Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Leases

In August 2018, the Company entered into an operating lease agreement for new office and laboratory space which consists of approximately 68,000 square feet located in South San Francisco, California. The lease term is 127 months beginning August 2018 through February 2029 with an option to extend the term for another seven years which is not reasonably assured of exercise. The Company has made certain tenant improvements, including the addition of laboratory space, and has received $4.5 million of tenant improvement allowances up to March 31, 2020. The rent payments began on March 1, 2019 after an abatement period.

In October 2018, the Company entered into an operating lease agreement for new office and laboratory space which consists of 14,943 square feet located in South San Francisco, California. The lease term is 124 months beginning November 2018 through

February 2029, with an option to extend the term for another seven years which is not reasonably assured of exercise. The Company has made certain tenant improvements, including the upgrading of current office and laboratory space with a lease incentive allowance of $0.8 million. Rent payments began in November 2018.

In February 2019, the Company entered into a lease agreement for approximately 118,000 square feet of space to develop a cell therapy manufacturing facility in Newark, California. The lease has a term of 188 months and is expected to commence in April 2020. Upon certain conditions, the Company has two ten-year options to extend the lease which are not reasonably assured of exercise. Rent payments are expected to begin in early 2021 after an abatement period. The Company is entitled to a tenant improvement allowance of $2.9 million for costs related to the design and construction of certain Company improvements.

The Company maintained letters of credit for the benefit of landlords in the amount of $4.3 million which is disclosed a restricted cash as of March 31, 2020 and December 31, 2019, respectively.

The balance sheet classification of our lease liabilities were as follows (in thousands):


	March 31, 2020		December 31, 2019
Operating lease liabilities
Current portion included in accrued and other current liabilities	$	1,807	$	1,679
Long-term portion of lease liabilities	51,536		51,349
Total operating lease liabilities	$	53,343	$	53,028

The components of lease costs for operating leases, which were recognized in operating expenses, were as follows (in thousands):


	Three Months Ended March 31
	2020		2019
Operating lease cost	$	1,868	$	1,351
Variable lease cost	210		139
Total lease costs	$	2,078	$	1,490

Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2020 was $1.4 million and was included in net cash used in operating activities in our condensed statements of cash flows.

The undiscounted future lease payments under the lease agreements as of March 31, 2020 were as follows (in thousands:


Year ending December 31:
2020 (remaining 9 months)	$	4,236
2021	7,633
2022	7,951
2023	8,203
2024	8,467
2025 and thereafter	55,398
Total undiscounted lease payments	91,888
Less: Present value adjustment	(34,736)
Less: Tenant improvement allowance	(3,809)
Total	$	53,343

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, we use our estimated incremental borrowing rate. The weighted average discount rate used to determine the operating lease liability was 8.34%. As of March 31, 2020, the weighted average remaining lease term for our operating leases is 10.7 years.

Other Commitments

The Company has entered into certain license agreements for intellectual property which is used as part of our development and manufacturing processes. Each of these respective agreements are generally cancellable by the Company. These agreements require payment of annual license fees and may include conditional milestone payments for achievement of specific research, clinical and commercial events, and royalty payments. The timing and likelihood of any significant conditional milestone payments or royalty payments becoming due was not probable as of March 31, 2020.

The Company enters into contracts in the normal course of business that includes arrangements with clinical research organizations, vendors for preclinical research and vendors for manufacturing. These agreements generally allow for cancellation with notice. As of March 31, 2020, the Company had non-cancellable purchase commitments of $5.3 million.