Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Operating Leases

The Company leases certain office space, laboratory facilities, and equipment. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include renewal options at the election of the Company to renew or extend the lease. These optional periods have not been considered in the determination of the ROU assets or lease liabilities associated with these leases as the Company did not consider it reasonably certain it would exercise the options. The Company performed evaluations of its contracts and determined it has operating leases.

The following table summarizes the Company’s recognition of its operating leases (in thousands):


Balance Sheet Classification	September 30, 2022
Other assets	$	2,717

Accrued expenses and other current liabilities	$	679
Non-current operating lease liabilities	4,386
Total liabilities	$	5,065

The following table summarizes the weighted-average remaining lease term and discount rates for the Company’s operating leases:


	September 30, 2022
Lease term (years)	5.7
Discount rate	8.64	%

The Company incurred rent expense for its operating leases of $0.2 million during each of the three months ended September 30, 2022 and 2021, and $0.6 million and $0.5 million during the nine months ended September 30, 2022 and 2021, respectively, included within operating expenses in the statements of operations and comprehensive loss. Cash paid for amounts included in the measurement of operating lease liabilities for the nine months ended September 30, 2022 was $0.7 million and was included in net cash used in operating activities in the statement of cash flows.

The maturities of the Company’s operating lease liabilities as of September 30, 2022 were as follows (in thousands):


2022 (excluding the nine months ended September 30, 2022)	$	267
2023	1,089
2024	1,120
2025	1,152
2026	1,093
Thereafter	1,722
Total lease payments	$	6,443
Less:
Imputed interest	(1,378)
Total	$	5,065

As of December 31, 2021, future annual minimum lease payments, as defined under the previous lease accounting guidance of ASC 840, due under non-cancelable operating leases at December 31 of each year are as follows (in thousands):


2022	$	986
2023	1,089
2024	1,120
2025	1,152
2026	1,093
Thereafter	1,722
Total minimum lease payments	$	7,162

Heat License Agreement

In connection with a license agreement with Heat Biologics Inc. (“Heat”), the Company is required to make payments of up to $20.6 million in aggregate for the achievement of specified development, regulatory and

commercial sales milestones for certain licensed products. The Company is required to pay Heat a percentage of upfront fees or other non-royalty payments not tied to milestone events that it receives in connection with certain sublicenses of the licensed patents. The Company is also required to pay Heat a royalty on all of its worldwide net sales, those of its affiliates, and sublicenses of certain licensed patents in the low single digits. The Company has not recorded a liability for the aforementioned payments given the achievement of specified development, regulatory and commercial sales milestones for certain licensed products is not probable as of the balance sheet date.

Litigation

From time to time, the Company may become involved in various legal actions arising in the ordinary course of business. On January 31, 2022 and February 11, 2022, putative class action lawsuits were filed in the U.S. District Court for the Eastern District of New York against us and certain of the Company’s officers and directors. The cases were consolidated on June 2, 2022, and the plaintiffs filed an amended complaint on July 1, 2022. The amended complaint cites the volatility in the Company’s common stock and alleges that the defendants made or are responsible for misleading omissions regarding the Company’s clinical trial results and the Collaboration Agreement. The parties and defendants reached a settlement in principle of the plaintiffs’ claims in the amount of $1.4 million on November 2, 2022 that is subject to a definitive settlement agreement, notice to stockholders and court approval. The Company has accrued the settlement amount in accrued expenses and other current liabilities as of September 30, 2022.

Contractual Obligations

Contractual obligations represent future cash commitments and liabilities under agreements with third parties, and exclude contingent liabilities for which the Company cannot reasonably predict future payment. The Company’s contractual obligations result primarily from obligations for various CMOs and CROs, which include potential payments that may be required under its agreements. The contracts also contain variable costs and milestones that are hard to predict, as they are based on such things as patients enrolled and clinical trial sites. The timing of payments and actual amounts paid under CMO and CRO agreements may be different depending on the timing of receipt of goods or services or changes to agreed-upon terms or amounts for some obligations. Such agreements are cancellable upon written notice by the Company and, therefore, are not long-term liabilities.