Centessa Pharmaceuticals plcCNTA
Centessa Pharmaceuticals plc Commitments Disclosure
Commitments and Contingencies
Commitments
As of December 31, 2024, the Company had non-cancellable commitments for purchase of clinical materials, contract manufacturing, maintenance, and committed funding of up to $7.6 million, of which the Company expects to pay $7.3 million within one year and the remaining $0.3 million over one to three years. The amount and timing of these payments vary depending on the rate of progress of development. Future clinical trial expenses have not been included
within the purchase commitments because they are contingent on enrollment in clinical trials and the activities required to be performed by the clinical sites.
Leases
On February 7, 2022, the Company entered into an operating lease for its new U.S. corporate headquarters in Boston, Massachusetts (the “Boston Lease”). After a build out of the space, the Boston Lease commenced on March 31, 2023. The 10-year Boston Lease is for 18,922 square feet with a fixed annual rent of approximately $1.6 million commencing in 2023 and escalating to approximately $1.9 million by year 10. The Boston Lease required the Company to issue a letter of credit in the amount of $0.7 million in favor of the landlord. The Company may, at its discretion, extend the Boston Lease for one extension term of five years. On October 11, 2023, the Company entered into a five-year agreement to sublet 4,242 square feet of the Boston Lease, which may be extended at subtenant’s option.
The following table provides balance sheet information related to leases as of December 31, 2024 (amounts in thousands):
| December 31, 2024 | ||||||||
| Assets: | ||||||||
| Operating lease, right-of-use asset | $ | 11,013 | ||||||
| Liabilities: | ||||||||
| $ | 602 | |||||||
| Operating lease liabilities, net of current portion | 8,286 | |||||||
| Total operating lease liabilities | $ | 8,888 | ||||||
In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the original term of the lease. The following table summarizes supplemental information related to leases as of December 31, 2024 (amount in thousands):
| December 31, 2024 | ||||||||
| Weighted-average remaining lease term | 8.0 years | |||||||
| Weighted-average discount rate | 11.97 | % | ||||||
The components of the Company’s lease costs and sublease income are classified on its consolidated statements of operations as follows (amounts in thousands):
| Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||||||
| Operating lease cost | $ | 1,998 | $ | 1,498 | |||||||
| Variable lease cost | 20 | 53 | |||||||||
| Short term lease cost | 4 | 26 | |||||||||
Sublease income | (350) | (58) | |||||||||
| Total operating lease cost | $ | 1,672 | $ | 1,519 | |||||||
Future lease payments under non-cancelable operating leases and expected sublease income as of December 31, 2024 were as follows (amounts in thousands):
| Operating Leases | Sublease Income | ||||||||||
| Year ending: | |||||||||||
| 2025 | $ | 1,634 | $ | 355 | |||||||
| 2026 | 1,667 | 362 | |||||||||
| 2027 | 1,700 | 370 | |||||||||
| 2028 | 1,734 | 345 | |||||||||
| 2029 | 1,769 | — | |||||||||
| Thereafter | 5,521 | — | |||||||||
Total undiscounted amounts | $ | 14,025 | $ | 1,432 | |||||||
Less: Imputed interest | (5,137) | ||||||||||
| Present value of lease liabilities | $ | 8,888 | |||||||||
| Less: current portion | (602) | ||||||||||
| Lease liabilities, net of current portion | $ | 8,286 | |||||||||
Licensing and Collaborative Arrangements
The Company is party to licensing and collaboration arrangements to develop and commercialize intellectual property. Included in research and development expense in the Company’s consolidated statement of operations and comprehensive loss for year ended December 31, 2024 were aggregate incurred expenses of $4.8 million, primarily reflecting development milestone costs. As of December 31, 2024, the Company had no licensing and collaborative arrangement milestone obligations recorded on its balance sheet.
License Agreement with Nxera Pharma UK Limited (formerly Heptares Therapeutics Limited) in connection with Orexin Program
The Company is party to a license, assignment, and research services agreement with Nxera Pharma UK Limited (“Nxera”), relating to certain specific molecules with, among other criteria, the primary mode of action of an orexin agonist or orexin positive modulator (“Molecules”). Under the agreement, Nxera assigned to the Company all of Nxeras’ right, title, and interest in and to intellectual property that is already in existence and that is developed as a result of the agreement that relates solely to Molecules or products that contain Molecules (“Products”), including all rights to obtain patent or similar protection throughout the world for such intellectual property and to take any and all actions regarding past infringements of existing intellectual property. Additionally, Nxera granted to the Company an exclusive, sublicensable (subject to certain terms) license to make, import, export, use, sell, or offer for sale, including to development, commercialization, registration, modification, enhancement, improvement, manufacturing, holding, keeping
or disposing of Molecules and Products. Nxera must not by itself or through a third party (other than a single company) exploit, use or dispose of (inter alia) any product in the field of orexin agonism and orexin positive modulation for the duration of the agreement and for three years thereafter.
In consideration for the assignment and license, the Company is to pay Nxera a royalty in the low single-digits on net sales of Products (subject to limitations in certain scenarios). Royalties are on a Product-by-Product and country-by country basis. Payments shall commence with the first commercial sale of such product in a country and shall continue until the later of: (a) the duration of regulatory exclusivity in the country; or (b) 10 years after the first commercial sale. Further, the Company is responsible for all development costs incurred by itself or Nxera in the performance of the research program (within the confines of the research budget). Additionally, the Company must pay Nxera, on a Molecule-by-Molecule basis, development milestone payments in the aggregate of a low double-digit number in the millions of pounds sterling. Milestone payments are payable once per Molecule. The Company anticipates paying between the low single digits millions of pounds sterling to low double digit millions of pounds sterling in the next twelve months.
The Company may terminate the agreement at any time following the expiration or termination of the research program. In addition, customary termination rights exist for both parties for breach and insolvency. In the event of termination, all licenses automatically terminate. The term of the agreement is until the later of: (i) the expiration of the last to expire patent within the licensed intellectual property; (ii) the expiration of the royalty term; and (iii) the fifteenth anniversary of the effective date. Upon expiration, with respect to any given Molecule, the license granted to the Company shall become perpetual, irrevocable, and fully-paid up.
Other License and Collaboration Agreements
The Company is a party to other license and collaboration agreements to develop and commercialize intellectual property in addition to the agreement discussed above. In aggregate, Centessa is obligated to make up to $4.3 million and $15.0 million in development and commercial milestone payments, respectively, related to these other agreements.
Contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. Legal charges incurred in connection with contingencies and litigation are expensed as incurred.
Litigation
On September 28, 2022 (“Original Complaint”), the Company and certain of its current and former officers were named as defendants in a proposed class-action lawsuit filed in the United States District Court for the Central District of California. The complaint generally alleges that the Company violated Sections 10(b) and 20(a) and Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) by allegedly making materially false and/or misleading statements, as well as allegedly failing to disclose material adverse facts relating to the safety profile and future clinical and commercial prospects of each of its lixivaptan and ZF874 programs, which caused the Company’s securities to trade at artificially inflated prices. On October 12, 2022, by order, the lawsuit was transferred to the United States District Court for the Southern District of New York. On February 10, 2023, an amended complaint was filed (“Amended Complaint”) in which our IPO underwriters were added as co-defendants. A number of the claims set forth in the Original Complaint were abandoned including with respect to intentional fraud theory and claims pursuant to Sections 10(b) or 20(a) of the Securities Exchange Act of 1934. The only claims alleged in the Amended Complaint were violations of Sections 11 and 15 of the Securities Act based on alleged misstatements in the S-1 filed by the Company in connection with its Initial Public Offering. The Amended Complaint also abandoned any claims concerning ZF874 and focuses entirely on lixivaptan. The Amended Complaint sought unspecified damages and attorneys’ fees, among other things. On August 23, 2023, the Company submitted its motion to dismiss all claims. On August 2, 2024, Judge Gregory Wood of the United States District Court for the Southern District of New York granted in full a motion to dismiss with leave for the plaintiff to amend within twenty-one days certain statements and no leave to amend other statements and no ability to expand the scope of the claims pleaded in the Amended Complaint. On August 27, 2024, the United States District Court for the Southern District of New York dismissed the plaintiff’s complaint with prejudice and ordered the case closed.
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.