LEASES

3 Months Ended

Mar. 31, 2024

Cambridge Lease

Under the Cambridge Lease, the Company leases approximately 65,167 square feet of office, storage and lab space in Cambridge, Massachusetts. The term of the Cambridge Lease with respect to the 59,216 square feet of office and storage space expires on September 11, 2026, with one five-year extension option available. The term of the Cambridge Lease with respect to the 5,951 square feet of lab space was set to expire on January 31, 2025, with an extension option for one additional period through September 11, 2026. On May 6, 2024, the Company extended the term of the Cambridge Lease with respect to the lab space through September 11, 2026. See Note 16, Subsequent Events, for further information.

The Cambridge Lease is non-cancelable and is classified as an operating lease. The renewal option as it relates to the office and storage portion of the Cambridge Lease was not included in the calculation of the right-of-use asset and operating lease liability as the renewal is not reasonably certain. However, the renewal option as it relates to the lab portion of the Cambridge Lease was included in the calculation of the right-of-use assets and operating lease liabilities as the renewal is reasonably certain. The Cambridge Lease does not contain residual value guarantees. In arriving at the operating lease liabilities, the Company applied incremental borrowing rates ranging from 6.65% to 6.94%, which were based on the remaining lease term at either the date of adoption of ASC 842 or the effective date of any subsequent lease term extensions. As of March 31, 2024, the remaining lease term for the Cambridge Lease was 2.45 years.

Operating lease costs were $1.2 million and $1.8 million for the three months ended March 31, 2024 and 2023, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $1.4 million and $1.7 million for the three months ended March 31, 2024 and 2023, respectively. The security deposit in connection with the Cambridge Lease is $1.7 million in the form of a letter of credit, which is included as restricted cash in other long-term assets in the Company’s condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.

Sublease and Former Boston Lease

Previously, the Company leased 27,924 square feet of office space in Boston, Massachusetts, or Boston Lease, under a non-cancelable operating lease that was set to expire in July 2031. The Company subleased the entire Boston Lease, effective October 2019 through February 2023. The Company did not record any rental income for the three months ended March 31, 2024 and recorded $0.3 million in rental income as other income in the unaudited condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2023.

In May 2023, pursuant to an Assignment and Assumption of Lease Agreement, or Lease Assignment Agreement, the Company assigned all of its rights, title and interest in, to, and under the Boston Lease to LG Chem Life Sciences Innovation Center, Inc., or LG Chem, and made a payment to LG Chem of $1.3 million. As of May 2023, LG Chem assumed all of the rights and obligations of the Company under the Boston Lease and the Company has no further obligations for rent or other payments under the Boston Lease. In accordance with ASC 842, Leases, the Company wrote off the right-of-use asset and lease liability associated with the Boston Lease, and recognized the difference between the right-of-use asset and the lease liability offset by the $1.3 million payment as a loss on lease termination in the unaudited condensed consolidated statement of operations and comprehensive loss of $0.5 million during the three months ended June 30, 2023.

Future Lease Commitments

Future commitments under the Cambridge Lease are as follows (in thousands):


	Operating Lease Commitments
Remainder of 2024	$	4,308
2025	5,819
2026	3,613
Total lease commitments	$	13,740
Less: present value adjustment	(1,033)
Current and long-term operating lease liabilities	$	12,707