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Note 8 - Leases

6 Months Ended

Jun. 30, 2026

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 June 30, 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 $0.1 million for the six months ended June 30, 2026. In May 2026, the Company amended the NC Lease to extend the lease term from the original expiration date of April 30, 2027 to June 30, 2032. 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 $0.9 million as of June 30, 2026.

The present values of the Company’s lease liability and corresponding Right-of-Use (ROU) asset are $9.1 million and $7.1 million, respectively, as of June 30, 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 and six months ended June 30, 2026 and 2025:

	*Three months ended*				*Six months ended*
	*June 30,*				*June 30,*
(in thousands)	*2026*		*2025*		*2026*		*2025*
Operating lease cost	$	484	$	474	$	1,002	$	978
Net lease cost	$	484	$	474	$	1,002	$	978

As of June 30, 2026, the weighted-average remaining operating lease term was 5.4 years and the weighted-average discount rate for operating leases was 8.44%. Cash paid for amounts included in the measurement of operating lease liabilities during the six months ended June 30, 2026 was $0.8 million. The balance sheet classification of lease liabilities was as follows:

	*June 30,*		*December 31,*
(in thousands)	*2026*		*2025*
Liabilities
Lease liability current portion	$	1,913	$	1,044
Lease liability non-current		7,141		7,021
Total lease liability	$	9,054	$	8,065

As of June 30, 2026, the maturities of lease liabilities were as follows:

	*Operating*
(in thousands)	*leases*
Remainder of 2026	$	1,034
2027		1,965
2028		2,162
2029		2,200
2030		2,239
After 2031		1,705
Total lease payments		11,305
Less: interest		(2,251	)
Present value of lease liabilities(*)	$	9,054

(*)

As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date and considering the term of the lease to determine the present value of lease payments. The Company used the incremental borrowing rate of 10.25% on February 28, 2019, for operating leases that commenced prior to that date through December 31, 2021. The Company used an incremental borrowing rate of 5.65% for the NC lease. The Company used an incremental borrowing rate of 8.4% for the modified Office Agreement operating lease.