In September 2020, the Company entered into an operating lease agreement, denominated in Swedish Krona, for office space located in Lund, Sweden. The term of the lease commenced in October 2020 and is scheduled to expire in September 2023, with lease payments being made on a quarterly basis.

In December 2020, the Company entered into a lease agreement for laboratory and office space located at 480 Arsenal Way, Watertown, Massachusetts (the “Arsenal Way Lease”). The term of the lease commenced in April 2021. The lease has an initial term from the rent commencement date, which is a month after the lease commencement date, of approximately seven years, with an option to extend the term for an additional five years at then-market rental rates. In connection with the execution of the lease agreement, the Company delivered a letter of credit of $0.3 million to the landlord, which is included in restricted cash in the accompanying condensed consolidated balance sheets. The landlord contributed an aggregate of $0.7 million toward the cost of tenant improvements for the premises. Under the terms of the lease, the base rent is $1.0 million, subject to a 3% annual rent increase, plus an allocation of operating expenses and taxes.

In May 2021, the Company entered into an agreement to sublease 6,330 rentable square feet of its Arsenal Way Lease to a subtenant through March 2023. Sublease income is recognized on a straight-line basis over the term of the sublease agreement. Sublease rent income, including common area maintenance charges, was $0.2 million for each of the three months ended March 31, 2023 and 2022, which was allocated and recorded as a reduction to general and administrative expenses and research and development expenses. The Company was not relieved of its primary obligation under the Arsenal Way Lease as a result of the sublease.

The Company recognizes monthly operating lease expense on a straight-line basis over the term of the lease as research and development or general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. Variable lease expense relates primarily to office lease common area maintenance, insurance, and property taxes, is expensed as incurred, and is excluded from the calculation of the lease liabilities and right-of-use-assets. Variable lease expense for each of the three months ended March 31, 2023 and 2022 was $0.1 million.

The following table summarizes the presentation of the Company’s operating leases on its condensed consolidated balance sheets (in thousands):


Leases	Balance sheet classification	March 31, 2023		December 31, 2022
Assets:
Operating lease assets	Operating lease right-of-use assets	$	4,579	$	4,770
Total lease assets		$	4,579	$	4,770
Liabilities:
Current:
Operating lease liabilities	Operating lease liability, current	$	740	$	726
Noncurrent:
Operating lease liabilities	Operating lease liability, long-term		4,046		4,235
Total lease liabilities		$	4,786	$	4,961

The components of lease cost under ASC 842 included within research and development expenses and general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive loss were as follows (in thousands):


	Three Months Ended March 31,
Lease cost	2023			2022
Operating lease cost	$	286		$	286
Short-term lease cost		—			—
Variable lease cost	95			130
Sublease income		(134	)		(134	)
Total lease cost	$	247		$	282

As of March 31, 2023 and December 31, 2022, the weighted-average remaining lease term for operating leases was 5.1 years and 5.3 years, respectively, and the weighted-average discount rate was 7.87% and 7.86%, respectively. Cash paid for amounts included in the measurement of lease liabilities was $0.3 million for the three months ended March 31, 2023.

Future minimum annual lease commitments under the Company’s non-cancellable operating leases as of March 31, 2023 were as follows (in thousands):


Year ended December 31,	Amount
2023 (remaining 9 months)	$	815
2024		1,098
2025		1,131
2026		1,165
2027		1,200
Thereafter		404
Total lease payments		5,813
Less: interest		(1,027	)
Present value of operating lease liabilities	$	4,786