Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Leases

The Company subleases certain office and laboratory space under a non-cancelable operating lease expiring in January 2025 for the initial leased space and for the expansion space leased pursuant to an amendment to the lease agreement entered into in August 2018. In February 2022, the Company exercised its renewal option to extend the term of the expansion space until January 2025. The sublease agreement included options to extend for the entire premises through October 2028. The options to extend must be exercised prior to the termination of the original lease agreement. The period covered by the options was not included in the non-cancellable lease term as it was not determined to be reasonably certain to be executed. The lease is subject to charges for common area maintenance and other costs, and base rent is subject to an annual 3% increase each subsequent year. Costs determined to be variable and not based on an index or rate were not included in the measurement of the operating lease liabilities.

Monthly rent expense is recognized on a straight-line basis over the term of the leases. The operating leases are included in the condensed consolidated balance sheets at the present value of the lease payments at a weighted average discount rate of 7% using the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment as the leases do not provide an implicit rate. The weighted average remaining lease term was 2.3 years.

Lease costs were comprised of the following (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Operating lease cost	$	778	$	1,008	$	2,318	$	3,084
Short-term lease cost	12		13		32		34
Total lease cost	$	790	$	1,021	$	2,350	$	3,118

Cash paid for amounts included in the measurement of operating lease liabilities for the three months ended September 30, 2022 and 2021 was $0.5 million and $1.0 million, respectively, and cash paid for amounts included in the measurement of operating lease liabilities for the nine months ended September 30, 2022 and 2021 was $2.4 million and $3.2 million, respectively.

Gross future minimum annual rental commitments as of September 30, 2022, were as follows (in thousands):


	Undiscounted Rent Payments
Year ending December 31
2022 (remaining 3 months)	$	806
2023	3,319
2024	3,419
2025	144
Total undiscounted rent payments	$	7,688

Present value discount	(569)
Present value of lease payments	$	7,119
Current portion of operating lease liabilities (included as a component of accrued expenses and other current liabilities)	2,907
Noncurrent operating lease liabilities	4,212
Total operating lease liability	$	7,119

For the three months ended September 30, 2022 and 2021 the Company recorded approximately $0.8 million and $1.1 million, respectively, in rent expense. For the nine months ended September 30, 2022 and 2021, the Company recorded approximately $2.5 million and $3.3 million, respectively, in rent expense.

Litigation

Kuhne vs. Gossamer Bio, Inc., et. al.

On April 3, 2020, Scott Kuhne, individually and on behalf of all others similarly situated, filed a putative class action lawsuit against the Company, certain of its executive officers and directors, and the underwriters of its IPO in the United States District Court for the Southern District of California (Case No. 3:20-cv-00649-DMS-DEB). The second amended complaint was filed on November 20, 2020. The complaint was filed on behalf of all investors who purchased the Company's securities pursuant to or traceable to the Company's February 8, 2019 IPO. The complaint alleged that the Company, certain of its executive officers and directors, and the underwriters of its IPO made false and/or misleading statements and failed to disclose material adverse facts about its business, operations and prospects in violation of Sections 11 and 15 of the Securities Act of 1933, as amended. The plaintiff sought damages, interest, costs, attorneys’ fees, and other unspecified equitable relief. The Company moved to dismiss the complaint on January 19, 2021. On April 19, 2021, the Court granted the Company's motion to dismiss in substantial part without leave to amend, and denied the motion to dismiss as to a single claim. On October 29, 2021, the parties informed the Court that they had reached a settlement in principle, and the Court vacated all deadlines. The parties entered a settlement agreement on February 1, 2022. Pursuant to the agreement, the Company paid approximately $2.4 million, in exchange for customary releases and settlement terms. The Court entered an order preliminarily approving the settlement on March 14, 2022, and the final settlement approval hearing was held on September 30, 2022. The Court subsequently entered orders approving the lead plaintiff’s requested plan of allocation for the settlement fund and request for attorneys’ fees and reimbursement of litigation expenses. The Court entered a judgment approving the class action settlement on September 30, 2022. In accordance with the authoritative guidance on the evaluation of loss contingencies, the Company recorded a $2.4 million litigation charge related to this matter for the year ended December 31, 2021, which was included as a component of accrued expenses and other current liabilities on the Consolidated Balance Sheet for the year ended December 31, 2021.