Lease obligation

6 Months Ended

Jun. 30, 2022

Lease obligation

Lease obligation

6. Lease obligation

Operating Leases

As of June 30, 2022, the Company has a lease for office and lab space at 64 Sidney Street in Cambridge, Massachusetts through November 30, 2026 and a lease for additional laboratory and office space at 75 Hayden Avenue in Lexington, Massachusetts through January 31, 2031.

In September 2021, the Company entered into an agreement with BioNTech US, Inc. (“BioNTech US”) to sublease part of the office and lab space leased by the Company at 75 Sidney Street in Cambridge, Massachusetts (the “Sublease Agreement”) at that time. The sublease term was for approximately 3.3 years. The sublease did not relieve the Company of its original obligation under the lease, and therefore the Company did not adjust the operating lease right-of-use asset as a result of the sublease and accounted for the sublease as a separate lease.

On June 22, 2022 the Company entered into a Lease Termination Agreement (the “Lease Termination Agreement”) and terminated the lease for office and lab space at 75 Sidney Street (the “75 Sidney Street Lease”), effective immediately. The 75 Sidney Street Lease was previously scheduled to terminate, in accordance with its terms, on November 30, 2026. In connection with the Lease Termination Agreement, the Company also entered into a Sublease Termination Agreement (the “Sublease Termination Agreement”) and terminated the Sublease Agreement with BioNTech US. The Company did not incur any termination penalties in connection with the Lease Termination Agreement or Sublease Termination Agreement. The Company derecognized the related right-of-use asset of approximately $14.5 million and the operating lease liabilities of $17.0 million, accordingly, resulting in a gain of $2.5 million in the three-month period ended June 30, 2022.

The Company’s lease agreements require the Company to maintain a cash deposit or irrevocable letter of credit in the aggregate amount of $1.8 million payable to its landlords as security for the performance of its obligations under the leases. Approximately $0.3 million relates to the letter of credit held for the 75 Sidney Street Lease, which is included in prepaid expenses and other current assets in the accompanying condensed balance sheets. The remaining $1.5 million is recorded as restricted cash and included in deposits and other non-current assets in the accompanying condensed consolidated balance sheets.

During the three and six months ended June 30, 2022, the Company incurred lease expenses of $1.4 million and $2.8 million, respectively, for operating leases. During the three and six months ended June 30, 2021, the Company incurred lease expenses of $1.9 million and $3.7 million, respectively, for operating leases. As of June 30, 2022, the weighted average remaining lease term was 6.5 years and the weighted average incremental borrowing rate used to determine the operating lease liability was 7.4%.

The following table summarizes the operating sublease income generated under the Sublease Agreement for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Operating sublease income	(in thousands)
	$	690	$	—	$	1,380	$	—