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Leases

9 Months Ended

Sep. 30, 2023

5. Leases

Operating Lease Obligations

In January 2021, we entered into a lease agreement for our current corporate headquarters facility located in San Carlos, California and a license agreement for temporary lab and office space in Palo Alto, California. The lease term for our current corporate headquarters facility began on December 3, 2021 and expires on December 31, 2025. We have two 60-month renewal options. We extended the license agreement for our temporary headquarters in the Palo Alto office by 60 days to March 3, 2022 to accommodate our relocation plan. The original term of the license agreement for the temporary space in Palo Alto terminated when the San Carlos office leasehold improvements were completed and we moved into our current corporate headquarters. These two

agreements are accounted for as a combined lease because the contracts were negotiated as a package with the same commercial objective. Upon commencement of the San Carlos lease in December 2021, we recorded a ROU asset and lease liability of $28.4 million and $12.9 million, respectively.

In July 2016, we entered into a five-year lease agreement for our previous headquarters facility located in Foster City, California. The original term of the lease was from September 1, 2016 to August 31, 2021, with two 30-month renewal options. In July 2019, we leased another facility in Foster City, California as a result of growth in personnel and lab space requirements. The original term of this lease was from July 1, 2019 to October 31, 2021, with no renewal options. In November 2020, we extended the terms of both of these leases for six months to March 1, 2022 and April 30, 2022, respectively. In February 2022, we entered into an early termination agreement for one of the facilities in Foster City and terminated our lease on February 12, 2022 instead of April 30, 2022.

Information related to our lease is as follows (dollar amounts in thousands):


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,			September 30,
	2023		2022		2023			2022
Cash paid for operating lease liabilities	$	1,671	$	1,631	$	5,013		$	3,743

Weighted-average remaining lease term (in years)						2.04			3.04
Weighted-average discount rate						7.6	%		7.6	%

Maturities of lease liabilities as of September 30, 2023 were as follows:


Years ending December 31,	(in thousands)
Remainder of 2023	$	1,114
2024		6,850
2025		7,022
Total future undiscounted lease payments		14,986
Less: Imputed interest		(1,177	)
Total lease liabilities	$	13,809

Rent expense recognized under the leases was $1.9 million and $1.9 million for the three months ended September 30, 2023 and 2022, respectively, and $5.8 million and $6.0 million for the nine months ended September 30, 2023 and 2022, respectively.

In September 2023, we entered into an assignment and assumption of lease agreement (the “Assignment Agreement”) for a new operating lease in the same building as our current headquarters (the “Assumed Lease Premises”). The assumed lease has an original contractual term of 10.0 years, expiring on November 30, 2031, unless earlier terminated. Pursuant to the Assignment Agreement, the base rent is abated for three full calendar months following the October 1, 2023 effective date of the Assignment Agreement. Thereafter, we are obligated to pay an aggregate of approximately $1.9 million in rent payments for the remaining nine months of the first year, with a 3% rent adjustment (not inclusive of rent abatement) every year thereafter. For accounting purposes, as of September 30, 2023, this new lease had not yet commenced and, as such, no lease liability or ROU asset were recorded on the condensed balance sheet and no operating lease expense had been recorded on the condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2023. See Note 14, “Subsequent Events.”