Leases

9 Months Ended

Sep. 30, 2024

The Company leases certain office and laboratory space, primarily located in Somerville, Massachusetts. Additionally, the Company has embedded leases through its agreements with CMOs and a contract testing organization ("CTO") in both the United States and internationally. Except as described below, there have been no material changes in lease obligations from those disclosed in Note 11 to the consolidated financial statements included in the Company's 2023 Annual Report on Form 10-K.

Embedded leases

Periodically, throughout the three and nine months ended September 30, 2024, the Company amended several of its embedded contract manufacturing leases, some of which were accounted for as lease modifications under ASC 842. The lease modifications primarily relate to the execution of new statements of work with the vendors or the extension of contractual terms.

As it relates to embedded leases related to drug product manufacturing and quality testing, due to lease modification adjustments and amortization, the Company increased its finance lease right-of-use assets in the amount of $10.3 million during the nine months ended September 30, 2024.

As it relates to embedded leases related to drug substance manufacturing, due to lease modification adjustments and amortization, the Company decreased its finance lease right-of-use assets in the amount of $12.1 million during the nine months ended September 30, 2024.

The following paragraphs describe significant lease modifications to the Company's embedded drug substance manufacturing leases that were executed during the three months ended September 30, 2024.

In August 2024, the Company provided its lessor with 12-months’ written notice of its intent to terminate one of its embedded leases effective August 31, 2025. The termination, which relates to an embedded drug vector manufacturing lease, resulted in the reduction to the lease term and the corresponding reduction in fixed lease payments.

In September 2024, the Company extended one of its embedded lease for the manufacturing of vector for five years, resulting in a lease term extending through September 2029. The extension resulted in additional fixed lease payments.

Summary of all lease costs recognized under ASC 842

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating and finance leases for the three months and nine months ended September 30, 2024 and 2023 (in thousands):


	For the three months ended September 30,				For the nine months ended September 30,
	2024		2023		2024		2023
			(As Restated)				(As Restated)
Finance leases
Interest expense	$	2,364	$	4,311	$	9,421	$	12,327
Amortization expense	14,193		6,459		43,896		16,903
Total fixed finance lease cost	$	16,557	$	10,770	$	53,317	$	29,230
Operating leases
Fixed lease cost	$	9,486	$	11,470	$	28,459	$	34,411
Total fixed operating lease cost	$	9,486	$	11,470	$	28,459	$	34,411
Variable lease cost	9,129		4,186		22,128		16,140
Short-term lease cost	98		43		265		140
Total lease cost	$	35,270	$	26,469	$	104,169	$	79,921

Operating sublease income	$	10,219	$	9,742	$	30,825	$	30,223

Cash paid in the measurement of lease liabilities
Operating cash flows used for operating leases					$	15,323	$	18,686
Operating cash flows used for finance leases					$	1,411	$	9,125
Financing cash flows for finance leases					$	69,576	$	40,299

Supplemental balance sheet information related to leases was as follows:


	As of		As of
	September 30, 2024		September 30, 2023
Weighted average remaining lease term - finance leases	1.92 years		1.72 years
Weighted average discount rate - finance leases	12.56	%	14.49	%
Weighted average remaining lease term - operating leases	6.32 years		7.21 years
Weighted average discount rate - operating leases	6.97	%	7.02	%

As of September 30, 2024, future minimum commitments under ASC 842 under the Company’s leases were as follows (in thousands):


	Operating Leases		Financing Leases
Remaining Lease Payments
Remainder of 2024	$	9,151	$	57,718
2025	37,084		43,068
2026	35,719		2,738
2027	36,742		1,673
2028	37,795		685
2029 and thereafter	81,986		—
Total	$	238,477	$	105,882
Less: Imputed Interest	(45,910)		(4,036)
Present Value of Lease Liabilities	$	192,567	$	101,846