Lease

Rent expense was $0.2 million for the years ended December 31, 2021 and 2020. On May 22, 2019, the Company entered into an office sublease agreement for 4,677 square feet in San Diego, California (“San Diego Lease”) which expired on March 31, 2021. On March 17, 2021, the Company entered into a direct lease with the landlord for the same facility (the “San Diego Lease”) which expires on May 31, 2022. Base rent under the San Diego Lease is approximately $77,000 for the remainder of the lease term and the monthly rent expense is being recognized on a straight-line basis over the lease term.

The San Diego Lease is included in the accompanying consolidated balance sheet at the present value of the lease payments. As the San Diego Lease does not have an implicit interest rate, the present value reflects a 10.0% discount rate which is the estimated rate of interest that the Company would have to pay in order to borrow an amount equal to the lease payments on a collateralized basis over a similar term and in a similar economic environment. As of December 31, 2021, the Company has recognized a net operating lease right-of-use asset and a lease liability of $75,000 that matures in May 2022, which has a weighted average remaining lease term of 0.42 years.

Related Party Transactions

In January 2019, the Company engaged Newfront Insurance as its primary insurance broker. The son of Richard Vincent, the Company’s Chief Financial Officer, acted as the Company’s agent at Newfront Insurance. During the years ended December 31, 2021 and 2020, the Company paid total related policy premiums of $1.8 million and $1.4 million, respectively, for which Mr. Vincent’s son received a commission of $0.1 million.

 Effective in September 2019, the Company and Shanghai Pharmaceutical (USA) Inc. (“SPH USA”) entered into a Materials Supply and Services Agreement (“SPH USA Services Agreement”), pursuant to which the Company and SPH USA will execute various statements of work for the transfer to SPH USA of key reagents and other materials, and for the supply of certain services by the Company to SPH USA, as contemplated under and in furtherance of the License and Development Agreement between the Company and SPH USA effective as of November 2018. During the year ended December 31, 2021, the Company recorded amounts receivable from SPH USA related to statements of work totaling $0.4 million (see Note 4). SPH USA is the Company’s largest stockholder and an affiliate of two of the Company’s directors.

In connection with the securities purchase agreements and underwritten offering, other investors included individuals or entities affiliated with David F. Hale, SPH USA, Daniel L. Kisner and Michael G. Carter (see Note 6).