Leases

6 Months Ended

Jun. 30, 2021

The Company’s leases consist of operating leases for general office space, laboratory, manufacturing and warehouse facilities, and equipment. These noncancellable operating leases have initial lease terms ranging from one year to seven years. Leases with an initial term of 12 months or less are expensed as incurred and are not recorded as right-of-use assets on the Company’s condensed consolidated balance sheets. Certain leases include an option to renew, with renewal terms that can extend the lease term for additional periods. The exercise of lease renewal options is at the Company’s sole discretion. For renewal options that are reasonably certain at the lease Commencement Date of being exercised, the Company includes the renewal option period in the lease term. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option that is reasonably certain to be exercised.

The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Because the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the lease Commencement Date in determining the present value of future lease payments. The Company used the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date.

In March 2021, the Company entered into a second amendment (Second Amendment) to its lease agreement covering approximately 59,013 square feet of general administrative office space (Existing Premises) located on Vista Sorrento Parkway, in San Diego, California (Vista Sorrento Lease). The Second Amendment expanded the Existing Premises by adding approximately 14,916 square feet of general administrative office space (Expansion Space), and extended the lease term for the Existing Premises through January 2028. The Expansion Space lease Commencement Date occurred in March 2021, and the lease term expires in January 2028. The Company has two options to extend the term of the Vista Sorrento Lease, covering both the Existing Premises and the Expansion Space, with each option providing for an additional period of five years. The Vista Sorrento Lease term was determined assuming the renewal options would not be exercised. The Company recognized right-of-use leased assets and corresponding operating lease liabilities of $15.1 million on the condensed consolidated balance sheet in the first quarter of 2021 related to the Second Amendment.

The Company’s lease cost recorded in the condensed consolidated statements of operations was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Operating lease cost	$	2,197	$	1,899	$	4,203	$	3,655
Short-term lease cost	22		71		44		135
Total lease cost	$	2,219	$	1,970	$	4,247	$	3,790

Maturities of operating lease liabilities at June 30, 2021 were as follows (in thousands):


Years Ending December 31,
2021 (remaining)	$	4,742
2022	9,129
2023	6,856
2024	5,691
2025	5,801
Thereafter	10,654
Total undiscounted lease payments	42,873
Less: amount representing interest	(6,237)
Present value of operating lease liabilities	36,636
Less: current portion of operating lease liabilities	(9,260)
Operating lease liabilities - long term	$	27,376

The weighted-average remaining lease term and weighted-average discount rate for operating leases were as follows:


	June 30, 2021		December 31, 2020
Weighted-average remaining lease term (in years)	5.3		3.6
Weighted-average discount rate used to determine operating lease liabilities	5.6	%	6.6	%

Cash paid for amounts included in the measurement of lease liabilities, representing operating cash flows used for operating leases, was $4.7 million and $2.9 million for the six months ended June 30, 2021 and 2020, respectively.