16. Commitments and Contingencies

Litigation

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. In addition to the estimated loss, the recorded liability would include probable and estimable legal costs associated with the claim or potential claim. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. The Company is not currently a party to any material litigation or legal proceedings.

Lease

On April 18, 2022, the Company entered into an operating lease agreement for office space located in Lexington, Massachusetts (the "Office Lease"). On August 8, 2022, the Company commenced occupancy of the leased space. The lease ran through September 30, 2025 and the Company did not renew or continue occupancy of this premises upon lease expiration.

The Company accounts for the Office Lease under the provisions of ASC 842. The Company recorded a right-of-use asset and a corresponding operating lease liability on the Company's condensed consolidated balance sheets upon the accounting commencement date in August 2022. The lease liability was measured at the accounting commencement date utilizing a 12% discount rate. The lease expired in September 2025 and therefore the right-of-use asset and the operating lease liability had a balance of $0 at September 30,

2025. The Company recorded lease expense related to the Office Lease of $35,934 and $106,525 and other short-term payments of $6,427 and $16,291 for the three and nine months ended September 30, 2025, respectively, in selling, general and administrative expenses. The Company recorded lease expense of $35,296 and $105,887 and other short-term payments of $5,521 and $16,827 for the three and nine months ended September 30, 2024, respectively, in selling, general and administrative expenses.

The Office Lease contained escalating payments during the lease period. Upon execution of the Office Lease, the Company prepaid one month of rent, which applied to the first month's rent, and a security deposit, which is held in escrow and will be credited after the termination of the lease with a refund expected in the first half of 2026.

As of September 30, 2025, a security deposit of approximately $25,000 was included in prepaid expenses and other current assets on the Company’s condensed consolidated balance sheet related to the Office Lease.

No future minimum lease payments remained under this lease as of September 30, 2025.

Third-party clinical trial supply organization

On July 1, 2025, the Company entered into a clinical trial supply agreement in the amount of approximately $6.5 million with a clinical trial supply organization whereby the clinical trial supply organization will provide services for the Company's PAH Phase 2b clinical study, known as IMPROVE-PAH. The estimated total remaining contract costs as of September 30, 2025 were approximately $6.3 million. The estimated period of performance for the committed work with the clinical trial supply organization is through 2029.

Third-party clinical research organization

On August 8, 2025, the Company entered into an arrangement with a contract research organization (“CRO”) to support the Company's PAH Phase 2b clinical study known as IMPROVE-PAH in the amount of approximately $24.8 million, of which $2.5 million is subject to achievement of certain performance milestones by the CRO. The estimated total remaining contract costs as of September 30, 2025 were approximately $19.0 million. The estimated period of performance for the committed work with the CRO is through 2027. The Company prepaid $1.0 million to the CRO, which will be held as a retainer until the end of the study and applied against the final invoice.

The amount and timing of any such payments related to the $2.5 million performance milestones are contingent upon the vendor meeting specific contractual criteria. As of September 30, 2025, the achievement of these milestones is not considered probable, and the potential payments cannot be reasonably estimated. Accordingly, no liability has been recorded in the accompanying consolidated financial statements. The Company will continue to evaluate this arrangement each reporting period and will recognize a liability when achievement of the milestones become probable, and the amount can be reasonably estimated.