Commitments and Contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Leases

The Company has a non-cancelable operating lease for certain executive, administrative, and general business office space for its headquarters in New York, New York, which began on June 5, 2020, was amended in February 2022 to add additional space, and has a term through September 2025. The Company assessed the lease amendment for the additional space and determined it should be accounted for as a separate contract.

The weighted average discount rate of the Company's operating leases under FASB Topic ASC 842, Leases ("ASC 842") is approximately 13%. As of September 30, 2024, the leases have a remaining term of 1.0 year.

Rent expense related to the Company's operating leases was approximately $0.1 million for each of the three months ended September 30, 2024 and 2023, and $0.4 million for each of the nine months ended September 30, 2024 and 2023.

The Company made cash payments related to its operating leases of approximately $0.1 million for each of the three months ended September 30, 2024 and 2023, and $0.4 million for each of the nine months ended September 30, 2024 and 2023.

Future minimum lease payments are as follows as of September 30, 2024 (in thousands):


Future minimum lease payments:
2024 (remaining)	$	135
2025	477
Total future minimum lease payments	612
Less: imputed interest	(36)
Current and non-current operating lease liabilities	$	576

Subsequent to September 30, 2024, on October 3, 2024, the Company entered into an amendment to its operating leases which provides for the extension of the expiration date from September 30, 2025 to September 30, 2026, and approximately $0.6 million in additional future minimum lease payments. The annual rent remains unchanged.

Exclusive License Agreement with GenFleet Therapeutics (Shanghai) Inc.

On March 31, 2022, the Company entered into an exclusive license agreement with GenFleet pursuant to which GenFleet granted to the Company a sublicensable royalty-bearing license under certain of its intellectual property, to develop, manufacture, and commercialize SLS009 for the treatment, diagnosis or prevention of disease in humans and animals in the SLS009 Territory.

In consideration for the exclusive license, the Company agreed to pay to GenFleet (i) an upfront and technology transfer fee of $10.0 million, all of which has been paid, (ii) development and regulatory milestone payments for up to three indications totaling up to $48.0 million in the aggregate upon the achievement of such milestones, and (iii) sales milestone payments totaling up to $92.0 million in the aggregate upon the achievement of certain net sales thresholds in a given calendar year. The Company also agreed to pay GenFleet single-digit tiered royalties based upon a percentage of annual net sales, with the royalty rate escalating based on the level of annual net sales of SLS009 in the SLS009 Territory ranging from the low to high single digits.

Legal Proceedings

From time to time, the Company may be subject to various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of its business, which may include employment matters, breach of contract disputes and stockholder litigation. Such actions and proceedings are subject to many uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time. The Company records a liability in its consolidated financial statements for costs related to claims, including future legal costs, settlements and judgments, when the Company has assessed that a loss is probable and an amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred.

On December 20, 2023, the Company commenced a binding arbitration proceeding against 3D Medicines, administered by the Hong Kong International Arbitration Centre and governed by New York State law in accordance with the dispute resolution provisions in the 3D Medicines Agreement. The arbitration proceeding involves, among other things, the trigger and payment of the relevant milestone payments due to the Company as well as 3D Medicines’ failure to use commercially reasonable best efforts to develop GPS in the 3DMed Territory, and particularly in mainland China. See Part II, Item 1. Legal Proceedings. Except for this arbitration proceeding, as of September 30, 2024, there was no pending or threatened litigation.