12.	Operating Leases

The Company adopted Topic

842

as of

January 1, 2019

using the modified retrospective adoption method, which did

not

require it to restate prior periods. The Company has elected the transition relief package of practical expedients permitted within Topic

842.

Accordingly, the Company has

not

reassessed the classification of its existing leases as of the transition date, whether existing contracts at the transition date contain a lease, or whether unamortized initial direct costs before the transition adjustments would have met the definition of initial direct costs at lease commencement. The Company also applied practical expedients to

not

separate lease and nonlease components for all new leases as well as leases commencing before the effective date if certain criteria are met, and does

not

record leases on its balance sheet with terms of

twelve

months or less. Lease expense associated with leases with terms of

twelve

months or less are immaterial and recognized as incurred. The Company has included options to extend in the terms of its leases where it is reasonably certain that it will exercise these options.

At the inception of an arrangement the Company determines whether the arrangement is or contains a lease based on the circumstances present. Leases with a term greater than

one

year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. Lease liabilities and the corresponding right-of-use assets are recorded based on the present values of lease payments over the expected lease terms. The interest rate implicit in lease contracts is typically

not

readily determinable. As such, the Company utilizes the appropriate incremental borrowing rates, which are the rates that would be incurred to borrow on a collateralized basis, over similar terms, amounts equal to the lease payments in a similar economic environment. Variable payments that do

not

depend on a rate or index are

not

included in the lease liability and are recognized as incurred. Certain adjustments to the right-of-use assets

may

be required for items such as initial direct costs paid or incentives received. If significant events, changes in circumstances, or other events indicate that the lease term or other inputs have changed, the Company would reassess lease classification, remeasure the lease liability by using revised inputs as of the reassessment date, and adjust the right-of-use asset.

The Company leases approximately

134,000

square feet of administrative, research and development, and manufacturing space in Bedford, Massachusetts, and approximately

33,000

square feet of office, research and development, training, and warehousing space in Padova, Italy. The current term of the Bedford lease extends to

2022

with several extension options, and the current term of the Padova lease extends to

2026.

The Company identified and assessed significant assumptions in recognizing the right-of-use asset and lease liability on

January 1, 2019

as follows:

Incremental borrowing rate

. The Company derives its incremental borrowing rate from information available at the lease commencement date in determining the present value of lease payments. The incremental borrowing rate represents a collateralized rate of interest the Company would have to pay to borrow over a similar term an amount equal to the lease payments in a similar economic environment. The Company’s lease agreements do

not

provide implicit rates. As the Company did

not

have any external borrowings at the transition date with comparable terms to its lease agreements, the Company estimated its incremental borrowing rate based on its credit quality, line of credit agreement and by comparing interest rates available in the market for similar borrowings, and adjusting this amount based on the impact of collateral over the term of the lease.

Lease and nonlease components.

The Company is required to pay variable fees for operating expenses in addition to monthly base rent for certain operating leases. The amounts of additional rent associated with these fees are considered nonlease components. The Company has elected the practical expedient which allows nonlease components in a contract to be accounted for as part of a single lease component to which they relate. Any variable components of these operating costs are excluded from lease payments and are recognized in the period incurred.

Extension Options.

The terms of the Company’s leases include options to extend the lease term. As of the transition date to Topic

842

the Company has included extension options reasonably certain to be exercised in the lease term.

The components of lease expense and other information are as follows:

	For the three months ending March 31, 2019
Lease cost
Operating lease cost	$	522
Short-term lease cost		2
Variable Lease Cost		52
Total lease cost	$	576

Other information
Operating cash flows from operating leases	$	497
Weighted-average remaining lease term (in years)		17.6
Weighted-average discount rate		4.1	%

Future minimum commitments due under these lease agreements as of

March 31, 2019

are as follows:

Years ending December 31,	Operating Lease Obligation
2019 (remaining 9 months)	$	1,490
2020		2,025
2021		2,024
2022		1,981
2023		1,965
Thereafter		23,530
Present value adjustment		(9,708	)
Present value of lease payments		23,307
Less current portion included in Accrued expenses and other current liabilities		(1,075	)
Lease liabilities	$	22,232