Leases

12 Months Ended

Dec. 31, 2023

LEASES

We have recorded right-of-use operating lease assets under three lease agreements. We have evaluated our facility leases and determined that, effective upon the adoption of Topic 842, the leases evaluated are all operating leases. We have performed an evaluation of our other contracts with suppliers and collaborators in accordance with Topic 842 and have determined that, except for the facility leases described below, none of our contracts contain a lease.

We recorded right-of-use operating lease assets for our facility in Waltham, Massachusetts under a lease agreement entered into during December 2020 with lease commencement dates during April and May 2021. In August 2023, we entered into an amendment to the lease agreement to expand the leased premises to include an additional 4,247 square feet of office space. As of December 31, 2023, the Waltham office space consists of 17,111 square feet with the lease terminating in June 2026. We have an option to extend the lease term for one additional five year period. This option to extend the lease term has not been included in the calculation of the right-of-use asset and lease liability since the exercise of the option is uncertain and therefore deemed not probable. We recorded a $1.6 million right-of-use asset and lease liability for the Waltham lease upon commencement of the lease and an additional $0.3 million right-of-use asset and lease liability upon commencement of the lease amendment.

We have also recorded a right-of-use operating lease asset for our facility located in Fremont, California under a lease agreement entered into in September 2008 that was amended multiple times to add space and to extend the lease term through March 2025. The office space consists of 72,500 square feet. We do not have an option to renew the lease at our current Fremont location beyond March 2025. In March 2023, we entered into a sub-lease Agreement (Sub-lease) with Chronus Health, Inc. (Chronus). We have sub-leased to Chronus approximately 21,644 square feet of the 72,500 square foot building's interior space, plus corresponding exterior support space and parking. The term of the Sub-lease expires on February 1, 2025. In accordance with the Sub-lease, we recognized an impairment of long-lived assets totaling $0.4 million during the three months ended March 31, 2023, which consisted primarily of impairment to the Fremont facility right-of-use asset, as determined by measuring the undiscounted future cash flows from the sub-leased space. The Sub-lease commenced in April 2023 and we recognized $0.8 million of income from the Sub-lease during the year ended December 31, 2023.

We have recorded a right-of-use operating lease asset for our facility located in Milwaukee, Wisconsin under a lease agreement entered into in October 2020 with a lease commencement date in November 2020. The office space consists of 4,768 square feet with the lease terminating in February 2026. We have an option to extend the lease term by one additional five-year period. This option to extend the lease term has not been included in the calculation of the right-of-use asset and lease liability since the exercise of the option is uncertain and therefore deemed not probable. We recorded a $0.4 million right-of use asset and lease liability for the Milwaukee lease upon commencement of the lease.

All of our leases are operating leases and each contain customary rent escalation clauses. Certain of the leases have both lease and non-lease components. We have elected to account for each separate lease component and the non-lease components associated with that lease component as a single lease component for all classes of underlying assets.

The following table provides additional details of our facility leases presented in our balance sheets (dollars in thousands):


	December 31,
Facilities	2023			2022
Right-of-use assets	$	5,589		$	9,295

Current portion of lease liabilities	4,435			3,894
Operating lease liability, net of current portion	1,725			5,855
Total lease liabilities	$	6,160		$	9,749

Weighted-average remaining life (years)	1.6			2.4
Weighted-average discount rate	6.8		%	6.8		%

The lease costs, which are included in operating expenses in our statements of operations, were as follows (in thousands):


	Year Ended December 31,
	2023		2022		2021
Operating lease expense	$	3,857	$	4,257	$	3,671
Cash paid for operating lease	$	4,481	$	4,292	$	3,438

The following table summarizes our undiscounted cash payment obligations for our operating lease liabilities as of December 31, 2023 (in thousands):


Ending December 31,
2024	$	4,715
2025	1,450
2026	329

Thereafter	—
Total undiscounted operating lease payments	6,494
Imputed interest expenses	(334)
Total operating lease liabilities	6,160
Less: Current portion of operating lease liability	(4,435)
Operating lease liability, net of current portion	$	1,725