Quarterly report pursuant to Section 13 or 15(d)

Note 10 - Leases

Note 10 - Leases
9 Months Ended
Sep. 30, 2022
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]

10.    Leases


In August 2015, the Company entered into a sublease to lease approximately 3,950 square feet of office space in Boston, Massachusetts. In July 2021, the Company extended the lease for this office space for an additional 10 months through December 31, 2022, and the Company does not expect to extend the lease beyond expiration.



In October 2018, Pieris GmbH entered into a new lease for office and laboratory space located in Hallbergmoos, Germany, or the Hallbergmoos Lease. Under the Hallbergmoos Lease, which commenced in February 2020 and provides an initial rental term of 12.5 years, Pieris GmbH rents approximately 105,000 square feet. 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, and an option to extend the Hallbergmoos Lease for two additional 60-month periods. The Company is not reasonably certain to exercise the option to extend the lease expiration beyond its current expiration date. 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. In addition to the base rent, Pieris GmbH is also responsible for certain administrative and operational costs in accordance with the Hallbergmoos Lease. Pieris GmbH provided a security deposit of $0.8 million as required by the Hallbergmoos Lease. The Company will serve as a guarantor for the Hallbergmoos Lease.


The Hallbergmoos Lease included $11.5 million of tenant improvements allowance for normal tenant improvements, for which construction began in March 2019. The Company capitalized the leasehold incentives which are included in Property and equipment, net on the Condensed Consolidated Balance Sheet and are amortized on a straight-line basis over the shorter of the useful life or the remaining lease term. The lease incentive allowance was also factored in as a reduction to the right-of-use asset upon the adoption of ASC 842.


The following table summarizes operating lease costs included in operating expenses (in thousands):



Three Months Ended September 30,


Nine Months Ended September 30,










Operating lease costs

  $ 314     $ 370     $ 943     $ 1,126  

Variable lease costs (1)

    148       198       446       562  

Total lease cost

  $ 462     $ 568     $ 1,389     $ 1,688  


(1) Variable lease costs include certain additional charges for operating costs, including insurance, maintenance, taxes, utilities, and other costs incurred, which are billed based on both usage and as a percentage of the Company’s share of total square footage.


The following table summarizes the weighted-average remaining lease term and discount rate:



As of September 30, 2022


Weighted-average remaining lease term (years)


Weighted-average discount rate

    10.5 %


Cash paid for amounts included in the measurement of the lease liabilities were $0.5 million and $0.6 million, respectively, for the three months ended September 30, 2022 and 2021. For the nine months ended September 30, 2022 and 2021, cash paid for amounts included in the measurement of the lease liabilities were $1.6 million and $1.9 million, respectively.


As of September 30, 2022, the maturities of the Company’s operating lease liabilities and future minimum lease payments were as follows (in thousands):






  $ 545  











Total undiscounted lease payments


Less: present value adjustment

    (6,861 )

Present value of lease liabilities

  $ 12,217