Commitments and contingencies

6 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

The Company may be subject to litigation, claims and disputes in the ordinary course of business. There is an inherent risk in any litigation or dispute and no assurance can be given as to the outcome of any claims.

Indemnifications

In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend the indemnified parties for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. To date, the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require it to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by corporate law. The Company also has directors’ and officers’ insurance.

Leases

The Company leases certain of its facilities under non-cancellable operating leases expiring at various dates through 2044. The Company is also responsible for utilities, maintenance, insurance, and property taxes under these leases.

Certain leases include options to renew or terminate at the Company’s discretion. The lease terms include periods covered by these options if it is reasonably certain the Company will renew or not terminate. The Company’s lease agreements do not contain any material residual value guarantees or restrictive covenants.

Supplemental balance sheet information related to the Company’s operating leases as of March 31, 2022 was the following:


(in thousands)	March 31, 2022
Assets:
Operating lease right-of-use asset	$	78,215
Current liabilities:
Current portion of operating lease liabilities	$	14,166
Noncurrent liabilities:
Operating lease liabilities, net of current portion	$	65,496

Future minimum lease payments under all non-cancelable operating leases that have commenced as of March 31, 2022 are as follows:


(in thousands)	Operating leases
Years ending September 30:
Remainder of 2022	$	7,140
2023	13,987
2024	13,372
2025	13,706
2026	12,280
Thereafter	96,817
Total minimum lease payments	$	157,302
Less: imputed interest	(60,012)
Less: tenant improvement allowance (receipt anticipated in 2022)	(17,628)
Total operating lease liabilities	$	79,662
Less: current portion	(14,166)
Operating lease liabilities, net of current portion	$	65,496

For the remainder of 2022, future minimum lease payments are comprised of the anticipated receipt of tenant improvement allowances totaling $17.6 million anticipated to be received in 2022, partially offset by non-cancelable operating lease payments of $7.1 million. The statement of cash flows for the six months ended March 31, 2022, include changes in right-of-use assets and operating lease liabilities of $16.6 million and $18.2 million, respectively. For the six months ended March 31, 2021, changes in right-of-use assets and operating lease liabilities were $2.7 million and $2.5 million, respectively.

During the three and six months ended March 31, 2022, operating lease expense was $3.9 million and $7.4 million, respectively. Cash payments for amounts included in the measurement of operating lease liabilities were $3.2 million and $6.0 million for the three and six months ended March 31, 2022, respectively. As of March 31, 2022, the weighted-average remaining lease term was 15.5 years and the weighted-average discount rate was 6.45%.

On July 28, 2021, the Company entered into a 7-year operating lease for approximately 21,000 square-feet of office space located in South San Francisco, California, to further expand the Company operations. Upon execution of the lease agreement, the Company provided the landlord an approximate $0.2 million security deposit. The Company will pay an initial annual base rent of approximately $1.7 million, which is subject to scheduled 3% annual increases, plus certain operating expenses. The Company has the right to sublease the facility, subject to landlord consent. The lease commenced on October 1, 2021. As of lease commencement date, the total future minimum lease payments under the agreement were $13.1 million.

On August 6, 2021, Abveris, which was subsequently acquired by the Company, entered into a 10-year, 5-month operating lease for approximately 22,000 square-feet of office space located in Canton, Massachusetts, to further expand operations. Upon execution of the lease agreement, the Company provided the landlord an approximate $0.6 million irrevocable letter of credit as a security deposit. The Company will pay an initial annual base rent of approximately $1.2 million, which is subject to scheduled 2% annual increases, plus certain operating expenses. The Company has the right to sublease the

facility, subject to landlord consent. The lease commenced on March 3, 2022. As of lease commencement date, the total future minimum lease payments under the agreement were $13.2 million.