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Commitments and Contingencies
 6 Months Ended
Mar. 31, 2025
Commitments and Contingencies [Abstract]  
COMMITMENTS AND CONTINGENCIES

8. COMMITMENTS AND CONTINGENCIES

 

Operating Lease

 

Effective July 1, 2019, Citius Pharma entered into a 76-month lease for office space in Cranford, NJ. On February 28, 2025, we extended the lease until February 28, 2030. A right-of-use asset of $786,697 was recognized as a non-cash asset addition on the lease amendment date. 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.

 

  ● 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  Six Months Ended
March 31,
2025		   Six Months Ended
March 31,
2024		 
Operating lease cost  $119,412   $119,411 
Variable lease cost   8,631    2,468 
Total lease cost  $128,043   $121,879 
           
Other information          
Weighted-average remaining lease term - operating leases   4.9 Years    1.6 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,  March 31,
2025		 
2025 (excluding the 6 months ended March 31, 2025)  $106,493 
2026   192,740 
2027   232,827 
2028   237,686 
2029   242,545 
2030   102,849 
Total lease payments   1,115,140 
Less: interest   (183,345)
Present value of lease liabilities  $931,795 
Leases  Classification  March 31,
2025		   September 30,
2024		 
Assets           
Lease asset  Operating  $922,099   $246,247 
Total lease assets     $922,099   $246,247 
              
Liabilities             
Current  Operating  $145,098   $241,547 
Non-current  Operating   786,697     21,318 
Total lease liabilities     $931,795   $262,865 

 

Interest expense on the lease liability was $8,567 and $17,490 for the six months ended March 31, 2025 and 2024, 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 four-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 March 31, 2025, 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 calendar years 2025 and 2026, respectively.

 

As of March 31, 2025, 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 calendar year 2025 and $1.6 million in 2026.