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Leases
 3 Months Ended
Mar. 31, 2022
Leases [Abstract]  
Leases Leases
The Company adopted ASC 842, Leases, as of January 1, 2022. Prior period amounts have not been adjusted and continue to be reported in accordance with the Company's historic accounting under ASC 840, Leases.
Operating Leases
The Company leases office and laboratory spaces in Vista, California, under leases that expire in April 2027, with an option to extend portions of the leases for additional 5-year periods. The Company has not included the optional renewal periods in the measurement of the lease liabilities because it is not reasonably certain that the Company will exercise these renewal options. The Company's lease payments under each of these leases are subject to escalation clauses.
Effective on August 23, 2021, the Company entered into a sub-lease agreement for an additional office space in Carlsbad, California. The sub-lease commenced in October 2021 and expires in April 2027. The sub-lease agreement provides for monthly base rent of $66,021 which began on October 1, 2021, and such amount shall increase by approximately 3% annually beginning October 1, 2022. The Company is entitled to base rent abatement for a specified period of time which began on November 1, 2021.
The Company determines if a contract contains a lease at inception or modification of a contract. The Company discounts their lease obligations using its incremental borrowing rate at the commencement date. The incremental borrowing rate is the rate of interest the Company would have to pay to borrow on a collateralized basis over a
similar term and amount equal to the lease payments in a similar economic environment. The Company primarily considers industry data, its credit rating and the lease term to determine its incremental borrowing rate.
Finance Leases
The Company has entered into various finance lease agreements to obtain laboratory equipment. The terms of the Company's finance leases generally range from three to five years and are typically secured by the underlying equipment. The portion of the future payments designated as principal repayments were classified as finance lease liabilities on the Company's balance sheet.
Operating and Finance Leases Balances and Costs
Operating and finance leases consist of the following (in thousands):
Lease BalanceClassificationMarch 31, 2022
Lease Assets
OperatingOperating lease right-of-use assets$5,633 
FinanceProperty and equipment, net$1,370 
Lease Liabilities
Current
OperatingOperating lease liabilities$949 
FinanceAccrued and other current liabilities$592 
Non-current
OperatingNon-current operating lease liabilities$5,284 
FinanceOther non-current liabilities$744 
Costs associated with the Company's leases were included in the statements of operations as follows (in thousands):
Lease CostThree months ended March 31, 2022
Operating leases
Operating lease cost(1)
$389 
Finance lease cost
Amortization of lease assets158 
Interest on finance lease liabilities19 
Total lease cost$566 
(1) Includes variable lease cost of $42,000 for the three months ended March 31, 2022.
Supplemental cash flow information on leases is as follows (in thousands):
Cash paid for amounts included in the measurement of lease liabilitiesThree months ended March 31, 2022
Operating cash out flows from operating leases$282 
Operating cash out flows from interest paid on finance leases$19 
Financing cash out flows from finance leases$146 
Information regarding the weighted-average lease term and weighted average discount rate are as follows:
March 31, 2022
Weighted-average remaining lease term (years)
Operating leases5.1
Finance leases2.5
Weighted-average discount rate
Operating leases8.0 %
Finance leases5.4 %
Future payments under operating and finance leases as of March 31, 2022 are as follows (in thousands):
Operating LeasesFinance Leases
2022 (remaining)$1,055 $488 
20231,446 566 
20241,489 313 
20251,533 66 
20261,584 — 
Thereafter539 — 
Total minimum lease payments7,646 1,433 
Less: imputed interest(1,413)(97)
Total lease liabilities6,233 1,336 
Less: current portion(949)(592)
Lease obligations, net of current portion$5,284 $744 
Disclosures Under ASC 840
Minimum annual lease payments under non-cancelable operating lease arrangements at December 31, 2021 are as follows (in thousands):
Years Ending December 31,
Operating Leases
2022$1,337 
20231,445 
20241,489 
20251,533 
20261,584 
Thereafter539 
Total minimum lease payments$7,927 
For the three months ended March 31, 2021, rent expense was $0.2 million.
Leases Leases
The Company adopted ASC 842, Leases, as of January 1, 2022. Prior period amounts have not been adjusted and continue to be reported in accordance with the Company's historic accounting under ASC 840, Leases.
Operating Leases
The Company leases office and laboratory spaces in Vista, California, under leases that expire in April 2027, with an option to extend portions of the leases for additional 5-year periods. The Company has not included the optional renewal periods in the measurement of the lease liabilities because it is not reasonably certain that the Company will exercise these renewal options. The Company's lease payments under each of these leases are subject to escalation clauses.
Effective on August 23, 2021, the Company entered into a sub-lease agreement for an additional office space in Carlsbad, California. The sub-lease commenced in October 2021 and expires in April 2027. The sub-lease agreement provides for monthly base rent of $66,021 which began on October 1, 2021, and such amount shall increase by approximately 3% annually beginning October 1, 2022. The Company is entitled to base rent abatement for a specified period of time which began on November 1, 2021.
The Company determines if a contract contains a lease at inception or modification of a contract. The Company discounts their lease obligations using its incremental borrowing rate at the commencement date. The incremental borrowing rate is the rate of interest the Company would have to pay to borrow on a collateralized basis over a
similar term and amount equal to the lease payments in a similar economic environment. The Company primarily considers industry data, its credit rating and the lease term to determine its incremental borrowing rate.
Finance Leases
The Company has entered into various finance lease agreements to obtain laboratory equipment. The terms of the Company's finance leases generally range from three to five years and are typically secured by the underlying equipment. The portion of the future payments designated as principal repayments were classified as finance lease liabilities on the Company's balance sheet.
Operating and Finance Leases Balances and Costs
Operating and finance leases consist of the following (in thousands):
Lease BalanceClassificationMarch 31, 2022
Lease Assets
OperatingOperating lease right-of-use assets$5,633 
FinanceProperty and equipment, net$1,370 
Lease Liabilities
Current
OperatingOperating lease liabilities$949 
FinanceAccrued and other current liabilities$592 
Non-current
OperatingNon-current operating lease liabilities$5,284 
FinanceOther non-current liabilities$744 
Costs associated with the Company's leases were included in the statements of operations as follows (in thousands):
Lease CostThree months ended March 31, 2022
Operating leases
Operating lease cost(1)
$389 
Finance lease cost
Amortization of lease assets158 
Interest on finance lease liabilities19 
Total lease cost$566 
(1) Includes variable lease cost of $42,000 for the three months ended March 31, 2022.
Supplemental cash flow information on leases is as follows (in thousands):
Cash paid for amounts included in the measurement of lease liabilitiesThree months ended March 31, 2022
Operating cash out flows from operating leases$282 
Operating cash out flows from interest paid on finance leases$19 
Financing cash out flows from finance leases$146 
Information regarding the weighted-average lease term and weighted average discount rate are as follows:
March 31, 2022
Weighted-average remaining lease term (years)
Operating leases5.1
Finance leases2.5
Weighted-average discount rate
Operating leases8.0 %
Finance leases5.4 %
Future payments under operating and finance leases as of March 31, 2022 are as follows (in thousands):
Operating LeasesFinance Leases
2022 (remaining)$1,055 $488 
20231,446 566 
20241,489 313 
20251,533 66 
20261,584 — 
Thereafter539 — 
Total minimum lease payments7,646 1,433 
Less: imputed interest(1,413)(97)
Total lease liabilities6,233 1,336 
Less: current portion(949)(592)
Lease obligations, net of current portion$5,284 $744 
Disclosures Under ASC 840
Minimum annual lease payments under non-cancelable operating lease arrangements at December 31, 2021 are as follows (in thousands):
Years Ending December 31,
Operating Leases
2022$1,337 
20231,445 
20241,489 
20251,533 
20261,584 
Thereafter539 
Total minimum lease payments$7,927 
For the three months ended March 31, 2021, rent expense was $0.2 million.