Operating lease liabilities and their corresponding ROU assets are recorded based on the present value of future lease payments over the expected remaining lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. 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 a lessee 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 analysis, the impact of collateralization, and the term of each of the Company’s lease agreements.

In March 2019, the Company entered into an interim services agreement which ultimately led to a Development and Manufacturing Services Agreement ("DMS Agreement") with a third-party supplier in July 2019. The DMS Agreement specifies a dedicated manufacturing suite for the manufacture of AlloVir’s products at the facility. The DMS Agreement initially expired upon the later of (1) July 2021 and (2) the completion of services under all statements of work (“SOWs”). Effective June 2022, the Company entered into a First Amendment to the DMS Agreement to extend the expiration date to June 2024 provided that the terms and conditions of the DMS Agreement will continue to apply to any active SOW's. The DMS Agreement (or any individual SOW) may be terminated earlier by AlloVir at any time by providing 190 days’ notice. In March 2019, at the inception of this lease, the Company recorded a ROU asset and lease liability of $6.9 million over a total estimated lease term of approximately 4.25 years, expiring in July 2023. In September 2019, the Company executed a SOW for another dedicated manufacturing suite under the DMS Agreement with substantially the same terms as the original SOW. In September 2019, at the inception of this lease, the Company recorded a ROU asset and lease liability of $6.3 million over a total estimated lease term of approximately 3.75 years, expiring in July 2023. The SOW calls for a fixed monthly payment through July 2023, with additional two-year renewal options. The use of these manufacturing suites qualifies as a lease under ASC 842, as it includes an identified asset for exclusive use by the Company at its direction.

In February 2022, the Company entered into amendments to both SOWs under the DMS Agreement. The original SOW under the DMS Agreement (beginning March 2019) was modified to add a new termination clause whereby the Company can terminate the lease upon entering into a contract for another suite at the facility. Management concluded that the SOW amendment constituted a lease modification under ASC 842 and recorded a $1.4 million reduction to the related ROU asset and lease liability in February 2022. The original SOW under the DMS Agreement was terminated in October 2022 upon execution of the new 2022 SOW under the DMS Agreement. The second SOW under the DMS agreement (beginning September 2019) was terminated as of the effective date of the amendment in February 2022. As a result of the amendment, which also represented a lease modification under ASC 842, the Company recorded a $2.6 million reduction to the related ROU asset and lease liability.

In October 2022, the Company entered into a new SOW under the DMS Agreement ("2022 SOW under the DMS Agreement") with a third-party supplier. The 2022 SOW under the DMS Agreement contained an embedded lease for a dedicated manufacturing suite for the manufacture of AlloVir’s products at the facility because the Company directs how and for what purpose the suite is used and obtains substantially all of the economic benefit of the suite. At inception of the lease, it was determined that, in exchange for this dedicated manufacturing suite, AlloVir will pay the supplier a monthly fixed suite utilization fee, fixed batch payments and other related fixed costs, totaling $16.3 million over the 2.25 year lease term ending in December 2024. As part of the arrangement, there were also variable costs for materials, non-fixed batch payments, testing, storage, knowledge and tech transfer and other common area maintenance fees that were not included in the measurement of the lease. The lease of the facility was determined to be classified as an operating

lease and commenced in October 2022, the point at which the suite was substantially complete and available for use by the Company. Accordingly, at inception, the Company recorded a ROU asset and lease liability of $14.7 million.

In May 2020, the Company entered into a new Development and Manufacturing Services Agreement (“2020 DMS Agreement”) with ElevateBio BaseCamp, Inc. ("BaseCamp") and signed a SOW in November 2020. The 2020 DMS Agreement and related SOW contained an embedded lease for a dedicated manufacturing suite for the manufacture of AlloVir’s products at the facility because the Company directs how and for what purpose the suite is used and obtains substantially all of the economic benefit of the suite. At inception of the lease, it was determined that, in exchange for this dedicated manufacturing suite, AlloVir will pay the supplier a monthly fixed suite utilization fee, and other related fixed costs, totaling $3.2 million over the two-year lease term (one year lease with a one-year renewal option), that covers costs associated with reserving capacity for AlloVir, as well as cleaning services, utilities, handling and maintenance of the manufacturing suite. At inception of the lease, the Company estimated that the exercise of the one-year renewal option was reasonably certain to occur, and the Company was reasonably certain that it would not exercise its early termination right, providing for a total estimated lease term of two years expiring in January 2023. As part of the arrangement, there were also variable costs for materials, non-fixed batch payments, storage, knowledge and tech transfer and other common area maintenance fees that were not included in the measurement of the lease. The lease of the facility was determined to be classified as an operating lease and commenced in February 2021, the point at which the new facility area was substantially complete and available for use by the Company. Accordingly, at inception, the Company recorded a ROU asset of $3.1 million and a lease liability of $2.5 million. The Company prepaid $0.6 million of the suite utilization fee, which was reclassified from prepaid expense to the ROU asset upon lease commencement.

In February 2022, the Company decided not to exercise the one-year renewal option and subsequently executed a Change Order to modify the terms of the SOW under the 2020 DMS Agreement. Management concluded that the amendments laid out in the change order collectively constituted a lease remeasurement under ASC 842 and recorded a $1.3 million reduction to the related lease liability and a $1.5 million reduction to the related ROU asset.

In September 2021, the Company entered into a new lease agreement with BP Bay Colony LLC and a sublease with AMAG Pharmaceuticals Inc. for the lease of property in Waltham, Massachusetts (collectively, the "Waltham leases"). The space identified under the Waltham leases is intended for general office space, research and development, laboratory use, and light manufacturing. The Waltham leases have been classified as operating leases and commenced in September 2021. At the inception date, the Company has recorded an ROU asset and lease liability of $6.0 million for the lease and a ROU asset and lease liability of $17.3 million for the sublease based on a July 30, 2030 end date for the Waltham leases. As part of the arrangement, there were also variable costs for common area maintenance fees that were not included in the measurement of the lease. The agreement also provides a $3.1 million tenant improvement allowance which is to be reimbursed by the landlord over the duration of the first two years of the Waltham leases. As of December 31, 2022 $0.9 million of the tenant improvement allowance has been used. The Company has the option to renew the leased space for an additional one time period of five years with written notice from the Company. As of December 31, 2022, the Company has no reasonable certainty that this option to extend will be exercised.

Maturities of operating lease liabilities at December 31, 2022 are as follows (in thousands):


2023		9,074
2024		12,525
2025		3,229
2026		3,308
2027		3,386
Thereafter		9,683
Total lease payments		41,205
Less: interest		5,818
Total lease liability	$	35,387
Lease liability – current	$	7,165
Lease liability – long-term	$	28,222

Total lease costs were $6.6 million and $6.2 million for the years ended December 31, 2022 and 2021, respectively. Cash paid for operating leases was $4.8 million and $5.2 million for the year ended December 31, 2022 and 2021, respectively. The Company’s total variable lease costs, such as materials, non-fixed batch payments, testing, storage, knowledge and tech transfer, and other common area

maintenance fees, related to the operating leases was $3.7 million and $14.5 million for the years ended December 31, 2022 and 2021, respectively. The weighted average remaining lease term is 6.93 years at December 31, 2022. The weighted average discount rate is 6.23%.