Protagonist Therapeutics, Inc Leases Disclosure
Note 10. Leases
On January 1, 2019, the Company adopted ASC 842, which requires entities to recognize assets and liabilities for leases with lease terms of more than 12 months on the balance sheet. Leases with terms of 12 months or less are not recorded on the balance sheet, and the related lease expenses are recognized on a straight-line basis over the lease term. The Company has one operating lease agreement entered into in March 2017 for laboratory and office space located in Newark, California. The Company provided the landlord with a $450,000 letter of credit collateralized by restricted cash as security deposit for the lease, which expires in May 2024. During the years ended December 31, 2020 and 2019, the Company recognized $89,400 and $64,000 of sublease income, respectively. The Company did recognize any sublease income for the year ended December 31, 2018. Under the terms of the lease, the Company is responsible for certain taxes, insurance and maintenance expenses.
The weighted average lease term and discount rate are as follows:
December 31, | ||||||
| 2020 |
| 2019 | |||
Operating Lease Term and Discount Rate: | ||||||
Weighted-average remaining lease term | 3.4 years | 4.4 years | ||||
Weighted-average discount rate |
| 11.0% |
| 11.0% | ||
The following table summarizes the Company’s minimum lease payments and lease liability as of December 31, 2020 (in thousands):
Year Ending December 31: |
| Amount | |
2021 | $ | 2,000 | |
2022 | 2,059 | ||
2023 | 2,121 | ||
2024 | 895 | ||
2025 | — | ||
Thereafter |
| — | |
Total future minimum lease payments | 7,075 | ||
Less: imputed interest | (1,116) | ||
Present value of future minimum lease payments | 5,959 | ||
Less: current portion of operating lease liability | (1,459) | ||
Operating lease liability - noncurrent | $ | 4,500 | |
Supplemental lease cost information is as follows (in thousands):
Year Ended December 31, | ||||||
| 2020 | 2019 | ||||
Operating lease cost | $ | 1,775 | $ | 1,792 | ||
Supplemental balance sheet information is as follows (in thousands):
As of December 31, | ||||||
| 2020 |
| 2019 | |||
Operating Leases: | ||||||
$ | 4,950 | $ | 6,042 | |||
$ | 1,459 | $ | 1,256 | |||
4,500 | 5,961 | |||||
$ | 5,959 | $ | 7,217 | |||
Supplemental cash flow information is as follows (in thousands):
Year Ended December 31, | ||||||
| 2020 | 2019 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||
Operating cash flow used by operating leases | $ | 1,941 | $ | 1,885 | ||
Prior to the adoption of ASC 842, the Company’s rent expense was $1.9 million for the year ended December 31, 2018. Rent expense was recognized on a straight-line basis over the term of the lease and accordingly, the Company recorded the difference between cash rent payments and the recognition of rent expense as a deferred rent liability.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2020 | Mar 10, 2021 | Showing above |
| 2019 | Mar 10, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.