Note 5 - Leases

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

5. Leases

The Company’s operating lease obligations primarily consist of leased office, laboratory, and manufacturing space under a non-cancelable operating lease. In addition to the minimum future lease commitments presented below, the lease requires the Company to pay property taxes, insurance, maintenance, and repair costs. The most recent amendment also provides an optional one-year extension of the lease following the end of the current term on November 30, 2025, which was not included in the assessment of the lease term as it is not reasonably certain the Company will elect to exercise this option. Rent expense is recognized using the straight-line method over the term of the lease.

The current lease was to expire on November 30, 2024. On March 6, 2024, the Company entered into an amendment to the lease which extended the lease term for a period of one year, subsequent to the original expiration. As amended, the lease will expire on November 30, 2025. Under the terms of the amendment, the Company will be obligated to pay an additional $1.3 million in base rent payments through November 2025, beginning on December 1, 2024. In total, the Company is obligated to pay approximately $7.1 million in base rent payments through November 2025, which began on December 1, 2019. The weighted average remaining lease term as of March 31, 2024 is 1.7 years.

In connection with the amendment the Company adjusted its right-of-use asset and lease liability to $2.2 million. As of the date of the amendment, the operating lease was included on the balance sheet at the present value of the future base payments discounted at a 6.5% discount rate using the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment as the lease do provide an implicit rate.

The Company’s operating lease expense, excluding variable maintenance fees and other expenses on a monthly basis, was approximately $105,000. Rent expense for the three months ended March 31, 2024 and 2023 was approximately$315,000 and $314,000, respectively. The Company’s variable expenses for the three months ended March 31, 2024 and 2023 were approximately $90,000 and $65,000, respectively. Operating right-of-use asset amortization for the three months ended March 31, 2024 and 2023 was approximately $292,000 and $280,000, respectively. Due to payments being made in excess of operating lease expense recognized, the Company recorded approximately $9,000 and $13,000 as prepaid rent included in other assets on the condensed balance sheet as of March 31, 2024 and December 31, 2023, respectively.

The following table presents the future operating lease payments and leasehold liability included on the balance sheet related to the Company’s operating lease as of March 31, 2023 (in thousands):

Year Ending December 31,
2024 (remaining nine months of the year)	$	934
2025		1,166
Total		2,100
Less: Imputed interest		(109	)
Leasehold liability as of March 31, 2024	$	1,991

The following table shows ROU assets and lease liabilities, and the associated financial statement line items, as of March 31, 2024 and December 31, 2023 (in thousands):

	Financial Statement Line	March 31,		December 31,
Lease-Related Assets and Liabilities	Items	2024		2023
Right of use assets:
Operating lease	Right of use asset	$	1,991	$	1,102
Total right of use assets		$	1,991	$	1,102
Lease liabilities:
Operating lease	Leasehold liability, current portion	$	1,156	$	1,102
	Leasehold liability, long-term portion		835		—
Total lease liabilities		$	1,991	$	1,102