What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-02-27 compared with 2024-02-29 · 264 added, 239 removed, 1246 unchanged (29% of the section changed)

17 unchanged sentences

OTHER INFORMATION

Trading Plans

During the fiscal quarter ended December 31, 2023, our directors and officers (as defined in Rule 16a - 1 (f) under the Exchange Act) who adopted or terminated contracts, instructions, written plans or arrangements for the purchase or sale of our securities are set forth in the table below:

Trading Arrangement

Name and Title

Rule 10b5 - 1*

Non-Rule 10b5 - 1**

Total Shares of Common Stock to be Sold

Expiration Date

Brian Stuglik ,

December 16, 2023

Up to 9,900 shares

June 30, 2024

Troy Wilson ,

December 15, 2023

Up to 27,000 shares

June 30, 2024

December 17, 2023

Up to 22,000 shares

June 30, 2024

Adrian Senderowicz ,

December 15, 2023

Up to 27,000 shares

June 30, 2024

* Intended to satisfy the affirmative defense of Rule 10b5 - 1 (c)

** Not intended to satisfy the affirmative defense of Rule 10b5 - 1 (c)

During the three months ended December 31, 2024, no director or officer (as defined in Rule 16a - 1 (f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5 - 1 trading arrangement” or “non-Rule 10b5 - 1 trading arrangement,” as each term is defined in Item 408 (a) of Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

1 unchanged sentence

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item will be included in our 2024 Proxy Statement, which will be filed with the SEC, and is incorporated by reference herein.

We have adopted an insider trading policy applicable to our directors, officers and employees, that we believe is reasonably designed to promote compliance with insider trading laws and regulations and the Nasdaq stock exchange listing standards.

A copy of our policy is filed with this Annual Report on Form 10-K as Exhibit 19.1.

The other information required by this Item will be included in our 2025 Proxy Statement, which will be filed with the SEC, and is incorporated by reference herein.

EXECUTIVE COMPENSATION

57 unchanged sentences

2011 Incentive Award Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 17, 2021 and incorporated herein by reference)

Sixth Amendment to Puma Biotechnology, Inc.

2011 Incentive Award Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 24, 2024 and incorporated herein by reference)

Puma Biotechnology, Inc.

5 unchanged sentences

Form of Stock Option Grant Notice and Stock Option Agreement, issued pursuant to the 2011 Incentive Award Plan (filed as Exhibit 10.5 to the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2012 and incorporated herein by reference)

Form of Chief Executive Officer Stock Option Grant Notice and Stock Option Agreement, issued pursuant to the 2011 Incentive Award Plan (filed as Exhibit 10.6 to the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2012 and incorporated herein by reference)

Form of Performance Share Award Agreement, issued pursuant to the 2011 Incentive Award Plan (filed as Exhibit 10.2(d) to the Company’s Annual Report on Form 10-K filed with the SEC on March 3, 2014 and incorporated herein by reference)

Form of Restricted Stock Unit Award Agreement, issued pursuant to the 2011 Incentive Award Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 17, 2016 and incorporated herein by reference)

Form of Stock Option Grant Notice and Stock Option Agreement, issued pursuant to the 2017 Employment Inducement Incentive Award Plan (filed as Exhibit 10.2(k) to the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2019 and incorporated herein by reference)

Form of Restricted Stock Unit Award Agreement, issued pursuant to the 2017 Employment Inducement Award Plan

Office Lease by and between the Company and CA - 10880 Wilshire Limited Partnership, executed on December 7, 2011 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 13, 2011 and incorporated herein by reference)

12 unchanged sentences

Form of Indemnification Agreement (filed as Exhibit 10.17 to the Company’s Registration Statement on Form S-1/A filed with the SEC on October 15, 2012 and incorporated herein by reference)

Amended Non-Employee Director Compensation Program (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 7, 2020 and incorporated herein by reference)

Amended Non-Employee Director Compensation Program, dated April 27, 2022 (filed as Exhibit 10.1 to the Company’s Current Report on Form 10-Q filed with the SEC on May 5, 2022 and incorporated herein by reference)

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Sixth Amendment to Note Purchase Agreement, dated September 8, 2023, by and between the Company and Athyrium Opportunities IV CO-Invest 1 LP, as Administrative Agent (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 2, 2023, and incorporated herein by reference)

Seventh Amendment to Note Purchase Agreement and Third Amendment to Disclosure Letter, dated April 12, 2024, by and between the Company and Athyrium Opportunities IV CO-Invest 1 LP, as Administrative Agent (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 2, 2024, and incorporated herein by reference)

Open Market Sale Agreement SM , dated November 4, 2021, by and between the Company and Jeffries LLC (filed as Exhibit 1.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 4, 2021 and incorporated herein by reference)

Exclusive License Agreement, dated September 16, 2022, by and between the Company and Millennium Pharmaceuticals, Inc., a wholly owned subsidiary of Takeda Pharmaceutical Company Limited (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 3, 2022 and incorporated herein by reference)

Insider Trading and Compliance Policy

Consent of KPMG LLP

7 unchanged sentences

Puma Biotechnology, Inc.

Policy for Recovery of Erroneously Awarded Compensation

Policy for Recovery of Erroneously Awarded Compensation (filed as Exhibit 97.1 to the Company’s Annual Report on Form 10-K filed with the SEC on February 29, 2024 and incorporated herein by reference)

Inline XBRL Instance Document

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PUMA BIOTECHNOLOGY, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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We have audited the accompanying consolidated balance sheets of Puma Biotechnology, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

and subsidiary (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2024 and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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PUMA BIOTECHNOLOGY, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

6 unchanged sentences

Marketable securities

31,746 11,354

Accounts receivable, net of allowance for credit loss of $ 362 and $ 881

32,011 47,837

Inventory, net

Prepaid expenses, current

7 unchanged sentences

Restricted cash, long-term

Deferred tax assets

Prepaid expenses and other, long-term

6 unchanged sentences

36,898 52,721

Accrued in-licensed rights, current

Post-marketing commitment liability, current

Post-marketing commitment liability

Lease liabilities, current

Current portion of long-term debt

45,329 33,997

Total current liabilities

96,111 99,382

Accrued expenses, long-term

Other liabilities, long-term

Lease liabilities, long-term

11 unchanged sentences

1,407,000 1,398,605

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Accumulated deficit

6 unchanged sentences

PUMA BIOTECHNOLOGY, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

3 unchanged sentences

$ 195,186 $ 203,107 $ 200,023

License revenue

Royalty revenue

21 unchanged sentences

— — ( 12,456 )

Loss on debt extinguishment

— — ( 8,146 )

Other income (expense)

2 unchanged sentences

( 6,866 ) ( 9,966 ) ( 23,263 )

Net income (loss) before income taxes

Net income before income taxes

$ 24,100 $ 22,674 $ 457

1 unchanged sentence

( 897 ) ( 1,083 ) ( 455 )

Net income (loss)

Deferred income tax benefit

$ 30,278 $ 21,591 $ 2

Net income (loss) per share of common stock—basic

Net income per share of common stock—basic

$ 0.62 $ 0.46 $ -

Net income (loss) per share of common stock—diluted

Net income per share of common stock—diluted

$ 0.62 $ 0.45 $ -

5 unchanged sentences

PUMA BIOTECHNOLOGY, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

For the Year Ended December 31,

Net income (loss)

$ 30,278 $ 21,591 2

Other comprehensive income (loss):

Unrealized gain (loss) on available-for-sale securities, net of tax of $0

( 4 ) 2 ( 2 )

Comprehensive income (loss)

Unrealized income (loss) on available-for-sale securities, net of tax of $ 0

Comprehensive income

$ 30,288 $ 21,587 $ 4

1 unchanged sentence

PUMA BIOTECHNOLOGY, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

1 unchanged sentence

Comprehensive

Income (Loss)

Balance at December 31, 2021

4 unchanged sentences

1,017,744 — — — — —

Unrealized loss on available-for-sale securities

— — — ( 2 ) — ( 2 )

Shares issued under private investments in public equity, net of issuance costs of approximately $ 0.2 M

4,152,409 1 12,223 — — 12,224

Unrealized gain on available-for-sale securities

Balance at December 31, 2022

4 unchanged sentences

1,301,127 — — — — —

Shares issued under private investments in public equity, net of issuance costs of approximately $ 0.2 M

Unrealized loss on available-for-sale securities

— — — ( 4 ) — ( 4 )

Unrealized gain on available-for-sale securities

— — — — 21,591 21,591

Balance at December 31, 2023

4 unchanged sentences

1,459,047 — 150 — — 150

Unrealized loss on available-for-sale securities

Unrealized gain on available-for-sale securities

— — — 10 — 10

4 unchanged sentences

PUMA BIOTECHNOLOGY, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

2 unchanged sentences

Operating activities:

Net income (loss)

$ 30,278 $ 21,591 $ 2

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

7 unchanged sentences

Loss on impairment of asset

Loss on debt extinguishment

Changes in operating assets and liabilities:

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( 15,823 ) ( 7,583 ) ( 33,065 )

Deferred tax assets

( 7,075 ) — —

Post-marketing commitment liability

( 1,267 ) ( 940 ) ( 921 )

Net cash provided by (used in) operating activities

Net cash provided by operating activities

38,918 27,009 ( 15,827 )

1 unchanged sentence

Purchase of property and equipment

( 56 ) ( 140 ) —

Acquired in-process research and development

9 unchanged sentences

Financing activities:

Net proceeds from shares issued under employee stock plans

Gross proceeds from private investments in public equity

Issuance costs associated with private investments in public equity

Proceeds from debt

Payment of debt

( 33,330 ) — —

Payment of prepayment costs, end of loan payment and other extinguishment costs

— — ( 8,521 )

Payment of debt issuance costs

— — ( 1,910 )

Installment payment for purchase of intangible asset

— — ( 20,000 )

Net cash provided by (used in) financing activities

Payment of exit costs

Net cash (used in) provided by financing activities

( 33,846 ) — 12,223

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

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

( 15,366 ) 7,884 3,500

14 unchanged sentences

PUMA BIOTECHNOLOGY, INC.

AND SUBSIDIARIES

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8 unchanged sentences

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary.

All significant intercompany accounts and transactions have been eliminated.

All intercompany accounts and transactions have been eliminated.

The accompanying consolidated financial statements of the Company and its subsidiary has been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”).

The Company has incurred significant operating losses since its inception.

While the Company recently reported net income, we cannot assure that we will continue to do so and will need to continue to generate significant revenue to sustain operations and successfully commercialize neratinib.

While the Company has reported net income, the Company cannot assure that it will continue to do so and will need to continue to generate significant revenue to sustain operations and successfully commercialize neratinib.

In 2017, the Company received U.S.

4 unchanged sentences

The Company is required to make substantial payments to Pfizer upon the achievement of certain milestones and has contractual obligations for clinical trial contracts.

The Company has entered into other exclusive sub-license agreements with various parties to pursue regulatory approval, if necessary, and commercialize NERLYNX, if approved, in many regions outside the United States, including Europe (excluding Russia and Ukraine), Australia, Canada, China, Southeast Asia, Israel, South Korea, and various countries and territories in Central and South America.

The Company plans to continue to pursue commercialization of NERLYNX in other countries outside the United States, if approved.

3 unchanged sentences

Under the terms of the exclusive license agreement, the Company assumed sole responsibility for the global development and commercialization of alisertib.

The Company paid Takeda an upfront license fee of $ 7.0 million in October 2022 and is eligible to receive potential future milestone payments of up to $ 287.3 million upon the Company’s achievement of certain regulatory and commercial milestones over the course of the exclusive license agreement, as well as tiered royalty payments for any net sales of alisertib.

The Company paid Takeda an upfront license fee of $ 7.0 million in October 2022 and Takeda is eligible to receive potential future milestone payments of up to $ 287.3 million upon the Company’s achievement of certain regulatory and commercial milestones over the course of the exclusive license agreement, as well as tiered royalty payments for any net sales of alisertib.

The Company recorded in-process research and development expense of $ 7.0 million during the year ended December 31, 2022, in connection with the up-front payment related to the asset acquisition.

12 unchanged sentences

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary.

All intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation.

These reclassifications had no effect on the reported results of operations.

An adjustment to the presentation of operating lease assets and liabilities, net has been made to the Consolidated Statements of Cash Flows for the year ended December 31, 2022.

Segment Reporting

Management has determined that the Company operates in one business segment, which is the development and commercialization of innovative products to enhance cancer care.

Management has determined that the Company operates in one reporting segment, which is the development and commercialization of innovative products to enhance cancer care.

We derive our global product, license and royalty revenue through the sales of NERLYNX®.

The majority of our royalty revenue is derived from our sub-licensee sales into China.

The accounting policies of this operating segment are the same as those described below in Note 2–Significant Accounting Policies.

Our Chief Operating Decision Maker (“CODM”) is our President, Chief Executive Officer and Chairman of the Board, Alan Auerbach.

The CODM primarily uses our Consolidated Statement of Operations and related revenues, expenses and net income in evaluating the performance of the single operating segment and determining how to allocate resources of the Company as a whole, including our sales force and related marketing, research and development programs, including alisertib, and licensing strategy.

Consolidated revenue, expenses and net income are also used to monitor budget versus actual results.

The CODM does not typically review total asset amounts in evaluating the results of the operating segment.

In addition to the significant expense categories included within consolidated net income presented on the Company's Consolidated Statements of Operations, see below for disaggregated amounts that comprise operating expenses:

For the Year Ended December 31,

Cost of sales

$ 64,404 $ 62,682 $ 55,093

General and administrative

36,749 37,892 38,671

Commercialization

37,849 45,132 43,261

Research and development:

Clinical research and development

24,715 17,784 19,967

Medical affairs

4,605 6,751 7,821

Other research and development (1)

22,935 22,508 20,673

Acquired in-process research and development

Operating costs and expenses

191,257 192,750 192,485

Stock based compensation

8,245 10,247 11,826

Total operating costs and expenses

$ 199,502 $ 202,997 $ 204,311

( 1 ) Other research and development expense include regulatory affairs, pharmacovigilance, quality assurance, chemical manufacturing and other costs.

Use of Estimates

4 unchanged sentences

Other significant estimates also include those related to legal and other expense accruals.

Net Income (Loss) per Share of Common Stock

Basic net income (loss) per share of common stock is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the periods presented, as required by ASC 260, Earnings per Share .

For purposes of calculating diluted loss per share of common stock, the denominator includes both the weighted average number of shares of common stock outstanding and the number of dilutive common stock equivalents, such as stock options, restricted stock units (“RSUs”) and warrants.

Net Income per Share of Common Stock

Basic net income per share of common stock is computed by dividing net income applicable to common stockholders by the weighted average number of shares of common stock outstanding during the periods presented, as required by ASC 260, Earnings per Share .

For purposes of calculating diluted income per share of common stock, the denominator includes both the weighted average number of shares of common stock outstanding and the number of dilutive common stock equivalents, such as stock options, restricted stock units (“RSUs”) and warrants.

A common stock equivalent is not included in the denominator when calculating diluted earnings per common share if the effect of such common stock equivalent would be anti-dilutive.

The following potentially dilutive outstanding common stock equivalents were excluded from diluted net income (loss) per share because of their anti-dilutive effect:

The following potentially dilutive outstanding common stock equivalents were excluded from diluted net income per share because of their anti-dilutive effect:

For the Year Ended December 31,

24 unchanged sentences

However, no such costs were incurred during the year ended December 31, 2024 .

For the year ended December 31, 2024 , fou r customers individually comprised approximately 28.4 %, 18.8 %, 14.1 % and 12.3 % respec tively, of the Company’s total product revenue.

For the year ended December 31, 2023 , four customers individually comprised approximately 31.4 %, 17.2 %, 15.2 % and 11.9 %, respectively, of the Company’s total product revenue.

For the year ended December 31, 2022 , two major customers accounted for approximately 35 % and 20 %, respectively, of the Company’s total product revenue.

For the year ended December 31, 2021 , two major customers accounted for approximately 31 % and 22 %, respectively, of the Company’s total product revenue.

Reserves for Variable Consideration

53 unchanged sentences

At this time, the Company cannot estimate if or when these milestone-related performance obligations might be achieved.

In September 2024, the Pharmacovigilance Risk Assessment Committee approved a change in existing post approval requirements for overall results and a reduction in sample size for the Pierre Fabre NERLYFE post-marketing study in Europe.

As of December 31, 2024, there is a post-marketing liability of $ 4.6 million, and the final costs of the study are being assessed.

Any adjustment to the liability will be recorded as license revenue as the original $ 9.0 million estimate in study costs were recorded as a reduction to license revenue.

Royalty Revenue

70 unchanged sentences

ASC 740 also provides g uidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

As of December 31, 2023 , the Company’s uncertain tax positions includes a reserve for its R&D credits.

As of December 31, 2024 , the Company’s uncertain tax positions include a reserve for its R&D credits.

Financial Instruments

5 unchanged sentences

Restricted cash represents cash held at financial institutions that is pledged as collateral for stand-by letters of credit for lease and legal verdict commitments.

The lease related letters of credit will lapse at the end of the respective lease terms through 2026.

At December 31, 2023 and 2022 , the Company had restricted cash in the amount of $ 2.1 million and $ 2.6 million, resp ectively.

The lease related letters of credit will expire at the end of the respective lease terms through 2026.

At December 31, 2024 and 2023 , the Company had restricted cash in the amount of $ 2.1 million.

Investment Securities

24 unchanged sentences

$ 16,996 $ 38,102 $ — $ 55,098

US Government

17,568 — — 17,568

5 unchanged sentences

$ 29,068 $ 8,490 $ — $ 37,558

$ 3,444 $ — $ — $ 3,444

Commercial paper

9 unchanged sentences

$ 55,095 $ 3 $ — $ 55,098

US Government

17,564 6 ( 2 ) 17,568

5 unchanged sentences

$ 37,561 $ — $ ( 3 ) $ 37,558

$ 3,443 $ 1 $ — $ 3,444

Commercial paper

10 unchanged sentences

The Company estimates an allowance for credit loss primarily based on the credit worthiness of its customers, historical payment patterns, aging of receivable balances and general economic conditions.

The Company recorded $ 0.5 million credit loss recovery in the year ended December 31, 2024.

The Company recorded $ 0.9 million credit loss expense in the year ended December 31, 2023, and no such expense in the year ended December 31, 2022.

The Company recorded a recovery of credit loss expense of $ 1.0 million in year ended December 31, 2021.

As of December 31, 2023 and 2022, accounts receivable from individual customers with balances due in excess of 10% of total accounts receivable totaled $ 32.3 million and $ 28.9 million, respectively.

As of December 31, 2024 and 2023, accounts receivable from individual customers with balances due in exc ess of 10% of total accounts receivable totaled $ 22.9 million and $ 32.3 million, respectivel y.

The Company’s success depends on its ability to successfully commercialize NERLYNX.

10 unchanged sentences

The Company values its inventories at the lower of cost and estimated net realizable value.

The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing overhead, on a first -in, first -out basis.

The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing overhead, on a first -in, first -out basis and uses standard costing.

The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and it writes down any excess and obsolete inventories to their estimated realizable value in the period in which the impairment is first identified.

14 unchanged sentences

$ 8,724 $ 7,080

Other Current Assets

Other current assets consisted of the following at December 31 ( in thousands):

December 31, 2023

December 31, 2022

CARES Act Credit Receivable

Reimbursement receivable

$ 912 $ 2,429

Other current assets primarily contain receivables other than trade receivables.

For the year ended December 31, 2023, the Company recorded a $ 0.7 million receivable for reimbursement from a vendor for damaged inventory.

For the year ended December 31, 2022, the Company recorded a $ 1.9 million receivable rela ted to the Coronavirus Aid Relief Economic Security Act (the “CARES Act”), w hich was received in the first quarter of 2022.

Other amounts consist primarily of capitalized sublease commission and a sublease tenant improvement allowance, net of amortization.

Property and Equipment, Net

7 unchanged sentences

If the undiscounted cash flows used in the recoverability test are less than the carrying value, the Company would then determine the fair value of the long-lived asset and recognize an impairment loss for the amount in excess of the carrying value.

No impairments were recorded during the years ended December 31, 2023 and 2022.

No impairments were recorded during the year ended December 31, 2024 and an impairment charge of $ 0.6 million was recorded during the year ended 2023 related to a sublease.

ASC Topic 842, Leases , as adopted in the first quarter of 2019, requires lessees to recognize most leases on the balance sheet with a corresponding right-of-use asset (“ROU asset”).

18 unchanged sentences

The incremental borrowing rate (“IBR”) represents the rate of interest the Company would expect to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

When determinable, the Company uses the rate implicit in the lease to determine the present value of lease payments.

As the Company’s leases do not provide an implicit rate, the Company uses its incremental b orrowing rate based on the information available at the commencement date in determining the present value of lease payments.

As the implicit rate on the Company’s leases are not readily determinable, the Company uses its IBR based on the information available at the commencement date in determining the present value of lease payments.

The Company’s average IBR for existing leases as of December 31, 2024 was 10.9 %.

21 unchanged sentences

In June 2020, the Company entered into a letter agreement with Pfizer relating to the method of payment associated with a milestone payment under the Company’s license agreement with Pfizer (see Note 13–Commitments and Contingencies).

The Company capitalized the milestone payments as an intangible asset and is amortizing the asset to cost of sales on a straight-line basis over the estimated useful life of the licensed patent through 2030.

The Company capitalized the mil estone payments as an intangible asset and is amortizing the asset to cost of sales on a straight-line basis over the estimated useful life of the licensed patent through 2030.

In addition, the Company reached a commercial milestone by achieving aggregate worldwide net sales of $ 250 million in calendar year 2022, resulting in a payable to Pfizer of $ 12.5 million as of December 31, 2022.

2 unchanged sentences

As of December 31, 2024 , estimated future amortization expense related to the Company’s intangible asset was approximately $ 9.7 million for each year from 2025 through 2029, and $ 2.4 million for 2030.

Recently Issued Acc ounting Standards

Recently Issued Accounting Standards

In October 2023, the FASB issued ASU 2023 - 06, Disclosure Improvements – Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.

11 unchanged sentences

The Company is currently evaluating the effect that adoption of ASU 2023 - 09 will have on its consolidated financial statements.

Update (ASU) 2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures, which requires enhanced disclosures about segment expenses on an annual and interim basis.

The impact of the adoption of this ASU is not expected to have a material effect on our consolidated financial statements.

In November 2021, the FASB issued ASU No.

2021 - 10, Government Assistance (Topic 832 ) , which enhances disclosure of transactions with governments that are accounted for by applying a grant or contribution model.

ASU 2021 - 10 requires entities to provide information about the nature of the transactions, the related accounting policies used to account for the transactions, the effect of the transactions on an entity's finan cial statements, and significant terms and conditions associated with the transactions.

ASU 2021 - 10 must be adopted for fiscal years beginning after December 15, 2021.

In November 2024, the FASB issued ASU 2024 - 03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures:

The ASU requires more detailed information about specified categories of expenses included in certain expense captions presented on the face of the income statement.

This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

We adopted this guidance during 2022, and recognized approximately $ 3.8 million in payroll tax credits under the CARES Act.

The amendments may be applied either ( 1 ) prospectively to financial statements issued for reporting periods after the effective date of this ASU or ( 2 ) retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and related disclosures.

Accounting Pronouncements Adopted During the Current Year

Segment Reporting Disclosures

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures.

The standard expands reportable segment disclosure requirements for public business entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit (referred to as the “significant expense principle”).

We have adopted this standard for our fiscal year 2024 annual financial statements and interim financial statements thereafter and have applied this standard retrospectively for all prior periods presented in the financial statements.

See Segment Reporting in Note 2–Significant Accounting Policies above for further information.

Note 3—Accounts Receivable

5 unchanged sentences

Royalty revenue receivable

21,049 12,750

Total accounts receivable

1 unchanged sentence

Allowance for credit losses

( 362 ) ( 881 )

Total accounts receivable, net

4 unchanged sentences

In determining estimated credit losses, the Company evaluated its historical loss rates, current economic conditions and reasonable and supportable forecasts of future economic conditions.

The Compan y recorded a recovery of credit loss expense of $ 0.5 million in year ended December 31, 2024.

The Company recorded $ 0.9 million credit loss expense in the year ended December 31, 2023, and no such expense in the year ended December 31, 202 2.

The Company recorded a recovery of credit loss expense of $ 1.0 million in year ended December 31, 2021.

Note 4—Prepaid Expenses and Other

4 unchanged sentences

Professional fees

Prepaid Taxes

Other clinical development

$ 6,151 $ 7,151

Other current prepaid amounts consist primarily of deposits, signing bonuses, licenses, subscriptions and software.

Other long-term prepaid amounts consist primarily of prefunding of reimbursement claims.

Other current prepaid amounts consist primarily of deposits, signing bonuses, licenses, subscriptions and software, and prefunding of reimbursement claims.

Note 5—Property and Equipment

11 unchanged sentences

Property and equipment, net

$ 855 $ 1,146

For the years ended December 31, 2023 , 2022 and 2021 , the Company incurred depreciation expense of $ 0.4 million, $ 0.6 million, and $ 0.7 million, respectively.

For the years ended December 31, 2024 , 2023 and 2022 , the Company incurred depreciation expense of $ 0.4 millio n, $ 0.4 million, and $ 0.6 million, respectively.

Note 6—Leases

12 unchanged sentences

Components of copier lease expense include both fixed and variable lease expenses.

Total rent expense for years ended December 31, 2023 , 2022 and 2021 was approximately $ 4.9 million, $ 4.9 million and $ 5.1 million, respectively .

Fo r purposes of determining straight-line rent expense, the lease term is calculated from the date the Company first takes possession of the facility, including any periods of free rent and any renewal option periods that the Company is reasonably certain of exercising.

Total rent expense for years ended December 31, 2024 , 2023 and 2022 was approxi mately $ 4.9 mill ion for each year .

Fo r purposes of determining straight-line rent expense, the lease term is calculated from the date the Company first obtains control of the facility, including any periods of free rent and any renewal option periods that the Company is reasonably certain of exercising.

The Company’s office and equipment leases generally have contractually specified minimum rent and annual rent increases are included in the measurement of the ROU asset and related lease liability.

1 unchanged sentence

Such amounts are generally variable and therefore not included in the measurement of the ROU asset and related lease liability but are instead recognized as variable lease expense in selling, general and administrative costs in the consolidated statements of operations when they are incurred.

Variable lease payments not included in the lease liability were $ 0.7 million and $ 0.5 million for the years ended December 31, 2024 and 2023, respectively.

The future minimum lease payments under ASC 842 as of December 31, 2024 were as follows (in thousands):

5 unchanged sentences

As a result of the long-term sublease entered during 2023, the Company recorded an impairment expense on the right-of-use asset of approximately $ 0.6 million.

For both subleases, the term of the leases run until March 2026 and the rent amounts payable to the Company increase approximately 3 % per year.

The Company recorded sublease income of $ 0.5 million for each of the years e nded December 31, 2023 , 2022 and 2021 , in other income (expenses) in the consolidated statements of operations.

For both subleases, the term of the leases were to run until March 2026 and the rent amounts payable to the Company increase approximately 3 % per year .

The February 2019 sublease was terminated in December 2024.

As a result, the Company received $ 0.7 million, which approximated the sublease rental payments on the remaining lease term.

The Company recorded sublease income of $ 1.4 million, $ 0.5 million and $ 0.5 million for the years ended December 31, 2024 , 2023 and 2022 , respectively, in other income (expenses) in the consolidated statements of operations.

The future minimum lease payments to be received as of December 31, 2024 were as follows (in thousands):

21 unchanged sentences

Accrued legal verdict expense

$ 7,706 $ 8,000

Accrued royalties

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36,898 52,721

Accrued legal verdict expense

Accrued other

Accrued other liabilities

$ 37,019 $ 52,842

Included in accrued liabilities is approximately $ 7.7 million ($ 8.0 million net of imputed interest) as of December 31, 2023, and $ 15.4 million ($ 16.0 million net of imputed interest) as of December 31, 2022, that is related to Eshelman v.

Included in accrued liabilities is approximately $ 7.7 million ($ 8.0 million net of imputed interest) as of December 31, 2023 that was related to Eshelman v.

Puma Biotechnology, Inc., et al.

3 unchanged sentences

Eshelman $ 16.0 million.

The settlement amount will be paid in two separate payments, the first payment of $ 8.0 million was paid in January 2023, and the second payment of $ 8.0 million will be paid on or before November 1, 2024.

The settlement amount was paid in two separate payments.

The first payment of $ 8.0 million was paid in January 2023, and the second payment of $ 8.0 million was paid in October 2024.

Accrued variable consideration represents estimates of adjustments to product revenue, net for which reserves are established.

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Accrued CRO services, accrued other clinical development expenses, and accrued legal fees represent the Company’s estimates of such costs and are recognized as incurred.

Accrued compensation includes commissions, vacation and restructuring costs.

Accrued compensation includes commissions and vacation.

Other accrued expenses consist primarily of grants, software and taxes.

Restructuring Costs

On October 26, 2023, the Company implemented a reduction in our workforce of approximately 5 % across the Company.

The Company incurred approximately $ 0.4 million in related costs, including severance payments and insurance premiums, of which approximately $ 0.1 million is included in accrued compensation as of December 31, 2023.

The Company believes that all payments related to this plan will be made by March 31, 2024 .

Long-term debt consisted of the following at December 31, 2024 (in thousands):

3 unchanged sentences

$ 102,000 July 23, 2026

debt issuance costs and discounts

unamortized debt issuance costs and discounts

current portion

debt repayment

Total long-term debt, net

Athyrium Note Purchase Agreement

The Company issued senior notes for an aggregate principal amount of $ 100.0 million pursuant to a note purchase agreement dated July 23, 2021, by the Company, and its subsidiaries, and Athyrium Opportunities IV Co-Invest 1 LP (“Athyrium”), as Administrative Agent, and certain other investor parties (the “Note Purchase Agreement”), with an initial maturity date of July 23, 2026 ( the “Athyrium Notes”).

The Company issued senior notes for an aggregate principal amount of $ 100.0 million pursuant to a note purchase agreement dated July 23, 2021 by the Company, and its subsidiary, and Athyrium, as Administrative Agent, and certain other investor parties (the “Note Purchase Agreement”), with an initial maturity date of July 23, 2026 ( the “Athyrium Notes”).

The Athyrium Notes were issued for face amount of $ 100.0 million net of an original issue discount of $ 1.5 million.

The Athyrium Notes also require a 2.0 % exit payment to be made on each payment of principal.

The borrowings under the Athyrium Notes, together with cash on hand, were used to repay the Company’s outstanding indebtedness, including the applicable exit and prepayment fees owed to lenders under its Oxford Credit Facility.

The Company can borrow up to an additional $ 25.0 million under the Note Purchase Agreement for certain purposes specified in the Note Purchase Agreement.

The Athyrium Notes are secured by substantially all of the Company’s assets.

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Interest on the Athyrium Notes is calculated in part based on the Secured Overnight Financing Rate (“SOFR”), which replaced the “London Interbank Offering Rate” as the floating benchmark for interest rate calculations applicable to the Athyrium Notes pursuant to the terms of the Third Amendment to Note Purchase Agreement dated as of September 16, 2022 ( the “Third Amendment”).

The modification of the Note Purchase Agreement pursuant to the Third Amendment did not meet the requirements of a debt extinguishment under ASC 470 - 50 - Debt Modifications and Exchanges and no gain or loss was recognized.

The Company performed a quantitative analysis and determined that the terms of the new debt and original debt instrument are not substantially different.

The modification of the Note Purchase Agreement pursuant to the Third Amendment did not meet the requirements of a debt extinguishment under ASC Topic 470 - 50 - Debt Modifications and Exchanges and no gain or loss was recognized.

The Company performed a quantitative analysis and determined that the terms of the new debt and original debt instrument were not substantially different.

Accordingly, the Third Amendment is accounted for as a debt modification.

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Interest is payable quarterly on the last business day of March, June, September and December each year.

Beginning June 30, 2024, principal payments are required to be made quarterly at 11.11 % of the original face amount with the remaining balance paid at maturity.

Each principal payment will also include a 2.0 % exit payment.

As of December 31, 2023, the effective interest rate for the loan wa s 12.99 %.

At the Company’s option, the Company may prepay the outstanding principal balance of the notes in whole or in part, subject to a prepayment fee of 2.0 % of the amount prepaid if the prepayment occurs on or prior to the second anniversary of the issuance date of such notes, plus the present value of remaining interest that would have accrued through and including the second anniversary date, and 2.0 % of the amount prepaid if the prepayment occurs after the second anniversary but on or prior to the third anniversary of the issuance date of such notes.

In the second quarter of 2024, the Company began paying the principal payments required to be made quarterly at 11.11 % of the original face amount.

The remaining balance will be paid at maturity.

Each principal payment also includes a 2.0 % exit payment.

Each quarterly principal payment approximates $ 11.1 million, and each quarterly exit fee payment approximates $ 0.2 million.

As of December 31, 2024, the effective interest rate for the loan was 12.99 %.

As of December 31, 2024, the Company may prepay the outstanding principal balance of the notes, in whole or in part, without premium or penalty.

The Athyrium Notes include affirmative and negative covenants applicable to the Company.

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As of December 31, 2024, the Company was in compliance with such covenants.

As of December 31, 2023 , the principal balance outstanding under the Athyrium Notes was $ 100.0 million, representing all of the Company’s debt.

As of December 31, 2024 , the principal balance outstanding under the Athyrium Notes w as $ 66.7 million, representing all of the Company’s debt.

The future minimum principal and exit payments under the Athyrium Notes as of December 31, 2024 , were as follows (in thousands):

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Amortization of debt issuance costs is expensed using the effective interest method and is included in interest expense in the consolidated statements of operations.

For the years ended December 31, 2023, 2022 and 2021 , the Company recorded approximately $ 1.3 million, $ 1.2 million and $ 2.6 million, respectively, of interest expense related to the amortization of debt issuance costs, discounts and exit fees in the consolidated statements of operations.

For the years ended December 31, 2024, 2023 and 2022 , the Company recorded app roximately $ 1.4 million, $ 1.3 million and $ 1.2 million, respe ctively, of interest expense related to the amortization of debt issuance costs, discounts and exit fees in the consolidated statements of operations.

Note 10—Stockholders’ Equity (Deficit)

Co mmon Stock

The Company did not issue any shares of common stock upon exercise of stock options for the years ended December 31, 2023, 2022 and 2021.

The Company issued 64,118 shares of common stock upon exercise of stock options for the year ended December 31, 2024 and did not issue any shares of common stock in 2023 or 2022.

The Company issued 1,394,929 , 1,301,127 and 1,017,744 shares of common stock upon vesting of RSUs during the years ended December 31, 2024, 2023 and 2022 , respectively.

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The amendment was approved by the Company's stockholders on June 15, 2021.

On June 18, 2024, the stockholders of the Company approved an amendment to the Company’s 2011 Plan, increasing the number of authorized shares of the Company’s common stock that may become issuable under the 2011 Plan by 3,000,000 shares and extending the period during which incentive stock options may be granted.

As of December 31, 2024 , a total of 17,529,412 shares of the Company’s common stock have been reserved for issuance under the 2011 Plan.

25 unchanged sentences

2,389 2,728 3,226

Warrant modification:

Selling, general, and administrative

Total stock-based compensation expense

$ 8,245 $ 10,247 $ 11,826

Stock Option Rollforward

Activity with respect to options granted under the 2011 Plan and 2017 Plan is summarized as follows:

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( 105,646 ) $ 5.78 — —

Outstanding at December 31, 2022

( 64,118 ) $ 2.33 — —

( 638,419 ) $ 146.47 — —

( 375,414 ) $ 66.89 — —

Outstanding at December 31, 2024

4,051,928 $ 33.80 5.0 $ 313

Nonvested at December 31, 2023

Vested and expected to vest at December 31, 2024

4,051,928 $ 33.80 5.0 $ 313

1 unchanged sentence

At December 31, 2024 , total estimated unrecognized compensation cost related to non-vested stock options granted prior to that date was approximately $ 0.9 million, which is expected to be recognized over a weighted-average period of 1.0 years.

At December 31, 2023 , the total estimated unrecognized compensation cost related to non-vested RSUs was approximately $ 3.9 million, which is expected to be recognized over a weighted-average period of 1.1 years.

The weighted-average grant date fair value of options granted during the years ended December 31, 2023, 2022 and 2021 , was $ 3.17 , $ 1.72 and $ 7.90 per share, respectively.

At December 31, 2024 , the total estimated unrecognized compensation cost related to non-vested RSUs was approximately $ 4.0 million, which is expected to be recognized over a weighted-a verage period of 1.0 years .

The wei ghted-average grant date fair value of options granted during th e years ended December 31, 2024, 2023 and 2022 , was $ 4.57 , $ 3.17 and $ 1.72 per share, respectively.

The weighted-average grant date fair value of RSUs awarded during the year ended December 31, 2024, 2023 and 2022 was $ 5.86 , $ 3.96 and $ 2.49 , respectively.

Stock Option Rollforward

Weighted Average Grant-Date Fair Value

Nonvested shares at December 31, 2021

835,297 $ 7.76

582,353 $ 1.72

( 618,274 ) $ 6.61

Nonvested shares at December 31, 2022

799,376 $ 4.25

581,614 $ 3.17

( 674,010 ) $ 4.15

Nonvested shares at December 31, 2023

706,980 $ 3.46

Restricted Stock Unit Rollforward

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1,289,449 $ 5.14

1,543,027 $ 3.96

( 1,301,127 ) $ 5.00

( 118,695 ) $ 4.66

Nonvested shares at December 31, 2023

1,624,972 $ 3.96

Note 11—401 (k) Savings Plan

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The Company is required to make matching contributions to the 401 (k) plan equal to 100 % of the first 3% of wages deferred by each participating employee and 50 % on the next 2% of wages deferred by each participating employee.

The Company incurred expenses for employer matching contributions of approximately $ 1.6 million, $ 1.5 million, and $ 1.5 million for the years ended December 31, 2023, 2022 and 2021 , respectively.

The Company incurred expenses for employer matching contributions of a pproximately $ 1.6 million, $ 1.6 million, and $ 1.5 million for th e years e nded December 31, 2024, 2023 and 2022 , respectively.

Note 12—Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes.

Under this method, income tax expense is recognized for the amount of:

The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standards Codification Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of:

(i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns.

1 unchanged sentence

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date.

Income tax expense was as follows for the years ended December 31 (in thousands):

The components of income before income taxes for the years ended December 31 ( in thousands) are as follows:

$ 24,100 $ 22,674 $ 457

Income Before Income Taxes

$ 24,100 $ 22,674 $ 457

The provisions of income taxes are summarized as follows (in thousands):

897 1,083 455

( 6,632 ) — —

( 7,075 ) — —

$ ( 6,178 ) $ 1,083 $ 455

The provision for income taxes in the accompanying consolidated statements of operations differs from the amount calculated by applying the statutory income tax rate to income (loss) from continuing operations before income taxes.

Approximately $ 4.2 million of tax expense for the year ended December 31, 2023 is due to stock-based compensation expense shortfall and the expiration of vested stock options.

Approximatel y $ 1.8 million of the tax benefit for the year ended December 31, 2023 is due to R&D tax credits, net of an approximately $ 0.5 million reser ve related to unrecognized tax benefits for the method of allocation of expenses used in the R&D tax credits calculation.

Approximately $ 7.1 million of the $ 25.3 million change in valuation allowance is attributable to a partial valuation allowance release (see further discussion within the tax footnotes below).

Approximately $ 12.2 million of tax expense is due to stock-based compensation expense shortfall, the expiration of vested stock options, and non-deductible stock-based compensation.

Approximately $ 1.5 million of the tax benefits are due to R&D tax credits, net of a $ 0.4 million reserve related to unrecognized tax benefits for the method of allocation of expenses used in the R&D credit calculation.

The primary components of such differences are as follows as of December 31 ( in thousands):

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Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes give rise to the Company’s deferred income taxes.

The components of the Company’s net deferred tax assets are as follows as of December 31 ( in thousands):

The components of the Company’s net deferred tax assets as of December 31, 2024 and 2023 are as follows (in thousands):

Deferred tax assets:

Net operating loss carry forwards

Net operating loss carryforwards

$ 232,184 $ 240,960 $ 253,544

1 unchanged sentence

63,175 62,051 59,726

Organization costs

26,081 37,946 37,876

1 unchanged sentence

23,933 19,882 10,371

Accrued legal verdict

261 3,878 14,144

Accrued expenses

Carryforward of disallowed interest

— 1,477 4,761

Accrued expenses

Lease liabilities

Accrued legal verdict

Other deferred tax assets

4,745 4,231 3,560

Lease liabilities

1,764 3,034 4,035

Gross deferred tax assets

351,972 371,818 377,801

Deferred tax liabilities:

Lease right-of-use assets

Valuation allowance

( 343,482 ) ( 368,751 ) ( 374,962 )

Net deferred tax assets

8,490 3,067 2,940

Deferred tax liabilities:

Other deferred tax liabilities

( 70 ) ( 149 ) ( 211 )

Right of use assets

( 1,148 ) ( 1,997 ) ( 2,870 )

Total deferred tax assets

( 197 ) ( 921 ) 141

Valuation allowance

Total deferred tax liabilities

( 1,415 ) ( 3,067 ) ( 2,940 )

Net deferred tax assets

As the ultimate realization of the potential benefits of the Company’s deferred tax assets is considered unlikely by management, the Company has offset the deferred tax assets attributable to those potential benefits through valuation allowances.

Accordingly, the Company did not recognize any benefit from income taxes in the accompanying consolidated statements of operations to offset its pre-tax losses.

The valuation allowance decreased by approximate ly $ 6.2 million and approximately $ 5.1 million for the years ended December 31, 2023 and 2022 , respectively.

At December 31, 2023 , the Company had federal and state net operating loss carryforwards, respectively, of approximately $ 874.2 million and approximately $ 839.1 million, which will begin to expire in 2033.

At December 31, 2023 , the Company also has federal research and development credit carryforwards of approx imately $ 39.7 million .

If not utilized, the carryforwards will begin to expire in 2033.

Net deferred tax assets (liability)

$ 7,075 $ — $ —

As of December 31, 2023, the Company had deferred tax assets totaling $ 371.8 million, primarily attributable to net operating loss (NOL) carryforwards and R&D tax credit carryforwards.

A valuation allowance of $ 368.8 million had been established in prior periods as the management concluded it was more likely than not that the asset will not be realized.

During the year ended December 31, 2024, the Company has recorded a net decrease in the valuation allowance of $ 25.3 million.

The decrease is attributable to recognizing $ 18.2 million of net deferred tax assets primarily related to utilization of net operating losses and stock based compensation.

The remaining change is attributable to a partial valuation allowance release of $ 7.1 million driven by forecasted earnings in 2025.

The remaining valuation allowance of $ 343.5 million reserves against deferred tax assets that are more likely than not to not be recognized, as the Company's forecasted profitability is uncertain beyond 2025 due to various risks which are further outlined in ITEM 1A.

RISK FACTORS.

Management’s decision to release a portion of the valuation allowance was based on an assessment of both positive and negative evidence, as required under ASC 740.

Positive evidence supporting the partial release included:

Three consecutive years of cumulative pretax income, indicating a trend of profitability.

• Projected earnings in 2025, increasing the likelihood of realizing certain deferred tax assets.

Negative evidence that led to retaining a portion of the valuation allowance included:

Competitive pressure and risks of alternative treatments, potential impacting market share on our commercial product, NERLYNX.

Future profits are contingent on the successful clinical development and approval of pipeline products.

Future limitations on the utilization of NOL and R&D tax credits.

• The Company does not have material deferred tax liabilities (DTLs) to offset deferred tax assets (DTAs).

As of December 31, 2024, the remaining valuation allowance of $ 343.5 million continues to reflect management’s assessment of uncertainties related to the realization of certain net operating losses and R&D tax credit carryforwards, which remain subject to expiration or utilization limitations.

The decision to retain the remaining valuation allowance was based on inherent uncertainty in future taxable income.

The partial release of the valuation allowance decreased the effective tax rate by 29.36 %.

Management will continue to evaluate the realizability of deferred tax assets on a quarterly basis.

At December 31, 2024, the Company had federal and state net operating loss carryforwards respectively of approximately $ 834.5 million and $ 833.8 million, respectively, which will begin to expire respectively in 2035 and 2036.

At December 31, 2024, the Company also has federal research and development credit carryforwards of approximately $ 40.5 million.

If not utilized, the research and development credit carryforwards will begin expiring in 2033.

The Company has state research and development credit carryforwards of approximately $ 25.7 million which do not expire.

Pursuant to the Internal Revenue Code, Sections 382 and 383, use of the Company’s net operating loss and credit carryforwards could be limited if a cumulative change in ownership of more than 50% occurs within a three -year period.

The Company performed an initial assessment of the potential limitation on net operating loss and credit carryforwards, and concluded that there will be no limitation for the tax year 2023.

The Company performed an assessment of the potential limitation on net operating loss and credit carryforwards, and concluded that there will be no limitation for the tax year 2024 for federal purposes.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits at December 31 ( in thousands):

6 unchanged sentences

$ 3,045 $ 2,811 $ 2,522

During the year ended December 31, 2023, the Company completed an R&D credit study.

As a result of the study, the Company computed the credit under safe harbor rules, which when applied consistently, results in a more conservative approach of calculating the amount of the R&D credit.

The Company concluded that a release of uncertain tax benefits for the portion of the R&D credit attributable to safe harbor was appropriate, and released a portion of previously recorded uncertain tax positions reserve.

During prior period we completed research and development credit study.

As a result of the study, we computed our credit under safe harbor rules which when applied consistently result in more conservative approach of calculating the amount of credit.

We concluded that a release of uncertain tax benefits for the portion of the R&D credit attributable to safe harbor was appropriate and released a portion of previously recorded uncertain tax positions reserve.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates.

In the normal course of business, the Company is subject to examination by the federal and state jurisdictions where applicable.

There are currently no pending income tax examinations.

The Company is currently pending a federal income tax examination for the fiscal year ended December 31, 2022.

The Company’s tax years for 2012 and forward are subject to examination by the federal and California tax authorities due to the carryforward of unutilized net operating losses and research and development credits.

32 unchanged sentences

Under the terms of the exclusive license agreement, the Company assumed sole responsibility for the global development and commercialization of alisertib.

The Company paid Takeda an upfront license fee of $ 7 million in October 2022 and is eligible to receive potential future milestone payments of up to $ 287.3 million upon the Company’s achievement of certain regulatory and commercial milestones over the course of the exclusive license agreement, as well as tiered royalty payments for any net sales of alisertib.

The Company paid Takeda an upfront license fee of $ 7.0 million in October 2022 and is eligible to receive potential future milestone payments of u p to $ 287.3 million upon the Company’s achievement of certain regulatory and commercial milestones over the course of the exclusive license agreement, as well as tiered royalty payments for any net sales of alisertib.

The Company recorded in-process research and development expense of $ 7.0 million in connection with the up-front payment related to the asset acquisition.

As of December 31, 2023 , no milestones had been accrued as the underlying contingencies were not probable or estimable.

As of December 31, 2024 , no milestones had been accrued as the underlying contingencies were not considered probable.

Clinical Trial Contracts

1 unchanged sentence

The Company may cancel these agreements with a 30 to 45 day written notice to the outside vendor.

The Company would be obligated to pay for services rendered up to that point, which amounts to total contractual obligations of approximatel y $ 66.0 million within the next twelve months.

The Company would be obligated to pay for services rendered up to that point, which amounts to total contractual obligations of approximately $ 42.3 million w ithin the next twelve months.

Th e contracts also contain variable costs that are hard to predict as they are based on such things as patients enrolled and clinical trial sites, which can vary, and therefore, are not included in the total obligations amount.

Included in the total contractual obligations amount above are payments to be made when milestones are reached.

As of December 31, 2023 , Company obligations for potential milestone payments totaled approximately $ 15.5 million.

As of December 31, 2024 , the Company's obligations for potential milestone payments total ed approximately $ 16.3 million.

This amount will be paid by the Company if all milestones are reached and would reduce the overall contractual obligation if one or more milestone is never reached.

5 unchanged sentences

When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded.

Included in accrued liabilities is approximately $ 7.7 million ($ 8.0 million net of imputed interest) as of December 31, 2023 that is related to Eshelman v.

Puma Biotechnology, Inc., et al .

The Company announced on November 10, 2022 , that the parties entered into a settlement agreement.

Pursuant to the settlement agreement, Dr.

Eshelman filed a Stipulation of Voluntary Dismissal with Prejudice on November 7, 2022 , and the Company agreed to pay Dr.

Eshelman $ 16.0 million.

The settlement amount will be paid in two separate payments, the first payment of $ 8.0 million was paid in January 2023, and the final payment of $ 8.0 million will be paid on or before November 1, 2024.

Legal Malpractice Suit

17 unchanged sentences

On August 22, 2023, the defendants filed motions to dismiss the case.

These motions were presented at a hearing on February 20, 2024, but there has yet to be a ruling.

Mfolozi Dlamini, individually and on behalf of all others similarly situated v.

Puma Biotechnology, Inc.

On May 26, 2023, Mfolozi Dlamini filed a Class Action Complaint against the Company in the United States District Court for the Central District of California, alleging injuries as a result of unauthorized disclosure of certain individuals’ personally identifiable information in connection with a data security incident discovered by the Company in June 2022.

On September 21, 2023, the plaintiff and the Company agreed to dismiss the action with prejudice.

These motions were presented at a hearing on February 20, 2024.

The Superior Court Judge granted the motions to dismiss on March 20, 2024.

The Company appealed this ruling to the North Carolina Court of Appeals.

Patent-Related Proceedings

2 unchanged sentences

10,603,314 (“the ‘314 patent”) and 10,596,162 (“the ‘162 patent”) ( Puma Biotechnology, Inc.

AstraZeneca Pharmaceuticals LP et al.

, 1:21CV01338 (D.

AstraZeneca Pharmaceuticals LP et al ., 1:21CV01338 (D.

The Company’s complaint alleges that AstraZeneca’s commercial manufacture, use, offer for sale, sale, distribution, and/or importation of Tagrisso® (osimertinib) products for the treatment of gefitinib and/or erlotinib-resistant non-small cell lung cancer infringes the ‘314 and ‘162 patents.

8 unchanged sentences

Fact discovery closed on May 19, 2023, and expert discovery closed on November 17, 2023.

The parties recently exchanged motions for summary judgment on certain issues and also Daubert challenges to certain expert opinions.

A jury trial is scheduled to begin on May 13, 2024.

The Court denied the parties’ respective motions for summary judgment and Daubert motions, other than to clarify that Plaintiffs’ damages cannot extend to any time period before the asserted patents were issued.

The Court granted AstraZeneca’s motion to dismiss the Company as a Plaintiff on constitutional standing grounds but denied the motion to dismiss Wyeth as a Plaintiff on constitutional standing grounds.

On April 29, 2024, the Court granted AstraZeneca’s motion to dismiss AstraZeneca’s counterclaims against the Company, which removed the Company from the case.

Wyeth remained in the case as a Plaintiff and counterclaim-defendant.

Under the Company’s worldwide exclusive license agreement with Pfizer, Inc.

(the parent of Wyeth) as amended, the Company also maintains contractual rights to recover monetary damages in the AstraZeneca litigation, and those contractual rights are unaffected by the court’s March 18, 2024 and April 29, 2024 orders.

A jury trial was held May 13- 17, 2024.

The jury found in favor of Wyeth and against AstraZeneca.

In particular, the jury found that use of Tagrisso® according to each of the three FDA-approved indications infringes the asserted claims of the ‘314 and ‘162 patents, and that AstraZeneca induces that infringement.

The jury further rejected AstraZeneca’s challenges to the validity of the patents, finding that they are not invalid.

The jury awarded damages to Wyeth for past acts of infringement through December 31, 2023, in the amount of $ 107,500,000 .

A separate bench trial related to certain equitable claims and defenses raised by AstraZeneca was held before Judge Kennelly on June 20 and 25, 2024.

On August 6, 2024, Judge Kennelly issued his ruling on the issues that were tried in the bench trial, finding for Wyeth and against AstraZeneca on all claims and defenses.

The Court found that AstraZeneca had not proved its claim that Wyeth’s asserted patents were invalid as indefinite, or that Wyeth had committed acts that would give rise to findings of unclean hands, implied waiver, or patent misuse.

AstraZeneca has filed a motion challenging the jury’s verdict and requesting a new trial.

Wyeth has filed a motion requesting supplemental damages for past infringement from January 1, 2024, through the date of judgment;

pre-and-post judgment interest, and ongoing royalties through the remaining term of the patents.

Briefing on these motions from both sides was completed on July 16, 2024.

On August 14, 2024, Judge Kennelly ruled on AstraZeneca’s motion challenging the jury’s verdict, granting it in part and denying it in part.

The Court granted AstraZeneca’s motion for judgment as a matter of law that the '314 and '162 patents are invalid under 35 U.S.C.

§ 112 for lacking enablement and adequate written description as to a particular claim limitation.

In all other respects, the Court denied AstraZeneca’s motion.

The Court entered its final and appealable judgment accordingly.

The Company respectfully disagrees with the Court’s ruling regarding invalidity with respect to the particular claim limitation.

Wyeth filed a notice of appeal on September 12, 2024 appealing the District Court’s judgment as a matter of law, as well as other rulings and opinions of the Court adverse to Wyeth.

Wyeth filed its opening brief on appeal to the Federal Circuit on December 18, 2024.

Acebright China Litigation

On January 18, 2022, Shanghai Acebright Pharmaceuticals Group Co., Ltd.

(“Acebright”) filed an ANDA with the National Medical Products Administration in China (“NMPA”) seeking approval to market a generic version of the Company’s NERLYNX® (neratinib) tablet, 40mg in China.

(“Acebright”) filed an abbreviated new drug application (“ANDA”) with the National Medical Products Administration in China (“NMPA”) seeking approval to market a generic version of the Company’s NERLYNX® (neratinib) tablet, 40mg in China.

Acebright seeks approval prior to the expiration of three patents listed on the China Patent Information Registration Platform for Marketed Drugs (“Chinese Orange Book”), namely, Chinese Patent Nos.

5 unchanged sentences

On July 11, 2022, CNIPA decided that claims 5 and 6 of Patent No.

ZL200880118789.3 are not eligible for registration in the Chinese Orange Book on the ground that these two pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms,” which are not eligible for listing in the Chinese Orange Book.

ZL200880118789.3 are not eligible for registration in the Chinese Orange Book on the ground that these two pharmaceutical method-of-use claims fall within the scope of “patents of crystalline forms,” which are not eligible for listing in the Chinese Orange Book.

On September 9, 2022, CNIPA decided that the generic drug in Acebright’s ANDA does not fall within the protection scope of claims 1, 3, 5 and 6 of Patent No.

8 unchanged sentences

On May 24, 2023, the BJIPC accepted the Company’s withdrawal request.

On July 24, 2023, the Company withdrew the remaining one civil lawsuit and one appeal in relation to Chinese Patent No.

On July 24, 2023, the Company withdrew the one remaining civil lawsuit and one appeal in relation to Chinese Patent No.

ZL200880118789.3 at the BJIPC.

5 unchanged sentences

On January 2, 2024, Jiangsu Nanjing Intermediate People’s Court accepted the civil complaint.

China Litigation

An oral hearing was held on June 19, 2024, during which the Company amended its complaint to allege that Acebright making, selling and offering to sell the generic version of NERLYNX® infringes the ’789 patent.

On July 24, 2024, the Company submitted a request to withdraw the lawsuit.

On August 8, 2024, Jiangsu Nanjing Intermediate People’s Court accepted the withdrawal request.

On September 27, 2024, the Company filed an additional patent infringement claim against Acebright at Jiangsu Nanjing Intermediate People’s Court.

On October 14, 2024, the Court accepted the complaint and designated case number ( 2024 ) Su 01 Min Chu 2192 to this case.

On December 16, 2024, the Court conducted an evidence exchange hearing.

On January 10, 2025, the Court conducted a hearing of party experts on the evaluation of evidence.

Aosaikang China Litigation

On November 17, 2022, Jiangsu Aosaikang Pharmaceutical Co.

8 unchanged sentences

Also on January 6, 2023, the CNIPA declined to accept the Company’s request for administrative determination in relation to Patent Nos.

ZL200880118789.3 and ZL201710057547.9, alleging that the listed claims are not eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms,” which are not eligible for listing in the Chinese Orange Book.

ZL200880118789.3 and ZL201710057547.9, alleging that the listed claims are not eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall within the scope of “patents of crystalline forms,” which are not eligible for listing in the Chinese Orange Book.

On January 28, 2023, the Company requested the NMPA to institute a nine -month stay against Aosaikang ANDA starting from the CNIPA’s acceptance of the Company’s request for administrative determination.

3 unchanged sentences

The two CNIPA administrative decisions on NERLYNX® Patents have lifted the stay of Aosaikang’s ANDA by NMPA.

The Company has the right to appeal each CNIPA administrative decision within six months of receiving the decision.

The Company also has the right to enforce the four Orange Book patents in civil litigation before the Chinese court.

China Litigation

On October 22, 2024, the NMPA approved Aosaikang’s ANDA to market a generic version of the Company’s NERLYNX® in China with the approval number of GuoYaoZhunZi H20249180.

Convalife China Litigation

Convalife Pharmaceuticals (Shanghai) Co., Ltd (“Convalife”) filed an ANDA with NMPA in China seeking approval to market a generic version of the Company’s NERLYNX®.

7 unchanged sentences

Also on February 3, 2023, the CNIPA declined to accept the Company’s request for administrative determination in relation to Patent Nos.

ZL200880118789.3 and ZL201710057547.9, alleging that the listed claims are not eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall within the scope of “patents of crystalline forms,” which are not eligible for listing in the Chinese Orange Book.

On February 24, 2023, the Company requested the NMPA to institute a nine -month stay against Convalife ANDA starting from the CNIPA’s acceptance of the Company’s request for administrative determination.

3 unchanged sentences

The two CNIPA administrative decisions on NERLYNX® Patents have lifted the stay of Convalife’s ANDA by NMPA.

The Company has the right to appeal each CNIPA administrative decision within six months of receiving the decision.

The Company also has the right to enforce the four Orange Book patents in civil litigation before the Chinese court.

On June 28, 2024, the NMPA approved Convalife’s ANDA to market a generic version of the Company’s NERLYNX® in China with the approval number of GuoYaoZhunZi H20244222.

Kelun China Litigation

7 unchanged sentences

On March 21, 2023, the CNIPA declined to accept the Company’s request for administrative determination in relation to Patent Nos.

ZL200880118789.3 and ZL201710057547.9, alleging that the listed claims are not eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall within the scope of “patents of crystalline forms,” which are not eligible for listing in the Chinese Orange Book.

On March 24, 2023, the CNIPA accepted the Company’s request for administrative determination in relation to Patent Nos.

4 unchanged sentences

On September 25, 2023, the CNIPA accepted the Company’s withdrawal request.

Demai Litigation

Zhengzhou Demai Pharmaceutical Co., Ltd (“Demai”) filed an ANDA with NMPA in China seeking approval to market a generic version of the Company’s NERLYNX®.

The ANDA application No.

is CYHS2402776.

On August 26, 2024, Demai made a Type 4.2 declaration against Orange Book Patent ZL201410082103.7, alleging that its generic version of NERLYNX does not fall within the scope of the claims of this Orange Book patent.

On September 30, 2024, the Company filed a lawsuit against Demai at the BJIPC based on Nerlynx Patent No.

ZL201080060546.6 and on October 8, 2024, the Company filed a lawsuit against Demai at the BJIPC based on Nerlynx Patent No.

ZL201410082103.7.

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