The Company is party to non-cancelable facility operating lease (the "Corporate Office Lease") of office space for its corporate headquarters in Carlsbad, California. The initial contractual term is for 39-months commencing on June 1, 2022 and expiring on August 31, 2025. The Company has the option to renew the Corporate Office Lease for an additional 36-month period at the prevailing market rent upon completion of the initial lease term. The Company has determined it is not likely that it will exercise this renewal option.

The Corporate Office Lease is also subject to additional variable charges for common area maintenance, insurance, taxes and other operating costs. This additional variable rent expense is not estimable at lease inception. Therefore, it is excluded from the Company’s straight-line expense calculation at lease inception and is expensed as incurred.

As of September 30, 2024, the Company recognized an operating right-of-use asset related to the Corporate Office Lease in the amount of $113,000 and an operating lease liability related to the Corporate Office Lease of $122,000, all of which is classified as current. As of September 30, 2024, the total remaining future minimum lease payments associated with the Corporate Office Lease of approximately $128,000, including imputed interest of $6,000 calculated using a discount rate of 10.75%, will be paid over the remaining lease term of approximately 0.9 years.

Maturities of the Company's operating lease liabilities as of September 30, 2024 are as follows:


Year ending December 31,
2024 (remaining)	$	34
2025		94
Total operating lease payments		128
Less: imputed interest		(6	)
Total operating lease obligations	$	122

The Company recognized operating lease expense associated with its Corporate Office Lease of approximately $32,000 in both the three months ended September 30, 2024, and September 30, 2023 and approximately $97,000 in both the nine months ended September 30, 2024 and September 30, 2023.

Consistent with past practice, in June 2024, the Company entered into an agreement to finance insurance policies that renewed in May 2024. The financing arrangement entered into in June 2024 has a stated annual interest rate of 8.42% and is payable over a 9-month period with the first payment payable on June 30, 2024. The insurance financing arrangement is secured by the associated insurance policies. As of September 30, 2024 and December 31, 2023, the aggregate remaining balance under the Company's insurance financing arrangements in place at each time was approximately $0.2 million.

In order to better utilize the Company’s resources on the implementation of its refocused business plans and corporate strategy, the Company committed to a cost-reduction plan on September 9, 2022 (the "2022 Cost-Reduction Plan") and a reduction-in-workforce on October 27, 2023 (the "2023 RIF"). The 2022 Cost-Reduction Plan consisted primarily of a 20% reduction in the Company's employee workforce to better align the Company’s resources with its business plan. The 2023 RIF consisted of a 25% reduction in the Company's employee workforce, specifically research and development employees that were no longer deemed critical for the Company’s development of PALI-2108.

The Company recognized no restructuring expenses related to either the 2022 Cost-Reduction Plan or the 2023 RIF for the three and nine months ended September 30, 2024 and September 30, 2023. Total expenses related to the 2022 Cost-Reduction Plan and the 2023 RIF through September 30, 2024 were approximately $0.4 million and $0.2 million, respectively. The Company does not expect to incur any other significant costs associated with either the 2022 Cost-Reduction Plan or the 2023 RIF.

The following table summarizes the change in the Company's accrued restructuring liabilities under both the 2022 Cost-Reduction Plan and the 2023 RIF, which consisted solely of employee compensation and benefits and is classified within accrued liabilities in the condensed consolidated balance sheets as of each period shown (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024			2023
Balance as of the beginning of period	$	—	$	—	$	131		$	180
Net accrual adjustments		—		—		(3	)		—
Cash paid		—		—		(128	)		(180	)
Balance as of the end of period	$	—	$	—	$	—		$	—

From time to time, the Company may be involved in various lawsuits, legal proceedings, or claims that arise in the ordinary course of business. Management believes there are no claims or actions pending against the Company through September 30, 2024, which will have, individually or in aggregate, a material adverse effect on its business, liquidity, financial position, or results of operations. Litigation, however, is subject to inherent uncertainties, and an adverse result in such matters may arise from time to time that may harm the Company’s business.