6. COMMITMENTS AND CONTINGENCIES

Operating Lease

As of December 31, 2025, the Company leased office and laboratory facilities under operating leases, which expire at various dates through 2027. The Company had $678 thousand in letters of credit outstanding as security on certain of these leases. As part of its adoption of ASC 842, the Company recorded operating right-of-use assets and operating lease liabilities for these leases as of January 1, 2022.

The Company entered into an operating sublease agreement on January 18, 2023 (the “Sublease”) with respect to part of its existing Boston office and laboratory facilities (the “Head Lease”). The Company accounted for the Head Lease and the Sublease as separate contracts and there was no effect on the right-of-use asset or lease liability associated with the Head Lease. The Sublease ended on December 31, 2024. The Head Lease rent expense is presented separately from income related to the Sublease and both are reported as components of operating expenses on the consolidated statements of operations and comprehensive loss. The Company recorded $0 and $385 thousand of income related to the Sublease for the years ended December 31, 2025 and 2024, respectively.

Finance Leases

The Company leases research equipment and furniture under finance leases.

The following table contains a summary of the lease costs recognized under ASC 842 pertaining to the Company’s finance and operating leases (in thousands):

 

 

For the Twelve Months Ended December 31,

 

 

 

2025

 

 

2024

 

Lease Cost:

 

 

 

 

 

 

Amortization of finance ROU assets

 

$

17

 

 

$

771

 

Interest on finance lease liabilities

 

 

32

 

 

 

90

 

Operating lease cost

 

 

1,672

 

 

 

1,849

 

Variable lease cost

 

 

847

 

 

 

601

 

Total lease costs

 

 

2,568

 

 

 

3,311

 

Operating Sublease income

 

 

 

 

 

(385

)

Total lease costs, net

 

$

2,568

 

 

$

2,926

 

During the year ended December 31, 2025, the Company disposed of research equipment classified as a ROU asset under a lease agreement. The ROU asset was sold, resulting in a loss of $43 thousand, which is included in the other expense line in the consolidated statements of operations and comprehensive loss for the period.

During the year ended December 31, 2024, the Company recognized impairment charges on certain finance right-of-use assets due to streamlining operations and focusing resources on advancing the clinical development of solnerstotug. These charges amounted to $0.6 million, which are not included in the regular amortization expense shown in the table above. The amount related to the right-of-use asset impairment is recorded in the long-lived asset impairment charges line in the consolidated statements of operations and comprehensive loss.

The following table contains a summary of other information pertaining to the Company’s finance and operating leases (in thousands, except lease term and discount rate):

 

 

For the Twelve Months Ended December 31,

 

 

 

2025

 

 

2024

 

Other Operating Lease Information:

 

 

 

 

 

 

Operating cash outflows for operating leases

 

$

1,748

 

 

$

1,875

 

Operating cash inflows for operating subleases

 

$

 

 

$

(401

)

Operating cash outflows for finance leases

 

$

32

 

 

$

90

 

Financing cash outflows from finance leases

 

$

790

 

 

$

811

 

 

 

 

 

 

 

 

Weighted average remaining lease term

 

 

 

 

 

 

Operating leases

 

0.9 years

 

 

1.8 years

 

Financing leases

 

0.4 years

 

 

1.1 years

 

 

 

 

 

 

 

 

Weighted average discount rate

 

 

 

 

 

 

Operating leases

 

7.6%

 

 

7.7%

 

Financing leases

 

9.4%

 

 

8.6%

 

The following table presents the maturity of the Company’s operating and finance lease liabilities as of December 31, 2025 (in thousands):

 

 

Operating

 

 

Financing

 

2026

 

$

1,413

 

 

$

81

 

2027

 

 

59

 

 

 

 

Total future minimum lease payments

 

 

1,472

 

 

 

81

 

Less amount representing interest

 

 

43

 

 

 

1

 

Total lease liabilities

 

$

1,429

 

 

$

80

 

License Agreements

In the normal course of business, the Company enters into licensing agreements with various parties to obtain the right to make, use, and sell licensed products currently in development.

Litigation

The Company records estimated losses from loss contingencies, such as a loss arising from a litigation, when it determines that it is probable a liability has been incurred and the amount of loss can be reasonably estimated. Litigation is subject to many factors that are difficult to predict so that there can be no assurance, in the event of a material unfavorable result in one or more claims, the Company will not incur material costs.

Historical Timeline

Fiscal YearFiled
2025Mar 30, 2026Showing above
2024Mar 28, 2025
2023Feb 29, 2024
2022Mar 29, 2023
2021Mar 15, 2022

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.