Cullinan Therapeutics, Inc. Leases Disclosure
Cullinan has an operating lease for approximately 14,000 square feet of office space in a multi-tenant building in Cambridge, Massachusetts, which commenced in August 2022 and goes through July 2026. Cullinan also had an operating lease for approximately 8,000 square feet of office space in a multi-tenant building in Cambridge, Massachusetts, which commenced in and expired in (the "Suite 520 Lease"). Lease expense consisted of operating lease costs of $1.2 million and $1.7 million for 2024 and 2023, respectively.
The following table summarizes supplemental cash flow information for 2024 and 2023 (in thousands):
|
|
2024 |
|
|
2023 |
|
||
Cash paid for amounts included in measurement of lease liabilities: |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
$ |
1,738 |
|
|
$ |
1,881 |
|
The following table summarizes Cullinan’s future minimum lease payments as of December 31, 2024 (in thousands):
|
|
December 31, 2024 |
|
|
2025 |
|
$ |
1,461 |
|
2026 |
|
|
872 |
|
Total future minimum lease payments |
|
|
2,333 |
|
Less: imputed interest |
|
|
(182 |
) |
Total lease liabilities at present value |
|
$ |
2,151 |
|
The following table summarizes the weighted-average lease term and discount rate as of December 31, 2024 and 2023:
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|
2024 |
|
|
2023 |
|
||
Weighted-average remaining lease term (in years) |
|
|
1.6 |
|
|
|
2.4 |
|
Weighted-average discount rate |
|
|
11.0 |
% |
|
|
10.9 |
% |
As Cullinan’s operating leases did not provide an implicit rate, the Company used its incremental borrowing rate based on the information available in determining the present value of lease payments. Cullinan’s incremental borrowing rate was based on the term of the lease, the economic environment and reflects the rate the Company would have had to pay to borrow on a secured basis.
Sublease Agreement
Cullinan had a sublease agreement, which commenced in September 2022 and was scheduled to continue through May 2024 for the office space that the Company leased under the Suite 520 Lease. In September 2023, Cullinan and its subtenant cancelled the sublease agreement for the office space that the Company leased under the Suite 520 Lease, and Cullinan determined that the remaining right-of-use asset for the Suite 520 Lease and the related leasehold improvements (“Suite 520 Asset Group”) was not recoverable. Upon determining that the remaining Suite 520 Asset Group was not recoverable, the Company recorded an impairment of long-lived assets of $0.4 million for the carrying value in excess of the fair value of the Suite 520 Asset Group within income from operations in its consolidated statements of operations and other comprehensive income (loss) for 2023.
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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.