francisco, California. The lease commenced on March 1, 2018 and terminates on February 28, 2025.

The contractually specified minimum rent and annual rent increases for the operating lease are included in the measurement of the ROU asset and related lease liabilities. Under the lease arrangement, we may be required to pay directly, or reimburse the lessor for real estate taxes, insurance, utilities, maintenance and other operating costs. Such amounts are generally variable and therefore not included in the measurement of the ROU asset and related lease liability but are instead recognized as variable lease expense in our Condensed Consolidated Statements of Operations when they are incurred. The operating lease agreement has one option to extend the lease term for a period of five years at the fair market rate at the time of the extension. The option to extend the lease was not recognized as part of the Company’s lease liability and ROU asset as the Company determined the renewal rent costs are uncertain and the option is not reasonably certain to be exercised.

Because the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. The Company recorded lease liabilities and ROU asset for its office lease based on the present value of lease payments over the expected lease term. As of December 31, 2019, the weighted average remaining lease term was 5.17 years and the weighted average discount rate used to determine the operating lease liability was 10.0%.

Information related to the Company’s ROU asset and related lease liabilities were as follows (in thousands):

 

 

 

Twelve months

Ended December 31, 2019

 

 

 

 

 

 

 

 

Cash paid for operating lease liabilities

 

$

774

 

 

Operating lease costs

 

 

1,099

 

 

Variable lease costs

 

 

505

 

 

ROU asset obtained in exchange for operating lease obligation

 

 

4,236

 

 

 

Maturities of lease liabilities as of December 31, 2019 were as follows

   for the years ending December 31:

 

 

 

 

 

2020

 

$

1,497

 

 

2021

 

 

1,542

 

 

2022

 

 

1,588

 

 

2023

 

 

1,635

 

 

2024

 

 

1,684

 

 

Thereafter

 

 

282

 

 

Total undiscounted lease payments

 

 

8,228

 

 

Less: imputed interest

 

 

(1,864

)

 

Total lease liabilities

 

$

6,364

 

 

 

 

 

 

 

 

Operating lease liabilities, current

 

 

900

 

 

Operating lease liabilities, noncurrent

 

 

5,464

 

 

Total operating lease liabilities

 

$

6,364

 

 

ASC 840 Disclosure

The Company elected the alternative modified transition method and included the following table previously disclosed. As of December 31, 2018, future minimum lease payments under the noncancelable facility operating lease, were as follows (in thousands):

 

Year ending December 31:

 

 

 

 

2019

 

$

1,453

 

2020

 

 

1,497

 

2021

 

 

1,542

 

2022

 

 

1,588

 

2023

 

 

1,635

 

2024

 

 

1,684

 

Thereafter

 

 

282

 

Total future minimum lease payments

 

$

9,681

 

 

For the years ended December 31, 2019, 2018 and 2017, the Company recognized $1.1 million, $1.0 million and $0.3 million of rent expense, respectively. Variable lease costs were $0.5 million, $0.4 million and $0.1 million for the years ended December 31, 2019, 2018 and 2017, respectively.