Annual report [Section 13 and 15(d), not S-K Item 405]

Leases

v3.25.1
Leases
12 Months Ended
Dec. 31, 2024
Leases [Abstract]  
Leases . Leases

The Company leases office and laboratory space in addition to a manufacturing agreement which has been determined to contain an embedded lease.

Operating lease commitments

The Company leases office and laboratory space which 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. In 2024, the Company extended the terms of its lab and office operating leases and leased additional lab space resulting in an increase in the right-of-use asset and lease liability of $4,242.

Finance lease commitments - Embedded leases

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 rese-cel. WuXi converted the Company’s non-dedicated suite to a Dedicated Suite for GMP manufacturing for the Company’s rese-cel 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. In 2024, the Company remeasured the lease due to resolution of the contingency related to variable costs and an amendment to the 2023 work order to extend the term of the agreement for an additional 18 months through August

2026 resulting in an increase in the right-of-use asset and lease liability of $10,963. The Company may terminate the Dedicated Suite lease for convenience with six months’ prior written notice and up to a $1,080 termination fee if both the rese-cel and MuSK-CAART work orders are terminated.

As described further in Note 7, in December 2024, the Company entered into the Lonza Agreement with Lonza to serve as one of our manufacturing partners. Under the initial work order, Lonza will perform cell therapy manufacturing activities for our CAR-T cell therapy product rese-cel for a term of 12 months and total cost of approximately $16,000 with the ability to extend the manufacturing period subject to the terms of the Lonza Agreement. The Lonza Agreement is currently being evaluated for lease accounting under ASC 842. No right-of-use asset or liability was recognized as of December 31, 2024, as lease commencement begins in fiscal year 2025.

Summary of lease costs recognized under ASC 842

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating and finance leases for the years ended December 31, 2024 and 2023.

 

 

 

For the year ended December 31,

 

 

 

2024

 

 

2023

 

Finance leases

 

 

 

 

 

 

Interest expense

 

$

748

 

 

$

 

Amortization expense

 

 

3,102

 

 

 

 

Total fixed finance lease cost

 

$

3,850

 

 

$

 

Variable lease cost

 

 

930

 

 

 

 

Total finance lease cost

 

$

4,780

 

 

$

 

Operating leases

 

 

 

 

 

 

Fixed lease cost

 

$

3,247

 

 

$

2,477

 

Total fixed operating lease cost

 

$

3,247

 

 

$

2,477

 

Variable lease cost

 

 

296

 

 

 

65

 

Short-term lease cost

 

 

750

 

 

 

717

 

Total operating lease cost

 

$

4,293

 

 

$

3,259

 

 

 

 

 

 

 

 

Cash paid in the measurement of lease liabilities

 

 

 

 

 

 

Operating cash flows used for operating leases

 

$

3,291

 

 

$

2,456

 

Operating cash flows used for finance leases

 

 

748

 

 

 

 

Financing cash flows for finance leases

 

 

897

 

 

 

 

Other information

 

 

 

 

 

 

Weighted average remaining lease term - finance leases (in years)

 

 

1.7

 

 

 

 

Weighted average discount rate - finance leases

 

 

11.5

%

 

 

 

Weighted average remaining lease term - operating leases (in years)

 

 

1.7

 

 

 

1.5

 

Weighted average discount rate - operating leases

 

 

11.0

%

 

 

9.5

%

 

For finance leases embedded in CDMO arrangements, interest expense is recognized using the effective interest method, applying the Company's incremental borrowing rate as required by ASC 842, and amortization expense is recognized on a straight-line basis over the shorter of the life of the asset or the term of the lease.

Future lease payments under the non-cancelable operating and finance leases as of December 31, 2024 are as follows:
 

 

 

Finance Leases

 

 

Operating Leases

 

2025

 

$

6,328

 

 

$

4,227

 

2026

 

 

3,792

 

 

 

2,769

 

     Total undiscounted lease payments

 

 

10,120

 

 

 

6,996

 

Less imputed interest

 

 

(890

)

 

 

(626

)

     Total lease liability

 

$

9,230

 

 

$

6,370