The Company has entered into noncancelable agreements with vendors to secure raw materials and contract manufacturing organizations (CMOs) to manufacture its commercial supply of TAVNEOS. Some of these agreements contain binding commitment provisions for orders placed under purchase orders and forecasted quantities within a specified time frame. As of June 30, 2022, the Company’s noncancelable contractual obligations under these terms of the agreements are approximately $11.6 million. The Company enters into contracts in the normal course of business with CROs for clinical trials and with vendors for preclinical research studies, research supplies and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts and not included in the purchase obligations above.

In May 2004, the Company entered into a noncancelable operating lease for its previous office and primary research facility located in Mountain View, California. In May 2019, the Company entered into a third amendment to the lease agreement for the same facility to extend the term of the lease through April 2021. In July 2020, the Company entered into a letter agreement to further extend the lease term through June 2021.

In July 2019, the Company entered into a ten-year operating lease for a 96,463 square foot facility in San Carlos, California to replace its previous headquarters located in Mountain View, California. Upon execution of the lease agreement, the Company provided the landlord an approximately $1.1 million security deposit in the form of a letter of credit. The lease commenced in June 2020 and will expire in February 2031 subject to an option to extend the lease for five years. The lease extension option was not considered in the right-of-use asset or the lease liability as the Company did not consider it reasonably certain the option would be exercised. Monthly rent payments began in March 2021. Following a six-month period of discounted rent, the Company is obligated to pay an initial annual base rent at a rate of approximately $6.5 million, which is subject to scheduled 3% annual increases, plus certain operating expenses. The Company moved its headquarters to this new facility in April 2021.

The Company was provided a tenant improvement allowance of $15.4 million plus an additional allowance of $4.8 million for the same. The additional allowance is repaid by the Company as additional rent in equal monthly payments at a rate of 7% per annum through the initial term of the lease. As of June 30, 2022, the Company received total tenant improvement allowance of $20.2 million. The Company has the right to sublease the facility, subject to landlord consent.

The balance sheet classification of the Company’s operating lease assets and liabilities was as follows (in thousands):


	June 30,		December 31,
	2022		2021
Balance Sheet
Assets:
Operating lease right-of-use assets	$	24,359	$	24,806
Liabilities:
Operating lease liabilities:
Accrued and other current liabilities (1)	$	3,035	$	2,810
Non-current lease liabilities		45,243		46,830

The component of lease costs, which was included in operating expenses in the Company’s Condensed Consolidated Statements of Operations, was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating lease cost	$	1,375	$	1,740	$	2,750	$	3,482

During the six months ended June 30, 2022 and 2021, cash paid for amounts included in the measurement of lease liabilities was $4.0 million and $2.0 million, respectively, excluding the $0 and $7.7 million tenant improvement allowance received in 2022 and 2021, respectively. These amounts were included in net cash used in operating activities in the Company’s Condensed Consolidated Statements of Cash Flows.

Future minimum lease payments under all noncancelable operating leases as of June 30, 2022 are as follows (in thousands):


	Operating leases
Year ending December 31:
Remaining of fiscal year 2022	$	3,683
2023		7,535
2024		7,741
2025		7,952
2026		8,170
Thereafter		36,517
Total minimum payments		71,598
Less: interest		(23,320	)
Present value of lease liabilities	$	48,278

As of June 30, 2022, the remaining lease term was 8.7 years and the operating discount rate used to determine the operating lease liability was 9.5%.

The Company and its Chief Executive Officer were named as defendants in two putative shareholder class actions filed on May 5, 2021, and June 8, 2021, in the U.S. District Court for the Northern District of California. These cases have been consolidated into the lead case, Homyk v. ChemoCentryx, Inc., No. 4:21-cv-03343-JST (N.D. Cal.) (the “Homyk action”). The Homyk action alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act in connection with statements regarding the New Drug Application, or NDA, for TAVNEOS, and the underlying Phase III clinical trial, seeking an award of damages, interest and attorneys’ fees. A lead plaintiff was selected on January 28, 2022, and a consolidated amended complaint was filed on March 28, 2022. The Company has moved to dismiss these claims and expects the motion to be heard sometime after August 12, 2022. In addition, the Company, the Board of Directors and certain of our officers were named as defendants in a putative shareholder derivative action filed on January 25, 2022, in the U.S. District Court for the Northern District of California, Napoli v. Schall, 3:22-cv-00499 (N.D. Cal) (the “Napoli action”). On March 11, 2022, the Court entered a stipulation staying the Napoli action until judgment is entered in the Homyk action. The Company plans to vigorously defend against both actions. Given the early stages of both cases, the Company is unable to estimate a reasonably possible range of loss, if any, that may result from either litigation.