Leases

3 Months Ended

Mar. 31, 2023

LEASESIn March 2020, the Company entered into an 11-year lease agreement to move its research and development operations from 21 Erie Street, Cambridge, Massachusetts, to a 40,514 square-feet facility at 301 Binney Street, Cambridge, Massachusetts (Cambridge facility). The lease commenced on February 28, 2020 with an initial annual base rent of $4.1 million. The initial rent payment was paid as of September 30, 2020, with rent payments escalating 3.0% annually after the initial 12 payments. The Company executed a letter of credit for $2.0 million in connection with the lease. The lease includes $3.7 million in certain tenant improvement allowances, which the

Company included in its calculation of the right-of-use asset in the lease at commencement. As of March 31, 2023, $3.7 million in improvement costs incurred by the Company were reimbursed by the lessor and are now included within the total lease liability. In connection with the lease, the Company recognized an operating lease right-of-use asset of $21.5 million and $21.9 million and an aggregate lease liability of $27.5 million and $28.0 million as of March 31, 2023 and December 31, 2022, respectively. The remaining lease term is 7 years and 11 months, and the estimated incremental borrowing rate is 8.50%.

In February 2021, the Company entered into a new lease agreement for its office space in San Mateo, California totaling 17,340 square-feet. The initial annual base rent for the new space was $1.2 million, and such amount increases by 3% annually on each anniversary of the new premises commencement date. In connection with the larger space leased, the Company made a one-time cash security deposit in the amount of $59,000. The lease commenced in April 2021 and terminates August 31, 2026. In connection with the lease, the Company recognized an operating lease right-of-use asset of $2.6 million and $2.8 million and an aggregate lease liability of $3.5 million and $3.7 million as of March 31, 2023 and December 31, 2022, respectively. The remaining lease term is 3 years and 3 months, and the estimated incremental borrowing rate is 11.18%.

The following table summarizes the presentation of the Company’s operating leases in its balance sheets as of March 31, 2023 and December 31, 2022:


Balance Sheet Caption	March 31, 2023		December 31, 2022
	(in thousands)
Assets:
Operating lease assets	$	24,123	$	24,707
Liabilities:
Current portion of operating lease liabilities	$	3,032	$	2,347
Noncurrent operating lease liabilities	27,945		28,744
Total operating lease liabilities	$	30,977	$	31,091

The following table summarizes the effect of operating lease costs in the Company’s statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022:


Statement of Operations and Comprehensive Loss Caption	Three months ended March 31,
	2023		2022
	(in thousands)
Research and development	$	767	$	767
General and administrative	511		511
Total operating lease cost	$	1,278	$	1,278

The Company made cash payments of $0.9 million and $1.0 million under the lease agreements during the three months ended March 31, 2023 and 2022, respectively.

The undiscounted future non-cancellable lease payments under the Company's operating leases as of March 31, 2023 for the next five years and thereafter is expected to be as follows:


Period Ending December 31,	Amount
	(in thousands)
2023	$	4,211
2024	5,749
2025	1,327
2026	5,405
2027 and thereafter	21,298
Total undiscounted lease payments	37,990
Less: Present value adjustment	(7,013)

Present value of operating lease liabilities	$	30,977