Quarterly report pursuant to Section 13 or 15(d)

Lease Agreements

v3.21.2
Lease Agreements
9 Months Ended
Sep. 30, 2021
Lease Agreements  
Lease Agreements

12.Lease Agreements

We currently lease our research and office space under a noncancelable lease agreement with our landlord, Healthpeak Properties, Inc. (formerly known as HCP BTC, LLC), which was originally set to expire in 2018. The lease term provides for renewal option for up to two additional periods of five years each. In July 2017, we exercised our option to extend the term of our lease for another five years through January 2023 and modified the amount of monthly base rent during such renewal period.

In December 2014, we entered into a sublease agreement, which was amended in 2017, with an unrelated third party to occupy approximately 57,000 square feet of our research and office space. In February 2017, we entered into an amendment to the sublease agreement to increase the subleased research and office space for an additional 9,328 square feet under the same term of the sublease. Effective July 2017, the sublease agreement was amended primarily to extend the term of the sublease through January 2023 and modified the monthly base rent to equal the amount we will pay our landlord. Because the future sublease income under the extended sublease agreement is the same as the amount we will pay our landlord, we did not recognize any loss on sublease relative to this amendment. We expect to receive approximately $6.2 million in future sublease income (excluding our subtenant’s share of facilities operating expenses) through January 2023.

We recorded rent expense on a straight-line basis for our lease, net of sublease income. For our sublease arrangement which we classified as an operating lease, our loss on the sublease was comprised of the present value of our future payments to our landlord less the present value of our future rent payments expected from our subtenant over the term of the sublease.

As of September 30, 2021 and December 31, 2020, we had operating lease right-of-use asset of $11.8 million and $17.9 million, respectively, and lease liability of $12.9 million and $19.3 million, respectively, in the condensed balance sheet. The weighted average remaining term of our lease as of September 30, 2021 was 1.33 years.

As of September 30, 2021, we received from our landlord leasehold improvement incentives amounting to $563,000 related to leasehold improvements. We record these leasehold improvement incentives as a reduction to operating lease right-of-use asset and lease liability until the lease ends and the asset is transferred.

The components of our operating lease expense were as follows (in thousands):

Three Months Ended 

Nine Months Ended 

September 30, 

September 30, 

2021

2020

2021

2020

Fixed operating lease expense

    

$

1,340

    

$

1,340

    

$

4,020

    

$

4,020

Variable operating lease expense

259

237

651

704

Total operating lease expense

 

$

1,599

 

$

1,577

 

$

4,671

 

$

4,724

Supplemental information related to our operating lease were as follow (in thousands):

Three Months Ended 

Nine Months Ended 

September 30, 

September 30, 

2021

2020

2021

2020

Cash payments included in the measurement of operating lease liabilities

$

2,529

$

2,431

$

7,554

$

7,263

Supplemental information related to our operating sublease was as follow (in thousands):

Three Months Ended 

Nine Months Ended 

September 30, 

September 30, 

2021

2020

2021

2020

Fixed sublease expense

    

$

1,095

    

$

1,096

    

$

3,285

    

$

3,286

Variable sublease expense

236

245

680

742

Sublease income

(1,331)

(1,341)

(3,965)

(4,028)

Net

 

$

 

$

 

$

 

$

The following table presents the future lease payments of our operating lease liabilities as of September 30, 2021 (in thousands):

Operating Lease

Sublease Receipts

Net

Remainder of 2021

$

2,529

$

(1,137)

$

1,392

2022

10,485

(4,716)

5,769

2023

877

(394)

483

Total minimum payments required

$

13,891

$

(6,247)

$

7,644