What changed in this filing

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Item 1. Financial Statements

2020-11-05 compared with 2020-08-04 · 153 added, 134 removed, 526 unchanged (35% of the section changed)

3 unchanged sentences

(In thousands)

September 30,

Current assets:

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(In thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Product sales, net

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Total costs and expenses

Income (loss) from operations

Loss from operations

Interest income

Interest expense

Net income (loss)

Net income (loss) per share, basic and diluted

Weighted average shares used in computing net income (loss) per share

Net loss per share, basic and diluted

Weighted average shares used in computing net loss per share, basic and diluted

See Accompanying Notes.

RIGEL PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss)

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive income (loss):

Net unrealized gain (loss) on short-term investments

Comprehensive income (loss)

Comprehensive loss

See Accompanying Notes.

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Stockholders’

Balance at December 31, 2019

Balance at January 1, 2020

( 1,276,228 )

9 unchanged sentences

( 1,272,561 )

Comprehensive

Stockholders’

Income (Loss)

Balance at December 31, 2018

Net unrealized loss on short-term investments

Issuance of common stock upon exercise of options

Stock compensation expense

Balance at September 30, 2020

( 1,286,735 )

Balance at January 1, 2019

( 1,209,334 )

Net unrealized gain on short-term investments

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( 1,247,538 )

Net unrealized loss on short-term investments

Issuance of common stock upon exercise of options

Stock compensation expense

Balance at September 30, 2019

( 1,259,028 )

RIGEL PHARMACEUTICALS, INC.

1 unchanged sentence

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities

Net income (loss)

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

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

Stock-based compensation expense

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Our pioneering research focuses on signaling pathways that are critical to disease mechanisms.

Our first U.S.

Food and Drug Administration (FDA) approved product is TAVALISSE ® (fostamatinib disodium hexahydrate), the only oral spleen tyrosine kinase (SYK) inhibitor, for the treatment of adult patients with chronic immune thrombocytopenia (ITP) who have had an insufficient response to a previous treatment.

The marketing authorization application (MAA) for fostamatinib was approved by the European Commission (EC) in Europe in January 2020 for the treatment of chronic ITP in adult patients who are refractory to other treatments and is marketed in Europe under the name TAVLESSE ® (fostamatinib).

Our clinical programs include a Phase 3 study of fostamatinib in warm autoimmune hemolytic anemia (AIHA);

a completed Phase 1 study of R835, a proprietary molecule from our interleukin receptor associated kinase (IRAK 1/4) inhibitor program;

and an ongoing Phase 1 study of R552, a proprietary molecule from our receptor-interacting protein kinase (RIP1) inhibitor program.

In addition, we have product candidates in clinical development with partners BerGenBio ASA (BerGenBio), Daiichi Sankyo (Daiichi), Aclaris Therapeutics (Aclaris), and AstraZeneca AB (AZ).

Our first product approved by the United States Food and Drug Administration (FDA) is TAVALISSE ® (fostamatinib disodium hexahydrate) tablets, the only oral spleen tyrosine kinase (SYK) inhibitor, for the treatment of adult patients with chronic immune thrombocytopenia (ITP) who have had an insufficient response to a previous treatment.

The product has been approved by the European Commission (EC) for the treatment of chronic ITP in adult patients who are refractory to other treatments and is marketed in Europe under the name TAVLESSE ® (fostamatinib).

Fostamatinib is currently being studied in a Phase 3 trial for the treatment of warm autoimmune hemolytic anemia (AIHA);

a NIH/NHLBI-Sponsored Phase 2 trial for the treatment of hospitalized COVID-19 patients, in collaboration with Inova ® Health System;

and a Phase 2 trial for the treatment of COVID-19 pneumonia being conducted by Imperial College London.

Additionally, we plan to study fostamatinib in a Phase 3 clinical trial for the treatment of hospitalized COVID-19 patients which is expected to launch in the fourth quarter of 2020.

Other clinical trials include an ongoing Phase 1 study of R835, a proprietary molecule from its interleukin receptor associated kinase (IRAK) inhibitor program;

and an ongoing Phase 1 study of R552, a proprietary molecule from its receptor-interacting protein kinase (RIP) inhibitor program.

In addition, we have product candidates in clinical development with partners AstraZeneca (AZ), BerGenBio ASA (BerGenBio), and Daiichi Sankyo (Daiichi).

Basis of Presentation

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Measurement of Credit Losses on Financial Instruments , which represents a new credit loss standard that will change the impairment model for most financial assets and certain other financial instruments.

Specifically, this guidance will require entities to utilize a new “expected loss” model as it relates to trade and other receivables.

Specifically, this guidance

will require entities to utilize a new “expected loss” model as it relates to trade and other receivables.

In addition, entities will be required to recognize an allowance for estimated credit losses on available-for-sale debt securities, regardless of the length of time that a security has been in an unrealized loss position.

This guidance is effective for annual reporting

periods beginning after December 15, 2019, including interim periods within those annual reporting periods.

This guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those annual reporting periods.

We adopted this new standard on January 1, 2020 with no material impact on our financial statements and related disclosures.

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

At June 30, 2020 and December 31, 2019, our physical inventory included active pharmaceutical product of which costs have been previously charged to research and development expense.

At September 30, 2020 and December 31, 2019, our physical inventory included active pharmaceutical product of which costs have been previously charged to research and development expense.

However, manufacturing of drug product, finished bottling and other labeling activities that occurred post FDA approval are included in the inventory value at each balance sheet date.

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We recognize revenue in accordance with ASC Topic 606, Revenue From Contracts with Customers (ASC 606) , when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.

To determine whether arrangements are within the

scope of ASC 606, we perform the following five steps:

To determine whether arrangements are within the scope of ASC 606, we perform the following five steps:

(i) identify the contract(s) with a customer;

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These SDs charge us for the difference between what they pay for the product and our contracted selling price to these specialty pharmacy providers, in-office dispensing providers, group purchasing organizations, and government entities.

These reserves are established in the same period that the related revenue is

recognized, resulting in a reduction of product revenue.

These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue.

Actual chargeback amounts are generally determined at the time of resale to the specialty pharmacy providers, in-office dispensing providers, group purchasing organizations, and government entities by our SDs.

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Sales-based Milestone Payments and Royalties:

For arrangements that include sales-based royalties, including milestone payments based on the volume of sales, we determine whether the license is deemed to be the predominant item to which the royalties or sales-based milestones relate to and if such is the case, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

(i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

We currently lease our research and office space under a noncancelable lease agreement with our landlord through January 2023.

In December 2014, we entered into a sublease agreement with an unrelated third party to occupy a portion of our research and office space through January 2023.

All of our leases outstanding as of June 30, 2020 continued to be classified as operating leases.

All of our leases outstanding as of September 30, 2020 continued to be classified as operating leases.

We recorded an operating lease right-of-use asset and an operating lease liability on our balance sheet.

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On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law.

The Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

We are currently analyzing the impact of these changes and therefore an estimate of the impact to income taxes is not yet

While we continue to evaluate the impact of the CARES Act, we do not currently believe it will have a material impact on our financial statements or related disclosures.

interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

We are currently analyzing the impact of these changes and therefore an estimate of the impact to income taxes is not yet available.

We do not currently believe it will have a material impact on our financial statements or related disclosures.

On June 29, 2020, Assembly Bill 85 (A.B.

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In those cases, we recognize the change in estimate at the time we determine the condition is probable of achievement (by recognizing stock-based compensation expense as cumulative catch-up adjustment as if we had estimated at the grant date that the performance condition would have been achieved) and recognize the remaining compensation cost up to the date when we expect the performance condition will be achieved, if any.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period.

Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period and the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued.

Potentially dilutive securities include stock options and shares issuable under our Purchase Plan.

The dilutive effect of

these potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period.

Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period and the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued.

Because we were in a loss position for

all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have been antidilutive.

Potentially dilutive securities include stock options and shares issuable under our stock award plans.

The dilutive effect of these potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method.

Under the treasury stock method, an increase in the fair market value of our common stock can result in a greater dilutive effect from potentially dilutive securities.

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended June 30, 2020 and 2019 (in thousands except per share amounts):

Three Months Ended

Six Months Ended

EPS Numerator:

Net income (loss)

EPS Denominator—Basic:

Weighted-average common shares outstanding

EPS Denominator—Diluted:

Weighted-average common shares outstanding

Dilutive effect of stock options and shares under ESPP

Weighted-average shares outstanding and common stock equivalents

Net income (loss) per common share, basic and diluted

We had securities which could potentially dilute basic earnings per share, but were excluded from the computation of diluted earnings (loss) per share for all periods presented, as their effect would have been antidilutive.

We had securities which could potentially dilute basic earnings per share, but were excluded from the computation of diluted loss per share for all periods presented, as their effect would have been antidilutive.

These securities consist of the following (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Outstanding stock options

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Stock-Based Compensation

Total stock-based compensation related to all of our share-based payments that we recognized for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):

Total stock-based compensation related to all of our share-based payments that we recognized for the three and nine months ended September 30, 2020 and 2019 were as follows (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Selling, general and administrative

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The consideration and calculation of the above data gave us reasonable estimates of the expected term for each employee group.

We also considered the vesting schedules of the options granted and factors surrounding exercise behavior of the option groups, our current market price and company activity that may affect our market price.

We also considered the vesting schedules of the options granted and factors

surrounding exercise behavior of the option groups, our current market price and company activity that may affect our market price.

In addition, we considered the optionee type (i.e., officers and directors or all other employees) and other factors that may affect the expected term of the options.

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● Dividend yield—The expected dividend yield is 0 % as we have not paid and do not expect to pay dividends in the future.

The following table summarizes the weighted-average assumptions relating to options granted pursuant to our equity incentive plans for the three and six months ended June 30, 2020 and 2019:

The following table summarizes the weighted-average assumptions relating to options granted pursuant to our equity incentive plans for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Risk-free interest rate

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Options become exercisable at varying dates and generally expire 10 years from the date of grant.

We granted options to purchase 7,374,090 shares of common stock during the six months ended June 30, 2020 with a grant-date weighted-average fair value of $ 1.39 per share.

As of June 30, 2020, we had 776,250 shares of outstanding performance-based stock options wherein the achievement of the corresponding corporate-based milestones was not considered as probable.

Accordingly, none of the stock-based compensation expense of $ 1.2 million has been recognized as expense as of June 30, 2020.

As of June 30, 2020, there were approximately $ 14.3 million of unrecognized stock-based compensation cost related to time-based stock options and performance-based stock options, wherein achievement of the corresponding corporate-based milestones was considered as probable.

At June 30, 2020, there were 11,013,055 shares of common stock available for future grant under our equity incentive plans and 581,675 options to purchase shares were exercised during the six months ended June 30, 2020.

We granted options to purchase 8,288,090 shares of common stock during the nine months ended September 30, 2020 with a grant-date weighted-average fair value of $ 1.41 per share.

As of September 30, 2020, we had 1,101,250 shares of outstanding performance-based stock options wherein the achievement of the corresponding corporate-based milestones was not considered as probable.

Accordingly, none of the related stock-based compensation expense of $ 1.7 million has been recognized as expense as of September 30, 2020.

As of September 30, 2020, there were approximately $ 12.6 million of unrecognized stock-based compensation cost related to time-based stock options and performance-based stock options, wherein achievement of the corresponding corporate-based milestones was considered as probable.

At September 30, 2020, there were 13,989,943 shares of common stock available for future grant under our equity incentive plans and 607,486 options to purchase shares were exercised during the nine months ended September 30, 2020.

Employee Stock Purchase Plan

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A look-back option is a provision in our Purchase Plan under which eligible employees can purchase shares of our common stock at a price per share equal to the lesser of 85 % of the fair market value on the first day of the offering period or 85 % of the fair market value on the purchase date.

Our Purchase Plan also includes a feature that provides for a new offering period to begin when the fair market value of our common stock on any purchase date during an offering period falls below the fair market value of our common stock on the first day of such offering period.

market value of our common stock on the first day of such offering period.

This feature is called a “reset.” Participants are automatically enrolled in the new offering period.

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The total incremental fair value associated with this Purchase Plan “reset” was approximately $ 535,000 and is being amortized to expenses from July 1, 2020 to June 30, 2022.

As of June 30, 2020, there were 235,795 shares reserved for future issuance under the Purchase Plan and there was $ 1.2 million of unrecognized stock-based compensation cost related to our Purchase Plan.

The following table summarizes the weighted-average assumptions related to our Purchase Plan for the six months ended June 30, 2020 and 2019.

As of September 30, 2020, there were 235,795 shares reserved for future issuance under the Purchase Plan and there was $ 887,000 of unrecognized stock-based compensation cost related to our Purchase Plan.

The following table summarizes the weighted-average assumptions related to our Purchase Plan for the nine months ended September 30, 2020 and 2019.

Expected volatilities for our Purchase Plan are based on the historical volatility of our stock.

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Treasury constant maturity rates.

Six Months Ended

Nine Months Ended

September 30,

Risk-free interest rate

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Product sales:

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Total revenues

The following table summarizes revenues from each of our customers who individually accounted for 10% or more of our total revenues (as a percentage of total revenues):

The following table summarizes revenues from each of our customers who individually accounted for 10 % or more (wherein * denotes less than 10 %) of our total revenues (as a percentage of total revenues):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

ASD Healthcare and Oncology Supply

McKesson Specialty Care Distribution Corporation

Cardinal Healthcare

We commenced commercial sale of TAVALISSE in the U.S.

in May 2018 after FDA approval in April 2018.

Our MAA for fostamatinib for the treatment of chronic ITP in adult patients who are refractory to other treatments was approved by the EC in January 2020.

Our Marketing Authorization Application (MAA) for fostamatinib for the treatment of chronic ITP in adult patients who are refractory to other treatments was approved by the EC in January 2020.

Fostamatinib is marketed in Europe under the brand name TAVLESSE™ (fostamatinib).

Grifols launched TAVLESSE™ in the UK and Germany in July 2020, and expects a phased roll-out over the next 18 months across Europe.

In addition to the distribution agreements with our customers and SDs, we also enter into arrangements with specialty pharmacy providers, in-office dispensing providers, group purchasing organizations, and government entities that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of our products which reduced our gross product sales.

Also refer to Revenue Recognition policy discussion in “Note 3” above.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the six months ended June 30, 2020 and 2019 (in thousands):

The following table summarizes activity in each of the product revenue allowance and reserve categories for the nine months ended September 30, 2020 and 2019 (in thousands):

Discounts and

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Credit or payments made during the period

Balance at June 30, 2020

Balance at September 30, 2020

Discounts and

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Credit or payments made during the period

Balance at June 30, 2019

The discounts and allowances from gross product sales for the six months ended June 30, 2020 of $ 6.1 million in the first table above includes the provision for current period sales of $ 5.3 million which formed part of Other Accrued Liabilities in the balance sheet of which $ 4.3 million remained outstanding as of June 30, 2020.

Of the $ 6.1 million discounts and allowances from gross sales, $ 796,000 is recorded as reduction in accounts receivable and prepaid and other current assets in the balance sheet.

Balance at September 30, 2019

Of the $ 10.1 million discounts and allowances from gross product sales for the nine months ended September 30, 2020, $ 9.1 million was accounted for as additions to other accrued liabilities and $ 1.0 million as reductions in accounts receivable and prepaid and other current assets in the balance sheet.

Other accrued liabilities related to the discounts and allowances had a remaining outstanding balance of $ 4.9 million as of September 30, 2020.

Sponsored Research and License Agreements

We conduct research and development programs independently and in connection with our corporate collaborators.

As of June 30, 2020, we are a party to collaboration agreements with ongoing performance obligations with Kissei Pharmaceutical Co., Ltd.

(Kissei) for the development and commercialization of fostamatinib in Japan, China, Taiwan and the Republic of Korea and with Grifols, S.A.

(Grifols) to commercialize fostamatinib in all indications, including chronic ITP and AIHA, in Europe and Turkey and with Medison Pharma Ltd.

As of September 30, 2020, we are a party to collaboration agreements with ongoing performance obligations with Grifols, S.A.

(Grifols) to commercialize fostamatinib in all indications, including chronic ITP and AIHA, in Europe and Turkey, and with Kissei Pharmaceutical Co., Ltd.

(Kissei) for the development and commercialization of fostamatinib in Japan, China, Taiwan and the Republic of Korea, and with Medison Pharma Ltd.

(Medison) to commercialize fostamatinib in all indications, including chronic ITP and AIHA, in Canada and Israel.

As of June 30, 2020, we are also a party to collaboration agreements, but do not have ongoing performance obligations, with Aclaris for the development and commercialization of JAK inhibitors for the treatment of alopecia areata and other dermatological conditions, AZ for the development and commercialization of R256, an inhaled JAK inhibitor, BerGenBio for the development and commercialization of AXL inhibitors in oncology, and Daiichi to pursue research related to MDM2 inhibitors, a novel class of drug targets called ligases.

As of September 30, 2020, we are also a party to collaboration agreements, but do not have ongoing performance obligations, with Aclaris for the development and commercialization of JAK inhibitors for the treatment of alopecia areata and other dermatological conditions, AZ for the development and commercialization of R256, an inhaled JAK inhibitor, BerGenBio for the development and commercialization of AXL inhibitors in oncology, and Daiichi to pursue research related to MDM2 inhibitors, a novel class of drug targets called ligases.

Under these agreements, which we entered into in the ordinary course of business, we received or may be entitled to receive upfront cash payments, payments contingent upon specified events achieved by such partners and royalties on any net sales of products sold by such partners under the agreements.

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In January 2020, we received EC’s approval of our MAA for fostamatinib for the treatment of chronic ITP in adult patients who are refractory to other treatments.

With this approval, we received a $ 20.0 million non-refundable

payment in February 2020, which is comprised of a $ 17.5 million for EMA approval of fostamatinib for the first indication and a $ 2.5 million creditable advance royalty payment, based on the terms of the collaboration agreement.

The $ 20.0 million payment will be allocated to the distinct performance obligation in the collaboration agreement with Grifols.

With this approval, we received a $ 20.0 million non-refundable payment in February 2020, which is comprised of a $ 17.5 million for EMA approval of fostamatinib for the first indication and a $ 2.5 million creditable advance royalty payment, based on the terms of the collaboration agreement.

The $ 20.0 million payment was allocated to the distinct performance obligations in the collaboration agreement with Grifols.

We accounted for this agreement under ASC 606 and identified the following distinct performance obligations at inception of the agreement:

(a) granting of the license, (b) performance of research and regulatory services related to our ongoing long-term open-label extension study on patients with ITP, and (c) performance of clinical services related to our Phase 3 study in AIHA.

In addition, we will enter into a commercial supply agreement for the licensed territories.

In October 2020, we entered into a commercial supply agreement for the licensed territories.

We concluded each of these performance obligations is distinct.

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Upon execution of our agreement with Grifols, we determined that the upfront fee of $ 5.0 million, which is the non-refundable portion of the $ 30.0 million upfront fee, represented the transaction price.

In the first quarter of 2020, we revised the transaction price to include the $ 25.0 million of the upfront payment that is no longer refundable under our agreement and the $ 20.0 million payment received that is no longer constrained.

In the first quarter of 2020, we revised the transaction price to include the $ 25.0 million of the upfront payment that is no

longer refundable under our agreement and the $ 20.0 million payment received that is no longer constrained.

We allocated the updated transaction price to the distinct performance obligations in our collaboration agreement based on our best estimate of the relative standalone selling price as follows:

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We will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

During the three months ended June 30, 2020, we recognized no revenues related to the licensed rights in intellectual property and $ 396,000 in revenues related to the research services performed.

During the six months ended June 30, 2020, we recognized $ 39.9 million in revenues related to the licensed rights in intellectual property and $ 3.6 million in revenues related to the research services performed.

Deferred revenues as of June 30, 2020 was $ 1.8 million.

During the three and six months ended June 30, 2020, we also recognized $ 651,000 in revenues for a one-time delivery of drug supply to Grifols for commercialization.

During the three months ended September 30, 2020, we recognized no revenues related to the licensed rights in intellectual property and the research services performed.

During the nine months ended September 30, 2020, we recognized $ 39.9 million in revenues related to the licensed rights in intellectual property and $ 3.6 million in revenues related to the research services performed.

During the nine months ended September 30, 2020, we also recognized $ 651,000 in revenues for a one-time delivery of drug supply to Grifols for commercialization.

Deferred revenues related to the performance of research services as of September 30, 2020 was $ 1.8 million.

Kissei License Agreement

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We will recognize revenues related to the supply of fostamatinib and material right upon delivery of fostamatinib to Kissei.

For sales-based milestones and royalties, we determined that the license is the predominant item to which the royalties or sales-based milestones relate to.

For sales-based milestones and royalties, we determined that the

license is the predominant item to which the royalties or sales-based milestones relate to.

Accordingly, we will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

We will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

We did no t recognize any revenues during the three and six months ended June 30, 2020.

At June 30, 2020, deferred revenues related to the unsatisfied performance obligations related to the supply of fostamatinib and material right associated with discounted fostamatinib supply was $ 1.4 million.

Other license agreements

We did no t recognize any revenues during the three and nine months ended September 30, 2020.

At September 30, 2020, deferred revenues related to the unsatisfied performance obligations related to the supply of fostamatinib and material right associated with discounted fostamatinib supply was $ 1.4 million.

Medison Commercial and License Agreements

In October 2019, we entered into two exclusive commercial and license agreements with Medison for the commercialization of fostamatinib for chronic ITP in Israel and in Canada pursuant to which we received a $ 5.0 million upfront payment with respect to the agreement in Canada.

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As such this arrangement is accounted for as a financing arrangement.

Accrued interest expense related to this financing arrangement as of June 30, 2020 is immaterial.

As of June 30, 2020 and December 31, 2019, we have the following inventories (in thousands):

Accrued interest expense related to this financing arrangement as of September 30, 2020 is immaterial.

Pursuant to this exclusive commercialization license agreement, in August 2020, we entered into a commercial supply agreement with Medison.

Other license agreements

For the three and nine months ended September 2020, we recognized $ 2.1 million of revenue as a result of the achievement of a milestone in accordance with the Amended Collaboration Agreement dated April 20, 2005 with Daiichi.

All deliverables under the agreement had been previously delivered, as such the above payment has been recognized as revenue in the third quarter of 2020.

We received the milestone payment from Daiichi in October 2020.

As of September 30, 2020 and December 31, 2019, we have the following inventories (in thousands):

September 30,

Work in process

Finished goods

As of June 30, 2020, we have $ 3.0 million in advance payments to our manufacturer of our raw materials, which is included as part of “Prepaid and other current assets” in our condensed balance sheet.

As of September 30, 2020, we have $ 4.2 million in advance payments to our manufacturer of our raw materials, which is included as part of “Prepaid and other current assets” in our condensed balance sheet.

We take ownership of such raw materials when they are completed and delivered to us.

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Cash, cash equivalents and short-term investments consisted of the following (in thousands):

September 30,

Money market funds

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Cash equivalents and short-term investments include the following securities with gross unrealized gains and losses (in thousands):

June 30, 2020

September 30, 2020

treasury bills

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Corporate bonds and commercial paper

As of June 30, 2020, our cash equivalents and short-term investments, which have contractual maturities within one year, had a weighted-average time to maturity of approximately 74 days .

As of September 30, 2020, our cash equivalents and short-term investments, which have contractual maturities within one year, had a weighted-average time to maturity of approximately 64 days .

We view our short-term investments portfolio as available for use in current operations.

We have the ability to hold all investments as of June 30, 2020 through their respective maturity dates.

At June 30, 2020 , we had no investments that had been in a continuous unrealized loss position for more than 12 months.

As of June 30, 2020 , a total of 10 individual securities had been in an unrealized loss position for 12 months or less, and the losses were determined to be temporary.

We have the ability to hold all investments as of September 30, 2020 through their respective maturity dates.

At September 30, 2020 , we had no investments that had been in a continuous unrealized loss position for more than 12 months.

As of September 30, 2020 , a total of 11 individual securities had been in an unrealized loss position for 12 months or less, and the losses were determined to be temporary.

The gross unrealized losses above were caused by interest rate fluctuations.

No significant facts or circumstances have arisen to indicate that there has been any significant deterioration in the creditworthiness of the issuers of the securities held by us.

Based on our review of these securities, including the assessment of the duration and severity of the unrealized losses and our ability and intent to hold the investments until maturity, there were no other-than-temporary impairments for these securities at June 30, 2020 .

The following table shows the fair value and gross unrealized losses of our investments in individual securities that are in an unrealized loss position, aggregated by investment category (in thousands):

June 30, 2020

September 30, 2020

Unrealized Losses

Government-sponsored enterprise securities

treasury bills

Under FASB ASC 820, Fair Value Measurements and Disclosures , fair value is defined as the price at which an asset could be exchanged, or a liability transferred in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability.

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Financial assets measured at fair value on a recurring basis are categorized in the tables below based upon the lowest level of significant input to the valuations (in thousands):

Assets at Fair Value as of June 30, 2020

Assets at Fair Value as of September 30, 2020

Money market funds

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There was no cumulative-effect adjustment on our accumulated deficit as of January 1, 2019.

As of June 30, 2020, we had operating lease right-of-use asset of $ 21.9 million and lease liability of $ 23.3 million in the balance sheet.

The weighted average remaining term of our lease as of June 30, 2020 was 2.58 years.

As of June 30, 2020, we received from our landlord leasehold improvement incentives amounting to $ 563,000 related to leasehold improvements.

As of September 30, 2020, we had operating lease right-of-use asset of $ 19.9 million and lease liability of $ 21.3 million in the balance sheet.

The weighted average remaining term of our lease as of September 30, 2020 was 2.33 years.

As of September 30, 2020, we received from our landlord leasehold improvement incentives amounting to $ 563,000 related to leasehold improvements.

We record these leasehold improvement incentives as a reduction to operating lease right-of-use asset and lease liability until the lease ends and the asset is transferred.

For the three and six months ended June 30, 2020, the components of our operating lease expense were as follows (in thousands):

For the three and nine months ended September 30, 2020, the components of our operating lease expense were as follows (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Fixed operating lease expense

1 unchanged sentence

Total operating lease expense

Supplemental information related to the Company’s operating lease for the three and six months ended June 30, 2020 were as follow (in thousands):

Supplemental information related to the Company’s operating lease for the three and nine months ended September 30, 2020 were as follow (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cash payments included in the measurement of operating lease liabilities

Right-of-use asset obtained in exchange for operating lease obligations

The following table presents the future lease payments of our operating lease liabilities as of June 30, 2020 (in thousands):

The following table presents the future lease payments of our operating lease liabilities as of September 30, 2020 (in thousands):

Remainder of 2020

2 unchanged sentences

Total operating lease liabilities

For the three and six months ended June 30, 2020, we have the following operating sublease information (in thousands):

For the three and nine months ended September 30, 2020, we have the following operating sublease information (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Fixed sublease expense

1 unchanged sentence

Sublease income

The following table presents the future lease payments we expect to receive under our sublease as of June 30, 2020 (in thousands):

The following table presents the future lease payments we expect to receive under our sublease as of September 30, 2020 (in thousands):

Remainder of 2020

14 unchanged sentences

The facility also gives us the ability to access an additional $ 40.0 million at our option, subject to the achievement of certain customary conditions.

The following table presents the future minimum payments we expect to make on our outstanding loan as of June 30, 2020 (in thousands):

The following table presents the future minimum payments we expect to make on our outstanding loan as of September 30, 2020 (in thousands):

Year Ending December 31,

1 unchanged sentence

We paid certain costs and fees totaling $ 236,000 which were recorded as a direct deduction from the term loan on the balance sheet and are being amortized ratably as interest expense over the term of the loan, using the effective interest method.

As of June 30, 2020, the unamortized issuance costs and debt discounts amounted to $ 184,000 .

Interest expense, including amortization of the debt discount and accretion of the final fees, related to the Credit Agreement was $ 353,000 and $ 593,000 , respectively, for the three and six months ended June 30, 2020.

Accrued interest was $ 194,000 as of June 30, 2020.

As of June 30, 2020, the outstanding balance of the loan was $ 19.8 million, net of unamortized debt discount.

As of September 30, 2020, the unamortized issuance costs and debt discounts amounted to $ 164,000 .

Interest expense, including amortization of the debt discount and accretion of the final fees, related to the Credit Agreement was $ 429,000 and $ 1.0 million, respectively, for the three and nine months ended September 30, 2020.

Accrued interest was $ 233,000 as of September 30, 2020.

As of September 30, 2020, the outstanding balance of the loan was $ 19.8 million, net of unamortized debt discount.

The Credit Agreement contains certain covenants which, among others, require us to deliver financial reports at designated times of the year and maintain minimum net revenues and $ 10.0 million of cash in order to draw tranche three or tranche four.

As of June 30, 2020, we were not in violation of any covenants.

Subsequent Events

On August 4, 2020, we entered into an Open Market Sale Agreement SM (Sales Agreement) with Jefferies LLC (Jefferies), as our sales agent, pursuant to which, from time to time, we may sell through Jefferies, shares of our common stock having an aggregate offering price of up to $ 65.0 million (Shares) in “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (Securities Act), and are registered under the Securities Act.

We pay a commission of up to 3 % of the gross proceeds of any Shares sold pursuant to the Sales Agreement.

We and Jefferies may each terminate the Sales Agreement at any time upon prior written notice.

As of September 30, 2020, we were not in violation of any covenants.

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 1. Financial Statements