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Leases

12 Months Ended

Dec. 31, 2021

8. Leases

The Company leases office and laboratory space in Monrovia, California under a lease that expires in December 2025 with an option to renew for an additional five years at then market rates. In July 2017, under a separate lease agreement, the Company entered into a lease for additional space in the same building with a lease that continues through September 2022, also with an option to renew for an additional five years. The Company has assessed that it is unlikely to exercise either of the lease term extension options.

The Company leases additional office space in San Diego, California through August 2022, with an option to extend for an additional five years. The Company has assessed that it is unlikely to exercise the option to extend the lease term.

In June 2021, the Company entered into an Agreement of Lease (the Halstead Lease) relating to 129,543 rentable square feet, for laboratory and office space, in Pasadena, California, where the Company intends to move its corporate headquarters in the second half of 2022. The term of the Halstead Lease will become effective in two phases. The first phase commences on July 1, 2022 and encompasses 83,083 square feet while the second phase commences no later than September 30, 2026 and encompasses an additional 46,460 square feet. The term of the Halstead Lease is 13 years from the first phase commencement date. The Company received delivery of the first phase premises on July 1, 2021 and is scheduled to complete construction of office, laboratory, and related improvements in the second half of 2022. The Halstead Lease provides the Company with improvement allowances of up to $17,032,015 and $3,252,000 in connection with the Phase 1 and Phase 2 building improvements, respectively. The initial base monthly rent is $386,335.95, or $4.65 per square foot, and includes increases of three percent annually. The Company will also be responsible for its proportionate share of operating expenses, tax expense, and utility costs.

In July 2021, the Halstead Lease was amended to clarify the start date of the new lease as August 1, 2022 and to amend other provisions of the Halstead Lease to reflect the new start date of the lease. For the year ended December 31, 2021, ROU assets obtained in exchange for new operating lease liabilities are $29.7 million.

In June 2021, the Company entered into an 18-month lease for a 7,020-square-foot office space in Monrovia, California. The lease began on August 1, 2021, and the initial base monthly rent is $15,000.00. The Company received delivery of the premises on July 19, 2021. For the year ended December 31, 2021, ROU assets obtained in exchange for new operating lease liabilities are $0.3 million.

The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants.

The following table reconciles the undiscounted cash flows for the operating leases at December 31, 2021 to the operating lease liabilities recorded on the balance sheet (in thousands):


Years ending December 31,
2022	$	2,097
2023		5,566
2024		5,713
2025		5,817
2026		5,279
Thereafter		52,117
Total undiscounted lease payments		76,589
Less: Tenant allowance		(17,032)
Less: Imputed interest		(25,588)
Present value of lease payments	$	33,969

Lease liabilities - long-term	$	33,969

The following table summarizes lease costs, cash, and other disclosures for the years ended December 31, 2021, 2020, and 2019 (in thousands):


	Year Ended
	December 31,
	2021		2020		2019

Operating lease cost	$	4,342	$	2,503	$	2,596
Variable lease cost		58		150		80
Total lease costs	$	4,400	$	2,653	$	2,676
Cash paid for amounts included in
the measurement of lease liabilities	$	2,773	$	2,233	$	1,929
Weighted-average remaining lease term
—operating leases (in years)		12.3		7.4		5.5
Weighted-average discount rate
—operating leases		5.8%		5.5%		5.5%