Commitments and Contingencies

Corporate Headquarters Lease

In November 2016, the Company entered into an operating lease agreement (the “Corporate Headquarters Lease”) to occupy 51,000 square feet of laboratory and office space in Cambridge, Massachusetts. This facility serves as the Company’s corporate headquarters. The lease term began on November 1, 2016 and extends to March 31, 2025. The Company has the option to extend the lease term for one consecutive five-year period, at the market rate, by giving the landlord written notice of its election to exercise the extension at least twelve months prior to the original expiration of the lease term. The Company provided the landlord with a security deposit in the form of a letter of credit in the amount of $1.3 million, which is recorded as restricted cash and included within “Other non-current assets” in the consolidated balance sheets. The Corporate Headquarters Lease also provided the Company with a tenant improvement allowance of $0.5 million. Leasehold improvements related to this facility are being amortized over the shorter of their useful life or the lease term.

Accounting under ASC 842

As a result of the adoption of ASC 842 on January 1, 2019, the Company has recorded a right-of-use asset and a corresponding lease liability on the consolidated balance sheets as of December 31, 2019. As there is no rate implicit in the Corporate Headquarters Lease, the Company estimated its incremental borrowing rate based upon a synthetic credit rating and yield curve analysis. Based upon this analysis, the Company calculated a discount rate of 8.0% for the Corporate Headquarters Lease.

As of December 31, 2019, the future minimum lease payments due under the operating lease for the Company’s corporate headquarters are as follows (in thousands):



	Amount
2020	$	4,380
2021	4,505
2022	4,633
2023	4,764
2024 and thereafter	6,143
Total remaining minimum rental payments	24,425
Less: effect of discounting	(4,635		)
Total lease liability	$	19,790

The Company recorded operating lease expense for the Corporate Headquarters Lease of $4.2 million for the year ended December 31, 2019 pursuant to ASC 842. As of December 31, 2019, the remaining lease term of the Corporate Headquarters Lease was 5.3 years. The Company presents changes in its right-of-use asset and lease liability on a combined net basis within “Other liabilities” in the consolidated statements of cash flows.

Accounting under ASC 840

Prior to the adoption of ASC 842, and pursuant to the legacy guidance within ASC 840, the Company recorded rent expense on a straight-line basis through the end of the lease term and also recorded deferred rent on the condensed consolidated balance sheets. The Company recorded the tenant improvement allowance as a deferred lease incentive and was amortizing the deferred lease incentive through a reduction of rent expense ratably over the lease term.

As of December 31, 2018, the future minimum lease payments due under the Corporate Headquarters Lease were as follows (in thousands):



	Minimum Lease Payments
2019	$	4,260
2020	4,380
2021	4,505
2022	4,633
2023	4,764
2024 and thereafter	6,142
Total future minimum lease payments	$	28,684

The Company recorded total rent expense for the Corporate Headquarters Lease of $4.0 million for the year ended December 31, 2018 pursuant to ASC 840.

License and Collaboration Agreements

The Company has entered into various license agreements for certain technology. The Company could be required to make aggregate technical, clinical development and regulatory milestone payments of up to $11.7 million and low single-digit royalty payments based on a percentage of net sales of licensed products. As of December 31, 2019, the Company had made $0.5 million in aggregate milestone payments under these license agreements. The Company may cancel these agreements at any time by providing 30 to 90 days’ notice to the licensors, and all payments not previously due would no longer be owed.

The Company has also entered into collaboration agreements with various third parties for research services and access to proprietary technology platforms. Under these collaboration agreements, the Company could be required to make aggregate technical, clinical development and regulatory milestones payments ranging from $12.5 million to $12.9 million per product candidate and low single-digit royalty payments based on a percentage of net sales on a product-by-product basis. As of December 31, 2019, the Company had made $1.0 million in aggregate milestone payments under these collaboration agreements.