Leases

12 Months Ended

Dec. 31, 2023

Note 9. Leases

Lease-related costs for the years ended December 31, 2023 and 2022 are as follows (in thousands):

	2023		2022
Operating lease cost	$	3,478	$	3,182
Variable lease cost		1,678		1,370
Total lease cost	$	5,156	$	4,552

As of December 31, 2023, the maturities of the operating lease liabilities and a reconciliation to the present value of lease liabilities were as follows (in thousands):

	Remaining Lease Payments
2024	$	4,436
2025		4,527
2026		4,585
2027		4,549
2028		2,975
Thereafter		10,053
Total remaining undiscounted lease payments	$	31,125
Less: Imputed interest		(6,718	)
Less: Lease incentives (1)		(9,104	)
Total operating lease liabilities		15,303
Less: current portion		(1,566	)
Long-term operating lease liabilities	$	13,737
Weighted-average remaining lease term (in years)		6.4
Weighted-average discount rate		7.9	%

⁽¹⁾	Includes lease incentives that may be realized in 2024 for the costs of leasehold improvements.

The following table provides certain cash flow and supplemental cash flow information related to the Company’s lease liabilities for the years ended December 31, 2023 and 2022 (in thousands):

	2023		2022
Operating cash paid to settle operating lease liabilities	$	4,298	$	2,390
Right-of-use assets obtained in exchange for lease liabilities	$	83	$	10,033

In December 2021, the Company signed a 10-year lease for approximately 67,000 square feet of space in New Haven, Connecticut. The lease commenced on January 8, 2022 with rent payments beginning on July 7, 2022. Under the lease, the landlord agreed to reimburse the Company for up to $9.1 million in improvements to the space, to be used for such improvements as the Company deems “necessary or desirable”. On September 13, 2022, the Company filed a lawsuit against the landlord, alleging that the landlord has: (i) refused to reimburse the Company for costs related to improvements already incurred and submitted; (ii) delayed the Company’s completion of improvements, in order to avoid reimbursing the costs of those improvements; and (iii) improperly rejected the Company’s proposed improvement plans. The Company accounted for these lease incentives as an offset to the lease liability recorded at the inception of the lease. Although the Company believes it is contractually entitled to the $9.1 million of lease incentives, based on the current status of the litigation, the Company cannot determine the likely outcome or estimate the impact on such carrying values.

As of December 31, 2023 and 2022, the Company has incurred and recognized total leasehold improvements of approximately $1.6 million and $1.1 million, respectively, related to reimbursable construction costs included in construction in progress within Property and equipment, net, in the Consolidated Balance Sheets.