11. Commitments and Contingencies

Contractual Obligations

The Company has contracted with various consultants and third parties to assist in pre-clinical research and development and clinical trials work for the Company’s leading drug compounds. The contracts are terminable at any time but obligate the Company to reimburse the providers for any time or costs incurred through the date of termination.

Funding Commitments

The Company contracts in the normal course of business with contract development and manufacturing organizations (“CDMOs”) and other third parties for preclinical research studies and testing and manufacturing services, which are generally cancelable upon prior written notice. Payments due upon cancellation may consist of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation, and may also include termination penalties.

Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business. The Company records accruals for such loss contingencies when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. The Company, in accordance with this guidance, does not recognize gain contingencies until realized. The Company is not a party to any material legal proceedings, nor is it aware of any material pending or threatened litigation, and does not have contingency reserves established for any litigation liabilities as of September 30, 2026.

Leases

The Company’s only leases are for office space and are classified as operating leases on the condensed balance sheets.

In May 2024, the Company entered into a lease agreement for office space in New York, New York totaling approximately 8,900 square feet that continues through March 2032. In November 2025, the Company entered into an amendment to the lease agreement providing for approximately 4,600 square feet of additional office space through March 2032. The Company determined the amendment for additional space should be accounted for as a separate lease and recognized a right-of-use asset of $1.4 million and corresponding lease liability of $1.8 million during the second quarter of 2026 in connection with lease commencement.

The Company's real estate lease agreements include variable payments that are passed through by the landlord, such as insurance, taxes, and common area maintenance, and payments based on the usage of the asset. Pass-through charges and payments due to changes in usage of the asset are included within variable rent expenses and are not material. The Company’s lease agreements do not contain material residual value guarantees, restrictions, or covenants. Operating leases are recognized over the lease term and included in general and administrative expenses in the accompanying condensed statements of operations. Variable lease expenses are recognized in general and administrative expenses in the accompanying condensed statements of operations as incurred.

Royalty Agreements

Pursuant to Amended and Restated Royalty Participation Agreements entered into in August 2023, for which no consideration was received, the Company is obligated to pay certain investors, co-founders, and current and former directors and executive officers royalties on worldwide net sales of LB-102 in perpetuity, whether such sales are made by the Company or a licensee. As of September 30, 2026 and December 31, 2025, current and former directors and executive officers and their affiliates held 1.13% of these royalty interests. No royalties have been paid or accrued for any period presented, no amounts were due to any holder at either date, and no liability has been recorded because LB-102 is not approved and has no net sales. The amount of any future payments cannot be estimated as it depends on future net sales.