Leases

6 Months Ended

Jun. 30, 2022

The Company’s operating lease activity is comprised of non-cancelable facility leases for office and laboratory space in Boston, Massachusetts. The Company entered into an operating lease for office and laboratory space in Boston, Massachusetts in February 2020, and entered into subsequent amendments in 2021. The amendments run co-terminus with the existing lease. The Company has the option to terminate the lease and amendments after November 30, 2023 without penalty. The Company has a total of 42,046 square feet licensed at this facility. 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 June 30, 2022		Six Months Ended June 30, 2022
Operating lease cost	$	2,295	$	4,185
Variable lease cost	—		—
Total lease cost	$	2,295	$	4,185

Supplemental information related to operating leases was as follows:


Other information	Six Months Ended June 30, 2022
Operating cash flows used for operating leases (in thousands)	$	4,070
Weighted average remaining lease term	3.4 years
Weighted average discount rate	3.81%

Future payments due under operating leases as of June 30, 2022 were as follows (in thousands):


Maturity of Lease Liability	As of June 30, 2022
2022 (excluding the six-months ended June 30, 2022)	$	4,504
2023	9,219
2024	9,494
2025	8,650
Thereafter	—
Total lease payments	$	31,867
Less: imputed interest	(1,952)
Present value of operating lease liabilities	$	29,915

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 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. The Company has (i) the option to extend the IDB Lease 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 for use in its regular operations, or (ii) 10 months following the Commencement Date, provided that in the event the Landlord’s build-out of the Premises is not complete on such date, base rent becomes due upon substantial completion of such 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 tenant improvements for the Premises. 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 tenant 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 cash-collateralized letter of credit, which may be reduced in the future subject to reduction requirements specified in the IDB Lease therein. The cash collateralizing the letter of credit is classified as restricted cash on the Company's condensed consolidated balance sheets.

The Company concluded that the improvements resulting from both the Landlord's build-out and the tenant improvements are the Landlord's assets for accounting purposes. Payments made by the Company related to the tenant improvements prior to the accounting commencement date are treated as prepaid rent and will increase the right-of-use asset once the accounting commencement date occurs. As of June 30, 2022, the Company has incurred $3.2 million related to the build out of the lease space prior to the commencement date. Such amount is included in other current assets. The accounting commencement date, which has not occurred as of June 30, 2022, will occur when both the Landlord's build-out and the tenant improvements are substantially complete, . The Company will assess the classification of the IDB Lease at the accounting commencement date and measure the right-of-use asset and lease liability. As the accounting commencement date had not occurred as of June 30, 2022, the IDB Lease is excluded from the table above.