8. Leases

The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement. The Company leases office and laboratory space and a

dedicated manufacturing suite at WuXi under operating leases that have a weighted average remaining term of 1.5 years and 2.5 years as of December 31, 2023 and 2022, respectively.

As described further in Note 7, in August 2023, the Company entered into new work orders under the WuXi Agreement for WuXi to serve as one of the Company’s cell processing manufacturing partners for the global clinical development of CABA-201. WuXi converted the Company’s non-dedicated suite to a Dedicated Suite for GMP manufacturing for the Company’s CABA-201 and MuSK-CAART programs, for an initial term of 18 months. The terms of the August 2023 work orders included both fixed costs and contingent variable costs. The lease commenced October 1, 2023, and a right of use asset and lease liability of $953 was initially recorded for the fixed payments. Subsequent to December 31, 2023, the contingency related to the variable costs was resolved which resulted in an additional $4,350 in fixed undiscounted lease payments which will be made through the end of the lease. The Company may terminate for convenience with six months’ prior written notice and a $1,080 termination fee, the Dedicated Suite lease if both the CABA-201 and MuSK-CAART work orders are terminated.

The Company also leases office space under short-term leases that provide for either party to terminate the lease without cause and with 30 days’ notice. The Company’s operating leases include rent escalations and are subject to additional variable charges, including common area maintenance, property taxes and property insurance. Given the variable nature of such costs, they are recognized as expense as incurred. Additionally, some of the Company’s leases are subject to certain fixed fees which the Company has determined to be non-lease components. The Company has elected the practical expedient to account for lease and non-lease components as a single-lease component and has included fixed payments related to non-lease components in calculating the operating lease liability.

The weighted average discount rate for the Company’s operating leases is 9.5% and 8.3% as of December 31, 2023 and 2022, respectively, representing the Company's incremental borrowing rate at the beginning of each lease. For the year ended December 31, 2023, total lease cost was $3,259, consisting of $2,477 operating lease costs, $65 of variable lease costs and $717 of short-term lease cost. Cash paid for amounts included in the measurement of operating lease liabilities was $2,456 and $2,910 for the years ended December 31, 2023 and 2022, respectively. For the year ended December 31, 2022, total lease cost was $3,849, consisting of $3,042 operating lease costs, $36 of variable lease costs and $771 of short-term lease cost.