On December 21, 2020, the Company entered into a sublease agreement with Cotiviti, Inc. to lease office space at 201 Jones Road, Waltham, Massachusetts (the “Waltham Lease”). The Waltham Lease commenced on December 21, 2020 and expires on November 30, 2023. In addition to rent, the Waltham Lease requires the Company to pay certain taxes, insurance and operating costs relating to the leased premises (collectively, “Lease Operating Costs”). The Waltham Lease contains customary default provisions, representations, warranties and covenants. The Waltham Lease is classified as an operating lease.

On December 29, 2016, the Company entered into an agreement with BMR-Axiom LP (the “San Diego Landlord”) to lease office and laboratory space located at 4550 Towne Centre Court, San Diego, California (the “San Diego Lease”) for a period of 10 years commencing on October 30, 2017 (the “Initial Lease Term”). The Company had an option to extend the San Diego Lease for an additional 5 years at the end of the Initial Lease Term.

On August 6, 2020, La Jolla received notice from the Landlord that the Landlord exercised its option to terminate the San Diego Lease effective August 31, 2020. The Landlord exercised its right to terminate the San Diego Lease and recapture the property after La Jolla provided notice to the Landlord of its intent to assign the San Diego Lease. In connection with the termination of the San Diego Lease, La Jolla will have no further obligations under the San Diego Lease after the August 31, 2020 termination date, including with respect to future payments under the San Diego Lease.

The Company provided a standby letter of credit for $0.9 million in lieu of a security deposit. This amount decreased to $0.6 million after year two of the Initial Lease Term. As of December 31, 2020, there was no cash pledged as collateral for such letter of credit and recorded as restricted cash.

As of December 31, 2020, there was no lease liability and corresponding right-of-use asset related to the San Diego Lease.

In September 2020, the Company entered into a sublease agreement for office space in San Diego, California with an entity of which the Chairman of the Company’s board of directors is also the chairman and chief executive officer. The lease is cancellable without penalty by providing 30-days’ written notice. The lease is a short-term lease for accounting purposes. The Company made payments of approximately $64,000 under the lease in 2020. The Company recognizes the lease payments in the consolidated statements of operations and does not record a lease liability or right-of-use asset for this lease.

On November 16, 2006, Tetraphase entered into an agreement with ARE-480 Arsenal Street, LLC (the “Watertown Landlord”), to lease office and laboratory space located at 480 Arsenal Way, Watertown, Massachusetts (the “Watertown Lease”). The Watertown Lease originally provided for an expiration on November 30, 2019. In November 2018, Tetraphase entered into an Eighth Amendment to the Watertown Lease to extend the term of the lease through November 30, 2022 (the “Lease Term”). In January 2020, Tetraphase entered into a Ninth Amendment to the Watertown Lease to surrender a portion of its leased space, which reduced the leased premises by a total of 15,899 square feet from approximately 37,438 square feet to approximately 21,539 square feet.

On December 14, 2020, Tetraphase entered into a Termination of Lease and Voluntary Surrender of Premises Agreement with the Watertown Landlord for the Watertown Lease, effective December 31, 2020. In connection with the Lease Termination Agreement, La Jolla will pay the Landlord approximately $0.5 million and will otherwise have no further obligations under the Watertown Lease, including with respect to the estimated remaining $2.1 million of future lease payments.

Tetraphase provided a standby letter of credit for $0.2 million in lieu of a security deposit. As of December 31, 2020, there was no cash pledged as collateral for such letter of credit and recorded as restricted cash related to the Watertown Lease. As of December 31, 2020, there was no lease liability and corresponding right-of-use asset related to the Watertown Lease.

The Company recorded lease liabilities and right-of-use lease assets for certain operating leases based on the present value of lease payments over the expected lease term, discounted using the Company’s incremental borrowing rate. The options to extend the operating leases were not recognized as part of the Company’s lease liabilities and right-of-use lease assets. Lease expense under leases was $2.3 million and $2.9 million for the years ended December 31, 2020 and 2019, respectively. Cash paid for amounts included in the measurement of lease liabilities was $3.0 million and $3.8 million for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020, the weighted-average remaining lease term and the weighted-average discount rate for the operating leases was 2.8 years and 4.0%, respectively.

In connection with the terminations of the San Diego Lease and the Watertown Lease, the Company recorded a non-cash gain of approximately $13.0 million as other income (expense), net, in connection with the write-off of the lease liabilities and corresponding right-of-use lease assets. The $13.0 million gain is recorded in the consolidated statements of operations and consolidated statements of cash flows net of the loss on disposal of property and equipment in connection with the termination of such leases (see Note 4).

Future minimum lease payments, excluding Lease Operating Costs, under the Waltham Lease as of December 31, 2020 are as follows (in thousands):

2021	$	219
2022		181
2023		166
Thereafter		-
Total future minimum lease payments		566
Less: discount		(30	)
Total lease liabilities	$	536

From time to time, the Company may become subject to claims and litigation arising in the ordinary course of business. The Company is not a party to any material legal proceedings, nor is it aware of any material pending or threatened litigation.