Commitments and Contingencies | 7. Commitments and Contingencies Leases The Company has a three-year sublease agreement for office space in Waltham, Massachusetts that began in September 2016 and expires in September 2019. The Company has two five-year lease agreements for office and laboratory space in Lawrence, Kansas that began on January 1, 2016 and expire on December 31, 2020. The Company has two leases for additional office space in Lawrence, Kansas, that expire in December 2020. The lease agreements contain options to extend the lease terms however these extensions were not included in the right-of-use In addition, in August 2018, the Company entered into a nine-month sublease for additional office space in Waltham, Massachusetts that expires in May 2019. The expense related to this sublease is included in short-term lease costs for the three months ended March 31, 2019. The Company’s leases require the Company to pay for certain operating expenses based on actual costs incurred and therefore as the amounts are variable in nature are expensed in the period incurred and included in variable lease costs for the three months ended March 31, 2019. Payment escalations specified in the lease are recognized on a straight-line basis over the lease terms. The components of lease expense were as follows (in thousands): Three Months Ended Operating lease cost $ 155 Short-term lease cost 94 Variable lease cost 92 $ 341 Other information Cash paid for amounts included in the measurement of operating lease liabilities $ 160 Operating lease liabilities arising from obtaining new right-of-use $ — Weighted-average remaining lease term—operating leases (in years) 1.51 Weighted-average discount rate—operating leases 5.91 % Future annual minimum lease payments under operating leases as of March 31, 2019 were as follows (in thousands): Remainder of 2019 (nine months) $ 378 2020 333 Total future minimum lease payments 711 Less: imputed interest (33 ) Total operating lease liabilities $ 678 Included in the consolidated balance sheet: Current operating lease liabilities $ 434 Operating lease liabilities, net of current portion 244 Total operating lease liabilities $ 678 As previously disclosed in the Company’s 2018 Annual Report on Form 10-K ASC 840, Leases, Year Ending December 31, 2019 $ 726 2020 333 $ 1,059 In May 2018, the Company entered into a lease for office space in Waltham, Massachusetts, which is expected to commence in 2019. The initial term of the lease expires in November 2029, unless terminated earlier in accordance with the terms of the lease. The Company is entitled to two five-year options to extend. The initial annual base rent is approximately $2.0 million and will increase annually for a total of $22.4 million over the lease term. The Company is obligated to pay its portion of real estate taxes and costs related to the premises, including costs of operations, maintenance, repair, replacement and management of the new leased premises. The Company is required to maintain a cash balance of $1.1 million to secure a letter of credit associated with the lease. This amount was classified as long-term investment—restricted in the consolidated balance sheet as of March 31, 2019. Prior to the adoption of ASC 2016-02, construction-in-progress build-to-suit 2016-02, build-to right-of-use 2016-02. As previously disclosed in the Company’s 2018 Annual Report on Form 10-K ASC 840, Leases, Year Ending December 31, 2019 $ 170 2020 2,043 2021 2,088 2022 2,132 2023 2,177 Thereafter 13,783 $ 22,393 KBA Grants Prior to 2014, the Company received funding from two research and development grants from the Kansas Bioscience Authority, or KBA, totaling $2.0 million and no further amounts will be received under these grants. Pursuant to Kansas law, the Company may be required to repay some or all of the financial assistance received from the KBA, subject to the discretion of the KBA, if the Company relocates the operations in which the KBA invested outside of the State of Kansas, if the Company initiates procedures to dissolve and wind up or cease operations within ten years after receiving such financial assistance, or upon certain significant changes to ownership of the Company. The Company will only account for the repayment of the grants if it becomes probable that the Company will be required to repay any funds previously received. Legal Proceedings The Company is not currently a party to any material legal proceedings. 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 the costs related to its legal proceedings as they are incurred. 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 board of directors and senior management 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 aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of March 31, 2019 or December 31, 2018. |