Evommune, Inc. Commitments Disclosure
6. Commitments and Contingencies
Leases
The Company has operating leases for office space and equipment as well as finance leases of certain lab and office equipment. The Company's lab and office equipment leases each have original lease terms of three years. Generally, the Company’s leases are non-cancellable and do not have any residual value guarantees or any restrictions or covenants imposed by leases.
In July 2025, the Company executed a sixty-three-month lease agreement to lease office space in Palo Alto, California. The lease is expected to commence in March 2026 and includes annual lease payments during each of the first three years of approximately $1.5 million, with an increase of approximately 3% each year thereafter for the remainder of the lease. The Palo Alto lease includes an option to terminate after thirty-nine months, subject to a one-time termination fee equal to six months of base rent. The Palo Alto lease also includes a renewal option for one additional five-year period and does not have any residual value guarantees or any restrictions or covenants. The Company is not reasonably certain to exercise either the early-termination or renewal option, and therefore neither option will be included in the measurement of the related right-of-use asset and lease liability upon commencement of the lease.
In August 2025, the Company executed a sixty-month lease agreement to lease office space in New York, New York. The lease commenced in October 2025 and includes annual lease payments of approximately $0.4 million. The New York lease is non-cancellable and does not include a renewal option, any residual value guarantees or any restrictions or covenants.
As of December 31, 2025, future minimum lease payments included in the measurement of lease liabilities were as follows (in thousands):
|
|
Operating lease |
|
|
Finance lease |
|
||
2026 |
|
|
361 |
|
|
|
404 |
|
2027 |
|
|
394 |
|
|
|
183 |
|
2028 |
|
|
394 |
|
|
|
4 |
|
2029 and thereafter |
|
|
721 |
|
|
|
— |
|
Total undiscounted lease payments |
|
|
1,870 |
|
|
|
591 |
|
Less: imputed interest |
|
|
(338 |
) |
|
|
(63 |
) |
Total lease liability |
|
|
1,532 |
|
|
|
528 |
|
|
|
242 |
|
|
|
347 |
|
|
Operating and finance lease liability, net of current portion |
|
$ |
1,290 |
|
|
$ |
181 |
|
The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases and finance leases (in thousands):
|
|
Year ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Operating lease: |
|
|
|
|
|
|
||
Short-term lease cost |
|
$ |
1,075 |
|
|
$ |
954 |
|
Variable lease cost |
|
|
248 |
|
|
|
285 |
|
Operating lease cost |
|
|
817 |
|
|
|
832 |
|
Total operating lease costs |
|
|
2,140 |
|
|
|
2,071 |
|
Finance lease: |
|
|
|
|
|
|
||
Amortization of right-of-use assets |
|
$ |
373 |
|
|
$ |
208 |
|
Interest on lease liabilities |
|
|
75 |
|
|
|
59 |
|
Financing obligation: |
|
|
|
|
|
|
||
Interest expense |
|
|
7 |
|
|
|
34 |
|
Total finance lease and financing obligation cost |
|
|
455 |
|
|
|
301 |
|
Total lease cost |
|
$ |
2,595 |
|
|
$ |
2,372 |
|
For the year ended December 31, 2025, cash payments were $0.8 million, $0.4 million, and $0.2 million for operating leases, finance leases and financing obligation, respectively. For the year ended December 31, 2024, cash payments were $0.8 million, $0.2 million, and $0.2 million for operating leases, finance leases and financing obligation, respectively. Interest expense is recorded within other expense in the Company’s consolidated statements of operations. The weighted average discount rate and remaining terms are as follows:
|
|
As of December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Weighted-average remaining lease term (in years) |
|
|
|
|
|
|
||
Operating leases |
|
|
4.8 |
|
|
|
0.5 |
|
Finance leases |
|
|
1.6 |
|
|
|
2.4 |
|
Financing obligation |
|
|
— |
|
|
|
0.7 |
|
Weighted-average discount rate (percent) |
|
|
|
|
|
|
||
Operating leases |
|
|
8.25 |
% |
|
|
8.00 |
% |
Finance leases |
|
|
10.32 |
% |
|
|
10.61 |
% |
Financing obligation |
|
|
— |
|
|
|
12.70 |
% |
Research and Development Agreements
The Company enters into contracts in the normal course of business with clinical research organizations, contract manufacturing organizations and other third-party vendors for clinical trials, manufacturing, testing, and other research and development activities. These contracts generally provide for termination on notice, with varying termination fees, typically up to 50%, dependent on timing of notification in advance of planned activity timelines. As of December 31, 2025 and 2024, there were no amounts accrued related to termination and cancellation charges as these are not probable.
License Agreements
The Company has entered into various license agreements (Note 5), pursuant to which the Company is required to make payments contingent upon the occurrence of specified events. The Company is required to pay development and sales milestones and royalties on sales of products developed under these agreements. Except as disclosed in Note 5, no such other milestone events occurred during 2025 and 2024.
Guarantees and Indemnifications
The Company accrues a liability for any contingent liabilities when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount.
Legal proceedings
The Company was not subject to any material legal proceedings during the years ended December 31, 2025 and 2024, and, no material legal proceedings are currently pending or threatened.
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.