Note 7 - Leases

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE 7.  Leases

The Company has obtained the right of use for office and manufacturing facilities under six operating lease agreements with initial terms exceeding one year. The lease term at the commencement date is determined by considering whether renewal options and termination options are reasonably assured of exercise.

In  September 2021, the Company executed a lease for a facility in South San Francisco, California, with an initial term expiring on  March 31, 2029. This lease has two separate components, one commenced in the third quarter of 2022 and the other in the first quarter of 2023, resulting in an additional right of use asset of $15.0 million and $3.1 million, respectively.

As of September 30, 2024, the weighted average discount rate for operating leases with initial terms of more than one year was 9.8% and the weighted average remaining term of these leases was 4.4 years. Discount rates were determined using the Company’s marginal rate of borrowing at the time each lease was executed or extended.

The following table summarizes the Company’s undiscounted cash payment obligations for its operating lease liabilities with initial terms of more than 12 months as of  September 30, 2024 (in thousands):

Year Ending December 31,
2024 (three months remaining)	$	1,108
2025		4,511
2026		5,031
2027		5,207
2028		5,389
Thereafter		1,348
Undiscounted total		22,594
Less: imputed interest		(4,393	)
Present value of future minimum payments		18,201
Current portion of operating lease liability		(2,882	)
Operating lease liability, net of current portion	$	15,319

The Company is also required to pay for operating expenses related to the leased space. The operating expenses are incurred separately and were not included in the present value of lease payments. Operating lease expenses for the three and nine months ended September 30, 2024 and 2023 are summarized as follows (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2024			2023		2024			2023
Lease cost
Operating lease cost	$	1,554		$	1,554	$	4,661		$	4,617
Short-term lease cost		10			10		29			41
Variable lease cost		496			459		1,381			1,401
Sublease income		(20	)		—		(54	)		-
Total lease cost	$	2,040		$	2,023	$	6,017		$	6,059