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Commitments and Contingencies | 6 Months Ended
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Jun. 30, 2023
Commitments and Contingencies [Abstract] |
COMMITMENTS AND CONTINGENCIES | NOTE 8. COMMITMENTS AND CONTINGENCIES Operating Leases In August 2020, the Company leased 7,781 square feet and in January 2022, the Company leased an additional 5,611 square feet of laboratory and office space in Redwood City, California. The Company’s operating lease will expire in August 2026. In March 2022, the Company entered into an agreement for 5,144 square feet of temporary office space in Redwood City, California, for use while the extra space leased in January 2022 was under construction. The Company paid $26,000 monthly for the temporary office space rent through July 2022. In conjunction with signing the lease, the Company secured a letter of credit in favor of the lessor in the amount of $0.4 million. The funds related to this letter of credit are presented as restricted cash on the Company’s condensed consolidated balance sheets. The lease agreement includes an escalation clause for increased base rent and a renewal provision allowing the Company to extend this lease for an additional 60 months at the prevailing rental rate, which the Company is not reasonably certain to exercise. In addition to base rent, the Company pays its share of operating expenses and taxes. To complete certain leasehold improvements, the lessor agreed to provide the Company a tenant improvement allowance of $1.5 million as well as an option to take an additional allowance of $0.4 million to be repaid over the lease term at an interest rate of 9% per annum, which the Company exercised. The Company recognized the full $1.9 million in leasehold improvements covered by these allowances during the 2021 and 2022 fiscal years. In accordance with the lease agreement, the lessor managed and supervised the construction of the improvements. In exchange for these services, the Company paid the lessor a fee equal to 5% of total construction costs. As of June 30, 2023 and December 31, 2022, the leasehold improvements constructed are presented under property and equipment on the Company’s condensed consolidated balance sheets and will be depreciated on a straight-line basis over the remaining lease term. In addition to the construction management and supervision fee noted above, the Company pays variable costs related to its share of operating expenses and taxes. These variable costs are recorded as lease expense as incurred and presented as operating expenses in the condensed consolidated statements of operations and comprehensive loss. The components of lease costs, which were included in the Company’s condensed statements of operations and comprehensive loss, are as follows (in thousands):
|  | Six Months Ended June 30, |
|  | 2023 |  |  | 2022 |
Lease cost |  |  |  |  |  |
Operating lease cost |  | $ | 336 |  |  | $ | 286 |
Short-term lease cost |  |  | 1 |  |  |  | 123 |
Total lease cost |  | $ | 337 |  |  | $ | 409 |
Supplemental information related to the Company’s operating leases is as follows:
|  | Six Months Ended June 30, |
|  | 2023 |  |  | 2022 |
Cash paid for amounts included in the measurement of lease liabilities (in thousands) |  | $ | 553 |  |  | $ | 351 |
Weighted average remaining lease term (years) |  |  | 3.11 |  |  |  | 4.12 |
Weighted average discount rate |  |  | 8.00 | % |  |  | 8.00 | %
The following table summarizes a maturity analysis of the Company’s operating lease liabilities showing the aggregate lease payments as of June 30, 2023 (in thousands):
Year ending December 31, |  | Amount |
2023 (remainder of the year) |  | $ | 566 |
2024 |  |  | 1,153 |
2025 |  |  | 1,187 |
2026 |  |  | 740 |
Total undiscounted lease payments |  |  | 3,646 |
Less imputed interest |  |  | (412 | )
Total discounted lease payments |  |  | 3,234 |
Less current portion of lease liability |  |  | (917 | )
Noncurrent portion of lease liability |  | $ | 2,317 |
Stanford Sponsored Research Agreement In September 2020, the Company entered into a sponsored research agreement with Stanford for a research program related to the treatment of Fanconi Anemia patients in Bone Marrow Failure requiring allogeneic transplant with non-sibling donors at Stanford Lucile Packard Children’s Hospital (the “Research Project”) using briquilimab. Stanford will perform the Research Project and is fully responsible for costs and operations related to the Research Project. In addition, Stanford owns the entire right, title, and interest, in and to all technology developed using Stanford facilities and by Stanford personnel through the performance of the Research Project under this agreement (the “Fanconi Anemia Research Project IP”). Under this agreement, Stanford granted the Company an exclusive option to license Stanford’s rights in the Fanconi Anemia Research Project IP (the “Fanconi Anemia Option”) in the field of commercialization of briquilimab. There is no license granted or other intellectual property transferred under this agreement until the Fanconi Anemia Option is exercised. As of June 30, 2023, the Company has not yet exercised the Fanconi Anemia Option. As consideration for the services performed by Stanford under this sponsored research agreement, the Company agreed to pay Stanford a total of $0.9 million over approximately 3 years upon the achievement of development and clinical milestones, including FDA filings and patients’ enrollment. The first milestone in the amount of $0.3 million was achieved in 2020. The second milestone in the amount of $0.3 million was achieved in February 2022 and recognized as a research and development expense in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2022. The third milestone in the amount of $0.3 million was based on the progress of the clinical trials and was achieved in July 2023. License Agreements In March 2021, the Company entered into the Stanford License Agreement (Note 6), which was amended in July 2023, pursuant to which the Company is required to pay annual license maintenance fees, clinical development and commercial sales milestones and low single-digit royalties on net sales of licensed products. All products were in development as of June 30, 2023, and no royalties were due as of such date. The Company paid a $25,000 license maintenance fee in each of March 2023 and 2022 and recognized this as a research and development expense in the condensed statements of operations and comprehensive loss for each of the six months ended June 30, 2023 and 2022. No expenses were recognized for each of the three months ended June 30, 2023 and 2022. Legal Proceedings The Company, from time to time, may be party to litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the six months ended June 30, 2023 and the year ended December 31, 2022, and, to the best of its knowledge, no material legal proceedings are currently pending. Guarantees and Indemnifications In the normal course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. As of June 30, 2023 and December 31, 2022, the Company does not have any material indemnification claims that are probable or reasonably possible and consequently has not recorded related liabilities.

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