10. Leases

The Company is a lessee under leases of offices, lab spaces, and certain office equipment. Some of the Company’s leases include options to extend the lease, and these options are included in the lease term to the extent they are reasonably certain to be exercised.

900 Middlesex Turnpike Lease

The Company’s primary lease is the 900 Middlesex Turnpike Lease. On October 2, 2018, the Company entered into a 137-month operating lease for the Company’s new headquarters in Billerica, Massachusetts. The lease is for approximately 92,000 square feet of office and laboratory space and commenced on April 1, 2019. The lease contains a period of free rent and escalating monthly rent payments. As part of the lease, the Company was required to enter into a $1.0 million Letter of Credit drawable by the lessor under specifically outlined conditions, which will be subsequently reduced throughout the lease term. Pursuant to a work letter entered into in connection with the 900 Middlesex Turnpike Lease, the landlord contributed an aggregate of $8.2 million toward the cost of construction and tenant improvements for the building. Under the lease the Company has the option to extend the lease for two successive five-year terms, and the renewal options are not reasonably certain to be exercised.

In applying the ASC 842 transition guidance, the 900 Middlesex Turnpike Lease remained classified as an operating lease and the Company recorded ROU assets of $12.2 million and lease liability of $22.8 million on the effective date. The difference between the ROU and the lease liability was driven by the Company derecognizing deferred rent of $3.0 million and the lease obligation incentive of $7.6 million. The Company is recognizing rent expense on a straight-line basis throughout the remaining term of the leases.

48 Tvistevägen

The Company has three leases at 48 Tvistevägen Umeå, Sweden for laboratory spaces, manufacturing spaces, and office space. All of these Uman leases have been assessed as operating leases.

In applying the ASC 842 transition guidance, the Uman leases remained classified as operating leases and the Company recorded ROU assets of less than $0.1 million and lease liability of less than $0.1 million on the effective date. The Company is recognizing rent expense on a straight-line basis throughout the remaining term of the leases.

Summary of all lease costs recognized under ASC 842

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases for the three months ended March 31, 2020:


Operating leases (in thousands)	For the three months ended March 31, 2020
Lease Costs (1)
Operating lease costs	$	660
Total lease cost	$	660

Other information
Operating cash flows used for operating leases	$	407
Weighted average remaining lease term		10.3 years
Weighted average discount rate		9.73%

(1) Short-term lease costs and variable lease costs incurred by the Company for the three months ended March 31, 2020 were immaterial.

As of March 31, 2020, future minimum commitments under ASC 842 under the Company’s operating leases were as follows:


Maturity of lease liabilities (in thousands)	As of March 31, 2020
Remainder 2020	$	1,696
2021		3,363
2022		3,435
2023		3,487
2024		3,557
2025 and thereafter		22,203
Total lease payments	$	37,741
Less: imputed interest		14,695
Total operating lease liabilities	$	23,046

As previously disclosed in the Company’s 2019 Annual Report on Form 10-K and under the previous lease accounting standard, ASC 840, the total commitment for non-cancelable operating leases was $38.0 million as of December 31, 2019 (amounts in thousands):


2020	$	2,081
2021		3,322
2022		3,396
2023		3,480
2024 and Forward		25,760
	$	38,039