Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

On June 30, 2020, the Company entered into an amended and restated lease agreement (the “Amended and Restated Lease”) for office and laboratory space located in San Diego, California, for the Company’s new corporate headquarters. The Amended and Restated Lease supersedes in its entirety the original lease agreement for the Company’s future corporate headquarters dated as of August 22, 2019. The Amended and Restated Lease has a lease term of 12 years (“Lease Term”), unless terminated earlier. The Lease Term has an initial abatement period, and the initial base rent payable will be approximately $0.6 million per month following the abatement period, which amount will increase by 3% per year over the Lease Term. The Company has also received incentives from the landlord for tenant improvements. During 2020, the underlying asset was available for use by the Company to construct tenant improvements and therefore, the Lease Term was considered to have commenced.

The Amended and Restated Lease is considered to be an operating lease, and the Amended and Restated Lease indicates the interest rate applicable to the lease is 12% and, therefore, the Company used a discount rate of 12% to calculate the value of its lease payments over the Lease Term. As of June 30, 2021, the condensed consolidated balance sheet includes an operating right-of-use asset of $38.7 million and an operating lease liability of $44.5 million. As of December 31, 2020, the consolidated balance sheet includes an operating right-of-use asset of $39.9 million and an operating lease liability of $41.9 million. For the three and six months ended June 30, 2021, the Company recorded $2.0 million and $3.9 million in operating lease expense, respectively.

As of June 30, 2021, the approximate future minimum lease payments under the Amended and Restated Lease are as follows (in thousands):


	Operating Lease
2021 - remainder	$	—
2022	1,681
2023	7,844
2024	8,080
2025	8,322
Thereafter	68,257
Total operating lease payments(†)	94,184
Less: Amount representing interest	(49,701)
Total lease liability	$	44,483

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†The Company has an early termination right 7 years into the lease term, in which the total contractual obligation would be reduced by $41.1 million.

On June 24, 2014, the Company entered into a lease agreement for completed office and laboratory space located in San Diego, California. The office space under the lease was the Company’s corporate headquarters. The lease commenced in two phases (in July 2014 and March 2015) at a combined total initial monthly rent of $24,100 per month and was subject to a 3% annual rent increase following availability. In addition to such base monthly rent, the Company is obligated to pay certain

customary amounts for its share of operating expenses and facility amenities. The original lease provided for expiration on January 31, 2018, and the Company entered into subsequent amendments to the original lease to extend the lease term to mid-2021. All other terms and covenants from the original lease agreement remain unchanged. For the three and six months ended June 30, 2020, the Company recorded less than $0.1 million and $0.1 million in operating lease cost, respectively.