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COMMITMENTS AND CONTINGENCIES | 6 Months Ended
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Jun. 30, 2023
COMMITMENTS AND CONTINGENCIES. |
COMMITMENTS AND CONTINGENCIES | NOTE 5 COMMITMENTS AND CONTINGENCIES License Agreements On November 20, 2020, the Company exclusively licensed intellectual property from The Ohio State Innovation Foundation (OSIF) pursuant to a license agreement. Under the license agreement, the Company is obligated to make payments to OSIF aggregating up to $1.3 million per product covered by the OSIF licensed patent rights upon the achievement of specified development and regulatory approval milestones and approximately $2.3 million per product covered by the OSIF licensed patent rights upon the achievement of specified sales milestones. The Company is also obligated to pay low single-digit royalties to OSIF based on net sales by the Company and its affiliates and sublicensees of each product covered by the OSIF licensed patent rights. In addition, in the event the Company sublicenses the OSIF licensed patent rights, the Company is obligated to pay OSIF a specified portion of income received from sublicensing. Total costs incurred for license fees and milestones achieved under the OSIF license agreement were $6,250 and $12,500 for the three and six months ended June 30, 2023, respectively and $6,250 and $12,500 for the three and six months ended June 30, 2022, respectively. As of June 30, 2023, the Company has paid $0.7 million for license fees and milestones achieved in connection with the license agreement. On July 27, 2023, the Company provided notice to OSIF to terminate the license agreement because the licensed technology is no longer relevant to the Company’s business, effective as of 90 days from the date of such notice. Lease Agreements In January 2022, the Company entered into a lease agreement for approximately 18,614 square feet of office and laboratory space in Boulder, Colorado (the New Boulder Lease) with aggregate base rent payments of approximately $3.3 million over the initial 8.2-year term of the lease. Further, the Company provided a standby letter of credit (LOC) of $0.8 million during the term of the lease as collateral for the Company’s obligations under the lease. Provided there has been no event of default by the Company during the initial 36-month term, the Company will replace the initial LOC with a replacement LOC in the amount of $0.5 million. The New Boulder Lease includes two tenant improvement allowances, which includes one for $1.0 million in construction costs to be fully reimbursed by the lessor (the First Allowance) and one for $2.0 million in construction costs to be repaid to the lessor as additional rent payments over the initial term of the lease (the Second Allowance). Both the First Allowance and Second Allowance have been received in full as of June 30, 2023. The receipt of $2.0 million under the Second Allowance resulted in an increase to operating lease liabilities and an increase to aggregate base rent payments totaling $2.5 million. In February 2023, the New Boulder Lease was modified to occupy an additional 9,624 square feet of office space (the Expansion Space) with aggregate payments of approximately $1.5 million over the initial 7.3 year term of the lease. The Expansion space includes an improvement allowance in the amount of $0.5 million to be fully reimbursed by the lessor. As of June 30, 2023, $0 was received by the lessor under the allowance associated with the expansion space. Under the New Boulder Lease and the Expansion Space (collectively, the Lease), the Company has the option to extend the Lease for two additional terms of five years each. The Company is obligated to pay the lessor an amount not to exceed 5% of the net rents from the property for operating costs. Such amounts are not included in the measurement of the lease liabilities and are recognized as variable lease expense when they are incurred. Variable lease expense was $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively and $0 for both the three and six months ended June 30, 2022. The Lease is classified as an operating lease. The Company recorded lease liabilities and ROU lease assets for the Lease based on the present value of lease payments over the expected lease term, discounted using the Company’s incremental borrowing rate. The option to extend the Lease was not recognized as part of the Company’s lease liabilities and ROU lease assets, as such extensions are not reasonably certain to occur. As of June 30, 2023, the weighted-average remaining lease term and the weighted-average discount rate for the Lease was 6.8 years and 6.4%, respectively. Rent expense under the Lease was $0.1 million and $0.3 million for the three and six months ended June 30, 2023, respectively and $0.1 million and $0.2 million for the three and six months ended June 30, 2022, respectively. ​ ​ Future minimum lease payments under the Lease as of June 30, 2023 are as follows (in thousands):
​ | ​ | ​
Year Ending December 31, | ​ | ​
2023, remainder | $ | 400
2024 | ​ | 1,014
2025 |  | 1,031
2026 | ​ | 1,048
2027 | ​ | 1,066
Thereafter | ​ | 2,466
Total undiscounted future minimum lease payments | ​ | 7,025
Less: discount | ​ | (1,383)
Total lease liability | $ | 5,642
​ Litigation Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the six months ended June 30, 2023 and no material legal proceedings are currently pending or threatened. Indemnification Agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations in its financial statements as of June 30, 2023.

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