XML 66 R19.htm IDEA: XBRL DOCUMENT v3.22.4
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies COMMITMENTS AND CONTINGENCIES
Operating Leases
Operating lease liabilities are measured based on the present value of future lease payments over the expected remaining lease term. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and are initially equal to their corresponding lease liabilities, subject to certain adjustments such as prepaid lease payments, initial direct costs and lease incentives. When the rate implicit in the lease is not readily determinable, the Company uses an incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The Company estimates this rate based on prevailing market conditions, comparable company and credit analyses, the impact of collateralization, and the term of each of the Company’s lease agreements.
In March 2017, the Company entered into a lease agreement (the “99 Hayden Lease”) with 99 Hayden LLC for its prior headquarters located in Lexington, Massachusetts. In July and August 2019, the Company entered into the first and second amendment, respectively, to its 99 Hayden Lease to expand the rental space to 10,417 square feet. In August 2021, the Company entered into a third amendment to its 99 Hayden Lease (the "Third Amendment") to extend the lease term through March 31, 2023 and to further expand the rental space to 15,622 square feet. The lease modification from the Third Amendment resulted in a non-cash increase to the Company's operating lease liabilities and right-of-use assets of $0.7 million in the quarter ended September 30, 2021. As required under the term of the 99 Hayden Lease as collateral for the 99 Hayden Lease, the Company had restricted cash of $0.1 million in the form of a certificate of deposit as of December 31, 2022 and 2021. The 99 Hayden Lease provides for scheduled annual rent increases throughout the lease term and does not include termination or purchase options. As part of the 99 Hayden Lease, the Company is obligated to pay certain variable payments related to its pro rata share of operating costs including taxes, utilities, and insurance premiums.
On September 7, 2021, the Company entered into an indenture of lease (the “1050 Waltham Lease”) with Revolution Labs Owner LLC (the “Landlord”), pursuant to which the Company is leasing approximately 35,662 square feet of office, laboratory and vivarium space located at 1050 Waltham Street, Lexington, Massachusetts (the “Premises”) for its new principal executive office. In December 2022, the Company received access to a portion of the Premises pertaining to the office and laboratory space (the “Initial Premises”) in order to begin getting it ready for use. Accordingly, the 1050 Waltham Lease for the Initial Premises, which is considered a distinct lease component, was determined to be classified as an operating lease and the Company recorded an ROU asset of $15.4 million and a lease liability of $12.9 million on the consolidated balance sheets. The portion of the Premises pertaining to the vivarium space (the “Vivarium Premises”) was not made available for use by the Landlord as improvement work was still in progress.The Company’s obligation for the payment of base rent for the Premises begins four months after the Landlord reaches substantial completion of all agreed upon improvements to the Premises (the “Rent Commencement Date”), which is currently expected to occur in the first quarter of 2023. Costs incurred for tenant improvements of $0.4 million are recorded as other long term assets on the consolidated balance sheets as they have been incurred prior to the Rent Commencement Date. Base rent will initially be fixed at $0.2 million per month and will increase by approximately 3% per annum. In connection with its entry into the 1050 Waltham Lease, the Company has provided the Landlord a letter of credit in the amount of approximately $1.2 million, which is recognized as restricted cash within other assets on the consolidated balance sheets. In accordance with the 1050 Waltham Lease, the Company is obligated to reimburse the Landlord for certain variable costs, including its proportional share of taxes and operating expenses which are not included in the measurement of the 1050 Waltham Lease. The 1050 Waltham Lease has a non-cancelable term of eight years and four months, measured from the date of completion of all Landlord required
improvements, and therefore, the 1050 Waltham Lease is currently expected to expire on July 31, 2031. The Company has the option to extend the term of the 1050 Waltham Lease for a period of an additional five years. As of December 31, 2022, the Company has no reasonable certainty that this option to extend will be exercised.
Total lease costs were $1.1 million and $0.6 million for the years ended December 31, 2022 and 2021, respectively. Cash paid for operating leases was $0.9 million and $0.6 million for the years ended December 31, 2022 and 2021, respectively. The weighted average remaining lease term is 4.0 years at December 31, 2022. The weighted average discount rate is 10.0%.
Maturities of operating lease liabilities at December 31, 2022 are as follows (in thousands):
MATURITY OF LEASE LIABILITY
2023$1,741 
20242,202 
20252,269 
20262,337 
20272,407 
20282,479 
20292,553 
20302,630 
20311,561 
Total lease payments20,179 
Less: imputed interest(6,913)
Total operating lease liabilities$13,266 
Included in the consolidated balance sheet:
Current portion of lease liabilities$455 
Lease liabilities12,811 
Total operating lease liabilities$13,266 
The Vivarium Premises had not yet been made available to the Company as of December 31, 2022, therefore the commitment of $2.2 million, undiscounted, associated with this 1050 Waltham Lease component is not included in the table or values above. This Vivarium Premises component of the 1050 Waltham Lease is currently expected to commence in first half of 2023.
Short-term Leases
The Company enters into short-term leasing arrangements related to storage of clinical trial materials. For the year ended December 31, 2022, the Company engaged with a third-party vendor for master cell bank storage for various program trials, as well as extra space for additional storage for the Company’s lab equipment. The Company incurred $23,627 and $5,089 related to lease expense for the years ended December 31, 2022 and 2021, respectively.
Legal Proceedings
The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities.
Other
In connection with the 99 Hayden Lease entered into in March 2017, the Company received a loan from the landlord of $0.2 million related to its tenant improvement allowance, which is recorded as a non-current liability in the Company’s consolidated balance sheets. The Company is required to repay interest only on the loan of 8.0% for the first 18 months of the 99 Hayden Lease and will then repay the full amount plus interest in installments over the remaining 3.5 year term of the 99 Hayden Lease. This loan expired in December 2022. The Company made payments totaling $65,000 related to the loan in 2022. There is no future payment obligation as of December 31, 2022.