8. LEASES

The Company leases its office facilities under non-cancelable operating leases that expire at various dates through December 2030.

On September 12, 2024, the Company entered into a lease agreement for the lease of approximately 15,000 square feet of office space in Cambridge, Massachusetts, which serves as the Company's corporate headquarters facility. The lease commenced on June 1, 2025, at which time the Company recognized a right-of-use, or ROU, asset and corresponding lease liability of $5.1 million. The initial lease term is approximately 67 months with rental payments beginning seven months after the lease commencement. In addition to base rent, the Company will reimburse the landlord for certain operating expenses under the terms of the lease. The Company has the option to extend the lease one time for an additional five-year period, subject to the terms therein; however, the exercise of the option to extend the lease term was not determined to be reasonably certain, and the Company will therefore recognize lease expense through the expiration of the initial lease term ending in December 2030.

Operating lease expense totaled $2.2 million and $2.2 million for the years ended December 31, 2025 and 2024, respectively.

Lease liabilities are measured by calculating the present value of remaining lease payments under the lease arrangement. Since the rates implicit in our leases are not readily determinable, the Company uses estimated incremental borrowing rates in determining the discount rate used to calculate the present value of remaining lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments over a similar term equal to the lease term in a similar economic environment. The incremental borrowing rate is based on the information available at commencement date. As the Company has no recent external borrowings, the incremental borrowing is a hypothetical rate based on our understanding of what our credit rating would be and adjusted to reflect a collateralized borrowing.

The Company’s leases contain renewal options that can extend the lease for additional years. Because the Company is not reasonably certain to exercise these renewal options, they are not considered in determining the lease terms, and associated potential additional payments are excluded from lease payments. The Company has existing net leases in which the non-lease components (e.g., common area maintenance) are paid separately from rent based on actual costs incurred and therefore are not included in the operating lease right-of-use assets and lease liabilities and are reflected as an expense in the period incurred. Variable lease payments during the years ended December 31, 2025 and 2024 were not material.

During the years ended December 31, 2025 and 2024, the Company made cash payments for operating leases of $1.6 million and $2.5 million, respectively. Future minimum lease payments under non-cancelable leases as of December 31, 2025, were as detailed below (in thousands):

As of December 31, 2025 and 2024, the weighted average remaining lease term was 4.7 years and 1.2 years, respectively. As of December 31, 2025 and 2024, the weighted average incremental borrowing rate used to determine the operating lease right-of-use assets was 11.3% and 7.4%, respectively.