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Leases
 12 Months Ended
Dec. 31, 2024
Leases [Abstract]  
Leases Leases
The Company leases facilities in Ann Arbor, Michigan, Cambridge, Massachusetts and Burlington, Massachusetts. The Ann Arbor facility includes office space, and the Cambridge facility includes clean rooms, laboratories for MACI and Epicel manufacturing and office space. The Company also leases offsite warehouse space and certain equipment.

On January 28, 2022, the Company entered into a lease agreement (as amended, the “Burlington Lease”) to lease approximately 126,000 square feet of manufacturing, laboratory and office space in Burlington, Massachusetts (the “Premises”), which has been under construction. The Burlington facility is substantially complete, and the Company is currently utilizing the facility’s office space. The remaining tenant improvements to the manufacturing suites and related equipment remain ongoing and will be placed in service when they are ready for their intended uses. Once validated, the facility’s manufacturing component will eventually become the primary manufacturing facility for MACI and Epicel.

In April 2023, in connection with the Burlington Lease, the Company entered into a construction escrow agreement (the “Construction Escrow Agreement”) with the facility’s landlord and an escrow agent. Pursuant to the terms of the Construction Escrow Agreement, in April 2023, the Company began funding, into an escrow account maintained by the escrow agent, a portion of its share of tenant improvement construction costs at the facility, which are designated as restricted cash. At the same time, the facility’s landlord began funding a portion of its tenant improvement allowance through a separate escrow account. The Company funded the remaining 50% of its required cost amount, or approximately $28.3 million, with cash on hand, pursuant to the Construction Escrow Agreement in April 2024.

The term of the Burlington Lease began on June 1, 2023 (the “Commencement Date”), when the Company gained control of and commenced tenant improvement work at the Premises. The Company’s obligation to pay rent for the Premises began on July 1, 2024 (the “Rent Commencement Date”). The initial term of the Lease is 144 months following the Rent Commencement Date. The Company has a one-time option to extend the term of the Lease for an additional 10 years, exercisable under certain conditions and at a market rate determined in accordance with the Burlington Lease.
The annual base rent of the Burlington Lease is initially $57 per square foot per year, subject to annual increases of 2.5%. Monthly contractual payments are expected to range from $0.6 million to $0.8 million. Additionally, the Company is responsible for reimbursing the landlord for the Company’s share of the Premises’ property taxes and certain other operating expenses. The Burlington Lease also provides for a tenant improvement allowance from the landlord in an amount equal to $200 per square foot of the Premises, or approximately $24.4 million. The tenant improvement allowance has been and continues to be used towards the design and construction of the tenant improvements made to the Premises, subject to the terms set forth in the Burlington Lease.

The Company was not involved in the initial construction of the core and shell of the building. On June 1, 2023, the Company gained control of the Premises to begin construction of its tenant improvements. As such, the corresponding right-of-use asset and lease liability of $35.5 million was recorded on the Company’s consolidated balance sheet. As there was not an implicit rate within the lease available, the Company estimated the incremental borrowing rate of 7.7%, based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. The lease term of 13.1 years does not include the lease extension option, as the Company is not reasonably certain to exercise that option. The Company has determined that certain improvements to the Premises are landlord-owned improvements and costs incurred for these improvements are accounted for as a variable lease payment. In the years ended December 31, 2024 and 2023, the Company recorded a right-of-use asset related to landlord-owned improvements incurred of approximately $3.6 million and $2.0 million, respectively.

In January 2022, in connection with the execution of the Burlington Lease, the Company issued a letter of credit collateralized by cash deposits of approximately $6.0 million. Subsequent to the execution of the Revolving Credit Agreement on July 29, 2022 (see Note 8, “Revolving Credit Agreement” for further details), the letter of credit is issued under the sub-facility limit of the Revolving Credit Agreement. Such letter of credit shall be reduced to approximately $4.2 million and $1.8 million at the conclusion of the third and sixth lease years, respectively, provided certain conditions set forth in the Burlington Lease are satisfied.

For the year ended December 31, 2024, lease expense of $0.3 million, and for the years ended December 31, 2023 and 2022, lease expense of less than $0.1 million, was recorded related to short-term leases. For the years ended December 31, 2024, 2023 and 2022, the Company recognized $12.7 million, $10.3 million and $6.9 million, respectively, of operating lease expense. For the years ended December 31, 2024, 2023 and 2022, the Company recognized less than $0.1 million of financing lease expense.

Operating and finance lease assets and liabilities are as follows:

December 31,
(In thousands)Classification20242023
Assets
OperatingRight-of-use assets$70,098 $73,462 
FinanceProperty and equipment, net686 — 
Total leased assets$70,784 $73,462 
Liabilities
Current
OperatingCurrent portion of operating lease liabilities$9,257 $6,187 
FinanceOther current liabilities116 — 
Non-current
OperatingOperating lease liabilities89,593 81,856 
FinanceOther long-term liabilities570 — 
Total leased liabilities$99,536 $88,043 

Cash received for amounts included in the measurement of the Company’s operating lease liabilities was $1.4 million for the year ended December 31, 2024. Cash paid for amounts included in the measurement of the Company’s operating lease liabilities was $1.7 million and $5.3 million for the years ended December 31, 2023 and 2022, respectively.

Future minimum lease payments under non-cancellable leases as of December 31, 2024 are as follows:
(In thousands)Operating LeasesFinance LeasesTotal
2025$13,677 $116 $13,793 
202613,969 116 14,085 
202714,351 116 14,467 
202814,743 116 14,859 
202915,146 116 15,262 
Thereafter73,339 219 73,558 
Total lease payments$145,225 $799 $146,024 
Less: tenant improvement allowances(4,419)— (4,419)
Less: interest(41,956)(113)(42,069)
Present value of lease liabilities$98,850 $686 $99,536 

Lease terms and discount rates are as follows:
December 31,
20242023
Weighted-average remaining lease term (years)
Operating leases9.710.0
Finance leases6.9—
Weighted-average discount rate
Operating leases6.9%6.8%
Finance leases5.0%—%
Leases Leases
The Company leases facilities in Ann Arbor, Michigan, Cambridge, Massachusetts and Burlington, Massachusetts. The Ann Arbor facility includes office space, and the Cambridge facility includes clean rooms, laboratories for MACI and Epicel manufacturing and office space. The Company also leases offsite warehouse space and certain equipment.

On January 28, 2022, the Company entered into a lease agreement (as amended, the “Burlington Lease”) to lease approximately 126,000 square feet of manufacturing, laboratory and office space in Burlington, Massachusetts (the “Premises”), which has been under construction. The Burlington facility is substantially complete, and the Company is currently utilizing the facility’s office space. The remaining tenant improvements to the manufacturing suites and related equipment remain ongoing and will be placed in service when they are ready for their intended uses. Once validated, the facility’s manufacturing component will eventually become the primary manufacturing facility for MACI and Epicel.

In April 2023, in connection with the Burlington Lease, the Company entered into a construction escrow agreement (the “Construction Escrow Agreement”) with the facility’s landlord and an escrow agent. Pursuant to the terms of the Construction Escrow Agreement, in April 2023, the Company began funding, into an escrow account maintained by the escrow agent, a portion of its share of tenant improvement construction costs at the facility, which are designated as restricted cash. At the same time, the facility’s landlord began funding a portion of its tenant improvement allowance through a separate escrow account. The Company funded the remaining 50% of its required cost amount, or approximately $28.3 million, with cash on hand, pursuant to the Construction Escrow Agreement in April 2024.

The term of the Burlington Lease began on June 1, 2023 (the “Commencement Date”), when the Company gained control of and commenced tenant improvement work at the Premises. The Company’s obligation to pay rent for the Premises began on July 1, 2024 (the “Rent Commencement Date”). The initial term of the Lease is 144 months following the Rent Commencement Date. The Company has a one-time option to extend the term of the Lease for an additional 10 years, exercisable under certain conditions and at a market rate determined in accordance with the Burlington Lease.
The annual base rent of the Burlington Lease is initially $57 per square foot per year, subject to annual increases of 2.5%. Monthly contractual payments are expected to range from $0.6 million to $0.8 million. Additionally, the Company is responsible for reimbursing the landlord for the Company’s share of the Premises’ property taxes and certain other operating expenses. The Burlington Lease also provides for a tenant improvement allowance from the landlord in an amount equal to $200 per square foot of the Premises, or approximately $24.4 million. The tenant improvement allowance has been and continues to be used towards the design and construction of the tenant improvements made to the Premises, subject to the terms set forth in the Burlington Lease.

The Company was not involved in the initial construction of the core and shell of the building. On June 1, 2023, the Company gained control of the Premises to begin construction of its tenant improvements. As such, the corresponding right-of-use asset and lease liability of $35.5 million was recorded on the Company’s consolidated balance sheet. As there was not an implicit rate within the lease available, the Company estimated the incremental borrowing rate of 7.7%, based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. The lease term of 13.1 years does not include the lease extension option, as the Company is not reasonably certain to exercise that option. The Company has determined that certain improvements to the Premises are landlord-owned improvements and costs incurred for these improvements are accounted for as a variable lease payment. In the years ended December 31, 2024 and 2023, the Company recorded a right-of-use asset related to landlord-owned improvements incurred of approximately $3.6 million and $2.0 million, respectively.

In January 2022, in connection with the execution of the Burlington Lease, the Company issued a letter of credit collateralized by cash deposits of approximately $6.0 million. Subsequent to the execution of the Revolving Credit Agreement on July 29, 2022 (see Note 8, “Revolving Credit Agreement” for further details), the letter of credit is issued under the sub-facility limit of the Revolving Credit Agreement. Such letter of credit shall be reduced to approximately $4.2 million and $1.8 million at the conclusion of the third and sixth lease years, respectively, provided certain conditions set forth in the Burlington Lease are satisfied.

For the year ended December 31, 2024, lease expense of $0.3 million, and for the years ended December 31, 2023 and 2022, lease expense of less than $0.1 million, was recorded related to short-term leases. For the years ended December 31, 2024, 2023 and 2022, the Company recognized $12.7 million, $10.3 million and $6.9 million, respectively, of operating lease expense. For the years ended December 31, 2024, 2023 and 2022, the Company recognized less than $0.1 million of financing lease expense.

Operating and finance lease assets and liabilities are as follows:

December 31,
(In thousands)Classification20242023
Assets
OperatingRight-of-use assets$70,098 $73,462 
FinanceProperty and equipment, net686 — 
Total leased assets$70,784 $73,462 
Liabilities
Current
OperatingCurrent portion of operating lease liabilities$9,257 $6,187 
FinanceOther current liabilities116 — 
Non-current
OperatingOperating lease liabilities89,593 81,856 
FinanceOther long-term liabilities570 — 
Total leased liabilities$99,536 $88,043 

Cash received for amounts included in the measurement of the Company’s operating lease liabilities was $1.4 million for the year ended December 31, 2024. Cash paid for amounts included in the measurement of the Company’s operating lease liabilities was $1.7 million and $5.3 million for the years ended December 31, 2023 and 2022, respectively.

Future minimum lease payments under non-cancellable leases as of December 31, 2024 are as follows:
(In thousands)Operating LeasesFinance LeasesTotal
2025$13,677 $116 $13,793 
202613,969 116 14,085 
202714,351 116 14,467 
202814,743 116 14,859 
202915,146 116 15,262 
Thereafter73,339 219 73,558 
Total lease payments$145,225 $799 $146,024 
Less: tenant improvement allowances(4,419)— (4,419)
Less: interest(41,956)(113)(42,069)
Present value of lease liabilities$98,850 $686 $99,536 

Lease terms and discount rates are as follows:
December 31,
20242023
Weighted-average remaining lease term (years)
Operating leases9.710.0
Finance leases6.9—
Weighted-average discount rate
Operating leases6.9%6.8%
Finance leases5.0%—%