NOTE 8 – LEASES

The Company leases space under operating leases for administrative, manufacturing and laboratory facilities in Cleveland, Ohio. The Company also leases office space in New York, New York, that the Company sublets. The Company also leases certain office equipment under operating leases, which have a non-cancelable lease term of less than one year and the Company has elected the practical expedient to exclude these short-term leases from the Company’s right-of-use assets and lease liabilities.

During 2024, the Company signed a lease for 16,566 square feet of office space at 6700 Euclid Avenue, Cleveland, Ohio. Pursuant to the lease agreement, the lease term commences on January 1, 2025 with an initial term through December 30, 2030. Annual lease payments during the term of the lease are approximately $0.3 million. The total lease payments over the duration of the lease term are approximately $1.5 million. The additional space at the 6700 Euclid Avenue facility will allow the Company to convert office space at the 6555 Carnegie Avenue facility into additional manufacturing space to increase pz-cel manufacturing capacity. As the lease does not commence and the Company does not have access to the leased space until January 1, 2025, the impact of this lease agreement is not reflected in the consolidated financial statements of the Company as of December 31, 2024.

During 2023, the Company terminated one of its operating leases for office space. The termination resulted in a gain of $1.1 million representing the difference between the carry value of the right-of-use assets and the related lease liabilities. This gain was recorded in the year ended December 31, 2023, and is included in gain on operating lease right-of-use assets in the consolidated statement of operations and comprehensive loss.

During 2023, the Company modified one of its operating leases for office space to add up to 14,032 square feet to the Company’s existing facility in Cleveland, Ohio. The lease modification resulted in the recognition of $0.4 million of additional right-of-use assets and related lease liabilities in the Company’s consolidated balance sheet during the year ended December 31, 2023.

During 2022 and 2023, the Company entered into two sublease agreements with unrelated third parties to occupy the Company’s administrative offices in New York, New York. The Company expects to receive $0.5 million in future sublease income through September 2025 from the two subleases noted above.

The following table provides a summary of the Company’s operating lease liabilities (in thousands):

SUMMARY OF OPERATING LEASE LIABILITIES 

Lease costs and rent are reflected in general and administrative expenses and research and development expenses in the consolidated statements of operations and comprehensive loss, as determined by the underlying activities.

The following table provides a summary of the components of lease costs and rent (in thousands):

SCHEDULE OF COMPONENTS OF LEASE COST 

Cash paid for amounts included in the measurement of operating lease liabilities was $1.3 million and $1.2 million for the years ended December 31, 2024 and 2023, respectively.

Future minimum lease payments and obligations, which do not include short-term leases, related to the Company’s operating lease liabilities as of December 31, 2024 were as follows (in thousands):

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES 

The weighted-average remaining term of the Company’s operating leases was 60 months and the weighted-average discount rate used to measure the present value of the Company’s operating lease liabilities was 7.0% as of December 31, 2024.

The Company received $0.6 million and $0.5 million during the years ended December 31, 2024 and 2023, respectively, of sublease income which is recorded in other income on the consolidated statements of operations and comprehensive loss. Future cash receipts from the Company’s sublease agreements as of December 31, 2024 are as follows (in thousands):

 SCHEDULE OF FUTURE CASH RECEIPTS FROM OPERATING SUBLEASE