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Leases | 6 Months Ended
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Jun. 30, 2023
Leases [Abstract] |
Leases | 6. Leases The Company has operating leases for its current corporate offices, laboratories, manufacturing facilities, and dedicated space in a vivarium in South San Francisco, California. Rent expense, which is recognized on a straight-line basis over the term of each lease, was $2.7 million and $5.5 million for the three and six months ended June 30, 2023, respectively, and $2.8 million and $5.4 million for the three and six months ended June 30, 2022, respectively. The total cash received for operating leases included in the operating cash flows was $2.8 million and $0.2 million, inclusive of $7.8 million and $2.1 million of cash received related to tenant improvement allowance reimbursement less $5.0 million and $1.9 million of rent payments, for the six months ended June 30, 2023 and 2022, respectively. The weighted-average remaining lease term was 10.3 years for the corporate office, laboratory space leases, and additional facility as of June 30, 2023. The weighted-average discount rate was 9.74% as of June 30, 2023. In May 2018, the Company entered into a lease agreement for corporate office and laboratory space located in South San Francisco, California with an expiration date in May 2025 (the "Initial Lease Agreement"). In April 2019, the Company executed the first amendment to the Initial Lease Agreement for additional corporate space, laboratory space and manufacturing capabilities and an extension to the lease term through April 2026. In May 2020, the Company signed a second amendment to the Initial Lease Agreement. The amended lease provides for an eight-year non-cancelable lease of additional office and laboratory space in the same building. The lease amendment for additional office and laboratory space contains rent escalations during the term of the lease. The lease for this additional space commenced in January 2021 and expires in January 2029. The lease amendment also includes an extension of the lease term for the existing office and laboratory space beginning on May 1, 2020 and expiring in January 2029. The amendment to the Initial Lease Agreement also includes an option to extend the lease for an additional seven-year term. In January 2021, the Company signed a third amendment to the Initial Lease Agreement which provides for lease of additional space in the same building. The lease amendment for this additional space commenced in April 2021 and expires in March 2024. In October 2021, the Company signed a fourth amendment to the Initial Lease Agreement which provides for lease of additional space in the same building. The lease for additional office and laboratory space contains rent escalations during the term of the lease. The lease amendment of this additional space commenced in April 2022 and expires in January 2029. The lease amendment also includes this additional space in the Company’s option to extend the amended Initial Lease Agreement for an additional seven-year term. The other terms of the Initial Lease Agreement, as amended, remain unchanged. In July 2021, the Company entered into an additional lease agreement for corporate office, manufacturing and laboratory space located in South San Francisco, California with an expiration date approximately twelve years after the lease commencement date (the "Additional Lease Agreement"). The lease for this additional space and the Company's obligation to pay rent commenced in January 2022. In addition to ba se rent, the Company is responsible for payment of direct expenses, which include operating, insurance and tax expenses. The lease also provides for certain tenant improvement allowances of up to approximately $25.2 million for tenant improvements and certain infrastructure upgrades in connection with the initial buildout of the premises, approximately $4.4 million of which, if utilized, would need to be repaid by the Company over the lease term (the “Optional TIA”). In 2021, the Company delivered a security deposit in the form of a letter of credit of $1.6 million to the landlord in connection with the Additional Lease Agreement. In November 2021, the Company entered into an amendment to the Additional Lease Agreement. The lease amendment expressly includes manufacturing as a permitted use at the facility, clarifies that Silicon Valley Bank ("SVB") is an acceptable bank for purposes of issuing a letter of credit under the lease, revises the letter of credit transferability terms and replaces the form of letter of credit attached to the lease. In August 2022, the Company entered into fifth amendment to the Initial Lease Agreement and a second amendment to the Additional Lease Agreement for its existing facilities in South San Francisco, California. The fifth amendment to the Initial Lease Agreement includes an extension of the lease term for certain of the Company's existing facilities through July 31, 2030. The second amendment to the Additional Lease Agreement provides for approximately $15.0 million of additional tenant improvement allowances, in addition to the tenant improvement allowances of $25.2 million included in the original Additional Lease Agreement, and increases the base rent payments over the existing term of the lease. In March 2023, the Company held $2.7 million in collateral money market accounts supporting letters of credit issued by SVB to the landlord in connection with the Initial Lease Agreement and Additional Lease Agreement. In April 2023, the Company replaced the $2.7 million in letters of credit issued by SVB with letters of credit in the same amount from a different financial institution, and the Company entered into a third amendment to the Additional Lease Agreement. The lease amendment clarifies the form of letter of credit. In June 2023, the Company entered into a fourth amendment to the Additional Lease Agreement. The lease amendment confirms that the Company utilized the Optional TIA in the amount of approximately $4.4 million and as a result the Company began repaying the “Optional TIA” on July 1, 2023. The other terms of the Additional Lease Agreement, as amended, remain unchanged. Maturities of operating lease liabilities under existing operating leases as of June 30, 2023 were as follows (in thousands):
Year ending December 31, |  | Amount |
2023 (remaining six months) |  | $ | 6,560 |
2024 |  |  | 12,720 |
2025 |  |  | 13,027 |
2026 |  |  | 13,462 |
2027 |  |  | 13,912 |
2028 and thereafter |  |  | 87,254 |
Total undiscounted future minimum lease payments |  |  | 146,935 |
Less imputed interest |  |  | (56,438 | )
Total operating lease liabilities |  | $ | 90,497 |
Operating lease liabilities: |  |  |
Current |  |  | 6,050 |
Non-current |  |  | 84,447 |
Total lease liability |  | $ | 90,497 |
The Company tests long-lived assets for recoverability whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets may not be recoverable. During the three months ended June 30, 2023, the Company started to market for sublease portions of the Company's leased corporate office space in South San Francisco. As a result of these plans, the Company reviewed these spaces for impairment during the three months ended June 30, 2023. As part of the impairment evaluation of the spaces being marketed for sublease, the Company compared the estimated undiscounted income for the marketed sublease spaces to the net book value of the related long-term assets, which include right-of-use assets and certain property, plant and equipment, primarily for leasehold improvements (collectively, “Sublease Asset Group”). The Company estimated potential sublease income using market participant assumptions, which the Company evaluated based on current real estate trends and market conditions. For the Sublease Asset Group, the Company determined that the respective right-of-use assets had net carrying values that exceeded their estimated undiscounted future cash flows. Accordingly, the Company then estimated the fair value of the Sublease Asset Group based on its discounted cash flows. The carrying value of the Sublease Asset Group exceeded its fair values and, as a result, the Company recorded a right-of-use asset impairment of $4.1 million for the three months ended June 30, 2023. The impairment is recorded within general and administrative expenses in the condensed statements of operations and comprehensive loss.

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
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