As of June 30, 2026, Gyre Pharmaceuticals maintained leases for office spaces in the following locations: in Beijing, comprising approximately 2,130 square meters with a lease expiration in June 2027; in Zhengzhou, comprising approximately 180 square meters with a lease expiration in August 2026; in Shanghai, comprising approximately 224 square meters with a lease expiration in December 2026; in Nanjing, comprising approximately 70 square meters with a lease expiration in February 2027; and in Beijing, for a staff dormitory comprising approximately 249 square meters with a lease expiration in March 2028. Cullgen maintained leases for research and office facilities in Shanghai, China, comprising multiple buildings and floors with lease expirations ranging from November 2026 to February 2037. In connection with the Merger, the Company entered into an agreement for the early termination of the lease for its U.S. headquarters in San Diego, California, which termination was effective in July 2026, and relocated its U.S. headquarters to Cullgen's leased facility in San Diego, California, with a lease expiration in July 2028. The Company assessed the impact of early termination to be immaterial.

The Company also has multiple short-term leased properties used as offices and employee dormitories. The Company recorded a total of $18 thousand and $32 thousand in short-term rent expenses during the three months ended June 30, 2026 and 2025, respectively. The Company recorded a total of $35 thousand and $48 thousand in short-term rent expenses during the six months ended June 30, 2026 and 2025, respectively. The short-term rent expense amounts are recorded in operating expenses in the accompanying condensed consolidated statements of operations and comprehensive income.

As of June 30, 2026, the Company recorded an aggregate right-of-use asset of $3.3 million, and an aggregate lease liability of $3.4 million in the accompanying condensed consolidated balance sheets.

For the three months ended June 30, 2026 and 2025, the Company’s operating lease expense was $0.4 million and $0.5 million, respectively. For the six months ended June 30, 2026 and 2025, the Company's operating lease expense was $0.9 million and $0.8 million, respectively. Variable lease payments for the three and six months ended June 30, 2026 and 2025 were immaterial.

Supplemental cash flow information related to operating leases was as follows (in thousands):


	Six Months Ended June 30,
	2026		2025 (As Recast)
Cash paid for amounts included in the measurement of lease liabilities	$	584	$	718

The present value assumptions used in calculating the present value of the lease payments were as follows:


	June 30, 2026			December 31, 2025 (As Recast)
Weighted-average remaining lease term	5.1 years			5.4 years
Weighted-average discount rate		7.41	%		7.81	%

As of June 30, 2026, undiscounted future minimum payments under the Company’s operating leases were as follows (in thousands):


	Amount
Remaining in 2026	$	884
2027		1,117
2028		683
2029		222
2030		196
Thereafter		1,189
Total undiscounted lease payments		4,291
Less: imputed interest		(873	)
Total lease liabilities		3,418
Less: current portion of lease liabilities		(1,385	)
Lease liabilities, net of current portion	$	2,033

The Company is required to maintain security deposits of $0.5 million in connection with various leases, which amounts are included in other assets, noncurrent on the Company’s condensed consolidated balance sheets.

As of June 30, 2026, the Company held land use rights for two land parcels in Beijing’s Shunyi District, expiring in 2053, and in Cangzhou, Hebei Province, expiring from 2067 to 2070. These parcels, with a combined area of approximately 66,559 square meters, are utilized as manufacturing facilities. As of June 30, 2026, the aggregate carrying amount of the land use rights, net assets for these parcels was $1.5 million.