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. As of December 31, 2023 and 2022 the Company accrued $0.4 million related to the milestones. During each of the years ended December 31, 2023 and 2022, the Company paid approximately $0.1 million to Columbia pursuant to the terms of the License Agreement.

In November 2019, the Company entered into a lease agreement for office and laboratory space in San Diego, California (the “3033 Lease”). The Company gained access to the leased space and began recognizing rent expense under the 3033 Lease in May 2020. The Company has since amended the 3033 Lease, most recently in September 2023, which extended the term of the lease and provided a tenant improvement allowance of approximately $1.0 million. The term of the 3033 Lease will end in October 2036. The Company provided a standby letter of credit in the amount of $0.2 million as a security deposit during the term of the lease. As of December 31, 2023, $0.2 million was pledged as collateral for the letter of credit and recorded as restricted cash.

In June 2020, the Company entered into a lease agreement for office and laboratory space in San Diego, California (the “3010 Lease”). The Company gained access to the leased space and began recognizing rent expense under the 3010 Lease in April 2022. The Company has since amended the 3010 Lease, most recently in September 2023, which extended the term of the lease. The term of the 3010 Lease will end in October 2036. The Company provided a standby letter of credit in the amount of $0.4 million as a security deposit during the term of the lease. As of December 31, 2023, $0.4 million was pledged as collateral for the letter of credit and recorded as restricted cash.

In April 2021, the Company entered into a lease agreement for office and manufacturing space in San Diego, California (the “MR Lease”). The Company gained access to the leased space and began recognizing rent expense under the MR Lease in June 2021. The term of the MR Lease will end in July 2026.

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 to be constructed in connection with One Alexandria Square in La Jolla, California. In July 2023, the Company entered into an agreement to terminate the OAS Lease. Pursuant to this agreement, the OAS Lease terminated, effective September 13, 2023. In connection with the lease termination, ARE agreed to pay the Company lease termination payments of (a) approximately $1.8 million, which the Company received in September 2023, and (b) an additional amount of approximately $1.0 million, which the Company received in January 2024. In addition, ARE refunded the Company approximately $1.1 million in prepaid base rent under the terms of the OAS Lease in September 2023 and returned to the Company a letter of credit in the amount of approximately $1.1 million, previously issued to ARE pursuant to the terms of the OAS Lease, in November 2023.

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 December 31, 2023, the remaining weighted-average lease term was 13 years and the weighted-average incremental borrowing rate used to determine the operating lease liabilities was 9.7%. Cash payments included in the measurement of lease liabilities totaled $118.9 million. As of December 31, 2022, the remaining weighted-average lease term was 12.7 years and the weighted-average incremental borrowing rate used to determine the operating lease liabilities was 9.1%. Cash payments included in the measurement of lease liabilities totaled $86.7 million.

During the year ended December 31, 2023, the Company incurred $11.8 million of lease costs, $3.5 million is related to variable lease payments, which are primarily comprised of common area maintenance, and $8.3 million is related to straight-line operating lease expense. During the year ended December 31, 2022, the Company incurred $9.3 million of lease costs, of which $0.1 million is related to the Company’s short-term leases, $2.7 million is related to variable lease payments, which are primarily comprised of common area maintenance, and $6.5 million is related to straight-line operating lease expense.

During the year ended December 31, 2023, in connection with the amendments of the 3010 Lease and 3033 Lease described above, the Company recorded additional lease liabilities of $19.5 million.

Future minimum payments under the Company’s non-cancelable operating leases as of December 31, 2023 are as follows (in thousands):



2024	$	8,094
2025		5,716
2026		8,607
2027		8,580
2028		8,837
Thereafter		79,058
Future non-cancelable minimum lease payments		118,892
Less: present value discount		(52,505	)
Total lease liabilities		66,387
Less: current portion		7,764
Lease liabilities, noncurrent	$	58,623

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 December 31, 2023.

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.