In September 2021, the Company entered into an operating lease agreement, with a lease term commencement date of April 1, 2022, the date the Company took control of the property, for an office and laboratory space in Boston, Massachusetts. The lease payments will begin from December 1, 2022 and will continue through December 31, 2032 and have scheduled rent increases each year of 3%. In addition to the rent, the Company bears the costs of certain insurance, property taxes and maintenance, which represent the Company’s proportionate share of the actual expenses incurred by the landlord. There is an additional five-year option to extend the lease beyond December 31, 2032.

The lease is classified as operating lease. At the lease commencement date, the operating lease right-of-use ('ROU') assets of $15.3 million and lease liabilities of $15.3 million were recognized based on the present value of remaining fixed lease payments over the expected lease term using an incremental borrowing rate of 9.4%. As the Company’s operating leases do not provide an implicit rate, estimated incremental borrowing rates based on the information available at the time of lease commencement date were used in determining the present value of lease payments. Under the lease agreement a landlord provided for tenant improvement allowance of $6.4 million to be applied to the costs of the construction of the leasehold improvements. The tenant improvement allowance is recognized as a reduction in operating lease ROU assets and lease liabilities on the lease commencement date. Variable lease costs such as common area costs and other operating costs are expensed as incurred and were minimal for the three months ended June 30, 2022. The aggregate weighted-average remaining lease term was 10.6 years as of June 30, 2022.

During the three months ended June 30, 2022 and 2021, the Company incurred $1.2 million and $0.2 million in rent expense, respectively. For the six months ended June 30, 2022 and 2021, rent expense was $1.4 million and $0.4 million, respectively. The following table provides a reconciliation of the Company’s remaining undiscounted contractual rent obligations due within each respective fiscal year ending December 31 to the operating lease liabilities recognized as of June 30, 2022 (in thousands):


Years Ending December 31,	Operating Leases
2022	$	259
2023		3,117
2024		3,208
2025		3,302
2026		3,399
Thereafter		22,248
Total undiscounted payments		35,533
Less: tenant improvement allowance		(6,368	)
Less: present value adjustment		(13,484	)
Present value of future payments		15,681
Less: current portion of operating lease liabilities		—
Operating lease liabilities, net of current portion	$	15,681