11. Leases

The Company has an operating lease for its office space in Cambridge, MA and operating and finance leases for certain equipment. In March 2020, the Company entered into the Seventh Amendment to the office space lease to extend the term of the lease through March 2026 and to provide the Company with a tenant improvement allowance of $172. The current rate per square foot that is in place through March 2021 (the original expiration date of the lease) did not change. After March 2021, there are predetermined fixed escalations of the rate as outlined in the amendment. The Company has an option to extend the lease term for an additional five years. The Company’s exercise of this option was not considered reasonably certain as of March 31, 2020.

The extension is accounted for as a lease modification. The Company assessed the lease classification of the amended office space lease at the modification date and determined that the amended office space lease should be accounted for as an operating lease. The right-of-use asset and corresponding operating lease liability have been remeasured based on the present value of remaining lease payments over the remaining extended lease term, using the incremental borrowing rate applicable as of the lease modification date. The Company determined the appropriate incremental borrowing rate by using a synthetic credit rating which was estimated based on an analysis of outstanding debt of companies with similar credit and financial profiles. Since the operating lease is a net lease, as the non-lease components (i.e., common area maintenance) are paid separately from rent based on actual costs incurred, such non-lease components were not included in the right-of-use asset and liability and are reflected as an expense in the period incurred.

As a result of the modification, the Company recorded an increase of $9,980 to its right-of-use (ROU) asset and lease liabilities.

Following the change, the Company’s future minimum lease payments under non-cancellable leases as of March 31, 2020 were as follows:


	Operating leases		Finance leases
2020 (excluding the three months ended March 31, 2020)	$	1,809	$	87
2021		2,772		116
2022		2,843		84
2023		2,928		74
2024 and thereafter		6,904		18
Total lease payments		17,256		379
Present value adjustment		(4,811)		(41)
Present value of lease liabilities	$	12,445	$	338