Legal Proceedings, Commitments and Contingencies
Legal Proceedings
From time to time, the Company is subject to various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of its business, which may include employment matters, breach of contract disputes and stockholder litigation. Such actions and proceedings are subject to many uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time. The Company records a liability in its consolidated financial statements for costs related to claims, including future legal costs, settlements and judgments, when the Company has assessed that a loss is probable and an amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred.
On December 20, 2023, the Company commenced a binding arbitration proceeding against 3D Medicines, administered by the Hong Kong International Arbitration Centre and governed by New York State law in accordance with the dispute resolution provisions in the 3D Medicines Agreement. The arbitration proceeding involves, among other things, the trigger and payment of the relevant milestone payments due to the Company as well as 3D Medicines’ failure to use commercially reasonable best efforts to develop GPS in the 3DMed Territory, and particularly in mainland China. See Item 3. Legal Proceedings. Except for this arbitration proceeding, as of December 31, 2024, there was no other pending or threatened litigation.
Leases
The Company has a non-cancelable operating lease for certain executive, administrative, and general business office space for its headquarters in New York, New York, which commenced on June 5, 2020, was amended in February 2022 to add additional space, and had an initial lease term through December 30, 2024. The Company assessed the lease amendment for the additional space and determined it should be accounted for as a separate contract.
On October 3, 2024, the Company agreed to extend the expiration date for its office space by one year through September 30, 2026. The Company assessed the amendment for the lease extension and determined it
should be accounted for as a modification of the existing operating leases. Accordingly, on the effective modification date, the Company recognized an increase to its operating lease liabilities and corresponding operating lease right-of-use assets of approximately $0.5 million for the remeasurement at present value of the remaining lease payments using a discount rate of 13.0%.
The weighted average discount rate used to account for the Company's operating lease under ASC 842, Leases, as of December 31, 2024 and 2023 was approximately 13.0%. As of December 31, 2024 and 2023, the leases had a remaining term of 1.75 years.
Rent expense related to the Company's operating lease was approximately $0.6 million and $0.5 million for the years ended December 31, 2024 and 2023, respectively. The Company made cash payments related to operating leases of approximately $0.5 million during each of the years ended December 31, 2024 and 2023.
Future minimum rental payments under the Company's non-cancelable operating lease are as follows as of December 31, 2024 (in thousands):
| | | | | | | | |
| Total minimum lease payments: | | |
| 2025 | | $ | 635 | |
| 2026 | | 477 | |
| Total future minimum lease payments | | 1,112 | |
| Less: imputed interest | | (111) | |
| Operating lease liabilities | | $ | 1,001 | |