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Commitments and Contingencies | 6 Months Ended
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Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Note 8. Commitments and Contingencies Operating Leases The Company leases office space under various operating leases. Total rent expense for all operating leases in the accompanying condensed consolidated statements of operations and comprehensive loss was $0.1 million for each of the three months ended June 30, 2024 and 2023 and $0.2 million for each of the six months ended June 30, 2024 and 2023. On April 19, 2024, the Company entered into a 38-month operating lease for 5,817 square feet of office space in Irvine, California, that expires on June 30, 2027 (the “Lease Agreement”). On April 19, 2024, in conjunction with the Lease Agreement, the Company terminated an existing operating lease for 5,197 square feet of office space in Irvine, California, that was set to expire on December 31, 2024. On April 19, 2024, the effective date of the Lease Agreement, the Company recognized additional net ROU assets and lease liabilities in the amount of $0.5 million. On November 4, 2021, the Company entered into an operating lease for 6,138 square feet of office space in Burlington, Massachusetts, that expires on November 20, 2024. The Company determines if a contract contains a lease at inception. Our office leases have a remaining term of approximately 3 years and do not include options to extend the leases for additional periods. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities as adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases. As we have no outstanding debt nor committed credit facilities, secured or otherwise, we estimate this rate based on prevailing financial market conditions, comparable company and credit analysis, and management’s judgment. Our leases contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. While we do not currently have any lease agreement with lease and non-lease components, we elected to account for lease and non-lease components as separate components. We have elected the short-term lease recognition exemption for all applicable classes of underlying assets. Short-term disclosures include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the condensed consolidated balance sheet. The components of lease expense were as follows (in thousands):
|  | For the Six Months Ended June 30, |
|  | 2024 |  |  | 2023 |
Operating lease cost(a) |  | $ | 203 |  |  | $ | 199 |
(a) Includes variable operating lease expenses, which are immaterial |
Other information related to leases was as follows (in thousands, except lease term and discount rate):
|  | For the Six Months Ended June 30, |
|  | 2024 |  |  | 2023 |
Supplemental Cash Flows Information |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |
Operating cash flows from operating leases |  | $ | 114 |  |  | $ | 181 |
Weighted-average remaining lease term |  |  |  |  |  |
Operating leases |  | 1.67 years |  |  | 1.45 years |
Discount rate |  |  |  |  |  |
Operating leases |  |  | 2.12 | % |  |  | 2.49 | %
All noncancelable operating leases have remaining terms of less than one year. Future payments for these noncancelable operating leases for the remainder of the current fiscal year are as follows (in thousands):
|  | June 30, |
|  | 2024 |
2024 (remainder of) |  | $ | 185 |
2025 |  |  | 191 |
2026 |  |  | 197 |
2027 |  |  | 100 |
Total minimum lease payments |  |  | 673 |
Less imputed interest |  |  | (18 | )
Present value of lease liabilities |  |  | 655 |
Less current portion of operating lease liabilities |  |  | (269 | )
Non-current operating lease liabilities |  | $ | 386 |
Grants and Licenses ALS Therapy Development Foundation, Inc. License Agreement In May 2015, Anelixis executed a License Agreement (the “Agreement”), which is an exclusive patent rights agreement with ALS Therapy Development Foundation, Inc. (“ALS TDI”) for certain patents and “know-how” of ALS TDI. This Agreement continues until the licensee terminates the agreement with ninety days written notice. The Agreement requires license fees payable to ALS TDI, subject to the achievement of certain milestones and other conditions. The first and second milestones of the Agreement are the dosing of the first subjects in a first toxicity study in non-human primates and the dosing of the first patient in a Phase I Clinical Trial, respectively. Both of these milestones were achieved as of December 31, 2018 and 2017. The fee due for the achievement of these milestones was $1.0 million each. During 2018 and 2017, Anelixis issued $1.0 million worth of its common stock in lieu of making a cash payment. There were no milestones achieved during the six months ended June 30, 2024 or 2023. The Agreement was amended and restated in February 2020, and a first amendment to the restated license agreement was executed in September 2020. As amended in September 2020, the remaining milestone payments for a first licensed product total $6.0 million. In the event that the Company develops a second licensed product, the Company is obligated to pay up to $2.5 million in additional milestone payments. In addition to the milestone payments, the Company is required to pay ALS TDI an amended annual license maintenance fee of $0.1 million beginning on the earlier of January 1, 2022, the Company’s first sublicense, or change in control, as defined in the Agreement. The Company has made a $0.1 million annual license maintenance fee each year since 2022. Furthermore, the Company is required to pay ALS TDI fees based on reaching certain levels of annual net sales of any product produced with the patent rights. A royalty in the low single digits will be due on aggregate net sales. Upon the first calendar year of reaching $500.0 million in aggregate net sales, the Company will be required to pay ALS TDI a one-time milestone payment of $15.0 million. Upon the first calendar year of reaching $1.0 billion in aggregate net sales, the Company is obligated to pay ALS TDI a one-time milestone payment of $30.0 million. Lonza Sales AG Inc. License Agreement In September 2018, Anelixis executed a License Agreement (the “Lonza Agreement”), which is a manufacturing know-how rights agreement with Lonza Sales AG Inc. (“Lonza”) for the use of certain processes and know-how related to the manufacture of tegoprubart. The Lonza Agreement continues until the later of the last Valid Claim (as defined therein) or ten years from the First Commercial Sale of tegoprubart, as defined and subject to the conditions therein. A royalty in the low single digits will be due on aggregate net sales of tegoprubart that is manufactured by Lonza or any other third-party or licensee. eGenesis, Inc. Collaboration Agreement In September 2022, and subsequently amended in January 2023, Eledon executed a non-exclusive collaborative research agreement with eGenesis, Inc. (the “eGenesis Agreement”), under which eGenesis will gain access to tegoprubart for eGenesis’ ongoing preclinical research and development xenotransplant studies of human-compatible organs and cells for the treatment of organ failure. eGenesis will pay Eledon for supplies of tegoprubart based on the number of study days per animal needed for the eGenesis preclinical xenotransplant studies. The eGenesis agreement continues until September 2025, unless terminated earlier by either party. Legal Matters The Company and its subsidiaries are not a party to or the subject of any claim or lawsuit that individually or in the aggregate is anticipated to have a material effect on the Company’s results of operations, financial condition or cash flows. Indemnifications In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves future claims that may be made against the Company but have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future because of these indemnification obligations. No amounts associated with such indemnifications have been recorded to date. Contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. Management is not aware of any contingent liabilities requiring accrual at June 30, 2024.

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