Operating Leases

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Operating Leases

Note 4 — Operating Leases

Our leases consist of a Lease Agreement (the Mission Bay Lease) with ARE-San Francisco No. 19, LLC (ARE) for our 155,215 square foot corporate office and R&D facility located at 455 Mission Bay Boulevard South, San Francisco, California (the Mission Bay Facility) and a Lease Agreement (the Third Street Lease) with Kilroy Realty Finance Partnership, L.P. (Kilroy) for an additional 135,936 square foot of office space at 360 Third Street, San Francisco, California (the Third Street Facility). Both leases terminate in January 31, 2030, subject to two consecutive five year renewals for the Mission Bay Facility and one five year renewal for the Third Street Facility.

•The monthly base rent for both facilities will escalate over the term of the lease at various intervals.

•Both leases include various covenants, indemnities, defaults, termination rights, security deposits and other provisions customary for lease transactions of this nature.

•During the term of the Mission Bay Lease, we are responsible for paying our share of operating expenses specified in the lease, including utilities, common area maintenance, insurance costs and taxes.

•For the Third Street Lease, our fixed annual base rent on an industrial gross lease basis includes certain expenses and property taxes paid directly by the landlord.

Due to our 2022 and 2023 Restructuring Plans, during the year ended December 31, 2023, we recorded impairment charges of $30.6 million for our right-of-use assets which we are seeking to sublease. See Note 8 for additional information.

We generally recognize lease expense for our operating leases on a straight-line basis over the lease term. For spaces where we have recognized an impairment charge, the aggregate lease expense recognized over the remaining term is reduced by the amount of the impairment charge, but we recognize the remaining lease expense on an accelerated basis. The

components of lease expense, which we include in operating expenses in our Consolidated Statements of Operations, were as follows (in thousands):

	Year Ended December 31,
	2023		2022		2021
Operating lease expense	$	12,116	$	17,057	$	19,153
Variable lease expense		7,027		10,700		8,974
Total lease expense	$	19,143	$	27,757	$	28,127

During the years ended December 31, 2023, 2022 and 2021, we paid $21.0 million, $20.1 million and $16.8 million, respectively, of operating lease payments related to our lease liabilities, which we include in net cash used in operating activities in our Consolidated Statements of Cash Flows.

As of December 31, 2023, the maturities of our operating lease liabilities were as follows (in thousands):

Year ending December 31,
2024	$	19,822
2025		22,255
2026		22,958
2027		23,682
2028		24,427
2029 and thereafter		27,303
Total lease payments		140,447
Less: portion representing interest		(22,671	)
Operating lease liabilities		117,776
Less: current portion		(19,259	)
Operating lease liabilities, less current portion	$	98,517

As of December 31, 2023, the weighted-average remaining lease term is 6.1 years and the weighted-average discount rate was 5.8%.

We have entered into subleases for approximately 29,000 square feet of space in our Mission Bay Facility that would provide recovery of $10.5 million in aggregate fixed lease payments, as well as full recovery of the subtenants' share of operating expenses under our master lease agreement, subject to certain free rent periods. We record the total sublease income as a reduction of general and administrative expense, which totaled $2.2 million for the year ended December 31, 2023.

As of December 31, 2023, maturities of our operating lease receivables from subleases for each of the next five years and thereafter were as follows:

Year ending December 31,
2024	$	1,360
2025		1,535
2026		1,589
2027		1,645
2028		1,702
2029 and thereafter		1,757
Gross Lease Receivable	$	9,588