Commitments and Contingencies |
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Mar. 31, 2026 | |||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
| Commitments and Contingencies |
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 these 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 each had a balance of $0 at March 31, 2026. The Company recorded lease expense related to the Office Lease of $35,296 and other short-term payments of $5,132 for the three months ended March 31, 2025, 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 second quarter of 2026. As of March 31, 2026, 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 March 31, 2026.
Clinical and Manufacturing Agreements The Company has entered into various agreements with a contract research organization ("CRO") and contract manufacturing organizations ("CMOs") to support its ongoing Phase 3 study in PAH, known as IMPROVE-PAH, and manufacturing activities. These agreements are generally cancelable however some agreements are subject to payment of termination fees and typically include fixed and variable components based on actual services performed. As of March 31, 2026, the Company’s estimated contractual commitments under these agreements were as follows (in millions):
(1)
The total commitment of $73.7 million includes $7.5 million subject to achievement of certain performance milestones associated with IMPROVE-PAH. The amount and timing of any such payments related to the $7.5 million performance milestones are contingent upon the vendor meeting specific criteria. As of March 31, 2026, one milestone of $0.4 million had been achieved and therefore a liability was recognized, the remaining milestones are not considered probable, and the potential payments cannot be reasonably estimated. Accordingly, no liability has been recorded in the accompanying consolidated financial statements for the remaining milestones. The Company will continue to evaluate this arrangement each reporting period and will recognize a liability when achievement of the remaining milestones become probable, and the amount can be reasonably estimated.
The estimated remaining contract costs exclude the potential milestone payments. As of March 31, 2026, the Company had a remaining upfront payment balance of $1.3 million to the CRO, of which $1.0 million will be held as a retainer until the end of the study and applied against final invoicing and $0.3 million will be applied to passthrough costs as incurred.
(2)
In April 2026, the Company entered into change orders which increased the total commitment under the CMO agreements by approximately $0.6 million.
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