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Leases
12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases

7. Leases

Operating Leases

In July 2016, the Company entered into an operating lease for its facility in Boston, Massachusetts. Under the terms of the lease agreement, rent payments commenced in June 2017 with base rent in the first lease year of $2.1 million, subject to annual increases of 3.0% over the lease term through June 2027. The Company is also obligated to pay its ratable portion of operating expenses and taxes. The Company has the right to extend the lease for one additional five-year period at a market rental rate as determined by the landlord and agreed to by the Company. The lease is secured by a letter of credit in the amount of $0.5 million. In conjunction with the lease, the landlord provided the Company with a $5.3 million tenant improvement allowance.

In September 2019, the Company entered into an operating lease under which the Company leased additional office space from a separate third-party tenant under a sublease agreement at its existing facility. Under the terms of the lease agreement, rent payments commenced in December 2019 with base rent in the first lease year of $1.2 million, subject to annual rent escalation over the lease term through January 2027. The sublease is secured by a letter of credit in the amount of $0.3 million.

In January 2020, the Company entered into a sublease agreement to sublease a portion of its existing office and laboratory space to a third-party. The lease term commenced in March 2020 with an original term of 24 months. Annual base rent was $1.1 million for each year during the sublease term. The sublessee was obligated to pay its ratable portion of operating expenses during the sublease term. Subject to the Company’s consent, the sublease provided the sublessee one option to extend for up to one year, subject to a 3.0% rent increase. In May 2021, the sublessee exercised its right to extend the sublease term through October 31, 2022. Pursuant to the extension, base rent was $1.7 million for each year during the extension term. The sublessee provided a security deposit of $0.2 million in cash which was presented as a component of accrued expenses and other current liabilities on the consolidated balance sheet. Payments received under the sublease were recorded as a reduction to rent expense in the consolidated statements of operations and comprehensive loss.

In January 2022, the Company entered into a sublease agreement to sublease an additional portion of its existing office space to a third-party. The lease term commenced in February 2022 with an original term of six months. Base rent over the term amounted to $0.5 million. The sublease granted the sublessee the right to extend for two terms of three months each at the same base rent per month for an additional $0.3 million for each term. In June 2022, the sublessee exercised its first right to extend the sublease term and in September 2022, the sublessee exercised its second right to extend the sublease term. In January 2023, the Company and sublessee amended the sublease agreement to extend the sublease term through May 2023 at the same base rent per month. There is no rent escalation under the amended sublease and there is no option to further extend the term of the sublease agreement. The sublessee prepaid the last month’s rent of $0.1 million, which is presented as a component of accrued expenses and other current liabilities on the consolidated balance sheet. Payments received under the sublease are recorded as a reduction to rent expense in the consolidated statements of operations and comprehensive loss.

Finance Leases

In July 2020, the Company entered into a financing transaction with a third-party leasing company. Pursuant to the transaction, the Company transferred title and interest in certain laboratory equipment to the third party in exchange for a one-time cash payment of $0.5 million and agreed to lease the laboratory equipment back from the third party for $0.2 million per year for 2.5 years. The Company concluded the lease was a capital lease under ASC 840 and a finance lease after the Company’s adoption of ASC 842.

The components of lease cost for the year ended December 31, 2022 were as follows (in thousands):

 

Operating lease cost

 

$

2,917

 

Variable lease cost

 

 

782

 

Short-term lease cost

 

 

17

 

Finance lease cost:

 

 

 

Amortization of right-of-use assets

 

 

201

 

Interest expense on lease liabilities

 

 

14

 

Sublease income

 

 

(2,476

)

Total lease cost

 

$

1,455

 

 

Supplemental cash flow information related to the Company's leases for the year ended December 31, 2022 were as follow (in thousands):

 

Cash paid for amounts included in the measurement of lease liabilities

 

 

 

Operating cash flows for operating leases

 

$

3,616

 

Operating cash flows for finance leases

 

$

14

 

Financing cash flows for finance leases

 

$

213

 

 

Future minimum lease payments under the Company’s noncancelable leases as of December 31, 2022 were as follows (in thousands):

 

 

 

Operating Leases

 

 

Finance Leases

 

2023

 

$

3,705

 

 

$

19

 

2024

 

 

3,796

 

 

 

 

2025

 

 

3,889

 

 

 

 

2026

 

 

3,984

 

 

 

 

2027

 

 

1,350

 

 

 

 

Total lease payments

 

 

16,724

 

 

 

19

 

Present value adjustment

 

 

(2,690

)

 

 

 

Present value of lease payments

 

$

14,034

 

 

$

19

 

 

As of December 31, 2022, the Company’s operating leases had a weighted-average remaining lease term of 4.3 years and weighted average incremental borrowing rate of 8.7%. As of December 31, 2022, the Company’s finance lease had a weighted average remaining lease term of 0.1 years and weighted average incremental borrowing rate of 10.0%.