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Leases
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Leases

9. LEASES

 

The Company adopted Topic 842 on January 1, 2019. Upon adoption, the Company elected the package of transition practical expedients, which allowed it to carry forward prior conclusions related to whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases and initial direct costs for existing leases. The Company also elected the practical expedient to not reassess certain land easements and made an accounting policy election to not recognize leases with an initial term of 12 months or less within its consolidated balance sheets and to instead recognize those lease payments on a straight-line basis in its consolidated statements of operations over the lease term.

 

The Company elected to adopt this standard using the optional modified retrospective transition method with no restatement of its prior periods or cumulative adjustment to retained earnings. With the adoption of Topic 842, the Company’s consolidated balance sheet now contains the following line items: Right-of-use assets, Operating lease liabilities—short-term and Operating lease liabilities—long-term.

 

The Company determined that it held the following significant operating leases of office and laboratory space as of January 1, 2019:

 

 

An operating lease for 175,000 square feet of office and laboratory space in Waltham, Massachusetts that expires in 2021, with an option to extend the term for up to two five year periods, both of which the Company assumed would be exercised in its right-of-use asset and lease liability amounts;

 

An operating lease for 67,000 square feet of office space in Waltham, Massachusetts that expires in 2020, with an option to extend the term for up to two one year periods, which the Company did not assume would be exercised in its right-of-use asset and lease liability amounts;

 

An operating lease for 14,600 square feet of office space in Dublin, Ireland that expires in 2022, with an option to extend the term for an additional five year period which the Company did not assume would be exercised in its right-of-use asset and lease liability amounts; and

 

An operating lease for 7,000 square feet of corporate office and administrative space in Washington, D.C. that expires in 2029 and includes an option to extend the term for an additional five year period which the Company did not assume would be exercised in its right-of-use asset and lease liability amounts.

 

The Company also has two additional operating leases that are included in its lease accounting but are not considered significant.

 

As all the existing leases subject to the new lease standard were previously classified as operating leases by the Company, they were similarly classified as operating leases under the new standard. The Company has determined that the identified operating leases did not contain non-lease components and require no further allocation of the total lease cost. Additionally, the agreements in place did not contain information to determine the rate implicit in the leases. As such, the Company calculated the incremental borrowing rate based on the assumed remaining lease term for each lease in order to calculate the present value of the remaining lease payments. At December 31, 2019, the weighted average incremental borrowing rate and the weighted average remaining lease term for the operating leases held by the Company were 4.73% and 4.0 years, respectively.

 

On November 18, 2019, the Company entered into a definitive agreement to acquire Rodin Therapeutics, Inc. (“Rodin”), a privately held biopharmaceutical company focused on developing novel, small molecule therapeutics for synaptopathies. As part of this transaction, the Company assumed an operating lease for 5,300 square feet of office space in Boston, Massachusetts that expires in 2021, with an option to extend the term for an additional year.

 

As of December 31, 2019, right-of-use assets and liabilities arising from operating leases were $12.4 million and $13.8 million, respectively. During the year ended December 31, 2019, cash paid for amounts included for the measurement of lease liabilities was $9.1 million. The Company recorded operating lease expense of $8.1 million, $10.8 million and $9.4 million for the years ended December 31, 2019, 2018 and 2017, respectively.

 

Future lease payments under non-cancelable leases as of December 31, 2019 consisted of the following:

 

 

 

December 31,

 

(In thousands)

 

2019

 

2020

 

$

9,053

 

2021

 

 

2,727

 

2022

 

 

500

 

2023

 

 

509

 

2024

 

 

520

 

Thereafter

 

 

2,579

 

Total lease payments

 

$

15,888

 

Less: imputed interest

 

 

(2,080

)

Total operating lease liabilities

 

$

13,808

 

 

For comparable purposes, future lease payments under non-cancelable leases as of December 31, 2018 consisted of the following:

 

 

 

December 31,

 

(In thousands)

 

2018

 

2019

 

$

9,394

 

2020

 

 

10,717

 

2021

 

 

4,706

 

2022

 

 

2,455

 

2023

 

 

2,389

 

Thereafter

 

 

23,940

 

Total lease payments

 

$

53,601

 

 

In March 2018, the Company entered into a lease agreement for approximately 220,000 square feet of office and laboratory space located in a building to be built at 900 Winter Street, Waltham, Massachusetts (“900 Winter Street”). The initial term of the lease commenced on January 20, 2020 (the “Commencement Date”). The initial lease term expires on January 31, 2035, with an option to extend for an additional ten years.

As the Company (a) did not have the right to obtain or control the leased premises during the construction period; (b) did not have the right of payment for the partially constructed assets and, thus, could have been potentially leased to another tenant; and (c) did not legally own or control the land on which the property improvements are being constructed, it was not included as a right-of-use asset at December 31, 2019. Additionally, the future lease payments, outlined above, did not include the 900 Winter Street payments as of December 31, 2019 under Topic 842.