Leases

9 Months Ended

Sep. 30, 2022

Leases

Leases

8.           Leases

The Company leases its office facilities under non-cancellable operating lease agreements that expire at various dates through April 2033. Under the terms of the leases, the Company is responsible for certain insurance, property taxes and maintenance expenses. The office facilities lease agreements contain scheduled increases over the lease term. The Company was not party to any finance leases as of September 30, 2022.

The Company vacated its former office space in September 2021, prior to the expiration of the lease in March 2022. The remaining rent payable, deferred rent and associated prepaid rent for the former office space were expensed in full on September 30, 2021 and resulted in a charge of $1.5 million, recorded as a general and administrative operating expense in the Company’s condensed statement of operations. The associated cease-use liability was settled by March 2022 and the lease was terminated.

The Company's future lease payments as of September 30, 2022, which are presented as current portion of operating lease liabilities, and operating lease liabilities, net of current portion on the Company's condensed balance sheets (in thousands, except weighted-average data) are as follows:

	Operating
	Leases
Periods
2022 - remainder	$	1,870
2023		7,635
2024		7,846
2025		8,064
2026		8,288
Thereafter		57,290
Total lease payments	$	90,993
Less: imputed interest		(26,307)
Present value of lease liabilities	$	64,686
Lease liabilities, current		3,434
Lease liabilities, noncurrent		61,252
Total lease liabilities	$	64,686
Weighted-average remaining lease term (in years)		10.7
Weighted-average discount rate		6.64%

Lease expense under the Company’s operating leases was $1.5 million for the three months ended September 30, 2022 and $4.4 million for the nine months ended September 30, 2022. Variable lease expense for operating leases was $0.9 million and $2.6 million for the three months and nine months ended September 30, 2022, respectively. Rent expense recognized under ASC 840, inclusive of operating and maintenance costs, was $3.0 million and $10.9 million during the three months and nine months ended September 30, 2021, respectively.

Cash paid for amounts included in the measurement of lease liabilities for the three months ended September 30, 2022 was $1.9 million and the nine months ended September 30, 2022 was $5.6 million.

Practical Expedients

Leases with an initial term of 12 months or less are not recorded on the condensed balance sheets. The Company recognizes the lease expense for such leases on a straight-line basis over the lease term.

The Company has elected to account for lease (e.g., fixed payments including rent) and non-lease components (e.g., common-area maintenance costs) as a single combined lease component under ASC 842 as the lease components are the predominant elements of the combined components.

As part of the transition to ASC 842, the Company elected to use the modified retrospective transition method with the new standard being applied as of the January 1, 2022 adoption date. Additionally, the Company has elected, as of the adoption date, not to reassess whether expired or existing contracts contain leases under the new definition of a lease, not to reassess the lease classification for expired or existing leases, and not to reassess whether previously capitalized initial direct costs would qualify for capitalization under ASC 842.