Zentalis Pharmaceuticals, Inc.ZNTL
Zentalis Pharmaceuticals, Inc. Commitments Disclosure
Commitments and Contingencies
Legal Contingencies
From time to time, we may be involved in various disputes, including lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters. Any of these claims could subject us to costly legal expenses. The Company records a liability in its consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary to make the consolidated financial statements not misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in our consolidated financial statements. While we do generally believe that we have adequate insurance to cover many different types of liabilities, our insurance carriers may deny coverage, or our policy limits may be inadequate to fully satisfy any damage awards or settlement. If this were to happen, the payment of any such awards could have a material adverse effect on our consolidated results of operations and financial position. Additionally, any such claims, whether or not successful, could damage our reputation and business. We are currently not a party to any legal proceedings that require a loss liability to be recorded.
Operating Leases
In September 2020, we entered into a lease of laboratory and office space in San Diego. This lease was partially terminated and amended during September 2021. This amendment reduced the rentable square feet. The lease commenced in December 2021 and continues through September 2032. The lease also included access to a temporary space of laboratory and office space in San Diego. This lease component commenced in November 2020 and continued through January 2022. The lease is subject to approximately 3.0% annual increases throughout the lease term. We also pay for various operating costs, including utilities and real property taxes. The agreement includes two options to extend the lease for a period of five years each. When we determined our lease term for our operating lease right-of-use assets and lease liabilities for these leases, we did not include the extension options for this lease.
As a result of certain triggering events associated with the lease of our facility in San Diego, we performed an interim impairment test by comparing the carrying value of the long-lived asset group to its estimated fair value, which was determined based on the income approach using a discounted cash flow model. Estimates and assumptions used in the model included projected cash flows and a discount rate. As a result, we recorded an impairment expense of $3.0 million within our operating expenses against our operating lease right-of-use asset associated with our San Diego lease during the year ended December 31, 2025.
In March 2021, we entered into a lease of office space at 1359 Broadway, Suites 1710 and 1800 in New York, New York. The lease commenced in December 2021 and continues through November 2032. The lease is subject to one increase in per annum rent of approximately 8.1% commencing on the anniversary of the commencement date. We received lease incentives under the agreement, including tenant allowances and free rent periods. We also pay for various operating costs, including utilities and real property taxes. The agreement contains one option to extend the lease for a period of five years. When we determined our lease term for our operating lease right-of-use assets and lease liabilities, we did not include the extension options for the lease.
On March 6, 2023, we entered into a sublease agreement pursuant to which we sublet the office space located at 1359 Broadway, Suites 1710 and 1800 in New York, New York to a subtenant. As a result of certain triggering events, we performed an interim impairment test by comparing the carrying value of the long-lived asset group to its estimated fair value, which was determined based on the income approach using a discounted cash flow model. Estimates and assumptions used in the model included projected cash flows and a discount rate. As a result, we recorded an impairment expense of $5.0 million within our operating expenses against our operating lease right-of-use asset and fixed assets associated with this New York lease during the year ended December 31, 2023. For the years ended December 31, 2025 and 2024, we recorded lease income of $1.4 million relating to this sublease, presented as other income in the statement of operations.
In December 2023, we entered into a lease office space in New York, New York. In June 2024, we entered into an agreement to terminate this lease in exchange for consideration of $0.5 million.
Rent expense recorded by the Company under the leases was approximately $6.8 million, $6.9 million and $6.9 million for the years ended December 31, 2025, 2024 and 2023 respectively. We paid approximately $6.8 million, $6.5 million and $6.4 million of lease payments, respectively, during the years ended December 31, 2025, 2024 and 2023.
The following table presents the weighted average remaining lease term and weighted average discount rates related to our operating leases as of December 31, 2025:
| Weighted average remaining lease term (in years) | 6.8 | ||||
| Weighted average discount rate | 9.0% | ||||
Approximate annual future minimum operating lease payments as of December 31, 2025 are as follows (in thousands):
| Year | Amount | |||||||
| 2026 | $ | 7,278 | ||||||
| 2027 | 7,451 | |||||||
| 2028 | 7,760 | |||||||
| 2029 | 7,930 | |||||||
| 2030 | 8,105 | |||||||
| Thereafter | 14,984 | |||||||
| Total minimum lease payments: | 53,508 | |||||||
| Less: imputed interest | 13,931 | |||||||
| Total operating lease liabilities | 39,577 | |||||||
| Less: current portion | 3,873 | |||||||
| Lease liability, net of current portion | $ | 35,704 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 26, 2026 | Showing above |
| 2024 | Mar 26, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Mar 25, 2021 | |
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.