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Commitments and Contingencies | 3 Months Ended
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Mar. 31, 2025
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | 7. Commitments and contingencies Leases In January 2015, as amended in September 2016, the Company entered into an operating lease for approximately 42,000 square feet of office, laboratory and research and development space located at 700 Saginaw Drive, Redwood City, California (the 700 Building). In April 2020, the Company amended the lease to lease an additional 19,000 square feet of office, laboratory and research and development space located at 300 Saginaw Drive, Redwood City, California (the 300 Building). In November 2021, the Company amended the lease to lease an additional 41,000 square feet of office, laboratory and research and development space located at 800 Saginaw Drive, Redwood City, California (the 800 Building). In March 2023, the Company amended the lease to lease an additional approximately 40,000 square feet of office, laboratory and research and development space located at 900 Saginaw Drive, Redwood City, California (the 900 Building), and to extend the lease term through December 31, 2035. The Company obtained possession of the 900 Building in October 2023. In July 2024, the Company amended the lease to lease an additional approximately 43,000 square feet of office, laboratory and research and development space located at 500 Saginaw Drive, Redwood City, California (the 500 Building). In November 2024, the Company amended the lease to lease an additional approximately 46,961 square feet of office, laboratory and research and development space located at 600 Saginaw Drive, Redwood City, California (the 600 Building). The Company has the option to extend the lease for the Buildings for an additional ten years after December 31, 2035. Additionally, in November 2024, the Company also entered into a sublease agreement pursuant to which approximately 23,481 square feet of office space located on the first floor of the 600 Building was subleased. The term of the sublease is through October 2027, with no options to extend. The sublease is accounted for as an operating lease. The Company maintains letters of credit for the benefit of the landlord which are classified as restricted cash in the unaudited condensed consolidated balance sheets. Restricted cash related to letters of credit due to the landlord was $3.7 million as of March 31, 2025 and December 31, 2024. Through March 31, 2025, the landlord had provided the Company with $16.3 million in tenant improvement allowances, which were recognized as lease incentives. The lease incentives are being amortized as an offset to rent expense over the lease term in the unaudited condensed consolidated statements of operations and comprehensive loss. Upon the execution of the lease amendment in March 2023, which was deemed to be a lease modification, the Company re-evaluated the assumptions used during the lease amendment in November 2021. The Company determined the amendment consists of two separate contracts under ASC 842. One contract is related to a new right-of-use asset for the 900 Building, which is being accounted for as an operating lease, and the other is related to the modification of the lease term, as amended in November 2021, for the 700 Building, 300 Building and 800 Building. As a result, the Company recorded a right-of-use asset and a lease liability of $25.0 million for the 900 Building and an aggregate increase of $0.3 million to the right-of-use assets and lease liabilities for the 700 Building, 300 Building and 800 Building upon execution of the lease amendment. The Company is recognizing rent expense for the buildings on a straight-line basis through the remaining extended term of the lease. Upon the execution of the lease in July 2024, the Company determined that the contract is related to a new right-of-use asset for the 500 Building, which is being accounted for as an operating lease under ASC 842. Upon obtaining possession of the building in October 2024, the Company recorded a right-of-use asset of $18.2 million, a lease liability of $21.8 million and a lease receivable of $3.6 million for the 500 Building. The Company is recognizing rent expense for the buildings on a straight-line basis through the term of the lease. Upon the execution of the lease in November 2024, the Company determined that the contract is related to a new right-of-use asset for the 600 Building, which is being accounted for as an operating lease under ASC 842. The Company recorded a right-of-use asset and a lease liability of $26.3 million for the 600 Building. The Company is recognizing rent expense for the buildings on a straight-line basis through the remaining extended term of the lease. The balance sheet classification of the Company’s operating lease liabilities was as follows:
|  | March 31, |  |  | December 31, |
|  | 2025 |  |  | 2024 |
|  | (in thousands) |
Operating lease liabilities: |  |  |  |  |  |
Operating lease liability – current |  | $ | 12,979 |  |  | $ | 12,872 |
Operating lease liability – noncurrent |  |  | 121,363 |  |  |  | 122,971 |
Total operating lease liabilities |  | $ | 134,342 |  |  | $ | 135,843 |
The components of lease costs for the three months ended March 31, 2025 and 2024 were as follows (in thousands):
|  | Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
|  | (in thousands) |
Operating lease cost |  | $ | 4,823 |  |  | $ | 2,798 |
Less: Sublease income |  |  | (1,268 | ) |  |  | — |
Total operating lease cost, net(1) |  | $ | 3,555 |  |  | $ | 2,798 |
(1) Net lease cost does not include short-term lease and variable lease costs, which were immaterial. As of March 31, 2025, the maturities of the Company’s operating lease liabilities were as follows (in thousands):
2025 (remaining nine months) |  | $ | 14,068 |
2026 |  |  | 17,048 |
2027 |  |  | 17,554 |
2028 |  |  | 17,695 |
2029 |  |  | 18,314 |
Thereafter |  |  | 124,123 |
Total undiscounted lease payments |  | $ | 208,802 |
Less: Imputed interest |  |  | (67,800 | )
Less: Lease receivable |  |  | (6,660 | )
Total operating lease liabilities |  | $ | 134,342 |
Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate. The weighted-average discount rate used to determine the operating lease liability was 7.65%. As of March 31, 2025 and December 31, 2024, the weighted-average remaining lease term was 10.8 years and 11.0 years, respectively. Legal matters From time to time, the Company may be involved in litigation related to claims that arise in the ordinary course of its business activities. Defending such proceedings is costly and can impose a significant burden on management and employees. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. The Company accrues for these matters when it is probable that losses will be incurred and these losses can be reasonably estimated. On December 9, 2024, Nemeth v. Casdin, et al., Case No. 2024-1268-KSJM (Del. Ch.), was filed in the Court of Chancery of the State of Delaware (the Complaint) arising from CM Life Sciences III., Inc.’s (CMLS III) December 17, 2021 merger with EQRx, Inc. (Legacy EQRx) (the Merger). The Complaint was filed by former stockholders of CMLS III and brings claims for breach of fiduciary duty and unjust enrichment against members of CMLS III’s board of directors, CMLS III’s officers, and CMLS III’s sponsor in connection with the Merger. The Complaint also brings claims for aiding and abetting breaches of fiduciary duties against certain investment firms involved with the merger process, the Company, solely as successor-in-interest to EQRx, and Legacy EQRx’s former Executive Chairman and CEO, Alexis Borisy, who is also on the Company’s board of directors. Defendants moved to dismiss the Complaint on February 28, 2025. On April 14, 2025, Plaintiffs filed their opposition to the Defendants’ motion to dismiss. Defendants’ reply briefs are due on May 22, 2025. At this juncture, the Company does not believe this action will have a material adverse impact on its operations or financial position. The Company is currently unable to predict the outcome of these lawsuits and therefore cannot determine the likelihood of loss, if any, nor estimate a range of possible loss. Indemnification The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these arrangements is not determinable. The Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the fair value of these agreements is minimal. Other The Company enters into agreements in the ordinary course of business with contract research organizations for clinical trials, contract manufacturing organizations to provide clinical trial materials and with vendors for preclinical studies and other services and products for operating purposes, which are generally cancelable at any time by the Company upon 30 to 90 days’ prior written notice.

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