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Right-of-use asset and lease liabilities

12 Months Ended

Dec. 31, 2022

Right-of-use asset and lease liabilities

Right-of-use asset and lease liabilities

9. Right-of-use asset and lease liabilities

The Company’s most significant leases relate to office and laboratory space under the following operating lease agreements:

Lexington, Massachusetts / United States

In July 2013, the Company entered into a lease for a facility in Lexington, Massachusetts, United States. The term of the lease commenced in November 2013, was set for 10 years starting from the 2014 rent commencement date and is non-cancellable. Originally, the lease for this facility had a termination date of 2024. In November 2018, the term was expanded by five years to June 2029. The lease continues to be renewable for two subsequent five-year terms. Additionally, the lease was expanded to include an additional 30,655 square feet within the same facility and for the same term. The lease of the expansion space commenced on June 1, 2019.

The contractually fixed annual increase of lease payments through 2029 for both the extension and expansion lease have been included in the lease payments.

In December 2021, the Company entered into a new lease for an additional facility in Lexington, Massachusetts, United States of approximately 13,501 square feet of space. The lease commenced in May 2022, is set for seven years and is non-cancellable. The lease is renewable for one five-year term.

In February 2022, the Company also entered into a new lease for an additional facility in Lexington, Massachusetts, United States of approximately 12,716 square feet. The lease commenced in November 2022 and is set for a non-cancellable period of seven years and four months. The lease is renewable for one five-year term.

Amsterdam / The Netherlands

In March 2016, the Company entered into a 16-year lease for a facility in Amsterdam, the Netherlands and amended this agreement in June 2016. The lease for the facility terminates in 2032, with an option to extend in increments of five-year periods. The lease contract includes variable lease payments related to annual increases in payments based on a consumer price index.

On December 1, 2017, the Company entered into an agreement to sub-lease three of the seven floors of its Amsterdam facility for a ten-year term ending on December 31, 2027, with an option for the sub-lessee to extend until December 31, 2031. In February 2020, the Company amended the agreement to sub-lease to take back one of the three floors effective March 1, 2020. The fixed lease payments to be received during the remaining term under the agreement to sub-lease amount to $4.8 million (EUR 4.5 million) as of December 31, 2022.

In May 2021, the Company entered into a sublease agreement to let an additional approximately 1,080 square meters of office space to accommodate the hiring of additional full-time employees. The lease expires in October 2028 and includes an option to break the lease on October 31, 2023.

Operating lease liabilities

The components of lease cost were as follows:


	Year ended December 31,
	2022		2021		2020

	(in thousands)
Operating lease cost	$	5,932	$	5,306	$	5,052
Variable lease cost		785		698		607
Sublease income		(849)		(907)		(904)
Total lease cost	$	5,868	$	5,097	$	4,755

The table below presents the lease-related assets and liabilities recorded on the Consolidated balance sheets.


	December 31,		December 31,
	2022		2021
	(in thousands)
Assets
Operating lease right-of-use assets	$	32,726		25,573
Liabilities
Current
Current operating lease liabilities		8,382		5,774
Non-current
Non-current operating lease liabilities		31,719		28,987
Total lease liabilities	$	40,101		34,761

Other information

The weighted-average remaining lease term as of December 31, 2022, is 7.2 years, compared to 8.3 years as of December 31, 2021, and the weighted-average discount rate as of December 31, 2022 is 11.2%, compared to 11.3% as of December 31, 2021. The Company uses an incremental borrowing rate applicable to the lease asset.

The table below presents supplemental cash flow and non-cash information related to leases.


	Year ended December 31,
	2022		2021		2020

	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	7,532	$	5,738	$	5,769

Right-of-use asset obtained in exchange for lease obligation
Operating lease	$	9,824	$	1,699	$	—

Undiscounted cash flows

The table below reconciles the undiscounted cash flows as of December 31, 2022, for each of the first five years and the total of the remaining years to the operating lease liabilities recorded on the Consolidated balance sheet as of December 31, 2022.


	Lexington		Amsterdam⁽¹⁾		Other		Total

	(in thousands)
2023	$	5,236	$	3,042	$	104	$	8,382
2024		5,504		1,993		104		7,601
2025		5,859		1,993		104		7,956
2026		6,031		1,993		104		8,128
2027		6,207		1,997		104		8,308
Thereafter		9,343		7,190		469		17,002
Total lease payments	$	38,180	$	18,208	$	989	$	57,377

Less: amount of lease payments representing interest payments		(10,611)		(6,268)		(397)		(17,276)
Present value of lease payments		27,569		11,940		592		40,101
Less: current operating lease liabilities		(5,236)		(3,042)		(104)		(8,382)
Non-current operating lease liabilities	$	22,333	$	8,898	$	488	$	31,719

(1)

Payments are due in EUR and have been translated at the foreign exchange rate as of December 31, 2022, of $1.07 / €1.00)