Business Context and Reporting Period
Assembly Biosciences, Inc. filed this Form 8-K on July 18, 2018, to report the entry into a material definitive agreement. The filing details a Sub-Sublease for approximately 46,641 square feet of office and laboratory space located at 331 Oyster Point Boulevard in South San Francisco, California.
Key Financial Metrics and Obligations
This filing does not report revenue, profit, cash flow, margins, or general liquidity metrics. It specifically outlines the following financial obligations related to the new lease:
- Security Deposit: The Company deposited $552,986.74 as security for performance.
- Lease Term: The term continues until December 15, 2023.
- Rent Commencement: Expected on or before October 16, 2018.
- Base Rent Structure: Monthly base rent ranges from approximately $226,209 (prorated) at commencement to $268,652 (prorated) at the end of the term, with annual increases.
- Additional Costs: The Company is obligated to pay allocated operating expenses, real property taxes, and other charges passed through from the Master Landlord or Sublandlord.
Material Changes and Expansion Options
The primary material change is the commitment to the new facility in South San Francisco. The agreement includes the following options:
- Expansion Option: The Company may expand the Premises by approximately 33,137 square feet of office space, provided notice is given by December 31, 2019.
- Right of First Refusal: The Company holds a right of first refusal regarding any future sub-sublease of portions of the premises by the Sub-Sublandlord.
Outlook, Risks, and Contingencies
The filing notes that the lease term begins only after necessary consents are executed by HCP BTC, LLC (Master Landlord) and Amgen, Inc. (Sublandlord). The Sub-Sublandlord has agreed to use good faith efforts to obtain permits and complete improvements, with delivery of the complete Premises expected no later than November 30, 2018. The full text of the Sub-Sublease is not included in this filing but is planned for inclusion in the Form 10-Q for the quarter ending September 30, 2018.
Investor Verification Checklist
- Verify the execution of consents from HCP BTC, LLC and Amgen, Inc. to confirm the official start date of the lease term.
- Monitor the Form 10-Q for the quarter ending September 30, 2018, for the full text of the Sub-Sublease agreement.
- Track the actual delivery date of the Premises to confirm the Rent Commencement Date and initial rent liability.
- Assess the impact of the $552,986.74 security deposit on current cash liquidity.
- Evaluate the potential capital requirements for the optional expansion of 33,137 square feet if the notice is exercised by December 31, 2019.