The Company’s lease portfolio primarily comprises operating leases for office, laboratory, and manufacturing space. These leases contain various rent abatement periods, after which they require monthly lease payments that may be subject to annual increases throughout the lease term. Certain leases include options to extend the term. The renewal option is considered in the remaining lease term for the lease only when the Company is reasonably certain it will renew the lease. Certain leases provide the Company with the right to make tenant improvements, including the addition of laboratory space or build-out of manufacturing capabilities, and include a lease incentive allowance.

In June 2022, the Company entered into a lease agreement for 79,565 square feet of office, laboratory, and manufacturing space located in Bothell, Washington (the Bothell facility). The initial term of the lease expires in February 2039, with the option to extend the lease for up to three additional five-year terms. The lease agreement also provides for up to $19.9 million for reimbursement of tenant improvements, as well as an additional $8.0 million for tenant improvements, available at the Company’s election, which the Company would be obligated to repay to the landlord monthly over the initial term of the lease with interest at a rate of 6.5% per year. The Company is obligated to pay base rent of approximately $68.8 million over the initial term of the lease. In accordance with the lease agreement, the Company has obtained a letter of credit in the amount of $1.6 million. The Company recognized the ROU asset and lease liability in the three months ended March 31, 2023 when the lease commenced.

In July 2021, the Company entered into a lease for the Fremont facility with the intent to establish and develop its manufacturing operations at such facility. The Company decided in June 2022 to establish and develop its manufacturing operations at the Bothell facility rather than the Fremont facility. In the third quarter of 2023, the Company entered into a lease termination agreement for the early termination of the Fremont lease. On the lease termination date, the Company derecognized the remaining balances related to the ROU asset and lease liability of $14.2 million and $15.9 million, respectively, and incurred fees of $4.4 million, resulting in a loss on lease termination of $2.7 million, which is included in general and administrative expense for the twelve months ended December 31, 2023.

The following table contains additional information related to the Company’s operating leases:


Location	Use	Approximate Square Footage	Commencement Dates	Expiration Dates
Seattle, WA	Office/Laboratory	48,000	March 2019 to September 2020	December 2026 to April 2028
Cambridge, MA	Office/Laboratory	60,000	March 2019 to January 2022	November 2025 to February 2028
South San Francisco, CA	Office/Laboratory	100,000	December 2019 to April 2022	April 2024 to April 2030
Rochester, NY	Office/Laboratory	3,000	January 2022	January 2025
Bothell, WA	Office/Laboratory/Manufacturing	80,000	January 2023	January 2039

Throughout the term of the lease agreements, the Company is responsible for paying, in addition to base rent, certain operating costs, such as common area maintenance, taxes, utilities, and insurance. These additional charges are considered variable lease costs and are recognized in the period in which the costs are incurred.

The following table summarizes the Company’s lease costs:


	Year Ended December 31,
	2023		2022		2021
	(in thousands)
Operating lease cost	$	27,277	$	23,881	$	16,425
Short-term lease cost		-		-		512
Variable lease cost		7,527		7,193		5,230
Total lease cost	$	34,804	$	31,074	$	22,167

As of December 31, 2023, the weighted-average remaining lease term was 8.7 years and the weighted-average IBR was 11.1%.

The following table reconciles the Company’s undiscounted operating lease cash flows by fiscal year to the present value of the operating lease liabilities as of December 31, 2023 (in thousands):


2024	$	23,965
2025		25,394
2026		22,472
2027		19,899
2028		15,226
2029 and thereafter		93,495
Total undiscounted lease payments		200,451
Less: imputed interest		(88,846	)
Less: tenant improvement allowances		(7,509	)
Present value of operating lease liabilities		104,096
Less: current portion of operating lease liabilities	$	(13,195	)
Operating lease liabilities, net of current portion	$	90,901