Leases

12 Months Ended

Dec. 31, 2023

7. Leases

In May 2020, the Company entered into a lease agreement for a cell therapy manufacturing facility in Framingham, Massachusetts, or the Framingham Lease, for clinical and commercial production of the Company’s investigational cell therapy product candidates. The Framingham Lease expires in March 2036 and the Company has an option to extend the term of the lease for two additional seven-year periods. The right-of-use asset and corresponding lease liability does not include the additional seven-year periods under the renewal option as the Company is not reasonably certain to exercise that option.

In July 2020, the Company entered into a lease agreement for an office and laboratory facility in Boston, Massachusetts, with a commencement date of June 1, 2021, or the 2020 Lease. At lease commencement, the Company recorded a right-of-use asset of $149.8 million and a corresponding operating lease liability of $147.9 million. Tenant incentives of $49.2 million were recorded as a reduction to the operating lease asset and liability at lease commencement. The lease expires in March 2034 and the Company has an option to extend the term of the lease for two additional five-year periods. The right-of-use asset and corresponding lease liability does not include the additional five-year periods under the renewal option as the Company is not reasonably certain to exercise that option. Subsequent to signing the 2020 Lease, the Company amended its leases for its primary office and research facility in Cambridge, Massachusetts in 2021, which resulted in a termination in 2022.

The Company also rents certain office space in Zug, Switzerland, on a short-term basis for which a right-of-use asset and liability are not recorded, in accordance with the practical expedient elected.

The Company has embedded leases in certain research and license agreements for which the Company has recorded a right of use asset and liability. These arrangements are not significant in comparison to the Company’s total operating lease assets and liabilities. In addition, the Company has identified certain short-term leases embedded within its manufacturing contracts which are not recorded on the Company’s balance sheet in accordance with the practical expedient elected.

The Company identified and assessed the following estimates in recognizing the right-of-use asset and corresponding liability:

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Expected lease term: The expected lease term includes noncancelable lease periods and, when applicable, periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, as well as periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option.

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Incremental borrowing rate: As the discount rates in the Company’s leases are not implicit, the Company estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term.

The following table summarizes the lease assets and liabilities as of December 31, 2023 and 2022 (in thousands):


	As of December 31,
	2023		2022
Assets
Operating lease assets	$	153,993	$	156,921
Total lease assets		153,993		156,921
Liabilities
Current
Operating lease liabilities		15,625		15,842
Non-current
Operating lease liabilities, net of current portion		223,007		228,179
Total lease liabilities	$	238,632	$	244,021

The following table summarizes operating lease costs included in research and development and general and administrative expense, as well as sublease income for the years ended December 31, 2023, 2022 and 2021 (in thousands):


	Years Ended December 31,
	2023			2022		2021
Operating lease costs	$	25,870		$	34,896	$	22,520
Short-term lease costs		—			824		11,087
Variable lease costs		14,387			11,882		8,402
Sublease income		(137	)		—		(5,253	)
Net lease cost	$	40,120		$	47,602	$	36,756

The following table summarizes the maturity of undiscounted payments due under lease liabilities and the present value of those liabilities as of December 31, 2023 (in thousands):


	Total
2024		28,703
2025		28,825
2026		29,402
2027		28,669
2028		28,146
Thereafter		178,884
Total	$	322,629
Present value adjustment		(83,997	)
Present value of lease liabilities	$	238,632

The following table summarizes the lease term (in years) and discount rate for operating leases as of December 31, 2023 and 2022:


	As of December 31,
	2023			2022
Weighted-average remaining lease term		10.8			11.8
Weighted-average discount rate		5.9	%		5.9	%

The following table summarizes the cash paid for amounts included in the measurement of lease liabilities for the years ended December 31, 2023, 2022 and 2021 (in thousands):


	Years Ended December 31,
	2023			2022			2021
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows used in operating leases	$	(27,310	)	$	(17,004	)	$	(19,753	)
Operating lease non-cash items:
Right-of-use assets increased (decreased) through lease modifications and reassessments		2,660			1,208			(14,230	)
Right-of-use assets obtained in exchange for operating lease liabilities		7,552			—			152,486
Leasehold improvements paid directly by landlord		—			19,252			30,500