Leases

9 Months Ended

Sep. 30, 2023

Redwood City, California

The Company has a lease for facilities in Redwood City, California (“Redwood City Premises”), which expires December 31, 2031, with option to extend for a period of eight years. Related to this lease, the Company provided the landlord with a letter of credit in the amount of $2.7 million as of September 30, 2023, which is classified as restricted cash under long term assets on the Company’s condensed consolidated balance sheets. In October 2023, the Company entered into an amendment to the letter of credit reducing the amount to $1.9 million.

In March 2023, the Company entered into an amendment to accelerate the expiration of one of the facilities in its Redwood City Premises from December 31, 2031 to September 30, 2023. Concurrently, the Company entered into an agreement for additional tenant improvement allowance towards its other Redwood City Premises. As a result of the modification the Company revalued the lease liability based on the new and remaining lease terms, which resulted in a reduction to the lease liability of $8.3 million, and recognized the remeasurement to the lease liabilities as an adjustment to the right-of-use asset. The estimated value of non-cash consideration, composed primarily of leasehold improvements and furniture and fixtures, was $14.9 million, which was fully amortized as of September 30, 2023.

Durham, North Carolina

The Company has an operating lease agreement for a building in Durham, North Carolina (“NC Premises”). The lease commenced in April 2021 when the Company obtained control of the NC Premises, and the lease term expires in October 2037 with two options to extend the lease term for a period of five years each. In April 2023, the Company entered into an amendment to reduce the rent payments for the NC Premises, effective as of May 1, 2023.

On October 26, 2021, the Company entered into a sublease agreement with a subtenant for the NC Premises through October 2037, the remainder of the lease term. In line with the amendment to the NC Premises’ lease, sublease rent payments were correspondingly reduced. Sublease income for operating leases is recognized on a cash basis over the lease term based on assessment of probability of collection. In September 2022, the Company assessed the collectability of sublease income receivable to be less than probable and recognized an adjustment to eliminate the deferred rent receivable as an adjustment to sublease income, resulting in an increase in general and administrative expenses in the three and nine month periods ended September 30, 2022. As a result of the adjustment to eliminate the deferred rent receivable, sublease income for the three and nine months ended September 30, 2022 was a negative $4.1 million and $0.8 million, respectively. Sublease income was $1.3 million and $4.1 million for the three and nine months ended September 30, 2023, respectively. The sublease income is classified as a reduction of rent expense in operating expenses.

As of September 30, 2023, undiscounted future non-cancellable lease payments under the lease agreements are as follows (in thousands):


Year ending December 31,	Operating Leases		Sublease Payments Receivable
2023 (remaining three months)	$	2,696	$	1,286
2024	11,086		5,248
2025	11,448		5,405
2026	11,821		5,568
2027	12,207		5,735
Thereafter	94,653		66,416
Total undiscounted lease payments	$	143,911	$	89,658
Less: Present value adjustments	$	(68,387)
Total lease liability	$	75,524