What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-05 compared with 2024-08-06 · 70 added, 69 removed, 160 unchanged (46% of the section changed)

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, contains forward-looking statements regarding the expectations of Karyopharm Therapeutics Inc., herein referred to as “Karyopharm,” the “Company,” “we,” or “our,” with respect to the possible achievement of discovery and development milestones, our future discovery and development efforts, including regulatory submissions and approvals, our commercialization efforts, our partnerships and collaborations with third parties, our future operating results and financial position, our business strategy, and other objectives for future operations.

This Quarterly Report on Form 10-Q, contains forward-looking statements regarding the expectations of Karyopharm Therapeutics Inc., herein referred to as “Karyopharm,” the “Company,” “we,” or “our,” with respect to the possible achievement of discovery and development milestones, our future discovery and development efforts, including regulatory submissions and approvals, our commercialization efforts, our partnerships and collaborations with third parties, our future operating results and financial position, our ability to continue as a going concern, our business strategy, and other objectives for future operations.

We often use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and other words and terms of similar meaning to help identify forward-looking statements, although not all forward-looking statements contain these identifying words.

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is currently supported by sales representatives, nurse liaisons, and a market access team, as well as KaryForward, an extensive patient and healthcare provider support program.

Our commercial efforts are also

supplemented by patient support initiatives coordinated by our dedicated network of participating specialty pharmacy providers.

Our commercial efforts are also supplemented by patient support initiatives coordinated by our dedicated network of participating specialty pharmacy providers.

We plan to continue to educate physicians, other healthcare providers and patients about XPOVIO’s clinical profile and unique mechanism of action as we continue to expand XPOVIO use.

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is managed by our partners in their respective territories.

XPOVIO/NEXPOVIO has received regulatory approval in various indications in over 40 countries outside the U.S.

XPOVIO/NEXPOVIO has received regulatory approval in various indications in 45 countries outside the U.S.

and is commercially available in a growing number of countries as our partners continue to secure reimbursement approvals.

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In January 2024, we announced that further clinical development of our eltanexor program is on hold in an effort to focus our resources on our prioritized late-stage programs.

As of June 30, 2024, we had an accumulated deficit of $1.5 billion.

We had net losses of $13.6 million and $66.8 million for the six months ended June 30, 2024 and 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $1.5 billion.

We had net losses of $45.6 million and $101.3 million for the nine months ended September 30, 2024 and 2023, respectively.

Based on our current business plan and current capital resources, combined with the uncertainty regarding the availability of additional funding, we have concluded that there is substantial doubt regarding our ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued.

See “Liquidity and Capital Resources” below for a further discussion of our liquidity and the conditions that raise substantial doubt regarding our ability to continue as a going concern.

In May 2024, we entered into a series of transactions (the “Refinancing Transactions”) to limit our aggregate indebtedness, extend the maturity of certain of our indebtedness and provide us with additional working capital.

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In addition, HCRx purchased $5.0 million aggregate principal amount of our new 6.00% secured convertible senior notes through satisfaction of $5.0 million of our existing obligations to HCRx.

Please refer to Note 10 “ Long-Term Obligations ”, to the condensed consolidated financial statements contained within Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details of these refinancing transactions.

CRITICAL ACCOUNTING ESTIMATES

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There have been no changes to the critical accounting estimates we identified in Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report except for our estimated value of the gain on extinguishment of debt, the embedded derivatives, and the liability classified common stock warrants related to the Refinancing Transactions, which were valued using methodologies that incorporate certain unobservable inputs including (i) the volatility of our common stock price and (ii) our estimated credit spread.

Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report except for our estimated value of the gain on extinguishment of debt, the embedded derivatives in the 2029 Notes (as defined below) and the liability classified common stock warrants related to the Refinancing Transactions, which were valued using methodologies that incorporate certain unobservable inputs including (i) the volatility of our common stock price, (ii) our estimated credit spread and (iii) an estimate of when the warrants will be exercised based on an option pricing model.

RESULTS OF OPERATIONS

The following table summarizes our results of operations (in thousands, except for percentages):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Product revenue, net

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Other income (expense), net

Income (loss) before income taxes

Loss before income taxes

Income tax provision

Net income (loss)

Product Revenue, net (in thousands, except for percentages)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Product revenue, net

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sales of XPOVIO.

Net product revenue for the three and six months ended June 30, 2024 decreased as compared to the three and six months ended June 30, 2023, primarily due to decreased demand as a result of increasing competition and higher gross-to-net driven by increased Medicare/Medicaid rebates and 340B discounts.

We expect product revenue to slightly increase in the second half of 2024 as compared to the first half of 2024.

Net product revenue for the three months ended September 30, 2024 decreased as compared to the three months ended September 30, 2023, primarily due to higher gross-to-net discounts driven by increased Medicare rebates and 340B discounts.

Net product revenue for the nine months ended September 30, 2024 decreased as compared to the nine months ended September 30, 2023, primarily due to decreased demand as a result of increasing competition and higher gross-to-net discounts driven by increased Medicare rebates and 340B discounts.

We expect net product revenue to remain relatively consistent in the fourth quarter of 2024 as compared to the third quarter of 2024.

License and Other Revenue (in thousands, except for percentages)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Menarini Group ("Menarini")

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Total license and other revenue

License and other revenue for the three months ended June 30, 2024 increased by $5.6 million as compared to the three months ended June 30, 2023 primarily due to $4.0 million of license-related revenue recognized from Menarini during the three months ended June 30, 2024 and a $2.3 million increase in revenue for the reimbursement of development-related expenses from Menarini due to an increase in the corresponding expenses.

License and other revenue for the six months ended June 30, 2024 increased by $2.3 million as compared to the six months ended June 30, 2023 primarily due to a $3.3 million increase in revenue for the reimbursement of development-related expenses from Menarini due to an increase in the corresponding expenses.

We expect license and other revenue to decrease slightly in the second half of 2024 as compared to the first half of 2024 due to a decrease in the reimbursement of development-related expenses from Menarini partially offset by an increase in expected milestone revenue.

License and other revenue for the three months ended September 30, 2024 increased by $3.5 million as compared to the three months ended September 30, 2023 primarily due to $6.0 million of milestone revenue recognized from Menarini during the three months ended September 30, 2024, partially offset by a $3.3 million decrease in revenue for the reimbursement of development-related expenses from Menarini due to the timing of the reimbursement we receive, up to a limit of $15.0 million per calendar year.

License and other revenue for the nine months ended September 30, 2024 increased by $5.8 million as compared to the nine months ended September 30, 2023 primarily due to $10.0 million of milestone revenue recognized from Menarini during the nine months ended September 30, 2024, partially offset by a decrease of $3.5 million of license-related revenue from Menarini.

We expect license and other revenue to decrease in the fourth quarter of 2024 as compared to the third quarter of 2024 due to the maximum reimbursement revenue from Menarini already having been recognized, coupled with lower milestone revenue expected in the fourth quarter of 2024 compared to the third quarter of 2024.

Operating Expenses (in thousands, except for percentages)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Cost of sales

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Cost of Sales

Cost of sales were consistent for the three and six months ended June 30, 2024 and 2023.

We expect cost of sales to remain relatively consistent in the second half of 2024 as compared to the first half of 2024.

Cost of sales in aggregate dollars were consistent for the three and nine months ended September 30, 2024 and 2023.

We expect cost of sales to remain relatively consistent in the in the fourth quarter of 2024 as compared to the third quarter of 2024.

Research and Development Expenses (in thousands, except for percentages)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Clinical trial and related costs:

Selinexor in myelofibrosis

Selinexor in endometrial cancer

Selinexor in multiple myeloma

Selinexor in endometrial cancer

Other programs

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These costs represent costs that are incurred across multiple programs or to support our general research and development operations.

Research and development expenses for the three months ended June 30, 2024 increased by $6.9 million as compared to the three months ended June 30, 2023.

The $7.4 million increase in clinical trial and related costs was primarily due to increased activity in our ongoing pivotal Phase 3 trials in myelofibrosis and multiple myeloma, including increased purchases of comparator drugs.

These increases were partially offset by decreases of clinical trial and related costs in other programs, primarily KPT-1200, our IL-12 compound that we sold to Libo Pharma Corp.

in December 2023.

Research and development expenses for the six months ended June 30, 2024 increased by $10.0 million as compared to the six months ended June 30, 2023.

Research and development expenses for the three months ended September 30, 2024 increased by $0.6 million as compared to the three months ended September 30, 2023 primarily due to increased activity in our ongoing pivotal Phase 3 trial in myelofibrosis, partially offset by decreases in clinical trial and related costs in other programs.

Research and development expenses for the nine months ended September 30, 2024 increased by $10.6 million as compared to the nine months ended September 30, 2023.

The $13.9 million increase in clinical trial and related costs was primarily due to increased activity in each of our three ongoing pivotal Phase 3 trials, including increased purchases of comparator drugs.

These increases were partially offset by decreases of clinical trial and related costs in other programs, primarily KPT-1200, our IL-12 compound, and eltanexor.

The decrease in personnel costs of $3.6 million was primarily due to a reduction in headcount and contractors for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

We expect our research and development expenses to be relatively consistent in the second half of 2024 as compared to the first half of 2024.

These increases were partially offset by decreases of clinical trial and related costs in other programs.

The decrease in personnel costs of $4.8 million was primarily due to a reduction in headcount and contractors for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 primarily due to our ongoing cost reduction initiatives.

We expect our research and development expenses to slightly decrease in the fourth quarter of 2024 as compared to the third quarter of 2024 primarily due to the reduced scope of our Phase 3 trial in multiple myeloma, as well as reduced headcount due to our ongoing cost reduction initiatives, partially offset by an expected increase in expenses related to our Phase 3 trial in myelofibrosis.

Selling, General and Administrative Expenses (in thousands, except for percentages)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Personnel costs

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Total selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended June 30, 2024 decreased by $3.4 million as compared to the three months ended June 30, 2023.

Selling, general and administrative expenses for the three months ended September 30, 2024 decreased by $3.2 million as compared to the three months ended September 30, 2023.

The decrease in personnel costs of $2.4 million was primarily due to a reduction in headcount and contractors.

Selling, general and administrative expenses for the six months ended June 30, 2024 decreased by $9.8 million as compared to the six months ended June 30, 2023.

Selling, general and administrative expenses for the nine months ended September 30, 2024 decreased by $12.9 million as compared to the nine months ended September 30, 2023.

The decrease in personnel costs of $8.0 million was primarily due to a reduction in headcount and contractors.

The $4.4 million decrease in consulting, professional and other costs was primarily due to our cost reduction initiatives.

Selling, general and administrative expenses for the three and six months ended June 30, 2024 also included approximately $1.2 million of expenses related to the Refinancing Transactions, of which $0.8 million was included in stock-based compensation and $0.4 million was included in consulting, professional and other costs.

We expect our selling, general and administrative expenses to remain relatively consistent in the second half of 2024 as compared to the first half of 2024.

The $4.5 million decrease in consulting, professional and other costs was primarily due to our ongoing cost reduction initiatives.

We expect our selling, general and administrative expenses to remain relatively consistent in the fourth quarter of 2024 as compared to the third quarter of 2024.

Other Income (Expense), net (in thousands, except for percentages)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Interest expense

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Total other income (expense), net

Other income (expense), net for the three months ended June 30, 2024 increased by $54.9 million, as compared to the three months ended June 30, 2023 and for the six months ended June 30, 2024 increased by $54.6 million as compared to the six months ended June 30, 2023.

The increases for the three and six month periods were primarily due to a $44.7 million gain on extinguishment of debt from the Refinancing Transactions and a $14.3 million gain from the remeasurement of embedded derivatives and liability classified common stock warrants, both of which are non-cash items.

These gains were partially offset by an increase in interest expense due to the new term loan and new secured convertible senior notes.

We expect Other income (expense), net to decrease in the second half of 2024 as compared to the first half of 2024, as the $44.7 million gain on extinguishment of debt is a non-recurring gain.

This will be partially offset by an increase in interest expense on the new term loan and new secured convertible senior notes.

The future impact from remeasurements of the embedded derivatives and liability classified common stock warrants will depend on a variety of factors, including movements in our stock price.

Other income (expense), net for the three months ended September 30, 2024 decreased by $2.5 million, as compared to the three months ended September 30, 2023, primarily due to a $5.3 million increase in interest expense related to the new term loan and new secured convertible senior notes, partially offset by a gain of $4.0 million recognized during the three months ended September 30, 2024 from the remeasurement of embedded derivatives and liability classified common stock warrants, both of which are non-cash items.

Other income (expense), net for the nine months ended September 30, 2024 increased by $52.0 million as compared to the nine months ended September 30, 2023, primarily due to a $44.7 million gain on extinguishment of debt from the Refinancing Transactions and a $18.3 million gain from the remeasurement of embedded derivatives and liability classified common stock warrants, both of which are non-cash items.

These gains were partially offset by an increase in interest expense related to the new term loan and new secured convertible senior notes.

We expect Other income (expense), net to remain relatively consistent in the fourth quarter of 2024 as compared to the third quarter of 2024, however the future impact from remeasurements of the embedded derivatives and liability classified common stock warrants will depend on a variety of factors, including movements in our stock price.

LIQUIDITY AND CAPITAL RESOURCES

We have historically financed our operations primarily through a combination of proceeds from (i) product revenue sales, (ii) public and private placements of equity securities, (iii) the issuance of convertible debt, (iv) a term loan, (v) our deferred royalty obligation, (vi) at the market offerings and (vii) business development activities.

As of June 30, 2024, our principal source of liquidity was $152.1 million of cash, cash equivalents and investments.

We have had recurring losses since inception and incurred a loss of $13.6 million for the six months ended June 30, 2024.

We expect that our cash, cash equivalents and investments at June 30, 2024 will be sufficient to fund our current operating plans and capital expenditure requirements for at least twelve months from the date of issuance of the financial statements contained in this Quarterly Report on Form 10-Q.

As of September 30, 2024, our principal source of liquidity was $133.5 million of cash, cash equivalents and investments.

We have had recurring losses since inception and incurred a loss of $45.6 million for the nine months ended September 30, 2024.

We anticipate that we will continue to incur significant operating losses in the foreseeable future.

Based on our current business plan and current capital resources, combined with the uncertainty regarding the availability of additional funding, we have concluded that there is substantial doubt regarding our ability to continue as a going concern within one year after the date the accompanying condensed consolidated financial statements are issued.

We expect that our cash, cash equivalents and investments as of September 30, 2024 will be sufficient to fund our current operating plans and debt obligation requirements into the fourth quarter of 2025.

See “Liquidity and Capital Resources – Funding Requirements” below and Note 1 “ Nature of Business ” to the condensed consolidated financial statements included under Part I, Item I of this Quarterly Report on Form 10-Q for a further discussion of our liquidity and the conditions that raise substantial doubt regarding our ability to continue as a going concern.

The following table provides information regarding our cash flows (in thousands):

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Net cash used in operating activities

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Operating activities.

The $37.6 million increase in net cash used in operating activities for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily driven by working capital changes, including the collection of $22.4 million of milestone payments from Antengene in the first quarter of 2023.

The $27.5 million increase in net cash used in operating activities for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by working capital changes, including the collection of $22.4 million of milestone payments from Antengene in the first quarter of 2023.

Investing activities.

The $84.4 million increase in net cash provided by investing activities for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was driven by a $60.0 million decrease in purchases of investments and a $24.6 million increase in proceeds from the maturities of investments.

The $99.6 million increase in net cash provided by investing activities for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was driven by a $85.3 million decrease in purchases of investments and a $14.5 million increase in proceeds from the maturities of investments.

Financing activities.

The $40.1 million increase in net cash provided by financing activities for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was driven by $83.3 million of proceeds from our new term loan, partially offset by a $40.5 million payment of our deferred royalty obligation and a $2.6 million payment of debt issuance costs related to the Refinancing Transactions.

The $40.1 million increase in net cash provided by financing activities for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was driven by $83.3 million of proceeds from our new term loan, partially offset by a $40.5 million payment of our deferred royalty obligation and a $2.6 million payment of debt issuance costs related to the Refinancing Transactions.

Sources of Liquidity

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(“HCRx”), which was subsequently amended on June 23, 2021, August 1, 2023 and May 8, 2024 (the “Revenue Interest Agreement” and, as amended, the “Amended Revenue Interest Agreement”), pursuant to which, HCRx paid us a total of $135.0 million, less certain transaction expenses.

For additional information on the Amended Revenue Interest Agreement, see Note 10, “ Long-Term Obligations ”, to the condensed consolidated financial statements included under Part I, Item I of this Quarterly Report on Form 10-Q.

For additional information

on the Amended Revenue Interest Agreement, see Note 10, “ Long-Term Obligations ”, to the condensed consolidated financial statements included under Part I, Item I of this Quarterly Report on Form 10-Q.

On May 8, 2024, we entered into a credit and guaranty agreement (the “Credit Agreement”) with certain existing lenders and HCRx, which provides for a senior secured term loan facility of $100.0 million.

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Under the 2023 Open Market Sale Agreement, we may issue and sell shares of our common stock having an aggregate offering price of up to $100.0 million (the “Shares”) from time to time through Jefferies.

We did not sell any Shares under the 2023 Open Market Sales Agreement during the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024, $100.0 million of Shares was available for issuance and sale under the 2023 Open Market Sale Agreement.

During the six months ended June 30, 2024, we received $13.0 million in milestone payments under our license and distribution agreements pursuant to which we are entitled to receive additional milestone payments, if certain development goals and sales milestones are achieved as well as royalties on future net sales of the licensed and sold products in the territories under such arrangements.

We did not sell any Shares under the 2023 Open Market Sales Agreement during the three and nine months ended September 30, 2024 and 2023.

As of September 30, 2024, $100.0 million of Shares was available for issuance and sale under the 2023 Open Market Sale Agreement.

During the nine months ended September 30, 2024, we received $17.7 million in milestone payments under our license and distribution agreements pursuant to which we are entitled to receive additional milestone payments, if certain development goals and sales milestones are achieved as well as royalties on future net sales of the licensed and sold products in the territories under such arrangements.

In addition, under the license agreement we entered into with Menarini in December 2021 (the “Menarini Agreement”), Menarini will reimburse us for 25% of all documented expenses we incur for the global development of selinexor from 2022 through 2025, provided that such reimbursements shall not exceed $15.0 million per calendar year.

We received $5.8 million of reimbursements under the Menarini Agreement during the six months ended June 30, 2024.

We received $13.0 million of reimbursements under the Menarini Agreement during the nine months ended September 30, 2024.

Commitments, Contingencies and Contractual Obligations

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Pursuant to the Newton, MA Lease, we have provided a security deposit in the form of a cash-collateralized letter of credit in the amount of $0.3 million which is classified in long-term restricted cash on our condensed consolidated balance sheets.

We expect to incur total lease costs of $4.8 million from June 30, 2024 to September 30, 2025.

As of September 30, 2024, we expect to incur total lease costs of $3.9 million from September 30, 2024 to September 30, 2025.

In addition, we are party to certain short-term leases having a term of twelve months or less at the commencement date.

We recognize short-term lease expense on a straight-line basis and do not record a related right-of-use asset or lease liability for such leases.

These costs were insignificant for both the six months ended June 30, 2024 and 2023.

These costs were insignificant for both the nine months ended September 30, 2024 and 2023.

Contractual Obligations

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If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or commercialization efforts.

We currently expect that cash, cash equivalents and investments at June 30, 2024 will be sufficient to fund our current operating plans and capital expenditure requirements for at least twelve months from the date of issuance of the financial statements contained in this Quarterly Report on Form 10-Q while we continue to commercialize XPOVIO in the U.S.

See Note 1 “ Nature of Business ” to the condensed consolidated financial statements included under Part I, Item I of this Quarterly Report on Form 10-Q for a further discussion of the conditions that raise substantial doubt regarding our ability to continue as a going concern.

We currently expect that cash, cash equivalents and investments as of September 30, 2024 will be sufficient to fund our current operating plans and debt obligation requirements into the fourth quarter of 2025 while we continue to commercialize XPOVIO in the U.S.

and continue the clinical trials of our product candidates.

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If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce or eliminate our research and development programs and/or commercialization efforts ,” under the heading “Risk Factors ” in this Quarterly Report on Form 10-Q.

In addition to the expenses required to fund our operations described above, our funding requirements as of June 30, 2024 also include the following:

• Lease costs for our headquarters in Newton, Massachusetts of $4.8 million from June 30, 2024 to September 30, 2025;

In addition to the expenses required to fund our operations described above, our funding requirements as of September 30, 2024 also include the following:

• Lease costs for our headquarters in Newton, Massachusetts of $3.9 million from September 30, 2024 to September 30, 2025;

• Future obligations related to the 2025 Notes of $25.6 million over the next two years;

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We are exposed to market risk related to changes in interest rates.

We had cash, cash equivalents and investments of $152.1 million as of June 30, 2024.

We had cash, cash equivalents and investments of $133.5 million as of September 30, 2024.

Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S.

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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