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Commitments and Contingencies | 3 Months Ended
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Mar. 31, 2022
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies |
7. | Commitments and Contingencies
Leases At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company calculates the associated lease liability and corresponding right-of-use asset upon lease commencement using a discount rate based on the rate implicit in the lease or an incremental borrowing rate commensurate with the term of the lease. Lease renewable options are included in the estimation of lease term when it is reasonably certain that the Company will exercise such options. The Company records lease liabilities within current liabilities or long-term liabilities based upon the length of time associated with the lease payments. The Company records its operating lease right-of-use assets as long-term assets. Right-of-use assets for finance leases are recorded within property and equipment, net in the condensed balance sheets. Leases with an initial term of 12 months or less are not recorded on the condensed balance sheets. Instead, the Company recognizes lease expense for these leases on a straight-line basis over the lease term in the condensed statements of operations. The Company leases laboratory, office and storage facilities in San Antonio, Texas, under operating lease agreements that expire in 2025. The Company also leases certain office space in Austin, Texas under a month-to-month operating lease agreement. On March 1, 2021, the Company entered into a lease agreement for office space in Charlottesville, Virginia (the “Charlottesville Lease”). The Charlottesville Lease has a term of 12 months and is renewable for four additional one-year periods. The minimum lease payment is $30,000 for the first twelve months, subject to a 3% annual increase if and when the lease is renewed. The lease commencement date is April 1, 2021 and currently expires on March 31, 2023. The Company measured the operating lease right-of-use asset and related lease liability related to the Charlottesville Lease as of the lease commencement date. In addition, the Company has entered into leases for certain equipment under various operating and finance leases. During 2021, contractual terms of all finance leases had expired and the Company did not have any right-of-use assets or lease liabilities relating to finance leases as of March 31, 2022. The Company’s existing operating lease agreements generally provide for periodic rent increases, and renewal and termination options. The Company’s lease agreements do not contain any material variable lease payments, residual value guarantees or material restrictive covenants. Certain leases require the Company to pay taxes, insurance, and maintenance. Payments for the transfer of goods or services such as common area maintenance and utilities represent non-lease components. The Company elected the package of practical expedients and therefore does not separate non-lease components from lease components. The Company’s operating lease liabilities and corresponding right-of-use assets are included in the condensed balance sheets. As of March 31, 2022, weighted average discount rate used to measure operating lease liabilities and the operating leases remaining term were 9.0% and 2.82%, respectively. The table below summarizes the Company’s lease costs from its unaudited condensed statement of operations, and cash payments from its unaudited condensed statement of cash flows during the three months ended March 31, 2022 and 2021 (in thousands):
|  | Three Months Ended March 31, |
|  |  | 2022 |  |  | 2021 |
Lease expense: |  |  |  |  |  |  |
Operating lease expense |  | $ | 45 |  | $ | 50 |
Finance lease expense: |  |  |  |  |  |  |
Depreciation of right-of-use assets |  | — |  | 4 |
Total lease expense |  | $ | 45 |  | $ | 54 |
Cash payment information: |  |  |  |  |  |  |
Operating cash used for operating leases |  | $ | 45 |  | $ | 49 |
Financing cash used for finance leases |  | $ | — |  | $ | 6 |
Total cash paid for amounts included in the measurement of lease liabilities |  | $ | 45 |  | $ | 55 |
Total rent expenses for the three months ended March 31, 2022 and 2021 were $60,000 and $50,000, respectively, which includes leases in the table above, month-to-month operating leases, and common area maintenance charges. The Company’s future minimum annual lease payments under operating leases at March 31, 2022 are as follows (in thousands):
|  | Operating Leases |
Remainder of 2022 |  | $ | 114 |
2023 |  | 137 |
2024 |  | 113 |
2025 |  | 18 |
Thereafter |  |  | — |
Total minimum lease payments |  | $ | 382 |
Less: amount representing interest |  |  | (37 | )
Present value of obligations under leases |  |  | 345 |
Less: current portion |  |  | (110 | )
Noncurrent lease obligations |  | $ | 235 |
Services Agreement and Statement of Work with Medidata On March 31, 2022, the Company and Medidata Solutions, Inc. (“Medidata”) entered into a Statement of Work (the “SOW”), pursuant to which Medidata will build a Sythetic Control Arm® (SCA) platform that facilitates the use of historical clinical data to incorporate into the Company’s Phase 2 clinical trial of Rhenium-186 NanoLiposome (186RNL) in recurrent glioblastoma (“GBM”). The SOW is governed under the terms of a services agreement (the “Services Agreement”), dated November 5, 2021. The SOW has a term of six (6) months. The Company will pay Medidata $1.45 million in managed services fees and a contingent managed services fee of $150,000 if the U.S. Food & Drug Administration approves a path forward for the Company to use the SCA in its clinical trial of 186RNL for treatment of GBM. The SOW may only be terminated for a material breach by either party or if the clinical study’s authorization or approval is withdrawn by a regulatory agency. Piramal Master Services Agreement On January 8, 2021, the Company entered into a Master Services Agreement (the “MSA”) with Piramal Pharma Solutions, Inc. (“Piramal”), for Piramal to perform certain services related to the development, manufacture, and supply of the Company’s RNL-Liposome Intermediate Drug Product. The MSA includes the transfer of analytical methods, development of microbiological methods, process transfer and optimization, intermediate drug product manufacturing, and stability studies for the Company, which has been initiated at Piramal’s facility located in Lexington, Kentucky. The MSA has a term of five years and will automatically renew for successive one-year terms unless either party notifies the other no later than six months prior to the original term or any additional terms of its intention to not renew the MSA. The Company has the right to terminate the MSA for convenience upon thirty days’ prior written notice. Either party may terminate the MSA upon an uncured material breach by the other party or upon the bankruptcy or insolvency of the other party. Other commitments and contingencies The Company has entered into agreements with various research organizations for pre-clinical and clinical development studies, which have provisions for cancellation. Under the terms of these agreements, the vendors provide a variety of services including conducting research, recruiting and enrolling patients, monitoring studies and data analysis. Payments under these agreements typically include fees for services and reimbursement of expenses. The timing of payments due under these agreements is estimated based on current study progress. As of March 31, 2022, the Company did not have any clinical research study obligations. Legal proceedings On June 22, 2021, the Company was named as a defendant in an action brought by Lorem Vascular, Pte. Ltd. (“Lorem”) in the District Court for the District of Delaware. The complaint alleges false representations were made to Lorem regarding the manufacturing facility in the United Kingdom (the “UK Facility”) that Lorem purchased from the Company under the Asset and Equity Purchase Agreement, dated March 29, 2019, between the Company and Lorem (the “Lorem Agreement”). Lorem also claims that false representations were made regarding the UK Facility’s certification to sell and distribute devices in the European Union and export such devices to China. In connection with these allegations, Lorem claims entitlement to at least $6,000,000 in compensatory damages and operational costs and expenses (collectively, the “Lorem Claim”). The Company believes that the Lorem Claim is without merit and is vigorously defending the case. No liability was accrued as of March 31, 2022. The Company is subject to various claims and contingencies related to legal proceedings. Due to their nature, such legal proceedings involve inherent uncertainties including, but not limited to, court rulings, negotiations between affected parties and governmental actions. Management assesses the probability of loss for such contingencies and accrues a liability and/or discloses the relevant circumstances, as appropriate.

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