NOTE 8 - LEASES

In October 2014, the Company entered into an agreement (the Office Agreement) with Fortress Biotech, Inc. (FBIO) to occupy a portion of the approximately 24,000 square feet of office space in New York City leased by FBIO. The Office Agreement requires the Company to pay its proportionate share of rent and other costs associated with the underlying lease. In connection with the Office Agreement, the Company pledged $1.3 million to secure a line of credit as a security deposit, which is recorded as restricted cash in the accompanying condensed consolidated balance sheets. The Office Agreement is being treated as a related party transaction.

In February 2026, FBIO entered into a sublease agreement with a third party for substantially all of the office space subject to the Office Agreement. Concurrently, the Company and FBIO amended the Office Agreement to reduce the Company’s share of rent and other costs for the remaining lease term. The Company evaluated the amendment and determined that it represents a lease modification under ASC 842, Leases. As a result of the modification, the Company remeasured its operating lease liability with a corresponding adjustment to the related right-of-use asset. The remeasurement resulted in a reduction of both the operating lease liability and right-of-use asset of approximately $1.1 million as of March 31, 2026.

The Company remains obligated under the Office Agreement for its proportionate share of rent and related costs through the expiration of the lease term and may be required to fund its share of any shortfall between the head lease obligations and sublease income. The modification is expected to reduce the Company’s lease expense prospectively.

In March 2026, the Company finalized an approximately five-year lease for office space in New York City (the Gansevoort Lease). The Company estimates an average annual rental obligation of approximately $0.4 million under the Gansevoort Lease. The Company took possession of this space in March 2026, with rental payments beginning in July 2026.

In October 2021, the Company finalized a five-year lease for office space in North Carolina (the NC Lease). The Company estimates an average annual rental obligation of $0.2 million under the NC Lease. The Company took possession of this space in  February 2022, with rental payments beginning in  April 2022. The Company incurred rental expense of less than $0.1 million for the three months ended March 31, 2026.

The present values of the Company’s lease liability and corresponding Right-of-Use (ROU) asset are $8.4 million and $6.5 million, respectively, as of March 31, 2026. The Company’s leases have remaining lease terms of one to six years. One lease has a renewal option to extend the lease for an additional term of five years. The following components of lease expense are included in the condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025:

As of March 31, 2026, the weighted-average remaining operating lease term was 5 years and the weighted-average discount rate for operating leases was 8.36%. Cash paid for amounts included in the measurement of operating lease liabilities during the three months ended March 31, 2026 was $0.4 million. The balance sheet classification of lease liabilities was as follows:

As of March 31, 2026, the maturities of lease liabilities were as follows: