Leases

3 Months Ended

Mar. 31, 2022

The Company’s operating lease activity is comprised of non-cancelable facility leases for office and laboratory space in Boston, Massachusetts. In February 2020, the Company entered into an operating lease for 26,235 square feet of office and laboratory space in Boston, Massachusetts. In June 2021, the Company entered into amendments to the operating lease for 8,631 square feet of additional office and laboratory space at its location in Boston, Massachusetts. The terms of the amendments begin between July 2021 and March 2022 and run co-terminus with the existing lease. The Company has the option to terminate the lease and amendments after November 30, 2023 without penalty. Consistent with the conclusion under ASC 840, it is not probable that the Company will exercise this option to terminate the lease early and, therefore, lease payments through November 2025 are included in the right-of-use asset and lease liabilities in the condensed consolidated balance sheets. The Company paid a security deposit of $0.8 million, which is recorded as a component of other non-current assets in the accompanying condensed consolidated balance sheets.

The components of operating lease cost were as follows (in thousands):


	Three Months Ended March 31, 2022
Operating lease cost	$	1,890
Variable lease cost	—
Total lease cost	$	1,890

Supplemental information related to operating leases was as follows:


Other information	Three Months Ended March 31, 2022
Operating cash flows used for operating leases (in thousands)	$	1,839
Weighted average remaining lease term	3.7 years
Weighted average discount rate	3.81%

Future payments due under operating leases as of March 31, 2022 were as follows (in thousands):


Maturity of Lease Liability	As of March 31, 2022
2022 (excluding the three-months ended March 31, 2022)	$	6,735
2023	9,219
2024	9,494
2025	8,650
Thereafter	—
Total lease payments	$	34,098
Less: imputed interest	(2,242)
Present value of operating lease liabilities	$	31,856

On March 16, 2022, the Company and IDB 17-19 Drydock Limited Partnership, as landlord (Landlord), entered into a lease agreement (IDB Lease) with respect to approximately 81,442 square feet of office and laboratory space (Premises) in Boston, Massachusetts, which, when available for occupancy, will become the Company’s new consolidated headquarters location and supplement its existing space in Massachusetts. The Premises have not been made available to the Company as of March 31, 2022 and the lease is therefore excluded from the table above, as the IDB Lease has not commenced.

The term of the IDB Lease commences the date upon which the Landlord tenders possession of the Premises to the Company following the Landlord’s substantial completion of the initial build-out of the Premises (Commencement Date) and shall continue for a period of approximately 10 years, unless earlier terminated in accordance with the terms of the IDB Lease (Lease Term). The Company has (i) the option to extend the Lease Term for an additional period of five (5) years, and (ii) a right of first offer on adjacent space to the Premises, subject to the terms and conditions of the IDB Lease. As these options are not reasonably certain of occurring, they will not be included in the initial calculation of the Company's right-of-use asset upon lease commencement.

The initial fixed rental rate is $0.5 million per month, which is for a 12 month period during which the base rent is payable for 65,000 square feet, and will increase 3% per annum thereafter for the entire 81,442 square feet leased. Base rent becomes due upon the earlier of (i) the Company’s occupancy of the Premises, or (ii) 10 months following the Commencement Date, provided that in the event the Landlord’s initial build-out of the Premises is not complete on such date, base rent becomes due upon substantial completion of such initial build-out. Under the terms of the IDB Lease, the Landlord will provide an allowance in an amount not to exceed $19.5 million (calculated at a rate of $240.00 per rentable square foot of the Premises) toward the cost of completing the initial build-out of the Premises, which allowance is reflected in the base rent. In addition, the Company has the right to require the Landlord to provide an additional contribution in an amount not to exceed $1.6 million (calculated at a rate of $20.00 per rentable square foot of the Premises) toward the cost of additional improvements to the Premises, which amount shall be repaid by the Company in an amount of equal monthly payments of principal and interest as would be necessary to repay a loan in the full amount of the additional contribution used by the Company, subject to an 8% annual interest charge, on a level direct reduction basis over a 120 month period. The Company will be required to pay its share of operating expenses, taxes and any other expenses payable under the IDB Lease. In connection with the execution of the IDB Lease, the Company executed a $3.9 million cash-collateralized letter of credit, which may be reduced in the future subject to reduction requirements specified in the IDB Lease therein. The letter of credit is classified as restricted cash on the Company's condensed consolidated balance sheets.

The Company concluded the accounting commencement date will occur when the Landlord completes the build-out of the base building and control passes to the Company, which had not occurred as of March 31, 2022. The Company will assess the classification of the IDB Lease at the accounting commencement date, measure the right-of-use asset and lease liability. Payments made by the Company related to the initial build-out prior to commencement will be treated as prepaid rent within other non-current assets, which will increase the right-of-use asset once the lease commences. As of March 31, 2022, the Company has incurred $0.6 million related to the build out of the lease space prior to the commencement date.