Note 11 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

11. Commitments and Contingencies

Leases

The Company adopted ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"), effective January 1, 2021, using the modified retrospective transition method, in which the new standard is applied as of the date of initial adoption. The Company recognized and measured agreements executed prior to the date of initial adoption that were considered leases on January 1, 2021. No cumulative effect adjustment of initially applying the standard to the opening balance of retained earnings was made upon adoption. The Company elected the package of practical expedients permitted under the transition guidance that will retain the lease classification and initial direct costs for any leases that exist prior to adoption of the standard. In addition, the Company elected the accounting policy of not recording short-term leases with a lease term at the commencement date of 12 months or less on the consolidated balance sheet as permitted by the new standard.

The Company has evaluated its leases and determined that it has one lease that is classified as an operating lease. The classification of this lease is consistent with the Company’s determination under the previous accounting standard.

When available, the Company will use the rate implicit in the lease to discount lease payments to present value; however, the Company’s current lease does not provide an implicit rate. Therefore, the Company used its incremental borrowing rate to discount the lease payments based on the date of the lease commencement.

The Company has one operating lease for its corporate office and laboratory facility (“Facility”) that was signed in December 2020. The Company moved into the Facility in January 2021. The Facility lease has an initial term of four years and five months, beginning on January 1, 2021. The Facility lease contains scheduled rent increases over the lease term. The discount rate used for the Facility lease is 6.25%, and the remaining lease term of the Facility lease is two years and five months as of December 31, 2022.

The table below presents the undiscounted cash flows for the lease term. The undiscounted cash flows are reconciled to the operating lease liabilities recorded on the consolidated balance sheets:

	(000's)
Years ending December 31,
2023	$	1,233
2024		1,379
2025		543
Total minimum lease payments		3,155
Less: amount of lease payments representing interest		(220	)
Present value of future minimum lease payments		2,935
Less: operating lease obligations, current portion		(1,097	)
Operating lease obligations, long-term portion	$	1,838

Milestone payments

As part of the ABL Bio agreements, the Company is obligated to pay certain development milestone payments.  In the fourth quarter of 2021, the Company was notified of the completion of Phase 1b of the clinical trial for CTX-009.  As a result, the Company was obligated to pay a $6.0 million milestone payment to ABL Bio on the deliverance of the final report related to the clinical trial. There were no accrued milestone payments as of December 31, 2022. See Note 10 for this and other agreements.