Leases

3 Months Ended

Mar. 31, 2022

Leases

Leases

G. Leases

The Company currently has one real estate lease with CRP/King 830 Winter L.L.C. for the rental of approximately 120,000 square feet of laboratory and office space at 830 Winter Street, Waltham, Massachusetts through March 2026. The Company uses this space for its corporate headquarters and other operations. The Company may extend the lease for two additional terms of five years and is required to pay certain operating expenses for the leased premises subject to escalation charges for certain expense increases over a base amount. During 2020, the Company executed four subleases for approximately 65,000 square feet of this space in the aggregate through the remaining initial term of the lease. The balance of the space is being used by the Company.

The Company’s operating lease liabilities related to its real estate lease agreements were calculated using a collateralized incremental borrowing rate. The weighted average discount rate for the operating lease liability is approximately 11%. A 100 basis point change in the incremental borrowing rate would result in less than a $1 million impact to the ROU assets and liabilities recorded. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term, which was $1.0 million in each of the three-month periods ended March 31, 2022 and 2021 and is included in operating expenses in the consolidated statement of operations. Cash paid against operating lease liabilities was $1.2 million and $1.4 million in the three-month periods ended March 31, 2022 and 2021, respectively. As of March 31, 2022, the Company’s ROU asset and lease liability for operating leases totaled $11.9 million and $18.0 million, respectively, and the weighted-average remaining term of the operating leases is approximately four years.

The maturities of operating lease liabilities discussed above are as follows (in thousands):

2022 (nine months remaining)	$	4,114
2023		5,503
2024		5,522
2025		5,543
2026		1,429
Thereafter		13
Total lease payments		22,124
Less imputed interest		(4,099)
Total lease liabilities	$	18,025

In addition to the amounts in the table above, the Company is also responsible for variable operating expenses and real estate taxes that are expected to approximate $3.4 million per year through March 2026.

Sublease Income

In 2020, the Company executed four agreements to sublease a total of approximately 65,000 square feet of the Company’s leased space at 830 Winter Street, Waltham, Massachusetts through March 2026. During each of the three months ended March 31, 2022 and 2021, the Company recorded $1.2 million of sublease income, inclusive of the sublessees’ proportionate share of operating expenses and real estate taxes for the period.

Two of the four sublease agreements include an early termination option after certain periods of time for an agreed-upon fee. Assuming no early termination option is exercised, the Company is entitled to receive $12.5 million in minimum rental payments over the remaining term of the subleases, which is not included in the operating lease liability table above. The sublessees are also responsible for their proportionate share of variable operating expenses and real estate taxes.