NOTE 6 – COMMITMENTS AND CONTINGENCIES

Operating Leases

We lease space under operating leases for manufacturing and laboratory facilities and administrative offices in Cleveland, as well as administrative offices in New York. We also lease office space in Madrid, Spain as well as certain office equipment under operating leases, which have a non-cancelable lease term of less than one year and therefore, we have elected the practical expedient to exclude these short-term leases from our right-of-use assets and lease liabilities.

We can terminate the operating leases for our manufacturing and laboratory facilities and administrative offices in Cleveland early at December 31, 2020 and pay for unamortized tenant improvements. Our total lease costs and unamortized tenant improvements would total $1.7 million by exercising the early termination provision.

Components of lease cost under ASC 842 are as follows for the year ended December 31, 2019:

The following table presents information about the amount and timing of cash flows arising from operating leases under ASC 842 as of December 31, 2019:

Rent expense for the years ended December 31, 2018 and 2017 under ASC 840 was $1.3 million and $0.7 million, respectively.

Manufacturing

We have engaged a contract manufacturer to assist us with developing and defining the processes necessary to manufacture our RDEB product candidate. We had a remaining commitment of $6.4 million at December 31, 2019. The amount is payable based on the completion of specific activities outlined in the contracted project plan; we expect to spend the entire $6.4 million in 2020.

Legal

We are not currently subject to any material pending legal proceedings as of December 31, 2019.