In May 2015, the Company executed a lease agreement for office and laboratory space in Emeryville, California. In January 2016, the Company executed the first amendment to the lease agreement for additional rentable office and laboratory space which extended the lease term to March 31, 2023 and updated the option to renew the lease at market rent from the prior additional term of three years to five years. In October 2018, the Company executed a second amendment to extend the lease to September 2026. Additionally, the second amendment provided a tenant improvement allowance of $0.2 million, which was paid to the Company in November 2018.

The 5980 Horton Street Building Lease is considered an operating lease under ASC 842 as it does not meet the criteria of a finance lease. As of September 30, 2023, the operating lease right-of-use asset and operating lease liability were $1.3 million and $1.5 million, respectively. As of December 31, 2022, the operating lease right-of-use asset and operating lease liability were $1.6 million and $1.9 million, respectively. The discount rate used to determine the lease liability was 7.5%.

In October 2018, the Company executed a second lease agreement for additional office and laboratory space in Emeryville, California. The new lease has an initial term of 87 months beginning on the rent commencement date with the option to renew the lease for one additional term of five years at market rent. The Company did not have to pay rent until October 2019. This lease agreement also provided for a tenant improvement allowance of $0.4 million, which was paid to the Company in December 2019. The Company amortizes the tenant improvement allowance on a straight-line basis over the remaining term of the lease as a reduction of rent expense.

In May 2019, the Company amended the second lease agreement executed in October 2018 to add additional office, manufacturing and laboratory space (the “Expansion”). The amendment extended the term of the lease to December 31, 2029. The Company did not have to pay rent until December 2019. The lease agreement also included a tenant improvement allowance, which was increased to $2.3 million in February 2021 pursuant to a second amendment to the second lease agreement. As of September 30, 2023, the Company has received $2.3 million of this tenant improvement allowance. The tenant improvement allowance funds improvements to the additional office, manufacturing and laboratory space, which the Company has determined to be lessee owned. The allowance is treated as a reduction of lease payments used to measure the lease liability.

The 5858 Horton Street Building Lease and Expansion are considered operating leases under ASC 842 as they do not meet the criteria of a finance lease. As of September 30, 2023, the operating lease right-of-use asset and operating lease liability was $10.7 million and $13.6 million, respectively. As of December 31, 2022, the operating lease right-of-use asset and operating lease liability was $11.5 million and $14.3 million, respectively. The discount rate used to determine the lease liability was 7.8%.

Neither of the leases include a general option for the Company to terminate the leases.

The following table summarizes the components of lease expense for the three and nine months ended September 30, 2023 and 2022, which are included in operating expenses in the Company’s condensed statements of operations (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease cost	$	698	$	697	$	2,095	$	2,090
Variable lease cost		311		260		933		751
Total	$	1,009	$	957	$	3,028	$	2,841

Variable lease payments include amounts relating to common area maintenance and are recognized in the condensed statements of operations as incurred.

The following table summarizes supplemental information related to operating leases:


	September 30, 2023			December 31, 2022
Weighted-average remaining lease term (in years)		6.0			6.7
Weighted-average discount rate:		7.8	%		7.8	%

The following table summarizes the maturities of lease liabilities as of September 30, 2023 (in thousands):


2023 (remaining three months)	$	773
2024		3,149
2025		3,244
2026		3,135
2027		2,810
Thereafter		5,875
Total future minimum lease payments		18,986
Less: Amount representing interest		(3,829	)
Present value of future minimum lease payments		15,157
Less: Current portion of operating lease liabilities		3,126
Long-term portion of operating lease liabilities	$	12,031

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions, such as with vendors and other parties. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently maintains directors’ and officers’ liability insurance that would generally enable it to recover a portion of any future amounts paid. The Company believes the estimated fair value of its indemnification agreements in excess of applicable insurance coverage is not material.

From time to time, the Company may become involved in legal proceedings arising from the ordinary course of its business. If applicable, the Company records a legal liability when it believes that it is both probable that a liability may be imputed, and the amount of the liability can be reasonably estimated. Significant judgment by the Company is required to determine both probability and the estimated amount. There are no material legal proceedings outstanding at September 30, 2023.