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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Leases Company as a Lessee: Operating Lease Obligations The Company currently leases office spaces and laboratory spaces located in Greater Los Angeles, California, Dallas, Texas, and the United Kingdom. The Company’s leased facilities have original lease terms ranging from 2 to 5 years that predominately require the Company to provide a security deposit, while certain leases provide the right for the Company to renew the lease upon the expiration of the initial lease term, and various leases have scheduled rent increases on an annual basis. The exercise of lease renewal options for the Company’s existing leases is at the Company’s sole discretion, and not included in the measurement of right of use asset or lease liability as they are not reasonably certain to be exercised. Certain leases have leasehold improvements and are being amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease. Such improvements incurred by the Company will revert to the landlord at the expiration of the lease and will be removed from Company’s condensed consolidated balance sheets. The Company’s lease costs consist of the following (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Operating lease cost | $ | 172 |  | $ | 351 |  | $ | 1,097 |  | $ | 1,867
Variable lease cost | 283 |  | 234 |  | 649 |  | 906
Total lease cost | $ | 455 |  | $ | 585 |  | $ | 1,746 |  | $ | 2,773
The following table summarizes cash flow information related to the Company’s lease obligations (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Cash paid for operating lease liabilities | $ | 494 |  |  | $ | 491 |  |  | $ | 1,756 |  |  | $ | 1,806 |
The following table summarizes the Company’s lease assets and liabilities (in thousands):
| September 30, 2024 |  | December 31, 2023
Operating lease right-of-use assets | $ | 1,104 |  |  | $ | 2,387 |
Current operating lease liabilities | $ | 1,761 |  |  | $ | 1,750 |
Non-current operating lease liabilities | $ | 1,411 |  |  | $ | 2,877 |
The following table summarizes other supplemental information related to the Company’s lease obligations:
| September 30, 2024 |  | December 31, 2023
Weighted-average remaining lease term (in years) | 1.93 |  | 2.60
Weighted-average discount rate | 6.75 | % |  | 6.75 | %
Future minimum lease payments under operating lease liabilities were (in thousands):
| September 30, 2024
2024 (remaining three months) | $ | 735 |
2025 | 1,591 |
2026 | 1,195 |
Total future lease payments | 3,521 |
Less: imputed interest | 349 |
Total lease liability balance | 3,172 |
Less: current portion of operating lease liabilities | 1,761 |
Total operating lease liabilities, non-current | $ | 1,411 |
During the nine months ended September 30, 2024 and 2023, the Company evaluated its remaining right-of-use assets for impairment, as the Plan (as defined below in Note 11) has resulted in a cessation of use for several locations. The Company determined these assets were impaired, and has recognized an impairment loss of $0.6 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, and $0.8 million and $7.2 million for the nine months ended September 30, 2024 and 2023 respectively, which are recorded in the line item “restructuring and impairment charges” in the condensed consolidated statements of operations and comprehensive loss. Company as Lessor: Tarzana Facility Lease with AstraZeneca On July 10, 2024, Complex Therapeutics LLC entered into a lease (the “Lease”) with AstraZeneca Pharmaceuticals LP (“Tenant”) pursuant to which Tenant is leasing the Property located in Tarzana, CA. The Lease has an initial term of approximately 15 years, beginning on July 10, 2024 (the “Commencement Date”) and ending on July 31, 2039, with Tenant having two consecutive options to extend the term for a five-year period each and a one-time option to terminate the Lease on the tenth anniversary of the Commencement Date, which, if exercised, obligates Tenant to pay Complex Therapeutics LLC a termination fee. The initial base rent is $0.6 million per month ($7.5 million annually) and the base rent will escalate by 3% per annum. Tenant is also required to pay certain operating expenses and tax expenses as additional rent. There is rent abatement during the first year of the Lease such that Tenant will pay no rent or reduced rent during this period. Tenant also has a right of first offer to purchase the premises that are subject to the Lease. The Lease is classified as an operating lease and revenue will be recognized on a straight-line basis and will be recorded within the condensed consolidated statements of operations and comprehensive loss in the line item “Other rental income” as this is not a part of the Company’s core operations rental income has been presented in other income rather than as revenue on the statement of operations and comprehensive loss. Lease income related to the operating lease was as follows (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Rental income related to fixed lease income | $ | 1,493 |  |  | $ | — |  |  | $ | 1,493 |  |  | $ | — |
Approximate future fixed contractual lease payments to be received under a non-cancelable operating lease in effect as of September 30, 2024, are as follow s (in thousands):
| September 30, 2024
2024 (remaining three months) | $ | 1,493 |
2025 | 8,957 |
2026 | 8,957 |
2027 | 8,957 |
2028 | 8,957 |
Thereafter | 94,795 |
Total | $ | 132,116 |
Legal Proceedings From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. The Company does not expect that the resolution of these matters will have a material adverse effect on its financial position, results of operations or cash flows. Debt In June 2022, the Company’s wholly owned subsidiary, Complex Therapeutics Mezzanine LLC, and the Company’s wholly owned indirect subsidiary, Complex Therapeutics LLC, entered into a mortgage construction loan and mezzanine construction loan (together, the “Loan”) secured by its Tarzana, California land and building (the “Property”). The initial principal amount of the Loan was $52.1 million, with additional future principal of up to $32.9 million to fund ongoing Property construction costs. Construction has been completed and on July 10, 2024, Complex Therapeutics LLC entered into the Lease. If the Company does not refinance or sell the Property prior to July 2025, when the Loan will be payable, the Company intends to use its option to extend the Loan until July 2026; the Company also has an another option to extend the Loan until July 2027. As of September 30, 2024, the outstanding principal amount under the Loan was $82.8 million and unamortized debt issuance costs were $0.7 million. During the year ended December 31, 2023, $0.6 million in additional principal was paid in accordance with the Loan. The Loan is guaranteed by the Company and secured by the Property, and bears interest at the one-month Secured Overnight Financing Rate, plus 5.25% per annum. The Company discontinued capitalizing interest in June 2023 as the building was substantially complete at such time. The Loan contains customary negative and affirmative covenants that include limitations on the ability of the Company to enter into significant contracts and incur additional debt. The Company is also required to maintain consolidated net worth and liquid assets of at least $85.0 million as of September 30, 2024 and December 31, 2023 as defined in the loan agreement. As of September 30, 2024, the Company was in compliance with the covenants of the Loan. The Company is also required to maintain certain insurance coverage on the Property. In connection with the Loan, the Company entered into an interest rate swap to effectively limit its maximum interest rate, as discussed in Note 4. The net carrying amount of the liability component of the Loan was as follows (in thousands):
| September 30, 2024 |  | December 31, 2023
Principal amount | $ | 82,837 |  |  | $ | 82,837 |
Unamortized debt issuance cost | (664) |  |  | (1,410) |
Net carrying amount | $ | 82,173 |  |  | $ | 81,427 |
The following table sets forth the interest expense recognized related to the Loan (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Contractual interest expense | $ | 1,758 |  |  | $ | 1,754 |  |  | $ | 5,241 |  |  | $ | 2,482 |
Amortization of debt issuance cost | 249 |  |  | 249 |  |  | 747 |  |  | 747 |
Total interest expense related to the Loan | $ | 2,007 |  |  | $ | 2,003 |  |  | $ | 5,988 |  |  | $ | 3,229 |
Other Commitments In the normal course of business, the Company enters into contracts and various purchase agreements commitments with third-party vendors for clinical research services, products and other services from third parties for operating purposes. These agreements generally provide for termination or cancellation, other than for costs already incurred. As of September 30, 2024 and December 31, 2023, the Company had no outstanding liabilities, respectively, in commitments for employee benefits as part of the Plan. As of September 30, 2024 and December 31, 2023, the Company had $2.0 million and $3.1 million, respectively, in commitments for contract terminations as part of the Plan (see Note 11). The Company has entered into an agreement with a third-party collaborator to develop the CoStAR-TIL Collaboration Product with the aim of enrolling patients in IITs in China. Milestone payments of $2.6 million were made during the nine months ended September 30, 2024 and were recorded within research and development expense in the condensed consolidated statements of operations and comprehensive loss, and upon successful completion of future milestones, the Company may be required to pay up to $3.4 million for clinical development.
Commitments and Contingencies | Commitments and Contingencies Leases Company as a Lessee: Operating Lease Obligations The Company currently leases office spaces and laboratory spaces located in Greater Los Angeles, California, Dallas, Texas, and the United Kingdom. The Company’s leased facilities have original lease terms ranging from 2 to 5 years that predominately require the Company to provide a security deposit, while certain leases provide the right for the Company to renew the lease upon the expiration of the initial lease term, and various leases have scheduled rent increases on an annual basis. The exercise of lease renewal options for the Company’s existing leases is at the Company’s sole discretion, and not included in the measurement of right of use asset or lease liability as they are not reasonably certain to be exercised. Certain leases have leasehold improvements and are being amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease. Such improvements incurred by the Company will revert to the landlord at the expiration of the lease and will be removed from Company’s condensed consolidated balance sheets. The Company’s lease costs consist of the following (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Operating lease cost | $ | 172 |  | $ | 351 |  | $ | 1,097 |  | $ | 1,867
Variable lease cost | 283 |  | 234 |  | 649 |  | 906
Total lease cost | $ | 455 |  | $ | 585 |  | $ | 1,746 |  | $ | 2,773
The following table summarizes cash flow information related to the Company’s lease obligations (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Cash paid for operating lease liabilities | $ | 494 |  |  | $ | 491 |  |  | $ | 1,756 |  |  | $ | 1,806 |
The following table summarizes the Company’s lease assets and liabilities (in thousands):
| September 30, 2024 |  | December 31, 2023
Operating lease right-of-use assets | $ | 1,104 |  |  | $ | 2,387 |
Current operating lease liabilities | $ | 1,761 |  |  | $ | 1,750 |
Non-current operating lease liabilities | $ | 1,411 |  |  | $ | 2,877 |
The following table summarizes other supplemental information related to the Company’s lease obligations:
| September 30, 2024 |  | December 31, 2023
Weighted-average remaining lease term (in years) | 1.93 |  | 2.60
Weighted-average discount rate | 6.75 | % |  | 6.75 | %
Future minimum lease payments under operating lease liabilities were (in thousands):
| September 30, 2024
2024 (remaining three months) | $ | 735 |
2025 | 1,591 |
2026 | 1,195 |
Total future lease payments | 3,521 |
Less: imputed interest | 349 |
Total lease liability balance | 3,172 |
Less: current portion of operating lease liabilities | 1,761 |
Total operating lease liabilities, non-current | $ | 1,411 |
During the nine months ended September 30, 2024 and 2023, the Company evaluated its remaining right-of-use assets for impairment, as the Plan (as defined below in Note 11) has resulted in a cessation of use for several locations. The Company determined these assets were impaired, and has recognized an impairment loss of $0.6 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, and $0.8 million and $7.2 million for the nine months ended September 30, 2024 and 2023 respectively, which are recorded in the line item “restructuring and impairment charges” in the condensed consolidated statements of operations and comprehensive loss. Company as Lessor: Tarzana Facility Lease with AstraZeneca On July 10, 2024, Complex Therapeutics LLC entered into a lease (the “Lease”) with AstraZeneca Pharmaceuticals LP (“Tenant”) pursuant to which Tenant is leasing the Property located in Tarzana, CA. The Lease has an initial term of approximately 15 years, beginning on July 10, 2024 (the “Commencement Date”) and ending on July 31, 2039, with Tenant having two consecutive options to extend the term for a five-year period each and a one-time option to terminate the Lease on the tenth anniversary of the Commencement Date, which, if exercised, obligates Tenant to pay Complex Therapeutics LLC a termination fee. The initial base rent is $0.6 million per month ($7.5 million annually) and the base rent will escalate by 3% per annum. Tenant is also required to pay certain operating expenses and tax expenses as additional rent. There is rent abatement during the first year of the Lease such that Tenant will pay no rent or reduced rent during this period. Tenant also has a right of first offer to purchase the premises that are subject to the Lease. The Lease is classified as an operating lease and revenue will be recognized on a straight-line basis and will be recorded within the condensed consolidated statements of operations and comprehensive loss in the line item “Other rental income” as this is not a part of the Company’s core operations rental income has been presented in other income rather than as revenue on the statement of operations and comprehensive loss. Lease income related to the operating lease was as follows (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Rental income related to fixed lease income | $ | 1,493 |  |  | $ | — |  |  | $ | 1,493 |  |  | $ | — |
Approximate future fixed contractual lease payments to be received under a non-cancelable operating lease in effect as of September 30, 2024, are as follow s (in thousands):
| September 30, 2024
2024 (remaining three months) | $ | 1,493 |
2025 | 8,957 |
2026 | 8,957 |
2027 | 8,957 |
2028 | 8,957 |
Thereafter | 94,795 |
Total | $ | 132,116 |
Legal Proceedings From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. The Company does not expect that the resolution of these matters will have a material adverse effect on its financial position, results of operations or cash flows. Debt In June 2022, the Company’s wholly owned subsidiary, Complex Therapeutics Mezzanine LLC, and the Company’s wholly owned indirect subsidiary, Complex Therapeutics LLC, entered into a mortgage construction loan and mezzanine construction loan (together, the “Loan”) secured by its Tarzana, California land and building (the “Property”). The initial principal amount of the Loan was $52.1 million, with additional future principal of up to $32.9 million to fund ongoing Property construction costs. Construction has been completed and on July 10, 2024, Complex Therapeutics LLC entered into the Lease. If the Company does not refinance or sell the Property prior to July 2025, when the Loan will be payable, the Company intends to use its option to extend the Loan until July 2026; the Company also has an another option to extend the Loan until July 2027. As of September 30, 2024, the outstanding principal amount under the Loan was $82.8 million and unamortized debt issuance costs were $0.7 million. During the year ended December 31, 2023, $0.6 million in additional principal was paid in accordance with the Loan. The Loan is guaranteed by the Company and secured by the Property, and bears interest at the one-month Secured Overnight Financing Rate, plus 5.25% per annum. The Company discontinued capitalizing interest in June 2023 as the building was substantially complete at such time. The Loan contains customary negative and affirmative covenants that include limitations on the ability of the Company to enter into significant contracts and incur additional debt. The Company is also required to maintain consolidated net worth and liquid assets of at least $85.0 million as of September 30, 2024 and December 31, 2023 as defined in the loan agreement. As of September 30, 2024, the Company was in compliance with the covenants of the Loan. The Company is also required to maintain certain insurance coverage on the Property. In connection with the Loan, the Company entered into an interest rate swap to effectively limit its maximum interest rate, as discussed in Note 4. The net carrying amount of the liability component of the Loan was as follows (in thousands):
| September 30, 2024 |  | December 31, 2023
Principal amount | $ | 82,837 |  |  | $ | 82,837 |
Unamortized debt issuance cost | (664) |  |  | (1,410) |
Net carrying amount | $ | 82,173 |  |  | $ | 81,427 |
The following table sets forth the interest expense recognized related to the Loan (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Contractual interest expense | $ | 1,758 |  |  | $ | 1,754 |  |  | $ | 5,241 |  |  | $ | 2,482 |
Amortization of debt issuance cost | 249 |  |  | 249 |  |  | 747 |  |  | 747 |
Total interest expense related to the Loan | $ | 2,007 |  |  | $ | 2,003 |  |  | $ | 5,988 |  |  | $ | 3,229 |
Other Commitments In the normal course of business, the Company enters into contracts and various purchase agreements commitments with third-party vendors for clinical research services, products and other services from third parties for operating purposes. These agreements generally provide for termination or cancellation, other than for costs already incurred. As of September 30, 2024 and December 31, 2023, the Company had no outstanding liabilities, respectively, in commitments for employee benefits as part of the Plan. As of September 30, 2024 and December 31, 2023, the Company had $2.0 million and $3.1 million, respectively, in commitments for contract terminations as part of the Plan (see Note 11). The Company has entered into an agreement with a third-party collaborator to develop the CoStAR-TIL Collaboration Product with the aim of enrolling patients in IITs in China. Milestone payments of $2.6 million were made during the nine months ended September 30, 2024 and were recorded within research and development expense in the condensed consolidated statements of operations and comprehensive loss, and upon successful completion of future milestones, the Company may be required to pay up to $3.4 million for clinical development.
Commitments and Contingencies | Commitments and Contingencies Leases Company as a Lessee: Operating Lease Obligations The Company currently leases office spaces and laboratory spaces located in Greater Los Angeles, California, Dallas, Texas, and the United Kingdom. The Company’s leased facilities have original lease terms ranging from 2 to 5 years that predominately require the Company to provide a security deposit, while certain leases provide the right for the Company to renew the lease upon the expiration of the initial lease term, and various leases have scheduled rent increases on an annual basis. The exercise of lease renewal options for the Company’s existing leases is at the Company’s sole discretion, and not included in the measurement of right of use asset or lease liability as they are not reasonably certain to be exercised. Certain leases have leasehold improvements and are being amortized over the shorter of the estimated useful life of the improvements or the remaining life of the lease. Such improvements incurred by the Company will revert to the landlord at the expiration of the lease and will be removed from Company’s condensed consolidated balance sheets. The Company’s lease costs consist of the following (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Operating lease cost | $ | 172 |  | $ | 351 |  | $ | 1,097 |  | $ | 1,867
Variable lease cost | 283 |  | 234 |  | 649 |  | 906
Total lease cost | $ | 455 |  | $ | 585 |  | $ | 1,746 |  | $ | 2,773
The following table summarizes cash flow information related to the Company’s lease obligations (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Cash paid for operating lease liabilities | $ | 494 |  |  | $ | 491 |  |  | $ | 1,756 |  |  | $ | 1,806 |
The following table summarizes the Company’s lease assets and liabilities (in thousands):
| September 30, 2024 |  | December 31, 2023
Operating lease right-of-use assets | $ | 1,104 |  |  | $ | 2,387 |
Current operating lease liabilities | $ | 1,761 |  |  | $ | 1,750 |
Non-current operating lease liabilities | $ | 1,411 |  |  | $ | 2,877 |
The following table summarizes other supplemental information related to the Company’s lease obligations:
| September 30, 2024 |  | December 31, 2023
Weighted-average remaining lease term (in years) | 1.93 |  | 2.60
Weighted-average discount rate | 6.75 | % |  | 6.75 | %
Future minimum lease payments under operating lease liabilities were (in thousands):
| September 30, 2024
2024 (remaining three months) | $ | 735 |
2025 | 1,591 |
2026 | 1,195 |
Total future lease payments | 3,521 |
Less: imputed interest | 349 |
Total lease liability balance | 3,172 |
Less: current portion of operating lease liabilities | 1,761 |
Total operating lease liabilities, non-current | $ | 1,411 |
During the nine months ended September 30, 2024 and 2023, the Company evaluated its remaining right-of-use assets for impairment, as the Plan (as defined below in Note 11) has resulted in a cessation of use for several locations. The Company determined these assets were impaired, and has recognized an impairment loss of $0.6 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, and $0.8 million and $7.2 million for the nine months ended September 30, 2024 and 2023 respectively, which are recorded in the line item “restructuring and impairment charges” in the condensed consolidated statements of operations and comprehensive loss. Company as Lessor: Tarzana Facility Lease with AstraZeneca On July 10, 2024, Complex Therapeutics LLC entered into a lease (the “Lease”) with AstraZeneca Pharmaceuticals LP (“Tenant”) pursuant to which Tenant is leasing the Property located in Tarzana, CA. The Lease has an initial term of approximately 15 years, beginning on July 10, 2024 (the “Commencement Date”) and ending on July 31, 2039, with Tenant having two consecutive options to extend the term for a five-year period each and a one-time option to terminate the Lease on the tenth anniversary of the Commencement Date, which, if exercised, obligates Tenant to pay Complex Therapeutics LLC a termination fee. The initial base rent is $0.6 million per month ($7.5 million annually) and the base rent will escalate by 3% per annum. Tenant is also required to pay certain operating expenses and tax expenses as additional rent. There is rent abatement during the first year of the Lease such that Tenant will pay no rent or reduced rent during this period. Tenant also has a right of first offer to purchase the premises that are subject to the Lease. The Lease is classified as an operating lease and revenue will be recognized on a straight-line basis and will be recorded within the condensed consolidated statements of operations and comprehensive loss in the line item “Other rental income” as this is not a part of the Company’s core operations rental income has been presented in other income rather than as revenue on the statement of operations and comprehensive loss. Lease income related to the operating lease was as follows (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Rental income related to fixed lease income | $ | 1,493 |  |  | $ | — |  |  | $ | 1,493 |  |  | $ | — |
Approximate future fixed contractual lease payments to be received under a non-cancelable operating lease in effect as of September 30, 2024, are as follow s (in thousands):
| September 30, 2024
2024 (remaining three months) | $ | 1,493 |
2025 | 8,957 |
2026 | 8,957 |
2027 | 8,957 |
2028 | 8,957 |
Thereafter | 94,795 |
Total | $ | 132,116 |
Legal Proceedings From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. The Company does not expect that the resolution of these matters will have a material adverse effect on its financial position, results of operations or cash flows. Debt In June 2022, the Company’s wholly owned subsidiary, Complex Therapeutics Mezzanine LLC, and the Company’s wholly owned indirect subsidiary, Complex Therapeutics LLC, entered into a mortgage construction loan and mezzanine construction loan (together, the “Loan”) secured by its Tarzana, California land and building (the “Property”). The initial principal amount of the Loan was $52.1 million, with additional future principal of up to $32.9 million to fund ongoing Property construction costs. Construction has been completed and on July 10, 2024, Complex Therapeutics LLC entered into the Lease. If the Company does not refinance or sell the Property prior to July 2025, when the Loan will be payable, the Company intends to use its option to extend the Loan until July 2026; the Company also has an another option to extend the Loan until July 2027. As of September 30, 2024, the outstanding principal amount under the Loan was $82.8 million and unamortized debt issuance costs were $0.7 million. During the year ended December 31, 2023, $0.6 million in additional principal was paid in accordance with the Loan. The Loan is guaranteed by the Company and secured by the Property, and bears interest at the one-month Secured Overnight Financing Rate, plus 5.25% per annum. The Company discontinued capitalizing interest in June 2023 as the building was substantially complete at such time. The Loan contains customary negative and affirmative covenants that include limitations on the ability of the Company to enter into significant contracts and incur additional debt. The Company is also required to maintain consolidated net worth and liquid assets of at least $85.0 million as of September 30, 2024 and December 31, 2023 as defined in the loan agreement. As of September 30, 2024, the Company was in compliance with the covenants of the Loan. The Company is also required to maintain certain insurance coverage on the Property. In connection with the Loan, the Company entered into an interest rate swap to effectively limit its maximum interest rate, as discussed in Note 4. The net carrying amount of the liability component of the Loan was as follows (in thousands):
| September 30, 2024 |  | December 31, 2023
Principal amount | $ | 82,837 |  |  | $ | 82,837 |
Unamortized debt issuance cost | (664) |  |  | (1,410) |
Net carrying amount | $ | 82,173 |  |  | $ | 81,427 |
The following table sets forth the interest expense recognized related to the Loan (in thousands):
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Contractual interest expense | $ | 1,758 |  |  | $ | 1,754 |  |  | $ | 5,241 |  |  | $ | 2,482 |
Amortization of debt issuance cost | 249 |  |  | 249 |  |  | 747 |  |  | 747 |
Total interest expense related to the Loan | $ | 2,007 |  |  | $ | 2,003 |  |  | $ | 5,988 |  |  | $ | 3,229 |
Other Commitments In the normal course of business, the Company enters into contracts and various purchase agreements commitments with third-party vendors for clinical research services, products and other services from third parties for operating purposes. These agreements generally provide for termination or cancellation, other than for costs already incurred. As of September 30, 2024 and December 31, 2023, the Company had no outstanding liabilities, respectively, in commitments for employee benefits as part of the Plan. As of September 30, 2024 and December 31, 2023, the Company had $2.0 million and $3.1 million, respectively, in commitments for contract terminations as part of the Plan (see Note 11). The Company has entered into an agreement with a third-party collaborator to develop the CoStAR-TIL Collaboration Product with the aim of enrolling patients in IITs in China. Milestone payments of $2.6 million were made during the nine months ended September 30, 2024 and were recorded within research and development expense in the condensed consolidated statements of operations and comprehensive loss, and upon successful completion of future milestones, the Company may be required to pay up to $3.4 million for clinical development.

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