RIGEL PHARMACEUTICALS INC 10-Q

Item 1. Financial Statements ​ RIGEL PHARMACEUTICALS, INC. CONDENSED BALANCE SHEET S (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ ​ 2020 2019(1) ​ ​ ​ (unaudited) ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 36,567 ​ $ 22,521 ​ Short-term investments ​ 36,245 ​ 75,557 ​ Accounts receivable, net ​ 14,631 ​ 10,111 ​ Inventories ​ ​ 2,050 ​ 1,354 ​ Prepaid and other current assets ​ 10,355 ​ 9,462 ​ Total current assets ​ 99,848 ​ 119,005 ​ Property and equipment, net ​ 2,517 ​ 2,159 ​ Operating lease right-of-use asset ​ ​ 19,873 ​ ​ 25,709 ​ Other assets ​ 820 ​ 696 ​ ​ ​ $ 123,058 ​ $ 147,569 ​ Liabilities and stockholders’ equity ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 2,283 ​ $ 4,152 ​ Accrued compensation ​ 8,173 ​ 8,819 ​ Accrued research and development ​ 3,296 ​ 5,960 ​ Other accrued liabilities ​ 9,037 ​ 6,721 ​ Lease liabilities, current portion ​ ​ 8,334 ​ ​ 7,272 ​ Deferred revenue, current portion ​ ​ 3,069 ​ ​ 25,288 ​ Total current liabilities ​ 34,192 ​ 58,212 ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term portion of deferred revenue ​ ​ 146 ​ ​ 1,404 ​ Long-term portion of lease liabilities ​ 12,929 ​ 19,230 ​ Loans payable, net of discount ​ ​ 19,836 ​ ​ 9,810 ​ Other long-term liabilities ​ 5,000 ​ 5,098 ​ ​ ​ ​ ​ ​ ​ ​ ​ Commitments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ ​ Preferred stock ​ — ​ — ​ Common stock ​ 169 ​ 168 ​ Additional paid-in capital ​ 1,337,519 ​ 1,329,852 ​ Accumulated other comprehensive income ​ 2 ​ 23 ​ Accumulated deficit ​ ( 1,286,735 ) ​ ( 1,276,228 ) ​ Total stockholders’ equity ​ 50,955 ​ 53,815 ​ ​ ​ $ 123,058 ​ $ 147,569 ​ (1) The balance sheet at December 31, 2019 has been derived from the audited financial statements included in Rigel’s Annual Report on Form 10-K for the year ended December 31, 2019 . See Accompanying Notes. ​ 3 ​ Table of Contents RIGEL PHARMACEUTICALS, INC. CONDENSED STATEMENTS OF OPERATION S (In thousands, except per share amounts) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2020 2019 2020 2019 Revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product sales, net ​ $ 16,289 ​ $ 11,716 ​ $ 43,943 ​ $ 29,943 ​ Contract revenues from collaborations ​ ​ 2,100 ​ ​ 9,141 ​ ​ 46,228 ​ ​ 13,945 ​ Total revenues ​ ​ 18,389 ​ ​ 20,857 ​ ​ 90,171 ​ ​ 43,888 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of product sales ​ ​ 140 ​ ​ 310 ​ ​ 574 ​ ​ 728 ​ Research and development ​ 14,600 ​ 14,463 ​ ​ 44,963 ​ 38,638 ​ Selling, general and administrative ​ 17,430 ​ 18,121 ​ ​ 54,780 ​ 56,276 ​ Total costs and expenses ​ 32,170 ​ 32,894 ​ 100,317 ​ 95,642 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss from operations ​ ( 13,781 ) ​ ( 12,037 ) ​ ( 10,146 ) ​ ( 51,754 ) ​ Interest income ​ 36 ​ 555 ​ 563 ​ 2,068 ​ Interest expense ​ ​ ( 429 ) ​ ​ ( 8 ) ​ ​ ( 924 ) ​ ​ ( 8 ) ​ Net loss ​ $ ( 14,174 ) ​ $ ( 11,490 ) ​ $ ( 10,507 ) ​ $ ( 49,694 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted ​ $ ( 0.08 ) ​ $ ( 0.07 ) ​ $ ( 0.06 ) ​ $ ( 0.30 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares used in computing net loss per share, basic and diluted ​ 168,932 ​ 167,609 ​ 168,658 ​ 167,326 ​ ​ See Accompanying Notes. ​ 4 ​ Table of Contents RIGEL PHARMACEUTICALS, INC. CONDENSED STATEMENTS OF COMPREHENSIVE LOSS (In thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2020 2019 2020 2019 Net loss ​ $ ( 14,174 ) ​ $ ( 11,490 ) ​ $ ( 10,507 ) ​ $ ( 49,694 ) ​ Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net unrealized gain (loss) on short-term investments ​ ( 44 ) ​ ( 7 ) ​ ( 21 ) ​ 60 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive loss ​ $ ( 14,218 ) ​ $ ( 11,497 ) ​ $ ( 10,528 ) ​ $ ( 49,634 ) ​ ​ See Accompanying Notes. ​ 5 ​ Table of Contents RIGEL PHARMACEUTICALS, INC. CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except share amounts) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-in ​ Comprehensive ​ Accumulated ​ Stockholders’ ​ Shares Amount Capital Income Deficit Equity Balance at January 1, 2020 167,987,850 ​ $ 168 ​ $ 1,329,852 ​ $ 23 ​ $ ( 1,276,228 ) ​ $ 53,815 Net income — ​ ​ — ​ ​ — ​ ​ — ​ ​ 21,243 ​ 21,243 Net unrealized gain on short-term investments — ​ ​ — ​ ​ — ​ ​ 55 ​ ​ — ​ 55 Issuance of common stock upon exercise of options 581,675 ​ ​ 1 ​ ​ 1,335 ​ ​ — ​ ​ — ​ 1,336 Stock compensation expense — ​ ​ — ​ ​ 2,050 ​ ​ — ​ ​ — ​ 2,050 Balance at March 31, 2020 168,569,525 ​ $ 169 ​ $ 1,333,237 ​ $ 78 ​ $ ( 1,254,985 ) ​ $ 78,499 Net loss — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 17,576 ) ​ ​ ( 17,576 ) Net unrealized loss on short-term investments — ​ ​ — ​ ​ — ​ ​ ( 32 ) ​ ​ — ​ ​ ( 32 ) Issuance of common stock upon participation in Purchase Plan 348,098 ​ ​ — ​ ​ 541 ​ ​ — ​ ​ — ​ ​ 541 Stock compensation expense — ​ ​ — ​ ​ 1,778 ​ ​ — ​ ​ — ​ ​ 1,778 Balance at June 30, 2020 ​ 168,917,623 ​ $ 169 ​ $ 1,335,556 ​ $ 46 ​ $ ( 1,272,561 ) ​ $ 63,210 Net loss — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 14,174 ) ​ ​ ( 14,174 ) Net unrealized loss on short-term investments — ​ ​ — ​ ​ — ​ ​ ( 44 ) ​ ​ — ​ ​ ( 44 ) Issuance of common stock upon exercise of options 25,811 ​ ​ — ​ ​ 52 ​ ​ — ​ ​ — ​ ​ 52 Stock compensation expense — ​ ​ — ​ ​ 1,911 ​ ​ — ​ ​ — ​ ​ 1,911 Balance at September 30, 2020 168,943,434 ​ $ 169 ​ $ 1,337,519 ​ $ 2 ​ $ ( 1,286,735 ) ​ $ 50,955 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at January 1, 2019 167,171,505 $ 167 $ 1,319,068 $ ( 24 ) $ ( 1,209,334 ) $ 109,877 Net loss — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 17,598 ) ​ ( 17,598 ) Net unrealized gain on short-term investments — ​ ​ — ​ ​ — ​ ​ 34 ​ ​ — ​ 34 Issuance of common stock upon exercise of options 7,583 ​ ​ — ​ ​ 16 ​ ​ — ​ ​ — ​ 16 Stock compensation expense — ​ ​ — ​ ​ 2,986 ​ ​ — ​ ​ — ​ 2,986 Balance at March 31, 2019 167,179,088 ​ $ 167 ​ $ 1,322,070 ​ $ 10 ​ $ ( 1,226,932 ) ​ $ 95,315 Net loss — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 20,606 ) ​ ( 20,606 ) Net unrealized gain on short-term investments — ​ ​ — ​ ​ — ​ ​ 33 ​ ​ — ​ 33 Issuance of common stock upon exercise of options and participation in Purchase Plan 425,331 ​ ​ 1 ​ ​ 855 ​ ​ — ​ ​ — ​ 856 Stock compensation expense — ​ ​ — ​ ​ 2,693 ​ ​ — ​ ​ — ​ 2,693 Balance at June 30, 2019 ​ 167,604,419 ​ $ 168 ​ $ 1,325,618 ​ $ 43 ​ $ ( 1,247,538 ) ​ $ 78,291 Net loss — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 11,490 ) ​ ( 11,490 ) Net unrealized loss on short-term investments — ​ ​ — ​ ​ — ​ ​ ( 7 ) ​ ​ — ​ ( 7 ) Issuance of common stock upon exercise of options 4,625 ​ ​ — ​ ​ 9 ​ ​ — ​ ​ — ​ 9 Stock compensation expense — ​ ​ — ​ ​ 2,108 ​ ​ — ​ ​ — ​ 2,108 Balance at September 30, 2019 167,609,044 ​ $ 168 ​ $ 1,327,735 ​ $ 36 ​ $ ( 1,259,028 ) ​ $ 68,911 ​ ​ ​ 6 ​ Table of Contents RIGEL PHARMACEUTICALS, INC. CONDENSED STATEMENTS OF CASH FLOW S (In thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ ​ 2020 2019 ​ Operating activities ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 10,507 ) ​ $ ( 49,694 ) ​ Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ ​ Stock-based compensation expense ​ 5,665 ​ 7,704 ​ Depreciation and amortization ​ 500 ​ 503 ​ Non-cash operating lease expense ​ ​ 5,836 ​ ​ 5,181 ​ Net amortization and accretion of discount on short-term investments and term loan ​ ​ ( 171 ) ​ ​ ( 917 ) ​ Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ ( 4,520 ) ​ ( 7,475 ) ​ Inventories ​ ​ ( 235 ) ​ ( 195 ) ​ Prepaid and other current assets ​ ( 893 ) ​ ( 2,000 ) ​ Other assets ​ ( 124 ) ​ 40 ​ Accounts payable ​ ( 1,869 ) ​ ( 3,730 ) ​ Accrued compensation ​ ( 646 ) ​ ( 2,886 ) ​ Accrued research and development ​ ( 2,664 ) ​ ( 1,132 ) ​ Other accrued liabilities ​ 1,731 ​ 3,207 ​ Lease liability ​ ​ ( 5,239 ) ​ ​ ( 4,793 ) ​ Deferred revenue ​ ​ ( 23,477 ) ​ ​ 24,326 ​ Net cash used in operating activities ​ ( 36,613 ) ​ ( 31,861 ) ​ Investing activities ​ ​ ​ ​ ​ ​ ​ Purchases of short-term investments ​ ( 63,671 ) ​ ( 100,501 ) ​ Maturities of short-term investments ​ 103,184 ​ 85,306 ​ Capital expenditures ​ ( 758 ) ​ ( 844 ) ​ Net cash provided by (used in) investing activities ​ 38,755 ​ ( 16,039 ) ​ Financing activities ​ ​ ​ ​ ​ ​ ​ Net proceeds from term loan financing ​ ​ 9,975 ​ ​ 9,789 ​ Net proceeds from issuances of common stock upon exercise of options and participation in Purchase Plan ​ 1,929 ​ 882 ​ Net cash provided by financing activities ​ 11,904 ​ 10,671 ​ Net increase (decrease) in cash and cash equivalents ​ 14,046 ​ ( 37,229 ) ​ Cash and cash equivalents at beginning of period ​ 22,521 ​ 76,322 ​ Cash and cash equivalents at end of period ​ $ 36,567 ​ $ 39,093 ​ Supplemental disclosure of cash flow information ​ ​ ​ ​ ​ ​ ​ Interest paid ​ $ 814 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ See Accompanying Notes. ​ ​ 7 ​ Table of Contents Rigel Pharmaceuticals, In c. Notes to Condensed Financial Statements (unaudited) ​ In this report, “Rigel,” “we,” “us” and “our” refer to Rigel Pharmaceuticals, Inc. ​ 1. Nature of Operations ​ We are a biotechnology company dedicated to discovering, developing and providing novel small molecule drugs that significantly improve the lives of patients with immune and hematologic disorders, cancer and rare diseases. Our pioneering research focuses on signaling pathways that are critical to disease mechanisms. 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). ​ 2. Basis of Presentation ​ Our accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP), for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Act of 1933, as amended (Securities Act). Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements include only normal and recurring adjustments that we believe are necessary to fairly state our financial position and the results of our operations and cash flows. Interim-period results are not necessarily indicative of results of operations or cash flows for a full-year or any subsequent interim period. The balance sheet at December 31, 2019 has been derived from audited financial statements at that date but does not include all disclosures required by U.S. GAAP for complete financial statements. Because certain disclosures required by U.S. GAAP for complete financial statements are not included herein, these interim unaudited condensed financial statements and the notes accompanying them should be read in conjunction with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. ​ The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ from these estimates. ​ 3. Summary of Significant Accounting Policies ​ Recent Accounting Pronouncements ​ In June 2016, the FASB issued ASU 2016-13— Financial Instruments – Credit Losses (Topic 326): 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 8 ​ Table of Contents 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. We adopted this new standard on January 1, 2020 with no material impact on our financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13 —Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13) , which modifies the disclosure requirements on fair value measurements. This guidance is effective for fiscal years beginning after December 15, 2019, and interim periods therein. We adopted this new standard on January 1, 2020 with no material impact on our financial statements and related disclosures. In November 2018, the FASB issued ASU 2018-18— Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 . This standard provides guidance on the interaction between Revenue Recognition (Topic 606) and Collaborative Arrangements (Topic 808) by aligning the unit of account guidance between the two topics and clarifying whether certain transactions between collaborative participants should be accounted for as revenue under Topic 606. ASU 2018-18 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. We adopted this new standard on January 1, 2020 with no material impact on our financial statements and related disclosures. ​ Inventories ​ Inventories are stated at the lower of cost or estimated net realizable value. We determine the cost of inventories using the standard cost method, which approximates actual cost based on a first-in, first out basis. Inventories consist primarily of third-party manufacturing costs and allocated internal overhead costs. We began capitalizing inventory costs associated with our product upon regulatory approval when, based on management’s judgment, future commercialization was considered probable and the future economic benefit was expected to be realized. ​ Prior to FDA approval of TAVALISSE, all manufacturing costs were charged to research and development expense in the period incurred. 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. ​ We provide reserves for potential excess, dated or obsolete inventories based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life. ​ Cost of Product Sales ​ Cost of product sales consists of third-party manufacturing costs, transportation and freight, and indirect overhead costs associated with the manufacture and distribution of TAVALISSE. A portion of the cost of producing the product sold to date was expensed as research and development prior to the Company’s New Drug Application (NDA) approval for TAVALISSE and therefore is not included in the cost of product sales during this period. ​ Accounts Receivable ​ Accounts receivable are recorded net of customer allowances for prompt payment discounts and any allowance for doubtful accounts. We estimate the allowance for doubtful accounts based on existing contractual payment terms, actual payment patterns of our customers and individual customer circumstances. To date, we have determined that an allowance for doubtful accounts is not required. ​ ​ 9 ​ Table of Contents Revenue Recognition ​ 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: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligation. We apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is determined to be within the scope of this new guidance, we assess the goods or services promised within each contract and identify, as a performance obligation, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. ​ Product Sales ​ Revenues from product sales are recognized when the specialty distributors (SDs), who are our customers, obtain control of our product, which occurs at a point in time, upon delivery to such SDs. These SDs subsequently resell our products to specialty pharmacy providers, health care providers, hospitals and clinics. In addition to distribution agreements with these 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. ​ Under ASC 606, we are required to estimate the transaction price, including variable consideration that is subject to a constraint, in our contracts with our customers. Variable consideration is included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Revenue from product sales are recorded net of certain variable consideration which includes estimated government-mandated rebates and chargebacks, distribution fees, estimated product returns and other deductions. ​ Provisions for returns and other adjustments are provided for in the period the related revenue is recorded. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. ​ The following are our significant categories of sales discounts and allowances: ​ Sales Discounts . We provide our customers prompt payment discounts that are explicitly stated in our contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. ​ Product Returns. We offer our SDs a right to return product purchased directly from us, which is principally based upon the product’s expiration date. Product return allowances are estimated and recorded at the time of sale. ​ Government Rebates: We are subject to discount obligations under the state Medicaid programs and Medicare prescription drug coverage gap program. We estimate our Medicaid and Medicare prescription drug coverage gap rebates based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability that is included as part of Other Accrued Liabilities account in the Balance Sheet. Our liability for these rebates consists primarily of estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period. ​ 10 ​ Table of Contents Chargebacks and Discounts: Chargebacks for fees and discounts represent the estimated obligations resulting from contractual commitments to sell products to certain specialty pharmacy providers, in-office dispensing providers, group purchasing organizations, and government entities at prices lower than the list prices charged to our SDs who directly purchase the product from us. 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. 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. The estimated obligations arising from these chargebacks and discounts are included as part of Other Accrued Liabilities in the balance sheet. ​ Co-Payment Assistance: We offer co-payment assistance to commercially insured patients meeting certain eligibility requirements. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with product that has been recognized as revenue. ​ Contract Revenues from Collaborations ​ In the normal course of business, we conduct research and development programs independently and in connection with our corporate collaborators, pursuant to which we license certain rights to our intellectual property to third parties. The terms of these arrangements typically include payment to us for a combination of one or more of the following: upfront license fees; development, regulatory and commercial milestone payments; product supply services; and royalties on net sales of licensed products. ​ Upfront License Fees: If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from upfront license fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, we determine whether the combined performance obligation is satisfied over time or at a point in time. If the combined performance obligation is satisfied over time, we use judgment in determining the appropriate method of measuring progress for purposes of recognizing revenue from the up-front license fees. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. ​ Development, Regulatory or Commercial Milestone Payments: At the inception of each arrangement that includes payments based on the achievement of certain development, regulatory and commercial or launch events, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until uncertainty associated with the approvals has been resolved. The transaction price is then allocated to each performance obligation, on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of achieving such development and regulatory milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, and recorded as part of contract revenues from collaborations during the period of adjustment. ​ Product Supply Services: Arrangements that include a promise for future supply of drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options. We assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. ​ 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 11 ​ Table of Contents (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). ​ Leases ​ 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 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. Right-of-use lease assets represent our right to use the underlying asset for the lease term and the lease obligation represents our commitment to make the lease payments arising from the lease. Right-of-use lease assets and obligations are recognized at the commencement date based on the present value of remaining lease payments over the lease term. As our lease does not provide an implicit rate, we have used an estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The operating lease right-of-use asset includes any lease payments made prior to commencement. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as common area costs and property taxes are expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet. ​ For our sublease agreement wherein we are the lessor, sublease income will be recognized on a straight-line basis over the term of the sublease. The difference between the cash received, and the straight-line lease income recognized, if any, will be recorded as part of prepaid and other current assets in the balance sheet. ​ Research and Development Accruals ​ We have various contracts with third parties related to our research and development activities. Costs that are incurred but not billed to us as of the end of the period are accrued. We make estimates of the amounts incurred in each period based on the information available to us and our knowledge of the nature of the contractual activities generating such costs. Clinical trial contract expenses are accrued based on units of activity. Expenses related to other research and development contracts, such as research contracts, toxicology study contracts and manufacturing contracts are estimated to be incurred generally on a straight-line basis over the duration of the contracts. Raw materials and study materials not related to our approved drug, purchased for us by third parties are expensed at the time of purchase. ​ Income Taxes ​ Income taxes have been provided using the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and net operating loss and tax credit carryforwards measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse or the carryforwards are utilized. Valuation allowances are established when it is determined that it is more likely than not that such assets will not be realized. ​ We account for uncertain tax positions consistent with authoritative guidance. The guidance prescribes a “more likely than not” recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We do not expect any material change in our unrecognized tax benefits over the next twelve months. We recognize interest and penalties related to unrecognized tax benefits as a component of income taxes. ​ 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 12 ​ Table of Contents 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. 85) was signed into California law. A.B. 85 provides for a three-year suspension of the use of net operating losses for medium and large businesses and a three-year cap on the use of business incentive tax credits to offset no more than $ 5.0 million of California state tax per year. A.B. 85 suspends the use of net operating losses for taxable years 2020, 2021 and 2022 for certain taxpayers with taxable income of $ 1.0 million or more. The carryover period for any net operating losses that are suspended under this provision will be extended. A.B. 85 also requires that business incentive tax credits including carryovers may not reduce the applicable tax by more than $ 5.0 million for taxable years 2020, 2021 and 2022. We are currently evaluating the impact of A.B. 85 on our financial statements and related disclosures. ​ 4. Stock Award Plans ​ On May 16, 2018, our stockholders approved the adoption of the Company’s 2018 Equity Incentive Plan (2018 Plan). The 2018 Plan is the successor plan to the 2011 Equity Incentive Plan, the 2000 Equity Incentive Plan, and the 2000 Non-Employee Directors' Stock Option Plan. ​ To date, we have two stock option plans, our 2018 Plan and the Inducement Plan (collectively, the Equity Incentive Plans), that provide for granting to our officers, directors and all other employees and consultants options to purchase shares of our common stock. We also have our Employee Stock Purchase Plan (Purchase Plan), wherein 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. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model which considered our stock price, as well as assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, volatility, expected term, risk-free interest rate and dividends. We estimate volatility over the expected term of the option using historical share price performance. For expected term, we take into consideration our historical data of options exercised, cancelled and expired. The risk-free rate is based on the U.S. Treasury constant maturity rate. We have not paid and do not expect to pay dividends in the foreseeable future. We use the straight-line attribution method over the requisite employee service period for the entire award in recognizing stock-based compensation expense. We account for forfeitures as they occur. ​ We granted performance-based stock options to purchase shares of our common stock which will vest upon the achievement of certain corporate performance-based milestones. We determined the fair values of these performance-based stock options using the Black-Scholes option pricing model at the date of grant. For the portion of the performance-based stock options of which the performance condition is considered probable of achievement, we recognize stock-based compensation expense on the related estimated grant date fair values of such options on a straight-line basis from the date of grant up to the date when we expect the performance condition will be achieved. For the performance conditions that are not considered probable of achievement at the grant date or upon quarterly re-evaluation, prior to the event actually occurring, we recognize the related stock-based compensation expense when the event occurs or when we can determine that the performance condition is probable of achievement. 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. ​ 5. 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 13 ​ Table of Contents 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. ​ 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 ​ Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ ​ ​ ​ 2020 2019 ​ 2020 2019 ​ Outstanding stock options ​ ​ 27,646 ​ ​ 22,665 ​ ​ 27,646 ​ ​ 22,665 ​ ​ Purchase Plan ​ ​ 59 ​ ​ 125 ​ ​ 59 ​ ​ 125 ​ ​ Total ​ ​ 27,705 ​ ​ 22,790 ​ ​ 27,705 ​ ​ 22,790 ​ ​ ​ ​ ​ 6. Stock-Based Compensation ​ 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 ​ Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ ​ ​ 2020 2019 ​ 2020 2019 ​ Selling, general and administrative ​ $ 1,352 ​ $ 1,611 ​ $ 3,981 ​ $ 5,519 ​ Research and development ​ ​ 532 ​ ​ 487 ​ ​ 1,684 ​ ​ 2,185 ​ Total stock-based compensation expense ​ $ 1,884 ​ $ 2,098 ​ $ 5,665 ​ $ 7,704 ​ ​ The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. We have segregated option awards into the following three homogenous groups for the purposes of determining fair values of options: officers and directors, all other employees, and consultants. We account for forfeitures as they occur. ​ We determined weighted-average valuation assumptions separately for each of these groups as follows: ​ ● Volatility—We estimated volatility using our historical share price performance over the expected life of the option. We also considered other factors, such as implied volatility, our current clinical trials and other company activities that may affect the volatility of our stock in the future. We determined that at this time historical volatility is more indicative of our expected future stock performance than implied volatility. ​ ● Expected term—For options granted to consultants, we use the contractual term of the option, which is generally ten years , for the initial valuation of the option and the remaining contractual term of the option for the succeeding periods. We analyzed various historical data to determine the applicable expected term for each of the other option groups. This data included: (1) for exercised options, the term of the options from option grant date to exercise date; (2) for cancelled options, the term of the options from option grant date to cancellation date, excluding non-vested option forfeitures; and (3) for options that remained outstanding at the balance sheet date, the term of the options from option grant date to the end of the reporting period and the estimated remaining term of the options. 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 14 ​ Table of Contents 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. ​ ● Risk-free interest rate—The risk-free interest rate is based on U.S. Treasury constant maturity rates with similar terms to the expected term of the options for each option group. ​ ● 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 nine months ended September 30, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ Nine Months Ended ​ ​ ​ ​ September 30, ​ ​ September 30, ​ ​ ​ 2020 2019 2020 2019 Risk-free interest rate ​ 0.5 % 1.7 % ​ 1.2 % 2.5 % ​ Expected term (in years) ​ 6.7 ​ 6.0 ​ ​ 6.5 ​ 6.5 ​ ​ Dividend yield ​ 0.0 % 0.0 % ​ 0.0 % 0.0 % ​ Expected volatility ​ 70.5 % 63.0 % ​ 66.0 % 65.6 % ​ ​ The exercise price of stock options granted under our stock plans is equal to the fair market value of the underlying shares on the date of grant. Options become exercisable at varying dates and generally expire 10 years from the date of grant. ​ 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 ​ Our Purchase Plan permits eligible employees to purchase common stock at a discount through payroll deductions during defined offering periods. The price at which the stock is purchased is equal to the lesser of 85 % of the fair market value of our common stock on the first day of the offering or 85 % of the fair market value of our common stock on the purchase date. The initial offering period commenced on the effective date of our initial public offering. ​ The fair value of awards granted under our Purchase Plan is estimated on the date of grant using the Black-Scholes option pricing model, which uses weighted-average assumptions . Our Purchase Plan provides for a twenty-four -month offering period comprised of four six-month purchase periods with a look-back option. 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 15 ​ Table of Contents 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. We had a “reset” on January 2, 2020 because the fair market value of our stock on December 31, 2019 was lower than the fair market value of our stock on January 1, 2019, the first day of the offering period. We applied modification accounting in accordance with the relevant accounting guidance. The total incremental fair value associated with this Purchase Plan “reset” was approximately $ 753,000 and is being recognized as expense from January 1, 2020 to December 31, 2021. We also had another “reset” on July 1, 2020 because the fair market value of our stock on June 30, 2020 was lower than the fair market value of our stock on January 1, 2020, the first day of the offering period. We applied modification accounting in accordance with the relevant accounting guidance. 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 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. Expected term represents the weighted-average of the purchase periods within the offering period. The risk-free interest rate for periods within the expected term is based on U.S. Treasury constant maturity rates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ ​ ​ September 30, ​ ​ ​ 2020 2019 ​ Risk-free interest rate ​ 1.0 % 2.8 % ​ Expected term (in years) ​ 1.6 ​ 1.7 ​ ​ Dividend yield ​ 0.0 % 0.0 % ​ Expected volatility ​ 62.3 % 63.0 % ​ ​ ​ 7. Revenues ​ Revenues disaggregated by category were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ ​ ​ 2020 2019 ​ 2020 2019 ​ Product sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross product sales ​ $ 20,318 ​ $ 14,348 ​ $ 54,042 ​ $ 36,745 ​ Discounts and allowances ​ ​ ( 4,029 ) ​ ​ ( 2,632 ) ​ ​ ( 10,099 ) ​ ​ ( 6,802 ) ​ Product sales, net ​ $ 16,289 ​ $ 11,716 ​ $ 43,943 ​ $ 29,943 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues from collaborations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ License revenues ​ ​ 2,100 ​ ​ 7,750 ​ ​ 41,958 ​ ​ 12,249 ​ Research and development services and others ​ ​ — ​ ​ 1,391 ​ ​ 4,270 ​ ​ 1,696 ​ Total revenues from collaborations ​ ​ 2,100 ​ ​ 9,141 ​ ​ 46,228 ​ ​ 13,945 ​ Total revenues ​ $ 18,389 ​ $ 20,857 ​ $ 90,171 ​ $ 43,888 ​ ​ 16 ​ Table of Contents 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 ​ Nine Months Ended ​ ​ ​ September 30, ​ September 30, ​ ​ ​ 2020 2019 ​ 2020 2019 ​ ASD Healthcare and Oncology Supply ​ ​ 48 % ​ ​ 28 % ​ ​ 26 % ​ ​ 34 % ​ McKesson Specialty Care Distribution Corporation ​ ​ 34 % ​ ​ 22 % ​ ​ 20 % ​ ​ 27 % ​ Daiichi ​ ​ 11 % ​ ​ — ​ ​ * ​ ​ — ​ Aclaris ​ ​ — ​ ​ 19 % ​ ​ — ​ ​ * ​ Celgene ​ ​ — ​ ​ 18 % ​ ​ — ​ ​ * ​ Grifols ​ ​ — ​ ​ * ​ ​ 49 % ​ ​ 11 % ​ ​ We commenced commercial sale of TAVALISSE in the U.S. in May 2018 after FDA approval in April 2018. 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 nine months ended September 30, 2020 and 2019 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Chargebacks, ​ Government ​ ​ ​ ​ ​ ​ Discounts and ​ and Other ​ ​ ​ ​ ​ ​ Fees ​ Rebates ​ Returns ​ Total Balance at January 1, 2020 $ 1,293 $ 1,801 ​ $ 238 ​ $ 3,332 Provision related to current period sales ​ ​ 5,625 ​ ​ 2,775 ​ ​ 676 ​ ​ 9,076 Adjustment related to prior period sales ​ ​ ( 75 ) ​ ​ ( 490 ) ​ ​ 565 ​ ​ — Credit or payments made during the period ​ ​ ( 5,020 ) ​ ​ ( 2,407 ) ​ ​ ( 72 ) ​ ​ ( 7,499 ) Balance at September 30, 2020 $ 1,823 ​ $ 1,679 ​ $ 1,407 ​ $ 4,909 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Chargebacks, ​ Government ​ ​ ​ ​ ​ ​ ​ ​ Discounts and ​ and Other ​ ​ ​ ​ ​ ​ ​ ​ Fees ​ Rebates ​ Returns ​ Total Balance at January 1, 2019 $ 622 $ 843 ​ $ 170 ​ $ 1,635 Provision related to current period sales ​ ​ 3,561 ​ ​ 2,296 ​ ​ 99 ​ ​ 5,956 Credit or payments made during the period ​ ​ ( 2,932 ) ​ ​ ( 1,298 ) ​ ​ — ​ ​ ( 4,230 ) Balance at September 30, 2019 $ 1,251 ​ $ 1,841 ​ $ 269 ​ $ 3,361 ​ 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. ​ 17 ​ Table of Contents 8. Sponsored Research and License Agreements ​ We conduct research and development programs independently and in connection with our corporate collaborators. 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 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. Total future contingent payments to us under all of these agreements could exceed $ 607.2 million if all potential product candidates achieved all of the payment triggering events under all of our current agreements (based on a single product candidate under each agreement). Of this amount, $ 67.5 million relates to the achievement of development events, $ 163.7 million relates to the achievement of regulatory events and $ 376.0 million relates to the achievement of certain commercial or launch events. This estimated future contingent amount does not include any estimated royalties that could be due to us if the partners successfully commercialize any of the licensed products. Future events that may trigger payments to us under the agreements are based solely on our partners’ future efforts and achievements of specified development, regulatory and/or commercial events. ​ Grifols License Agreement ​ In January 2019, we entered into an exclusive license agreement with Grifols to commercialize fostamatinib in all indications, including chronic ITP and AIHA, in Europe and Turkey. Under the agreement, we received an upfront payment of $ 30.0 million, with the potential for $ 297.5 million in total regulatory and commercial milestones, which included a $ 20.0 million payment upon approval from the European Medicines Agency (EMA) for fostamatinib in chronic ITP as discussed below. We will also receive stepped double-digit royalty payments based on tiered net sales which may reach 30 % of net sales. In return, Grifols will receive exclusive rights to fostamatinib in human diseases, including chronic ITP and AIHA, in Europe and Turkey. The agreement also requires us to conduct the Phase 3 trial in AIHA. ​ 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 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 October 2020, we entered into a commercial supply agreement for the licensed territories. We concluded each of these performance obligations is distinct. We based our assessment on the following: (i) our assessment that Grifols can benefit from the license on its own by developing and commercializing the underlying product using its own resources, and (ii) the fact that the manufacturing services are not highly specialized in nature and can be performed by other vendors. 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 18 ​ Table of Contents 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: (a) for the license, we estimated the standalone selling price using the adjusted market assessment approach to estimate its standalone selling price in the licensed territories; (b) for the research and regulatory services, we estimated the standalone selling price using the cost plus expected margin approach. As a result of the adjusted transaction price, adjustments are recorded on a cumulative catch-up basis, and recorded as part of contract revenues from collaborations in the first quarter of 2020. ​ The remaining future variable consideration of $ 277.5 million related to future regulatory and commercial milestones were fully constrained until we can ascertain that significant reversal of cumulative revenue would not occur, given the inherent uncertainty of success with these future milestones. We will recognize revenues related the research and regulatory services throughout the term of the respective clinical programs using the input method. For sales-based milestones and royalties, we determined that the license is the predominant item to which the royalties or sales-based milestones relate. 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. ​ 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 ​ In October 2018, we entered into an exclusive license and supply agreement with Kissei to develop and commercialize fostamatinib in all current and potential indications in Japan, China, Taiwan and the Republic of Korea. Kissei is responsible for performing and funding all development activities for fostamatinib in the above-mentioned territories. We received an upfront cash payment of $ 33.0 million, with the potential for up to an additional $ 147.0 million in development, regulatory and commercial milestone payments, and will receive mid to upper twenty percent, tiered, escalated net sales-based payments for the supply of fostamatinib. Under the agreement, we granted Kissei the license rights to fostamatinib in the territories above and are obligated to supply Kissei with drug product for use in clinical trials and pre-commercialization activities. We are also responsible for the manufacture and supply of fostamatinib for all future development and commercialization activities under the agreement. ​ 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) supply of fostamatinib for clinical use and (c) material right associated with discounted fostamatinib that are supplied for use other than clinical or commercial. In addition, we will provide commercial product supply if the product is approved in the licensed territory. We concluded that each of these performance obligations is distinct. We based our assessment on the following: (i) our assessment that Kissei can benefit from the license on its own by developing and commercializing the underlying product using its own resources and (ii) the fact that the manufacturing services are not highly specialized in nature and can be performed by other vendors. Moreover, we determined that the upfront fee of $ 33.0 million represented the transaction price and was allocated to the performance obligations based on our best estimate of the relative standalone selling price as follows: (a) for the license, we estimated the standalone selling price using the adjusted market assessment approach to estimate its standalone selling price in the licensed territories; (b) for the supply of fostamatinib and the material right associated with discounted fostamatinib, we estimated the standalone selling price using the cost plus expected margin approach. Variable consideration of $ 147.0 million related to future development and regulatory milestones was fully constrained due to the fact that it was probable that a significant reversal of cumulative revenue would occur, given the inherent uncertainty of success with these future milestones. 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 19 ​ Table of Contents 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 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. We accounted for the agreement made with an upfront payment under ASC 606 and identified the following combined performance obligations at inception of the agreement: (a) granting of the license and (b) obtaining regulatory approval in Canada of fostamatinib in ITP. We determined that the non-refundable upfront fee of $ 5.0 million represented the transaction price. However, under the agreement, we have the option to buy back all rights to the product in Canada within six months from obtaining regulatory approval for the treatment of AIHA in Canada. The buyback option precludes us from transferring control of the license to Medison under ASC 606. We believe that the buyback provision, if exercised, will require us to repurchase the license at an amount equal to or more than the upfront $ 5.0 million. As such this arrangement is accounted for as a financing arrangement. 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. ​ ​ ​ 9. Inventories ​ As of September 30, 2020 and December 31, 2019, we have the following inventories (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ ​ 2020 2019 ​ Work in process ​ $ 1,043 ​ $ 810 ​ Finished goods ​ ​ 1,007 ​ ​ 544 ​ Total ​ $ 2,050 ​ $ 1,354 ​ ​ 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. ​ 20 ​ Table of Contents 10. Cash, Cash Equivalents and Short-Term Investments ​ Cash, cash equivalents and short-term investments consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ ​ 2020 2019 ​ Cash ​ $ 1,492 ​ $ 3,371 ​ Money market funds ​ 17,625 ​ 7,457 ​ U.S. treasury bills ​ 23,297 ​ 12,539 ​ Government-sponsored enterprise securities ​ 18,451 ​ 19,017 ​ Corporate bonds and commercial paper ​ 11,947 ​ 55,694 ​ ​ ​ $ 72,812 ​ $ 98,078 ​ Reported as: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 36,567 ​ $ 22,521 ​ Short-term investments ​ 36,245 ​ 75,557 ​ ​ ​ $ 72,812 ​ $ 98,078 ​ ​ Cash equivalents and short-term investments include the following securities with gross unrealized gains and losses (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ ​ ​ September 30, 2020 ​ Cost ​ Gains ​ Losses ​ Fair Value U.S. treasury bills ​ $ 23,297 ​ $ 1 ​ $ ( 1 ) ​ $ 23,297 ​ Government-sponsored enterprise securities ​ ​ 18,449 ​ ​ 2 ​ ​ — ​ ​ 18,451 ​ Corporate bonds and commercial paper ​ 11,947 ​ — ​ — ​ 11,947 ​ Total ​ $ 53,693 ​ $ 3 ​ $ ( 1 ) ​ $ 53,695 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ ​ ​ December 31, 2019 ​ Cost ​ Gains ​ Losses ​ Fair Value U.S. treasury bills ​ $ 12,532 ​ $ 8 ​ $ ( 1 ) ​ $ 12,539 ​ Government-sponsored enterprise securities ​ ​ 19,010 ​ ​ 8 ​ ​ ( 1 ) ​ ​ 19,017 ​ Corporate bonds and commercial paper ​ 55,685 ​ ​ 14 ​ ​ ( 5 ) ​ 55,694 ​ Total ​ $ 87,227 ​ $ 30 ​ $ ( 7 ) ​ $ 87,250 ​ ​ 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 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 September 30, 2020 . ​ 21 ​ Table of Contents 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2020 Fair Value Unrealized Losses U. S. treasury bills ​ $ 14,027 ​ $ ( 1 ) ​ Total ​ $ 14,027 ​ $ ( 1 ) ​ ​ ​ ​ 11. Fair Value ​ 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. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied. ​ Assets and liabilities recorded at fair value in our financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: ​ Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets at the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. ​ The fair valued assets we hold that are generally included under this Level 1 are money market securities where fair value is based on publicly quoted prices. ​ Level 2—Inputs, other than quoted prices included in Level 1, that are either directly or indirectly observable for the asset or liability through correlation with market data at the reporting date and for the duration of the instrument’s anticipated life. ​ The fair valued assets we hold that are generally assessed under Level 2 included government-sponsored enterprise securities, U.S. treasury bills and corporate bonds and commercial paper. We utilize third party pricing services in developing fair value measurements where fair value is based on valuation methodologies such as models using observable market inputs, including benchmark yields, reported trades, broker/dealer quotes, bids, offers and other reference data. We use quotes from external pricing service providers and other on-line quotation systems to verify the fair value of investments provided by our third-party pricing service providers. We review independent auditor’s reports from our third-party pricing service providers particularly regarding the controls over pricing and valuation of financial instruments and ensure that our internal controls address certain control deficiencies, if any, and complementary user entity controls are in place. ​ Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the reporting date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. ​ We do not have fair valued assets and liabilities classified under Level 3. ​ 22 ​ Table of Contents Fair Value on a Recurring Basis ​ 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 September 30, 2020 ​ Level 1 Level 2 Level 3 Total Money market funds ​ $ 17,625 ​ $ — ​ $ — ​ $ 17,625 ​ U.S. treasury bills ​ ​ — ​ ​ 23,297 ​ ​ — ​ ​ 23,297 ​ Government-sponsored enterprise securities ​ — ​ 18,451 ​ — ​ 18,451 ​ Corporate bonds and commercial paper ​ — ​ 11,947 ​ — ​ 11,947 ​ Total ​ $ 17,625 ​ $ 53,695 ​ $ — ​ $ 71,320 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets at Fair Value as of December 31, 2019 ​ Level 1 Level 2 Level 3 Total Money market funds ​ $ 7,457 ​ $ — ​ $ — ​ $ 7,457 ​ U.S. treasury bills ​ ​ — ​ ​ 12,539 ​ ​ — ​ ​ 12,539 ​ Government-sponsored enterprise securities ​ — ​ 19,017 ​ — ​ 19,017 ​ Corporate bonds and commercial paper ​ — ​ 55,694 ​ — ​ 55,694 ​ Total ​ $ 7,457 ​ $ 87,250 ​ $ — ​ $ 94,707 ​ ​ ​ 12. Lease Agreements ​ We currently lease our research and office space under a noncancelable lease agreement with our landlord, Healthpeak Properties, Inc. (formerly known as HCP BTC, LLC) which was originally set to expire in 2018. The lease term provides for renewal option for up to two additional periods of five years each. In July 2017, we exercised our option to extend the term of our lease for another five years through January 2023 and modified the amount of monthly base rent during such renewal period. ​ In December 2014, we entered into a sublease agreement, which was amended in 2017, with an unrelated third party to occupy approximately 57,000 square feet of our research and office space. In February 2017, we entered into an amendment to the sublease agreement to increase the subleased research and office space for an additional 9,328 square feet under the same term of the sublease. Effective July 2017, the sublease agreement was amended primarily to extend the term of the sublease through January 2023 and modified the monthly base rent to equal the amount we will pay our landlord. Because the future sublease income under the extended sublease agreement is the same as the amount we will pay our landlord, we did not recognize any loss on sublease relative to this amendment. We expect to receive approximately $ 10.7 million in future sublease income (excluding our subtenant’s share of facilities operating expenses) through January 2023. ​ We adopted ASU No. 2016-02 – Leases , and related amendments (Topic 842) on January 1, 2019 using a modified retrospective approach and elected the transition method and the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification and our assessment on whether a contract is or contains a lease. We also elected to combine lease and non-lease components, such as common area maintenance charges, as single lease, and elected to use the short-term lease exception permitted by the standard. ​ As a result of the adoption of Topic 842 on January 1, 2019, we recognized $ 32.8 million in operating right-of-use asset and $ 33.2 million in lease liability, and derecognized $ 399,000 of deferred rent in the balance sheet at adoption date. These were calculated using the present value of our remaining lease payments using an estimated incremental borrowing rate of 9 % , which represented the weighted average discount rate for our lease. There was no cumulative-effect adjustment on our accumulated deficit as of January 1, 2019. 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. ​ 23 ​ Table of Contents 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 nine months ended September 30, 2020, the components of our operating lease expense were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ Nine Months Ended ​ ​ ​ September 30, ​ ​ September 30, Fixed operating lease expense $ 1,340 $ 4,020 Variable operating lease expense ​ ​ 237 ​ ​ 704 Total operating lease expense $ 1,577 $ 4,724 ​ 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 ​ ​ Nine Months Ended ​ ​ ​ September 30, ​ ​ September 30, Cash payments included in the measurement of operating lease liabilities ​ $ 2,431 ​ $ 7,263 ​ The following table presents the future lease payments of our operating lease liabilities as of September 30, 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Remainder of 2020 ​ ​ ​ ​ $ 2,431 2021 ​ ​ ​ ​ ​ 10,082 2022 ​ ​ ​ ​ ​ 10,485 2023 ​ ​ ​ ​ ​ 877 Total operating lease payments ​ ​ ​ ​ ​ 23,875 Less: imputed interest ​ ​ ​ ​ ​ ( 2,612 ) Total operating lease liabilities ​ ​ ​ ​ $ 21,263 ​ For the three and nine months ended September 30, 2020, we have the following operating sublease information (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ Nine Months Ended ​ ​ ​ September 30, ​ ​ September 30, Fixed sublease expense $ 1,096 $ 3,286 Variable sublease expense ​ ​ 245 ​ ​ 742 Sublease income ​ ​ ( 1,341 ) ​ ​ ( 4,028 ) Net $ — $ — ​ 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 ​ ​ ​ ​ $ 1,093 2021 ​ ​ ​ ​ ​ 4,534 2022 ​ ​ ​ ​ ​ 4,716 2023 ​ ​ ​ ​ ​ 394 Total operating lease liabilities ​ ​ ​ ​ $ 10,737 ​ ​ ​ 24 ​ Table of Contents 13. Debt ​ On September 27, 2019, we entered into a Credit and Security Agreement (Credit Agreement), dated as of September 27, 2019 (Closing Date) with MidCap Financial Trust (MidCap). The Credit Agreement provides for a $ 60.0 million term loan credit facility with the following tranches: (i) on the Closing Date, $ 10.0 million aggregate principal amount of term loans, (ii) until December 31, 2020, an additional $ 10.0 million term loan facility at our option, (iii) until March 31, 2021, an additional $ 20.0 million term loan facility subject to the satisfaction of certain conditions and at our option and (iv) until March 31, 2022, an additional $ 20.0 million term loan facility subject to the satisfaction of certain conditions and at our option. The obligations under the Credit Agreement are secured by a perfected security interest in all of our assets except for intellectual property and certain other customary excluded property pursuant to the terms of the Credit Agreement. ​ The outstanding principal balance of the loan bears interest at an annual rate of one-month LIBOR plus 5.65 % , subject to a LIBOR floor of 1.50 % and is payable monthly in arrears. Commencing on October 1, 2019, the Credit Agreement provides that we initially make interest-only payments for 24 months followed by 36 months of amortization payments. The interest-only period will be extended to 36 months and again to 48 months upon the satisfaction of certain conditions set forth in the Credit Agreement. All unpaid principal and accrued interest is due and payable no later than September 1, 2024. A final payment fee of 2.5 % of principal is due on the final payment of the term loan. ​ We may make voluntary prepayments, in whole or in part, subject to certain prepayment premiums and additional interest payments. The Credit Agreement also contains certain provisions, such as event of default and change in control provisions, which, if triggered, would require us to make mandatory prepayments on the term loan, which are subject to certain prepayment premiums and additional interest payments. ​ As discussed above, at Closing Date, $ 10.0 million was funded in an initial tranche. In March 2020, we signed a credit extension form for the second tranche amounting to $ 10.0 million, which we received in May 2020. 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 September 30, 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Year Ending December 31, ​ ​ ​ 2021 ​ $ 1,667 2022 ​ ​ 6,667 2023 ​ ​ 6,667 2024 ​ ​ 4,999 Principal amount (Tranches 1 and 2) ​ $ 20,000 ​ 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 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 September 30, 2020, we were not in violation of any covenants. ​ ​ 25 ​ Table of Contents