In July 2021, the Company entered into a non-cancelable operating lease agreement pursuant to which the Company leased office space in Boston, Massachusetts at 225 Franklin Street ("225 Lease"). The 225 Lease commencement date was January 1, 2022 and the 225 Lease runs through December 31, 2026. The 225 Lease does not contain any options for renewal or extension. The Company began to occupy the space in May 2022. Previously, the Company’s principal office was located at 125 Summer Street in Boston, Massachusetts pursuant to a lease that expired in July 2022.

In connection with the 225 Lease commencement, the Company recorded a right-of-use asset and operating lease liability of $2,938 and $2,873 as of January 1, 2022. As of January 1, 2021, the date of adoption of ASC 842, the Company utilized operating classification for its former facility lease and recorded a right-of-use asset and lease liability related to its former office lease at 125 Summer Street.

The following assets and liabilities are recorded on the Company’s consolidated balance sheet as of December 31, 2022 and 2021.


				As of December 31,
	2022				2021
Right-of-use asset		$	2,389	$	161
Current lease liability			721	197
Non-current lease liability			2,403	—

The components of the lease allocated between the general and administrative and the research and development expenses on the consolidated statement of operations for the years ended December 31, 2022 and 2021 were as follows:


			Year Ended December 31,
	2022		2021
Operating lease costs	$	811	$	281
Variable lease costs		78		37
Total lease costs	$	889	$	318

The variable lease costs for the years ended December 31, 2022 and 2021 include common area maintenance and other operating charges associated with the Company’s lease of its principal office facilities in Boston, MA. As the Company’s lease does not provide an implicit rate, the Company utilized its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.


					As of December 31,
	2022					2021
Remaining lease term (in years)			4.0		0.5
Discount rate		3.1		%		7.0	%

Future minimum payments under the 225 Lease, currently the Company’s only operating lease as of December 31, 2022 were as follows:


2023	$	805
2024		821
2025		838
2026		855
Total lease payments		3,319
Less amount representing implied interest		(195	)
Total lease liability	$	3,124
Current portion of operating lease liabilities		721
Noncurrent portion of operating lease liabilities	$	2,403

Rent expense recognized under all operating leases was $811, $318 and $303 for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company is required to maintain a letter of credit for the duration of the 225 Lease. The Company maintains a bank deposit of $198, to collateralize the letter of credit which is classified as restricted cash and a long-term asset in the consolidated balance sheet as of December 31, 2022.

In December 2021, the Company entered into a license agreement with MSD International GmbH, an affiliate of Merck & Co, Inc. (“Merck”) (“Merck License Agreement”) for the development, manufacture and commercialization of ruzasvir (“Compound”). Ruzasvir is the NS5A inhibitor the Company is developing in combination with bemnifosbuvir for the treatment of HCV.

Pursuant to the terms of the Merck License Agreement, the Company obtained from Merck an exclusive (subject to certain reserved rights to conduct internal research), sublicensable, and worldwide license under certain Merck patents and know-how to research, develop, manufacture, have manufactured, use, import, export, sell, offer for sale, and otherwise commercialize the Compound, or products containing the Compound (each a “Product”) for all therapeutic or prophylactic uses in humans (“Field”).

In consideration for the rights the Company acquired under the Merck License Agreement, the Company paid Merck a non-refundable upfront payment in the amount of $25,000 in February 2022 and will be required to pay Merck milestone payments up to $135,000 in the aggregate upon its achievement of certain development and regulatory milestones and up to $300,000 in the aggregate upon its achievement of certain sales-based milestones. Additionally, the Company will pay Merck tiered royalties based on annual net sales of Products ranging from high single digits to mid-teens percentages. The Company’s royalty payment obligations will continue until the later of (i) the expiration of the last to expire valid claim of a licensed Merck patent claiming such Product (or a Compound contained in such Product) and (ii) a period of years after the first commercial sale of such Product in such country. The Company may terminate the Merck License Agreement for convenience upon prior written notice. The first potential milestone would be payable upon the commencement of a Phase 3 clinical trial.

The Company recognized, as research and development expense, the $25,000 non-refundable upfront payment amount as a cost of the asset acquired in the year ended December 31, 2021 because the in-process research and development asset does not have an alternative future use. The upfront payment, paid in February 2022, was included in accrued expenses as of December 31, 2021.

The Company has an agreement with a consultant that requires payment of a success fee calculated as a percentage of certain product sales, subject to a cumulative maximum payout of $5.0 million. This success payment is contingent upon the occurrence of future events and the timing and likelihood of such payment is neither probable nor estimable.

The Company enters into certain types of contracts that contingently requires the Company to indemnify various parties against claims from third parties. These contracts primarily relate to (i) the Company’s bylaws, under which the Company must indemnify directors and executive officers, and may indemnify other officers and employees, for liabilities arising out of their relationship, (ii) contracts under which the Company must indemnify directors and certain officers and consultants for liabilities arising out of their relationship, and (iii) procurement, service or license agreements under which the Company may be required to indemnify vendors, service providers or licensees for certain claims, including claims that may be brought against them arising from the Company’s acts or omissions with respect to the Company’s products, technology, intellectual property or services.

From time to time, the Company may receive indemnification claims under these contracts in the normal course of business. In the event that one or more of these matters were to result in a claim against the Company, an adverse outcome, including a judgment or settlement, may cause a material adverse effect on the Company’s future business, operating results or financial condition. It is not possible to determine the maximum potential amount payable under these contracts since the Company has no history of prior indemnification claims and the unique facts and circumstances involved in each particular claim will be determinative.