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 March 31, 2024, the Company recognized an operating right-of-use asset related to the Corporate Office Lease in the amount of $170,000 and a current and noncurrent operating lease liability related to the Corporate Office Lease of $125,000 and $58,000, respectively. As of March 31, 2024, the total remaining future minimum lease payments associated with the Corporate Office Lease of approximately $196,000, including imputed interest of $13,000 calculated using a discount rate of 10.75%, will be paid over the remaining lease term of approximately 1.4 years.

Maturities of the Company's operating lease liabilities as of March 31, 2024 are as follows:


Year ending December 31,
2024 (remaining)	$	137
2025		59
Total operating lease payments		196
Less: imputed interest		(13	)
Total operating lease obligations	$	183

The Company recognized operating lease expense associated with its Corporate Office Lease and its predecessor corporate headquarters lease of approximately $32,000 in both the three months ended March 31, 2024 and March 31, 2023, respectively.

Consistent with past practice, in June 2023, the Company entered into an agreement to finance an insurance policy that renewed in May 2023. The financing arrangement entered into in June 2023 has a stated annual interest rate of 7.92% and is payable over a 9-month period with the first payment commencing June 30, 2023. The insurance financing arrangement is secured by the associated insurance policy. As of March 31, 2024 and December 31, 2023, the aggregate remaining balance under the Company's insurance financing arrangements in place at each time was zero and $0.2 million, respectively.

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 months ended March 31, 2024 and March 31, 2023. Total expenses related to the 2022 Cost-Reduction Plan and the 2023 RIF through March 31, 2023 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 March 31,
	2024			2023
Balance as of the beginning of year	$	131		$	180
Cash paid		(96	)		(175	)
Balance as of the end of period	$	35		$	5

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 March 31, 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.

In accordance with the Company’s certificate of incorporation, as amended, amended and restated bylaws, and indemnification agreements, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving in such capacity. There have been no claims to date, and the Company has a directors and officers liability insurance policy that may enable it to recover a portion of any amounts paid for future claims.