Leases

9 Months Ended

Mar. 31, 2024

9. Leases

In July 2020, we entered into a lease agreement (the Initial Lease Agreement) for approximately 32,800 square feet of office space in San Diego, California. The Lease Agreement was scheduled to expire in March 2028 but was extended by 20 months to November 2029 in accordance with the amended lease agreement we entered into in January 2022 (the Amended Lease Agreement). The Initial and Amended Lease Agreements are collectively referred to as the Lease Agreements. The Lease Agreements contain rent escalations over the lease term. In addition, the Lease Agreements contain an option to renew and extend the lease term, which is not included in the determination of the right-of-use (ROU) asset and operating lease liability, as it was not reasonably certain to be exercised. Upon commencement of the Amended Lease Agreement, to extend the lease term, we recognized an additional operating lease ROU asset and a corresponding operating lease liability. The Lease Agreements include variable non-lease components (e.g., common area maintenance, maintenance, etc.) that are not included in the ROU asset and operating lease liability and are reflected as an expense in the period incurred as a component of the lease cost.

The Amended Lease Agreement also provides for an additional 12,300 square feet of office space adjacent to our current office in San Diego. Upon taking control of the additional office space on July 1, 2022, we recognized operating lease ROU assets obtained in exchange for operating lease liabilities of $4.3 million.

The total operating lease costs for the Lease Agreements were as follows for the periods presented (in thousands):


	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2024		2023		2024		2023
Operating lease cost	$	609	$	609	$	1,826	$	1,826
Variable lease costs		69		2		93		37
Total lease costs included in general and administrative expenses	$	678	$	611	$	1,919	$	1,863

Supplemental cash flow information related to our operating leases was as follows for the periods presented (in thousands):


	For the Three Months Ended March 31,				For the Nine Months Ended March 31,
	2024		2023		2024		2023
Cash paid for amount included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	584	$	567	$	1,751	$	1,700

The following is a schedule of the future minimum lease payments under the Lease Agreements, reconciled to the operating lease liability, as of March 31, 2024 (in thousands):


Remainder of fiscal year ending June 30, 2024	$	584
Years ending June 30,
2025		1,913
2026		2,477
2027		2,551
2028		2,715
Thereafter		4,385
Total lease payments		14,625
Less: Present value discount		(2,958	)
Total operating lease liability	$	11,667

Balance Sheet Classification - Operating Leases
Operating lease liability	$	1,052
Operating lease liability, long-term		10,615
Total operating lease liability	$	11,667

Other Balance Sheet Information - Operating Leases
Weighted-average remaining lease term (in years)		5.7
Weighted-average discount rate		7.50	%