On January 23, 2023, the Company entered into a lease agreement (Northbridge Lease) for its new standalone commercial manufacturing facility, including office and lab space located at 600 Commerce Drive, Northbridge, Massachusetts. The new 41,141 square-foot manufacturing facility will be Current Good Manufacturing Practice (cGMP) compliant to meet U.S. FDA and European Medicines Agency (EMA) standards and will support DURAVYU™ clinical supply and commercial readiness upon regulatory approval. In addition, the building will have the capacity and capabilities for pipeline expansion. The lease includes a non-cancellable lease term of fifteen years and four months, with two options to extend the lease term for two additional terms of either five years or ten years at 95% of the then-prevailing fair market rent. The lease term, under ASC 842, commenced during the second quarter of 2024. The Company’s obligation to pay base rent will begin four months following the qualification of the premises. The qualification of the premises is anticipated to occur during the fourth quarter of 2024. The Company is responsible for real estate taxes, maintenance, and other operating expenses applicable to the leased premises. The Company recognized an initial increase of $17.7 million to its lease liabilities and $17.9 million to its ROU assets resulting from the Northbridge Lease during the second quarter of 2024.

Since the Company elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the respective lease components. The expected lease terms include non-cancellable lease periods. Renewal option periods have not been included in the determination of the lease terms as they are not deemed reasonably certain of exercise. Variable lease payments, such as common area maintenance, real estate taxes, and property insurance are not included in the determination of the lease’s ROU asset or lease liability.

As of June 30, 2024 the weighted average remaining term of the Company’s operating leases was 12.6 years and the weighted average discount rate was 11.56%.

Supplemental balance sheet information related to operating leases as of June 30, 2024 and December 31, 2023 are as follows (in thousands):


	June 30,		December 31,
	2024		2023
Other current liabilities – operating lease current portion	$	1,130	$	563
Operating lease liabilities – noncurrent portion		22,164		4,906
Total operating lease liabilities	$	23,294	$	5,469

The elements of lease expense were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Lease expense included in:
Research and development	$	518	$	291	$	809	$	582
General and administrative		65		65		130		129
Variable lease costs		63		14		135		59
Total lease expense	$	646	$	370	$	1,074	$	770

Cash paid for amounts included in the measurement of operating lease liabilities was $0.2 million and $0.3 million for the six months ended June 30, 2024 and 2023.

The Company’s total future minimum lease payments under non-cancellable leases at June 30, 2024 were as follows (in thousands):


	Operating Leases
Remainder of 2024	$	1,227
2025		3,794
2026		4,136
2027		4,225
2028		3,322
Thereafter		31,900
Total lease payments	$	48,604
Less imputed interest		(25,310	)
Total	$	23,294