Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies

Commitments and Contingencies

9. Commitments and Contingencies

Leases

We have entered into one operating lease for real estate with a term of 78 months, including renewal terms that can extend the lease term by 60 months, which we include in the lease term when it is reasonably certain that we will exercise the option. As of June 30, 2024, our operating lease for real estate had a remaining lease term of 15 months. The right-of-use (ROU) asset is included in Other assets on our interim consolidated balance sheets as of June 30, 2024 and December 31, 2023, and represents our right to use the underlying asset for the applicable lease terms. Our obligations to make lease payments are included in both Accrued expenses and Other long-term liabilities on our interim consolidated balance sheets as of June 30, 2024 and December 31, 2023. Additionally, we entered into several operating leases for clinical site equipment which were subsequently cancelled due to the discontinuation of the RAISE II trial. Our operating leases for clinical site equipment each had a term of 18 months prior to the May 2024 terminations of each lease. The ROU assets were included in Other assets on our consolidated balance sheets as of December 31, 2023, and represented our right to use the underlying assets for the applicable lease terms. The ROU assets related to the clinical site equipment operating leases were written off and included in restructuring costs for the six months ended June 30, 2023. Our obligations to make lease payments were included in both Accrued expenses and Other long-term liabilities on our consolidated balance sheets as of December 31, 2023. All ROU assets were initially measured at cost, which comprise the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received. The ROU asset(s) are subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received.  

As of June 30, 2024 and December 31, 2023, ROU assets were $0.7 million and $1.0 million, respectively, and operating lease liabilities were $1.0 million and $1.4 million, respectively. We have entered into various short-term operating leases, primarily for clinical trial equipment, with an initial term of twelve months or less. These leases are not recorded on our balance sheets. All operating lease expense is recognized on a straight-line basis over the lease term. During the six months ended June 30, 2024 and 2023, we recognized $1.3 million and $0.3 million, respectively, in total lease costs, of which $0.8 million recognized during the six months ended June 30, 2024 were restructuring costs resulting from the RAISE II trial equipment lease terminations as noted above. During the three months ended June 30, 2024 and June 30, 2023, we recognized $1.0 million and $0.1 million, respectively, in total lease costs, of which $0.8 million recognized during the three months ended June 30, 2024 were restructuring costs resulting from the RAISE II trial equipment lease terminations as noted above. In all periods, we recognized less than $0.1 million related to short-term operating leases.

Because the rate implicit in each lease is not readily determinable, we use our incremental borrowing rate to determine the present value of the lease payments. The weighted average incremental borrowing rate used to determine the initial value of ROU assets and lease liabilities was 11.0%, derived from a corporate yield curve based on a synthetic credit rating model using a market signal analysis. We have certain contracts for real estate which may contain lease and non-lease components which we have elected to treat as a single lease component.

ROU assets for operating leases are periodically reduced by impairment losses. We use the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize.  As of June 30, 2024, we recognized $0.8 million of impairment losses for our ROU asset related to the RAISE II trial equipment leases. These costs were including in restructuring costs in our consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2024. As of December 31, 2023, we had not recognized any impairment losses for our ROU assets.

Maturities of operating lease liabilities as of June 30, 2024 were as follows (in thousands):

Remainder of 2024	$	422
2025		641
		1,063
Less: imputed interest		(74)
Total lease liabilities	$	989
Current operating lease liabilities	$	778
Non-current operating lease liabilities		211
Total lease liabilities	$	989

Contingencies

On June 5, 2024, a securities class action lawsuit captioned Bishins v. Marinus Pharmaceuticals, Inc., et. al., Case 2:24-cv-02430, was filed against us and certain of our officers in the U.S. District Court for the Eastern District of Pennsylvania. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (Exchange Act) and Rule 10b-5 promulgated thereunder on the basis of purportedly materially false and misleading statements and omissions concerning our RAISE and RAISE II clinical trials. The complaint seeks, among other things, unspecified damages, attorneys’ fees, expert fees, and other costs. Motions to appoint lead plaintiffs and lead counsel for the action were due on August 5, 2024. One purported stockholder filed a motion by the August 5 deadline. That motion is currently pending, and we intend to move to dismiss the complaint once a schedule has been set. We intend to vigorously defend against this action.

We currently are not able to estimate the possible cost to us from this action, as the pending lawsuit is currently at an early stage, and we cannot be certain how long it may take to resolve the pending lawsuit or the possible amount of any damages that we may be required to pay.