What changed in this filing

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Item 9A. Controls and Procedures

2021-02-24 compared with 2020-02-26 · 576 added, 604 removed, 862 unchanged (58% of the section changed)

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Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules13a-15(f)

and 15d-15(f)

of the Exchange Act.

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Opinion on Internal Control Over Financial Reporting

We have audited Karyopharm Therapeutics Inc.’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (

2013 framework) (

the COSO criteria).

We have audited Karyopharm Therapeutics Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria).

In our opinion, Karyopharm Therapeutics Inc.

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Directors, Executive Officers and Corporate Governance

Information regarding our directors, including the audit committee and audit committee financial experts, and executive officers and compliance with Section 16(a) of the Exchange Act, if applicable, will be included in our 2020 Proxy Statement and is incorporated herein by reference.

Information regarding our directors, including the audit committee and audit committee financial experts, and compliance with Section 16(a) of the Exchange Act, if applicable, will be included in our 2021 Proxy Statement and is incorporated herein by reference.

Information regarding our executive officers is set forth in “ Business—Information about Our Executive Officers

” in Part I, Item 1 of this Annual Report on Form 10-K.

We have adopted a Code of Business Conduct and Ethics for all of our directors, officers and employees as required by Nasdaq governance rules and as defined by applicable SEC rules.

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The information required by this Item 12 of Form 10-K

regarding security ownership of certain beneficial owners and management will be included in our 2020 Proxy Statement and is incorporated herein by reference.

regarding security ownership of certain beneficial owners and management and securities authorized for issuance under equity compensation plans will be included in our 2021 Proxy Statement and is incorporated herein by reference.

Certain Relationships and Related Transactions, and Director Independence

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generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013

and our report dated February 26, 2020 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 24, 2021 expressed an unqualified opinion thereon.

Adoption of ASU No.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accrued Research and Development Costs

Description of the Matter

The Company’s accrued research and development costs totaled $15.1 million at December 31, 2020.

As discussed in Note 2 to the consolidated financial statements, the Company’s accrued research and development costs are recognized based on various inputs, including an evaluation of the progress to complete specific tasks using data such as clinical site activations, patient enrollment, and other information provided to the Company by its service providers based on their actual costs incurred.

Payments for these activities are based on the terms of individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the consolidated balance sheet as accrued expenses.

Auditing the Company’s accrued research and development costs is especially challenging due to the significant volume of information received from service providers that conduct research and development activities on the Company’s behalf.

While the Company’s estimates of accrued research and development costs are primarily based on information received related to each study or ongoing work order from its service providers, the Company may need to make an estimate for additional costs incurred.

Finally, due to the duration of certain of the Company’s ongoing research and development activities and the timing of invoicing received from third parties, the actual amounts incurred are not typically known by the report date.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of the controls over the Company’s process for recording accrued research and development costs.

These procedures included controls over management’s review of inputs used, as well as the completeness and accuracy of the underlying data, in calculating the accrual.

To test accrued research and development costs, our audit procedures included, among others, testing the accuracy and completeness of the underlying data used to calculate accrued research and development costs, as well as evaluating the assumptions and estimates used by management.

To assess the nature and extent of services incurred, we corroborated the progress of clinical trials with the Company’s research and development personnel that oversee the clinical trials and obtained information from service providers regarding costs incurred to date.

We also tested subsequent invoices received and inspected the Company’s contracts with service providers and any pending change orders to assess the effect on the accrual.

/s/ Ernst & Young LLP

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Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(in thousands, except per share amounts)

Current assets:

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Operating lease liabilities

Deferred rent

Other current liabilities

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Deferred revenue, net of current portion

Deferred rent, net of current portion

Total liabilities

Commitments and contingencies (Note 9

Stockholders’ equity:

Preferred stock, $ 0.0001

Preferred stock, $ 0.0001 par value;

5,000 shares authorized;

issued and outstanding

Common stock, $ 0.0001

no ne issued and outstanding

Common stock, $ 0.0001 par value;

200,000 shares authorized;

and 60,829,308

shares issued and outstanding at December 31, 2019 and 2018, respectively

73,923 and 65,370 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively

Additional paid-in

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Accumulated deficit

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Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(in thousands, except per share amounts)

For the Years Ended December 31,

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Interest expense

Other expense

Other income (expense), net

Total other (expense) income, net

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Net loss per share—basic and diluted

Weighted-average number of common shares outstanding used in net loss per share—basic and diluted

Weighted-average number of common shares outstanding used to compute net loss per share—basic and diluted

The accompanying notes are an integral part of these consolidated financial statements.

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For the Years Ended December 31,

Other comprehensive income (loss):

Unrealized gain (loss) on investments

Foreign currency translation adjustment

Comprehensive income (loss):

Unrealized gains on investments

Foreign currency translation adjustments

Comprehensive loss

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Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(in thousands)

Common Shares

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Balance at December 31, 2017

Cumulative effect adjustment for adoption of new accounting guidance

Vesting of restricted stock

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Stock-based compensation expense

Issuance of common stock, net of issuance costs of $ 1.1

Unrealized loss on investments

Issuance of common stock, net of issuance costs

Equity component of convertible senior notes

Equity component of deferred financing costs for convertible senior notes

Unrealized gain on investments

Foreign currency translation adjustment

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Stock-based compensation expense

Issuance of common stock, net of issuance costs of $ 0.2

Equity component of 2025 Notes

Equity component of deferred financing costs for 2025 notes

Issuance of common stock, net of issuance costs

Unrealized gain on investments

Foreign currency translation adjustment

Balance at December 31, 2019

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Stock-based compensation expense

Issuance of common stock, net of issuance costs of $ 1.0

Issuance of common stock, net of issuance costs

Unrealized gain on investments

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Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

and amortization

Net amortization of premiums and discounts on investments

Amortization of debt discount and issuance costs

Stock-based compensation expense

Amortization of the value of debt discount and issuance costs

Change in operating assets and liabilities:

Realized and unrealized gain on marketable equity securities

Inventory obsolescence charge

Change in fair value of embedded derivative liability

Changes in operating assets and liabilities:

Accounts receivable

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Accrued expenses and other liabilities

Operating lease liabilities

Deferred revenue

Deferred rent

Operating lease liabilities

Net cash used in operating activities

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Purchases of investments

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Financing activities

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Effect of exchange rate on cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash end of period

Cash, cash equivalents and restricted cash at end of period

Reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets

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Cash paid for amounts included in the measurement of operating lease liabilities

Cash paid for interest on deferred royalty obligation

The accompanying notes are an integral part of these consolidated financial statements.

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Organization and Operations

We are an innovation-driven pharmaceutical company focused on the discovery, development and commercialization of novel, first-in-class

drugs directed against nuclear export and related targets for the treatment of cancer and other major diseases.

nhibitor of N

We are a commercial-stage pharmaceutical company pioneering novel cancer therapies and dedicated to the discovery, development and commercialization of first-in-class

drugs directed against nuclear export for the treatment of cancer and other diseases.

) compounds function by binding with and inhibiting the nuclear export protein exportin 1 (“XPO1”).

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We were incorporated in Delaware on December 22, 2008 and have a principal place of business in Newton, Massachusetts.

In July 2019, the U.S.

Food and Drug Administration (“FDA”) approved XPOVIO ®

(selinexor) in combination with dexamethasone for the treatment of adult patients with relapsed or refractory multiple myeloma (“RRMM”) who have received at least four prior therapies and whose disease is refractory to at least two proteasome inhibitors, at least two immunomodulatory agents, and an anti-CD38 monoclonal antibody.

This indication is approved under accelerated approval based on response rate.

Following accelerated approval by the FDA, XPOVIO became commercially available in the United States in July 2019.

As of December 31, 2019, we had an accumulated deficit of $ 873.3 million.

We have had limited revenues to date from product sales and have financed our operations principally through private placements of our preferred stock, proceeds from our initial public offering and follow-on

offerings of common stock, proceeds from the issuance of convertible debt, proceeds pursuant to the Revenue Interest Financing Agreement (deferred royalty obligation), and cash generated from our business development activities.

We expect to continue to incur significant expenses and operating losses for at least the foreseeable future.

We expect that our cash, cash equivalents and investments at December 31, 2019 will be sufficient to fund current operating plans and capital expenditure requirements for at least twelve months from the date of issuance of these financial statements.

Our lead asset, XPOVIO ®

(selinexor), received its initial U.S.

approval from the U.S.

Food and Drug Administration (the “FDA”) in July 2019 and is currently approved and marketed for the following indications:

(i) in combination with bortezomib and dexamethasone for the treatment of adult patients with multiple myeloma who have received at least one prior therapy;

(ii) in combination with dexamethasone for the treatment of adult patients with relapsed or refractory multiple myeloma who have received at least four prior therapies and whose disease is refractory to at least two proteasome inhibitors, at least two immunomodulatory agents, and an anti-CD38 monoclonal antibody;

and (iii) for the treatment of adult patients with relapsed or refractory diffuse large B-cell

lymphoma (“DLBCL”), not otherwise specified, including DLBCL arising from follicular lymphoma, after at least two lines of systemic therapy.

While we began to generate revenue from the sales of XPOVIO in July 2019, to date, we have financed our operations through a combination of product revenue sales and through private placements of our preferred stock, proceeds from our initial public offering and follow-on

offerings of common stock, proceeds from the issuance of convertible debt, proceeds pursuant to a revenue interest financing agreement (deferred royalty obligation), and cash generated from our business development activities.

As of December 31, 2020, we had an accumulated deficit

of $ 1.1 billion.

We expect to continue to incur significant expenses and we will need to continue to rely on additional financing to achieve our business objectives.

We expect that our cash, cash equivalents and investments at December 31, 2020 will be sufficient to fund our current operating plans and capital expenditure requirements for at least twelve months from the date of issuance of these financial statements.

Summary of Significant Accounting Policies

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Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

We view our operations and manage our business in one operating segment, which is the business of discovering, developing and commercializing drugs to treat cancer and certain other major diseases.

All of our revenue to date has been derived in the United States.

All of our material long-lived assets reside in the United States.

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, in deciding how to allocate resources and in assessing performance.

We view our operations and manage our business in one operating segment, which is the business of discovering, developing and commercializing drugs to treat cancer and certain other diseases.

All of our revenue to date has been derived in the U.S.

All of our material long-lived assets reside in the U.S.

Use of Estimates

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

On an ongoing basis, we evaluate our estimates, including estimates related to our net product revenue, clinical trial accruals, stock-based compensation expense, interest expense on our deferred royalty obligation and

other reported amounts of expenses during the reported period.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of

contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances.

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(“KPSC”, our wholly-owned Massachusetts corporation incorporated in December 2013), (iii) Karyopharm Europe GmbH (our wholly-owned German limited liability company, incorporated in September 2014), (iv) Karyopharm Therapeutics (Bermuda) Ltd.

(our limited liability company, registered in Bermuda in March 2015), and (vi) Karyopharm Israel Ltd.

(our wholly -

owned Israeli subsidiary formed in June 2018).

(our limited liability company, registered in Bermuda in March 2015), and (v) Karyopharm Israel Ltd.

(our wholly-owned Israeli subsidiary formed in June 2018).

All intercompany balances and transactions have been eliminated in consolidation.

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All of our securities are classified as available-for-sale

and are reported in short-term investments or long-term investments based on maturity dates and whether such assets are reasonably expected to be realized in cash or sold or consumed during the normal cycle of business.

and are reported as short-term investments or long-term investments based on maturity dates and whether such assets are reasonably expected to be realized in cash or sold or consumed during the normal cycle of business.

Available-for-sale

investments are recorded at fair value, with unrealized gains or losses included in Accumulated Other Comprehensive Loss, exclusive of other-than-temporary impairment losses, if any.

Short-term and long-term investments are composed of corporate debt securities, commercial paper, U.S.

government agency securities and certificates of deposit.

investments are recorded at fair value.

Short-term and long-term investments are composed of corporate debt securities, commercial paper and U.S.

government and agency securities.

We review investments whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time.

We evaluate whether the decline in fair value has resulted from credit losses or other factors.

In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.

If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for a credit loss is recorded on our consolidated balance sheet, limited by the amount that the fair value is less than the amortized cost basis.

Any impairment that is not related to a credit loss is recognized in other comprehensive income (loss).

Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense.

Losses are charged against the allowance when we believe the uncollectability of an available-for-sale

security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Concentrations of Credit Risk and Off-Balance

Financial instruments which potentially subject us to credit risk consist primarily of cash, cash equivalents and investments.

We hold these investments in highly rated financial institutions, and, by policy, limit the amounts of credit exposure to any one financial institution.

We hold these investments in highly rated financial institutions, and, by policy, limit the

amounts of credit exposure to any one financial institution.

These amounts at times may exceed federally insured limits.

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We are required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values.

The fair value hierarchy prioritizes

valuation inputs based on the observable nature of those inputs.

The fair value hierarchy applies only to

inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality.

The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs.

The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality.

The hierarchy defines three levels of valuation inputs:

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Unobservable inputs that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability

Our cash equivalents are composed of money market funds.

Our cash equivalents are comprised of money market funds, U.S.

government and agency securities, commercial paper and corporate debt securities.

We measure these investments at fair value.

The fair value of cash equivalents is determined based on “Level 1” inputs.

Items classified as Level 2 within the valuation hierarchy consist of commercial paper, corporate debt securities, U.S.

government agency securities and certificates of deposit.

The fair value of cash equivalents held in money market funds and U.S.

government and agency securities is determined based on “Level 1” inputs.

Items classified as Level 2 within the valuation hierarchy consist of commercial paper, corporate debt securities, and U.S.

government and agency securities.

We estimate the fair values of these marketable securities by taking into consideration valuations obtained from third-party pricing sources.

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In certain cases where there is limited activity or less transparency around inputs to valuation, the related assets or liabilities are classified as Level 3.

The embedded derivative liability associated with our deferred royalty obligation, as discussed further in Note 1 5

, “Long-Term Obligations”, is measured at fair value using an option pricing Monte Carlo simulation model and is included as a component of the deferred royalty obligation.

The embedded derivative liability is subject to remeasurement at the end of each reporting period, with changes in fair value recognized as a component of interest and other income (expense), net.

The embedded derivative liability associated with our deferred royalty obligation is measured at fair value using an option pricing Monte Carlo simulation model and is included as a component of the deferred royalty obligation.

The embedded derivative liability is subject to remeasurement at the end of each reporting period, with changes in fair value recognized as a component of other income (expense), net.

The assumptions used in the option pricing Monte Carlo simulation model include:

(1) our estimates of the probability and timing of related events;

(2) the probability-weighted net sales of XPOVIO and any of our other future products, including worldwide net product sales and upfront payments, milestones and royalties;

(3) our risk-adjusted discount rate that includes a company specific risk premium;

(4) our cost of debt;

(5) volatility;

and (6) the probability of a change in control occurring during the term of the instrument.

Our embedded derivative liability, as well as the estimated fair value of the deferred royalty obligation, is described in Note 1 5

, “Long-Term Obligations.”

The following table presents information about our financial assets

and liability

that have been measured at fair value at December 31, 2019 and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):

(i) our estimates of the probability and timing of related events;

(ii) the probability-weighted net sales of XPOVIO and any of our other future products, including worldwide net product sales and upfront payments, milestone payments and royalties;

(iii) our risk-adjusted discount rate that includes a company specific risk premium;

(iv) our cost of debt;

(v) volatility;

and (vi) the probability of a change in control occurring during the term of the instrument.

Our embedded derivative liability, as well as the estimated fair value of the deferred royalty obligation, is described in Note 15, “ Long-Term obligations

The following table presents information about our financial assets and liability that have been measured at fair value at December 31, 2020 and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):

Quoted Prices

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Money market funds

government and agency securities

Commercial paper

Corporate debt securities

Commercial paper

government and agency securities

Corporate debt securities (one to two year maturity)

Corporate debt securities (one to two-year

government and agency securities (one to two-year

Financial liability

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government and agency securities

Certificate of deposit

Corporate debt securities (one to two year maturity)

Corporate debt securities (one to two-year

Financial liability

Embedded derivative liability

The following table sets forth a summary of the changes in the estimated fair value of our embedded derivative liability during the year ended December 31, 2020 (in thousands):

Balance as of December 31, 2019

Addition of derivative related to deferred royalty obligation .

Change in fair value of derivative since issuanc e

Change in fair value of derivative since issuance

Balance as of December 31, 2020

evel 3 embedded derivative liability, as well as the estimated fair value of the deferred royalty obligation, is described in Note 1 5

, “Long-Term Obligations”.

Our Level 3 embedded derivative liability, as well as the estimated fair value of the deferred royalty obligation, is described in Note 15, “ Long-Term Obligations

Property and Equipment, Net

Property and equipment are recorded at cost, less accumulated depreciation.

Property and equipment are recorded at cost, less accumulated depreciation and amortization.

Depreciation is recorded using the straight-line method over the estimated useful lives of the respective assets, generally three to five years .

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Expenditures for maintenance and repairs are charged to expense while the costs of significant improvements are capitalized.

Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are eliminated from the balance sheets and any related gains or losses are reflected in the consolidated statements of operations.

Upon retirement or sale, the costs of the assets disposed of and the related accumulated depreciation or amortization is eliminated from the balance sheets and any related gains or losses are reflected in the consolidated statements of operations.

We adopted Accounting Standards Update (“ASU”) 2016-02,

Leases (Topic 842)

, as well as subsequent amendments, which were codified in ASC 842, on January 1, 2019, using the optional transition method.

Pursuant to the guidance under ASU 2016-02,

we elected the optional package of practical expedients to leases that commenced prior to the effective date, which allowed us to not reassess:

(i) whether expired or existing contracts contain leases;

(ii) lease classification for any expired or existing leases;

and (iii) initial direct costs for any existing leases.

The new standard also allows entities to make certain policy elections, some of which we elected, including:

(i) a policy to not record right-of-use

assets and leases on the balance sheet for short-term leases that qualify and (ii) a policy to not separate lease and non-lease

components for certain classes of underlying assets on contracts entered into or modified after the effective date.

We did not elect the use of hindsight in estimating the lease term for leases subject to transition to the new standard.

The standard had a material impact on our consolidated balance sheet as of December 31, 2019, specifically through recognition of right-of-use

assets of $ 11.7 million and lease liabilities of $ 16.0 million for our existing operating lease for office space in Newton, MA on the effective date.

The difference between the operating lease right-of-use

assets and operating lease liabilities is due to the change in classification of deferred rent and lease incentives through December 31, 2018 of $ 4.3 million from liabilities to a reduction in our operating lease right-of-use

The standard did not have a material impact on our consolidated statements of operations and comprehensive loss for the year ended December 31, 2019, as expense for our existing operating leases continues to be recognized consistent with the recognition pattern before adoption of the new standard.

At the inception of an arrangement, we determine if an arrangement is, or contains, a lease based on the unique facts and circumstances present in that arrangement.

Lease classification, recognition, and measurement are then determined at the lease commencement date.

For arrangements that contain a lease we (i) identify lease and non-lease

components, (ii) determine the consideration in the contract, (iii) determine whether the lease is an operating or financing lease;

and (iv) recognize lease right-of-use

assets and liabilities.

Lease liabilities and their corresponding right-of-use

assets are recorded based on the present value of lease payments over the expected lease term.

The interest rate implicit in lease contracts is typically not readily determinable and as such, we use

our incremental borrowing rate based on the information available at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment.

Most leases include options to renew and, or, terminate the lease, which can impact the lease term.

The exercise of these options is at our discretion and we do not include any of these options within the expected lease term as we are not reasonably certain we will exercise these options.

Fixed, or in substance fixed, lease payments on our operating lease are recognized over the expected term of the lease on a straight-line basis.

Variable lease expenses that are not considered fixed, or in substance fixed, are recognized as incurred.

Fixed and variable lease expense on our operating lease is recognized within operating expenses within our consolidated statements of operations.

Long-Lived Assets

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We have not recorded an impairment in any period since inception.

Deferred Rent

Deferred rent consists of rent escalation payment terms, tenant improvement allowances and other incentives received from landlords related to our operating leases under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 840.

Rent escalation represents the difference between actual operating lease payments due and straight-line rent expense.

Tenant improvement allowances and other incentives were also recorded as deferred rent under ASC 840 through December 31, 2018.

Deferred rent and lease incentives are recorded as a reduction to our operating lease right-of-use

assets as of December 31, 2019.

Accrued Research and Development Costs

As part of the process of preparing our consolidated financial statements, we estimate our accrued research and development costs.

This process involves reviewing quotes and contracts, identifying services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost.

Most of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met.

We make estimates of our accrued research and development costs at each balance sheet date in our financial statements based on facts and circumstances known to us at that time.

We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary.

The significant estimates in our accrued research and development costs include fees paid to contract research organizations (“CROs”), and contract manufacturing organizations (“CMOs”), in connection with research and development activities for which we have not yet been invoiced.

We base our expenses related to CROs and CMOs on our estimates of the services received and efforts expended pursuant to quotes and contracts with CROs and CMOs that conduct research and development activities on our behalf.

The payment terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.

There may be instances in which payments made to our service providers will exceed the level of services provided and result in a prepayment of the research and development expense.

In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period.

If the actual timing of the performance of services or the level of effort varies from our estimates, we adjust the accrual or prepayment accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.

Our estimates have not been materially different than amounts actually incurred to date.

Revenue Recognition

We adopted Accounting Standards Update (“ASU”) 2014-09,

We adopted ASU 2014-09,

Revenue from Contracts with Customers

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ASC 606 applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements, and financial instruments.

Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects

the consideration which we expect to receive in exchange for those goods or services.

Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps:

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Product Revenue Recognition

In the third quarter of 2019, we began to ship XPOVIO in the United States to specialty pharmacies and specialty distributors, collectively referred to as our customers, under a limited number of distribution arrangements with such third parties.

In the third quarter of 2019, we began to ship XPOVIO in the U.S.

to specialty pharmacies and specialty distributors, collectively referred to as our customers, under a limited number of distribution arrangements with such third parties.

Our specialty pharmacy customers resell XPOVIO directly to patients, while our specialty distributor customers resell XPOVIO to healthcare entities, who then resell to patients.

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Revenue from product sales is recorded at the net sales price, which includes estimates of variable consideration for which reserves are reported.

These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer).

These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are generally classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer).

Certain of the amounts noted are known at the time of sale based on contractual terms and, therefore, are recorded pursuant to the most likely amount method under ASC 606.

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We provide customary discounts on XPOVIO sales to our customers for prompt payment, terms for which are explicitly stated in our contracts with such customers.

We also pay fees for distribution services to our customers for sales order management, data, and distribution services, terms for which are also explicitly stated in our contracts with such customers.

We also pay fees

for distribution services to our customers for sales order management, data, and distribution services, terms for which are also explicitly stated in our contracts with such customers.

Such fees are not for a distinct good or service and, accordingly, are recorded as a reduction of revenue, as well as a reduction to accounts receivable (cash discounts) or as a component of accrued expenses (distributor fees).

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We estimate the amount of product sales that will be returned using a probability-weighted estimate, initially calculated based on data from similar products and other qualitative considerations, such as visibility into the inventory remaining in the distribution channel.

Reserves for estimated returns are recorded as a reduction of revenue in the period that the related revenue is recognized, as well as a reduction to accounts receivable.

Reserves for estimated returns are recorded as a reduction of revenue in the period that the related revenue is recognized, as well as a component of accrued expenses.

Based on the distribution model for XPOVIO, contractual inventory limits with our customers, the price of XPOVIO, and limited contractual return rights, we currently believe there will be minimal XPOVIO returns.

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Government rebates

We are subject to discount obligations under state Medicaid programs, Medicare, the Department of Veterans Affairs (“VA”), the Department of Defense (“DOD”), and others.

We are subject to discount obligations under state Medicaid programs, Medicare, the Department of Veterans Affairs, the Department of Defense, and others.

These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability, which is included as a component of accrued expenses.

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Other incentives offered by us include co-payment

assistance, which we provide as financial assistance to patients with commercial insurance which requires prescription drug co-payments

assistance, which we provide as financial assistance to patients with commercial insurance that requires prescription drug co-payments

by the patient.

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assistance amounts per claim that we expect to receive associated with sales of XPOVIO that have been recognized as revenue but remain in distribution channel inventories at the end of the reporting period.

Such estimates are based on experience with similar products in the industry, as well as actuals for our product sales to date.

Such estimates are based on industry experience with similar products, as well as actual amounts from our product sales to date.

Any adjustments to such estimated liabilities on units in the distribution channel at period end, as well as actual amounts incurred on units sold through the distribution channel during the period, are recorded in the same period that the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability, which is included as a component of accrued expenses.

Product revenue reserves and allowances:

As noted above, cash discounts, product returns, and chargebacks are recorded as reductions of accounts receivable and distributor fees, government rebates, and other incentives are recorded as a component of accrued expenses.

To date, we have determined a material reversal of revenue would not occur in a future period, for the estimates detailed above, as of December 31, 2019 and,

therefore, the transaction price was not reduced further during the year ended December 31, 2019.

As noted above, cash discounts and chargebacks are recorded as reductions of accounts receivable and product returns, distributor fees, government rebates, and other incentives are recorded as a component of accrued expenses.

To date, we have determined a material reversal of revenue would not occur in a future period, for the estimates detailed above, as of December 31, 2020 and, therefore, the transaction price was not reduced further during the year ended December 31, 2020.

Actual amounts of consideration ultimately received may differ from our estimates.

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At the end of each reporting period, we re-evaluate

the probability of achieving development milestone payments which may not be subject to a material reversal and, if necessary, adjust our estimate of the overall transaction price.

the probability of achieving development milestone payments that may not be subject to a material reversal and, if necessary, adjust our estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up

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Contract liabilities within deferred revenue are recognized as revenue after control of the goods or services is transferred to the customer and all revenue recognition criteria have been met.

For arrangements that include sales-based royalties, including sales-based milestone payments, and a license of intellectual property that is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of when the related sales occur or when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

For arrangements that include sales-based royalties, including sales-based milestone payments, and a license of intellectual property that is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of when the related sales occur or when the performance obligation to which some or all of the royalties have been allocated has been satisfied (or partially satisfied).

Accounts Receivable

In general, accounts receivable consists of amounts due from customers, net of customer allowances for cash discounts, product returns, and chargebacks.

Our contracts with customers have standard payment terms that

generally require payment within 30 days for specialty pharmacy customers and 65 days for specialty distributor

We analyze accounts that are past due for collectability, and periodically evaluate the creditworthiness of our customers.

As of December 31, 2019, we determined an allowance for doubtful accounts was not required based upon our review of contractual payment terms and individual customer circumstances.

In general, accounts receivable consists of amounts due from customers, net of customer allowances for cash discounts and chargebacks.

Our contracts with customers have standard payment terms that generally require payment within 30 days for specialty pharmacy customers and 65 days for specialty distributor customers.

We analyze accounts for collectability, and periodically evaluate the creditworthiness of our customers.

As of December 31, 2020 and 2019, respectively, we determined there were no credit losses associated with our accounts receivable based upon our review of contractual payment terms and individual customer circumstances, and therefore, an allowance for doubtful accounts was not required.

Prior to regulatory approval, we expense costs relating to the production of inventory as research and development expense in the period incurred.

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We determine the cost of our inventories, which includes amounts related to materials and manufacturing overhead, on a first-in,

Raw materials and work in process includes all inventory costs prior to packaging and labelling, including raw material, active product ingredient, and drug product.

Raw materials and work in process includes all inventory costs prior to packaging and labelling, including raw material, active pharmaceutical ingredient, and drug product.

Finished goods include packaged and labelled products.

Inventories that may be used for either research and development or commercial sale are classified as inventory until the material is consumed or otherwise allocated for research and development.

Raw materials and work in process that may be used for either research and development or commercial sale are classified as inventory until the material is consumed or otherwise allocated for research and development.

If the material is intended to be used for research and development, it is expensed as research and development once that determination is made.

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The determination of whether inventory costs will be realizable is based on our estimates.

If actual market conditions are less favorable than projected by us, additional write-downs of inventory may be required, which would be recorded as cost of sales.

If actual market conditions are less favorable than we project, additional write-downs of inventory may be required, which would be recorded as cost of sales.

Cost of Sales

Cost of sales includes the cost of producing and distributing inventories that are related to product revenue during the respective period, including salary related and stock-based compensation expense for employees involved with production and distribution, freight, and indirect overhead costs, as well as third-party royalties payable on product revenue, net.

Cost of sales includes the cost of producing and distributing inventories that are related to product revenue during the respective period, including salaryrelated and stock-based compensation expense for employees involved with production and distribution, freight, and indirect overhead costs, as well as third-party royalties payable on net product revenue.

In addition, shipping and handling costs for product shipments are recorded in cost of sales as incurred.

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Deferred Royalty Obligation

We treat the liability related to net revenues, as discussed further in Note 15, as a deferred royalty obligation, amortized under the effective interest rate method over the estimated life of the revenue streams.

We treat the liability related to net revenues, as discussed further in Note 15, “

Long-term obligations”

, as a deferred royalty obligation, amortized under the effective interest rate method over the estimated life of the revenue streams.

We recognize interest expense thereon using the effective rate, which is based on our current estimates of future revenues over the life of the arrangement.

In connection therewith, we periodically assess our expected revenues using internal projections, impute interest on the carrying value of the deferred royalty obligation, and record interest expense using the imputed effective interest rate.

To the extent our estimates of future revenues are greater or less than previous estimates or the estimated timing of such payments is materially different than

previous estimates, we will account for any such changes by adjusting the effective interest rate on a prospective basis, with a corresponding impact to the reclassification of our deferred royalty obligation.

To the extent our estimates of future revenues are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, we will account for any such changes by adjusting the effective interest rate on a prospective basis, with a corresponding impact to the reclassification of our deferred royalty obligation.

The assumptions used in determining the expected repayment term of the deferred royalty obligation and amortization period of the issuance costs requires that we make estimates that could impact the short-term and long-term classification of such costs, as well as the period over which such costs will be amortized.

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costs associated with preclinical activities and regulatory operations.

Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided to us by our vendors on their actual costs incurred.

Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are accordingly reflected in the financial statements as prepaid or accrued research and development.

Costs for certain research and development activities, such as clinical trials, are recognized based on various inputs, including an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, and other information provided to us by our vendors on their actual costs incurred.

Comprehensive Loss

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The functional currency of our subsidiaries in Germany and Israel are the Euro and Shekel, respectively.

Foreign currency transaction gains and losses are recorded in the consolidated statement of operations.

Net foreign exchange losses of less than $ 0.1 million were recorded in other income for the years ended December 31, 2019, 2018 and 2017.

Foreign currency transaction gains and losses are recorded in the consolidated statements of operations.

Net foreign exchange losses of $ 0.3 million were recorded in other income (expense), net for the year ended December 31, 2020.

Net foreign exchange losses of less than $ 0.1 million were recorded in other income (expense), net for the years ended December 31, 2019 and 2018.

We use the liability method of accounting for income taxes.

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We recognize interest and/or penalties related to income tax matters in income tax expense.

Our foreign tax provision pertains to foreign income taxes due at our German subsidiary which operates on a cost plus profit margin basis.

The Tax Cuts and Jobs Act of 2017 (“TCJA”) resulted in significant changes to the U.S.

corporate income tax system.

For additional details regarding this act, see Note 14

, “Income Taxes”.

Our state tax provision pertains to income generated by our KPSC entity.

Our foreign tax provision pertains to foreign income taxes due by our German and Israel subsidiaries, both of which operate on a cost-plus profit margin basis.

Accounting for Stock-Based Compensation

We account for our stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation

ASC 718 requires all stock-based payments to employees

and non-employees,

including grants of employee stock options, restricted stock and restricted stock units, as

as modifications to existing stock options and shares issued under our employee stock purchase plan (“ESPP”), to be recognized in the consolidated statements of operations based on their fair values.

ASC 718 requires all stock-based payments to employees and non-employees,

including grants of employee stock options, restricted stock and restricted stock units, as well as modifications to existing stock options and shares issued under our employee stock purchase plan (“ESPP”), to be recognized in the consolidated statements of operations based on their fair values.

We use the Black-Scholes option pricing model to determine the fair value of options granted.

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Our potential dilutive shares, stock options, unvested restricted stock and restricted stock units are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect at December 31, 2019, 2018 and 2017 (in common stock equivalent shares):

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect (in thousands):

As of December 31,

Outstanding stock options

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We have the option to settle the conversion obligation for our 3.00% convertible senior notes due 2025 (the “Notes”) in cash, shares or any combination of the two.

As the Notes are not convertible as of December 31, 2019, they are not participating securities and they will not have an impact on the calculation of basic earnings or loss per share.

Based on our net loss position, there is no impact on the calculation of dilutive loss per share during the year ended December 31, 2019.

As the Notes were not convertible as of December 31, 2020, they were not participating securities and they did not have an impact on the calculation of basic earnings or loss per share.

Based on our net loss position, there was no impact on the calculation of dilutive loss per share during the year ended December 31, 2020.

Recently Adopted Accounting Standards

In February 2016, the FASB issued ASU No.

Leases (Topic 842)

(“ASU 2016-02”),

which supersedes the lease guidance under FASB ASC Topic 840, Leases

, resulting in the creation of FASB ASC Topic 842, Leases

The FASB also issued amendments to ASU 2016-02,

including ASU 2018-10,

Codification Improvements to Topic 842, Leases

(“ASU 2018-10”)

and ASU 2018-11,

Leases (Topic 842) Targeted

(“ASU 2018-11”),

which we collectively refer to as the new leasing standard.

In summary, the new leasing standard requires that all lessees (i) recognize, on the balance sheet, liabilities to remit lease payments and right-of-use

assets, representing the right to use the underlying asset for the lease term for both finance and operating leases, and (ii) disclose qualitative and quantitative information about its leasing arrangements.

We adopted the standard effective January 1, 2019 using the optional transition method under ASU 2018-11

and, therefore, prior period financial information has not been retrospectively adjusted.

Pursuant to the guidance under ASU 2016-02,

we elected the optional package of practical expedients to leases that commenced prior to the effective date, which allowed us to not reassess:

(i) whether expired or existing contracts contain leases;

(ii) lease classification for any expired or existing leases;

and (iii) initial direct costs for any existing leases.

The new standard also allows entities to make certain policy elections, some of

which we elected, including:

(i) a policy to not record right-of-use

assets and leases on the balance sheet for short-term leases that qualify and (ii) a policy to not separate lease and non-lease

components for certain classes of underlying assets on contracts entered into or modified after the effective date.

We did not elect the use of hindsight in estimating the lease term for leases subject to transition to the new standard.

As summarized in the table below, the standard had a material impact on our condensed consolidated balance sheet as of December 31, 2019, specifically through recognition of right-of-use

assets of $ 11.7 million

and lease liabilities of $ 16.0 million for our existing operating lease for office space in Newton, MA on the effective date.

The difference between the operating lease right-of-use

assets and operating lease liabilities is due to the change in classification of deferred rent and lease incentives through December 31, 2018 from liabilities to a reduction in our operating lease right-of-use

However, the standard did not have a material impact on our consolidated statement of operations and comprehensive loss for the twelve months ended December 31, 2019, as expense for our existing operating leases continues to be recognized consistent with the recognition pattern before adoption of the new standard.

Please refer to Note 9, “Commitments and Contingencies” for further information

January 1, 2019

Consolidated balance sheet data (in thousands):

Operating lease and right-of-use

Deferred rent(2)

Deferred rent non-current(2)

Operating lease liabilities(3)

operating lease

liabilities(3)

Represents capitalization of operating lease right-of-use

assets, offset by reclassification of deferred rent and tenant incentives to operating lease right-of-use

Represents reclassification of deferred rent and tenant incentives to operating lease right-of-use

Represents recognition of operating lease liabilities.

We implemented internal controls to enable the preparation of financial information upon adoption.

In June 2018, the FASB issued ASU No.

Compensation-Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting

(“ASU 2018-07”).

largely aligns the accounting for share-based payment awards issued to employees and nonemployees by expanding the scope of Topic 718 to apply to nonemployee share-based transactions, as long as the transaction is not effectively a form of financing.

The new guidance was adopted on January 1, 2019 and it did not have a material impact on our consolidated financial statements.

In November 2018, the FASB issued ASU No.

Collaborative Arrangements (Topic 808)—Clarifying the Interaction between Topic 808 and Topic 606

(“ASU 2018-18”).

The amendments in ASU 2018-18

clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606, when the collaborative arrangement participant is a customer in the context of a unit of account.

The amendments under ASU 2018-18

are effective for interim and annual fiscal periods beginning after December 15, 2019, with early adoption permitted.

The amendments in ASU 2018-18

should be applied retrospectively to the date of initial application of ASC 606.

We adopted this guidance effective January 1, 2019 using the modified retrospective approach.

The adoption of this standard did not have a material impact on our condensed consolidated financial statements, as each of our arrangements detailed below within Note 11

, “License and Asset Purchase Agreements,” were previously accounted for under ASC 606, not ASC 808, and we have no other arrangements within the scope of ASC 808.

In December 2019, the FASB issued ASU No.

Simplifying the Accounting for Income Taxes

(“ASU 2019-12”).

The ASU removes the exception to the incremental approach for intraperiod allocation of tax expense when a company has a loss from continuing operations and income from other items that are not included in continuing operations, such as income recorded in Other Comprehensive Income.

The general rule under ASC 740-20-45-7

is that the tax effect of pretax income or loss from continuing operations should be determined by a computation that does not consider the tax effects of items that are not included in continuing

(the so-called

incremental approach).

Previously, companies could consider the impact on a loss from continuing operations of items in discontinued operations or other comprehensive income.

However, under the amended guidance, companies should not consider the effect of items outside of continuing operations in calculating the tax effect on continuing operations.

The new guidance is effective for public business entities with fiscal years, and the related interim periods, beginning after December 15, 2020.

For other entities, the ASU is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

The guidance in the ASU may be adopted prior to the effective date.

We adopted this guidance effective January 1, 2019.

The adoption of this standard did not have a material impact on our condensed consolidated financial statements.

Recently Issued Accounting Standards

In June 2016, the FASB issued ASU No.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No.

Financial Instruments—Credit Losses (Topic 326):

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(“ASU 2016-13”).

requires that credit losses be reported as an allowance using an expected losses model, representing the entity’s current estimate of credit losses expected to be incurred.

The accounting guidance currently in effect is based on an incurred loss model.

Certain amendments thereto were also issued by the FASB.

and the related amendments require that credit losses be reported as an allowance using an expected loss model, representing the

entity’s current estimate of credit losses expected to be incurred.

The previous accounting guidance, as applied by us through December 31, 2019, was based on an incurred loss model.

For available-for-sale

debt securities with unrealized losses, this standard now requires allowances to be recorded instead of reducing the amortized cost of the investment.

The amendments under ASU 2016-13

are effective for interim and annual fiscal periods beginning after December 15, 2019.

We do not expect the adoption of ASC 2016-13

to have a material impact on our consolidated financial statements.

debt securities with unrealized losses, ASU 2016-13

and the related amendments now require allowances to be recorded instead of reducing the amortized cost of the investment.

and the related amendments were effective for

interim and annual fiscal periods beginning after December 15, 2019.

We adopted this guidance effective January 1, 2020.

The adoption of this standard did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No.

Fair Value Measurement—Disclosure Framework-Changes to the Disclosure Requirement for Fair Value Measurement

Fair Value Measurement

— Disclosure Framework-Changes to the Disclosure Requirement for Fair Value Measurement

(“ASU 2018-13”).

The amendments in ASU 2018-13

modify the disclosure requirements on fair value measurements in ASC 820, Fair Value Measurement, based on the concepts in the FASB Concepts Statement, including the consideration of costs and benefits.

modify the disclosure requirements on fair value measurements in Accounting Standards Codification (“ASC”) 820, Fair Value Measurement

, based on the concepts in the FASB Concepts Statement, including the consideration of costs and benefits.

The amendments under ASU 2018-13

are effective for interim and annual fiscal periods beginning after December 15, 2019, with early adoption permitted.

We do not expect ASU 2018-13

to have a material impact on our consolidated financial statements

were effective for interim and annual fiscal periods beginning after December 15, 2019, with early adoption permitted.

We adopted this guidance effective January 1, 2020.

The adoption of this standard did not have a material impact on our consolidated financial statements.

Recently Issued Accounting Standards

In August 2020, the FASB issued ASU No.

Intangible-Goodwill and Other Internal-Use Software (Subtopic 350-40)

Debt—Debt with Conversion and Other Options

(Subtopic 470-20)

and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)

(“ASU 2020-06”).

updates guidance regarding accounting for implementation costs associated with a cloud computing arrangement that is a service contract.

The amendments under ASU 2018-15

are effective for interim and annual fiscal periods beginning after December 15, 2019, with early adoption permitted.

We do not expect the adoption of ASU 2018-15

to have a material impact on our consolidated financial statements.

reduces complexity of accounting for convertible debt and other equity-linked instruments.

The new standard is effective for companies that are SEC filers (excluding smaller reporting companies) for fiscal years beginning after December 15, 2021 and interim periods within that year, and two years later for other companies.

Companies can early adopt the standard at the start of a fiscal year beginning after December 15, 2020.

The standard can either be adopted on a modified retrospective or a full retrospective basis.

We plan to early adopt the standard on January 1, 2021 using the modified retrospective basis.

Upon adoption of ASC 2020-06,

we expect the carrying value of our convertible debt will increase by approximately $ 50.6 million with a corresponding decrease to additional paid-in

capital of $ 65.6 million and a decrease to accumulated deficit of $ 15.0 million.

Our deferred tax liability is also expected to decrease by approximately $ 11.8 million with a corresponding increase in the income tax valuation allowance.

While we do not expect a material impact to our consolidated statements of operations and consolidated statements of cash flows upon adoption, non-cash

interest expense associated with the amortization of debt discounts will be significantly reduced in future periods.

In March 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law and provides an estimated $ 2.2 trillion to fight the COVID-19

pandemic and stimulate the U.S.

The business tax provisions of the CARES Act include temporary changes to income and non-income-based

Some of the key income tax provisions include (i) eliminating 80% of taxable income limitations by allowing corporate entities to fully utilize net operating loss (“NOL”) carryforwards to offset taxable income in 2020, 2019 or 2018 and reinstating it for tax years after 2020;

(ii) allowing NOLs generated in 2020, 2019 or 2018 to be carried back five years;

(iii) increasing the net interest expense deduction limit to 50% of adjusted taxable income from 30% for the 2020 and 2019 tax years;

(iv) allowing taxpayers with alternative minimum tax credits to claim a refund for the entire amount of the credit instead of recovering the credit through refunds over a period of years, as required by the 2017 Tax Cut and Jobs Act;

and (v) allowing entities to deduct more of their charitable cash contributions made during calendar year 2020 by increasing the taxable income limitation to 25% from 10%.

Companies are required to account for these provisions in the period that includes the March 2020 enactment date (i.e., the first quarter for calendar year-end

We have assessed the impact of these provisions and they are not material to our consolidated financial statements or related disclosures.

Measures not related to income-based taxes within the CARES Act include (i) allowing an employer to pay its share of Social Security payroll taxes that would otherwise be due from the date of enactment through December 31, 2020 over the following two years and (ii) allowing eligible employers subject to closure due to the COVID-19

pandemic to receive a 50% credit on qualified wages against their employment taxes each quarter, with any excess credits eligible for refunds.

These measures of the CARES Act also are not material to our consolidated financial statements or related disclosures.

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

Estimated Useful

Estimated Useful Life

Laboratory equipment

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Less accumulated depreciation and amortization

Depreciation and amortization expense recorded for the years ended December 31, 2019, 2018, and 2017 was $ 1.0

$ 0.7 million and $ 0.7 million, respectively.

Depreciation and amortization expense recorded for the years ended December 31, 2020, 2019, and

2018 was $ 1.0 million, $ 1.0 million and $ 0.7 million, respectively.

The following table summarizes our investments in debt securities, classified as available-for-sale

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government and agency securities

Corporate debt securities (one to two year maturity)

Corporate debt securities (one to two-year

government and agency securities (one to two-year

The following table summarizes our investments in debt securities, classified as available-for-sale

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government and agency securities

Certificates of deposit

Corporate debt securities (one to two year maturity)

At December 31, 2019 and December 31, 2018, we held 27 and 79 debt securities, respectively, that were in an unrealized loss position.

The aggregate fair value of debt securities in an unrealized loss position at December 31, 2019 and 2018 was $ 63.8 million and $ 180.6 million, respectively.

As of December 31, 2019 we did no

t have any securities in a continuous unrealized loss position for more than 12 months.

As of December 31, 2018, 8 corporate debt securities with a fair value of $ 14.9 million had been in a continuous unrealized loss position for more than 12 months.

The unrealized losses of less than $ 0.1 million related to these corporate debt securities were included in accumulated other comprehensive loss as of December 31, 2018.

At December 31, 2018, we did not intend to sell the securities with an unrealized loss position in accumulated other comprehensive income, and it was not likely that we would be required to sell these securities before recovery of their amortized cost basis.

We review investments for other-than-temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time.

Other-than-temporary impairments of investments are recognized in the consolidated statements of operations if we have experienced a credit loss and have the intent to sell the

investment or if it is more likely than not that we will be required to sell the investment before recovery of the amortized cost basis.

Evidence considered in this assessment includes reasons for the impairment, compliance with our investment policy, the severity and the duration of the impairment and changes in value subsequent to the end of the period.

The unrealized losses at December 31, 2019 and 2018 are attributable to changes in interest rates, and we do no

t believe any unrealized losses represent other-than-temporary impairments.

The following table presents our inventory of XPOVIO at December 31, 2019 and 2018 (in thousands):

December 31, 2019

December 31, 2018

Raw materials and work in process

Corporate debt securities (one to two-year

At December 31, 2020 and 2019, we held 37 and 27 debt securities, respectively, that were in an unrealized loss position.

The unrealized losses at December 31, 2020 and 2019 are attributable to changes in interest rates and we do no t believe any unrealized losses represent credit losses.

We do not intend to sell these securities and it is not more likely than not that we will be required to sell them before recovery of their amortized cost basis.

The following table summarizes our debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded at December 31, 2020, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

Less than 12 Months

12 Months or Longer

Commercial paper

Corporate debt securities

The following table summarizes our debt securities in an unrealized loss position for which an allowance for credit losses has not been recorded at December 31, 2019, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands):

Less than 12 Months

12 Months or Longer

Corporate debt securities

The following table presents our inventory of XPOVIO (in thousands):

Raw materials

Work in process

Finished goods

Total inventory

At December 31, 2019, all of our inventory was related to XPOVIO, which was approved by the FDA in July 2019, at which time we began to capitalize costs to manufacture XPOVIO.

At December 31, 2020 and 2019, all of our inventory was related to XPOVIO, which was approved by the FDA in July 2019, at which time we began to capitalize costs to manufacture XPOVIO.

Prior to FDA approval of XPOVIO, all costs related to the manufacturing of XPOVIO and related material were charged to research and development expense in the period incurred.

At December 31, 2019, we have determined that a reserve related to XPOVIO inventory is not required.

During 2020, we recorded an inventory-related excess and obsolescence provision of $ 0.3 million.

We did no t record such a provision in 2019.

Accrued Expenses

Accrued expenses consisted of the following as of December 31, 2019 and 2018 (in thousands):

Research and development costs

Accrued expenses consisted of the following (in thousands):

Payroll and employee-related costs

Research and development costs

Professional fees

Related Party Transactions

We paid consulting expenses of $ 0.2 million for the years ended December 31, 2019 and 2018, for consulting services with certain related parties, including a family member of management and a board member.

At December 31, 2019 and 2018, there was

respectively, included in accounts payable and accrued expenses due to related parties.

We paid consulting expenses of $ 0.3 million, $ 0.2 million and $ 0.2 million for the years ended December 31, 2020,

2019 and 2018, respectively, for consulting services with certain related parties, including a family member of management and a board member.

At both December 31, 2020 and 2019, there was less than $ 0.1 million included in accounts payable and accrued expenses due to related parties.

Stockholders’ Equity

Underwritten Offerings

On May 7, 2018, we completed a follow-on

On March 6, 2020, we completed a follow-on

offering under our shelf registration statement on Form S-3

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We received aggregate net proceeds of approximately $ 161.8 million from the offering after deducting the underwriting discounts and commissions and other offering expenses.

On April 28, 2017, we completed a follow-on

On May 7, 2018, we completed a follow-on

offering under our shelf registration statement on Form S-3

pursuant to which we issued an aggregate of 3,902,439 shares of common stock at a public offering price of $ 10.25 per share.

We received net proceeds of approximately $ 37.9 million

from the offering after deducting the underwriting discount and commissions and offering expenses.

Controlled Equity Offering Sales Agreement

On December 7, 2015, we entered into a Controlled Equity Offering Sales Agreement (as amended on November 7, 2016 and December 1, 2017, the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent (“Cantor”), pursuant to which we issued and sold through Cantor an aggregate of 9,172,159 shares of our common stock, for net proceeds of approximately $ 89.1 million.

The Sales Agreement was terminated effective August 12, 2018 .

Under the Sales Agreement, Cantor sold shares of our common stock by methods deemed to be an “at-the-market”

offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

We paid Cantor a commission of up to 3.0 % of the gross proceeds from the sale of the shares of our common stock pursuant to the Sales Agreement and provided Cantor with customary indemnification and contribution rights.

During the year ended December 31, 2018, we did not sell any shares under the Sales Agreement.

During the year ended December 31, 2017, we sold an aggregate of 3,405,763 shares under the Sales Agreement for net proceeds of approximately $ 37.0 million.

pursuant to which we issued an aggregate of 10,525,424 shares of common stock, which included the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $ 14.75 per share.

We received aggregate net proceeds of approximately $ 145.7 million from the offering after deducting the underwriting discounts and commissions and other offering expenses.

Open Market Sale Agreement

On August 17, 2018, we entered into an Open Market Sale Agreement (the “Open Market Sale Agreement”) with Jefferies LLC, as agent (“Jefferies”), pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $ 75.0 million (the “Open Market Shares”) from time to time through Jefferies (the “Open Market Offering”).

Under the Open Market Sale Agreement, Jefferies may sell the Open Market Shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act.

We may sell the Open Market Shares in amounts and at times to be determined by us from time to time subject to the terms and conditions of the Open Market Sale Agreement, but we have no obligation to sell any of the Open Market Shares in the Open Market Offering.

On August 17, 2018, we entered into an Open Market Sale Agreement (the “Open Market Sale Agreement”) with Jefferies LLC, as agent (“Jefferies”), pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $ 75.0 million from time to time through Jefferies (the “Open Market Offering”).

On May 5, 2020, we entered into Amendment No.

1 to the Open Market Sale Agreement, pursuant to which we increased the maximum aggregate offering price of shares of our common stock that we may issue and sell from time to time through Jefferies, by $ 100.0 million, from $ 75.0 million to up to $ 175.0 million (the “Open Market Shares”).

We or Jefferies may suspend or terminate the offering of Open Market Shares upon notice to the other party and subject to other conditions.

We have agreed to pay Jefferies commissions for its services in acting as agent in

the sale of the Open Market Shares in the amount of up to 3.0 % of gross proceeds from the sale of the Open Market Shares pursuant to the Open Market Sale Agreement.

We have agreed to pay Jefferies commissions for its services in acting as agent in the sale of the Open Market Shares in the amount of up to 3.0 % of gross proceeds from the sale of the Open Market Shares pursuant to the Open Market Sale Agreement.

We have also agreed to provide Jefferies with customary indemnification and contribution rights.

During the year ended December 31, 2019, we sold an aggregate of 3,712,359 Open Market Shares under the Open Market Sale Agreement, for net proceeds of approximately $ 46.2 million.

During the year ended December 31, 2020, we did no t sell any shares under the Open Market Sale Agreement.

During the year ended December 31, 2019, we sold an aggregate of 3,712,359 shares of our common stock under the Open Market Sale Agreement, for net proceeds of approximately $ 46.2 million.

Commitments and Contingencies

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asset of $ 11.7 million and corresponding lease liability of $ 16.0 million related only to the Newton, MA Lease.

As of December 31, 201 8

, there was a balance of $ 1.7 million and $ 2.6 million related to unamortized deferred rent and tenant incentive allowances, respectively, for the Newton, MA Lease, both accounted for as liabilities.

As of December 31, 2018, there was a balance of $ 1.7 million and $ 2.6 million related to unamortized deferred rent and tenant incentive allowances, respectively, for the Newton, MA Lease, both accounted for as liabilities.

These balances were deducted from the lease liability on the Newton, MA Lease in arriving at the right-of-use

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The Newton, MA Lease also includes real estate taxes and common area maintenance (“CAM”) charges in the annual rental payments.

As these charges were included in minimum annual rental payments as part of our accounting for the Newton, MA Lease under ASC 840 through December 31, 2018, we have included such amounts in the calculation of the operating lease liability, consistent with ASC 842 and our accounting policy elections thereunder, as specified in Note 2, “Recent Accounting Pronouncements.” The operating lease cost for the Newton, MA Lease for the year ended December 31, 2019 was $ 2.8 million, of which approximately $ 0.9 million was charges for CAM.

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

The operating lease cost for the Newton, MA Lease for both the years ended December 31, 2020 and 2019 was $ 2.8 million, of which approximately $ 1.0 million and $ 0.9 million, respectively, were charges for CAM.

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 the year ended December 31, 2019.

These costs were insignificant for the years ended December 31, 2020 and 2019.

Lease Commitments

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The incremental borrowing rate is the rate of interest that we would expect to pay to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment.

In determining the incremental borrowing rate, we considered

(i) our estimated public credit rating, (ii) our observable debt yields, as well as other bonds in the market issued by other companies with similar credit ratings as us, and (iii) adjustments necessary for collateral, lease term, and inflation or foreign currency.

In determining the incremental borrowing rate, we considered (i) our estimated public credit rating, (ii) our observable debt yields, as well as other bonds in the market issued by other companies with similar credit ratings as us, and (iii) adjustments necessary for collateral, lease term, and inflation or foreign currency.

From time to time we may face legal claims or actions in the normal course of business.

We have been named as a defendant in securities class action litigation in the U.S.

We were named as a defendant in a securities class action litigation filed on July 23, 2019 in the U.S.

District Court for the District of Massachusetts.

A complaint was filed on July 23, 2019, by the Allegheny County Employees’ Retirement System, against us and certain of our current and former executive officers and directors as well as the underwriters of our public offerings of common stock conducted in April 2017 and May 2018.

A second complaint was filed by Heather Mehdi on September 17, 2019, against the same defendants with the exception of the underwriters.

The two complaints are related and we expect them to be consolidated by the court.

Both complaints allege violations of federal securities laws based on our disclosures related to the results from the Phase 2 SOPRA study and Part 2 of the Phase 2b STORM study, and seek unspecified compensatory damages, including interest;

The complaint was filed by the Allegheny County Employees’ Retirement System, against us and certain of our current and former executive officers and directors as well as the underwriters of our public offerings of common stock conducted in April 2017 and May 2018.

This complaint was voluntarily dismissed on March 12, 2020.

A second complaint was filed by Heather Mehdi on September 17, 2019, in the same court and against the same defendants with the exception of the underwriters.

In April 2020, the court appointed a lead plaintiff, Myo Thant (“Plaintiff”), who filed an amended complaint on June 29, 2020.

The amended complaint alleges violations of federal securities laws based on our disclosures related to the results from the Phase 2 SOPRA study and Part 2 of the Phase 2b STORM study, and seeks unspecified compensatory damages, including interest;

reasonable costs and expenses, including attorneys’ and expert fees;

unspecified recessionary damages;

and such equitable/injunctive relief or other relief as the court may deem just and proper.

We have reviewed the allegations and believe they are without merit.

We moved to dismiss the complaint on July 31, 2020 and concluded related briefing in September 2020.

Before the court ruled on this motion to dismiss, Plaintiff filed a second amended complaint.

We moved to dismiss the second amended complaint on November 2, 2020.

On December 14, 2020, we were named as a

defendant in a shareholder derivative suit based on allegations substantially similar to those in the class action litigation.

The suit was filed in the U.S.

District Court for the District of Massachusetts, by Plaintiff Vladimir Gusinsky Revocable Trust, against us and certain of our current and former executive officers and directors.

On January 12, 2021, the shareholder derivative suit was stayed pending the outcome of further proceedings in the securities class action.

We intend to defend vigorously against this litigation.

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sales of XPOVIO, which we began shipping to our customers in July 2019.

The following table summarizes activity in each of the product revenue allowance and reserve categories from the date of approval by the FDA through December 31, 2019 (in thousands):

The following table summarizes activity in each of the product revenue allowance and reserve categories (in thousands):

Discounts and

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Ending balance at December 31, 2019

Discounts, chargebacks, and returns are recorded as reductions of accounts receivable, and fees, rebates, and other incentives are recorded as a component of accrued expenses.

Provision related to sales in the current year

Credits and payments made

Ending balance at December 31, 2020

Discounts and chargebacks are recorded as reductions of accounts receivable, and returns, fees, rebates, and other incentives are recorded as a component of accrued expenses.

As of December 31, 2020 and 2019, net product revenue of $ 12.9 million and $ 7.9 million, respectively, were included in accounts receivable.

To date, we have had no bad debt write-offs and we do not currently have credit issues with any customers.

There were no credit losses associated with our accounts receivables as of December 31, 2020 and 2019.

License and Asset Purchase Agreements

During 2020, we were a party to the following license and other strategic agreements:

Antengene License Agreement

Effective May 23, 2018 (the “Antengene Effective Date”), we entered into a License Agreement (“Antengene License Agreement”) with Antengene Therapeutics Limited, a corporation organized and existing under the laws of Hong Kong (“Antengene”) and a subsidiary of Antengene Corporation Co.

Ltd., a corporation organized and existing under the laws of the People’s Republic of China, pursuant to which we granted Antengene exclusive rights to develop and commercialize, at its own cost, (i) selinexor, our lead, novel, oral Selective Inhibitor of Nuclear Export (“SINE”) compound, (ii) eltanexor, our second-generation oral SINE compound, and (iii) KPT-9274,

our first-in-class

orally bioavailable small molecule that is a non-competitive

dual modulator of PAK4 and NAMPT, each for the diagnosis, treatment and/or prevention of all human oncology indications (the “Oncology Field”), as well as (iv) verdinexor, our lead compound in development for the

treatment of viral indications for the diagnosis, treatment and/or prevention of certain human non-oncology

indications (the “Non-Oncology

Field”) (the “Antengene Licensed Compounds”).

We licensed the development and commercial rights to Antengene for selinexor and eltanexor in the Oncology Field in mainland China and Macau and licensed the development and commercial rights to Antengene for KPT-9274

in the Oncology Field and verdinexor in the Non-Oncology

Field in mainland China, Taiwan, Hong Kong, Macau, South Korea, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam (the “Antengene Territory”).

Pursuant to the terms of the Antengene License Agreement, we received an upfront payment of $ 11.7 million, and could receive up to $ 105.0 million in milestone payments if certain development and regulatory

goals are achieved and up to $ 45.0 million in milestone payments if certain sales milestones are achieved, as well as a high single-digit to low double-digit royalty based on future net sales of the Antengene Licensed Compounds in the Antengene Territory.

In May 2020, we entered into an amendment to our May 2018 license agreement (the “Original Antengene Agreement” and, as amended, the “Amended Antengene Agreement”) with Antengene Therapeutics Limited, a corporation organized and existing under the laws of Hong Kong (“Antengene”) and a subsidiary of Antengene Corporation Co.

Ltd., a corporation organized and existing under the laws of the People’s Republic of China, pursuant to which we expanded the territory licensed to Antengene in the Original Antengene Agreement for the exclusive development and commercialization rights of selinexor, eltanexor and KPT-9274,

each for the diagnosis, treatment and/or prevention of all human oncology indications, as well as verdinexor for the diagnosis, treatment and/or prevention of certain human non-oncology

indications (“Antengene Licensed Compounds”).

Under the terms of the Amended Antengene Agreement, Antengene has the exclusive development and commercialization rights for the Antengene Licensed Compounds in mainland China, Taiwan, Hong Kong, Macau, South Korea, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand,

Vietnam, Australia and New Zealand (the “Antengene Territory”).

Under the terms of the Original Antengene Agreement, we received an upfront cash payment

of $ 11.7 million in 2018 and in June 2020 we received a one-time

upfront cash payment of $ 11.7 million in connection with the Amended Antengene Agreement.

We are also entitled to future milestone payments from Antengene if certain development, regulatory and commercialization goals are achieved.

Finally, we are also eligible to receive tiered double-digit royalties based on future net sales of selinexor and eltanexor, and tiered single- to double-digit royalties based on future net sales of verdinexor and KPT-9274

in the Antengene Territory.

In addition, upon Antengene’s election and the parties’ full execution of a manufacturing technology transfer plan and satisfaction of other specified conditions (the “Antengene Manufacturing Election”), we will grant to Antengene non-exclusive

rights to manufacture the Antengene Licensed Compounds and products containing such compounds in or outside of the Antengene Territory solely for development and commercialization in the fields in the Antengene Territory.

As part of the Antengene License Agreement, Antengene will also have the right to participate in global clinical studies of the Antengene Licensed Compounds and will bear the cost and expense for patients enrolled in clinical studies in the Antengene Territory.

As part of the Amended Antengene Agreement, Antengene will also have the right to participate in global clinical studies of the Antengene Licensed Compounds and will bear the cost and expense for patients enrolled in clinical studies in the Antengene Territory.

Antengene is responsible for seeking regulatory and marketing approvals for the Antengene Licensed Compounds in the Antengene Territory, as well as any development of the products specifically necessary to obtain such approvals.

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Until such time as Antengene elects to manufacture its own drug substance, we will furnish clinical supplies of drug substance to Antengene for use in Antengene’s development efforts pursuant to a clinical supply agreement between us and Antengene, and Antengene may elect to have us provide commercial supplies of drug product to Antengene pursuant to a commercial supply agreement between us and Antengene, in each case the costs of which will be borne by Antengene.

The Antengene License Agreement will continue in effect on a product-by-product,

The Amended Antengene Agreement will continue in effect on a product-by-product,

country-by-country

basis until the later of the tenth anniversary of the first commercial sale of the applicable product in such country or the expiration of specified patent protection and regulatory exclusivity periods for the applicable product in such country.

However, the Antengene License Agreement may be terminated earlier by (i) either party for breach of the Antengene License Agreement by the other party or in the event of the insolvency or bankruptcy of the other party, (ii) Antengene on a product-by-product basis for certain safety reasons or on a product-by-product, country-by-country basis for any reason with 180 days’ prior notice or (iii) us in the event Antengene challenges or assists with a challenge to certain of our patent rights.

We assessed the Antengene arrangement in accordance with ASC 606 and concluded that the contract counterparty, Antengene, is a customer.

We identified the following material promises under the contract:

(i) exclusive licenses for each Antengene Licensed Compound, (ii) initial data transfers for each Antengene Licensed Compound, which consisted of regulatory data compiled by us for the Antengene Licensed Compounds as of the Antengene Effective Date, and (iii) obligations to stand-ready to provide an initial clinical supply for each Antengene Licensed Compound.

However, the Amended Antengene Agreement may be terminated earlier by (i) either party for breach of the Amended Antengene Agreement by the other party or in the event of the insolvency or bankruptcy of the other party, (ii) Antengene on a product-by-product

basis for certain safety reasons or on a product-by-product,

country-by-country

basis for any reason with 180 days’ prior notice or (iii) us in the event Antengene challenges or assists with a challenge to certain of our patent rights .

We assessed the Amended Antengene Agreement in accordance with ASC 606 and concluded that the amendment was a contract modification.

We further concluded that the performance obligations under the Amended Antengene Agreement were the same performance obligations identified in the Original Antengene Agreement, including the following material promises under the contract:

(i) exclusive licenses for each Antengene Licensed Compound;

(ii) initial data transfers for each Antengene Licensed Compound, which consisted of regulatory data compiled by us for the Antengene Licensed Compounds as of May 2018 (the “Antengene Effective Date”);

and (iii) obligations to stand-ready to provide an initial clinical supply for each Antengene Licensed Compound.

We also identified immaterial promises under the contract relating to information exchanges and participation on operating committees and other working groups.

Separately, we also identified certain customer options that would create an obligation for us if exercised by Antengene, including (i) additional data transfers for each Antengene Licensed Compound, which would consist of the transfer of additional regulatory data compiled by us for each Antengene Licensed Compound after the Antengene Effective Date, (ii) obligations to provide additional clinical supply and related substance supply for each Antengene Licensed Compound upon request by Antengene, (iii) manufacturing technology transfers and licenses for each Antengene Licensed Compound under the Antengene Manufacturing Election, as detailed above, and (iv) options for a backup compound, which represents Antengene’s option to select a replacement compound in the event it elects to discontinue the development of the Antengene Licensed Compounds (the “Antengene Transfer Options”).

The Antengene Transfer Options individually represent material rights, as they were offered at a significant and incremental discount.

Therefore, they were further assessed as performance obligations under the Antengene License Agreement.

(ii) obligations to provide additional clinical supply and related substance supply for each Antengene Licensed Compound upon request by Antengene;

(iii) manufacturing technology transfers and licenses for each Antengene Licensed Compound under the Antengene Manufacturing Election, as detailed above;

and (iv) options for a backup compound, which represents Antengene’s option to select a replacement compound in the event it elects to discontinue the development of the Antengene Licensed Compounds (the “Antengene Transfer Options”).

Antengene Transfer Options individually represent material rights, as they were offered at a significant and incremental discount.

Therefore, they were further assessed as performance obligations under the Amended Antengene Agreement.

Finally, we also identified certain other customer options that would create a manufacturing obligation for us if exercised by Antengene, including for commercial supply.

These options do not represent a material right, as they are not offered at a significant and incremental discount.

In further evaluating the promises detailed above, we determined that the exclusive licenses, initial data transfers, and stand-ready obligation to provide initial clinical supply for each Antengene Licensed Compound were not distinct from one another, and must be combined as four separate performance obligations (the “Antengene Combined License Obligation for selinexor ,

” “Antengene Combined License Obligation for eltanexor ,

” “Antengene Combined License Obligation for KPT-9274”

and “Antengene Combined License Obligation for verdinexor”).

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We also determined that each of the Antengene Transfer Options represents a distinct performance obligation.

Based on these determinations, we identified eight performance obligations at the inception of the Antengene License Agreement, including (i) the Antengene Combined License Obligation for selinexor, (ii) the Antengene Combined License Obligation for eltanexor, (iii) the Antengene Combined License Obligation for KPT-9274,

(iv) the Antengene Combined License Obligation for verdinexor, and the four components of the Antengene Transfer Options, including (v) the material right for additional data transfer, (vi) the material right for additional clinical supply and related substance supply, (vii) the material right for manufacturing technology transfer and license, and (viii) the material right for the option for a backup compound.

Based on these determinations, we identified eight performance obligations at the inception of the Antengene License Agreement, including (i) the Antengene Combined License Obligation for selinexor;

(ii) the Antengene Combined License Obligation for eltanexor;

(iii) the Antengene Combined License Obligation for KPT-9274;

(iv) the Antengene Combined License Obligation for verdinexor;

and the four components of the Antengene Transfer Options, including (v) the material right for additional data transfer;

(vi) the material right for additional clinical supply and related substance supply;

(vii) the material right for manufacturing technology transfer and license;

and (viii) the material right for the option for a backup compound.

We further determined that the up-front

payment of $ 11.7 million constituted the entirety of the consideration included in the transaction price at contract inception, which was allocated to the performance obligations based on their relative stand-alone selling prices.

We determined that substantially all of the total standalone selling price in the arrangement is derived from the four Antengene Combined License Obligations for selinexor, eltanexor, KPT-9274

payment of $ 11.7 million, received upon execution of the Original Antengene Agreement, constituted the entirety of the consideration included in the transaction price at contract inception, which was allocated to the performance obligations based on their relative stand-alone selling prices.

We determined that substantially all of the total standalone selling price in the arrangement was derived from the four Antengene Combined License Obligations for selinexor, eltanexor, KPT-9274

and verdinexor.

In connection therewith, we also estimated the standalone selling price for each of the material rights within the Antengene Transfer Options, and determined that such amounts were insignificant, and, therefore, immaterial for purposes of allocation.

Accordingly, we allocated the $ 11.7 million transaction price amongst the Antengene Combined License Obligations as follows:

Accordingly, we allocated the $ 11.7 million transaction price among the Antengene Combined License Obligations as follows:

$ 9.4 million for selinexor, $ 1.1 million for eltanexor, $ 1.0 million for KPT-9274,

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We believe that a change in the assumptions used to determine our best estimate of the stand-alone selling prices for any of the identified performance obligations would not have a significant effect on the allocation of the underlying transaction price to the performance obligations.

Upon execution of the Antengene License Agreement, the only fixed component of the transaction price included the $ 11.7 million up-front

payment owed to us.

As referenced above, we are eligible to receive additional payments of up to $ 105.0 million in milestone payments if certain development and regulatory

are achieved and up to $ 45.0 million in milestone payments if certain sales milestones are achieved, as well as a high single-digit to low double-digit royalty on future net sales of the Antengene Licensed Compounds in the Antengene Territory.

In addition, we would receive cost reimbursement in connection with Antengene’s election to receive additional clinical supply for the Antengene Licensed Compounds in the future.

We expect to receive

the next milestone payment

under this agreement, which is $ 5.0 million, upon the first NDA filing in the Antengene Territory in Multiple Myeloma.

The future development a nd

regulatory milestones and cost reimbursement for providing additional clinical supply of the Antengene Licensed Compounds, both of which represent variable consideration, were evaluated under the most likely amount method, and were not included in the transaction price at contract inception and/or through December 31, 2019, because the amounts were fully constrained as of December 31, 2019.

As part of our

evaluation of the constraint, we considered numerous factors, including that receipt of such amounts is outside of our control.

Separately, any consideration related to sales-based milestones, as well as royalties on net sales upon commercialization by Antengene, will be recognized when the related sales occur, as they were determined to relate predominantly to the intellectual property licenses granted to Antengene and, therefore, have also been excluded from the transaction price in accordance with the sales-based royalty exception, as well as our accounting policy.

Under the Original Antengene Agreement, we had already fulfilled all of our promises under the combined performance obligations for selinexor and

as of the effective date of the Amended Antengene Agreement.

We recognized $ 1.0 million under the Original Antengene Agreement during the first quarter of 2020 and had recognized $ 9.4 million under the Original Antengene Agreement in 2019.

Accordingly, the licenses to the incremental territories for selinexor and

were considered distinct from the promised goods and services already provided.

By contrast, we have not yet fulfilled all of our promises under the combined performance obligations for eltanexor and verdinexor under the Original Antengene Agreement.

Accordingly, the licenses to the incremental territories for eltanexor and verdinexor are not distinct from promised goods and services already provided.

Based on the conclusions noted above, we updated the transaction price, which included the $ 1.3 million unrecognized deferred revenue from the $ 11.7 million upfront payment we received from Antengene under the terms of the Original Antengene Agreement, and the $ 11.7 million upfront payment we received from Antengene under the terms of the Amended Antengene Agreement, and allocated the total, or $ 13.0 million, to the remaining performance obligations based on their estimated standalone selling prices as of the effective date of the Amended Antengene Agreement.

Since we had already fulfilled all of our promises under the combined

performance obligations for selinexor and KPT-9274

as of the effective date of the Amended Antengene Agreement, we recognized a cumulative adjustment to license revenue

of $ 12.7 million during the year ended December 31, 2020.

For the remaining promises to be fulfilled under the combined performance obligation for eltanexor, we adjusted short-term deferred revenue to $ 0.3 million as of December 31, 2020.

We will recognize such revenue when initial clinical supply of eltanexor is delivered to Antengene, which we expect to be within twelve months from December 31, 2020.

For the remaining promises to be fulfilled under the combined performance obligation for verdinexor, none of the transaction price was allocated thereto, as it was assessed as immaterial in comparison to the other combined performance obligations under the Amended Antengene Agreement.

Finally, we also reassessed other promised goods and services within the modified contract, including customer options and material rights, ultimately concluding such promised goods and services continue to be immaterial.

The future development and regulatory milestones and cost reimbursement for providing additional clinical supply of the Antengene Licensed Compounds, all of which represent variable consideration, were evaluated under the most likely amount method, and were not included in the transaction price at contract inception and/or through December 31, 2020, because the amounts were fully constrained as of December 31, 2020.

As part of our evaluation of the constraint, we considered numerous factors, including that receipt of such amounts is outside of our control.

Separately, any consideration related to sales-based milestones, as well as royalties on net sales upon commercialization of XPOVIO by Antengene, will be recognized when the related sales occur, as they were determined to relate predominantly to the intellectual property licenses granted to Antengene and, therefore, have also been excluded from the transaction price in accordance with the sales-based royalty exception, as well as our accounting policy.

We will re-evaluate

the transaction price in each reporting period, as uncertain events are resolved, or as other changes in circumstances occur.

Through the year ended December 31, 2019, we recognized $ 9.4 million in revenue under the Antengene License Agreement, as the Antengene Combined License Obligation for selinexor was satisfied when the initial clinical supply of selinexor was delivered during the second quarter of 2019.

Revenue will be recognized for the Antengene Combined License Obligation for eltanexor, the Antengene Combined License Obligation for KPT-9274,

and the Antengene Combined License Obligation for verdinexor once our promise to provide initial clinical supply of each of the Antengene Licensed Compounds in the future is fulfilled.

We currently expect the initial clinical supplies of KPT-9274

, eltanexor and verdinexor to be delivered within twelve months of the balance sheet date of December 31, 2019.

Accordingly, and as of December 31, 2019, the remaining $ 2.3 million of the upfront payment represents a contract liability, all of which was included in deferred revenue and is classified as a current liability.

During 2020 and 2019, we recognized $ 13.7 million and $ 9.4 million, respectively, in revenue under the Amended Antengene Agreement.

In addition, in December 2020, we received $ 9.8 million in regulatory milestone payments from Antengene following certain regulatory filings by Antengene for selinexor in both multiple myeloma and DLBCL indications in Australia, Singapore and South Korea.

Biogen Asset Purchase Agreement

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(the “Additional Supply”).

In consideration for these rights, we received an upfront payment of $ 10.0 million, and we are eligible to receive additional payments of up to $ 142.0 million based on the achievement by Biogen of future specified development and regulatory

milestones, and up to $ 65.0 million based on the achievement by Biogen of future specified commercial milestones.

In consideration for these rights, we received an upfront payment of $ 10.0 million in 2018, and we are eligible to receive additional payments of up to $ 142.0 million based on the achievement by Biogen of future specified development and regulatory milestones, and up to $ 65.0 million based on the achievement by Biogen of future specified commercial milestones.

We will also be eligible to receive tiered royalty payments that reach low double-digits based on future net sales until the later of the tenth anniversary of the first commercial sale of the applicable product and the expiration of specified patent protection for the applicable product, determined on a country-by-country

We and Biogen have made customary representations and warranties and agreed to customary covenants in the APA, including covenants requiring Biogen to use commercially reasonable efforts to develop KPT-350

in specified neurological indications, including ALS, in any of the United States, United Kingdom, France, Spain, Germany or Italy.

specified neurological indications, including ALS, in any of the U.S., United Kingdom, France, Spain, Germany or Italy.

The APA will continue in effect until the expiration of all royalty obligations, provided that the APA may be terminated earlier by Biogen, subject to the requirements that Biogen (i) negotiate in good faith with us regarding an assignment or license back to us of the purchased assets and (ii) not transfer or license the purchased assets to a third party unless such third party assumes Biogen’s obligations to us under the APA.

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We also identified immaterial promises under the contract that were not deemed performance obligations.

We further determined that other promises for Additional Supply and Transition

Assistance represented customer options, which would create an obligation for us if exercised by Biogen.

We further determined that other promises for Additional Supply and Transition Assistance represented customer options, which would create an obligation for us if exercised by Biogen.

Since no additional or material consideration is owed to us by Biogen upon exercise of the customer options for Additional Supply and Transition Assistance, we determined that both are offered at significant and incremental discounts.

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We further determined that the up-front

payment of $ 10.0

million constituted the entirety of the consideration included in the transaction price at contract inception, which was allocated to the performance obligations based on their relative stand-alone selling prices.

payment of $ 10.0 million constituted the entirety of the consideration included in the transaction price at contract inception, which was allocated to the performance obligations based on their relative stand-alone selling prices.

In connection therewith, we estimated the stand-alone selling price of the (i) Combined Performance Obligation, (ii) material right for Additional Supply, and (iii) material right for Transition Assistance, and determined that the stand-alone selling price of the material rights for Additional Supply and Transition Assistance were insignificant based on various quantitative and qualitative considerations.

Accordingly, we further determined that the allocation of the transaction price to the material rights for Additional Supply and Transition Assistance was insignificant.

Based on the estimates of the stand-alone selling prices for each of the performance obligations, we determined that substantially all of the $ 10.0

million transaction price should be allocated to the Combined Performance Obligation.

Based on the estimates of the stand-alone selling prices for each of the performance obligations, we determined that substantially all of the $ 10.0 million transaction price should be allocated to the Combined Performance Obligation.

We believe that a change in the assumptions used to determine our best estimate of the stand-alone selling prices for the identified performance obligations would not have a significant effect on the allocation of the underlying transaction price to the performance obligations.

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We may receive further payments upon the achievement of certain regulatory and sales milestones, as detailed above, as well as tiered royalty payments that reach low double-digits based on future net sales.

We expect to receive the next milestone payment under this agreement, which is $ 2.0 million, when the fifth patient in a Phase 1 Multiple Ascending Dose Trial in the United States of a Product in amyotrophic lateral sclerosis is dosed.

We expect to receive the next milestone payment under this agreement, which is $ 2.0 million, when the fifth patient in a Phase 1 Multiple Ascending Dose Trial in the U.S.

of a product in ALS is dosed.

The future development and regulatory milestones, which represent variable consideration, were evaluated under the most likely amount method, and were not included in the transaction price, because the amounts were fully constrained as of December 31, 2020.

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Ono License Agreement

Effective October 11, 2017 (the “Ono Effective Date”), we entered into a license agreement (the “Ono License Agreement”) with Ono Pharmaceutical Co., Ltd., a corporation organized and existing under the laws of Japan (“Ono”), pursuant to which we granted Ono exclusive rights to develop and commercialize, at its own cost, selinexor and eltanexor, for the diagnosis, treatment and/or prevention of all human oncology indications (the “Ono Field”) in Japan, Republic of Korea, Republic of China (Taiwan) and Hong Kong, as well as in the ten Southeast Asian countries currently comprising the Association of Southeast Asian Nations (the “Ono Territory”)

(the “Ono Exclusive License”).

Pursuant to the terms of the Ono License Agreement, we received an upfront payment of ¥ 2.5 billion (US$ 21.9 million on the date received), and could receive up to ¥ 10.15 billion (approximately US$ 90.5 million at the exchange rate as of the Ono Effective Date) in milestone payments if certain development and regulatory

goals are achieved and up to ¥ 9.0 billion (approximately US$ 80.2 million at the exchange rate as of the Ono Effective Date) in milestone payments if certain sales milestones are achieved, as well as a low double-digit royalty based on future net sales of selinexor and eltanexor in the Ono Territory.

In addition, upon Ono’s election and the parties’ full execution of a manufacturing technology transfer plan and satisfaction of other specified conditions (the “Ono Manufacturing Election”), we will grant to Ono non-exclusive

rights to manufacture selinexor, eltanexor and products containing such compounds in or outside of the Ono Territory solely for development and commercialization in the Ono Field in the Ono Territory.

As part of the Ono License Agreement, Ono will also have the right to participate in global clinical studies of selinexor and eltanexor and will bear the cost and expense for patients enrolled in clinical studies in the Ono Territory.

Ono is responsible for seeking regulatory and marketing approvals for selinexor and eltanexor in the Ono Territory, as well as any development of the products specifically necessary to obtain such approvals.

Ono is also responsible for the commercialization of products containing selinexor or eltanexor in the Ono Field in the Ono Territory at its own cost and expense.

Subject to the Ono Manufacturing Election, we will furnish clinical supplies of drug substance to Ono for use in Ono’s development efforts pursuant to a clinical supply agreement between us and Ono, and Ono may elect to have us provide commercial supplies of drug product to Ono pursuant to a commercial supply agreement between us and Ono, in each case the costs of which will be borne by Ono.

The Ono License Agreement will continue in effect on a product-by-product,

country-by-country

However, the Ono License Agreement may be terminated earlier by (i) either party for breach of the Ono License Agreement by the other party or in the event of the insolvency or bankruptcy of the other party,

(ii) Ono on a product-by-product

basis for certain safety reasons or on a product-by-product,

country-by-country

basis for any reason with 180 days’ prior notice or (iii) us in the event Ono challenges or assists with a challenge to certain of our patent rights.

We assessed this arrangement in accordance with ASC 606 and concluded that the contract counterparty, Ono, is a customer.

In April 2020, we terminated our October 2017 license agreement with Ono Pharmaceutical Co., Ltd., a corporation organized and existing under the laws of Japan (“Ono”), for the development and commercialization of selinexor and eltanexor for all human oncology indications in Japan, South Korea, Taiwan, Hong Kong, and the countries in the Association of Southeast Asian Nations.

Subsequent to termination, all rights to selinexor and eltanexor were returned to us and no further consideration was exchanged between the parties.

Accordingly, we recognized $ 2.2 million in license and other revenue during the year ended December 31, 2020, which represented the deferred revenue on the contract as of the date of termination.

FORUS Therapeutics Inc.

Distribution Agreement

In December 2020, we entered into an exclusive distribution agreement (“FORUS Agreement”) for the commercialization of XPOVIO in Canada with FORUS Therapeutics Inc.

Under the terms of the FORUS Agreement, we granted exclusive rights to FORUS as our sole and exclusive distributor of selinexor within Canada (the “FORUS Territory”).

Pursuant to the terms of the FORUS Agreement, we received an upfront payment of $ 5.0 million in the fourth quarter of 2020.

We are also eligible to receive additional payments if certain prespecified regulatory and commercial milestones are achieved by FORUS, as well as double-digit royalties on future net sales of XPOVIO in Canada.

We have retained the exclusive production rights and will supply finished products to FORUS for commercial use in Canada.

We assessed the FORUS Agreement in accordance with ASC 606 and concluded that the contract counterparty, FORUS, is a customer.

We identified the following material promises under the contract:

(i) the Ono Exclusive License for selinexor and eltanexor, (ii) initial data transfer for selinexor and eltanexor, which consisted of regulatory data compiled by us for the licensed compounds and products as of the Ono Effective Date, (iii) initial clinical supply for selinexor, which consisted of units of clinical supply for Ono to conduct its Phase I Trial, and (iv) an obligation to stand-ready to provide initial clinical supply for eltanexor.

We also identified immaterial promises under the contract relating to information exchanges, and participation on operating committees and other working groups.

Separately, we also identified certain customer options that would create an obligation for us if exercised by Ono, including the (i) additional data transfer for selinexor and eltanexor, which would consist

of the transfer of additional regulatory data compiled by us for the licensed compounds and products after the Ono Effective Date, (ii) additional clinical supply and related substance supply for selinexor and eltanexor, which would consist of supplying Ono with units and substance of selinexor and eltanexor incremental to the initial clinical supply for selinexor and the obligation to stand-ready to provide initial clinical supply for eltanexor, as noted above, (iii) manufacturing technology transfer and license for selinexor and eltanexor under the Ono Manufacturing Election, as detailed above, and (iv) options for a backup compound, which represents Ono’s option to select a replacement compound in the event it elects to discontinue the development of either of the licensed compounds (the “Ono Transfer Options”).

The Ono Transfer Options individually represent material rights, as they were offered at a significant and incremental discount.

Therefore, they were further assessed as performance obligations under the Ono License Agreement.

We also identified certain other customer options that would create a manufacturing obligation for us if exercised by Ono, including commercial supply.

option is referred to herein as the “Ono Manufacturing Option.” The Ono Manufacturing Option does not represent a material right, as it is not offered at a significant and incremental discount.

In further evaluating the promises detailed above, we determined that the (i) Ono Exclusive License, initial data transfer, and initial clinical supply for selinexor and (ii) Ono Exclusive License, initial data transfer, and obligation to stand-ready to provide initial clinical supply of eltanexor were not distinct from one another, and must be combined as two separate performance obligations (the “Ono Combined License Obligation for selinexor” and the “Ono Combined License Obligation for eltanexor”).

This is because, for both selinexor and eltanexor, Ono requires the initial data transfer and clinical supply to derive benefit from the Ono Exclusive License since we did not grant manufacturing licenses for selinexor and eltanexor at contract inception.

We also determined that each of the Ono Transfer Options represents a distinct performance obligation.

Based on these determinations, we identified six distinct performance obligations at the inception of the Ono License Agreement, including (i) the Ono Combined License Obligation for selinexor, (ii) the Ono Combined License Obligation for eltanexor, and the four components of the Ono Transfer Options, including (iii) the material right for additional data transfer, (iv) the material right for additional clinical supply and related substance supply, (iv) the material right for manufacturing technology transfer and license, and (vi) the material right for the option for a backup compound.

(i) transfer of exclusive rights to distribute XPOVIO in Canada;

and (ii) initial data transfer, which consisted of development and regulatory data compiled by us.

We also identified immaterial promises under the contract relating to ongoing regulatory cooperation from us in order to support FORUS in the regulatory approval process.

Separately, we also identified a customer option, which is our obligation to provide commercial supply to FORUS throughout the term of the FORUS Agreement.

This option does not represent a material right, as it is not offered at a significant and incremental discount.

In further evaluating the promises detailed above, we determined that the exclusive license and initial data transfer were not distinct from one another, and must be combined as a single, distinct performance obligation.

We further determined that the up-front

payment of ¥ 2.5 billion (US$ 21.9 million on the date received) constituted the entirety of the consideration included in the transaction price at contract inception, which was allocated to the performance obligations based on our best estimate of their relative stand-alone selling prices.

We determined that substantially all of the total standalone selling price in the arrangement is derived from the Ono Combined License Obligation for selinexor and the Ono Combined License Obligation for eltanexor.

In connection therewith, we estimated the standalone selling price for each of the material rights within the Ono Transfer Options, and determined that such amounts were insignificant, and, therefore, immaterial for purposes of allocation.

Accordingly, we allocated the ¥ 2.5 billion (US$ 21.9 million on the date received) upfront transaction price between the Ono Combined License Obligations as follows:

$ 19.7 million for selinexor and $ 2.2 million for eltanexor.

We believe that a change in the assumptions used to determine our best estimate of the

stand-alone selling prices for any of the identified performance obligations would not have a significant effect on the allocation of the underlying transaction price to the performance obligations.

Upon execution of the Ono License Agreement, the transaction price included only the ¥ 2.5 billion (US$ 21.9 million on the date received) up-front

payment owed to us.

As referenced above, we are eligible to receive additional payments of up to ¥ 10.15 billion (approximately US$ 90.5 million at the exchange rate as of the Ono Effective Date) based on the achievement by Ono of future specified development and regulatory

milestones and up to ¥ 9.0 billion (approximately US$ 80.2 million at the exchange rate as of the Ono Effective Date) based on the achievement by Ono of future specified commercial milestones, as well as a low double-digit royalty based on future net sales of selinexor and eltanexor in the Ono Territory.

In addition, we could receive cost reimbursement in connection with our promise to stand-ready to provide initial clinical supply for eltanexor in the future.

We expect to receive

the next milestone payment under this agreement upon the first licensed

product in Multiple

Myelomna , of ¥

1.5 billion (approximately US$

1.5 million), in Japan.

The future development and regulatory milestones and cost reimbursement for providing initial clinical supply of eltanexor, both of which represent variable consideration, were evaluated under the most likely amount method, and were not included in the transaction price, because the amounts were fully constrained as of December 31, 2019.

As part of our evaluation of the constraint, we considered numerous factors, including that receipt of such amounts is outside our control.

Separately, any consideration related to sales-based milestones, as well as royalties on net sales upon commercialization by Ono, will be recognized when the related sales occur, as they were determined to relate predominantly to the intellectual property granted to Ono and, therefore, have also been excluded from the transaction price in accordance with the sales-based royalty exception, as well as our accounting policy.

payment of $5.0 million, received upon execution of the FORUS Agreement, constituted the entirety of the consideration included in the transaction price at contract inception, which we allocated to the performance obligation.

During 2020, we recognized $ 5.0 million in revenue under the FORUS Agreement, as the performance obligation was satisfied when the initial data transfer was delivered during the fourth quarter.

The future regulatory milestones, which represent variable consideration, were evaluated under the most likely amount method, and were not included in the transaction price at contract inception and/or through December 31, 2020, because the amounts were fully constrained as of December 31, 2020.

As part of our evaluation of the constraint, we considered numerous factors, including that the receipt of such amounts is outside of our control.

Separately, any consideration related to commercial milestones, as well as royalties on net sales upon commercialization of XPOVIO by FORUS, will be recognized when the related sales occur, as they were determined to relate predominantly to the intellectual property licenses granted to FORUS and, therefore, have also been excluded from the transaction price in accordance with the sales-based royalty exception, as well as our accounting policy.

We will re-evaluate

the transaction price in each reporting period, as uncertain events are resolved, or as other changes in circumstances occur.

As the initial clinical supply of selinexor was delivered in April 2018, the Ono Combined License Obligation for selinexor was determined to be fulfilled and revenue of $ 19.7 million was recognized during the quarter ended June 30, 2018.

The transaction price allocated to the Ono Combined License Obligation for eltanexor will be recognized as revenue once our stand-ready promise to provide initial clinical supply of eltanexor in the future is fulfilled, which is the last remaining undelivered promise associated with the Ono Combined License Obligation for eltanexor.

As of December 31, 2019, $ 2.2 million of the Ono License Agreement upfront payment is included in deferred revenue and is classified as a non-current

The following revenue was recognized in 2020 that was included as a contract liability as of December 31, 2019 (in thousands):

Short-term Deferred Revenue

Original Antengene Agreement

Amended Antengene Agreement

Total short-term deferred revenue

Long-term Deferred Revenue

Ono License Agreement

Total long-term deferred revenue

Total deferred revenue

Stock-based Compensation

During 2010, we established the 2010 Stock Incentive Plan (the “Plan” or the “2010 Plan”).

Under the terms of the Plan, we granted options to our employees, officers, directors, consultants and advisors.

The exercise price of each stock option is the fair market value as determined in good faith by the Board of Directors (the Board) at the time each option is granted.

We granted service-based options under the Plan, which generally vest as follows:

25 % of the shares vest one calendar year from the vesting start date, 2.083 % of the shares vest on the first day of each month for the three years thereafter.

The options granted under the Plan generally expire in 10 years from the date of grant.

We will grant no further stock options or other awards under the 2010 Plan.

In October 2013,

adopted and our stockholders approved the 2013 Stock Incentive Plan (the “2013 Plan”).

The 2013 Plan became effective immediately prior to the closing of the IPO and provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and other stock-based awards.

In October 2013, the Board adopted and our stockholders approved the 2013 Stock Incentive Plan (the “2013 Plan”), which succeeded our 2010 Stock Incentive Plan, which has expired and under which no further grants will be made.

The 2013 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and other stock-based awards.

The number of shares of common stock reserved for issuance under the 2013 Plan is equal to the sum of (1) 969,696 shares plus (2) the number of shares (up to 2,126,377 shares) equal to the sum of the number of shares of common stock then available for issuance under the 2010 Plan and the number of shares of common stock subject to outstanding awards under the 2010 Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right plus (3) an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2014 and continuing until, and including, the fiscal year ending December 31, 2023, equal to the lesser of (A) 1,939,393 shares of common stock, (B) 4 % of the number of shares of common stock outstanding on the first day of such fiscal year, or (C) an amount determined by the Board.

In January 2019, 2018 and 2017, the number of shares available for issuance under the 2013 Plan was increased by 1,939,393 , 1,939,393 and 1,675,513 shares of common stock, respectively.

In each of the first quarters of 2020, 2019 and 2018, the number of shares available for issuance under the 2013 Plan was increased by 1,939,393 shares of common stock.

As of December 31, 2020, we had 1,716,897 shares available for issuance under the 2013 Plan.

During 2020, 2019 and 2018, we also granted stock options through inducement grants outside of our equity compensation plans to certain employees to induce them to accept employment with us (collectively, “Inducement Grants”).

The stock options were granted at an exercise price equal to the fair market value of a share of our common stock on the respective grant dates and are exercisable over four years with 25% of the total number of shares underlying the option vesting on the one year anniversary of the respective grant dates and in equal monthly installments thereafter.

The foregoing grants were made pursuant to inducement grants outside of our stockholder approved equity plans as permitted under the NASDAQ Stock Market listing rules.

We assessed the terms of these awards and determined there was no possibility that we would have to settle these awards in cash and therefore, equity accounting was applied.

Stock-based Compensation Expense

In connection with all share-based payment awards, total stock-based compensation expense recognized was as follows (in thousands):

Year Ended December 31,

Cost of goods sold

Research and development

Selling, general and administrative

Stock Options

The total stock-based compensation

expense related to employee and non-employee

The total stock-based compensation expense related to employee and non-employee

stock options for the years ended December 31, 2020, 2019 and 2018 was $ 17.0 million, $ 12.6 million and $ 16.4 million, respectively.

The following table summarizes stock option activity for employees and nonemployees:

The total stock-based compensation expense related to restricted stock units (“RSU”) for the years ended December 31, 2020, 2019 and 2018 was $ 6.0 million, $ 1.6 million and $ 0.4 million, respectively.

For the years ended December 31, 2020, 2019 and 2018, we recorded stock-based compensation expense related to the Employee Stock Purchase Plan (“ESPP”) of $ 1.4 million, $ 1.1 million and $ 0.4 million, respectively.

Stock Options

The following table summarizes stock option activity related to both the 2013 Plan and Inducement Grants for employees and non-employees:

Options outstanding at December 31, 2019

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The following table summarizes the assumptions used in calculating the fair value of the awards:

Years Ended December 31,

Year Ended December 31,

Expected term (in years)

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2.50 %- 3.05 %

We use the simplified method as prescribed by the Securities and Exchange Commission Staff Accounting Bulletin No.

107, Share-Based Payment

, to calculate the expected term as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for options granted to employees and utilize the contractual term for options granted to non-employees.

We use the simplified method to calculate the expected term as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for options granted to employees and non-employees.

The expected term is applied to the stock option grant group as a whole, as we do not expect substantially different exercise or post-vesting termination behavior among our employee population.

The expected volatility is based on the historical volatility of a representative group of companies with similar characteristics to us, including early stage of product development and therapeutic focus.

For these analyses, we select companies with comparable characteristics to

ours including enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected term of the options.

Our expected stock price volatility assumption for the year ended December 31, 2020 is based on the historical volatility of our publicly traded stock, given we now have five years of publicly available stock trading activity.

Our stock price volatility assumption for the years ended December 31, 2019 and 2018 is based on historical volatility of a representative group of companies with similar characteristics to us and who have similar risk profiles and positions within the industry.

The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options.

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At December 31, 2020, the total unrecognized compensation related to unvested employee and non-employee

stock option awards granted under the 2013 Plan was $ 26.7 million, which we expect to recognize over a weighted-average period of approximately 2.66 years.

stock option awards granted under the 2013 Plan and Inducement Grants was $ 41.1 million, which we expect to recognize over a weighted-average period of approximately 2.6 years.

Restricted Stock Units

A restricted stock unit (“RSU”) represents the right to receive one share of our common stock upon vesting of the RSU.

A RSU represents the right to receive one share of our common stock upon vesting of the RSU.

The fair value of each RSU is based on the closing price of our common stock on the date of grant.

We grant RSUs with service conditions that vest in

four equal annual installments provided that the employee remains employed with us.

During the year ended December 31, 2019, we granted 1,065,970

shares of RSUs under the 2013 Plan.

The following is a summary of RSU activity for the 2013 Plan for the years ended December 31, 2019 and 2018, respectively:

We grant RSUs with service conditions that vest in two or four equal annual installments provided that the employee remains employed with us.

During the year ended December 31, 2020, we granted 1,375,840 RSUs under the 2013 Plan.

The following is a summary of RSU activity for the 2013 Plan for the years ended December 31, 2020 and 2019:

Underlying RSUs

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Unvested at December 31, 2020

The total stock-based compensation expense related to RSUs for the years ended December 31, 2019, 2018 and 2017 was $ 1.6 million, $ 0.4 million and $

3.4 million, respectively.

As of December 31, 2019, there was $ 5.8 million of unrecognized compensation costs related to unvested RSUs, which are expected to be recognized over a weighted average period of 3.12 years.

As of December 31, 2020, there was $ 19.5 million of unrecognized compensation costs related to unvested RSUs under the 2013 Plan, which are expected to be recognized over a weighted average period of 2.7 years.

Employee Stock Purchase Plan

We have an Employee Stock Purchase Plan (“ESPP”) that permits eligible employees to enroll in six-month

We have an ESPP that permits eligible employees to enroll in six-month

offering periods.

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During the years ended December 31, 2020, 2019 and 2018, $ 2.9 million, $ 1.7 million and $ 0.9 million, respectively, was withheld from employees, on an after-tax

basis, in order to purchase 415,257 , 98,770 and

57,582 shares of our common stock, respectively.

For the years ended December 31, 2019, 2018 and 2017, we recorded stock-based compensation expense related to the ESPP

of $ 1.1 million, $ 0.4 million and $ 0.2 million, respectively.

As of December 31, 2019, 404,332 shares of our

common stock remained available for issuance under the ESPP.

basis, in order to purchase 249,228 , 415,257 and 98,770 shares of our common stock, respectively.

As of December 31, 2020, 855,104 shares of our common stock remained available for issuance under the ESPP.

As of December 31, 2020, there was $ 0.5 million of total unrecognized stock-based compensation expense related to the ESPP.

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We contributed a match of $ 2.9 million, $ 1.7 million and $ 1.1 million to the 401(k) Plan for the years ended December 31, 2020, 2019 and 2018, respectively.

New Tax Legislation

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“TCJA”).

This legislation reduced the U.S.

corporate tax rate from the current rate of 34 % to 21 % for tax years beginning after December 31, 2017.

As a result of the enacted law, we were required to revalue deferred tax assets and liabilities existing as of December 31, 2017 from the 34 % federal rate in effect through the end of 2017, to the new 21% rate.

We have recognized the impact of the TCJA in these consolidated financial statements and related disclosures.

In the year ended December 31, 2018, we recorded an impact of $ 0.5 million related to the return to provision items for federal rate change, which is offset by a full valuation allowance.

The impact of the remeasurement of our U.S.

deferred tax assets and liabilities to 21 % resulted in the reduction of deferred tax assets of approximately $ 42.7 million, which is offset by a full valuation allowance.

There was no impact to our income statement due to the reduction in the U.S.

corporate tax rate.

For the years ended December 31, 2019, 2018 and 2017, we recorded an income tax expense of less than $

million for our operations in Germany.

Our foreign tax provision pertains to foreign income taxes due at our German subsidiary which operates on a cost-plus profit margin.

For the years ended December 31, 2020, 2019 and 2018, we recorded an income tax expense of $ 0.3 million, which pertains to income generated by our KPSC entity, as well as foreign income taxes due by our German and Israel subsidiaries, both of which operate on a cost-plus profit margin.

The components of our current income tax provision were $ 0.1 million in state tax expense and $ 0.2 million in

tax expense for the year ended December 31, 2020.

Our current income tax provision consisted of less than $ 0.1 million in foreign income tax expense for the years ended December 31, 2019 and 2018, respectively.

We did no t have a deferred income tax provision for the years ended December 31, 2020, 2019 and 2018.

The components of loss before income taxes were as follows (in thousands):

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Capitalized research and development

Fixed assets and intangibles

Fixed assets and intangible assets

Deferred revenue

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Deferred royalty embedded derivative

AHYDO Interest

Interest Expense - Sec 163(j)

Unicap - Sec 263A

Transaction Costs

Valuation allowance

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Convertible debt amortization

Right-of-use asset

Deferred royalty obligation

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We have evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets.

Based on our history of operating losses, we have concluded that it is more likely than not that the benefit of our deferred tax assets will not be realized.

Based on our history of operating losses, we have concluded that it is more likely than not that the benefit of our deferred tax assets will no t be realized.

Accordingly, we have provided a full valuation allowance for deferred tax assets as of December 31, 2020, 2019 and 2018.

The valuation allowance increased

approximately $ 51.7

million during the year ended December 31, 2019 to $ 224.9

million, from $ 173.2 million during the year ended December 31, 2018, primarily due to the generation of net operating losses.

The valuation allowance increased by approximately $ 50.5 million during the year ended December 31, 2020 to $ 275.4 million, from $ 224.9 million during the year ended December 31, 2019, primarily due to the generation of net operating losses.

A reconciliation of income tax expense computed at the statutory federal income tax rate to income taxes as reflected in the financial statements is as follows:

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Effective Income Tax rate

As of December 31, 2019 and 2018, we had U.S.

federal net operating loss carryforwards of approximately $ 576.5 million and $ 427.0 million, respectively, which may be able to offset future income tax liabilities.

As of December

2018 , we had U.S.

federal net operating loss carryforwards of approximately $

698.8 million, $

576.5 million and $

427.0 million, respectively, which may be able to offset future income tax liabilities.

698.8 million carryforward as of December

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292.9 million will expire at various dates through

As of December 31, 2019 and 2018, we had U.S.

state net operating loss carryforwards of approximately $ 502.3 million and

million, respectively, which may be available to offset future state income tax liabilities and expire at various dates through 203 9

Also as of December 31, 2019, we had foreign net operating loss carryforwards of less than

million, which have an indefinite li fe and

may be able to offset future foreign income tax liabilities.

As of December 31, 2019 and 2018, we had federal research and development tax credit carryforwards of approximately $

million and $

million, respectively, available to reduce future tax liabilities, which expire at various dates through 203 9

As of December 31, 2019 and 2018, we had state research and development tax credit carryforwards of approximately $

As of December

2018 , we had U.S.

state net operating loss carryforwards of approximately $

575.2 million, $

502.3 million and $

million, respectively, available to reduce future tax liabilities, which expire at various dates through 203 4

414.8 million, respectively, which may be available to offset future state income tax liabilities and expire at various dates through

As of December

2018 , we did

no t have any foreign net operating loss carryforwards to offset future foreign income tax liabilities.

As of December 31, 2020, 2019 and 2018, we had federal research and development tax credit carryforwards of approximately $ 69.8 million, $ 58.5 million and $ 46.9 million, respectively, available to reduce future tax liabilities, which expire at various dates through 2040.

As of December 31, 2020, 2019 and 2018, we had state research and development tax credit carryforwards of approximately $ 6.8 million, $ 4.9 million and $ 3.0 million, respectively, available to reduce future tax liabilities, which expire at various dates through 2035.

We completed a study of R&D tax credits through December 31, 2019 and adjusted our deferred tax asset for the result of that study.

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Subsequent ownership changes may further affect the limitation in future years.

Previously, we have completed several financings since our inception, which resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code.

We completed a Section 382 analysis through July 31, 2015 and subsequently reduced our deferred tax assets for tax attributes we believe will expire unused.

We updated our Section 382 analysis through December 31, 2019 and confirmed there were no ownership changes since July 31, 2015.

In the future, we may complete financings that could result in a change in control,

which will reduce our deferred tax assets for tax attributes we believe will expire unused due to the change in control limitations.

In October 2016 the FASB issued ASU 2016-16.

This standard eliminates the deferral of the tax effects of intra-entity asset transfers other than inventory.

As a result, the income tax consequences from the intra-entity transfer of an asset other than inventory and associated changes to deferred taxes will be recognized when the transfer occurs.

We adopted this standard on January 1, 2018, using the modified retrospective method, through a cumulative-effect adjustment to retained earnings as of that date.

Upon adoption, we recognized additional deferred tax assets of approximately $ 19.2 million which were offset by a corresponding valuation allowance.

Previously, we have completed several financings since our inception, which have resulted in changes in control as defined by Sections 382 and 383 of the Internal Revenue Code.

We reduced our deferred tax assets for tax attributes we believe will expire unused.

In the future, we may complete financings that could result in a change in control, which will reduce our deferred tax assets for tax attributes we believe will expire unused due to the change in control limitations.

We will recognize interest and penalties related to uncertain tax positions in income tax expense.

As of December 31, 2020, 2019 and 2018, we had no accrued interest or penalties related to uncertain tax positions and no such amounts have been recognized.

We or one of our subsidiaries file income tax returns in the United States, and various state and foreign jurisdictions.

The federal, state and foreign income tax returns are generally subject to tax examinations for the tax years ended December 31, 2016 through December 31, 2019.

To the extent we have tax attribute

carryforwards

, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period.

We or one of our subsidiaries file income tax returns in the U.S.

and various state and foreign jurisdictions.

Our federal, state and foreign income tax returns are generally subject to tax examinations for the tax years ended December 31, 2017 through December 31, 2020.

To the extent we have tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period.

Long-term obligations

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On October 16, 2018, we completed an offering of $ 150.0 million aggregate principal amount of our 3.00 % convertible senior notes due 2025 (the “Notes”).

In addition, on October 26, 2018, we issued an additional $ 22.5 million aggregate principal amount of the Notes pursuant to the full exercise of the option to purchase additional Notes granted to the initial purchasers in the offering.

The Notes were sold in a private offering to qualified institutional buyers in reliance on Rule 144A under the Securities Act.

In addition, on October 26, 2018, we issued an additional $ 22.5 million aggregate principal amount of the Notes pursuant to the full exercise of the option to purchase

additional Notes granted to the initial purchasers in the offering.

The Notes were sold in a private offering to qualified institutional buyers in reliance on Rule

144 A under the Securities Act.

In accordance with accounting guidance for debt with conversion and other options, we separately accounted for the liability component (“Liability Component”) and the embedded conversion option (“Equity Component”) of the Notes by allocating the proceeds between the Liability Component and the Equity Component, due to our ability to settle the Notes in cash, shares of our common stock or a combination of cash and shares of our common stock, at our option.

In connection with the issuance of the Notes, we incurred approximately $ 5.6 million of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees, and allocated these costs between the Liability Component and the Equity Component based on the allocation of the proceeds.

Of the total debt issuance costs, $ 2.2 million was allocated to the Equity Component and recorded as a reduction to additional paid-in

capital and $ 3.4 million was allocated to the Liability Component and recorded as a reduction of the Notes.

The portion allocated to the Liability Component is amortized to interest expense using the effective interest method over seven years .

The Notes are our senior unsecured obligations and bear interest at a rate of 3.00 % per year payable semiannually in arrears on April 15 and October 15 of each year, beginning on April 15, 2019.

Upon conversion, the Notes will be convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election.

In connection with the issuance of the Notes, we incurred approximately $

5.6 million of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees, and allocated these costs between the Liability Component and the Equity Component based on the allocation of the proceeds.

Of the total debt issuance costs, $

2.2 million was allocated to the Equity Component and recorded as a reduction to additional

capital and $

3.4 million was allocated to the Liability Component and recorded as a reduction of the Notes.

The portion allocated to the Liability Component is amortized to interest expense using the effective interest method over

seven years .

The Notes are senior unsecured obligations and bear interest at a rate of 3.00 % per year payable semiannually in arrears on April 15 and October 15 of each year, beginning on April 15, 2019.

Upon conversion, the Notes will be converted into cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election.

The Notes will be subject to redemption at our option, on or after October 15, 2022, in whole or in part, if the conditions described below are satisfied.

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during any calendar quarter commencing after the calendar quarter ending on December 31, 2018 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price for the Notes on each applicable trading day;

during the five business day period immediately after any five consecutive trading day

period (the “Measurement Period”) in which the trading price per $ 1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;

during the five business day period immediately after any five consecutive trading day period (the “Measurement Period”) in which the trading price per $ 1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98 % of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;

if we call the Notes for redemption, until the close of business on the business day immediately preceding the redemption date;

upon the occurrence of specified corporate events as described within the indenture governing the Notes.

As of December 31, 2019, none of the above circumstances had occurred and as such, the Notes could not have been converted.

As of December 31, 2020, none of the ab o

ve circumstances had occurred and as such, the Notes could not have been converted.

We may not redeem the Notes prior to October 15, 2022.

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The redemption price will be 100 % of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any.

In addition, calling any convertible note for redemption will constitute a make-whole fundamental change with respect to that convertible note, in which case the conversion rate applicable to the conversion of that convertible note, if it is converted in connection with the redemption, will be increased in certain circumstances.

The initial carrying amount of the Liability Component of $ 101.2 million was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature.

In addition, calling any convertible note for redemption will constitute a

make-whole fundamental change with respect to that convertible note, in which case the conversion rate applicable to the conversion of that convertible note, if it is converted in connection with the redemption, will be increased in certain circumstances.

The initial carrying amount of the Liability Component of $ 101.2 million w a

s calculated by measuring the fair value of a similar liability that does not have an associated convertible feature.

The allocation was performed in a manner that reflected our non-convertible

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As of December 31, 2020, the “if-converted

value” did not

exceed the remaining principal amount of the Notes.

value” did not exceed the remaining principal amount of the Notes.

The fair value of the Notes was determined based on data points other than quoted prices that are observable, either directly or indirectly, and has been classified as Level 2 within the fair value hierarchy.

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The estimated fair value of the Notes as of December 31, 2020 was approximately $ 215.8 million.

The following table sets forth total interest expense recognized related to the Notes during the year ended December 31, 2019 (in thousands):

December 31, 2019

The following table sets forth total interest expense recognized related to the Notes (in thousands):

Year Ended December 31,

Contractual interest expense

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Future Minimum Payments

2024 and thereafter

Total minimum payments

unamortized discount

current portion

Convertible senior notes

Deferred Royalty Obligation

In September 2019,

we entered into a Revenue Interest Financing Agreement (”deferred royalty obligation”) with HealthCare Royalty Partners

In September 2019, we entered into a deferred royalty obligation pursuant to a Revenue Interest Financing Agreement with HealthCare Royalty Partners III, L.P.

and HealthCare Royalty Partners IV, L.P.

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We received $ 75.0 million upon closing (the “First Investment Amount”) and have the right to receive an additional $ 75.0 million (the “Second Investment Amount” and together with the First Investment Amount, the “Investment Amount”) upon the achievement of future regulatory and commercial milestones and subject to the approval of both parties and customary closing conditions.

In exchange for the First Investment Amount, HCR will receive a tiered royalty in the mid-single

In exchange for the First Investment Amount, HCR will receive tiered royalty payments in the mid-single

digits based on worldwide net revenues of XPOVIO and any of our other future products, including worldwide net product sales and upfront payments, milestones, and royalties.

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net sales is met.

Total royalty payments are capped

at 185 % of the Investment Amount.

If HCR has not received 65 % of the Investment Amount by December 31, 2022 or 100 % of the Investment Amount by December 31, 2024, we must make a cash payment sufficient to gross HCR up to such minimum amounts.

Total royalty payments are capped at 185 % of the Investment Amount.

If HCR has not received 65 % of the Investment Amount by December 31, 2022 or 100 % of the Investment Amount by December 31, 2024, we must make a cash payment sufficient to gross up the payments to such minimum amounts.

As the repayment of the funded amount is contingent upon worldwide net product sales and upfront payments, milestones, and royalties, the repayment term may be shortened or extended depending on actual worldwide net product sales and upfront payments, milestones, and royalties.

The repayment period commenced on October 1, 2019 and expires on the earlier of (i) the date in which HCR has received cash payments totaling an aggregate of 185 % of the Investment Amount or (ii) the legal maturity date of October 1, 2031.

If HCR has not received payments equal to 185 %

of the Investment Amount by the twelve-year anniversary of the initial closing date, we shall pay an amount equal to the Investment Amount plus a specific annual rate of return less payments previously received by HCR.

If HCR has not received payments equal to 185 % of the Investment Amount by the twelve-year anniversary of the initial closing date, we shall pay an amount equal to the Investment Amount plus a specific annual rate of return less payments previously received by HCR.

In the event of a change of control, we are obligated to pay HCR an amount equal to 185 % of the Investment Amount less payments previously received by HCR.

In addition, upon the occurrence of an event of default, including, among others, our failure to pay any amounts due to HCR under the deferred royalty obligation, insolvency, our failure to pay indebtedness when due, the revocation of regulatory approval of XPOVIO in the United States or our breach of any covenant contained in the Revenue Interest Financing Agreement and our failure to cure the breach within the prescribed time frame, we are obligated to pay HCR an amount equal to 185 % of the Investment Amount less payments previously received by HCR.

or our breach of any covenant contained in the Revenue Interest Financing Agreement and our failure to cure the breach within the prescribed time frame, we are obligated to pay HCR an amount equal to 185 % of the Investment Amount less payments previously received by HCR.

In addition, upon an event of default, HCR may exercise all other rights and remedies available under the Revenue Interest Financing Agreement, including foreclosing on the collateral that was pledged to HCR, which consists of all of our present and future assets relating to XPOVIO.

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Accordingly, we have accounted for the transaction as long-term debt.

We have further evaluated the terms of the debt and determined that the repayment

of the Investment Amount, less any payments made to date, upon a change of control is an embedded derivative that requires bifurcation from the debt instrument and fair value recognition.

We determined the fair value of the derivative using an option pricing Monte Carlo simulation model taking into account the probability of change of control occurring and potential repayment amounts and timing of such payments that would result under various scenarios, as further described in Note 2.

The aggregate fair value of the embedded derivative at issuance date is included in deferred royalty obligation.

We have further evaluated the terms of the debt and determined that the repayment of 185 %of the Investment Amount, less any payments made to date, upon a change of control is an embedded derivative that requires bifurcation from the debt instrument and fair value recognition.

The aggregate fair value of the embedded derivative was $ 1.8 million and $ 2.3 million as of December 31, 2020 and 2019, respectively.

We recorded a $ 0.5 million gain on the embedded derivative in other (income) expense, net during 2020 and did not incur a gain or loss on the embedded derivative during 2019.

We will remeasure the embedded derivative to fair value each reporting period until the time the features lapse and/or termination of the deferred royalty obligation.

The effective interest rate as of December 31, 2020 was 18.5 %.

In connection with the deferred royalty obligation, we incurred debt issuance costs

Debt issuance costs have been netted against the debt as of December 31, 2019 and are being amortized over the estimated term of the debt using the effective interest method, adjusted on a prospective basis for changes in the underlying assumptions and inputs.

In connection with the deferred royalty obligation, we incurred debt issuance costs totaling $ 1.4 million.

Debt issuance costs have been netted against the debt and are being amortized over the estimated term of the debt using the effective interest method, adjusted on a prospective basis for changes in the underlying assumptions and inputs.

The assumptions used in determining the expected repayment term of the debt and amortization period of the issuance costs requires that we make estimates that could impact the short and long-term classification of these costs, as well as the period over which these costs will be amortized.

The carrying value of the deferred royalty obligation at December 31, 2019 was $

million based on

million of proceeds, net of fair value of the bifurcated embedded derivative liability and debt issuance costs incurred.

The carrying value of the deferred royalty obligation approximates fair value at December 31, 2019 and was measured using Level 3 inputs.

The estimated fair market value was calculated using an option pricing Monte Carlo simulation model with inputs consistent with those used in determining the embedded derivative values as described in Note 2.

The carrying value of the deferred royalty obligation at December 31, 2020 and 2019 was $ 71.3 million based on $ 75.0 million of proceeds, net of the fair value of the bifurcated embedded derivative liability upon execution of the Revenue Interest Financing Agreement, and debt issuance costs incurred.

The carrying value of the deferred royalty obligation approximates fair value at December 31, 2020 and 2019 and was measured using Level 3 inputs.

EXHIBIT INDEX

2 unchanged sentences

001-36167) filed with the Commission on August 7, 2019)

Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on November 18, 2013)

Second Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on December 17, 2020)

Specimen Stock Certificate evidencing the shares of common stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Amendment No.

1 unchanged sentence

333-191584) filed with the Commission on October 28, 2013)

Third Amended and Restated Investors’ Rights Agreement dated as of July 26, 2013 (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1 (File No.

333-191584) filed with the Commission on October 4, 2013)

Indenture (including form of Note) with respect to the Registrant’s 3.00% convertible senior notes due 2025, dated as of October 16, 2018, between the Registrant and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No.

18 unchanged sentences

001-36167) filed with the Commission on May 10, 2018)

Form of Incentive Stock Option Agreement under 2013 Stock Incentive Plan adopted August 25, 2020 (incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-36167) filed with the Commission on November 2, 2020)

Form of Nonstatutory Stock Option Agreement under 2013 Stock Incentive Plan adopted August 25, 2020 (incorporated by reference to Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q (File No.001-36167) filed with the Commission on November 2, 2020)

Description of Exhibit

Form of Restricted Stock Unit Agreement under 2013 Stock Incentive Plan adopted August 25, 2020 (incorporated by reference to Exhibit 10.11 to the Registrant’s Quarterly Report on Form 10-Q (File No.001-36167) filed with the Commission on November 2, 2020)

Form of Nonstatutory Stock Option Agreement for Inducement Grants adopted August 25, 2020 (incorporated by reference to Exhibit 10.12 to the Registrant’s Quarterly Report on Form 10-Q (File No.001-36167) filed with the Commission on November 2, 2020)

2020 Israeli Equity Incentive Sub Plan to the 2013 Stock Incentive Plan (incorporated by reference to Exhibit 10.13 to the Registrant’s Quarterly Report on Form 10-Q (File No.001-36167) filed with the Commission on November 2, 2020)

Form of Option Agreement under 2020 Israeli Equity Incentive Sub Plan to the 2013 Stock Incentive Plan (incorporated by reference to Exhibit 10.14 to the Registrant’s Quarterly Report on Form 10-Q (File No.001-36167) filed with the Commission on November 2, 2020)

Form of Restricted Stock Unit Agreement under 2020 Israeli Equity Incentive Sub Plan to the 2013 Stock Incentive Plan (incorporated by reference to Exhibit 10.15 to the Registrant’s Quarterly Report on Form 10-Q (File No.001-36167) filed with the Commission on November 2, 2020)

2013 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Amendment No.

1 unchanged sentence

333-191584) filed with the Commission on October 28, 2013)

Description of Exhibit

Form of Indemnification Agreement between the Registrant and each of its Directors (incorporated by reference to Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1 (File No.

333-191584) filed with the Commission on October 4, 2013)

Managing Director Agreement, dated October 15, 2014, by and between Karyopharm Europe GmbH and Ran Frenkel (incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K (File No.

001-36167) filed with the Commission on March 13, 2015)

Letter Agreement, dated October 15, 2014, by and between the Registrant and Ran Frenkel (incorporated by reference to Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K (File No.

001-36167) filed with the Commission on March 13, 2015)

Amended and Restated Letter Agreement, dated as of January 23, 2015, between the Registrant and Michael Kauffman, M.D., Ph.D.

Amended and Restated Letter Agreement, dated as of August 31, 2020, between the Registrant and Michael Kauffman, M.D., Ph.D.

(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on January 23, 2015)

Amended and Restated Letter Agreement, dated as of January 23, 2015, between the Registrant and Sharon Shacham, Ph.D., M.B.A.

001-36167) filed with the Commission on August 31, 2020)

Amended and Restated Letter Agreement, dated as of August 31, 2020, between the Registrant and Sharon Shacham, Ph.D., M.B.A.

(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on January 23, 2015)

Amendment to Managing Director Agreement, dated February 15, 2015, by and between Karyopharm Europe GmbH and Ran Frenkel (incorporated by reference to Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K (File No.

001-36167) filed with the Commission on March 13, 2015)

Offer Letter, dated June 7, 2015, between the Registrant and Ran Frenkel (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on June 10, 2015)

First Amendment to Letter Agreement, dated October 4, 2016, between the Registrant and Ran Frenkel (incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K (File No.

001-36167) filed with the Commission on March 16, 2017)

Amended and Restated Letter Agreement, dated as of September 18, 2015, between the Registrant and Christopher B.

001-36167) filed with the Commission on August 31, 2020)

Amended and Restated Letter Agreement, dated as of August 31, 2020, between the Registrant and Christopher B.

Primiano (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-36167) filed with the Commission on November 9, 2015)

Amendment to Managing Director Agreement, dated October 16, 2015, between Karyopharm Europe GmbH and Ran Frenkel (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-36167) filed with the Commission on November 9, 2015)

Offer Letter, dated September 9, 2017, between the Registrant and Michael Falvey (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on September 12, 2017)

Offer Letter, dated June 7, 2018, between the Registrant and Anand Varadan (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-36167) filed with the Commission on August 31, 2020)

Separation Agreement dated as of January 17, 2019, between the Registrant and Michael Falvey (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on January 18, 2019)

Description of Exhibit

Consulting Agreement, dated as of January 18, 2019, between the Registrant and Michael Falvey (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on January 18, 2019)

Nonstatutory Stock Option Agreement, dated September 9, 2017, between the Registrant and Michael Falvey (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No.

Transition Agreement, dated as of September 25, 2020, between the Registrant and Christopher B.

Primiano (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on September 25, 2020)

Consulting Agreement, dated as of September 25, 2020, between the Registrant and Christopher B.

Primiano (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on September 25, 2020)

Offer Letter, dated February 3, 2019, between the Registrant and Michael Mason (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on February 25, 2019)

Description of Exhibit

Letter Agreement, dated as of August 31, 2020, between the Registrant and Michael Mason (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on August 31, 2020)

Nonstatutory Stock Option Agreement, dated February 25, 2019, between the Registrant and Michael Mason (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on February 25, 2019)

Office Lease Agreement between NS Wells Acquisition LLC and the Registrant, dated March 27, 2014 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

8 unchanged sentences

001-36167) filed with the Commission on August 7, 2018)

Research Agreement, dated as of July 18, 2011, between the Registrant and the Multiple Myeloma Research Foundation, Inc.

(incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1 (File No.

333-191584) filed with the Commission on October 4, 2013)

Open Market Sale Agreement SM , dated August 17, 2018, by and between the Registrant and Jefferies LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

Fifth Amendment to Lease, dated as of August 13, 2020, by and between the Registrant and AG-JCM Wells Avenue Property Owner, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-36167) filed with the Commission on November 2, 2020)

Open Market Sale Agreement, dated August 17, 2018, by and between the Registrant and Jefferies LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on August 17, 2018)

License Agreement, dated October 11, 2017, by and between the Registrant and Ono Pharmaceutical Co., Ltd.

(incorporated by reference to Exhibit 10.30 to the Registrant’s Annual Report on Form 10-K (File No.

001-36167) filed with the Commission on March 15, 2018)

Amendment No.

1 to the Open Market Sale Agreement, by and between the Registrant and Jefferies LLC, dated May 5, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on May 5, 2020)

Asset Purchase Agreement, dated January 24, 2018, by and between the Registrant and Biogen MA Inc.

3 unchanged sentences

001-36167) filed with the Commission on August 7, 2018)

Amendment to License Agreement, dated May 1, 2020, by and between Antengene Therapeutics Limited and the Registrant (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No.

001-36167) filed with the Commission on August 8, 2020).

Description of Exhibit

1 unchanged sentence

001-36167) filed with the Commission on August 7, 2018)

Offer Letter, dated February 3, 2019, between the Registrant and Michael Mason (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.

001-36167) filed with the Commission on February 25, 2019)

Karyopharm Therapeutics Inc.

1 unchanged sentence

001-36167) filed with the Commission on August 6, 2019)

Revenue Interest Financing Agreement, dated September 14, 2019, between the Registrant and HealthCare Royalty Partners III, L.P, and HealthCare Royalty Partners IV, L.P.

Revenue Interest Financing Agreement, dated September 14, 2019, between the Registrant and HealthCare Royalty Partners III, L.P.

and HealthCare Royalty Partners IV, L.P.

(incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (File No.

19 unchanged sentences

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

KARYOPHARM THERAPEUTICS INC.

February 24, 2021

KARYOPHARM THERAPEUTICS INC.

/s/ Michael G.

17 unchanged sentences

Mikael Dolsten, M.D., Ph.D.

Scott Garland

February 24, 2021

Scott Garland

/s/ Mansoor Raza Mirza

February 24, 2021

Mansoor Raza Mirza

/s/ Christy J.

February 24, 2021

/s/ Deepika R.

1 unchanged sentence

Pakianathan Ph.D.

/s/ Mansoor Raza Mirza

/s/ Richard Paulson

February 24, 2021

Mansoor Raza Mirza, M.D.

Richard Paulson

/s/ Chen Schor

February 24, 2021

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-K

Item 9A. Controls and Procedures