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Commitments and Contingencies
 3 Months Ended
Dec. 31, 2024
Commitments and Contingencies [Abstract]  
COMMITMENTS AND CONTINGENCIES

7. COMMITMENTS AND CONTINGENCIES

 

Operating Lease

 

Effective July 1, 2019, Citius Pharma entered into a 76-month lease for office space in Cranford, NJ. We pay our proportionate share of real estate taxes and operating expenses in excess of the base year expenses. These costs are variable lease payments and are not included in the determination of the lease’s right-of-use asset or lease liability.

 

The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:

 

  ● As the Cranford lease does not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments based on the remaining lease term as of the adoption date.

 

  ● Since the Company elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the combined lease component.

 

  ● The expected lease terms include noncancelable lease periods.

 

The elements of lease expense are as follows: 

 

Lease cost  Three Months Ended
December 31,
2024		   Three Months Ended
December 31,
2023		 
Operating lease cost  $59,705   $59,705 
Variable lease cost   1,264    1,204 
Total lease cost  $60,969   $60,909 
           
Other information          
Weighted-average remaining lease term - operating leases   0.8 Years    1.8 Years 
Weighted-average discount rate - operating leases   8.0%   8.0%

Maturities of lease liabilities due under the Company’s non-cancellable leases are as follows: 

 

Year Ending September 30,  December 31,
2024		 
2025 (excluding the 3 months ended December 31, 2024)  $190,716 
2026   21,460 
Total lease payments   212,176 
Less: interest   (7,607)
Present value of lease liabilities  $204,569 

 

Leases  Classification  December 31,
2024		   September 30,
2024		 
Assets             
Lease asset  Operating  $191,412   $246,247 
Total lease assets     $191,412   $246,247 
              
Liabilities             
Current  Operating  $204,569   $241,547 
Non-current  Operating        21,318 
Total lease liabilities     $204,569   $262,865 

 

Interest expense on the lease liability was $4,870 and $9,275 for the three months ended December 31, 2024 and 2023, respectively.

 

Commercial Manufacturing Contracts

 

The Company has entered into an agreement with a Contract Manufacturing Organization for the manufacture and supply of drug substance. The agreement runs through calendar 2026, with an automatic renewal for a subsequent 4-year term. Under this agreement, the Company is obligated to purchase minimum annual quantities of batches at a set price per batch, subject to annual increases. Additionally, the Company is required to pay an annual service fee of $250,000. The agreement also includes provisions for potential price increases based on increases in the manufacturer’s operating expenses or industry indices, as well as significant termination fees and obligations. As of December 31, 2024, the total minimum purchase commitment under this agreement was approximately $17.3 million consisting of payments of $11.9 million and $5.4 million for 2025 and 2026 respectively.

 

As of December 31, 2024, the Company also has commercial supply agreements with two other vendors for the completion and packaging of finished drug products. Minimum purchase commitments under these two agreements amount to approximately $4.5 million consisting of purchase commitment obligations of $2.9 million in 2025 and $1.6 million in 2026.