In 2016, the Company entered into an Exclusive License Agreement (the “License Agreement”) with The Trustees of Columbia University (“Columbia”). Under the License Agreement, the Company acquired the exclusive right to use certain patents, materials and information. The License Agreement includes a number of diligence obligations that requires the Company to use commercially reasonable efforts to research, discover, develop and market Patent Products and/or Other Products (as defined in the License Agreement) by certain dates. Under the License Agreement, the Company pays an annual license fee that increases each year, until it reaches a low six-digit fee for the fifth year, and for each subsequent year, for so long as the License Agreement remains in force. The license fee was immaterial for all periods presented. For any products within the scope of the License Agreement that the Company commercializes, the Company is required to pay royalties ranging from low to mid-single digits on net sales of Patent Products and low single-digit royalty rates on net sales of Other Products. The Company can credit the yearly annual license fee against any yearly royalty fees payable to Columbia. Additionally, if the Company receives any income in connection with any sublicenses, the Company must pay Columbia a high single-digit percentage of that income. Finally, the License Agreement provides for payments to Columbia based on the Company's achievement of certain development and commercialization milestones, which could total up to $3.9 million over the life of the License Agreement. During the six months ended June 30, 2022, the Company paid $0.1 million to Columbia pursuant to the terms of the License Agreement.

In November 2017, the Company entered into a non-cancelable operating lease in La Jolla, California for its prior headquarters, which expired in May 2022 upon commencement of the New HQ Lease (defined below). The lease included certain rent escalations and additional charges for common area maintenance and other costs. The Company gained access to the leased space and began recognizing rent expense under this lease in February 2018.

In November 2019, the Company entered into a lease agreement for office space in San Diego, California (the “3033 Lease”). The Company gained access to the leased space and began recognizing rent expense under this lease in May 2020. The Company has since amended the 3033 Lease to extend the lease and expand the existing premises for certain rent escalations. The term of the 3033 Lease will end 30 days following the Commencement Date of the OAS Lease (defined below).

In December 2019, the Company entered into a 5-year lease agreement for additional office space in San Diego, California (the “SV Lease”). The lease includes certain rent escalations and additional charges for common area maintenance and other costs. The Company gained access to the leased space and began recognizing rent expense under this lease in January 2020.

In June 2020, the Company entered into a lease agreement with ARE-SD Region No. 27, LLC (the “Landlord”) for new office and laboratory space in San Diego, California (“New HQ Lease”). The New HQ Lease term ends at the same time the OAS Lease term ends (defined below). The Landlord shall make available to the Company for use within 12 months after the commencement date a tenant improvement allowance (“TI Allowance”), which the Company will repay to the Landlord as additional rent over the base term and shall accrue interest at a rate of 8% per annum. Upon commencement, the contractual base rent will be charged, subject to partial rent abatement, annual base rent adjustments, the Company’s share of operating expenses and additional rent for the TI Allowance actually disbursed by the Landlord. The Company gained access to the New HQ Lease space and began recognizing rent expense under this lease in April 2022.

In April 2021, the Company entered into a 62-month lease agreement for additional office and manufacturing space in San Diego, California (the “MR Lease”). The lease includes certain rent escalations and additional charges for common area maintenance and other costs. The Company gained access to the leased space in June 2021 and began recognizing rent expense under this lease at that time.

In January 2022, the Company entered into a Lease Agreement (the “OAS Lease”) with an affiliate of Alexandria Real Estate Equities, Inc. (“ARE”) to lease two buildings (“Building 3” and “Building 4”) to be constructed in connection with One Alexandria Square in La Jolla, California. The two buildings are comprised of office and manufacturing space and are intended to serve as the Company’s future headquarters. The term of the OAS Lease will commence when ARE’s work for Building 3 is substantially complete, which is expected to be November 1, 2024 (the “Commencement Date”). The Company’s obligation to pay rent for Building 3 will begin approximately seven months following the Commencement Date. The Company’s obligation to pay rent for Building 4 will begin 12 months following the Commencement Date, subject to the substantial completion of ARE’s work on Building 4. The Company has an option to accelerate the construction and delivery of Building 4 to be the same date as the Commencement Date for Building 3 and will receive 12 months of base rent abatement on Building 4 if it exercises this option. The initial term of the OAS Lease is 144 months following the Commencement Date. The Company has the one-time option to extend the term of the OAS Lease by 60 months upon prior notice to ARE. The annual base rent under the OAS Lease is initially based on $64.80 per square foot per year, or approximately $7.3 million per year for Building 3 and $6.0 million per year for Building 4, subject to annual increases of 3% and certain other adjustments, and includes tenant improvement and warm shell allowances. Maximum tenant improvement and warm shell allowances total approximately $33 million. The Company will also pay for an estimated $24 million of certain tenant improvements plus 7% interest per year amortized in equal monthly payments over the term of the OAS Lease. At the time of entering into the OAS Lease, the Company paid ARE $1.1 million as prepayment for rent and, as a security deposit, provided ARE with a $1.1 million standby letter of credit.

On January 1, 2022, the Company adopted ASC 842 (see Note 2). As of January 1, 2022, the remaining weighted-average lease term was 2.9 years and the weighted-average incremental borrowing rate used to determine the operating lease liabilities was 3.6%. Cash payments included in the measurement of lease liabilities totaled $7.5 million. As of June 30, 2022, the remaining weighted-average lease term was 12.9 years and the weighted-average incremental borrowing rate used to determine the operating lease liabilities was 9.0%. Cash payments included in the measurement of lease liabilities totaled $89.7 million.

During the six months ended June 30, 2022, the Company incurred $3.4 million of lease costs, of which $0.1 million is related to the Company’s short-term leases and $0.9 million is related to variable lease payments, which are primarily comprised of common area maintenance and $2.4 million related to straight-line operating lease cost. The Company recorded straight-line operating lease costs of $0.8 million for the six months ended June 30, 2021.

As of June 30, 2022, future minimum payments under the Company’s non-cancelable operating leases that have commenced are as follows (in thousands):



2022 (six months remaining)	$	2,699
2023		6,693
2024		7,909
2025		5,572
2026 and thereafter		66,815
Future non-cancelable minimum lease payments		89,688
Less: discount		(40,051	)
Total lease liabilities		49,637
Less: current portion		5,239
Lease liabilities, noncurrent	$	44,398

The total undiscounted future minimum lease payments associated with the OAS Lease are approximately $179.0 million and are not included in the table above. The Company did not recognize lease liabilities or corresponding ROU lease assets for the OAS Lease as its lease term had not yet commenced as of June 30, 2022.

Future minimum payments under all of the Company’s non-cancelable operating leases, including those that have not yet commenced, are as follows:



2022 (six months remaining)	$	2,699
2023		6,693
2024		7,909
2025		10,914
2026 and thereafter		240,324
Total	$	268,539

As permitted under Delaware law and in accordance with the Company’s bylaws, the Company indemnifies its officers and directors for certain events or occurrences while the officers or directors are or were serving in such capacity. The Company is also party to indemnification agreements with its officers and directors. The Company considers the fair value of the indemnification rights and agreements as minimal. Accordingly, the Company has not recorded any liabilities for these indemnification rights and agreements as of June 30, 2022 or December 31, 2021.

We are not currently a party to any material legal proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors.