Leases

12 Months Ended

Dec. 31, 2019

The Company has two operating leases for office and laboratory space. The Company’s corporate headquarters is located at 701 Veterans Circle, Warminster, Pennsylvania. The lease expires on April 30, 2027, and the Company has the option of extending the lease for two further five-year terms. The Company also leases office space located at 626 Jacksonville Rd, Warminster, Pennsylvania under a lease that expires on December 31, 2021, and the Company has an option to extend the lease term to April 30, 2027. In connection with the Company’s site consolidation in 2018, the Company ceased using its office and laboratory space located in Burnaby, British Columbia, Canada on June 30, 2018. The Company subleased a portion of the Burnaby facility to various tenants, including Genevant, until the lease expired on July 31, 2019. The Company recognized the remaining lease payments for the Burnaby facility, less sublease income under contract, in site consolidation expenses in 2018.

The Company adopted ASU No. 2016-02, Leases (Topic 842) on January 1, 2019 using the modified retrospective basis applied at the effective date of the new standard and elected to utilize a package of practical expedients. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term. The leases do not provide an implicit rate so in determining the present value of lease payments, the Company utilized its incremental borrowing rate for the

applicable lease, which was 9.0% for the 701 Veterans Circle lease, 7.6% for the 626 Jacksonville Rd. lease and 5.0% for the Burnaby lease. The Company recognizes lease expense on a straight-line basis over the remaining lease term.

During the year ended December 31, 2020, the Company incurred total operating lease expenses of $0.7 million, which included lease expenses associated with fixed lease payments of $0.6 million, and variable payments associated with common area maintenance and similar expenses of $0.1 million. For the twelve months ended December 31, 2019, the Company incurred total operating lease expense of $1.2 million, which included fixed lease payments of $0.9 million, and variable payments of $0.3 million. Sublease income for the Company’s Burnaby site, which closed during that year, was $0.2 million for the twelve months ended December 31, 2019.

Weighted average remaining lease term and discount rate were as follows:


			As of December 31, 2020
Weighted-average remaining lease term (years)			6.1
Weighted average discount rate			9.0%

The Company did not include options to extend its lease terms as part of its ROU asset and lease liabilities.

Supplemental cash flow information related to the Company’s operating leases was as follows:


	2020		2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	657	$	1,116

Future minimum lease payments under operating leases that have remaining terms as of December 31, 2020 are as follows:


	As of December 31, 2020
	(in thousands)
2021	$	677
2022	581
2023	598
2024	616
2025	635
Thereafter	787
Total lease payments	$	3,894
Less: interest	(911)
Present value of lease payments	$	2,983