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LEASES | 6 Months Ended
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Jun. 30, 2024
Leases |
LEASES | 8) LEASES The Company currently has operating leases for office and laboratory space in the borough of Manhattan in New York, New York, and Cambridge, Massachusetts, which expire in 2026 and 2028, respectively. In addition, in October 2022, the Company entered into a sublease with a subsidiary of Bristol-Myers Squibb Company, as sublessor (“Sublessor”), for office, laboratory and research and development space of approximately 45,500 square feet in Somerville, Massachusetts. The sublease provides for base rental payments of approximately $0.5 million per month as well as monthly payments for parking and the Company’s share of traditional lease expenses, including certain taxes, operating expenses and utilities. The Company paid the Sublessor a security deposit in the form of a letter of credit in the amount of approximately $4.1 million. The Sublessor provided the Company with a tenant improvement allowance (“TIA”) of $190 per rentable square foot, or $8.6 million. As of June 30, 2024, the Company received the entire $8.6 million TIA. The Company incurred out-of-pocket tenant improvements costs of approximately $1.6 million, which were in excess of the $8.6 million TIA. On May 3, 2024, the Company received a notice from the Sublessor regarding past due rent payments of approximately $2.3 million, including amounts related to property taxes and common area maintenance costs, that the Company did not pay for the months of February, March, April and May 2024. Failure to pay the past due rent payments in full, plus approximately $70,000 in late fees and interest, within five business days from the date of the notice constitutes an event of default under the sublease. The Company also did not pay the rent for June, July or August 2024, and as of August 1, 2024, owed approximately $4.0 million in the aggregate in past due rent. On August 5, 2024, the Sublessor drew down on the letter of credit for the full $4.1 million to cover the approximately $4.0 million of past due rent payments, plus interest and penalties. On August 9, 2024, the Company and Sublessor entered into a sublease termination agreement, effective August 31, 2024. The sublease was originally scheduled to expire in 2033. See Note 17 for more information on the sublease termination agreement. For the three and six months ended June 30, 2024 and 2023, the net operating lease expenses were as follows (in thousands): NET OPERATING LEASE EXPENSE
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
|  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Operating lease expense |  | $ | 1,633 |  |  | $ | 67 |  |  | $ | 3,269 |  |  | $ | 135 |
Sublease income |  |  | (21 | ) |  |  | (21 | ) |  |  | (42 | ) |  |  | (42 | )
Variable lease expense |  |  | 332 |  |  |  | 7 |  |  |  | 663 |  |  |  | 12 |
Total lease expense |  | $ | 1,944 |  |  | $ | 53 |  |  | $ | 3,890 |  |  | $ | 105 |
The tables below show the beginning balances of the operating ROU assets and lease liabilities as of January 1, 2024 and the ending balances as of June 30, 2024, including the changes during the period (in thousands). OPERATING LEASE RIGHT-OF-USE ASSETS AND LIABILITIES
|  | Operating Lease ROU Assets |
Operating lease ROU assets at January 1, 2024 |  | $ | 32,781 |
Adjustment to ROU asset for remeasurement of Somerville Sublease liability |  |  | 4,245 |
Amortization of operating lease ROU assets |  |  | (1,036 | )
Operating lease ROU assets at June 30, 2024 |  | $ | 35,990 |
|  | Operating Lease Liabilities |
Operating lease liabilities at January 1, 2024 |  | $ | 35,070 |
Adjustment to lease liability due to remeasurement of Somerville Sublease |  |  | 4,245 |
Accretion of interest for Somerville Sublease |  |  | 1,787 |
Principal payments on operating lease liabilities |  |  | (792 | )
Operating lease liabilities at June 30, 2024 |  |  | 40,310 |
Less non-current portion |  |  | 36,044 |
Current portion at June 30, 2024 |  | $ | 4,266 |
As of June 30, 2024, the Company’s operating leases had a weighted-average remaining life of 9.3 years with a weighted-average discount rate of 11.07%. The maturities of the operating lease liabilities are as follows (in thousands): MATURITIES OF OPERATING LEASE LIABILITIES
|  | As of June 30, 2024 |
2024 |  | $ | 5,305 |
2025 |  |  | 6,075 |
2026 |  |  | 6,238 |
2027 |  |  | 6,308 |
2028 |  |  | 6,406 |
Thereafter |  |  | 33,879 |
Total payments |  |  | 64,211 |
Less imputed interest |  |  | (23,901 | )
Total operating lease liabilities |  | $ | 40,310 |

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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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