The Company has lease agreements for office, laboratory and manufacturing spaces that are classified as operating leases on the consolidated balance sheets. These leases have terms varying from one to approximately sixteen years, with renewal options of up to ten years, as well as early termination options. Extension and termination options are included in the total lease term when the Company is reasonably certain to exercise them. The leases are subject to additional variable charges, including common area

maintenance, property taxes, property insurance and other variable costs. 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 to combine and account for lease and non-lease components as a single-lease component for purposes of determining the total future lease payments.

In October 2024, the Company exercised its right of early termination for its Torrey Pines operating lease, which consists of 72,000 square feet of office, laboratory, and Good Manufacturing Practice (GMP) space. In connection with such exercise, the Company paid $2.5 million to its landlord. Termination of the lease, which previously extended through December 31, 2028, will now take effect on October 31, 2025. The Company accounted for this transaction as a modification to the lease agreement, which reduced the ROU asset and corresponding lease liability balances as of December 31, 2024 in connection with such transaction.

As of December 31, 2024, future undiscounted minimum contractual payments under the Company’s operating leases were $133.7 million, which will be paid over a remaining weighted-average lease term of 10.6 years. The weighted-average discount rate for the operating lease liabilities was 8.4%, which was the Company’s incremental borrowing rate at lease commencement, as the discount rates implicit in the leases could not be readily determined.

The components of lease expense for the years ended December 31, 2024 and 2023 were as follows (in thousands):


	Years Ended December 31,
	2024		2023
Straight-line lease expense	$	12,737	$	13,159
Variable lease expense		3,733		2,250
Total operating lease expense	$	16,470	$	15,409

Future undiscounted minimum payments under the Company’s operating leases as of December 31, 2024 are as follows (in thousands):


	Operating Lease Payments
Years Ending December 31,
2025	$	14,361
2026		11,050
2027		11,382
2028		10,293
2029		10,602
Thereafter		75,976
Total undiscounted lease payments	$	133,664
Less: imputed interest		(48,399	)
Total lease liability	$	85,265

As described in Note 1 above, the Company incurred a $1.3 million impairment charge against its right-of-use asset during the year ended December 31, 2024. The Company applied a discounted cash flow method to estimate the fair value of the right-of-use asset, which represents Level 3 non-recurring fair value measurements. The estimated fair value of the was determined by discounting the estimated rental rates using market participant assumptions. The Company’s estimates and assumptions used to determine the estimated fair value of the asset group is subject to risks, uncertainties, and changes in circumstances that may result in adjustments and material changes to the estimated fair values in future periods.