What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-02 compared with 2020-08-04 · 99 added, 116 removed, 192 unchanged (53% of the section changed)

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Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to successfully commercialize XPOVIO ® (selinexor) tablets;

the impact of the ongoing COVID-19 pandemic on our business, including decreased sales of XPOVIO, interrupting or delaying research and development efforts, impacting the ability to procure sufficient supply for the development and commercialization of selinexor or other product candidates, delaying ongoing or planned clinical trials, impeding the execution of business plans, planned regulatory milestones and timelines, or inconveniencing patients;

the impact of the ongoing COVID-19 pandemic on our business, including decreasing sales of XPOVIO, interrupting or delaying research and development efforts, impacting the ability to procure sufficient supply for the development and commercialization of selinexor or other product candidates, delaying ongoing or planned clinical trials, impeding the execution of business plans, planned regulatory milestones and timelines, or inconveniencing patients;

the adoption of XPOVIO in the commercial marketplace;

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the effect of current and future legislation and regulation and regulatory actions;

as well as other risks described in this Quarterly Report on Form 10-Q, our Annual Report, as filed with the Securities and Exchange Commission, or SEC, on February 26, 2020, and other filings with the SEC.

as well as other risks described in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, or SEC, on February 26, 2020, and other filings with the SEC.

As a result of these and other factors, we may not actually achieve the plans, intentions, expectations or results disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.

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We refer to myeloma that is refractory to these five agents as penta-refractory myeloma.

This indication was approved under the FDA’s Accelerated Approval Program based on response rate.

Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial.

The FDA has agreed that the randomized Phase 3 BOSTON ( Bo rtezomib, S elinexor and Dexame t has on e) study evaluating selinexor in combination with Velcade ® (bortezomib) and low-dose dexamethasone in patients with multiple myeloma after at least one prior line of therapy could serve as the confirmatory trial based on the positive topline data announced in March 2020.

In July 2020, the FDA accepted our supplemental new drug application, or sNDA, for XPOVIO, based on the BOSTON study, to treat patients with multiple myeloma after at least one prior line of therapy.

The FDA has assigned an action date of March 19, 2021 under the Prescription Drug User-Fee Act.

This indication was approved under the FDA’s Accelerated Approval Program based on response rate and was supported by data from the STORM ( S elinexor T reatment of R efractory M yeloma) study.

In addition to the FDA approval of our first New Drug Application, or NDA, we also filed a Marketing Authorization Application, or MAA, with the European Medicines Agency, or EMA, in January 2019, based on the STORM data, as discussed in more detail below.

Continued approval in the U.S.

for this indication is contingent upon verification and description of clinical benefit in a confirmatory trial.

based on the positive top - line data announced in March 2020.

In July 2020, t he FDA accepted our supplemental new drug application, or sNDA, for XPOVIO , based on the BOSTON study, to treat patients with multiple myeloma after at least one prior line of therapy .

The FDA has assigned an action date of March 19, 2021 under the Prescription Drug User Fee Act , or PDUFA, and, if approved, we expect to launch the expanded indication immediately thereafter .

In June 2020, XPOVIO was approved by the FDA for a second indication to treat adult patients with relapsed or refractory diffuse large B-cell lymphoma, or DLBCL, not otherwise specified, including DLBCL arising from follicular lymphoma, after at least two lines of systemic therapy.

We began commercialization of this indication in June 2020.

This indication was approved under the FDA’s A ccelerated A pproval Program based on response rate and c ontinued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial.

T he FDA has agreed that the XPORT-DLBCL-030 study could serve as the confirmatory trial for evaluating selinexor in DLBCL.

This trial will assess the effect of selinexor or placebo added to a standard backbone immunochemotherapy of rituximab-gemcitabine-dexamethasone-platinum , or R-GDP , in patients with one to three prior treatments for DLBCL.

Selinexor has received o rphan d rug designation from the FDA for the DLBCL indication .

This indication was approved under the FDA’s Accelerated Approval Program based on response rate and was supported by data from the SADAL ( S elinexor A gainst D iffuse A ggressive L ymphoma) study.

Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial.

The FDA has agreed that the XPORT-DLBCL-030 study could serve as the confirmatory trial for evaluating selinexor in DLBCL.

This trial will assess the effect of selinexor or placebo added to a standard backbone immunochemotherapy of rituximab-gemcitabine-dexamethasone-platinum, or R-GDP, in patients with one to two prior treatments for DLBCL.

Selinexor has received orphan drug designation from the FDA for the DLBCL indication.

We expect that the XPORT-DLBCL-030 study will begin by the end of 2020.

We are continuing to evaluate the optimal regulatory and access strategy for lymphoma and plan to submit a Marketing Authorization Application, or MAA , to the European Medicines Agency, or EMA , for the DLBCL indication as a Type II variation following the potential approval of XPOVIO in multiple myeloma at the appropriate time in the future .

With respect to an MAA submission to the EMA for DLBCL based on the SADAL study, we are continuing to evaluate the optimal regulatory and access strategy.

Our focus is on marketing XPOVIO in its currently approved indications as well as seeking the regulatory approval and potential commercialization of selinexor as an oral agent in additional cancer indications with significant unmet medical needs.

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Thus, we are currently advancing the clinical development of selinexor in multiple hematological malignancies and solid tumor indications.

Studies that support our approved indications include STORM ( S elinexor T reatment of R efractory M yeloma) and SADAL ( S elinexor A gainst D iffuse A ggressive L ymphoma).

On March 2, 2020, we announced positive topline data from the pivotal, randomized Phase 3 BOSTON study in multiple myeloma.

Ongoing clinical trials evaluating selinexor include the Phase 1b/2 STOMP ( S elinexor and Backbone T reatments o f M ultiple Myeloma P atients) study in combination with standard therapies in multiple myeloma, the Phase 2/3 SEAL ( Se linexor in A dvanced L iposarcoma) study evaluating single agent selinexor versus placebo in patients with previously treated, advanced unresectable dedifferentiated liposarcoma, and the Phase 3 SIENDO ( S elinexor/Placebo After Combination Chemotherapy I n Patients with Advanced or Recurrent ENDO metrial Cancer) study evaluating selinexor as maintenance therapy in endometrial cancer.

We have recently completed enrollment in the Phase 3 portion of the SEAL study and currently anticipate topline data in the second half of 2020.

As a result of the positive results from STORM, in addition to the FDA approval of our first New Drug Application, or NDA, we also filed an MAA with the EMA in January 2019, as discussed in more detail below.

In April 2020, we initiated a global randomized Phase 2 clinical trial for low dose oral selinexor in hospitalized patients with severe COVID-19.

This study, known as XPORT-CoV-1001, was expected to enroll approximately 230 patients at clinical sites in the U.S., Europe and Israel to assess the activity and safety of 20mg of selinexor given orally three times a week for two weeks.

Patients tolerating therapy well and experiencing clinical benefit could continue treatment for an additional two weeks at the discretion of the treating physician.

The primary endpoint of the study was time to clinical improvement based on improvement in the Ordinal Scale, consistent with the COVID-19 trial recommendations by the World Health Organization and the FDA.

In addition to its role in cancer, XPO1 has also been shown to facilitate the transport of several viral proteins from the nucleus of the host cell to the cytoplasm, and it amplifies the activities of pro-inflammatory transcription factors.

SINE compounds have shown potential to interfere with key host protein interactions with influenza, respiratory syncytial virus and other viruses, including SARS-CoV-2, the virus that causes COVID-19.

In May 2020, the protocol was amended to allow enrollment of patients with more severe disease.

Following a planned interim analysis (115 patients included in the efficacy analysis and 113 patients included in the safety analysis), the Data Safety Monitoring Board, or DSMB, for the study recommended that we discontinue the trial as it is unlikely to demonstrate a statistically significant efficacy benefit across the entire heterogenous patient population studied.

However, the DSMB concluded that the trial was likely to show a benefit in a subpopulation of patients <75 years old who have a COVID-GRAM non-high-risk score (a clinical risk score for disease severity), which represented approximately 75% of these 115 patients.

Preliminary results from unaudited site data indicate that in the specific subpopulation, a two-point improvement in Ordinal Score at Day 14 (the primary endpoint for the entire study) reached statistical significance, as did the two-point improvement in Ordinal Score by Day 28 and the rate of hospital discharge by Day 14 (all p≤0.05).

Fatalities were similar across the two arms in this subpopulation (4/49 on selinexor and 2/37 on placebo).

There was also a significant improvement in conversion to SARS-CoV2 PCR negative status on the selinexor arm as compared with the placebo arm across the entire population (p≤0.05).

In patients ≥75 years old or with a COVID-GRAM high risk score, there was no improvement in clinical outcomes;

fatalities were higher in the selinexor arm (6/15) than the placebo arm (1/12).

While the rate of fatalities in the study was imbalanced in the patients ≥75 years old or with a COVID-GRAM high risk score, after a detailed review, the DSMB considered that the fatalities on study were due to severe COVID-19 disease and/or underlying comorbidities without a clear contribution of selinexor.

After reviewing the safety and efficacy data that was shared with the DSMB, the FDA’s opinion was that the benefit-risk ratio was not favorable in the heterogenous patient population evaluated under the latest protocol for XPORT-CoV-1001, which included the patients with more severe disease, as described above.

We will continue to analyze the data to further characterize the specific subpopulation that will likely benefit from selinexor and will work with the FDA to identify a path forward for future clinical development.

We plan to seek potential partners and external funding to advance future clinical studies.

Ongoing clinical trials evaluating selinexor include the Phase 1b/2 STOMP ( S elinexor and Backbone T reatments o f M ultiple Myeloma P atients) study in combination with standard therapies in multiple myeloma, the randomized Phase 2/3 SEAL ( Se linexor in A dvanced L iposarcoma) study evaluating single agent selinexor versus placebo in patients with previously treated, advanced unresectable dedifferentiated liposarcoma following at least two prior therapies, and the randomized Phase 3 SIENDO ( S elinexor/Placebo After Combination Chemotherapy I n Patients with Advanced or Recurrent ENDO metrial Cancer) study evaluating selinexor as maintenance therapy in endometrial cancer.

On November 2, 2020, we announced positive top-line results from the Phase 3 portion of the randomized, double blind, placebo controlled, cross-over, SEAL study.

The SEAL study met its primary endpoint of a statistically significant increase in progression-free survival (hazard ratio=0.70;

These data indicate that treatment with XPOVIO reduced the risk of disease progression or death by approximately 30%, compared to placebo.

The trial allowed patients on placebo with objective progression to cross over to the XPOVIO treatment arm.

Among those patients who received XPOVIO, there was a trend towards an improvement in the median overall survival compared to those patients who began on the placebo arm of the study and never crossed over to the XPOVIO treatment arm of the study.

The safety profile for XPOVIO was consistent with previous clinical studies with fewer hematologic and infectious adverse events as compared to XPOVIO studies in patients with multiple myeloma and DLBCL.

We expect to submit an NDA in the first quarter of 2021 requesting FDA approval of XPOVIO to treat the patient population studied in SEAL.

In April 2020, we initiated a global randomized Phase 2 clinical trial for low dose oral selinexor in hospitalized patients with severe COVID-19, or XPORT-CoV-1001.

While the results of this study demonstrated encouraging anti-viral and anti-inflammatory activity in an important subset of treated patients, the interim analysis indicated that the trial was unlikely to meet its pre-specified primary endpoint across the entire patient population studied, and the trial was discontinued.

Although the FDA’s opinion was that the benefit-risk ratio was not favorable in the heterogenous patient population evaluated in XPORT-CoV-1001, which evaluated selinexor versus placebo in hospitalized patients with COVID-19 and included patients with more severe disease, we remain encouraged by the potential mechanistic activity of XPO1 inhibition and believe that these results warrant additional research of XPO1 inhibitors in COVID-19 and other infectious diseases.

In June 2020, the first patient was dosed in a Phase 1/2 clinical study evaluating oral selinexor in combination with standard of care therapy in patients with newly diagnosed or recurrent glioblastoma, or GBM.

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Arms A and B will investigate selinexor in combination with radiation therapy with or without the addition of temozolomide, while Arm C will evaluate the combination of selinexor and lomustine.

The primary endpoints in the study are progression-free survival in patients with newly diagnosed GBM and overall survival in patients with recurrent GBM.

The primary endpoint of the Phase I study is to establish the maximum tolerated dose, and the primary endpoint of the Phase 2 study is progression-free survival in patients with newly diagnosed GBM and overall survival in patients with recurrent GBM.

In addition to selinexor, we are also advancing a pipeline of novel drug candidates including our other oral SINE compounds eltanexor and verdinexor, as well as our oral dual PAK4/NAMPT inhibitor, KPT-9274.

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Based on clinical results to date and resource prioritization, we are continuing to focus on the development of eltanexor in MDS.

In August 2020, safety and efficacy results from a Phase 2 study of selinexor in patients with MDS or oligoblastic acute myeloid leukaemia refractory to hypomethylating agents were published in The Lancet Haematology.

In August 2020, safety and efficacy results from a Phase 2 study of selinexor in patients with MDS or oligoblastic acute myeloid leukemia refractory to hypomethylating agents were published in The Lancet Haematology.

Currently, no standard therapy for such patients exists.

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There were no drug-related serious adverse events and no treatment-related deaths.

In addition, we began clinical testing of KPT-9274 in patients with hematologic or solid tumors during 2016 and in July 2020, dosed the first patient in a Phase 1/2 clinical study of KPT-9274 in combination with an anti-PD1 monoclonal antibody.

In addition, w e have be e n evaluating KPT-9274 in patients with hematologic or solid tumors since 2016 and in July 2020 , dosed the first patient in a Phase 1 /2 clinical study of KPT-9274 in combination with an anti-PD1 monoclonal antibody .

Finally, verdinexor is our lead compound that is being evaluated as a potential therapy for viral, rare disease and autoimmune indications in humans and by a collaborator as a potential therapy for cancers in companion animals.

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We granted Antengene, our existing partner in China and other regions in Asia, the exclusive right to develop and commercialize selinexor and eltanexor in all human oncology indications in the following geographies comprising the Antengene Territory:

Australia, New Zealand, South Korea, Taiwan, Hong Kong and the Association of Southeast Asian Nations, or ASEAN countries, which are currently comprised of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

Australia, New Zealand, South Korea, Taiwan, Hong Kong and the countries in the Association of Southeast Asian Nations, which are currently comprised of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

The Amended Antengene Agreement also includes the development and commercialization of KPT-9274 in all human oncology indications and verdinexor in human non-oncology indications in Australia and New Zealand.

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in April 2020.

We have chosen to retain the rights to selinexor and eltanexor in Japan.

As of June 30, 2020, we had an accumulated deficit of $972.7 million.

We had net losses of $99.4 million and $109.6 million for the six months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020, we have generated $65.2 million to date in net product sales from XPOVIO, which first became commercially available in the U.S.

As of September 30, 2020, we had an accumulated deficit of $1.0 billion.

We had net losses of $152.9 million and $150.9 million for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, we have generated $86.5 million to date in net product sales from XPOVIO, which first became commercially available in the U.S.

in July 2019.

Commercialization of XPOVIO in the United States

XPOVIO became commercially available to patients in the U.S.

beginning in July 2019 and was approved for a second indication in June 2020.

The commercialization of XPOVIO is being supported by approximately 70 Karyopharm sales representatives and nurse liaisons as well as KaryForward TM , an extensive patient and healthcare provider support program.

The commercialization of XPOVIO, for both the multiple myeloma and the DLBCL indications, is being supported by approximately 70 sales representatives and nurse liaisons as well as KaryForward TM , an extensive patient and healthcare provider support program.

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

As of June 30, 2020, nearly 3,200 XPOVIO prescriptions have been filled since launch, driven by strong demand from both academic and community-based physicians.

Net product sales for XPOVIO were $34.7 million for the six months ended June 30, 2020.

XPOVIO sales have been driven by a combination of new patient starts and prescription refills.

W e plan to continue to build upon XPOVIO’s early commercial success in the late-line relapsed or refractory multiple myeloma market by educating physicians, healthcare providers and patients about XPOVIO’s clinical profile and unique mechanism of action.

Based on the positive results from the BOSTON trial, which we announced in early March 2020, our commercial team is preparing for XPOVIO’s potential expansion into the second line relapsed or refractory multiple myeloma market, subject to the FDA’s review and approval of our sNDA based on the data from the BOSTON trial , which was accepted by the FDA in July 2020 .

Finally, following the FDA approval of XPOVIO to treat patients with DLBCL, in June 2020 we began to sell XPOVIO in this indication to hematologists and oncologists in the U.S.

with our existing field sales force.

As of September 30, 2020, nearly 4,200 XPOVIO prescriptions have been filled since launch, driven by strong demand from both academic and community-based physicians.

Net product sales for XPOVIO were $56.0 million and $12.8 million for the nine months ended September 30, 2020 and 2019, respectively.

We plan to continue to build upon XPOVIO’s early commercial success in the late-line relapsed or refractory multiple myeloma market by continuing to educate physicians, healthcare providers and patients about XPOVIO’s clinical profile and unique mechanism of action.

Based on the positive results from the BOSTON trial, which we announced in early March 2020, our commercial team is preparing for XPOVIO’s potential expansion into the second line multiple myeloma market, subject to the FDA’s review and approval of our sNDA based on the data from the BOSTON trial, which has been assigned a March 19, 2021 PDUFA date.

Commercialization Outside of the United States

In January 2019, we submitted an MAA to the EMA requesting conditional approval for selinexor in combination with dexamethasone as a treatment for patients with triple class refractory multiple myeloma, meaning patients who have received at least three prior therapies and whose disease is refractory to at least one PI, one IMiD, and one anti-CD38 monoclonal antibody.

This submission was based on the results of the Phase 2b STORM study.

We received feedback from EMA’s Committee for Medicinal Products for Human Use, or CHMP, including the integrated inspection report, based on site audits and a sponsor inspection.

In January 2019, based on the results of the Phase 2b STORM study, we submitted an MAA to the EMA requesting conditional approval for selinexor in combination with dexamethasone as a treatment for patients with triple class refractory multiple myeloma, meaning patients who have received at least three prior therapies and whose disease is refractory to at least one PI, one IMiD, and one anti-CD38 monoclonal antibody.

In 2019, we received feedback from EMA’s Committee for Medicinal Products for Human Use, or CHMP, including an integrated inspection report, based on site audits and a sponsor inspection.

In January 2020, we were granted a three-month extension from CHMP to provide additional time to respond to the CHMP’s outstanding questions related to the application.

We are currently working with CHMP to address the outstanding questions;

however, due to reduced access to clinical trial sites as a result of the COVID-19 pandemic, we had not yet been able to complete certain re-monitoring activities and, therefore, requested, and the EMA has granted us, additional time to submit our response.

We expect to submit the requested re-monitoring data in the third quarter of 2020, and we expect to receive an opinion from CHMP with respect to our MAA before the end of 2020.

In addition, we expect to submit an MAA based on data from our BOSTON study before the end of 2020.

In September 2020, we submitted our responses following an additional extension of time due to the impact of the COVID-19 pandemic.

In October 2020, we received a further updated list of outstanding issues, or LOI, from CHMP summarizing the remaining topics for us to address and indicating that, as part of its assessment of the safety and efficacy of selinexor based on the STORM study, the CHMP intends to consult its Scientific Advisory Group for additional advice in the fourth quarter of 2020.

The LOI indicates that the CHMP is continuing to assess the Independent Review Committee’s adjudicated responses from the STORM study and asks us to justify the positive benefit-risk in the intended indication, which CHMP has also requested that we update to be more closely aligned with the patient population evaluated in the STORM study.

The LOI further requests that we demonstrate that selinexor provides an advantage over approved therapies in the relevant indication and that we provide a summary of top-line data from the BOSTON study and the context of such data for the current application.

We are currently in the process of preparing responses to the LOI, and we continue to expect to receive an opinion from CHMP with respect to this MAA before the end of 2020.

In addition, contingent upon and following receipt of CHMP’s opinion, we plan to submit an MAA before the end of 2020 with a request for conditional approval of selinexor in combination with Velcade ® (bortezomib) and low-dose dexamethasone in patients with multiple myeloma after at least one prior line of therapy based on data from our BOSTON study.

To commercialize selinexor following any regulatory approval outside of the U.S., we will work with existing and potential future partners to establish the appropriate commercial infrastructure outside of the U.S., or we may, in certain geographies, elect to establish the commercial infrastructure ourselves.

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The COVID-19 pandemic has and will continue to affect economies and businesses around the world.

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it will impact our employees, patients and business operations.

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including the impact on our employees, patients and business operations.

We have and may continue to experience disruptions in the future that could impact our results of operations and financial condition.

We are unable to predict the impact that the COVID-19 pandemic will have on our operating results and financial condition due to numerous uncertainties.

Although we do not currently expect that the ongoing COVID-19 pandemic will have a material impact on our business plans or results of operations, we are unable to predict the impact that the COVID-19 pandemic will have on our operating results and financial condition due to numerous uncertainties.

These uncertainties include the geographic spread of the pandemic, the severity of the virus, the duration of the outbreak, governmental, business or other actions, travel restrictions and social distancing, business closures or business disruptions, or changes to our operations, among others.

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RESULTS OF OPERATIONS

Comparison of the Three Months Ended June 30, 2020 and June 30, 2019

Comparison of the Three Months Ended September 30, 2020 and September 30, 2019

For the Three Months

Ended June 30,

Ended September 30,

(in thousands)

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Product revenue, net.

We recognized $18.6 million of net product revenue in the three months ended June 30, 2020 from U.S.

We recognized $21.3 million and $12.8 million of net product revenue in the three months ended September 30, 2020 and 2019, respectively, from U.S.

commercial sales of XPOVIO.

XPOVIO was initially approved by the FDA in July 2019, and therefore we did not have any net product revenue in the three months ended June 30, 2019.

We began to record net product revenue in the third quarter of 2019 following the July 2019 FDA approval of XPOVIO and its subsequent commercial launch in the U.S.

License and other revenue.

License and other revenue for the three months ended June 30, 2020 was $14.9 million compared to $9.5 million for the three months ended June 30, 2019.

During the three months ended June 30, 2020, we recognized $12.7 million pursuant to the Amended Antengene Agreement, and $2.2 million upon reacquisition of the exclusive development and commercial rights from Ono Pharmaceutical Co., Ltd., or Ono.

We recognized $9.4 million in revenue during the three months ended June 30, 2019 pursuant to the Original Antengene Agreement and $0.1 million related to clinical supply provided to various partners, as well as grant revenue pursuant to a government grant arrangement.

We expect license and other revenue to decrease in the third quarter of 2020 due to the non-recurring revenue recognized in the second quarter of 2020 pursuant to the terms of the Amended Antengene Agreement and the termination of the license agreement with Ono.

We recognized an insignificant amount of license and other revenue for the three months ended September 30, 2020 and $0.3 million of license and other revenue for the three months ended September 30, 2019.

We expect license and other revenue to increase slightly in the fourth quarter.

Cost of sales.

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Prior to the capitalization of XPOVIO inventory costs, such costs were recorded as research and development expenses in the period incurred.

During the three months ended June 30, 2020, we recorded $0.4 million of cost of sales, including $0.1 million related to royalties.

The cost of sales during the three months ended June 30, 2020 only reflects a portion of the costs related to the manufacturing of XPOVIO and related materials, since, prior to FDA approval, these costs were expensed.

The manufacturing costs of XPOVIO on-hand upon FDA approval were approximately $2.8 million.

At June 30, 2020, we had $2.7 million of this previously expensed XPOVIO and related material on-hand.

We expect cost of sales to remain relatively consistent quarter over quarter for the remainder of the year.

During the three months ended September 30, 2020 and 2019, we recorded $0.4 million and $1.0 million, respectively, of cost of sales, including $0.1 million and $0.7 million, respectively, related to royalties.

The cost of sales during the three months ended September 30, 2020 and 2019 only reflects a portion of the costs related to the manufacturing of XPOVIO and related materials, since, prior to FDA approval, these costs were expensed.

The manufacturing costs of XPOVIO on-hand upon FDA approval amounted to approximately $2.8 million.

At September 30, 2020, we had $2.1 million of this previously expensed XPOVIO and related material on-hand.

We expect to utilize zero cost inventory with respect to XPOVIO for an extended period of time.

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

Research and development expense.

Research and development expense increased approximately $16.1 million to $42.6 million for the three months ended June 30, 2020 from approximately $26.5 million for the three months ended June 30, 2019.

Research and development expense increased approximately $10.7 million to $37.0 million for the three months ended September 30, 2020 from approximately $26.3 million for the three months ended September 30, 2019.

The increase was primarily related to:

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an increase of $0.9 million in facility and IT infrastructure costs;

an increase of $1.0 million in travel, consulting and professional costs.

We expect our research and development expense to remain relatively consistent quarter over quarter for the remainder of the year, with possible fluctuation over the quarters due to timing of clinical trial study starts and related clinical trial enrollment.

partially offset by

a decrease of $0.6 million in travel, consulting and professional costs.

We expect our research and development expense to remain relatively consistent in the fourth quarter when compared to the third quarter , with possible fluctuation due to timing of clinical trial study starts and related clinical trial enrollment.

Selling, general and administrative expense.

Selling, g eneral and administrative expense increased approximately $6.2 million to $30.8 million for the three months ended June 30, 2020 from approximately $24.6 million for three months ended June 30, 2019.

Selling, g eneral and administrative expense increased approximately $5.7 million to $31.0 million for the three months ended September 30, 2020 from approximately $25.3 million for the three months ended September 30, 2019.

The increase was primarily related to:

an increase of $4.1 million in commercial-related activities;

an increase of $3.9 million in personnel costs, primarily related to an increase in headcount;

an increase of $2.8 million in commercial-related activities;

an increase of $0.1 million in facility and IT infrastructure costs;

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a decrease of $1.1 million in travel, consulting and professional costs.

We expect our selling, general and administrative expenses to remain relatively consistent quarter over quarter for the remainder of the year as a result of decreased travel and corporate events due to COVID-19 impacts, offset by costs expected to be incurred for the preparations in anticipation of the BOSTON launch, if approved.

We expect our selling, general and administrative expenses to remain relatively consistent in the fourth quarter when compared to the third quarter as a result of decreased travel and corporate events due to COVID-19 impacts, offset by costs expected to be incurred in anticipation of the launch, if approved, of the expanded indication for XPOVIO, based on the BOSTON study, to treat patients with multiple myeloma after at least one prior line of therapy.

Other expense, net.

Other expense, net increased from $1.7 million for the three months ended June 30, 2019 to $6.0 million for the three months ended June 30, 2020.

Other expense, net increased from $1.9 million for the three months ended September 30, 2019 to $6.3 million for the three months ended September 30, 2020.

The net increase of approximately $4.4 million was primarily due to an increase in interest expense of $3.7 million, coupled with a decrease in interest income of $0.5 million.

Of the $3.7 million increase in interest expense, $3.4 million was related to our Revenue Interest Financing Agreement, or deferred royalty obligation, and $0.3 million was related to our 3.00% senior convertible notes due 2025, or Notes.

We expect interest expense to increase in the third quarter of 2020 and beyond, related to the imputed interest on our deferred royalty obligation.

Comparison of the six months ended June 30, 2020 and June 30, 2019

Six Months Ended

We expect interest expense to increase slightly in the fourth quarter when compared to the third quarter, related to the imputed interest on our deferred royalty obligation.

Comparison of the nine months ended September 30, 2020 and September 30, 2019

Nine Months Ended

September 30,

(in thousands)

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Product revenue, net.

We recognized $34.7 million of net product revenue in the six months ended June 30, 2020 from U.S.

We recognized $56.0 million and $12.8 million of net product revenue in the nine months ended September 30, 2020 and 2019, respectively, from U.S.

commercial sales of XPOVIO.

XPOVIO was initially approved by the FDA in July 2019, and therefore we did not have any net product revenue in the six months ended June 30, 2019.

We began to record net product revenue in the third quarter of 2019 following the 2019 FDA approval of XPOVIO and its subsequent commercial launch in the U.S.

We did not generate any revenue from product sales prior to July 2019.

License and other revenue.

License and other revenue for the six months ended June 30, 2020 was $17.0 million compared to $9.6 million for the six months ended June 30, 2019.

During the six months ended June 30, 2020, we recognized $13.8 million pursuant to the Antengene Agreement, $2.2 million upon reacquisition of the exclusive development and commercial rights from Ono, and $1.0 million related to clinical supply provided to various partners, as well as grant revenue pursuant to a government grant arrangement.

During the six months ended June 30, 2019, we recognized $9.4 million in revenue pursuant to the Original Antengene Agreement and $0.2 million in revenue for clinical supply provided to various partners, as well as grant revenue pursuant to a government grant arrangement.

License and other revenue for the nine months ended September 30, 2020 was $17.0 million compared to $10.0 million for the nine months ended September 30, 2019.

During the nine months ended September 30, 2020, we recognized $13.8 million pursuant to the Antengene Agreement, $2.2 million upon reacquisition of the exclusive development and commercial rights from Ono, and $1.0 million related to clinical supply provided to various partners, as well as grant revenue pursuant to a government grant arrangement.

During the nine months ended September 30, 2019, we recognized $9.4 million in revenue pursuant to the Original Antengene Agreement, $0.2 million in revenue for clinical supply provided to various partners, and $0.3 million in grant revenue pursuant to a government grant arrangement.

Cost of sales.

During the six months ended June 30, 2020 , we recorded $ 1.2 million of cost of sales, including $ 0.9 million related to royalties.

We began capitalizing XPOVIO inventory costs during the third quarter of 2019 subsequent to FDA approval of XPOVIO , and therefore we did not have cost of sales for the six months ended June 30, 2019 .

During the nine months ended September 30, 2020 and 2019 , we recorded $ 1.7 million and $ 1.0 million, respectively, of cost of sales, including $ 1.0 million and $0.7 million, respectively, related to royalties.

Research and development expense.

Research and development expense increased approximately $12.1 million to $76.6 million for the six months ended June 30, 2020 from approximately $64.5 million for the six months ended June 30, 2019.

Research and development expense increased approximately $22.8 million to $113.6 million for the nine months ended September 30, 2020 from approximately $90.8 million for the nine months ended September 30, 2019.

The increase was primarily related to:

an increase of $6.1 million in personnel costs and consulting and professional expense;

an increase of $5.7 million in clinical trial costs;

an increase of $12.7 million in clinical trial costs, primarily related to COVID-19 trial activity as well as continued activity in our ongoing clinical trials;

an increase of $9.5 million in personnel costs, primarily related to an increase in headcount;

an increase of $2.6 million in facility and IT infrastructure costs;

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Selling, general and administrative expense.

Selling, general and administrative expense increased approximately $9.8 million to $61.5 million for the six months ended June 30, 2020 from approximately $51.7 million for the six months ended June 30, 2019.

Selling, general and administrative expense increased approximately $15.5 million to $92.5 million for the nine months ended September 30, 2020 from approximately $77.0 million for the nine months ended September 30, 2019.

The increase was primarily related to:

an increase of $10.3 million in commercial-related activities;

an increase of $4.3 million in personnel costs;

an increase of $8.2 million in personnel costs, primarily related to an increase in headcount;

an increase of $0.5 million in facility and IT infrastructure costs;

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Other expense, net.

Other expense, net increased from $3.0 million for the six months ended June 30, 2019 to $11.5 million for the six months ended June 30, 2020.

Other expense, net increased from $4.9 million for the nine months ended September 30, 2019 to $17.8 million for the nine months ended September 30, 2020.

The increase of approximately $12.9 million was primarily due to an increase in interest expense of $10.9 million, coupled with a decrease in interest income of $2.0 million.

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Although we do not currently expect that the ongoing COVID-19 pandemic will have a material impact on our business plans or results of operations, we are continually monitoring our liquidity and capital requirements in light of the evolving situation.

At June 30, 2020, our principal source of liquidity was $345.6 million of cash, cash equivalents and investments.

We have had recurring losses and incurred a loss of $99.4 million for the six months ended June 30, 2020.

Net cash used in operations for the six months ended June 30, 2020 was $85.3 million.

We expect that cash, cash equivalents and investments at June 30, 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 the financial statements contained in this Quarterly Report on Form 10-Q.

At September 30, 2020, our principal source of liquidity was $302.4 million of cash, cash equivalents and investments.

We have had recurring losses and incurred a loss of $152.9 million for the nine months ended September 30, 2020.

Net cash used in operations for the nine months ended September 30, 2020 was $129.6 million.

We expect that our cash, cash equivalents and investments at September 30, 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 the financial statements contained in this Quarterly Report on Form 10-Q.

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

1 to the Open Market Sale Agreement, dated August 17, 2018, or the Open Market Sale Agreement , with Jefferies LLC, as agent, or Jefferies, 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.

We did not sell any shares under the Open Market Sale Agreement during the second quarter of 2020.

As of July 31, 2020, we have sold an aggregate of 3,712,359 shares under the Open Market Sale Agreement, for net proceeds of approximately $46.2 million, all of which were sold in 2019.

We did not sell any shares under the Open Market Sale Agreement during the third quarter of 2020.

As of October 30, 2020, we have sold an aggregate of 3,712,359 shares under the Open Market Sale Agreement, for net proceeds of approximately $46.2 million, all of which were sold in 2019.

On March 6, 2020, we completed a follow-on offering under our shelf registration statement on Form S-3 pursuant to which we issued an aggregate of 7,187,500 shares of common stock, which included the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $24.00 per share.

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Pursuant to the deferred royalty obligation , HCR paid us $75.0 million, less certain transaction expenses, at the initial closing, which occurred on September 27, 2019, as disclosed in Note 11 to the Condensed Consolidated Financial Statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q.

On October 16, 2018, we completed an offering of $150.0 million aggregate principal amount of 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 of 1933, as amended.

The net proceeds from the sale of the Notes was $166.9 million, after deducting the initial purchasers’ discounts and commissions and actual offering expenses payable by us.

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 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.

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

Six Months Ended

Nine Months Ended

September 30,

Net cash used in operating activities

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Effect of exchange rate changes

Net decrease in cash, cash equivalents and

Net (decrease) increase in cash, cash equivalents and

restricted cash

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The net cash used in operating activities in both periods resulted primarily from our net losses adjusted for non-cash charges and changes in the components of working capital.

The decrease in cash used in operating activities during the six months ended June 30, 2020, compared to the six months ended June 30, 2019, was primarily driven by our decreased loss from operations during that period.

The decrease in cash used in operating activities during the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, was primarily driven by our decreased loss from operations during that period.

Investing activities.

The net cash (used in) provided by investing activities during the six months ended June 30, 2020, compared to the six months ended June 30, 2019, primarily reflects a $159.1 million increase in the purchases of investments, coupled with a $19.2 million decrease in proceeds from the maturities of investments.

The net cash (used in) provided by investing activities during the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, primarily reflects a $157.6 million increase in the purchases of investments, coupled with a $39.6 million decrease in proceeds from the maturities of investments.

Financing activities.

The net cash provided by financing activities for the six months ended June 30, 2020, compared to the six months ended June 30, 2019, reflects an increase of $166.3 million.

The increase was primarily related to the net cash proceeds of $161.8 million from the sale of shares of our common stock from the follow-on offering under our shelf registration statement on Form S-3 during the first quarter of 2020, coupled with a $4.5 million increase in proceeds from the exercise of stock options and shares issued under our Employee Stock Purchase Program in the first half of 2020 compared to the first half of 2019.

The net cash provided by financing activities for the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, reflects an increase of $78.7 million.

The increase was primarily related to the net cash proceeds of $161.8 million from the sale of shares of our common stock from the follow-on offering under our shelf registration statement on Form S-3 during the first quarter of 2020, coupled with a $5.2 million increase in proceeds from the exercise of stock options and shares issued under our Employee Stock Purchase Program in the first nine months of 2020 compared to the first nine months of 2019, partially offset by the $73.7 million net proceeds received in the third quarter of 2019 from the execution of our deferred royalty obligation in the third quarter of 2019.

Funding Requirements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis