Annexon, Inc. Commitments Disclosure
Leases
The Company leases its offices and laboratory in Brisbane, California, or the Brisbane Lease, under a ten-year noncancelable lease agreement that ends in October 2031 with a ten-year renewable option. In November 2021, the Company subleased unoccupied space for two years from December 2021 through November 2023, for aggregate sublease payments of $3.4 million. The sublease income, while it reduces the rent expense, is not considered in the value of the right-of-use assets or lease liabilities. The Company’s sublease income was zero and $2.0 million for the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2024, the operating lease right-of-use assets were $16.7 million and lease liabilities were $29.0 million in the consolidated balance sheet. The weighted average remaining lease term is 6.8 years.
The weighted average incremental borrowing rate used to measure the operating lease liability is 8.4%.
Operating lease cost for the years ended December 31, 2024 and 2023 was $3.8 million and $2.3 million, respectively. Variable lease payments for the years ended December 31, 2024 and 2023 were $2.3 million and $1.5 million, respectively.
Future minimum lease payments and related lease liabilities as of December 31, 2024 were as follows:
|
|
(in thousands) |
|
|
2025 |
|
$ |
5,065 |
|
2026 |
|
|
5,242 |
|
2027 |
|
|
5,425 |
|
2028 |
|
|
5,615 |
|
2029 and thereafter |
|
|
16,985 |
|
Total undiscounted lease payments |
|
|
38,332 |
|
Less: Imputed interest |
|
|
(9,360 |
) |
Total |
|
$ |
28,972 |
|
Guarantees and Indemnifications
In the normal course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. As of December 31, 2024, the Company did not have any material indemnification claims that were probable or reasonably possible and consequently has not recorded related liabilities.
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.