In the ordinary course of business, the Company enters into lease agreements with unaffiliated third parties for its facilities and office equipment. As of June 30, 2025, the Company had six active leases for adjacent office and laboratory suites in Irvine, California.

In December 2024, the Company entered into an agreement to terminate its existing facility lease agreements (the "Current Lease") and entered into a new lease agreement (the "New Lease"), both with the same landlord, to relocate its corporate headquarters to another location in Irvine, California. The Current Lease will terminate upon the earlier of the substantial completion of tenant improvements at the New Lease premises or the commencement of the Company's regular business activities at the New Lease premises, which the Company expects to begin occupying in late 2025, as discussed in more detail below.


	Amounts
2025 (remaining six months)	$	321
Thereafter	—




Total future lease payments, undiscounted	321
(Less): Imputed interest	(4)

Present value of operating lease payments	$	317
Operating lease liability, current	317
Operating lease liability, noncurrent	—
Total operating lease liability	$	317

In December 2024, the Company entered into the New Lease for 59,626 square feet of office space located in Irvine, California for a 10-year lease term. The New Lease payments are expected to commence in late 2025 following the earlier of: (i) eleven months following the New Lease execution date, or (ii) the date the Company commences its regular business activities at the premises following completion of tenant improvements. The base rent for the first year of the New Lease will be $2.5 million and is subject to annual increases of 3% thereafter. The Company is entitled to an abatement of base rent for the first five full calendar months from the beginning of the New Lease commencement date for an aggregate amount of $0.7 million. The New Lease also provides for a tenant improvement allowance, not to exceed $6.0 million, to be applied to the construction costs of the premises. The tenant improvement allowance must be used within one year of the Company commencing its regular business activities otherwise it will be forfeited with no further obligation by the landlord. As of June 30, 2025, no rent payments were made and the landlord had not provided any of the tenant improvement allowance.

Upon New Lease execution, the Company provided the landlord a letter of credit for $2.6 million to serve as a security deposit. Provided that no defaults occur and the Company meets certain financial milestones for certain time periods, the security deposit can subsequently be reduced to $2.0 million.

In January 2019, the Company executed a license agreement with Elanco Tiergesundheit AG (“Elanco”) for exclusive worldwide rights to certain intellectual property for the development and commercialization of lotilaner in the treatment or cure of any eye or skin disease or condition in humans, as amended in June 2022 (the "Eye and Derm Elanco Agreement"). The Company has sole financial responsibility for related development, regulatory, and commercialization activities.

The Company made cash payments to Elanco under the Eye and Derm Elanco Agreement comprised of $1.0 million upfront upon contract execution in January 2019 and a total of $4.0 million for three specified clinical milestone achievements in September 2020, April 2021, and March 2023, which were all recorded in research and development expense in the Condensed Statements of Operations and Comprehensive Loss.

In August 2023, a milestone of $4.0 million was achieved and paid to Elanco upon the first commercial sale of XDEMVY in the U.S. and in September 2024, a $5.0 million sales-based milestone obligation to Elanco was triggered for the achievement of reaching $100.0 million in net product sales of XDEMVY. These respective milestone payments were recorded to intangible assets, net in the accompanying Condensed Balance Sheets as of June 30, 2025 and December 31, 2024.

The Company is obligated to make further cash payments to Elanco of $2.0 million under the Eye and Derm Elanco Agreement upon achievement of the last clinical milestone in the treatment of human skin diseases using lotilaner and a maximum of $70.0 million for various commercial and sales threshold milestones for the treatment of human skin diseases and the treatment of blepharitis in humans using lotilaner.

In May 2025, Elanco sold and assigned its rights to receive certain future tiered royalties and commercial milestones under the Eye and Derm Elanco Agreement to an affiliate of Blackstone Private Credit Fund ("Blackstone"). Certain future payments under the Eye and Derm Elanco Agreement will be directed to Blackstone, with no modification to the Company’s obligations or the terms of the underlying agreement. The Company and Elanco amended the Eye and Derm Elanco Agreement to make certain conforming changes.

In addition, the Company is obligated to pay tiered contractual royalties in the mid to high single digits of its product sales, net. If the Company receives certain types of payments from its sublicensees, it will be obligated to pay a variable percentage in the low to mid double-digits of such proceeds, until achievement of the first applicable regulatory approval of a product covered under the license, which occurred in July 2023 with the FDA approval of XDEMVY. The Company's accrued royalties payable are recorded to cost of sales in the accompanying Condensed Statement of Operations and Comprehensive Loss for the three and six months ended June 30, 2025 and 2024, and accounts payable and other accrued liabilities in the accompanying Condensed Balance Sheets as of June 30, 2025 and December 31, 2024. Royalty expense for the three months ended June 30, 2025 and 2024, was $5.1 million and $2.1 million, respectively, and for the six months ended June 30, 2025 and 2024 was $9.0 million and $3.3 million, respectively.

In September 2020, the Company executed a license agreement with Elanco granting it a worldwide license to certain intellectual property for the development and commercialization of lotilaner for the treatment, palliation, prevention, or cure of all other diseases and conditions in humans (i.e., beyond that of the eye or skin), as amended in June 2022 (the "All Human Uses Elanco Agreement").

The Company made cash payments under the All Human Uses Elanco Agreement of $0.5 million related to a clinical milestone that was triggered in December 2022 upon enrollment of the first patient in the Phase 2a Carpo trial, for the potential treatment of Lyme disease. The Company is required to make further cash payments under this agreement upon the achievement of various clinical milestones up to an aggregate maximum of $4.0 million and various commercial and sales threshold milestones for an aggregate maximum of $77.0 million. In addition, the Company will be obligated to pay contractual royalties in the single digits of its product sales, net. If the Company receives certain types of payments from its sublicensees, it will also be obligated to pay a variable percentage in the low to mid double-digits of such proceeds, until achievement of the first applicable regulatory approval of a product covered under the license.

In October 2024, the Company executed a new in-license agreement from a third party for the exclusive worldwide rights to develop, manufacture, and commercialize a compound for all ophthalmic uses (the "In-License Agreement"). The Company made an upfront payment of $2.5 million upon contract execution in October 2024, which was recorded to research and development expense in the Statements of Operations for the year ended December 31, 2024. As of June 30, 2025, the Company is obligated to make potential future cash payments under the In-License Agreement of $3.0 million upon the achievement of an event-based development milestone and up to $102.0 million for various commercial and sales threshold milestones. Future annual worldwide net sales of products developed from the compound, developed, manufactured, and commercialized via the In-License Agreement, will also be subject to incremental royalty rates in the range of mid-to-high single digits.

The Company has entered into employment agreements, including severance and change in control agreements, with seven of its executive officers. These agreements provide for the payment of certain benefits upon separation of employment under specified circumstances, such as termination without cause, or termination in connection with a change in control event.

From time to time, the Company may be subject to various litigation and related matters arising in the ordinary course of business. The Company is currently not aware of any such matters where there is at least a reasonable probability that a material loss, if any, has been or will be incurred for financial statement recognition.

The Company has certain indemnity commitments, under which it may be required to make payments to its officers and directors in relation to certain transactions to the maximum extent permitted under applicable laws. The duration of these indemnities varies, and in certain cases, are indefinite and do not provide for any limitation of maximum payments. The Company has not been obligated to make any such payments to date and no liabilities have been recorded for this contingency in the accompanying Condensed Balance Sheets.