Leases

3 Months Ended

Mar. 31, 2024

Leases

Leases

9. Leases

We have entered into one operating lease for real estate and several operating leases for clinical site equipment. Our real estate operating lease has a term of 78 months, and includes renewal terms which can extend the lease term by 60 months, which we include in the lease term when it is reasonably certain that we will exercise the option. As of March 31, 2024, our operating lease had a remaining lease term of 18 months. Our operating leases for clinical site equipment each have a term of 18 months and include renewal terms that can extend the lease terms monthly at the end of each applicable term. As of March 31, 2024, our operating leases for clinical site equipment had an average remaining term of 14 months. The right-of-use (ROU) assets are included in Other assets on our interim consolidated balance sheets as of March 31, 2024 and December 31, 2023, and represent our right to use the underlying assets for the applicable lease terms. Our obligations to make lease payments are included in both Accrued expenses and Other long-term liabilities on our interim consolidated balance sheets as of March 31, 2024 and December 31, 2023. The ROU assets were initially measured at cost, which comprise the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received. The ROU assets are subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received.  

As of March 31, 2024 and December 31, 2023, ROU assets were $1.5 million and $1.0 million, respectively, and operating lease liabilities were $1.9 million and $1.4 million, respectively. We have entered into various short-term operating leases, primarily for clinical trial equipment, with an initial term of twelve months or less. These leases are not recorded on our balance sheets. All operating lease expense is recognized on a straight-line basis over the lease term. During the three months ended March 31, 2024 and 2023, we recognized $0.3 million and $0.1 million, respectively, in total lease costs, of which less than $0.1 million related to short-term operating leases for each period.

Because the rate implicit in each lease is not readily determinable, we use our incremental borrowing rate to determine the present value of the lease payments. The weighted average incremental borrowing rate used to determine the initial value of ROU assets and lease liabilities was 11.0%, derived from a corporate yield curve based on a synthetic credit rating model using a market signal analysis. We have certain contracts for real estate which may contain lease and non-lease components which we have elected to treat as a single lease component. The borrowing rate used to determine the initial value of the ROU asset and lease liability related to our operating lease for clinical site equipment was approximately 7.0%.

ROU assets for operating leases are periodically reduced by impairment losses. We use the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize.  As of March 31, 2024 and December 31, 2023, we have not recognized any impairment losses for our ROU assets.

Maturities of operating lease liabilities as of March 31, 2024 were as follows (in thousands):

Remainder of 2024	$	1,073
2025		955
		2,028
Less: imputed interest		(140)
Total lease liabilities	$	1,888
Current operating lease liabilities	$	1,306
Non-current operating lease liabilities		582
Total lease liabilities	$	1,888