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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-02 · 156 added, 121 removed, 135 unchanged (67% of the section changed)

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Company Overview

We are a late-stage biopharmaceutical company pursuing therapies with the potential to extend and enrich the lives of patients living with hematologic malignancies.

Our investigational first-in-class telomerase inhibitor, imetelstat, harnesses Nobel Prize winning science in a treatment that may alter the underlying course of these diseases.

Our lead indication for imetelstat is in low or intermediate-1 risk myelodysplastic syndromes, or lower-risk MDS.

In August 2023, our New Drug Application, or NDA, for the treatment of transfusion-dependent anemia in adult patients with low-to-intermediate-1 risk MDS who have failed to respond or have lost response to or are ineligible for erythropoiesis-stimulating agents, or ESAs, was accepted by the United States, or U.S., Food and Drug Administration, or FDA, for review and assigned a Prescription Drug User Fee Act, or PDUFA, action date of June 16, 2024.

In addition, the FDA held an advisory committee meeting as part of the NDA review on March 14, 2024 which voted 12 to 2 that the benefits of imetelstat outweigh its risks in this proposed indication.

For more information, see “—Recent Developments” below.

If imetelstat is approved for commercialization by the FDA, we anticipate commercial launch of imetelstat in transfusion-dependent lower-risk MDS in the U.S.

could occur at the time of approval.

In September 2023, we submitted a marketing authorization application, or MAA, in Europe that was validated for review by the European Medicines Agency, or EMA, for imetelstat for the same proposed indication as in the U.S.

We expect a review of the MAA could be completed in early 2025, and subject to MAA review completion on that timing and ultimate approval of the MAA by the European Commission, we believe EU commercial launch of imetelstat would occur in 2025.

Our NDA and EMA submissions are based on positive data from the IMerge Phase 3 clinical trial.

We are a commercial-stage biopharmaceutical company aiming to change lives by changing the course of blood cancer.

Our first-in-class telomerase inhibitor, RYTELO TM (imetelstat), harnesses Nobel Prize winning science in a treatment that aims to potentially reduce proliferation and induce death of malignant cells in the bone marrow, potentially altering the underlying course of these hematologic malignancies.

On June 6, 2024, the U.S.

Food and Drug Administration (FDA) approved RYTELO for the treatment of adult patients with low- to intermediate-1 risk myelodysplastic syndromes, or lower-risk MDS, with transfusion-dependent, or TD, anemia requiring four or more red blood cell units over eight weeks who have not responded to or have lost response to or are ineligible for erythropoiesis-stimulating agents, or ESAs.

In September 2023, we submitted a marketing authorization application, or MAA, in Europe that was validated for review by the European Medicines Agency, or EMA, for RYTELO for the same proposed indication as in the U.S.

We expect review of the MAA could be completed in early 2025, We plan to finalize our strategy for European Union, or EU, commercialization in 2025, which, subject to regulatory approval, could include self-commercialization or potential partnerships.

Our regulatory approval in the U.S.

for lower-risk MDS and our EMA submission are each based on positive data from the IMerge Phase 3 clinical trial.

The trial met its primary endpoint of ≥ 8-week red blood cell transfusion independence rate and a key secondary endpoint of ≥ 24-week red blood cell transfusion independence rate, demonstrating highly statistically significant (i.e., p<0.001 for both) and clinically meaningful benefits with imetelstat treatment versus placebo.

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and patients classified as Low or Intermediate-1 risk according to the International Prognostic Scoring System, or IPSS.

Consistent with prior imetelstat clinical experience, the most common Grade 3-4 adverse events were thrombocytopenia (62%) and neutropenia (68%) that were generally manageable and of short duration.

The most common Grade 3/4 adverse reactions were neutropenia (72%) and thrombocytopenia (65%), which lasted a median duration of less than two weeks, and in more than 80% of patients were resolved to Grade <2 in under four weeks..

In addition to lower-risk MDS, we are developing imetelstat for the treatment of several myeloid hematologic malignancies.

Our Phase 3 clinical trial IMpactMF evaluates imetelstat in patients with Intermediate-2 or High-Risk myelofibrosis who have relapsed after or are refractory to treatment with a janus associate kinase inhibitor, or JAK inhibitor, or relapsed/refractory MF, or R/R MF, with overall survival, or OS, as the primary endpoint.

In November 2023, the trial reached 50% enrollment.

Our Phase 3 clinical trial IMpactMF is evaluating imetelstat in patients with Intermediate-2 or High-Risk myelofibrosis who have relapsed after or are refractory to treatment with a janus associate kinase inhibitor, or JAK inhibitor, or relapsed/refractory MF, or R/R MF, with overall survival, or OS, as the primary endpoint.

In August 2024, the trial reached approximately 70% enrollment.

Based on our current planning assumptions for enrollment and event (death) rates in the trial, we expect the interim analysis for OS in IMpactMF may occur in early 2026, and the final analysis may occur in early 2027.

We are also conducting a Phase 1 combination therapy clinical trial, named IMproveMF, in first-line Intermediate-1, Intermediate-2 or High-Risk myelofibrosis, or frontline MF, that currently is enrolling patients.

Imetelstat is also being studied in

an investigator-led Phase 2 clinical trial, named IMpress, in Intermediate-2 or High-Risk myelodysplastic syndromes, or higher risk MDS, and acute myeloid leukemia, or AML, patients that are relapsed or refractory to hypomethylating agent, or HMA, treatment, in which the first patient was dosed in June 2023.

Imetelstat is also being studied in an investigator-led Phase 2 clinical trial, named IMpress, in Intermediate-2 or High-Risk myelodysplastic syndromes, or higher risk MDS, and acute myeloid leukemia, or AML, patients that are relapsed or refractory to hypomethylating agent, or HMA, treatment, in which the first patient was dosed in June 2023.

We believe that the positive data from IMerge Phase 3 and IMerge Phase 2, as well as our prior Phase 2 clinical trial of imetelstat in patients with relapsed/refractory MF, provide strong evidence that imetelstat targets telomerase to inhibit the uncontrolled proliferation of malignant stem and progenitor cells enabling recovery of bone marrow and normal blood cell production.

Recent Developments

On March 14, 2024, the FDA convened its Oncologic Drugs Advisory Committee, or ODAC, to discuss our NDA for imetelstat for the treatment of transfusion-dependent anemia in adult patients with IPSS low-to intermediate-1 risk MDS who have failed to respond or have lost response to or are ineligible for ESAs.

The ODAC discussed the efficacy of imetelstat in this proposed indication, based on the results of our IMerge Phase 3 clinical trial, considering the safety profile, and voted 12 to 2 that the benefits of imetelstat outweigh its risks in this proposed indication.

The FDA is not bound by the views or recommendations of its advisory committees, including the ODAC.

Accordingly, notwithstanding the ODAC discussion and vote, the FDA may delay the approval of or ultimately determine not to approve our NDA for imetelstat for a variety of reasons, including due to their perception, evaluation, inspection or analysis of imetelstat’s product quality, clinical data and outcomes, nonclinical data, safety risks, our or our third party vendors’ compliance, or other considerations that are or may be important to the FDA’s review of our NDA.

For example, the FDA raised questions at the ODAC about the hazard ratio for the overall survival, or OS, data from our IMerge Phase 3 trial, and while we believe that the data to date adequately demonstrate that there is no survival detriment for these patients, the FDA could continue to raise questions and/or seek additional information about the OS data as part of its ongoing review that could influence its review.

Moreover, while we have received comments from the FDA on our draft indication statement, or label, the FDA has not yet completed its review of the clinical, non-clinical and chemistry, manufacturing and controls, or CMC, portions of our NDA or scheduled any inspections of our contract manufacturers.

Accordingly, while the PDUFA target action date for our NDA is June 16, 2024, there can be no assurance as to the timing or outcome of FDA’s ultimate decision on our NDA.

The FDA may deny approval of the NDA altogether, or may require additional testing or data before our NDA may be approved.

In addition, the FDA may approve our NDA but limit imetelstat’s use to certain patients or under specified conditions resulting in a narrower or more restrictive label than we expect, or could require costly post-approval commitments or requirements.

Any such action by the FDA could severely and adversely affect our business and business prospects, including the potential commercialization of imetelstat, and might have a material adverse effect on our operations.

On July 26, 2024, we announced that the National Comprehensive Cancer Network, or NCCN, has updated its Clinical Practice Guidelines in Oncology for the treatment of MDS to include RYTELO as a Category 1 and 2A treatment of symptomatic anemia in patients with lower-risk MDS.

Treatments are classified as Category 1 and 2A when there is uniform NCCN consensus ≥85% that the intervention is appropriate.

For RS- lower-risk MDS patients with symptomatic anemia, RYTELO is included as a Category 1 second-line treatment after either erythropoiesis-stimulating agents (ESAs) or luspatercept in patients with serum EPO ≤500 mU/mL, and as a Category 2A first-line treatment in patients with serum EPO >500 mU/mL and unlikely to respond to immunosuppressive therapy.

For RS+ lower-risk MDS patients with symptomatic anemia, RYTELO is included as a Category 1 second-line treatment after luspatercept in patients with serum EPO ≤500 mU/mL, and as a Category 2A first-line treatment in patients with serum EPO >500 mU/mL.

Financial Overview

Since our inception, we have primarily financed our operations through the sale of equity securities, draw downs on our debt facility, interest income on our marketable securities and payments we received under our prior collaborative and licensing arrangements.

As of March 31, 2024, we had approximately $465.0 million in cash, cash equivalents, restricted cash and marketable securities and a long-term principal debt balance of $80.0 million.

Substantially all of our revenues to date have been payments under prior collaboration agreements, and milestones, royalties and other revenues from our licensing arrangements.

We currently have no source of product revenue.

While we reported a small profit for the year ended December 31, 2015 due to our recognition of revenue in connection with the upfront payment under a former imetelstat collaboration agreement, until 2015 we had never been profitable, and we have not reported any profit since.

As of June 30, 2024, we had approximately $430.4 million in cash, cash equivalents, restricted cash and marketable securities and a long-term principal debt balance of $80.0 million.

We began commercializing RYTELO in June 2024, and the commercial potential of and our ability to successfully commercialize RYTELO is unproven.

Our success in commercializing RYTELO will require, among other things, effective sales, marketing, manufacturing, distribution, information systems and pricing strategies, as well as compliance with applicable laws and regulations.

In addition, although we recently began commercializing RYTELO, substantially all of our revenues to date have been payments under prior collaboration agreements, and milestones, royalties and other revenues from our licensing arrangements.

We reported a small profit for the year ended December 31, 2015, and we have not reported any profit since.

We have incurred significant net losses since our inception in 1990, resulting principally from costs incurred in connection with our research and development activities and from general and administrative costs associated with our operations.

As of March 31, 2024, we had an accumulated deficit of approximately $1.7 billion.

The significance of future losses, future revenues and any potential future profitability will depend primarily on the clinical and commercial success of imetelstat, our sole product candidate.

In any event, imetelstat may require significant additional clinical testing prior to possible regulatory approval in the U.S.

and other countries.

We expect research and development expenses, general and administrative expenses, and losses to substantially increase in future periods as we continue to support the imetelstat development program, including the conduct and completion of IMpactMF, IMproveMF and IMpress, as well as the potential U.S.

and European commercialization of imetelstat in lower-risk MDS.

On March 19, 2024, we entered into an underwriting agreement with Cowen and Company, LLC and and Stifel, Nicolaus & Company, Incorporated relating to the March 2024 public offering of 41,999,998 shares of our common stock and a pre-funded warrant to purchase 8,002,668 shares of our common stock.

As of June 30, 2024, we had an accumulated deficit of approximately $1.7 billion.

The significance of future losses, future revenues and any potential future profitability will depend primarily on the clinical and commercial success of RYTELO, our sole product..

In addition, we are developing RYTELO for the treatment of several myeloid hematologic malignancies that will continue to require additional time and significant investment in clinical trials to complete.

We also expect to continue to seek regulatory approvals of RYTELO in jurisdictions outside of the United States.

As a result, we expect research and development expenses and selling, general and administrative expenses to increase in future periods as we continue to support the commercialization of RYTELO in the U.S.

and further development of RYTELO, including the conduct and completion of IMpactMF, IMproveMF and IMpress, as well as the potential European commercialization of RYTELO, in lower-risk MDS.

On March 21, 2024, we completed an underwritten offering of 41,999,998 shares of our common stock and a pre-funded warrant to purchase 8,002,668 shares of our common stock.

All of the securities were issued separately.

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The pre-funded warrant has an exercise price of $0.001 per share and may be exercised at any time until it is exercised in full.

As of March 31, 2024, the 2024 pre-funded warrant had not been exercised.

As of June 30, 2024, the 2024 pre-funded warrant had not been exercised.

The net cash proceeds from the March 2024 public offering were approximately $141.0 million, after deducting the underwriting discount and other offering expenses paid by us, and excluding any future proceeds from the exercise of the 2024 pre-funded warrant.

Based on our current operating plan and our assumptions regarding the timing of the potential approval and commercial launch of imetelstat in lower-risk MDS in the U.S., we believe that our existing cash, cash equivalents, and current and noncurrent marketable securities, together with projected revenues from U.S.

sales of imetelstat, if approved, potential proceeds from the exercise of our outstanding warrants, and potential future drawdowns under the Loan Agreement (as defined below), will be sufficient to fund our projected operating requirements into the second quarter of 2026.

Our ability to generate revenues from sales of imetelstat in the U.S., if regulatory approval is granted, depends on us being able to establish sales and marketing capabilities and gain acceptance in the marketplace, which we may be unable to do in a timely manner or at all.

In addition, we cannot predict with any certainty whether and to what extent the remaining outstanding warrants will be exercised for cash, or the timing or availability of additional funds under the Loan Agreement, if at all.

Even if imetelstat is approved in lower-risk MDS and commercialized by us in the U.S.

in that indication and we are able to drawdown the remaining tranches under the Loan Agreement in full, we will still require substantial additional funding to further advance the imetelstat program, including through the completion of our ongoing clinical trials and any potential future clinical trials, as well as conducting the clinical, regulatory and potential commercialization activities necessary to potentially bring imetelstat to market in relapsed/refractory MF and any other indications we are pursuing or may in the future pursue, and our need for additional funds may arise sooner than planned.

If adequate funds are not available on a timely basis, if at all, we may be unable to pursue further development or potential commercialization of imetelstat, which would severely harm our business and we might cease operations.

Based on our current operating plans and assumptions, we believe that our existing cash, cash equivalents, and current and noncurrent marketable securities, together with projected revenues from U.S.

sales of RYTELO, will be sufficient to fund our projected operating requirements into the second quarter of 2026.

We will require substantial additional funding to further advance the development of imetelstat, including through the completion of our ongoing clinical trials and any potential future clinical trials, as well as conducting the clinical, regulatory and commercialization activities necessary to potentially bring imetelstat to market in relapsed/refractory MF and any other indications we are pursuing or may in the future pursue, and our need for additional funds may arise sooner than planned.

If adequate funds are not available on a timely basis, if at all, our RYTELO commercialization efforts may be adversely affected and we may be unable to pursue further development of imetelstat, which would severely harm our business and we might cease operations.

If approved for marketing by regulatory authorities outside of the U.S., we may seek potential commercialization partners for such territories.

Until the FDA or similar international regulatory authorities approve imetelstat for marketing in lower-risk MDS, if at all, we cannot begin commercialization.

Until international regulatory authorities approve RYTELO for marketing, if at all, we cannot begin commercialization activities outside of the U.S.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2024, as compared to the critical accounting policies and estimates disclosed in our 2023 Form 10-K.

There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2024, as compared to the critical accounting policies and estimates disclosed in our 2023 Form 10-K.

Our condensed consolidated financial statements have been prepared in accordance with U.S.

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Thus, historical results should not be viewed as indicative of future operating results.

Revenue based on sales of imetelstat is dependent on obtaining regulatory approval to commercialize imetelstat in the U.S.

and other countries.

We are subject to risks common to companies in our industry and at our stage of development, including, but not limited to, risks inherent in research and development efforts, including the development, manufacture, regulatory approval for and commercialization of, imetelstat;

In this regard, although we have begun to recognize revenue from RYTELO product sales in the U.S., we are very early in the product launch.

We expect that our sales revenue may vary significantly from period to period as the launch progresses.

RYTELO is our only product approved for marketing by the FDA and is approved solely for lower-risk MDS.

Revenue based on sales of RYTELO is dependent on our ability to execute a successful commercial launch of RYTELO in the U.S., and obtaining regulatory approval to commercialize RYTELO in other countries and other indications.

uncertainty of non-clinical and clinical trial results or regulatory approvals or clearances;

the future development of imetelstat by us, including any future efficacy or safety results that may cause the benefit-risk profile of imetelstat to become unacceptable;

the future development of imetelstat by us and its use by patients generally, including any future efficacy or safety results from clinical or commercial use that may cause the benefit-risk profile of imetelstat to become unacceptable;

the uncertain and unpredictable drug research and discovery process;

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and potential competition.

In order for imetelstat to be commercialized, we must conduct non-clinical tests and clinical trials to demonstrate the safety and efficacy of imetelstat, obtain regulatory approvals or clearances and enter into manufacturing, distribution and marketing arrangements, as well as obtain market acceptance.

The following table summarizes our results of operations for the three and six months ended June 30:

Three Months Ended

Six Months Ended

(in thousands, except for percentage data)

Product revenues, net

Total revenues

Operating expenses:

Cost of goods sold

Research and development

Selling, general and

administrative expenses

Total operating expenses

Interest income

Interest expense

Other income and (expense), net

Net income (loss)

Product Revenues, Net

On June 6, 2024, we announced that the FDA approved RYTELO for the treatment of adult patients with low- to intermediate-1 risk myelodysplastic syndromes, or lower-risk MDS, with transfusion-dependent, or TD, anemia requiring four or more red blood cell units over eight weeks who have not responded to or have lost response to or are ineligible for erythropoiesis-stimulating agents, or ESA.

To date, our only source of product revenue has been from the U.S.

sales of RYTELO, which we began shipping to our customers in June 2024.

We did not generate any revenue from product sales prior to the three months ended June 30, 2024 .

Total product revenue, net for the three months ended June 30, 2024 was approximately $780,000.

We expect product revenues, net to increase through the remainder of 2024.

In connection with the divestiture of our human embryonic stem cell assets, including intellectual property and proprietary technology, to Lineage Cell Therapeutics, Inc., or Lineage, (formerly BioTime, Inc.

which acquired Asterias Biotherapeutics, Inc.) in 2013, we are entitled to receive royalties on sales from certain research or commercial products utilizing our divested intellectual property.

We recognized royalty revenues of $304,000 in the three months ended March 31, 2024 compared to $21,000 for the same period in 2023.

We recognized royalty revenues of $102,000 and $406,000 in the three and six months ended June 30, 2024, respectively compared to $29,000 and $50,000, respectively, for the same period in 2023.

Royalty revenues in 2024 and 2023 primarily reflect estimated royalties from sales of cell-based research products from our divested stem cell assets.

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We expect royalty revenues for the full-year of 2024 to be lower than the full-year of 2023 as a result of reduced royalties from sales of cell-based research products from our divested stem cell assets.

Operating Expenses:

In connection with the FDA approval of RYTELO on June 6, 2024, we subsequently begin capitalizing inventory manufactured or purchased after this date.

As a result, we expensed certain manufacturing costs of RYTELO as research and development expense prior to FDA approval and, therefore, these costs are not included in cost of goods sold.

We expect our operating expenses to remain consistent through the remainder of 2024.

Our cost of goods sold consist of raw materials, third-party manufacturing costs to manufacture the raw materials into finished product, freight, and indirect overhead costs associated with the sale of RYTELO in the U.S.

The following table summarizes our expenses, including as a percentage of total expenses, for the three and six months ended June 30:

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

(in thousands, except for percentage data)

Cost of goods sold

Research and development

Selling, general and administrative

Total operating cost and expenses

Cost of goods sold

Cost of goods sold was approximately $17,000 for the three and six months ended June 30, 2024, which consisted of costs to manufacture, and distribute our market product, RYTELO.

We began capitalizing inventory upon FDA approval of RYTELO.

All product costs incurred prior to FDA approval of RYTELO in June 2024 were expensed as research and development expenses.

Prior to receiving FDA approval for RYTELO in June 2024, we manufactured inventory to be sold upon commercialization and recorded the costs as research and development expense.

As a result, the manufacturing costs related to the inventory manufactured prior to receiving FDA approval were expensed in a prior period and are therefore excluded from the cost of goods sold for the three and six months ended June 30, 2024.

We estimate our cost of sales related to product revenue as a percentage of net product revenue will continue to be positively affected as we sell through certain inventory that was previously expensed prior to FDA approval.

Research and Development Expenses

During the three months ended March 31, 2024 and 2023, our imetelstat program and our research discovery program related to potential next generation telomerase inhibitors were the only research and development programs we supported.

During the three and six months ended June 30, 2024 and 2023, our imetelstat program and our research discovery program related to potential next generation telomerase inhibitors were the only research and development programs we supported.

For these research and development programs, we incur direct external, personnel-related and other research and development costs.

For the three months ended March 31, 2024 and 2023, direct external expenses included costs for our CROs, consultants and other clinical-related vendors, as well as expenses for contract manufacturing and quality activities.

For the three and six months ended June 30, 2024 and 2023, direct external expenses included costs for our CROs, consultants and other clinical-related vendors, as well as expenses for contract manufacturing and quality activities.

Personnel-related expenses primarily consist of salaries and wages, stock-based compensation, payroll taxes and benefits for our employees involved with ongoing research and development efforts.

Other research and development expenses primarily consist of research-related overhead associated with allocated expenses for rent and maintenance of facilities and other supplies.

Research and development expenses for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended March 31,

Research and development expenses for the three and six months ended June 30, 2024 and 2023 were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

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Total research and development expenses

The increase in research and development expenses for the three months ended March 31, 2024, compared to the same period in 2023, primarily reflects the net result of higher manufacturing costs due to the timing of imetelstat manufacturing batches and increased personnel-related expenses for additional headcount.

We expect research and development expenses to remain consistent in the future as we support IMpactMF, IMproveMF and IMpress, as well as the long-term treatment and follow-up of remaining patients in IMerge Phase 3.

For a more complete discussion of the risks and uncertainties associated with the development of imetelstat, see

the sub‑sections entitled “Risks Related to the Development of Imetelstat” and “Risks Related to Regulatory Compliance Matters and Commercialization of Imetelstat” in Part II, Item 1A entitled “Risk Factors” and elsewhere in this quarterly report on Form 10‑Q.

General and Administrative Expenses

General and administrative expenses were $27.1 million for the three months ended March 31, 2024, compared to $12.9 million for the same period in 2023.

The increase in general and administrative expenses for the three months ended March 31, 2024, compared to the same period in 2023, primarily reflects higher personnel-related expenses of approximately $11.9 million in preparation for commercial launch.

We expect general and administrative expenses to increase in the future as the imetelstat program matures to prepare for the potential launch and commercialization of imetelstat continue.

The decrease in research and development expenses for the three and six months ended June 30, 2024, compared to the same period in 2023, was primarily due to decreases in clinical development costs related to the Phase 3 IMerge trial, as well as decreases in manufacturing and quality costs due to the timing of imetelstat manufacturing batches.

Additionally, a portion of manufacturing and quality costs were capitalized in the current period due to FDA approval of RYTELO.

The decrease is partially offset by an increase in labor costs due to higher headcount, incentive and stock-based compensation expense recognized due to the vesting of performance-based stock options upon FDA approval.

For a more complete discussion of the risks and uncertainties associated with the development of imetelstat, see the sub‑sections entitled “Risks Related to the Development of Imetelstat” and “Risks Related to the Commercialization of RYTELO TM (Imetelstat” and “Risks Related to Regulatory Approval of RYTELO” in Part II, Item 1A entitled “Risk Factors” and elsewhere in this quarterly report on Form 10‑Q.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $39.4 million and $66.5 million for the three and six months ended June 30, 2024, respectively compared to $16.5 million and $29.4 million for the same period in 2023.

The increase in selling, general and administrative expenses for the three and six months ended June 30, 2024, compared to the same period in 2023, primarily reflects higher personnel-related expenses and stock-based compensation recognized upon FDA approval of RYTELO due to the vesting of performance-based stock options.

Interest Income

Interest income was $4.2 million for the three months ended March 31, 2024,compared to $3.9 million for the same period in 2023.

The increase in interest income for the three months ended March 31, 2024, compared to the same period in 2023, primarily reflects a larger marketable securities portfolio with the receipt of net cash proceeds from the underwritten offering completed in March 2024, as well as higher yields from recent marketable securities purchases.

Interest income was $5.3 million and $9.6 million for the three and six months ended June 30, 2024, compared to $4.7 million and $8.6 million for the same period in 2023.

The increase in interest income for the three and six months ended June 30, 2024, compared to the same period in 2023, primarily reflects a larger marketable securities portfolio with the receipt of net cash proceeds from the underwritten offering completed in March 2024, as well as higher yields from recent marketable securities purchases.

Interest earned in future periods will depend on the size of our marketable securities portfolio and prevailing interest rates.

Interest Expense

Interest expense was $3.4 million for the three months ended March 31, 2024, compared to $1.9 million for the same period in 2023.

The increase in interest expense for the three months ended March 31, 2024, compared to the same period in 2023, primarily reflects rising interest rates.

Interest expense was $3.3 million and $6.8 million for the three and six months ended June 30, 2024, compared to $2.0 million and $3.9 million for the same period in 2023.

The increase in interest expense for the three and six months ended June 30, 2024, compared to the same period in 2023, primarily reflects rising interest rates.

Currently, we have $80.0 million in principal debt outstanding.

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Other Income and (Expense), Net

Net other expense was $62,000 for the three months ended March 31, 2024 compared to income of $39,000 for the three months ended March 31, 2023.

Net other income and expense primarily reflects bank charges related to our cash operating accounts and marketable securities portfolio and foreign currency transaction adjustments.

Other income and expense, net was an expense of $63,000 and $125,000 for the three and six months ended June 30, 2024, compared to an expense of $11,000 for the three months ended June 30, 2023, and an income of $28,000 for the six months ended June 30, 2023.

Other income and expense primarily reflects bank charges related to our cash operating accounts and marketable securities portfolio and foreign currency transaction adjustments.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2024, we had cash, restricted cash, cash equivalents, and marketable securities of $465.0 million, compared to $378.1 million at December 31, 2023.

The increase in cash, restricted cash, cash equivalents and marketable securities during the three months ended March 31, 2024 was primarily the net result of the receipt of net cash proceeds of $141.0 million from our underwritten offering completed in March 2024.

As of June 30, 2024, we had cash, restricted cash, cash equivalents, and marketable securities of $430.4 million, compared to $378.1 million at December 31, 2023.

The increase in cash, restricted cash, cash equivalents and marketable securities during the six months ended June 30, 2024 was primarily the net result of the receipt of net cash proceeds of $141.0 million from our underwritten offering completed in March 2024.

On March 21, 2024, we completed an underwritten public offering consisting of 41,999,998 shares of our common stock and a pre-funded warrant to purchase 8,002,668 shares of our common stock.

All of the securities were issued separately.

The offering price of the common stock was $3.00 per share.

The offering price

of the common stock was $3.00 per share.

The offering price of the pre-funded warrant was $2.99 per share.

The pre-funded warrant has an exercise price of $0.001 per share and may be exercised at any time until it is exercised in full.

As of March 31, 2024, the 2024 pre-funded warrant had not been exercised.

As of June 30, 2024, the 2024 pre-funded warrant had not been exercised.

The net cash proceeds from this offering were approximately $141.0 million, after deducting the underwriting discount and other offering expenses paid by us, and excluding any future proceeds from the exercise of the pre-funded warrant.

See Note 8 on Stockholders’ Equity in Notes to Condensed Consolidated Financial Statements of this quarterly report on Form 10-Q for additional information about the underwritten offering completed in March 2024.

From January 1, 2024 through March 31, 2024, we received $49,000 in cash proceeds from the exercise of warrants we issued in 2020, covering 37,640 shares of our common stock.

As of March 31, 2024, we had warrants remaining from our 2020 issuance covering 2,436,861 shares of our common stock, which if exercised in full for cash, would provide $3.2 million in cash proceeds.

As of March 31, 2024, we had a long-term principal debt balance of $80.0 million under the Loan Agreement with Hercules and SVB.

From January 1, 2024 through June 30, 2024, we received $414,000 in cash proceeds from the exercise of warrants we issued in 2020, covering 281,211 shares of our common stock.

As of June 30, 2024, we had warrants remaining from our 2020 issuance covering 2,155,650 shares of our common stock, which if exercised in full for cash, would provide $2.8 million in cash proceeds.

As of June 30, 2024, we had a long-term principal debt balance of $80.0 million under the Loan Agreement with Hercules and SVB.

In June 2022, we entered into a second amendment to the Loan Agreement with Hercules and SVB.

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After giving effect to the third amendment, the aggregate principal amount draw down and remaining available to us under the Loan Agreement remains at $125.0 million, with such principal being available in a series of tranches, subject to certain terms and conditions.

The third amendment also provides that (i) the fourth tranche of the Loan Agreement was increased from $10.0 million to $30.0 million, (ii) the commitment period for the fifth tranche of the Loan Agreement of $20 million, which is available subject to achievement of a regulatory milestone and satisfaction of certain capitalization requirements, was extended through December 15, 2024, (iii) the variable annual interest rate on the outstanding loans has been

decreased to the greater of:

The third amendment also provides that (i) the fourth tranche of the Loan Agreement was increased from $10.0 million to $30.0 million, (ii) the commitment period for the fifth tranche of the Loan Agreement of $20.0 million, which is available subject to achievement of a regulatory milestone and satisfaction of certain capitalization requirements, was extended through December 15, 2024, (iii) the variable annual interest rate on the outstanding loans has been decreased to the greater of:

(x) 9.0%, or (y) the sum of (A) the Prime Rate (as reported in The Wall Street Journal) minus 4.5%, plus (B) 9.0%;

and (iv) the interest only period of the Term Loan has been extended through June 30, 2024, and is further extendable to December 31, 2024 upon achievement of a regulatory and financial milestone and satisfaction of certain capitalization requirements.

and (iv) the interest only period of the Term Loan has been extended from June 30, 2024 through December 31, 2024, due to regulatory approval of RYTELO and satisfaction of certain financial and capitalization requirements.

In connection with the third amendment, on the third amendment effective date, we borrowed and received the entire fourth tranche of the Term Loan in the amount of $30.0 million.

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On September 15, 2023, the third tranche of $20.0 million of the Term Loan expired and is no longer available for us, but was added to the fourth tranche as part of the third amendment to the Loan Agreement.

The Term Loan matures on October 1, 2025, which was extended from April 1, 2025 upon regulatory approval of RYTELO.

We have an investment policy to invest our cash in liquid, investment grade securities, such as interest-bearing money market funds, certificates of deposit, U.S.

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Future Funding Requirements

sales of imetelstat, if approved, potential proceeds from the exercise of outstanding warrants, and potential future drawdowns under the Loan Agreement, will be sufficient to fund our projected operating requirements into the second quarter of 2026.

Our ability to drawdown any remaining tranches under the Loan Agreement is subject to our achievement of certain regulatory milestones and satisfaction of certain capitalization requirements, as well as approval by an investment committee comprised of Hercules and SVB for the final $25.0 million tranche.

In addition, even if imetelstat is approved in lower-risk MDS and commercialized by us in the U.S.

in that indication and we are able to drawdown the remaining tranches under the Loan Agreement in full, we will still require substantial additional funding to further advance the imetelstat program, including through the completion of our ongoing clinical trials and any potential future clinical trials, as well as conducting the clinical, regulatory and potential commercialization activities necessary to potentially bring imetelstat to market in relapsed/refractory MF and any other indications we are pursuing or may pursue, and our need for additional funds may arise sooner than planned.

Because the outcome of any clinical activities and/or regulatory approval process is highly uncertain, we cannot reasonably estimate whether any development activities we may undertake will succeed;

whether we will obtain regulatory approval for imetelstat in any indication we pursue, including lower-risk MDS;

or, if approved, whether we will be able to effectively commercialize imetelstat, if at all.

We may never recoup our investment in any imetelstat development which would adversely affect our financial condition and our business and business prospects, and might cause us to cease operations.

Based on our current operating plans and assumptions, we believe that our existing cash, cash equivalents, and current and noncurrent marketable securities, together with projected revenues from U.S.

sales of RYTELO, will be sufficient to fund our projected operating requirements into the second quarter of 2026.

Despite recent FDA approval of RYTELO, the outcome of any clinical activities and/or regulatory approval process is highly uncertain, we cannot reasonably estimate whether our future development activities may succeed;

whether we will obtain regulatory approval for RYTELO in the EU in lower-risk MDS, or in any other jurisdictions or indications we are pursuing or may in the future pursue, or whether we will be able to effectively commercialize RYTELO in the U.S.

for lower-risk MDS or other potential indications, if at all.

We may never recoup our investment in any RYTELO development which would adversely affect our financial condition and our business and business prospects, and might cause us to cease operations.

In addition, our plans and timing expectations could be further delayed or interrupted by the effects of macroeconomic or other global conditions, including those resulting from inflation, rising interest rates, prospects of a recession, bank failures and other disruptions to financial systems, civil or political unrest, military conflicts, pandemics or other health crises and supply chain and resource issues.

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• the accuracy of the assumptions underlying our estimates for our capital needs;

• the scope, progress, timing, magnitude and costs of non-clinical and clinical development, manufacturing and potential commercialization of imetelstat, including the number of indications being pursued, subject to clearances and approvals by the FDA and similar international regulatory authorities;

• delays or disruptions in opening sites, screening and enrolling patients or treating and following patients, in our current or any potential future clinical trials of imetelstat;

• the costs, timing and outcomes of regulatory reviews or other regulatory actions related to imetelstat, including with respect to our NDA and MAA submissions for imetelstat in lower-risk MDS;

• the level of sales and market acceptance of RYTELO;

• the scope, progress, timing, magnitude and costs of non-clinical and clinical development, manufacturing and commercialization of imetelstat, including potential commercialization in the EU for lower-risk MDS, or in any other jurisdictions or other indication we may pursue, subject to clearances and approvals by the FDA and similar international regulatory authorities;

• delays or disruptions in opening sites, screening and enrolling patients or treating and following patients, in our current or any potential future clinical trials of RYTELO;

• the costs, timing and outcomes of regulatory reviews or other regulatory actions related to RYTELO, including with respect to our MAA submission for RYTELO in the EU for lower-risk MDS;

• the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims;

• the costs of manufacturing, developing, commercializing and marketing imetelstat, including with respect to third-party vendors and service providers and our ability to achieve any meaningful reduction in manufacturing costs, if imetelstat receives future regulatory approval or clearance, in the U.S., EU or other countries;

• the sales price for imetelstat, if any;

• the availability of coverage and adequate third-party reimbursement for imetelstat, if any;

• the extent to which we acquire or in-license other drugs and technologies, or invest in businesses, products or technologies, although we currently have no commitments or agreements relating to any of these types of transactions, or to which we out-license imetelstat;

• the extent to which we are able to enter into and conduct successful strategic partnerships, collaborations and alliances or licensing arrangements with third parties including for the commercialization and marketing of imetelstat in certain global regions;

• the extent and scope of our general and administrative expenses, including expenses associated with potential future litigation;

• the costs of manufacturing, developing, commercializing and marketing RYTELO, including with respect to third-party vendors and service providers and our ability to achieve any meaningful reduction in manufacturing costs;

• the sales price for RYTELO;

• the availability of coverage and adequate third-party reimbursement for RYTELO;

• the extent to which we are able to enter into and conduct successful strategic partnerships, collaborations, alliances or licensing arrangements with third parties, including for the commercialization and marketing of RYTELO in certain regions outside of the U.S., if approved for commercialization;

• the extent and scope of our selling, general and administrative expenses, including expenses associated with potential future litigation;

• our level of indebtedness and associated debt service obligations;

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• the costs of enabling our personnel to work remotely, including providing supplies, equipment and technology necessary for them to perform their responsibilities.

Until we can generate a sufficient amount of revenue from imetelstat to finance our cash requirements, which we may never achieve, we expect to finance future cash needs through a combination of public or private equity offerings, debt or other financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements, which may not be possible.

Availability of such financing sources may be negatively impacted by our ability to obtain FDA approval for and successfully commercialize imetelstat in lower-risk MDS, as well as further delays in reporting results from IMpactMF or investors’ perception of top-line results from IMerge Phase 3, despite our interpretation of such data being positive, as well as the other risks described in Part II, Item 1A, entitled "Risk Factors."

Until we can generate a sufficient amount of revenue from sales of RYTELO to finance our cash requirements, which we may never achieve, we expect to finance future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements, which may not be possible.

Availability of such financing sources may be negatively impacted by any further delays in our clinical trials, regulatory developments, or the other risks described in this section.

Additional financing through public or private debt or equity financings, including pursuant to the 2023 Sales Agreement with B.

Riley Securities, the remaining tranches of up to $45.0 million available under the Loan Agreement, which are subject to the achievement of certain clinical and regulatory milestones and satisfaction of certain capitalization and other requirements, as well as approval by an investment committee comprised of Hercules and SVB for the final $25.0 million tranche;

capital lease transactions or other financing sources, may not be available on acceptable terms, or at all.

We may be unable to raise equity capital, or may be forced to do so at a stock price or on other terms that could result in substantial dilution of ownership for our stockholders.

Riley Securities, Inc., the final $25.0 million tranche under the Loan Agreement, which is subject to the approval by an investment committee comprised of Hercules and SVB, capital lease transactions or other financing sources, may not be available on acceptable terms, or at all.

We may be unable to raise equity capital, or may be forced to do so at a stock price or on other terms that could result

in substantial dilution of ownership for our stockholders.

The receptivity of the public and private debt and equity markets to proposed financings has been substantially affected by uncertainty in the general economic, market and political climate due to the effects of macroeconomic or other global conditions, such as inflation, rising interest rates, prospects of a recession, government shutdowns, bank failures and other disruptions to financial systems, civil or political unrest, military conflicts, pandemics or other health crises and supply chain and resource issues, and may in the future be affected by other factors which are unpredictable and over which we have no control.

These effects have increased market volatility and could result in a significant long-term disruption of global financial markets, which could reduce or eliminate our ability to raise additional funds through financings, and could negatively impact the terms upon which we may raise those funds.

Similarly, these macroeconomic conditions have created extreme volatility and disruption in the capital markets and is expected to have further global

economic consequences.

Similarly, these macroeconomic conditions have created extreme volatility and disruption in the capital markets and is expected to have further global economic consequences.

If the equity and credit markets deteriorate, including as a result of macroeconomic or other global conditions, such as inflation, rising interest rates, prospects of a recession, government shutdowns, bank failures and other disruptions to financial systems, civil or political unrest, military conflicts, pandemics or other health crises and supply chain and resource issues, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive.

If we are unable to raise additional capital or establish alternative collaborative arrangements with third-party collaborative partners for imetelstat, the development and potential commercialization of imetelstat may be further delayed, altered or abandoned, which might cause us to cease operations.

If we are unable to effectively commercialize RYTELO, or raise additional capital or establish alternative collaborative arrangements with third-party collaborative partners for RYTELO, the development and commercialization of RYTELO may be further delayed, altered or abandoned, which might cause us to cease operations.

In addition, we may seek additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

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We may borrow funds on terms under agreements, such as the Loan Agreement, that include restrictive covenants, including covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

Moreover, if we raise additional funds through alliance, collaborative or licensing arrangements with third parties, we may have to relinquish valuable rights to imetelstat or our technologies or grant licenses on terms that are not favorable to us.

We cannot assure you that our existing capital resources, future interest income, future revenues from potential sales of imetelstat, if approved, potential future sales of our common stock, including under the 2023 Sales Agreement, and potential future drawdowns, if available, of the remaining tranches under the Loan Agreement, will be sufficient to fund our operating plans.

Moreover, if we raise additional funds through alliance, collaborative or licensing arrangements with third parties, we may have to relinquish valuable rights to RYTELO or our technologies or grant licenses on terms that are not favorable to us.

We cannot assure you that our existing capital resources, future interest income, future revenues from sales of RYTELO, potential future sales of our common stock, including under the 2023 Sales Agreement, will be sufficient to fund our operating plans.

Moreover, while we did not hold cash deposits or securities at SVB, if other banks and financial institutions enter receivership, become insolvent or otherwise fail in the future in response to financial conditions affecting the banking system and financial markets or otherwise, our ability to access our cash, cash equivalents and marketable securities may be delayed or precluded, which could have a material adverse effect on our business, business prospects and financial position.

Cash Flows from Operating Activities

Net cash used in operations for the three months ended March 31, 2024 and 2023 was $62.3 million and $46.4 million, respectively.

The increase in net cash used in operations for the three months ended March 31, 2024, compared to the same period in 2023, primarily reflects commercial preparatory activities, increases in headcount and higher payments to support ongoing clinical trials of imetelstat, to support pre-approval and commercialization efforts.

Net cash used in operations for the six months ended June 30, 2024 and 2023 was $115.7 million and $76.0 million, respectively.

The increase in net cash used in operations for the six months ended June 30, 2024, compared to the same period in 2023, primarily reflects an increase in net loss to $122.8 million, adjusted for non-cash items including stock based compensation expense related for employees and directors.

Cash Flows from Investing Activities

Net cash provided by investing activities was $34.2 million for the three months ended March 31, 2024 and net cash used in investing activities was $178.7 million for the three months ended March 31, 2023.

The increase in net cash provided by investing activities for the three months ended March 31, 2024, compared to the same period in 2023, primarily reflects a higher rate of purchases than maturities of marketable securities in 2024, as well as decreased purchases of marketable securities.

Net cash used by investing activities was $1.9 million for the six months ended June 30, 2024 and $223.2 million for the six months ended June 30, 2023.

The decrease in net cash used in investing activities for the six months ended June 30, 2024, compared to the same period in 2023, primarily reflects decreased purchases of marketable securities, as well as increased proceeds from maturities of marketable securities.

Cash Flows from Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2024 and 2023 was $147.8 million and $281.0 million, respectively.

Net cash provided by financing activities for the six months ended June 30, 2024 and 2023 was $164.6 million and $299.4 million, respectively.

Financing activities in 2024 primarily reflect an underwriting offering of 41,999,998 shares of common stock and a pre-funded warrant to purchase 8,002,668 shares of common stock, resulting in net cash proceeds of $141.0 million completed in March 2024.

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Our material cash requirements in the short- and long-term consist of the following operational and manufacturing expenditures, a portion of which contain contractual or other obligations.

We plan to fund our material cash requirements with our current financial resources and may consider additional funding through a combination of additional equity and debt financings, new collaborative arrangements, strategic alliances, or from other sources.

We plan to fund our material cash requirements with our current financial

resources and may consider additional funding through a combination of additional equity and debt financings, new collaborative arrangements, strategic alliances, or from other sources.

Contractual Obligations

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Our contractual obligations primarily consist of our current and noncurrent debt obligations under the Loan Agreement with Hercules and SVB, as described above and in Note 4 on Debt in Notes to Condensed Consolidated Financial Statements of this quarterly report on Form 10-Q, and obligations under non-cancellable operating leases.

The aggregate amount of our future operating lease payments was reported in our 2023 Form 10-K and there have been no changes to the contractual terms of our operating leases during the three months ended March 31, 2024.

In the normal course of business, we enter into agreements with CROs for clinical trials and third-party manufacturers for clinical and commercial supply manufacturing and with other vendors for non-clinical research studies, investigator-led trials and other services and products for operating purposes.

We have engaged third‑party contract manufacturers and have re-established our own manufacturing supply chain to manufacture and supply additional quantities of RYTELO that meet applicable regulatory standards for current and potential future clinical trials and commercial uses.

Related to those contract manufacturing agreements, we have noncancelable commercial purchase commitments for approximately $62.5 million in the aggregate as of June 30, 2024.

These purchase commitments can vary based on the commercial demand of RYTELO and are binding based on future manufacturing needs.

In the normal course of business, we enter into agreements with CROs for clinical trials for clinical and commercial supply manufacturing and with other vendors for non-clinical research studies, investigator-led trials and other services and products for operating purposes.

We have not considered these payments to be contractual obligations since the contracts are generally cancellable at any time by us upon less than 180 days’ prior written notice.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the three months ended March 31, 2024, there were no material changes to our quantitative and qualitative disclosures about market risk as set forth in Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" of our 2023 Form 10-K,

During the three months ended June 30, 2024, there were no material changes to our quantitative and qualitative disclosures about market risk as set forth in Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" of our 2023 Form 10-K,

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis