Leases

12 Months Ended

Dec. 31, 2022

LEASES

As a lessee, the Company leases office and laboratory space in Redwood City, California. The lease term commenced in November 2019 and was set to end in September 2032. The Company has an option to renew all leased space for an additional five-year term at then-current market rates. In connection with the lease, the Company maintains a letter of credit issued to the lessor in the amount of $0.5 million as of December 31, 2022 and 2021, respectively, which is secured by restricted cash and is presented as noncurrent at each date based on the term of the underlying lease. In addition, the Company leases approximately 6,000 square of office space in San Diego, California under a lease that runs through September 2024.

As of December 31, 2022, the remaining weighted-average lease term was 9.8 years and the weighted-average incremental borrowing rate used to determine the operating lease liabilities was 6.2%. As of December 31, 2021, the remaining weighted-average lease term was 10.8 years and the weighted-average incremental borrowing rate used to determine the operating lease liabilities was 5.9%.

For the years ended December 31, 2022 and December 31, 2021, the Company incurred $4.6 million and $2.8 million of lease costs, respectively, of which $0.3 million and $0.1 million is related to the Company’s short-term lease and $0.6 million and $0.7 million is related to variable lease payments, respectively. The variable lease payments are primarily comprised of common area maintenance and include costs associated with the temporary space. Cash paid for amounts included in the measurement of operating lease liabilities for the years ended December 31, 2022 and December 31, 2021 were $2.2 million and $0.9 million, respectively, and were included in net cash used in operating activities in the Company’s consolidated statements of cash flows.

As of December 31, 2022, future minimum commitments under the Company’s non-cancelable facility operating lease, in accordance with ASC 842, are as follows:


Years ending December 31,	(in thousands)
2023	$	3,634
2024	3,738
2025	3,846
2026	3,957
2027	4,072
Thereafter	21,065
Total undiscounted future minimum lease payments	40,312
Present value adjustment for minimum lease commitments	(10,438)
Total operating lease liabilities	$	29,874

As a lessor, the Company has contracts for equipment leased to customers. The Company accounts for the non-lease component under the revenue recognition ASC 606 guidance and the lease component under ASC 842 guidance. For an arrangement that has been classified as a sales-type lease, revenue is recognized when the transfer of control of the underlying leased asset has occurred and the net investment lease recorded, which is calculated at the present value of the remaining lease payments due from the lessee.

Revenue related to lease components from sales-type leases is presented as grant and other revenue and was $0.5 million and none for the year ended December 31, 2022 and 2021, respectively.

As of December 31, 2022 and 2021, lease receivables related to sales-type leases were $0.5 million and none, respectively, and is presented as prepaid expenses and other current assets on the consolidated balance sheets.