Guarantees and Indemnifications — In the ordinary course of its business, the Company makes certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. The Company, as permitted under Delaware law and in accordance with its Bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that may enable it to recover a portion of any future amounts paid. The Company believes the fair value of these indemnification agreements is minimal. The Company has not recorded any liability for these indemnities in the condensed consolidated balance sheets. However, the Company accrues for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable and the amount can be reasonably estimated. No such losses have been recorded to date.

Litigation — The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. As of March 31, 2022, the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company and no accrual has been recorded. The Company maintains liability insurance coverage to protect the Company’s assets from losses arising out of or involving activities associated with ongoing and

normal business operations. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company’s policy is to accrue for legal expenses in connection with legal proceedings and claims as they are incurred.

Contingencies — In July 2013, the Company entered into the Milestone Rights Agreement with the Original Milestone Purchasers, pursuant to which the Company granted the Milestone Rights to receive payments up to $90.0 million upon the occurrence of specified strategic and sales milestones, $65.0 million of which remains payable to the Milestone Purchasers upon achievement of such milestones (see Note 7 – Borrowings). The fair value of the Milestone Rights is recorded in the condensed consolidated balance sheet, including $1.1 million in accrued expenses and other current liabilities and $4.8 million in milestone rights liability.

Sale-Leaseback Transaction— On November 8, 2021, the Company sold the Property to the Purchaser for a sales price of $102.3 million, subject to terms and the conditions contained in a purchase and sale agreement.

Effective with the closing of the Sale-Leaseback Transaction, the Company and the Purchaser entered into a lease agreement (the “Lease”), pursuant to which the Company leased the Property from the Purchaser for an initial term of 20 years, with four renewal options of five years each. The total annual rent under the Lease starts at approximately $9.5 million per year, subject to a 50% rent abatement during the first year of the Lease, and will increase annually by (i) 2.5% in the second through fifth year of the Lease and (ii) 3% in the sixth and each subsequent year of the Lease, including any renewal term. The Company is responsible for payment of operating expenses, property taxes and insurance for the Property. The Purchaser will hold a security deposit of $2.0 million during the Lease term. Pursuant to the terms of the Lease, the Company has four options to repurchase the Property, in 2026, 2031, 2036 and 2041, for the greater of (i) $102.3 million and (ii) the fair market value of the Property.

Effective with the closing of the Sale-Leaseback Transaction, the Company and the Purchaser also entered into a right of first refusal agreement (the “ROFR”), pursuant to which the Company has a right to re-purchase the Property from the Purchaser in accordance with terms and conditions set forth in the ROFR. Specifically, if the Purchaser receives, and is willing to accept, a bona fide purchase offer for the Property from a third-party purchaser, the Company has certain rights of first refusal to purchase the Property on the same material terms as proposed in such bona fide purchase offer.

As of March 31, 2022, the related financing liability was $102.9 million, which was recognized in our condensed consolidated balance sheet as $93.5 million of financing liability — long-term and $9.4 million of financing liability — short-term. As of December 31, 2021, the related financing liability was $100.5 million, which was recognized in our condensed consolidated balance sheet as $93.5 million of financing liability — long-term and $7.0 million of financing liability — short-term.

	March 31, 2022			December 31, 2021
Weighted average remaining lease term (in years)	19.6				19.8
Weighted average discount rate		9.0	%		9.0	%

Three Months Ended

March 31,

2022

2021

Interest expense on financing liability

2,371

—

Financing liability payments as of March 31, 2022 was as follows (in thousands):

	March 31, 2022			December 31, 2021
2022⁽¹⁾	$	6,373		$	6,373
2023		9,778			9,778
2024		10,023			10,023
2025		10,274			10,274
2026		10,539			10,539
Thereafter		199,091			199,091
Total		246,078			246,078
Interest expense		(140,165	)		(142,485	)
Debt issuance costs		(3,040	)		(3,091	)
Total financing liability	$	102,873		$	100,502

Commitments — In July 2014, the Company entered into the Insulin Supply Agreement with Amphastar pursuant to which Amphastar manufactures for and supplies to the Company certain quantities of recombinant human insulin for use in Afrezza. Under the terms of the Insulin Supply Agreement, Amphastar is responsible for manufacturing the insulin in accordance with the Company’s specifications and agreed-upon quality standards.

In May 2021, the Company and Amphastar France Pharmaceuticals S.A.S. (“Amphastar”) amended the Insulin Supply Agreement to extend the term and restructure the annual purchase commitments. In connection with the amendment, the Company agreed to pay $2.0 million of amendment fees, which were recognized in cost of goods sold for the year ended December 31, 2021. The remaining purchase commitments as of March 31, 2022 and March 31, 2021 (pre-amendment) were as follows:

	March 31, 2022			March 31, 2021
2021	€		—	€	7.0 million
2022	€	4.1 million		€	8.5 million
2023	€	8.8 million		€	10.9 million
2024	€	14.6 million		€	14.6 million
2025	€	15.5 million		€	15.5 million
2026	€	19.4 million		€	19.4 million
2027	€	9.2 million		€		—

Pursuant to the amendment, the term of the Insulin Supply Agreement expires on December 31, 2027, unless terminated earlier, and can be renewed for additional, successive two-year terms upon 12 months’ written notice given prior to the end of the initial term or any additional two-year term. The Company and Amphastar each have normal and customary termination rights, including termination for a material breach that is not cured within a specific time frame or in the event of liquidation, bankruptcy or insolvency of the other party. In addition, the Company may terminate the Insulin Supply Agreement upon two years’ prior written notice to Amphastar without cause or upon 30 days’ prior written notice to Amphastar if a controlling regulatory authority withdraws approval for Afrezza, provided, however, in the event of a termination pursuant to either of the latter two scenarios, the provisions of the Insulin Supply Agreement require the Company to pay the full amount of all unpaid purchase commitments due over the initial term within 60 calendar days of the effective date of such termination.

Vehicle Leases – During the second quarter of 2018, the Company entered into a master lease agreement with Enterprise Fleet Management Inc. During 2021, 85 vehicles were retired and replaced, resulting in a fleet size of 89 vehicles. The Company received proceeds for the gain on the retired vehicles residual value in the amount of $0.5 million, which is included as a reduction to our lease expense. The revised monthly payment inclusive of maintenance fees, insurance and taxes is approximately $0.1 million and the additional right of use asset and lease obligation is approximately $1.4 million in the condensed consolidated balance sheets. The lease expense is included in selling, general and administrative expenses in the condensed consolidated statements of operations.

Office Leases — In May 2017, the Company executed an office lease with Russell Ranch Road II LLC for the Company’s corporate offices in Westlake Village, California. The office lease commenced in August 2017. The Company agreed to pay initial monthly lease payments of $40,951, subject to 3% annual increases, plus the estimated cost of maintaining the property and common areas by the landlord, with a five-month concession from October 2017 through February 2018. The lease also provides for allowances for tenant alterations and maintenance. The lease expense is included in selling, general and administrative expenses in the condensed consolidated statements of operations.

In November 2017, the Company executed an office lease with Russell Ranch Road II LLC to expand the office space for the Company’s corporate offices in Westlake Village, California. The office lease commenced in October 2018. The Company agreed to pay initial monthly lease payments of $35,969, subject to a 3% annual increase, plus the estimated operating cost of maintaining the property by the landlord, which are allocable based an annual assessment made by the landlord. In addition, the Company received reimbursement from the landlord of $56,325 for tenant improvements and was not required to pay a first-year common area maintenance fee.

Subsequent to March 31, 2022, the Company renewed its office lease with Russell Ranch Road II LLC. Pursuant to the renewal, the Company will pay initial monthly payments of $79,543, subject to 3% annual increases, plus the estimated cost of maintaining the property and common areas by the landlord. The Company will receive a fourteen-month concession from the lease commencement period of February 2023 through March 2024. The lease provides the Company with a 66 month renewal option.

	Three Months Ended March 31,
	2022		2021
Operating lease costs	$	288	$	350
Variable lease costs		86		111
Cash paid		442		461

	March 31, 2022			December 31, 2021
Weighted average remaining lease term (in years)		2.4			2.6
Weighted average discount rate		7.3	%		7.3	%

Future minimum office and vehicle lease payments as of March 31, 2022 and December 31, 2021, are as follows (in thousands):

	March 31, 2022		December 31, 2021
2022	$	1,060	$	1,444
2023		463		497
2024		375		409
2025		313		311
Total	$	2,211	$	2,661