Leases

3 Months Ended

Mar. 31, 2024

Operating Lease Obligations

In October 2023, we entered into the Commercial Manufacturing and Supply Agreement with Lonza. We have concluded that this agreement contains an embedded lease and will be accounted for in accordance with ASC 842 Leases upon the commencement date. As of March 31, 2024, the lease had not commenced and, as such, no lease liability or ROU asset was recorded on the consolidated balance sheets and no operating lease expense was recorded on the consolidated statements of operations. See Note 4, “Commercial Manufacturing and Supply Agreement,” for further details.

In September 2023, we entered into an assignment and assumption of lease agreement (the “Assignment Agreement”) for a new operating lease in the same building as our current corporate headquarters (the “Assumed Lease Premises”). The assumed lease has an original contractual term of 10 years, expiring on November 30, 2031, unless earlier terminated. Pursuant to the Assignment Agreement, the base rent was abated for three full calendar months following the October 1, 2023 effective date of the Assignment Agreement. Thereafter, we are obligated to pay an aggregate of approximately $1.9 million in rent payments for the remaining nine months of the first year, with a 3% rent adjustment (not inclusive of rent abatement) every year thereafter. Upon commencement of the lease in October 2023, we recorded a ROU asset and lease liability of $16.7 million and $16.8 million, respectively.

In January 2021, we entered into a lease agreement for our current corporate headquarters facility located in San Carlos, California and a license agreement for temporary lab and office space in Palo Alto, California. The lease term for our current corporate headquarters facility began on December 3, 2021 and expires on December 31, 2025. We have two 60-month renewal options. We extended the license agreement for our temporary headquarters in the Palo Alto office by 60 days to March 3, 2022 to accommodate our relocation plan. The original term of the license agreement for the temporary space in Palo Alto terminated when the San Carlos office leasehold improvements were completed and we moved into our current corporate headquarters. These two agreements are accounted for as a combined lease because the contracts were

negotiated as a package with the same commercial objective. Upon commencement of the San Carlos lease in December 2021, we recorded a ROU asset and lease liability of $28.4 million and $12.9 million, respectively.

Information related to our leases are as follows (dollar amounts in thousands):


	Three Months Ended
		March 31, 2024			March 31, 2023
Cash paid for operating lease liabilities		$	2,390		$	1,671

Weighted-average remaining lease term (in years)		5.61			2.54
Weighted-average discount rate		8.5		%	7.6		%

Maturities of lease liabilities as of March 31, 2024 were as follows:


Years ending December 31,	(in thousands)
Remainder of 2024	$	6,423
2025	9,836
2026	2,899
2027	2,986
2028	3,075
Thereafter	9,502
Total future undiscounted lease payments	34,721
Less: Imputed interest	(7,301)
Total lease liabilities	$	27,420

Rent expense recognized under the leases was $2.7 million and $1.9 million for the three months ended March 31, 2024 and 2023, respectively.