Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

Commitments and Contingencies
3 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Operating Leases


We lease our headquarters office and laboratory space in South San Francisco, California under the terms of a lease that expires on July 31, 2022 and that provides an option to renew for an additional five years at then-current market rates. Consistent with the guidance in Accounting Standards Codification Topic 842, Leases (ASC 842), beginning April 1, 2019, we recorded this lease in our Condensed Consolidated Balance Sheet as an operating lease. For the purpose of determining the right-of-use asset and associated lease liability, we determined that the renewal of this lease is reasonably probable. The lease of our South San Francisco facilities does not include any restrictions or covenants requiring special treatment under ASC 842.


The following table summarizes the presentation of the operating lease in our Condensed Consolidated Balance Sheet at June 30, 2020 and March 31, 2020:


    As of June 30, 2020     As of March 31, 2020  
Right of use asset – operating lease   $ 3,492,100     $ 3,579,600  
Current operating lease obligation   $ 325,700     $ 313,400  
Non-current operating lease obligation     3,631,100       3,715,600  
Total operating lease liability   $ 3,956,800     $ 4,029,000  


The following table summarizes the effect of operating lease costs in the Company’s condensed consolidated statements of operations for the three months ended June 30, 2020 and 2019:


    For the Three Months Ended     For the Three Months Ended  
    June 30, 2020     June 30, 2019  
Operating lease cost   $ 212,800     $ 208,800  


The minimum (base rental) lease payments related to our South San Francisco operating lease are expected to be as follows:


Fiscal Years Ending March 31,      
2021 (remaining nine months)   $ 488,000  
2022     668,400  
2023     726,000  
2024     766,000  
2025     789,000  
Thereafter     1,931,400  
Total lease expense     5,368,800  
Less imputed interest     (1,412,000 )
Present value of operating lease liabilities   $ 3,956,800  


The remaining lease term, including the assumed five-year extension at the expiration of the current lease period, and the discount rate assumption for our South San Francisco operating lease is as follows:


    As of June 30, 2020  
Assumed remaining lease term in years     7.08  
Assumed discount rate     8.54 %


The interest rate implicit in lease contracts is typically not readily determinable and, as such, we used our estimated incremental borrowing rate based on information available at the adoption of ASC 842, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment.


Supplemental disclosure of cash flow information related to our operating lease included in cash flows used by operating activities in the condensed consolidated statements of cash flows is as follows:


    For the Three Months Ended     For the Three Months Ended  
    June 30, 2020     June 30, 2019  
Cash paid for amounts included in the measurement of lease liabilities   $ 197,500     $ 188,200  


During the three months ended June 30, 2020, we recorded no new right of use assets arising from new lease liabilities.


We also lease a small office in the San Francisco Bay Area under a month-to-month arrangement at insignificant cost and have made an accounting policy election not to apply the ASC 842 operating lease recognition requirements to such short-term lease. We recognize the lease payments for this lease in general and administrative expense over the lease term. We recorded rent expense of $3,500 and $3,400 for the three months ended June 30, 2020 and 2019, respectively, attributable to this lease.