Operating Leases
The Company's lease obligations consist of an operating lease for its headquarters in San Diego, California, entered into in 2022 (the “2022 Lease”). The Company's prior operating lease for a facility in San Diego, California, entered into in 2018, expired in August 2025.
Under the terms of the 2022 Lease, the Company's expected future monthly minimum lease payments of $0.5 million, with six months of rent abatement in the first year, start on the earlier of (i) the date which is ten (10) months after substantial completion of demolition work, or (ii) the date of the substantial completion of improvements and first occupancy for business purposes, and the term expires on the date immediately preceding the one hundred thirty-seventh (137th) monthly anniversary of this lease payment start date. Lease payments are subject to annual 3% increases. The Company is also responsible for certain operating expenses and taxes during the term of the 2022 Lease. The 2022 Lease provides the Company with specified tenant improvement and landlord work allowances. The Company has (i) two options to extend the term of the 2022 Lease for an additional period of 5 years each, and (ii) a right of first offer on adjacent space to the new facility, subject to the terms and conditions of the 2022 Lease. The 2022 Lease commenced in 2023 when the building was ready and available for its intended use. As of the date of the recording of the 2022 Lease, the Company is not reasonably certain that these options will be exercised.
The Company’s estimated incremental fully collateralized borrowing rate of 8.6% was used in its present value calculation as the 2022 Lease does not have a stated rate and the implicit rate was not readily determinable. The rate was determined using a synthetic credit rating analysis.
Under the terms of the 2018 Lease and 2022 Lease, the Company provided the lessors with irrevocable letters of credit in the amounts of $0.5 million and $0.8 million, respectively, the latter of which is included in restricted cash and restricted cash, net of current portion in the accompanying consolidated balance sheets. The $0.5 million letter of credit related to the 2018 Lease, which was included in restricted cash in the accompanying consolidated balance sheet as of December 31, 2024, was released as of December 31, 2025. The lessor of the 2022 Lease is entitled to draw on the $0.8 million letter of credit in the event of any default by the Company under the terms of the lease.
As of December 31, 2025, the Company's future minimum payments under non-cancellable operating leases, were as follows:
| | | | | | | | |
| Year ending December 31, | | Minimum
Payments |
| 2026 | | $ | 6,795 | |
| 2027 | | 6,999 | |
| 2028 | | 7,209 | |
| 2029 | | 7,425 | |
| 2030 | | 7,648 | |
| Thereafter | | 35,903 | |
| Total future minimum lease payments | | 71,979 | |
| Less imputed interest | | (23,438) | |
| Total operating lease liabilities | | 48,541 | |
| Less operating lease liabilities, current | | (6,489) | |
| Operating lease liabilities, non-current | | $ | 42,052 | |
Operating lease cost was $8.4 million, $8.5 million, and $3.3 million for each of the years ended December 31, 2025, 2024 and 2023, respectively. Short-term lease expenses for the years ended December 31, 2025, 2024 and 2023 were not significant.
Remaining lease terms and discount rates for the Company's operating leases are as follows:
| | | | | | | | | | | |
| As of December 31, 2025 (1) | | As of December 31, 2024 |
| Weighted-average remaining lease term (years) | 9.3 years | | 10.1 years |
| Weighted-average discount rate | 8.6% | | 8.6% |
(1) Reflects only the Company's 2022 Lease as the 2018 Lease expired in August 2025.
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 | | 2023 |
| Operating cash flow used for operating leases | $ | 7,468 | | | $ | 4,491 | | | $ | 1,616 | |