Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

Commitments and Contingencies
3 Months Ended
Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

9. Commitments and Contingencies




In the ordinary course of business, the Company enters into non-cancellable leases to purchase equipment and for its facilities, including related party leases (see Note 10 – Transactions with Related Parties). Leases are accounted for as operating leases or finance leases, in accordance with ASC 842, Leases.


Operating Leases


The Company leases office space in Miami, Florida and research and development laboratory space in Bothell, Washington under operating leases that expire on August 31, 2024 and January 31, 2029, respectively. For operating leases, the weighted average discount rate is 6.0% and the weighted average remaining lease term is 6.3 years.


The following table summarizes the Company’s maturities of operating lease liabilities, by year and in aggregate, as of March 31, 2024 (table in thousands):


2024 (excluding the three months ended March 31, 2024)   $ 233  
2025     344  
2026     355  
2027     365  
2028     376  
2029 and thereafter     513  
Total operating lease payments     2,186  
Less: present value discount     (364 )
Total operating lease liabilities   $ 1,822  


As of March 31, 2024, the total operating lease liability of $240,000 is classified as a current operating lease liability.


The operating lease liabilities summarized above do not include variable common area maintenance (the “CAM”) charges, which are contractual liabilities under the Company’s Bothell, Washington lease. CAM charges for the Bothell, Washington facility are calculated annually based on actual common expenses for the building incurred by the lessor and proportionately billed to tenants based on leased square footage. For the three months ended March 31, 2024 and 2023, approximately $55,000 and $22,000 of CAM was included in general and administrative operating expenses on the condensed consolidated statements of operations, respectively.


The minimum lease payments above include the amounts that would be paid if the Company maintains its Bothell lease for the five-year term, starting February 2024.


On September 1, 2021, the Company entered into a three-year lease extension with a limited liability company controlled by Dr. Phillip Frost, a director and a principal stockholder of the Company. On an annualized basis, straight-line rent expense is approximately $62,000, including fixed and estimable fees and taxes.


On September 21, 2023, the Company amended the lease agreement with a North Creek Tec LLC, to expand its laboratory facility in Bothell – WA, with additional 6,000 sq ft for a period of 5 years that expires on January 31, 2029, with monthly lease payments under this lease total $660,000. In addition, the Company amended the lease agreement to extend the original laboratory facility for an additional 7 years with monthly lease payments under this lease total $1,498,000. Through January 2031. The minimum lease payment combined totals approximately $380,000 annually.


For the three months ended March 31, 2024 and 2023, operating lease expense, excluding short-term leases, finance leases and CAM charges, totaled approximately $87,000 and $ 58,000, respectively, of which $16,000 and $16,000 for each period was to a related party.


Finance Leases


In April 2020, the Company entered into lease agreements to acquire lab equipment with 36 monthly payments of $2,000 payable through March 31, 2023. The final payment under the lease agreement was made in March 2023. The Company is in contact with the lessor to transfer title of the equipment to the Company.


The leased lab equipment is depreciable over five years and is presented net of accumulated depreciation on the condensed consolidated balance sheets under property and equipment. As of December 31, 2023, total right-of-use assets lab equipment exchanged for finance lease liabilities was $162,000 and accumulated depreciation for lab equipment under finance leases was $162,000. The remaining lab equipment under the finance lease terminated on March 31, 2023, and due to the leased equipment’s remaining 25 months of useful life, it was transferred to fixed assets at book value of $32,000 and continues to depreciate.



Phase 2a Clinical Trial


On August 3, 2022 the Company engaged hVIVO, a subsidiary of London-based Open Orphan plc (AIM: ORPH), a rapidly growing specialist contract research organization (“CRO”), to conduct a Phase 2a clinical trial with the Company’s novel, broad-spectrum, orally administered antiviral influenza candidate. The Company prepaid a reservation fee of $1.7 million upon execution of the agreement. As of March 31, 2024 the Company expensed $137,000 leaving a balance of $1,146,000 in prepaid and other expenses. In addition, the Company incurred additional costs of $837,000 on this agreement during the three months ending March 31, 2024.


The total estimated cost of the agreement (including the reservation fee) is approximately $6.8 million.




From time to time, the Company is a party to, or otherwise involved in, legal proceedings arising in the normal course of business. As of the date of this report, except as described below, the Company is not aware of any proceedings, threatened or pending, against it which, if determined adversely, would have a material effect on its business, results of operations, cash flows or financial position.