Commitments and Contingencies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies |
Commitments and Contingencies
Leases
The Company leases office and laboratory space in Freising, Germany as well as office space in Boston, Massachusetts. In Freising, the Company leases approximately 19,000 square feet of office and laboratory space under four agreements, including three leases for space on three floors of the same building and a letter agreement for additional conference room space within the building. Two of the lease agreements can be terminated by the Company at the end of any quarter with eight months' notice. The other lease agreement will terminate on January 31, 2020 and the letter agreement will terminate on December 31, 2019. In August 2015, the Company entered into the Sublease to lease approximately 3,950 square feet in Boston, Massachusetts. The Sublease expires on February 27, 2022 or such earlier date pursuant to the termination provisions of the Sublease.
In October 2018, Pieris GmbH entered into a new lease for office and laboratory space located in Hallbergmoos, Germany. Under the Lease Agreement, Pieris GmbH will rent approximately 105,000 square feet, of which approximately 96,400 square feet is expected to be delivered by the lessor in the fourth quarter of 2019 and approximately 8,600 square feet is expected to be delivered by the lessor by May 2020. An additional approximately 22,300 square feet is expected to be delivered by the lessor by October 2024. Pieris GmbH has a first right of refusal to lease an additional approximate 13,400 square feet. Pieris GmbH intends to move its operations currently conducted in Freising, Germany to the new leased property.
The Lease Agreement is contingent on the lessor obtaining appropriate building permits from governmental authorities and either party may rescind the Lease Agreement if the lessor does not obtain such permits within a specified period of time. The Lease Agreement provides for an initial term of 150 months, commencing on the date the lessor first delivers the leased property to Pieris GmbH as agreed under the lease agreement. Pieris GmbH also has an option to extend the term of the Lease Agreement for two additional 60-month periods. Pieris GmbH may sublease space within the leased property with lessor’s consent, which may not be unreasonably withheld.
Monthly base rent for the initial 105,000 square feet of the leased property, including parking spaces, will total approximately $0.2 million per month, which amount shall be adjusted starting on the second anniversary of the commencement date by an amount equal to the German consumer price index. In addition to the base rent, Pieris GmbH is also responsible for certain administrative and operational costs in accordance with the terms of the Lease Agreement. Pieris GmbH provided a security deposit of $0.8 million as of December 31, 2018. The Company will serve as a guarantor for the Lease Agreement.
Pieris GmbH and the lessor are each entitled to terminate the Lease Agreement for due cause. Specifically, the lessor may terminate for Pieris GmbH’s default on rent payments beyond certain amounts, noncompliance with major obligations under the Lease Agreement, and certain bankruptcy and insolvency events.
The Company records rent expense on a straight-line basis over the lease term period. The Company recognized rent expense under its existing lease agreements in an amount of $0.5 million and $0.5 million for the years ended December 31, 2018 and 2017, respectively.
The Company’s contractual commitments of the non-cancellable portion under these operating leases as of December 31, 2018 are as follows (in thousands):
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