Neurogene Inc.NGNE
Neurogene Inc. Leases Disclosure
Leases
The Company enters into lease arrangements for its facilities as well as certain equipment, classified either as operating or finance leases.
The Company has an operating lease agreement, as amended by the execution of two subsequent amendments, for approximately 33,300 square feet of office space in Seattle, Washington for the Company’s principal executive offices, a laboratory for research and development, and related uses. In January 2020, the Company issued an irrevocable letter of credit in the amount of $0.5 million for the security deposit in accordance with the terms of the lease. The lease term commenced on January 15, 2020 and payments of rent obligations began on February 1, 2021. The lease is scheduled to expire on February 1, 2029, with the option to extend the lease for two five-year terms. The lease provides for a tenant improvement allowance of up to $9.5 million, which is included in the base rent, and has been fully utilized. The Company will also be responsible for the payment of additional rent to cover the Company’s share of the annual operating, tax expenses, and utilities costs for the building.
The Company has an operating lease agreement for approximately 6,272 square feet of laboratory and office space in Seattle, Washington, for research and development and related uses. In March 2021, the Company executed an amendment to this lease pursuant to which the contractual lease term was extended through September 30, 2026, unless terminated earlier, with the option to extend the lease for an additional 28-month term. The execution of this amendment was accounted for as a modification to the lease due to the extension of the lease term and an increase in lease payments, and the Company recorded an increase in the lease liability and related right-of-use asset of $1.6 million. In December 2022, the Company entered into an agreement to sublease this space to an unrelated third party. Pursuant to the terms of the sublease, the Company is entitled to receive up to $0.5 million in base lease payments. The term of the sublease is through August 2023, with an option by the sublessee to extend such term through November 2023.
As of December 31, 2022, and December 31, 2021, the Company’s operating lease right-of-use assets were $9.7 million and $10.8 million, respectively. As of December 31, 2022, and December 31, 2021, the Company's finance lease right-of use-assets, included within on the balance sheet, were $0.5 million and $0.2 million, respectively.
The components of the lease expense were as follows (in thousands):
| December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Finance lease cost | |||||||||||
| Amortization of right-of-use asset | $ | 58 | $ | 49 | |||||||
| Interest on lease liabilities | 8 | 12 | |||||||||
| Operating lease cost | 2,542 | 2,535 | |||||||||
| Short term lease cost | — | 40 | |||||||||
| Variable lease cost | 1,124 | 2,161 | |||||||||
| Total net lease cost | $ | 3,732 | $ | 4,797 | |||||||
Supplemental balance sheet information related to leases is as follows:
| December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Weighted average remaining lease term—finance leases | 3.00 years | 2.70 years | |||||||||
| Weighted average remaining lease term—operating leases | 5.87 years | 6.86 years | |||||||||
| Weighted average discount rate—finance leases | 6.99% | 6.98% | |||||||||
| Weighted average discount rate—operating leases | 12.46% | 12.42% | |||||||||
Supplemental cash flow information related to leases was as follows (in thousands):
| December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | 2,657 | $ | 2,249 | |||||||
| Cash paid for amounts included in the measurement of finance lease liabilities | $ | 64 | $ | 63 | |||||||
The calculation of the present value of the lease payments for operating leases did not include any options to extend the leases as the Company is not reasonably certain to exercise such options.
At December 31, 2022, the future payments under the Company’s operating and finance lease liabilities were as follows (in thousands):
| Finance Lease | Operating Lease | ||||||||||
| 2023 | $ | 173 | $ | 2,718 | |||||||
| 2024 | 109 | 2,781 | |||||||||
| 2025 | 109 | 2,845 | |||||||||
| 2026 | 26 | 2,806 | |||||||||
| 2027 | — | 2,557 | |||||||||
| Thereafter | — | 2,835 | |||||||||
| Total undiscounted lease payments | 417 | 16,542 | |||||||||
| Less: imputed interest | (44) | (4,845) | |||||||||
| Total lease liabilities | 373 | 11,697 | |||||||||
| Less: current portion | (140) | (1,375) | |||||||||
Non-current lease liabilities—December 31, 2022 | $ | 233 | $ | 10,322 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2022 | Mar 20, 2023 | Showing above |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 25, 2021 | |
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.