Wave Life Sciences Ltd. Leases Disclosure
8. LEASES
Lease Arrangements
The Company enters into lease arrangements for its facilities. A summary of the arrangements is as follows:
Operating Leases
Lexington
On September 26, 2016, and as amended on December 31, 2016, the Company entered into a 10 year and 9-month lease, which includes two successive five-year renewal options, for its facility in Lexington, Massachusetts, which the Company uses primarily for its current good manufacturing practices (“cGMP”) manufacturing, as well as for additional laboratory and office space. As there is not reasonable certainty that the renewal options will be exercised, the lease liabilities and the right-of-use assets pertaining to the Lexington Lease do not account for the two successive five-year renewal options. Throughout the term of the lease, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the lease, including a proportionate share of applicable taxes, operating expenses and utilities. As required under the terms of the lease agreement, the Company has placed restricted cash of approximately $2.8 million in a separate bank account as of December 31, 2025 and 2024.
Cambridge
In April 2015, the Company entered into a lease agreement for an office and laboratory facility in Cambridge, Massachusetts (the “Cambridge Lease”), which commenced in October 2015 with a term of 7.5 years with a five-year renewal the lease. Throughout the term of the lease, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the lease, including a proportionate share of applicable taxes, operating expenses and utilities. As required under the terms of the lease agreement, the Company has placed restricted cash of $1.0 million in a separate bank account as of December 31, 2025 and 2024.
In December 2020, the Company exercised its option under the Cambridge Lease to lease the additional office and laboratory space at the existing facility. The combined space constitutes the entire building. The lease for the additional space commenced on October 1, 2021, with a term of five years and is considered a separate lease from the Cambridge Lease. On the commencement date, the Company utilized the operating lease classification and recorded a right-of-use asset and corresponding operating lease liability of $4.5 million and began recognizing straight-line rent expense under ASC 842. Throughout the term of the lease, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the lease, including a proportionate share of applicable taxes, operating expenses and utilities.
In June 2022, the Company exercised the five-year renewal option under the Cambridge Lease to extend the lease term through March 2028 (the “Cambridge Lease Extension”). Therefore, as required by ASC 842, the Company calculated an incremental borrowing rate of 10.53% and remeasured the right-of-use asset and the lease liabilities related to the Cambridge Lease Extension. As a result, an additional $12.0 million of operating right-of-use asset and corresponding operating lease liabilities were recorded relating to the Cambridge Lease Extension.
The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases for the years ended December 31, 2025 and 2024:
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For the Year Ended December 31, |
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2025 |
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|
2024 |
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|
2023 |
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|
|
(in thousands) |
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Lease cost |
|
|
|
|
|
|
|
|
|
|||
Operating lease cost |
|
$ |
7,365 |
|
|
$ |
7,365 |
|
|
$ |
7,365 |
|
Variable lease cost |
|
|
3,083 |
|
|
|
2,998 |
|
|
|
2,798 |
|
Total lease cost |
|
$ |
10,448 |
|
|
$ |
10,363 |
|
|
$ |
10,163 |
|
|
|
|
|
|
|
|
|
|
|
|||
Other information |
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|
|
|
|
|
|
|
|
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Operating cash flows used for operating leases |
|
$ |
9,591 |
|
|
$ |
9,311 |
|
|
$ |
8,655 |
|
Weighted average remaining lease term |
|
2 years |
|
|
3 years |
|
|
4 years |
|
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Weighted average discount rate |
|
|
9.3 |
% |
|
|
9.2 |
% |
|
|
9.2 |
% |
Future minimum lease payments under the Company’s non-cancelable operating leases as of December 31, 2025, are as follows:
|
|
As of December 31, 2025 |
|
|
|
|
(in thousands) |
|
|
2026 |
|
|
9,584 |
|
2027 |
|
|
8,987 |
|
2028 |
|
|
886 |
|
2029 and thereafter |
|
|
- |
|
Total lease payments |
|
$ |
19,457 |
|
Less: imputed interest |
|
|
(1,691 |
) |
Total operating lease liabilities |
|
$ |
17,766 |
|
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.