ASSEMBLY BIOSCIENCES, INC. Leases Disclosure
Note 11 - Leases
Operating Leases
In August 2023, the Company entered into a sublease agreement for office and laboratory space in South San Francisco, California to serve as the Company's corporate headquarters. The sublease originally expired in October 2025, with an option to extend through September 2029. In December 2024, the Company amended the sublease to extend the term through September 2029 and modify the base rent payments beginning in January 2025, with scheduled annual rent increases over the remaining lease term. The Company's previous corporate headquarters sub-sublease in South San Francisco, California expired in December 2023. The Company also leased office space in Carmel, Indiana under a lease agreement that expired in August 2023, which had been substantially subleased since February 2021. The Company dissolved its China subsidiary in 2024, allowing the lease for its registrational office in Shanghai to expire in March 2024. The lease for the Company's registrational office in Beijing, which was month-to-month, ended in 2023. The Company also leases certain laboratory equipment accounted for as operating leases expiring at various dates, with the final lease expiring in 2025.
When the Company cannot determine the implicit rate in its leasing arrangements, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment.
At December 31, 2024, the Company had operating lease liabilities of $3.1 million and ROU assets of $3.1 million.
The following summarizes quantitative information about the Company’s operating leases (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Lease cost |
|
|
|
|
|
|
||
Operating lease cost |
|
$ |
1,417 |
|
|
$ |
3,507 |
|
Short-term lease cost |
|
|
1 |
|
|
|
12 |
|
Variable lease cost |
|
|
727 |
|
|
|
1,504 |
|
Sublease income |
|
|
— |
|
|
|
(102 |
) |
Total lease cost, net |
|
$ |
2,145 |
|
|
$ |
4,921 |
|
As of December 31, 2024, the weighted-average remaining lease term for operating leases was 4.7 years and the weighted-average discount rate for operating leases was 10.0%.
As of December 31, 2024, the maturities of the Company’s operating lease liabilities were as follows (in thousands):
2025 |
|
$ |
751 |
|
2026 |
|
|
806 |
|
2027 |
|
|
834 |
|
2028 |
|
|
863 |
|
2029 |
|
|
671 |
|
Total |
|
|
3,925 |
|
Less: present value discount |
|
|
(836 |
) |
Operating lease liabilities |
|
$ |
3,089 |
|
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About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.