The Company is party to a 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 December 31, 2024, the Company recognized an operating right-of-use asset related to the Corporate Office Lease in the amount of $84,000, which included in Operating lease right-of-use asset in the consolidated balance sheets, and an operating lease liability of $90,000, all of which is included in Current portion of operating lease liability in the consolidated balance sheets. As of December 31, 2024, the total remaining future minimum lease payments associated with the Corporate Office Lease of approximately $93,000, including imputed interest of $3,000 calculated using a discount rate of 10.75%, will be paid over the remaining lease term of approximately 0.7 years. Other than the remaining maturities of the operating lease liability due in 2025 related to Corporate Office Lease, as of December 31, 2024 the Company has no maturities of operating lease liabilities in 2025 or thereafter.

The Company recognized operating lease expense associated with its Corporate Office Lease of approximately $130,000 for each of the years ended December 31, 2024 and December 31, 2023, respectively.

In June 2024, the Company entered an agreement to finance insurance policies that renewed in May 2024. The financing arrangement entered 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 policy. As of December 31, 2024 and December 31, 2023, the aggregate remaining balance under the Company's insurance financing arrangement was approximately $0.1 million and $0.2 million, respectively, and is included in Insurance financing debt in the consolidated balance sheets.

Other than the remaining insurance financing arrangement payments due in 2025, as of December 31, 2024 the Company has no other minimum debt payments required in 2025 or thereafter.

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 proposed 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 its lead drug candidate, PALI-2108.

The Company recognized no restructuring expenses related to either the 2022 Cost-Reduction Plan or the 2023 RIF for the year ended December 31, 2024. For the year ended December 31, 2023, the Company recognized restructuring costs of approximately $0.2 million associated with the 2023 RIF, consisting of severance and benefits payments pursuant to employment agreements and the execution of severance and release agreements. Total expenses related to the 2022 Cost-Reduction Plan and the 2023 RIF through December 31, 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 consolidated balance sheets as of each year shown (in thousands):


	Year Ended December 31,
	2024			2023
Balance as of the beginning of year	$	131		$	180
Net accrual adjustments		(3	)		225
Cash paid		(128	)		(274	)
Balance as of the end of year	$	—		$	131

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 December 31, 2024, which will have, individually or in the 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.