The Company determines if an arrangement is or contains a lease at inception. Operating lease right-of-use (ROU) assets and liabilities are presented separately on our consolidated balance sheets. The Company does not have any finance leases.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term beginning at the commencement date. As the Company’s leases do not provide enough information to determine an implicit interest rate, the Company determines its incremental borrowing rate based on the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term in a similar economic environment. The operating lease ROU assets also include any lease payments made and excludes lease incentives and initial direct costs incurred. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

In September 2018, the Company entered into a lease agreement (the “Lease”) for approximately 129,800 square feet of office and laboratory space in Brisbane, California, which is now the Company’s corporate headquarters. The Company performed an evaluation of the Lease and determined it is an operating lease. The lease commencement date was in January 2020 and on the commencement date, the Company recognized $52.6 million of ROU asset and lease liability on its consolidated balance sheet in accordance with ASC 842. The Lease grants the Company an option to extend the Lease for an additional 10-year period. This optional period was not included in the measurement of the ROU asset or lease liability as it was not reasonably certain that the Company would exercise the option. The Lease requires the Company to share in prorated operating expenses and property taxes based upon actual amounts incurred. These expenses were classified as variable lease costs due to the Company’s election to account for each separate lease component and the non-lease components associated with that lease component as a single lease component.

The Lease provides for annual base rent of approximately $5.5 million in the first year of the lease term. The annual base rent for the second twelve months will be approximately $8.5 million, which will increase on an annual basis beginning from the 25th month to approximately $11.1 million for the tenth year of the lease.

As of March 31, 2020, the Company has capitalized $10.6 million of leasehold improvements within property and equipment and amortizes it over the lease term.

Supplemental balance sheet information related to operating leases was as follows (in thousands, except lease term and discount rate).

	March 31, 2020			December 31, 2019
Assets
Operating lease right-of-use assets	$	51,981		$	417

Liabilities
Operating lease liabilities - current	$	7,851		$	383
Operating lease liabilities - noncurrent		44,658			—
	$	52,509		$	383

Weighted average remaining lease term (years)		9.8			0.3
Weighted average discount rate		13.5	%		6.0	%

Information related to operating lease activity during the three months ended March 31, 2020 and 2019 was as follows (in thousands):

	Three Months Ended March 31,
	2020		2019
Operating lease cost	$	2,738	$	669
Variable lease cost		532		—
Total lease cost	$	3,270	$	669

Operating lease right-of-use assets obtained in exchange for lease obligations	$	52,630	$	1,095

Operating lease payments	$	2,174	$	727

Future annual payments of operating lease liabilities as of March 31, 2020 are as follows (in thousands):

Year ending December 31:	Amount
2020 (nine months remaining)	$	6,185
2021		8,449
2022		8,745
2023		9,051
2024		9,368
Thereafter		52,442
Total future lease payments		94,240
Less: imputed interest		(41,731	)
Total operating lease liabilities	$	52,509

The operating leases require the Company to share in prorated operating expenses and property taxes based upon actual amounts incurred; those amounts are not fixed for future periods and, therefore, are not included in the future commitments listed above.