Leases

12 Months Ended

Dec. 31, 2020

The Company enters into lease arrangements for its facilities as well as certain equipment, classified either as operating or finance leases.

The Company has a lease agreement for approximately 33,300 square feet of office space in Seattle, Washington for the Company’s principal executive offices, a laboratory for research and development and related uses (the "Blaine lease"). In January 2020, the Company issued an irrevocable letter of credit in the amount of $0.5 million for the security deposit in accordance with the terms of the lease. The lease commenced on January 15, 2020 and rent obligations were scheduled to commence on December 1, 2020. The Company will also be responsible for the payment of additional rent to cover the Company’s share of the annual operating and tax expenses and utilities costs for the building. The lease was originally scheduled to expire on December 1, 2028, with the option to extend the lease for two five-year terms. The lease provides for a tenant improvement allowance of $8.0 million, which is included in the base rent, and an optional additional tenant improvement allowance with a maximum amount of $1.5 million, which will result, if elected, in additional rent expense recognized over the term of the lease. In September 2020, the Company elected to utilize this additional tenant improvement allowance. This resulted in a remeasurement of the lease liability due to an increase in lease payments over the term of the lease. The Company recorded an increase to the lease liability and related right-of-use asset of $1.0 million. In November 2020, the Company executed an amendment to this lease that extends the scheduled rent commencement date to February 1, 2021 and the base term expiration to February 1, 2029. This amendment was accounted for as a modification to the lease and resulted in an immaterial reduction of the lease liability and related right-of-use asset. As of December 31,2020, there was a tenant improvement allowance receivable of $0.9 million recorded in other current assets on the consolidated balance sheets related to reimbursable build-out costs incurred by the Company.

The Company has a lease agreement for approximately 6,272 square feet of office space in Seattle, Washington, for the Company’s former principal executive offices, a laboratory for research and development and related uses. In June 2020, the Company executed an amendment to this lease pursuant to which the Company has the option to terminate the lease, without penalty, at any point subsequent to November 1, 2020 with 45 days advance written notice. At December 31, 2020, the Company determined that it is reasonably certain to not exercise this termination option. On March 24, 2021, the Company executed a second amendment to this lease, pursuant to which the term of the lease is extended through September 30, 2026. This will result in an increase in fixed rental payments over the updated term.

On June 30, 2020, the Company terminated its lease agreement for 10,946 square feet of office space in Vancouver, Canada. The lease termination resulted in an extinguishment of the lease liability and the write-off of the related right-of-use asset. After incurring additional expenses included in the termination fee of $0.5 million, the Company recognized a loss of $0.3 million on the termination of the lease, which was recorded in general and administrative expenses in June 2020. In addition, the Company wrote-off leasehold improvements and other property and equipment associated with the lease and incurred a loss on disposal of $0.2 million in June 2020.

As of December 31, 2020, and December 31, 2019, the Company’s operating lease right-of-use assets were $10.2 million and $0.8 million, respectively. As of December 31, 2020, and December 31, 2019, the Company's finance lease right-of use-assets, included within property and equipment on the consolidated balance sheet, were $0.3 million and $0.3 million, respectively.

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


	December 31,
	2020		2019
Finance lease cost
Amortization of right-of-use asset	$	46	$	19
Interest on lease liabilities	14		—
Operating lease cost	2,368		197
Short term lease cost	348		105
Variable lease cost	321		181
Total net lease cost	$	3,097	$	502

Supplemental balance sheet information related to leases is as follows:


	December 31,
	2020	2019
Weighted average remaining lease term—finance leases	2.45 years	3.33 years
Weighted average remaining lease term—operating leases	7.97 years	1.83 years
Weighted average discount rate—finance leases	7.11%	7.11%
Weighted average discount rate—operating leases	12.88%	5.37%

Supplemental cash flow information related to leases was as follows (in thousands):


	December 31,
	2020		2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	460	$	236
Cash paid for amounts included in the measurement of finance lease liabilities	60		9

The calculation of the present value of the operating lease payments for the Blaine lease did not include the option to extend the lease for two five year terms.

At December 31, 2020, the future payments under the Company’s operating and finance lease liabilities were as follows (in thousands):


	Finance Lease		Operating Lease
December 31, 2021	$	60	$	2,161
December 31, 2022	60		2,289
December 31, 2023	60		2,341
December 31, 2024	—		2,394
December 31, 2025	—		2,448
Thereafter	—		7,904
Total undiscounted lease payments	180		19,537
Less: imputed interest	(23)		(7,572)
Total lease liabilities	157		11,965
Less: current portion	(49)		(659)
Non-current lease liabilities—December 31, 2020	$	108	$	11,306

Leases