What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-02 compared with 2022-11-03 · 357 added, 424 removed, 280 unchanged (74% of the section changed)

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This discussion and analysis should be read in conjunction with our financial statements and the accompanying notes included in this report and the audited financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 7, 2023.

Our financial results for the three and nine months ended September 30, 2022 are not necessarily indicative of results that may occur in future interim periods or for the full fiscal year.

Our financial results for the three months ended March 31, 2023 are not necessarily indicative of results that may occur in future interim periods or for the full fiscal year.

This Quarterly Report on Form 10-Q contains statements indicating expectations about future performance and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), that involve risks and uncertainties.

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our business and scientific strategies;

risks and uncertainties associated with the commercialization and marketing of TAVALISSE in the US and in Europe;

risks that the FDA, EMA or other regulatory authorities may make adverse decisions regarding fostamatinib;

risks and uncertainties associated with the commercialization and marketing of our products in the US and outside the US;

risks that the FDA, EMA or other regulatory authorities may make adverse decisions regarding our products;

the progress of our and our collaborators’ product development programs, including clinical testing, and the timing of results thereof;

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In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements .

We are a biotechnology company dedicated to discovering, developing and providing novel small molecule drugs that significantly improve the lives of patients with hematologic disorders, cancer and rare immune diseases.

We are a biotechnology company dedicated to discovering, developing and providing novel therapies that significantly improve the lives of patients with hematologic disorders and cancer.

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

Our first product approved by the FDA is TAVALISSE® (fostamatinib disodium hexahydrate) tablets, the only oral SYK inhibitor, for the treatment of adult patients with chronic ITP who have had an insufficient response to a previous treatment.

The product is also commercially available in Europe, the UK (TAVLESSE) and Canada (TAVALISSE) for the treatment of chronic ITP in adult patients.

Our portfolio also includes olutasidenib, an oral, small molecule inhibitor of mIDH1 being investigated for the treatment of AML and other malignancies.

We in-licensed olutasidenib from Forma with exclusive, worldwide rights to develop, manufacture, and commercialize the investigational drug.

We conducted a Phase 3 clinical trial evaluating fostamatinib for the treatment of wAIHA, and recently announced that we do not expect to file a sNDA for this indication at this time considering the top-line data results and the guidance received from the FDA.

We recently announced the completion of the FOCUS Phase 3 clinical trial of fostamatinib for the treatment of hospitalized high-risk patients with COVID-19.

Fostamatinib is also currently being studied in an NIH/NHLBI sponsored Phase 3 trial (ACTIV-4 Host Tissue Trial) for the treatment of COVID-19 in hospitalized patients.

Our other clinical programs include our IRAK inhibitor program and a RIPK1 inhibitor program in clinical development with partner Lilly.

In addition, we have product candidates in clinical development with partners BerGenBio and Daiichi.

Business Update

Our first product approved by the FDA is TAVALISSE (fostamatinib disodium hexahydrate) tablets, the only approved oral SYK inhibitor, for the treatment of adult patients with chronic ITP who have had an insufficient response to a previous treatment.

The product is also commercially available in Europe and UK (as TAVLESSE), and in Canada, Israel and Japan (as TAVALISSE) for the treatment of chronic ITP in adult patients.

Our second FDA approved product is REZLIDHIA (olutasidenib) capsules for the treatment of adult patients with R/R AML with a susceptible IDH1 mutation as detected by an FDA-approved test.

We began our commercialization of REZLIDHIA in December 2022.

W e in-licensed olutasidenib from Forma with exclusive, worldwide rights for its development, manufacturing and commercialization.

We conducted a Phase 3 clinical trial evaluating fostamatinib for the treatment of wAIHA and announced that we did not file an sNDA for this indication considering the top-line data results and guidance received from the FDA.

We announced the completion of the FOCUS Phase 3 clinical trial of fostamatinib for the treatment of hospitalized high-risk patients with COVID-19.

Fostamatinib is currently being studied in an NIH/NHLBI sponsored Phase 2/3 trial (ACTIV-4 Host Tissue Trial) for the treatment of COVID-19 in hospitalized patients.

Business Updates

TAVALISSE IN ITP

For the nine months ended September 30, 2022, net product sales of TAVALISSE were $53.9 million, a 19% increase compared to the same period in 2021.

For the three months ended March 31, 2023, net product sales of TAVALISSE were $22.3 million, a 38% increase compared to the same period in 2022.

The increase in our net product sales was primarily driven by the increase in quantities sold as well as the increase in price per bottle of TAVALISSE.

These increases were partially offset by the increase in revenue reserves mainly due to higher rebates on recent contracts entered with certain Pharmacy Benefits Managers (PBMs), and higher government program rebates.

These increases were partially offset by the increase in revenue reserves mainly due to higher government and private party rebates.

Our first quarter net sales are typically impacted by the first quarter reimbursement issues such as the resetting of co-pays and the Medicare donut hole.

We continue to deploy resources to enable our field-based employees to continue to engage with health care providers, either in-person or virtually.

These engagements have enabled our field team to support existing prescribers, as well as develop relationships with new prescribers to identify appropriate patients for TAVALISSE.

In the third quarter of 2021, we expanded our sales force by increasing our territories.

The COVID-19 pandemic has, and may continue to, adversely impact our business and operations.

The degree to which the COVID-19 pandemic continues to affect our business and operations will depend on developments that are highly uncertain and beyond our knowledge or control.

Periodic resurgence of COVID-19 cases negatively impacted and may continue to impact our ability to grow our product sales.

As COVID-19 cases surge, we have observed reduced patient-doctor interactions and our representatives are having fewer visits with health care providers.

We continue to maintain our virtual engagements and as we see the declining trend in number of COVID-19 cases, we expect to continue to increase the in-person engagement with health care providers.

We began to see increased in-person engagements with health care providers in the beginning of 2021, however, in the fourth quarter of 2021, the Omicron variant surged which again limited our access.

In 2022, we have seen increasing demand for TAVALISSE as in-person interactions have increased and more patients have started therapy.

License and Transition Services Agreement with Forma

On July 27, 2022, we entered into a license and transition services agreement with Forma for an exclusive license to develop, manufacture and commercialize olutasidenib, Forma’s proprietary, investigational inhibitor of mIDH1, for any uses worldwide, including for the treatment of AML and other malignancies.

Pursuant to the terms of the license and transition services agreement, we paid Forma an upfront fee of $2.0 million, with the potential to pay up to $67.5 million additional payments upon achievement of specified development and regulatory milestones and up to $165.5 million additional payments upon achievement of certain commercial milestones.

The potential development and regulatory milestone payments of $67.5 million include a $2.5 million payment upon achievement of certain near-term regulatory milestone, a $5.0 million payment upon the first regulatory approval of the licensed product, and $10.0 million payment upon the licensed product’s first commercial sale subject to certain other conditions.

REZLIDHIA in R/R AML with mIDHI

For the three months ended March 31, 2023, we recognized $1.5 million of net product sales of REZLIDHIA.

We began the commercialization of REZLIDHIA in December 2022 following the FDA approval.

On December 1, 2022, the FDA approved REZLIDHIA capsules for the treatment of adult patients with R/R AML with a susceptible IDH1 mutation as detected by an FDA-approved test.

W e in-licensed olutasidenib from Forma with exclusive, worldwide rights for its development, manufacturing and commercialization.

Pursuant to the license and transition services agreement with Forma entered in July 2022, Forma provided us an exclusive license to develop, manufacture and commercialize olutasidenib, Forma’s proprietary inhibitor of mIDH1, for any uses worldwide, including for the treatment of AML and other malignancies.

In accordance with the terms of the license and transition services agreement, we paid Forma an upfront fee of $2.0 million, with the potential to pay up to $67.5 million additional payments upon achievement of specified development and regulatory milestones and up to $165.5 million additional payments upon achievement of certain commercial milestones.

In addition, subject to the terms and conditions of the license and transition services agreement, Forma would be entitled to tiered royalty payments on net sales of licensed products at percentages ranging from low-teens to mid-thirties, as well as certain portions of our sublicensing revenue, subject to certain standard reductions and offsets.

As of September 30, 2022, no milestone payment was met.

In October 2022, the near-term regulatory milestone was met which entitles Forma to receive a $2.5 million milestone payment.

Forma has submitted an NDA for olutasidenib for the treatment of m1DH1 R/R AML to the FDA and the PDUFA action date for the application is February 15, 2023.

Olutasidenib is highly synergistic with our existing hematology-oncology focused commercial and medical affairs infrastructure and if approved, would be our second commercial product in this space.

For more detailed discussions of in-licensed olutasidenib compound from Forma, refer to “In-licensed Program” section below.

On October 14, 2022, Novo Nordisk A/S (Novo Nordisk) announced the completion of the acquisition of Forma.

Following this acquisition, Forma became a wholly owned subsidiary of Novo Nordisk.

Fostamatinib in wAIHA

In June 2022, we announced top-line efficacy and safety data results from our FORWARD study, a Phase 3 pivotal trial of fostamatinib, an oral SYK inhibitor, in patients with wAIHA, which we initiated in March 2019.

We completed the enrollment of our FORWARD study in November 2021 with 90 patients enrolled and completed the treatment period for the last patient under the study in April 2022.

The results of the trial did not demonstrate statistical significance in the primary efficacy endpoint of durable hemoglobin response in the overall study population.

For more detailed discussions of the results of the trial, refer to “Clinical Stage Programs” section below.

We conducted an in-depth analysis of these data to better understand differences in patient characteristics and outcomes and submitted these findings to the FDA.

In October 2022, we announced that we received guidance from the FDA’s review of these findings.

Based on this guidance, we do not expect to file a supplemental New Drug Application (sNDA) for this indication at this time.

We will continue to explore our options for the wAIHA program in relation to our complete portfolio of development opportunities.

Of the 90 patients that completed the FORWARD Phase 3 study, 71 (79%) enrolled in the open-label extension study.

We plan on closing this study in 2023.

Fostamatinib in Hospitalized COVID-19 patients

In April 2021, we reported positive top-line results from a multi-center, Phase 2 clinical trial sponsored by the NIH/NHLBI, evaluating the safety of fostamatinib, our oral SYK inhibitor, for the treatment of hospitalized patients with COVID-19.

The trial met its primary endpoint of comparable safety than standard of care (SOC) and showed broad and consistent improvement in numerous efficacy endpoints, including mortality, ordinal scale assessment, and number of days in the intensive care unit (ICU).

In May 2021, the trial data were submitted as part of a request for an Emergency Use Authorization (EUA) from the FDA for fostamatinib as a treatment for hospitalized patients with COVID-19.

In August 2021, the FDA informed us that the clinical data submitted from the NIH/NHLBI-sponsored Phase 2 trial of fostamatinib to treat hospitalized patients suffering from COVID-19 were insufficient to support an EUA.

In September 2021, the data from the NIH/NHLBI-sponsored Phase 2 trial was published in Clinical Infectious Diseases, an official publication of the Infectious Disease Society of America.

In November 2020, we launched a pivotal Phase 3 clinical trial to evaluate the safety and efficacy of fostamatinib in hospitalized COVID-19 patients without respiratory failure that have certain high-risk prognostic factors.

In July 2022, we completed enrollment with 280 patients.

The trial had originally targeted a total of 308 patients;

however, we determined the trial would be sufficiently powered with 280 patients to potentially provide a clinically meaningful result and determine the efficacy and safety of fostamatinib in hospitalized COVID-19 patients.

On November 1, 2022, we announced the top-line results from the FOCUS Phase 3 clinical trial of fostamatinib in high risk hospitalized COVID-19 patents.

The trial approached but did not meet statistical significance (p=0.0603) in the primary efficacy endpoint of the number of days on oxygen through Day 29.

All prespecified secondary endpoints in the study numerically favored fostamatinib over placebo, including mortality, time to sustained recovery, change in ordinal scale assessment, and number of days in the ICU.

We are evaluating the opportunity and next steps in collaboration with our partner, the US Department of Defense.

In June 2021, we announced that fostamatinib has been selected for the NIH ACTIV-4 Host Tissue Trial in hospitalized patients with COVID-19.

The ACTIV-4 Host Tissue Trial, initiated and funded by NHLBI, is a randomized, placebo-controlled trial of therapies, including fostamatinib, targeting the host response to COVID-19 in hospitalized patients.

The ACTIV-4 Host Tissue Trial will evaluate fostamatinib in a targeted population of approximately 300 hospitalized patients with COVID-19.

During the year ended December 31, 2022, certain milestones were met which entitled Forma to receive a $17.5 million milestone payments.

No new milestone was met during the three months ended March 31, 2023.

For further discussions of the license and transition services agreement with Forma, see “Note 4 - Sponsored Research and License Agreements and Government Contract” to our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

R289, an Oral IRAK1/4 Inhibitor for Hematology-Oncology, Autoimmune, and Inflammatory Diseases

We continue to advance the development of our IRAK1/4 program, completing the evaluation of a new pro-drug formulation of R835, R289, in single-ascending and multiple ascending dose studies with positive safety results in 2021.

In January 2022, we received clearance from the FDA on our clinical trial design to explore R289 in low-risk myelodysplastic syndrome (MDS) .

The open-label, Phase 1b trial will determine the tolerability and preliminary efficacy of R289 in patients with low-risk MDS who are refractory or resistant to prior therapies.

In December 2022, we announced that we dosed the first patient in our Phase 1b trial of R289.

The Phase 1b trial of R289 is expected to enroll approximately 22 patients.

The primary objective of the trial is safety, with secondary and exploratory objectives to assess preliminary efficacy and characterize the pharmacokinetic and pharmacodynamic profile of R289.

The safety and efficacy data from this Phase 1b trial, along with the safety and pharmacokinetic/pharmacodynamic data from the completed first-in-human study in heathy volunteers, are intended to be used to determine the recommended Phase 2 dose for future clinical development of R289 targeting lower-risk MDS.

To date, we completed enrollment of the first cohort of the trial and enrollment of the second cohort is underway.

Global Strategic Partnership with Lilly

In February 2021, we entered into a global exclusive license agreement and strategic collaboration with Lilly (the Lilly Agreement), to develop and commercialize R552, a RIPK1 inhibitor, for the treatment of non-central nervous system (non-CNS) diseases.

In addition, the collaboration is aimed at developing additional RIPK1 inhibitors for the treatment of central nervous system (CNS) diseases.

Pursuant to the terms of the license agreement, we granted to Lilly the exclusive rights to develop and commercialize R552 and related RIPK1 inhibitors in all indications worldwide.

The parties’ collaboration is governed through a joint governance committee and appropriate subcommittees.

The agreement became effective in March 2021 upon clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

We are responsible for 20% of the development costs for R552 in the US, Europe, and Japan, up to a specified cap.

Lilly is continuing to advance R552, with an initial Phase 2a trial in active rheumatoid arthritis.

This initial Phase 2a trial in approximately 100 patients with moderately to severely active rheumatoid arthritis is anticipated to begin in the second quarter of 2023 and will involve global recruitment.

RIPK1 is implicated in a broad range of key inflammatory cellular processes and plays a key role in Tumor Necrosis Factor signaling, especially in the induction of pro-inflammatory necroptosis.

The program also includes RIPK1 compounds that cross the blood-brain barrier (CNS-

penetrants) to address neurodegenerative diseases such as Alzheimer’s disease and Amyotrophic Lateral Sclerosis.

The Phase 2a trial analysis is expected by the end of 2024.

Under the Lilly Agreement, we are responsible for 20% of the development costs for R552 in the US, Europe, and Japan, up to a specified cap.

Lilly is responsible for funding the remainder of all development activities for R552 and other non-CNS disease development candidates.

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If we exercise our first opt-out right (no later than September 30, 2023), we are required to fund our share of the R552 development activities in the US, Europe, and Japan up to a maximum funding commitment of $65.0 million through April 1, 2024.

Through March 31, 2023, Lilly billed us $15.9 million of the funding development costs and the amounts were fully paid as of March 31, 2023.

Under the Lilly Agreement, we were responsible for performing and funding initial discovery and identification of CNS disease development candidates, and following candidate selection, Lilly will be responsible for performing and funding all future development and commercialization of the CNS disease development candidates.

In June 2022, Lilly provided notice of continuance pursuant to the terms of the Lilly Agreement, whereby Lilly elected its option to lead the identification and selection of CNS penetrant lead candidate.

Under the terms of the license agreement, we were entitled to receive a non-refundable and non-creditable upfront cash payment amounting to $125.0 million, which we received in April 2021.

We are also entitled for additional milestone payments for non-CNS disease products consisting of up to $330.0 million in milestone payments upon the achievement of specified development, regulatory and commercial milestones, and up to $100.0 million in sales milestone payments on a product-by-product basis.

In addition, depending on the extent of our co-funding of R552 development activities, we would be entitled to receive tiered royalty payments on net sales of non-CNS disease products at percentages ranging from the mid-single digits to high-teens, subject to certain standard reductions and offsets.

We are also eligible to receive milestone payments for CNS disease products consisting of up to $255.0 million in milestone payments upon the achievement of specified development, regulatory and commercial milestones and up to $150.0 million in sales milestone payments on a product-by-product basis.

We would be entitled to receive tiered royalty payments on net sales of CNS disease products up to low-double digits, subject to certain standard reductions and offsets.

Lilly continues to advance R552, a RIPK1 inhibitor, with the initial Phase 2 study in an immunologic disease indication anticipated to begin in the first half of 2023.

RIPK1 is implicated in a broad range of key inflammatory cellular processes and plays a key role in Tumor Necrosis Factor (TNF) signaling, especially in the induction of pro-inflammatory necroptosis.

The program also includes RIPK1 compounds that cross the blood-brain barrier (CNS-penetrants) to address neurodegenerative diseases such as Alzheimer’s disease and Amyotrophic Lateral Sclerosis ( ALS).

Patent Infringement Lawsuit

In June 2022, we received a notice letter regarding an Abbreviated New Drug Application (ANDA) submitted to the FDA by Annora Pharma Private Limited (Annora), requesting approval to market a generic version of TAVALISSE.

On July 25, 2022, we filed a lawsuit in the United States District Court for the District of New Jersey against Annora and its subsidiaries for infringement of certain of our US patents.

For a more detailed discussion of this litigation matter, see “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q.

Fostamatinib in Hospitalized COVID-19 patients

In November 2022, we announced the top-line results from the FOCUS Phase 3 clinical trial to evaluate the safety and efficacy of fostamatinib in hospitalized COVID-19 patients without respiratory failure that have certain high-risk prognostic factors with 280 patients.

The trial had originally targeted a total of 308 patients;

The trial approached but did not meet statistical significance (p=0.0603) in the primary efficacy endpoint of the number of days on oxygen through Day 29.

We are evaluating the opportunity and discussing next steps with the FDA and in collaboration with our partner, the US Department of Defense.

The ACTIV-4 Host Tissue Trial is evaluating fostamatinib in a targeted population of approximately 600 hospitalized patients with COVID-19, 300 fostamatinib versus 300 placebo.

An interim analysis of the trial was completed by the Data and Safety Monitoring Board with a recommendation for the trial to continue.

Update on Current and Potential Future Impact of COVID-19 on our Business

We are continuing to monitor the impact of the evolving effects of the COVID-19 pandemic and have undertaken, and plan to continue to undertake, safety measures to keep our staff, patients, investigators and stockholders

safe and to help the communities where we live and work to reduce the number of people exposed to the virus .

Through our existing Crisis Management Team (CMT), we implemented and continue to monitor our business continuity plans to prevent or minimize business disruption and ensure the safety and well-being of our personnel.

Our CMT meets regularly to assess the effectiveness of our business continuity plans and make adjustments accordingly as COVID-19 continues to evolve.

We have a COVID-19 Headquarters Policy (Plan) in place to provide guidelines when working onsite.

We continue to evaluate the workplace for compliance with the local, state and federal guidance and may modify or update at any time to ensure the safety of our employees, contractors and visitors.

During the first quarter of 2022, we updated our Plan as we move towards a hybrid schedule, reinstituting more in-person interactions back into our business beginning April 2022.

We endeavor to provide the safest and most effective work environment under the circumstances, but we cannot guarantee that employees who come to the office will not be exposed to COVID-19 while at the office.

It will be the responsibility of all employees to participate and cooperate in safety and cleaning protocols.

We expect all employees, contractors, and visitors to our facility to comply with the Plan.

The ultimate impact of the COVID-19 pandemic on our business and financial condition is highly uncertain and subject to change, and as such, we cannot ascertain the full extent of the impacts on our sales of our products, our ability to continue to secure new collaborations and support existing collaboration efforts with our partners and our clinical and regulatory activities.

Periodic resurgence of COVID-19 cases negatively impacted and may continue to impact our ability to grow our product sales.

As COVID-19 cases surge, we have observed reduced patient-doctor interactions and our representatives are having fewer visits with health care providers.

We continue to maintain our virtual engagements and as we see the declining trend in number of COVID-19 cases, we expect to continue to increase the in-person engagements with health care providers.

We have plans in place to continue implementing both virtual and live initiatives to ensure we are able to meet the needs of health care providers as the pandemic continues to evolve.

With respect to our supply chain, we currently do not anticipate significant disruption in the supply chain for our commercial product.

However, we do not know the full extent of the impact on our supply chain if the COVID-19 pandemic continues and persists for an extended period of time .

See also the section titled “Risk Factors” in Item 1A of this Form 10-Q for additional information on risks and uncertainties related to the ongoing COVID-19 pandemic.

The COVID-19 pandemic has adversely impacted, and may continue to adversely impact, our business and operations.

The degree to which the COVID-19 pandemic may affect our business and operations and financial condition in the future will depend on developments that are highly uncertain and beyond our knowledge or control.

As such, we cannot ascertain the full extent of the future impacts it may have on our business.

We continue to monitor the effects of the COVID-19 pandemic and continues to undertake safety measures to keep our staff, patients, investigators and stockholders safe .

See also “Part I, Item 1A, Risk Factors” of this Quarterly Report on Form 10-Q for additional information on risks and uncertainties related to the ongoing COVID-19 pandemic.

Our Product Portfolio

The following table summarizes our portfolio:

Commercial Product

TAVALISSE in ITP

Commercial Products

TAVALISSE/Fostamatinib in ITP

Disease background.

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The primary efficacy endpoint of this program was a stable platelet response by week 24 with platelet counts at or above 50,000 per microliter of blood for at least four of the final six qualifying blood draws.

In August 2015, the FDA granted our request for Orphan Drug designation for fostamatinib for the treatment of ITP.

In August 2016, we announced the results of the first FIT study, reporting that fostamatinib met the study’s primary efficacy endpoint.

The study showed that 18% of patients receiving fostamatinib achieved a stable platelet response compared to none receiving a placebo control (p=0.0261).

The study showed that 18% of patients receiving fostamatinib achieved a stable platelet response compared to none receiving a placebo control.

In October 2016, we announced the results of the second FIT study, reporting that the response rate (16% in the treatment group, versus 4% in the placebo group) was consistent with the first study, although the difference was not statistically significant.

In the ITP double-blind studies, the most commonly-reported adverse reactions occurring in at least 5% of patients treated with TAVALISSE were diarrhea, hypertension, nausea, dizziness, increased alanine aminotransferase (ALT), increased aspartate aminotransferase (AST), respiratory infection, rash, abdominal pain, fatigue, chest pain, and neutropenia.

double-blind studies, the most commonly-reported adverse reactions occurring in at least 5% of patients treated with TAVALISSE were diarrhea, hypertension, nausea, dizziness, increased alanine aminotransferase, increased aspartate aminotransferase, respiratory infection, rash, abdominal pain, fatigue, chest pain, and neutropenia.

Serious adverse drug reactions occurring in at least 1% of patients treated with TAVALISSE in the ITP double-blind studies were febrile neutropenia, diarrhea, pneumonia, and hypertensive crisis.

TAVALISSE was approved by the FDA in April 2018 for the treatment of ITP in adult patients who have had an insufficient response to a previous treatment, and successfully launched in the US in May 2018.

In January 2020, the EC granted our Marketing Authorization Application (MAA) in Europe for fostamatinib (TAVLESSE) for the treatment of chronic ITP in adult patients who are refractory to other treatments.

In February 2020, Kissei Pharmaceutical Co., Ltd.

(Kissei) was granted orphan drug designation from the Japanese Ministry of Health, Labor and Welfare for R788 (fostamatinib) in chronic idiopathic thrombocytopenic purpura.

A post-hoc analysis from our Phase 3 clinical program in adult patients with chronic ITP, highlighting the potential benefit of using TAVALISSE in earlier lines of therapy, was published in the British Journal of Haematology in July 2020.

Inclusion in one of the leading peer-reviewed journals in the field of hematology underscores the significance of the 78% (25/32) response rate defined as at least one platelet count of at least 50,000/µL when TAVALISSE was used as a second-line therapy in our Phase 3 clinical program.

Adverse events were manageable and consistent with those previously reported with fostamatinib.

Our sales force is sharing this data with physicians.

Commercial activities, including sales and marketing

A significant portion of our business operations is related to our commercial activities for TAVALISSE.

Specifically, our marketing and sales efforts are focused on hematologists and hematologist-oncologists in the US who manage chronic adult ITP patients.

In addition, our collaborative partner Grifols has launched TAVLESSE in the UK, Germany, France, Italy, Spain, the Czech Republic and Norway and continues a phased rollout across the rest of Europe which is expected to include Denmark, Finland and Sweden.

We have a fully integrated commercial team consisting of sales, marketing, market access, and commercial operations functions.

Our sales team promotes TAVALISSE in the US using customary pharmaceutical company practices, and we concentrate our efforts on hematologists and hematologists-oncologists.

TAVALISSE is sold initially through third-party wholesale distribution and specialty pharmacy channels and group purchasing organizations before being ultimately prescribed to patients.

To facilitate our commercial activities in the US, we also enter into arrangements with various third parties, including advertising agencies, market research firms and other sales-support-related services as needed.

We believe that our commercial team and distribution practices are adequate to ensure that our marketing efforts reach relevant customers and deliver our products to patients in a timely and compliant fashion.

Also, to help ensure that all eligible patients in the US have appropriate access to TAVALISSE, we have established a reimbursement and patient support program called Rigel One Care (ROC).

Through ROC, we provide co-pay assistance to qualified, commercially insured patients to help minimize out-of-pocket costs and also provide free TAVALISSE to uninsured or under-insured patients who meet certain established clinical and financial eligibility criteria.

In addition, ROC is designed to provide reimbursement support, such as information related to prior authorizations, benefits investigations and appeals.

The FDA granted orphan drug designation for fostamatinib for the treatment of ITP in August 2015.

In January 2020, the EC granted our MAA in Europe for fostamatinib (TAVLESSE) for the treatment of chronic ITP in adult patients who are refractory to other treatments.

In December 2022, Japan’s PMDA approved the NDA for fostamatinib in chronic ITP.

Competitive landscape for TAVALISSE

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Fostamatinib is a potent and relatively selective SYK inhibitor, and its inhibition of Fc receptors and B-cell receptors of signaling pathways make it a potentially broad immunomodulatory agent.

Other products in the US that are approved by the FDA to increase platelet production through binding and TPO receptors on megakaryocyte precursors include PROMACTA ® (Novartis International AG (Novartis)), Nplate ® (Amgen, Inc.) and DOPTELET ® (Swedish Orphan Biovitrum AB).

In the longer term, we may eventually face competition from potential manufacturers of generic versions of our marketed products, including the proposed generic version of TAVALISSE that is the subject of an ANDA submitted to the FDA by Annora, which if approved, could result in significant decreases in the revenue derived from sale of TAVALISSE and thereby materially harm our business and financial condition.

Other products in the US that are approved by the FDA to increase platelet production through binding to TPO receptors on megakaryocyte precursors include PROMACTA ® (Novartis International AG (Novartis)), Nplate ® (Amgen, Inc.) and DOPTELET ® (Swedish Orphan Biovitrum AB).

In the longer term, we may eventually face competition from potential manufacturers of generic versions of our marketed products, including the proposed generic version of TAVALISSE that is the subject of an Abbreviated New Drug Application (ANDA) submitted to the FDA by Annora Pharma Private Limited (Annora), which, if approved and allowed to enter the market, it could result in significant decreases in the revenue derived from sale of TAVALISSE and thereby materially harm our business and financial condition.

Commercial activities, including sales and marketing

Our marketing and sales efforts are focused on hematologists and hematologist-oncologists in the US who manage chronic adult ITP patients.

We have a fully integrated commercial team consisting of sales, marketing, market access, and commercial operations functions.

Our sales team promotes our products in the US using customary

pharmaceutical company practices, and we concentrate our efforts on hematologists and hematologist-oncologists.

Our products are sold initially through third-party wholesale distribution and specialty pharmacy channels and group purchasing organizations before being ultimately prescribed to patients.

Also, to help ensure that all eligible patients in the US have appropriate access to our products, we have established a reimbursement and patient support program called Rigel OneCare (ROC).

Through ROC, we provide co-pay assistance to qualified, commercially insured patients to help minimize out-of-pocket costs and also provide free product to uninsured or under-insured patients who meet certain established clinical and financial eligibility criteria.

In addition, ROC is designed to provide reimbursement support, such as information related to prior authorizations, benefits investigations and appeals.

In addition, our collaborative partner Grifols has launched TAVLESSE in the UK and certain countries in Europe including Germany, France, Italy and Spain, and continues a phased rollout across the rest of Europe.

Our collaborative partner Medison has also launched TAVALISSE in Canada and Israel.

Further, our collaborative partner Kissei has also recently launched TAVALISSE in Japan.

Fostamatinib in Global Markets

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Fostamatinib in Europe/Turkey

In January 2019, we entered into an exclusive commercialization license agreement with Grifols to commercialize fostamatinib for the treatment, palliation, or prevention of human diseases, including chronic or persistent ITP and AIHA in Europe and Turkey.

Pursuant to the terms of the license agreement, Grifols has exclusive rights to commercialize, and non-exclusive rights to develop, fostamatinib in Europe and Turkey.

Grifols also received an exclusive option to expand the territory under its exclusive and non-exclusive licenses to include the Middle East, North Africa and Russia (including Commonwealth of Independent States).

In November 2020, Grifols exercised its option to include these territories under the agreement.

We have a commercialization license agreement with Grifols entered in January 2019, for an exclusive rights to commercialize fostamatinib for human diseases, including chronic ITP and AIHA, and non-exclusive rights to develop, fostamatinib in their territory.

Grifols territory includes Europe, the UK, Turkey, the Middle East, North Africa and Russia (including Commonwealth of Independent States).

We are responsible for performing and funding certain development activities for fostamatinib for ITP and AIHA and Grifols is responsible for all other development activities for fostamatinib in such territories.

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Under the terms of the agreement, we received an upfront cash payment of $30.0 million and will be eligible to receive regulatory and commercial milestones of up to $297.5 million.

In January 2020, the European Commission (EC) granted a MA 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 milestone payment, comprised of a $17.5 million payment due upon MAA approval by the EMA of fostamatinib for the first indication and a $2.5 million creditable advance royalty payment due upon EMA approval of fostamatinib in the first indication.

We will also receive tiered royalty payments ranging from the mid-teens to 30% of net sales of fostamatinib in Europe and Turkey.

In January 2020, the EC granted a MA 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 milestone payment, consisted of a $17.5 million payment due upon MAA approval by the EMA of fostamatinib for the first indication and a $2.5 million creditable advance royalty payment due upon EMA approval of fostamatinib in the first indication.

We are also entitled to receive stepped double-digit royalty payments based on tiered net sales which may reach 30% of net sales.

Fostamatinib in Japan/Asia

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.

We have an exclusive license and supply agreement with Kissei entered in October 2018, to develop and commercialize fostamatinib in all current and potential indications in Kissei’s territory which includes Japan, China, Taiwan and the Republic of Korea.

Kissei is a Japan-based pharmaceutical company addressing patients’ unmet medical needs through its research, development and commercialization efforts, as well as through collaborations with partners.

Under the terms of the agreement, we received an upfront cash payment of $33.0 million, with the potential for an additional $147.0 million in development and commercial milestone payments, and will receive product transfer price payments in the mid to upper twenty percent range based on tiered net sales for the exclusive supply of fostamatinib.

Kissei receives exclusive rights to fostamatinib in ITP and all future indications in Japan, China, Taiwan, and the Republic of Korea.

In September 2019, Kissei initiated a Phase 3 trial in Japan of fostamatinib in adult patients with chronic ITP.

The efficacy and safety of orally administered fostamatinib will be assessed by comparing it with placebo in a randomized, double-blind study.

Japan has the third highest prevalence of chronic ITP in the world behind the US and Europe.

Kissei receives exclusive rights to fostamatinib in ITP and all future indications in Kissei’s territory.

In September 2019, Kissei initiated a Phase 3 trial in Japan of fostamatinib in adult Japanese patients with chronic ITP.

The efficacy and safety of orally administered fostamatinib was assessed by comparing it with placebo in a randomized, double-blind study.

Japan has the third highest prevalence of chronic ITP in the world behind the US and

In February 2020, Kissei was granted orphan drug designation from the Japanese Ministry of Health, Labor and Welfare for R788 (fostamatinib) in chronic ITP.

In December 2021, Kissei reported positive top-line results for a Phase 3 clinical trial of fostamatinib in adult Japanese patients with chronic ITP, meeting its primary endpoint.

The Phase 3 clinical study showed that patients receiving fostamatinib achieved a stable platelet response significantly higher than patients receiving a placebo control.

A stable platelet response was defined as achieving greater than or equal to 50,000 platelets per μL of blood on at least four of the last six scheduled visits between weeks 14 and 24 of treatment.

Based on the positive Phase 3 results, in April 2022, Kissei has submitted an NDA to Japan’s Pharmaceuticals and Medical Devices Agency for fostamatinib in chronic ITP.

With this milestone event, during the second quarter of 2022, we received $5.0 million non-refundable and non-creditable payment from Kissei based on the terms of our collaboration agreement, and such amount was recognized as revenue in the second quarter of 2022.

In December 2021, Kissei reported positive top-line results for a Phase 3 clinical trial, meeting its primary endpoint.

The Phase 3 clinical trial showed that patients receiving fostamatinib achieved a stable platelet response significantly higher than patients receiving a placebo control.

Based on the positive Phase 3 results, in April 2022, Kissei submitted an NDA to Japan’s PMDA for fostamatinib in chronic ITP.

With this milestone event, we received $5.0 million non-refundable and non-creditable payment from Kissei and recognized the amount as revenue in the second quarter of 2022.

In December 2022, Japan’s PMDA approved TAVALISSE for the treatment of chronic ITP.

With this milestone event, we were entitled to receive $20.0 million non-refundable and non-creditable payment from Kissei based on the terms of our collaboration agreement, and such amount was recognized as revenue in the fourth quarter of 2022.

The amount was subsequently collected in January 2023.

In April 2023, Kissei announced the commercial launch of TAVALISSE for chronic ITP in Japan.

Fostamatinib in Canada/Israel

In October 2019, we entered into exclusive commercial and license agreements with Medison to commercialize fostamatinib in all potential indications in Canada and Israel.

We have an exclusive commercial and license agreements with Medison entered in October 2019, to commercialize fostamatinib in all potential indications in Canada and Israel.

Under the terms of the agreements, we received an upfront payment of $5.0 million with the potential for approximately $35.0 million in regulatory and commercial milestones.

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In November 2020, Health Canada approved the New Drug Submission for TAVALISSE for the treatment of thrombocytopenia in adult patients with chronic ITP who have had an insufficient response to other treatments.

In August 2021, Medison Israel received the licenses for registrational approval from the Ministry of Health, which triggered the first milestone that is the regulatory approval of the product in Israel for the first indication, for a non-refundable payment of $0.1 million.

In August 2021, Medison Israel received the licenses for registrational approval from the Ministry of Health, which event entitled us to receive $0.1 million of non-refundable milestone payment.

In November 2022, Medison Israel made its first commercial sale of TAVALISSE.

Fostamatinib in Latin America

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We are also responsible for the exclusive manufacture and supply of fostamatinib for all future development and commercialization activities under a Commercial and Supply Agreement.

In-licensed Program

Olutasidenib in AML and Other Malignancies

REZLIDHIA in R/R AML with mIDH1

Disease background.

mIDH1 alterations are seen in AML, glioma, chondrosarcoma, and intrahepatic cholangiocarcinoma.

It is estimated that there are approximately 1,000 adult patients, a well-identified patient population, with mIDH1 R/R AML, part of an AML market estimated to have an incidence of 20,000 cases in the US and estimated 120,000 cases globally.

Despite having approved treatment options for R/R AML patients who are mIDH1 positive, an unmet need remains.

Olutasidenib may represent a treatment option with durable remissions, reduced QTc potential, and a stable pharmacokinetics profile that enables a consistent drug exposure over time.

In July 2022, we entered into a license and transition agreement with Forma for an exclusive license to develop, manufacture and commercialize olutasidenib, Forma’s proprietary inhibitor of mIDH1, for any uses worldwide, including for the treatment of R/R AML and other malignancies.

Olutasidenib is an oral, small molecule investigational drug designed to selectively bind to and inhibit mIDH1.

Olutasidenib is an oral, small molecule drug designed to selectively bind to and inhibit mIDH1.

This targeted agent has the potential to provide therapeutic benefit by reducing 2-hydroxyglutarate levels and restoring normal cellular differentiation.

I socitrate dehydrogenase-1 ( IDH1) is a natural enzyme that is part of the normal metabolism of all cells.

IDH1 is a natural enzyme that is part of the normal metabolism of all cells.

When mutated, IDH1 activity can promote blood malignancies and solid tumors.

mIDH1 alterations are seen in AML, glioma, chondrosarcoma, and intrahepatic cholangiocarcinoma.

It is estimated that the US prevalence for AML is approximately 20,000 cases and global incidence for AML is approximately 120,000 cases, with approximately 6% to 9% linked to mIDH1.

Despite having approved treatment options for R/R AML patients who are mIDH1 positive, an unmet need remains.

Olutasidenib may represent a treatment option with reduced QTc potential, a more favorable drug-drug interaction profile (allowing for co-medication) and a stable pharmacokinetics (PK) profile that enables a consistent drug exposure over time.

Interim results from Forma’s Phase 2 registrational trial for olutasidenib in mIDH1 R/R AML were reported at the American Society of Clinical Oncology (ASCO) annual meeting in June 2021.

The results of this study of 153 patients showed that olutasidenib demonstrated a favorable tolerability profile as a monotherapy in patients with R/R

AML who have a susceptible mIDH1, and achieved a composite complete remission (CR), or CR plus CR with partial hematologic recovery (CRh) rate of 33.3% (30% CR and 3% CRh), the primary efficacy endpoint.

While a median duration of CR/CRh has not yet been reached, a sensitivity analysis (with a hematopoietic stem cell transplant, or HCST, as the end of a response) indicates the median duration of CR/CRh to be 13.8 months.

Orally available olutasidenib program.

REZLIDHIA (olutasidenib) is an oral, small molecule, inhibitor of mIDH1 designed to bind to and inhibit mIDH1 to reduce 2-hydroxyglutarate levels and restore normal cellular differentiation of myeloid cells.

REZLIDHIA is a novel, non-intensive monotherapy treatment in the R/R AML setting demonstrating a CR+CRh rate of 35% in patients with over 90% of those responders in complete remission.

The safety of REZLIDHIA 150 mg administered twice daily was evaluated in 153 adults with relapsed or refractory AML with an IDH1 mutation.

On December 1, 2022, the FDA has approved REZLIDHIA capsules for the treatment of adult patients with R/R AML with IDH1 mutation as detected by an FDA approved test.

On December 22, 2022, we began the commercialization of REZLIDHIA and made it available to patients.

The recommended dosage of REZLIDHIA is 150 mg taken orally twice daily until disease progression or unacceptable toxicity.

The FDA approval was based on the NDA for olutasidenib for the treatment of m1DH1 R/R AML submitted by Forma, that had a PDUFA action date for the application of February 15, 2023.

The NDA application was supported with Forma’s Phase 2 registrational trial for olutasidenib in mIDH1 R/R AML.

Interim results from Forma’s Phase 2 registrational trial were reported at the American Society of Clinical Oncology (ASCO) annual meeting in June 2021.

The interim results of this trial of 153 patients showed that olutasidenib demonstrated a favorable tolerability profile as a monotherapy in patients with R/R AML who have a susceptible mIDH1, and achieved a composite complete remission (CR), or CR plus CR with partial hematologic recovery (CRh) rate of 33.3% (30% CR and 3% CRh), the primary efficacy endpoint.

While a median duration of CR/CRh was not yet reached, a sensitivity analysis (with a hematopoietic stem cell transplant, or HCST, as the end of a response) indicated the median duration of CR/CRh was 13.8 months .

The overall response rate, comprised CR, CRh, CRi, partial response, and morphologic leukemia-free state (MLFS), was 46% and the median duration of ORR was 11.7 months.

The median overall survival (OS) was 10.5 months.

For patients with CR/CRh, the median OS was not yet reached, but the estimated 18-month survival is 87%.

The median overall survival was 10.5 months.

For patients with CR/CRh, the median overall survival was not reached, but the estimated 18-month survival was 87%.

The most frequently reported treatment emergent adverse events were nausea, constipation, increased white blood cell count, decreased RBC count, pyrexia, febrile neutropenia, and fatigue.

Grade 3/4 adverse events occurring in greater than 10% of patients, regardless of causality, were febrile neutropenia (20%), decreased red blood cell count (19%), decreased platelet count (16%), and decreased neutrophil count (13%).

Grade 3/4 laboratory liver abnormalities reported in 19 (12%) patients led to treatment discontinuation in seven (4%) patients.

The preferred terms of these laboratory liver abnormalities were alanine aminotransferase increased, aspartate aminotransferase increased, biliary tract disorder, blood bilirubin increased, cholangitis, cholestasis, hepatitis acute, hepatic enzymes increased, liver function test abnormal, liver function test increased, and transaminases increased.

Investigator-assessed IDH1 differentiation syndrome (all Grades) was observed in 21 (14%) patients, which led to treatment discontinuation in three patients and was fatal in one patient.

Subsequently, Forma presented the first Phase 2 results of olutasidenib used in combination with azacitidine, including safety/tolerability data, at the American Society of Hematology (ASH) Annual Meeting in December 2021.

Based on the results of its Phase 2 trial, Forma has submitted an NDA for olutasidenib for the treatment of m1DH1 R/R AML to the FDA and the PDUFA action date for the application is February 15, 2023.

On November 3, 2022, we announced the upcoming presentation of five posters highlighting data from our commercial and clinical hematology-oncology portfolio at the 64 th ASH Annual Meeting and Exposition that will be held in December 2022.

An updated interim analysis from a Phase 2 registrational study of olutasidenib in patients with R/R AML demonstrated robust efficacy and safety results.

The registrational cohort of the Phase 2 study enrolled 153 patients with mIDH1 R/R AML who received olutasidenib monotherapy 150 mg twice daily.

Olutasidenib was designated by the FDA as an orphan drug for the treatment of acute myeloid leukemia in April 2017.

On November 3, 2022, we announced the presentation of five posters highlighting data from our commercial and clinical hematology-oncology portfolio at the 64 th ASH Annual Meeting and Exposition which was held in December 2022.

An updated interim analysis from the Phase 2 registrational trial of olutasidenib in patients with R/R AML demonstrated robust efficacy and safety results.

The registrational cohort of the Phase 2 trial enrolled 153 patients with mIDH1 R/R AML who received olutasidenib monotherapy 150 mg twice daily.

The efficacy evaluable population was 147 patients who received their first dose at least six months prior to the interim analysis cutoff date of June 18, 2021.

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In this pivotal cohort, olutasidenib was well tolerated with an adverse event profile largely characteristic of symptoms or conditions experienced by patients undergoing treatment for AML or of the underlying disease itself.

We plan to pursue strategic actions to further develop olutasidenib for the treatment of other malignancies and its potential commercialization.

On November 10, 2022, we announced the publication of data in The Lancet Haematology, which summarizes the Phase 1 results of the Phase 1/2 trial of olutasidenib .

The objectives of the first phase of the multi-center, open-label Phase 1/2 trial were to assess the safety, pharmacokinetic and pharmacodynamic profile, and clinical activity of olutasidenib, both as monotherapy and in combination with azacitidine, in patients with treatment-naïve or R/R AML or myelodysplastic syndrome (MDS) harboring IDH1 mutations.

The published data suggest that olutasidenib, with or without azacitidine, was well-tolerated and was associated with improvements in clinical efficacy endpoints in patients with mIDH1 AML.

This trial showed that olutasidenib has the potential to provide an additional treatment option for mIDH1 AML.

In January 2023, we announced that REZLIDHIA has been added by the National Comprehensive Cancer Network (NCCN) to the latest NCCN Clinical Practice Guidelines in Oncology (NCCN Guidelines) for AML.

REZLIDHIA is now included as a recommended targeted therapy for adult patients with R/R AML with IDH1 mutation.

In February 2023, we announced peer-reviewed publication data in Blood Advances , which summarize clinical results from the Phase 2 registrational trial of REZLIDHIA in patients with mIDH1 R/R AML.

The published data demonstrate that REZLIDHIA induced durable remissions and transfusion independence with a well-characterized safety profile.

The observed efficacy is clinically meaningful and represents a therapeutic advance in this poor prognosis patient population with limited treatment options.

REZLIDHIA demonstrated both a high rate of response and an extended median duration of complete response of 28.1 months, which is more than a year longer than what is reported with the Standard of Care (SoC).

We plan to pursue strategic actions to further develop olutasidenib for the treatment of other malignancies and expansion of commercialization.

Competitive landscape for REZLIDHIA

There is currently one other product approved in the US for patients with IDH1 mutation.

The FDA granted approval to TIBSOVO ® (ivosidenib), an oral targeted IDH1 mutation inhibitor, (i) in July 2018, for adult patients with R/R AML with a susceptible IDH1 mutation, (ii) in May 2019, for newly diagnosed AML with a susceptible IDH1 mutation who are at least 75 years old or who have comorbidities that preclude use of intensive induction chemotherapy, (iii) in August 2021, for adult patients with previously treated, locally advanced or metastatic cholangiocarcinoma with an IDH1 mutation as detected by an FDA-approved test, and (iv) in May 2022, in combination with azacitidine (azacitidine for injection) for newly diagnosed AML with a susceptible IDH1 mutation, as detected by an FDA-approved test in adults 75 years or older, or who have comorbidities that preclude use of intensive induction chemotherapy.

In addition, some clinicians may utilize non-targeted treatments for patients with mIDH1 R/R AML, including use of venetoclax combinations, hypomethylating agents, other chemotherapy regimens, or investigational agents that may be available to them.

Commercial activities, including sales and marketing

REZLIDHIA is highly synergistic with our existing hematology-oncology focused commercial and medical affairs infrastructure.

Our commercial efforts will focus on targeting h ematologists and hematologist-oncologists who manage patients with R/R AML with mIDH1.

We plan to enter collaborations with third parties to commercialize REZLIDHIA outside of US.

Clinical Stage Programs

Fostamatinib in wAIHA

Disease background .

A utoimmune hemolytic anemia is a rare, serious blood disorder where the immune system produces antibodies that result in the destruction of the body’s own red blood cells.

Symptoms can include fatigue, shortness of breath, rapid heartbeat, jaundice or enlarged spleen.

While no medical treatments are currently approved for AIHA, physicians generally treat acute and chronic cases of the disorder with corticosteroids, other immuno-suppressants, or splenectomy.

Research has shown that inhibiting SYK with fostamatinib may reduce the destruction of red blood cells.

AIHA affects an estimated 45,000 Americans, and approximately 36,000 of those patients have wAIHA, where no approved treatment options currently exist.

Orally-available fostamatinib program .

We completed our Phase 2 clinical trial, also known as the SOAR study, in patients with wAIHA.

This trial was an open-label, multi-center, two-stage study that evaluated the efficacy and safety of fostamatinib in patients with wAIHA who had previously received treatment for the disorder but have

The primary efficacy endpoint of this study was to achieve increased hemoglobin levels by week 12 of greater than 10 g/dL, and greater than or equal to 2 g/dL higher than baseline.

In November 2019, we announced updated data that in a Phase 2 open-label study of fostamatinib in patients with wAIHA, data showed that 44% (11/25) of evaluable patients met the primary efficacy endpoint of a Hgb level >10 g/dL with an increase of ≥2 g/dL from baseline by week 24.

Including one late responder at week 30, the overall response rate was 48% (12/25).

Adverse events were manageable and consistent with those previously reported with fostamatinib.

In February 2022, the American Journal of Hematology published the data from our Phase 2 clinical trial of fostamatinib in adults with wAIHA who have failed at least one prior treatment.

The published data demonstrate that fostamatinib rapidly and durably increased hemoglobin (Hgb) levels, with clinically meaningful Hgb responses observed in nearly half of the patients, and a safety and tolerability profile consistent with the existing fostamatinib safety database of patients across multiple disease programs studied.

In January 2021, we announced that the FDA had granted Fast Track designation to fostamatinib for the treatment of wAIHA.

The FDA previously granted fostamatinib Orphan Drug designation for the treatment of wAIHA in January 2018.

In March 2019, we initiated our wAIHA pivotal Phase 3 clinical study of fostamatinib, known as the FORWARD study.

The clinical trial protocol calls for a placebo-controlled study of 90 patients with primary or secondary wAIHA who have failed at least one prior treatment.

The primary endpoint is a durable Hgb response, defined as Hgb >10 g/dL and >2 g/dL increase from baseline and durability measure, with the response not being attributed to rescue therapy.

In November 2020, we reached an agreement with the FDA on the durable response measure for the primary efficacy endpoint of the study as well as the inclusion of additional secondary endpoints.

In November 2021, we completed the enrollment of this study.

In April 2022, we completed the treatment period for the last patient under the study .

I n June 2022, we announced top-line efficacy and safety data from the FORWARD study with 90 patients.

Patients were randomized 1:1 to receive fostamatinib or matching placebo twice daily for 24 weeks.

The primary efficacy endpoint of Hgb response was defined as achieving a Hgb ≥10 g/dL with an increase from baseline ≥2 g/dL on three consecutive available visits during the 24-week treatment period.

The trial did not demonstrate statistical significance in the primary efficacy endpoint of durable hemoglobin response in the overall study population.

The trial also included key secondary endpoints, including hemoglobin response on at least one visit, change in Hgb from baseline of ≥2 g/dL, use of permitted rescue therapy after week 4, change in Hgb from baseline to end of treatment and change from baseline to week 24 in FACIT-F scale.

Across the trial's overall patient population, fostamatinib was generally well-tolerated.

The safety profile of the product was consistent with prior clinical experience and no new safety issues were discovered.

The most common adverse events (≥10%) with fostamatinib and placebo were diarrhea (26.7% and 6.7%), hypertension (24.4% and 17.8%), fatigue (15.6% and 11.1%), pyrexia (13.3% and 6.7%), nausea (13.3% and 8.9%), and dyspnea (13.3% and 11.1%).

Treatment-related serious adverse events were 6.7% (3/45) for fostamatinib and 4.4% (2/45) for placebo.

There were five deaths on the study (2 with fostamatinib and 3 with placebo), all of which were determined to be unrelated to study drug.

The safety results were consistent with the overall safety profile data collected to date, which includes more than 5,000 patients across multiple diseases.

We conducted an in-depth analysis of these data to better understand differences in patient characteristics and outcomes and submitted these findings to the FDA.

In October 2022, we announced that we received guidance from the FDA’s review of these findings.

Based on this guidance, we do not expect to file an sNDA for this indication at this time.

We will continue to explore our options for the wAIHA program in relation to our complete portfolio of development opportunities.

Of the 90 patients that completed the FORWARD Phase 3 study, 71 (79%) enrolled in the open-label extension study.

We plan on closing this study in 2023.

R289, an Oral IRAK1/4 Inhibitor for Hematology-Oncology, Autoimmune, and Inflammatory Diseases

Orally Available IRAK 1/4 Inhibitor Program.

During the second quarter of 2018, we selected R835, the active metabolite of R289, a proprietary molecule from our IRAK 1/4 preclinical development program, for human clinical trials.

This investigational candidate is an orally administered, potent and selective inhibitor of IRAK1 and IRAK4 that blocks inflammatory cytokine production in response to toll-like receptor (TLR) and the interleukin-1 receptor (IL-1R) family signaling.

TLRs and IL-1Rs play a critical role in the innate immune response and dysregulation of these pathways can lead to a variety of inflammatory conditions.

R835 prevents cytokine release in response to TLR and IL-1R activation in vitro.

R835 is active in multiple rodent models of inflammatory disease including psoriasis, arthritis, lupus, multiple sclerosis and gout.

Preclinical studies show that R835 inhibits both the IRAK1 and IRAK4 signaling pathways, which play a key role in inflammation and immune responses to tissue damage.

Dual inhibition of IRAK1 and IRAK4 allows for more complete suppression of pro-inflammatory cytokine release than inhibition of either one individually.

In October 2019, we announced results from a Phase 1 clinical trial of R835 in healthy subjects to assess safety, tolerability, pharmacokinetics (PK) and pharmacodynamics.

The Phase 1 trial was a randomized, placebo-controlled, double-blind trial in 91 healthy subjects, ages 18 to 55.

The Phase 1 trial showed positive tolerability and PK data as well as established proof-of-mechanism by demonstrating the inhibition of inflammatory cytokine production in response to a lipopolysaccharide (LPS) challenge.

In January 2022, we received clearance from the FDA on our clinical trial design to explore R289 in low-risk MDS.

The open-label, Phase 1b trial will determine the tolerability and preliminary efficacy of R289 in patients with low-risk MDS who are refractory or resistant to prior therapies.

In December 2022, we announced that we dosed the first patient in our Phase 1b trial of R289.

The Phase 1b trial of R289 is expected to enroll approximately 22 patients.

The primary objective of the trial is safety, with secondary and exploratory objectives to assess preliminary efficacy and characterize the pharmacokinetic and pharmacodynamic profile of R289.

To date, we completed enrollment of the first cohort of the trial and enrollment of the second cohort is underway.

Fostamatinib in Hospitalized COVID-19 Patients

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SYK is involved in the intracellular signaling pathways of many different immune cells.

Therefore, SYK inhibition may improve outcomes in patients with COVID-19 via inhibition of key Fc gamma receptor (FcγR) and c-type lectin receptor (CLR) mediated drivers of pathology such as inflammatory cytokine release by monocytes and macrophages, production of NETs by neutrophils, and platelet aggregation.

Therefore, SYK inhibition may improve outcomes in patients with COVID-19 via inhibition of key Fc gamma receptor and c-type lectin receptor mediated drivers of pathology, such as inflammatory cytokine release by monocytes and macrophages, production of NETs by neutrophils, and platelet aggregation.

Furthermore, SYK inhibition in neutrophils and platelets may lead to decreased thromboinflammation, alleviating organ dysfunction in critically ill patients with COVID-19.

Rigel-led Phase 3 Trial.

In November 2020, we launched a Phase 3 clinical trial to evaluate the safety and efficacy of fostamatinib in hospitalized COVID-19 patients without respiratory failure that have certain high-risk prognostic factors.

In November 2020, we launched our FOCUS Phase 3 clinical trial to evaluate the safety and efficacy of fostamatinib in hospitalized COVID-19 patients without respiratory failure that have certain high-risk prognostic factors.

In January 2021, we were awarded $16.5 million from the US Department of Defense’s Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense (JPEO-CBRND) to support this Phase 3 clinical trial.

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In December 2021, we expanded the inclusion criteria to include patients with more severe disease (NIAID Ordinal Scale 6) to more accurately reflect the clinically predominant patient population hospitalized with COVID-19 and help speed enrollment .

In collaboration with the FDA and Department of Defense, we also updated the primary endpoint for the study from progression to severe disease within 29 days, to the number of days on oxygen through day 29.

In collaboration with the FDA and Department of Defense, we also updated the primary endpoint for the trial from progression to severe disease within 29 days, to the number of days on oxygen through day 29.

This endpoint allows for closer comparison of the results with earlier results from the NIH/NHLBI Phase 2 clinical trial with fostamatinib and various other NIH-sponsored trials, such as the ACTIV-4 Host Tissue Trial, which uses a similar outcome measure as a primary endpoint.

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On November 1, 2022, we announced the top-line results of the FOCUS Phase 3 clinical trial of fostamatinib in high risk hospitalized COVID-19 patents.

On November 1, 2022, we announced the top-line results of the FOCUS trial.

The trial approached but did not meet statistical significance (p=0.0603) in the primary efficacy endpoint of the number of days on oxygen through Day 29.

We are evaluating the opportunity and next steps in collaboration with our partner, the US Department of Defense.

All prespecified secondary endpoints in the trial numerically favored fostamatinib over placebo, including mortality, time to sustained recovery, change in ordinal scale assessment, and number of days in the ICU.

We are evaluating the opportunity and discussing next steps with the FDA and in collaboration with our partner, the US Department of Defense.

NIH/NHLBI-sponsored Phase 2 Trial.

In September 2020, we announced a Phase 2 clinical trial sponsored by the NIH/NHLBI to evaluate the safety of fostamatinib for the treatment of hospitalized COVID-19 patients.

This multi-center, double-blind, placebo-controlled study randomly assigned fostamatinib or matched placebo (1:1) to 59 evaluable patients.

This multi-center, double-blind, placebo-controlled trial randomly assigned fostamatinib or matched placebo (1:1) to 59 evaluable patients.

Treatment was administered orally twice daily for 14 days, and a follow-up period to day 60.

The primary endpoint of this study was cumulative incidence of Serious Adverse Events (SAEs) through day 29.

The primary endpoint of this trial was cumulative incidence of Serious Adverse Events (SAEs) through day 29.

The trial also included multiple secondary endpoints designed to assess the early efficacy and clinically relevant endpoints of disease course.

The study completed the enrollment in March 2021.

The trial completed the enrollment in March 2021.

In April 2021, we announced that the Phase 2 clinical trial met its primary endpoint of safety.

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The master protocol for this study was designed to be flexible in the number of study arms, the use of a single placebo group, and the stopping and adding of new therapies.

Eligible participants will include patients hospitalized for COVID-19 with laboratory-confirmed SARS-CoV-2 infection on oxygen therapy.

The master protocol for this trial was designed to be flexible in the number of study arms, the use of a single placebo group, and the stopping and adding of new therapies.

Eligible participants include patients hospitalized for COVID-19 with laboratory-confirmed SARS-CoV-2 infection and a new need for oxygen therapy.

The primary outcome is oxygen-free days through day 28.

Secondary outcomes include hospital mortality, use of mechanical ventilation, and severity of disease as measured by World Health Organization (WHO) scale scores.

Secondary outcomes include 28-day hospital mortality, use of mechanical ventilation, and severity of disease as measured by World Health Organization (WHO) scale scores.

The ACTIV-4 Host Tissue Trial is evaluating fostamatinib in a targeted population of approximately 600 hospitalized patients with COVID-19, 300 fostamatinib versus 300 placebo.

An interim analysis of the trial was completed by the Data and Safety Monitoring Board with a recommendation for the trial to continue.

Imperial College of London Phase 2 Trial.

In July 2020, we announced a Phase 2 clinical trial sponsored by Imperial College of London to evaluate the efficacy of fostamatinib for the treatment of COVID-19 pneumonia.

This is a two-stage, open label, controlled clinical trial with patients randomized (1:1:1) to fostamatinib plus SOC, ruxolitinib plus SOC, or standard of care alone.

This is a two-stage, open label, controlled clinical trial with patients randomized (1:1:1) to fostamatinib plus SoC, ruxolitinib plus SoC, or SoC alone.

Treatment was administered twice daily for 14 days and patients receive a follow-up assessment at day 14 and day 28 after the first dose.

The primary endpoint of this study is progression from mild to severe COVID-19 pneumonia within 14 days in hospitalized patients (WHO COVID-19 Severity Scale 3-4).

The primary endpoint of this trial is progression from mild to severe COVID-19 pneumonia within 14 days in hospitalized patients (WHO COVID-19 Severity Scale 3-4).

In April 2022, Imperial College of London completed a pre-planned interim analysis of the primary endpoint, patients progressing from mild or moderate (modified WHO COVID-19 scale 3-4) to severe disease (modified WHO COVID-19 scale ≥5) within 14 days, in the Phase 2 MATIS trial.

The independent data monitoring committee determined that the fostamatinib plus standard of care arm did not meet the prespecified criteria for continuation to the next stage of the study.

The independent data monitoring committee determined that the fostamatinib plus SoC arm did not meet the prespecified criteria for continuation to the next stage of the trial.

No safety concerns were identified.

The study remains blinded and Imperial College of London plans to share results with us and scientific community once the trial is complete.

The trial remains blinded and Imperial College of London plans to share results with us and scientific community once the trial is complete.

Other Publications.

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The research was focused on drug repurposing for the much lower risk of toxicity and the ability of FDA-approved treatments to be delivered on a shortened timescale, which is critical for patients afflicted with lung disease resulting from COVID-19.

In addition, the in vitro studies led by the Amsterdam University Medical Center at the University of Amsterdam, showed that R406, the active metabolite of fostamatinib, blocked macrophage hyperinflammatory responses to a combination of immune complexes formed by anti-Spike IgG in serum from severe COVID-19 patients.

to a combination of immune complexes formed by anti-Spike IgG in serum from severe COVID-19 patients.

Anti-Spike IgG levels are known to correlate with the severity of COVID-19.

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These data provide insights for how fostamatinib may mitigate neutrophil-associated mechanisms contributing to COVID-19 immunopathogenesis.

R289, an Oral IRAK1/4 Inhibitor for Autoimmune, Inflammatory and Hematology-Oncology Diseases

Orally Available IRAK 1/4 Inhibitor Program.

During the second quarter of 2018, we selected R835, the active metabolite of R289 , a proprietary molecule from our IRAK 1/4 preclinical development program, for human clinical trials.

TLRs and IL-1Rs play a critical role in the innate immune response and dysregulation of these pathways can lead to a variety of inflammatory conditions including psoriasis, rheumatoid arthritis, inflammatory bowel disease and gout (among others).

R835 prevents cytokine release in response to TLR and IL-1R activation in vitro.

R835 is active in multiple rodent models of inflammatory disease including psoriasis, arthritis, lupus, multiple sclerosis and gout.

Preclinical studies show that R835 inhibits both the IRAK1 and IRAK4 signaling pathways, which play a key role in inflammation and immune responses to tissue damage.

Dual inhibition of IRAK1 and IRAK4 allows for more complete suppression of pro-inflammatory cytokine release.

In October 2019, we announced results from a Phase 1 clinical trial of R835 in healthy subjects to assess safety, tolerability, protein kinase (PK) and pharmacodynamics.

The Phase 1 study was a randomized, placebo-controlled, double-blind trial in 91 healthy subjects, ages 18 to 55.

In January 2022, we received clearance from the FDA on our clinical trial design to explore R289 in low-risk myelodysplastic syndromes (MDS).

The open-label, Phase 1b study will determine the tolerability and preliminary efficacy of R289 in patients with low-risk MDS who are relapsed, refractory/resistant, intolerant or have inadequate response to prior therapies such as erythropoietin, TPO, luspatercept, or hypomethylating agents (HMAs) for MDS.

We are also exploring indications in rare immune diseases.

Fostamatinib in wAIHA

Disease background .

A utoimmune hemolytic anemia is a rare, serious blood disorder where the immune system produces antibodies that result in the destruction of the body’s own red blood cells.

Symptoms can include fatigue, shortness of breath, rapid heartbeat, jaundice or enlarged spleen.

While no medical treatments are currently approved for AIHA, physicians generally treat acute and chronic cases of the disorder with corticosteroids, other immuno-suppressants, or splenectomy.

Research has shown that inhibiting SYK with fostamatinib may reduce the destruction of red blood cells.

AIHA affects an estimated 45,000 Americans, and approximately 36,000 of those patients have wAIHA, where no approved treatment options currently exist.

Orally available fostamatinib program .

We completed our Phase 2 clinical trial, also known as the SOAR study, in patients with wAIHA.

The primary efficacy endpoint of this study was to achieve increased hemoglobin levels by week 12 of greater than 10 g/dL, and greater than or equal to 2 g/dL higher than baseline.

In November 2019, we announced updated data that in a Phase 2 open-label study of fostamatinib in patients with wAIHA, data showed that 44% (11/25) of evaluable patients met the primary efficacy endpoint of a hemoglobin level >10 g/dL with an increase of ≥2 g/dL from baseline by week 24.

Including one late responder at week 30, the overall response rate was 48% (12/25).

Adverse events were manageable and consistent with those previously reported with fostamatinib.

In February 2022, the American Journal of Hematology published the data from our Phase 2 clinical trial of fostamatinib in adults with wAIHA who have failed at least one prior treatment.

The published data demonstrate that fostamatinib rapidly and durably increased hemoglobin levels, with clinically meaningful hemoglobin responses observed in nearly half of the patients, and a safety and tolerability profile consistent with the existing fostamatinib safety database of patients across multiple disease programs studied.

In January 2021, we announced that the FDA had granted Fast Track designation to fostamatinib for the treatment of wAIHA.

The FDA granted orphan drug designation for fostamatinib for the treatment of wAIHA in January 2018.

In March 2019, we initiated our wAIHA pivotal Phase 3 clinical trial of fostamatinib, known as the FORWARD study.

The clinical trial protocol calls for a placebo-controlled study of 90 patients with primary or secondary wAIHA who have failed at least one prior treatment.

The primary endpoint is a durable hemoglobin response, defined as hemoglobin >10 g/dL and >2 g/dL increase from baseline and durability measure, with the response not being attributed to rescue therapy.

In November 2020, we reached an agreement with the FDA on the durable response measure for the primary efficacy endpoint of the trial as well as the inclusion of additional secondary endpoints.

In November 2021, we completed the enrollment of this study.

In April 2022, we completed the treatment period for the last patient under the trial .

I n June 2022, we announced top-line efficacy and safety data from the FORWARD study with 90 patients.

Patients were randomized 1:1 to receive fostamatinib or matching placebo twice daily for 24 weeks.

The primary efficacy endpoint of hemoglobin response was defined as achieving a hemoglobin ≥10 g/dL with an increase from baseline ≥2 g/dL on three consecutive available visits during the 24-week treatment period.

The trial did not demonstrate statistical significance in the primary efficacy endpoint of durable hemoglobin response in the overall study population.

The trial also included key secondary endpoints, including hemoglobin response on at least one visit, change in hemoglobin from baseline of ≥2 g/dL, use of permitted rescue therapy after week 4, change in hemoglobin from baseline to end of treatment and change from baseline to week 24 in Functional Assessment of Chronic Illness

Therapy – Fatigue scale.

Across the trial’s overall patient population, fostamatinib was generally well-tolerated.

The safety profile of the product was consistent with prior clinical experience and no new safety issues were discovered.

The most common adverse events (≥10%) with fostamatinib and placebo were diarrhea, hypertension, fatigue, pyrexia, nausea, and dyspnea.

Treatment-related SAEs were 6.7% (3/45) for fostamatinib and 4.4% (2/45) for placebo.

There were five deaths on the trial (2 with fostamatinib and 3 with placebo), all of which were determined to be unrelated to study drug.

The safety results were consistent with the overall safety profile data collected to date, which includes more than 5,000 patients across multiple diseases.

We conducted an in-depth analysis of these data to better understand differences in patient characteristics and outcomes and submitted these findings to the FDA.

In October 2022, we announced that we received guidance from the FDA’s review of these findings.

Based on the result of the trial and the guidance from the FDA, we did not file an sNDA for this indication.

Of the 90 patients that completed the FORWARD study, 71 (79%) enrolled in the open-label extension study.

We plan on closing this study in 2023.

Partnered Clinical Programs

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We have an exclusive, worldwide research, development and commercialization agreement with BerGenBio for our investigational AXL receptor tyrosine kinase inhibitor, BGB324/R428 (now referred to as bemcentinib).

In October 2022, BerGenBio announced the initiation of a Phase 1b/2a trial evaluating bemcentinib in combination with the current SoC, checkpoint inhibitor pembrolizumab and doublet chemotheraphy, for the treatment of first line non-small cell lung cancer patients harboring serine/threonine kinase 11 mutations.

In October 2022, BerGenBio announced the initiation of a Phase 1b/2a trial evaluating bemcentinib in combination with the current SoC, checkpoint inhibitor pembrolizumab and doublet chemotheraphy, for the treatment of first line non-small cell lung cancer (NSCLC) patients harboring serine/threonine kinase 11 mutations.

In February 2023, BerGenBio also announced positive data from Phase 2 trial of bemcentinib in combination with pembrolizumab in patients with second-line NSCLC.

The treatment with bemcentinib in combination with pembrolizumab demonstrated long survival benefit and sustained disease control, particularly in patients with AXL TPS > 5, substantiating the relevance of AXL as a target and bemcentinib’s selective inhibition capabilities in NSCLC.

In March 2023, BerGenBio announced its first patient dosed in Phase 1B/2A trial evaluating bemcentinib in first-line NSCLC patients harboring STK11 mutations.

The product is also being investigated in Phase 2 clinical trials in patients with AML and COVID-19.

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DS-3032 - Daiichi

DS-3032 is an investigational oral selective inhibitor of the murine double minute 2 (MDM2) protein investigated by Daiichi in three Phase 1 clinical trials for solid and hematological malignancies including AML, acute lymphocytic leukemia, chronic myeloid leukemia in blast phase, lymphoma and MDS.

Preliminary safety and efficacy data from a Phase 1 study of DS-3032 suggests that DS-3032 may be a promising treatment for hematological malignancies including R/R AML and high-risk MDS.

In September 2020, worldwide rights to DS-3032 (milademetan) were out-licensed from Daiichi to Rain Therapeutics Inc.

In July 2021, Rain announced that it initiated a Phase 3 study to evaluate the efficacy and safety of milademetan (RAIN-32) for the treatment of well-differentiated/dedifferentiated liposarcoma, a rare cancer originating from fat cells located in the soft tissues of the body.

In late 2021, Rain commenced its second clinical trial for RAIN-32 in patients with MDM2-amplified advance solid tumors.

In August 2022, Rain announced completion of enrollment of its Phase 3 study for milademetan in liposarcoma.

AZ-D0449 – AZ

We had an agreement with AZ for exclusive, worldwide rights to develop and commercialize our proprietary JAK inhibitor.

In preclinical studies, this molecule was shown to be a potent inhibitor of IL-13 and IL-4 signaling.

Inhibiting the IL-13 and IL-14 pathways could reduce the severity of inflammation and improve lung function by mechanisms associated with several hallmarks of asthma such as bronchoconstriction, mucus overproduction and airway remodeling.

In December 2021, AZ provided a notice of termination of the agreement effective April 19, 2022 and returned to us the full rights to our propriety JAK inhibitor.

Research/Preclinical Programs

We are conducting proprietary research in the broad disease areas of inflammation/immunology, immuno-oncology and cancers.

Within these disease areas, our researchers are investigating mechanisms of action of our clinical-stage compounds potentially revealing and expanding their clinical utility into novel indications or additional biological pathophysiology aspects of disease, as well as screening compounds against potential novel targets and optimizing those leads that appear to have the greatest potential.

DS-3032 is an investigational oral selective inhibitor of the MDM2 protein investigated by Daiichi in three Phase 1 clinical trials for solid and hematological malignancies including AML, acute lymphocytic leukemia, chronic myeloid leukemia in blast phase, lymphoma and MDS.

Preliminary safety and efficacy data from a Phase 1 trial of DS-3032 suggests that DS-3032 may be a promising treatment for hematological malignancies including R/R AML and high-risk MDS.

In September 2020, worldwide rights to DS-3032 (milademetan) were out-licensed from Daiichi to Rain Oncology Inc., formerly Rain Therapeutics Inc.

In July 2021, Rain announced that it initiated a Phase 3 trial to evaluate the efficacy and safety of milademetan (RAIN-32) for the treatment of well-differentiated/dedifferentiated liposarcoma, a rare cancer originating from fat cells located in the soft tissues of the body and in August 2022, Rain announced the completion of enrollment of its Phase 3 trial for milademetan in liposarcoma.

In late 2021, Rain commenced its second clinical trial for RAIN-32 in patients with MDM2-amplified advance solid tumors, and in November 2022, Rain provided an interim analysis of the trial which showed that the drug safety profile of milademetan is preliminary consistent with its prior Phase 1 trial.

Research, Preclinical and Clinical Development Programs

We have retained a selected team of experts in drug discovery and preclinical development to leverage our existing proprietary collection of inhibitors, small-molecule compound libraries and large database of associated phenotypic and biochemical assay results of therapeutic interest.

We maintain leading expertise on specific areas of operation such as inhibition of SYK, IRAK1/4, RIPK1 and mIDH1 kinases to assist clinical development and commercial affairs, as well as to expand and explore additional opportunities for such inhibitors in the clinical

Our preclinical operations involve collaborations with clinical research organizations, leading investigators from universities and research organizations around the world, and strategic collaborations with other pharmaceutical companies.

We have assembled a team of experts in drug development to design and implement clinical trials and to analyze the data derived from these trials.

The clinical development group possesses expertise in project management and regulatory affairs.

We work with external clinical research organizations with expertise in managing clinical trials, drug formulation, and the manufacture of clinical trial supplies to support our drug development efforts.

Commercialization and Sponsored Research and License Agreements

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Results of Operations

Three months ended September 30, 2022 and 2021

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

(in thousands)

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Total revenues

The following table summarizes the percentages of revenues from each of our customers who individually accounted for 10% or more (wherein * denotes less than 10%) of the total net product sales and revenues from collaborations:

Three Months Ended September 30,

Nine Months Ended September 30,

The following table summarizes the percentages of revenues from each of our customers who individually accounted for 10% or more of the total net product sales and revenues from collaborations:

Three Months Ended March 31,

McKesson Specialty Care Distribution Corporation

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ASD Healthcare and Oncology Supply

Net product sales during the periods presented pertained to sales of TAVALISSE in the US, net of chargebacks, discounts and fees, government and other rebates and returns.

For the three and nine months ended September 30, 2022, net product sales of TAVALISSE increased by 20% and 19%, respectively, compared to the same periods in 2021.

The increases were primarily driven by the increase in quantities sold mainly due to the recent sales force expansion and

increased in-person engagements, as well as the increase in price per bottle of TAVALISSE.

These increases were partially offset by the increase in revenue reserves mainly due to higher rebates on contracts we recently entered with certain PBMs, and higher government program rebates.

Net product sales pertained to sales of our products in the US, net of chargebacks, discounts and fees, government and other rebates and returns.

For the three months ended March 31, 2023, net product sales increased by 47% compared to the same period in 2022.

The increase was primarily driven by increased TAVALISSE net product sales and the current period net product sales from REZLIDHIA.

TAVALISSE net product sales increased by $6.1 million or 38% in the three months ended March 31, 2023 compared to the same period in 2022, primarily as a result of increased quantities sold and higher price per bottle, partially offset by increased revenue reserves mainly due to higher government and private payer rebates.

In the three months ended March 31, 2023, we recognized $1.5 million of net product sales from REZLIDHA.

We began our commercialization of REZLIDHIA in December 2022.

Our first quarter net sales are typically impacted by the first quarter reimbursement issues such as the resetting of co-pays and the Medicare donut hole.

Contract revenues from collaborations of $0.7 million in the three months ended September 30, 2022 were comprised primarily of revenue from Grifols related to the research and development services, delivery of fostmatinib and royalty revenue.

Contract revenues from collaborations in the three months ended September 30, 2021 were comprised of $2.4 million in revenue related to our license agreement with Lilly, $1.8 million in revenue related to a milestone payment under our collaboration agreement with Daiichi, $0.2 million in revenue related to the research and development services with Grifols and $0.1 million in revenue from milestone payment under our commercial and license agreement with Medison.

Contract revenues from collaborations in the nine months ended September 30, 2022 comprised of $7.6 million in revenue from Kissei related to a milestone payment and delivery of fostamatinib supply, $2.4 million in revenue from Grifols related the research and development services, delivery of fostamatinib supply and royalty revenue, $2.0 million in revenue related to our license agreement with Knight, and $0.5 million in revenue related to our license agreement with Lilly.

Contract revenues from collaborations in the nine months ended September 30, 2021 were comprised of $66.4 million revenue related to our license agreement with Lilly, $4.0 million revenue related to grant of non-exclusive license of a certain patent to an unrelated third-party company, $1.8 million in revenue related to the achievement of milestone under our collaboration agreement with Daiichi, $1.0 million revenue for the delivery of drug supply under our collaboration agreement with Grifols, $0.6 million in revenue related to the research and development services with Grifols and $0.1 million in revenue from milestone payment under our commercial and license agreement with Medison.

Government contract revenue was related to the income we recognized from the $16.5 million government award granted to us, pursuant to the agreement we entered in January 2021 with the US Department of Defense to support our ongoing Phase 3 clinical trial to evaluate the safety and efficacy of fostamatinib in hospitalized COVID-19 patients.

Through September 30, 2022, we recognized $13.0 million of revenue from this award and we expect to receive the remaining award of $3.5 million and will recognize as income throughout the period we conduct our clinical trial, when there is reasonable assurance that the conditions of the grant will be met, and the grant will be received.

Our potential future revenues may include product sales from TAVALISSE;

payments from our collaboration partners and from new collaboration partners with whom we enter into agreements in the future, if any;

and from existing government grants and any future grants we may be entitled to, if any;

the timing and amount of which is unknown at this time.

W e cannot currently fully forecast the extent of the impacts that the COVID-19 pandemic may have on our revenues.

Contract revenues from collaborations in the three months ended March 31, 2023 consisted primarily of revenue from Grifols related to the delivery of drug supplies of $1.6 million and royalty revenue of $0.7 million.

Contract revenues from collaborations in the three months ended March 31, 2022 consisted primarily of $0.2 million in revenue related to our license agreement with Lilly, and $0.3 million in revenue related to the research and development services with Grifols.

No government contract revenue was recognized in the three months ended March 31, 2023 and 2022.

Government contract revenue is primarily derived from income we recognize from the $16.5 million government award granted to us, pursuant to the agreement we entered in January 2021 with the US Department of Defense to support our

ongoing Phase 3 clinical trial to evaluate the safety and efficacy of fostamatinib in hospitalized COVID-19 patients.

Through March 31, 2023, we received $15.0 million of the awards which we recognized as revenue in the respective periods, with remaining $1.5 million awards available, subject to us meeting certain clinical trial events or milestones and approval by the US Department of Defense as specified in the agreement.

Our potential future revenues may include product sales, payments from our collaboration partners and from new collaboration partners with whom we enter into agreements in the future, if any, and from existing government grants and any future grants we may be entitled to, if any, the timing and amount of which is unknown at this time.

Our net product sales may be impacted by changes to the government program rebates and new private payer rebate contracts we entered or may enter in the future.

As of September 30, 2022, we had deferred revenues of $1.4 million, which we will recognize as revenue upon satisfaction of our remaining performance obligations under our respective collaboration agreements.

As of March 31, 2023, we had deferred revenues of $1.4 million, which we will recognize as revenue upon satisfaction of our remaining performance obligations under our respective collaboration agreements.

Cost of Product Sales

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

(in thousands)

Cost of product sales

The cost of product sales for the periods presented was related to our product, TAVALISSE, and sale of fostamatinib to our collaborative partners.

Prior to the FDA approval in May 2018, manufacturing and related costs were charged to research and development expense.

Therefore, these costs were not capitalized and as a result, are not fully reflected in the cost of product sales during the periods presented.

We expect we will continue to have a lower cost of product sales that excludes the cost of the active pharmaceutical ingredient (API) that was produced prior to FDA approval until we sell TAVALISSE that includes newly manufactured API.

We expect that this will be the case for the near-term and as a result, our cost of product sales will be less than we anticipate it will be in future periods.

As we produce TAVALISSE in the future, our inventory cost in the condensed balance sheet and cost of product sales will increase reflecting the full cost of manufacturing.

There were no material increases in our cost of product sales related to our sales of TAVALISSE in the US during the three and nine months ended September 30, 2022, compared to the same periods in 2021.

For the nine months ended September 30, 2022 compared to the same period in 2021, the increase in cost of product sales was primarily due to delivery of drug supply pursuant to our supply agreements during the second quarter of 2022 with our collaborative partners, Grifols and Kissei.

The cost of product sales includes the cost of inventories sold to specialty distributors and to our collaborative partners.

Inventories sold for the periods presented include inventory quantities acquired or produced prior to the FDA approval of the product, and do not reflect the full cost of the inventories sold, since such costs incurred prior to FDA approval were previously expensed and charged to research and development expense.

We expect to continue to have a lower cost of product sales as we sell inventory quantities that were acquired or produced prior to the FDA approval of the product, until we sell inventory quantities reflecting the full cost.

We expect that this will be the case in the near term, and as a result, our cost of product sales will be less than we anticipate it will be in future periods.

As we acquire or produce more FDA approved inventory quantities in the future, our inventory cost in the balance sheet and cost of product sales will increase, reflecting the full cost of acquiring or producing such products.

Further, following the approval of REZLIDHIA, we recognize amortization expense from capitalized intangible asset and royalty expense on REZLIDHIA sales within cost of sales.

The increase in cost of product sales in the three months ended March 31, 2023 compared to the same period in 2022 was partly due to amortization of capitalized intangible asset of $0.3 million and royalty expense of $0.2 million recorded within cost of sales in the three months ended March 31, 2023.

No such expenses were incurred in the same period in 2022.

Incrementally, cost of sales increased due to the increase in inventory quantities sold to our specialty distributors and delivery of drug supplies pursuant to our supply agreements with our collaborative partners.

Research and Development Expense

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

(in thousands)

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Stock-based compensation expense included in research and development expense

The decrease in research and development expense in the three months ended September 30, 2022 compared to the same period in 2021 was mainly due to lower research and development costs in our COVID-19 study of $1.8 million, lower research and development costs in our AIHA study of $0.9 million, and lower research and development costs in our IRAK1/4 inhibitor program of $1.2 million.

These decreases were primarily due to timing of activities related to such studies.

Further, personnel-related costs decreased by $0.8 million and other various research and development expenses including allocated facilities and laboratory costs decreased by $0.9 million, primarily as a result of the restructuring of our early-stage research department in November 2021.

These decreases were partially offset by the $2.0 million upfront payment to Forma recorded as acquired IPR&D included within research and development expense in the third quarter of 2022.

The decrease in research and development expense in the nine months ended September 30, 2022 compared to the same period in 2021 was mainly due to decrease in personnel-related costs of $3.5 million, and decrease in various research and development expenses including allocated facilities and laboratory costs of $3.4 million, primarily as a result of the restructuring as discussed above.

Further, research and development costs decreased by $3.8 million on our COVID-19 study, and $2.5 million on or AIHA study, primarily due to timing of activities related to such studies.

These decreases were partially offset by the increase of research and development in our IRAK 1/4 inhibitor program of $3.0 million, upfront payment to Forma of $2.0 million as discussed above, and increase in consulting and third-party services of $1.2 million.

Stock-based compensation expense included within research and development in the three months ended March 31, 2023 include an incremental charge of approximately $0.5 million from stock option modifications related to the acceleration of vesting and extension of exercise period of vested stock option grants made to a former officer whose employment ended in March 2023.

The decrease in research and development expense in three months ended March 31, 2023 compared to the same period in 2022 was mainly due to the winding down of activities related to our two Phase 3 clinical trials of fostamatinib for the treatment of hospitalized high-risk patients with COVID-19 of $2.5 million and evaluating fostamatinib for the treatment of w AIHA of $1.3 million, as well as timing of activities related to our IRAK 1/4 inhibitor

program of $1.4 million.

In addition, personnel-related costs decreased by $0.4 million, and other research and development expenses including allocated facilities and laboratory costs decreased by $0.4 million.

These decreases were partially offset by higher stock-based compensation expense of $0.6 million primarily due to stock option modifications as discussed above.

Our research and development expenditures include costs related to preclinical and clinical trials, scientific personnel, supplies, equipment, consultants, sponsored research, stock-based compensation, allocated facility costs, and upfront payment related to our in-licensed agreement with Forma.

W e expect to continue to incur significant research and development expense as we continue our activities in our clinical studies including COVID-19 and IRAK 1/4 inhibitor program.

In July 2022, we completed the enrollment of the FOCUS Phase 3 clinical trial of fostamatinib for the treatment of hospitalized high-risk patients with COVID-19 and on November 1, 2022, we announced the top-line results of the clinical trial.

The trial approached but did not meet statistical significance in the primary efficacy endpoint.

We are evaluating the opportunity and next steps in collaboration with our partner, the US Department of Defense.

W e expect to continue to incur significant research and development expense as we continue our activities in our clinical studies including our IRAK 1/4 inhibitor program.

We are evaluating the opportunity and discussing next steps with the FDA and in collaboration with our partner, the US Department of Defense.

Our Phase 3 clinical trial for hospitalized COVID-19 patients is partially funded by the award granted to us by the US Department of Defense as discussed above.

Our P hase 3 wAIHA study has completed enrollment in November 2021 and completed the treatment period for the last patient in April 2022.

In June 2022, we announced that the top-line results from the trial did not demonstrate statistical significance in the primary efficacy endpoint of durable hemoglobin response in the overall study population.

We conducted an in-depth analysis of these data to better understand differences in patient characteristics and outcomes and submitted these findings to the FDA.

In October 2022, we announced that we received guidance from the FDA’s review of these findings.

Based on this guidance, we do not expect to file an sNDA for this indication at this time.

We will continue to explore our options for the wAIHA program in relation to our complete portfolio of development opportunities.

Following our agreement with Forma to acquire exclusive license to develop, manufacture and commercialize olutasidenib, we recorded the upfront payment of $2.0 million as IPR&D, and included such amount within research and development expense in the three and nine months ended September 30, 2022.

As specified in the agreement, Forma is entitled to receive future potential development and regulatory milestones.

As we incur such milestone payment obligations in the future, we will record such amounts within research and development expenses if such milestone payment obligations are incurred at development stage or prior to a regulatory approval.

Further, we may incur research and development costs as we continue to pursue strategic actions to further develop olutasidenib for the treatment of other malignancies.

In November 2021, we exited our early-stage research to focus our resources on our mid to late-stage development programs and our commercialization efforts.

In October 2022, we announced further reduction in our workforce resulting to elimination of certain positions primarily in development as well as administration group.

We continue to expect cost savings on our research and development costs because of these reduction in workforce.

We believe that this strategy strengthens our ability to execute on near-term value drivers, such as growing ITP sales, expanding the addressable market for fostamatinib and olutasidenib, and advancing our other clinical trials.

Currently, we cannot fully forecast the scope of the evolving effects that the COVID-19 pandemic may have on our ability to continue to treat patients enrolled in our trials, enroll and assess new patients, supply study drug, obtain complete data points in accordance with the study protocol, and overall impact on, and timing of, clinical study results.

Our P hase 3 wAIHA study completed enrollment in November 2021, and in June 2022, we announced that the top-line results did not demonstrate statistical significance in the primary efficacy endpoint.

In October 2022, we announced that we received guidance from the FDA’s further review of these findings.

Based on the result of the trial and the guidance from FDA, we did not file an sNDA for this indication.

We do not track fully burdened research and development costs separately for each of our drug candidates.

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“Other” expenses primarily consist of allocated facilities costs and allocated stock-based compensation expense relating to personnel in research and development groups.

“Other” expenses also include the upfront payment to Forma recorded in the third quarter of 2022.

“Other” expenses also include the upfront payment to Forma and pre-regulatory approval milestone recorded as research and development expense in 2022.

In addition to reviewing the three categories of research and development expenses described in the preceding paragraph, we principally consider qualitative factors in making decisions regarding our research and development programs, which include enrollment in clinical trials and the results thereof, the clinical and commercial potential for our drug candidates and competitive dynamics.

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Clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory approval to commence a trial, delays from scale up, delays in reaching agreement on acceptable clinical trial agreement terms with prospective clinical sites, delays in obtaining institutional review board approval to conduct a clinical trial at a prospective clinical site or delays in recruiting subjects to participate in a clinical trial.

Further, the evolving effects of COVID-19 pandemic may affect our ability to continue to treat patients enrolled in our trials, enroll and assess new patients, supply study drug, obtain complete data points in accordance with the study protocol, and overall impact on, and timing of, clinical trial results.

We currently do not have reliable estimates of total costs for a particular drug candidate to reach the market.

Our potential products are subject to a lengthy and uncertain regulatory process that may involve unanticipated additional clinical trials and may not result in receipt of the necessary regulatory approvals.

Failure to receive the necessary regulatory approvals would prevent us from commercializing the product candidates affected.

In addition, clinical trials of our potential products may fail to demonstrate safety and efficacy, which could prevent or significantly

delay regulatory approval.

Failure to receive the

necessary regulatory approvals would prevent us from commercializing the product candidates affected.

In addition, clinical trials of our potential products may fail to demonstrate safety and efficacy, which could prevent or significantly delay regulatory approval.

The following table presents our total research and development expense by category (in thousands).

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

From January 1, 2007*

to September 30, 2022

to March 31, 2023

* We started tracking research and development expense by category on January 1, 2007.

“Other” expenses for the three and nine months ended September 30, 2022 consisted of allocated facilities costs of $1.2 million and $3.5 million, respectively, allocated stock-based compensation expense of $0.6 million and $1.5 million, respectively, and acquired IPR&D of $2.0 million related to our in-license agreement with Forma for each of the respective periods.

“Other” expenses for the three and nine months ended September 30, 2021 consisted of allocated facilities cost of $1.5 million and $4.5 million, respectively, and allocated stock-based compensation expense of $0.4 million and $1.5 million, respectively.

For the three and nine months ended September 30, 2022 and 2021, a major portion of our total research and development expense was associated with our COVID-19, AIHA and IRAK programs, personnel-related costs of our research and development personnel and allocated facilities costs.

“Other” expenses for the three months ended March 31, 2023 and 2022 consisted of allocated facilities costs of $0.6 million and $1.3 million, respectively, and stock-based compensation expense of $1.0 million and $0.5 million, respectively.

For the three months ended March 31, 2023, a major portion of our total research and development expense was associated with our IRAK program.

For the three months ended March 31, 2022, a major portion of our total research and development expense was associated with our COVID-19, AIHA and IRAK programs.

Selling, General and Administrative Expense

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

(in thousands)

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Stock-based compensation expense included in selling, general and administrative expense

Stock-based compensation expense for the nine months ended September 30, 2022 include an incremental charge of approximately $0.8 million recorded in the first quarter of 2022 as a result of stock option modification in March 2022 related to the extension of exercise period of the stock option grants made to two former Board of Directors whose terms expired in May 2022.

The increase in selling, general and administrative expense in the three months ended September 30, 2022 compared to the same period in 2021 was mainly due to the increase in personnel-related costs and recruitment fees of $1.6 million, increase in trainings, conferences and travel related costs of $0.7 million, increase in costs of commercial activities of $0.2 million, and increase in other various sales, general and administrative costs of $0.5 million.

The increase in selling, general and administrative expense in the nine months ended September 30, 2022 compared to the same period in 2021 was mainly due to the increase in personnel-related costs and recruitment fees of $5.9 million, increase in costs of commercial activities of $3.8 million, increase in trainings, conferences and travel related costs of $2.4 million, increase in stock-based compensation expense of $1.2 million primarily due to an incremental charge as discussed above, and increase in other various sales, general and administrative costs of $0.3 million.

These increases were partially offset by the decrease in our consulting and third-party services of $0.7 million.

We expect our selling, general and administrative expense for the remainder of 2022 to increase as we continue to expand our commercial activities, including the effect of the recent sales force expansion and prepare for the potential commercial launch of olutasidenib.

As discussed above, in October 2022, we announced a reduction in our workforce

resulting to elimination of certain positions in our administrative group.

We expect some cost savings on our general and administrative costs in the future because of such reduction in workforce.

In response to the limitations on in-person office visits during the ongoing COVID-19 pandemic, we continue to deploy resources to enable our field-based employees to continue to engage virtually with healthcare providers.

These virtual engagements have enabled our field team to support existing prescribers as well as partner with new prescribers to identify appropriate patients for our product.

However, we are not currently able to fully forecast the scope of impacts that the COVID-19 pandemic may have on our commercial activities and sales of our product.

Stock-based compensation expense included within selling, general and administrative in the three months ended March 31, 2022 include an incremental charge of approximately $0.8 million from stock option modifications to extend the exercise period of the stock option grants made to our two former Board of Directors whose terms expired in May 2022.

The increase in selling, general and administrative expense in the three months ended March 31, 2023 compared to the same period in 2022 was mainly due to increased expenses on consulting and third party services of $1.7 million, partially offset by lower stock-based compensation expense of $1.0 million primarily due to the stock option modifications as discussed above, and decreased other various sales, general and administrative costs of $0.4 million.

We expect our selling, general and administrative expenses to increase as we continue to expand our commercial activities of our products.

We expect some cost savings on our general and administrative costs in the future because of reduction in workforce in our administrative group in October 2022.

We continue to deploy resources to enable our field-based employees to engage with healthcare providers.

These engagements have enabled our field team to cover existing prescribers, as well as develop relationships with new prescribers to identify appropriate patients for our products.

However, due to the evolving effects of COVID-19 pandemic, we may not be able to fully forecast the scope of impacts it may have on our commercial activities and sales of our product.

Interest Income and Interest Expense

Three Months Ended September 30,

September 30,

(in thousands)

Three Months Ended March 31,

(in thousands)

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Interest expense

Interest income is primarily related to our interest-bearing cash and investment balances.

Interest expense is comprised primarily of interest on the outstanding term loan with MidCap and interest accreted on the outstanding financing liability associated with the license agreements with Lilly and Medison.

The decrease in interest expense in the three and nine months ended September 30, 2022, compared with the same periods in 2021, were mainly due to the timing of accretion of interest on the outstanding financing liability.

During the three and nine months ended September 30, 2022, no interest and $0.7 million interest, respectively, was recognized on the outstanding financing liability, compared to $0.9 million and $2.3 million, for the three and nine months ended September 30, 2021, respectively.

The decrease in interest expense as discussed above were partially offset by higher interest on our term loan with MidCap due to the increase in the outstanding term loan balance.

In February 2022, we accessed additional $10.0 million term loan (Tranche 3), and in July 2022, we accessed additional $10.0 million term loan (Tranche 4) from our credit facility with MidCap.

Provision for Income Taxes

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Provision for (benefit from) income taxes

For the three and nine months ended September 30, 2022, we did not recognize provision for income taxes due to our pre-tax book loss as we continue to record a full valuation allowance on our deferred tax assets considering our cumulative losses in prior years and forecasted losses in the future.

The benefit from and the provision for income tax for the three and nine months ended September 30, 2021 were determined using our effective tax rate on our year-to-date income (loss).

We estimated a state tax liability over our pre-tax income (loss) for 2021, which was primarily due to revenue recognized for the Lilly Agreement.

We did not estimate a provision for federal income taxes due to the sufficient net operating loss carryforwards that were generated prior to enactment of the Tax Cuts and Jobs Act, as well as our ability to utilize significant research and development credit carryforwards

Interest income is related to our interest-bearing cash and investment balances.

Interest expense for the periods presented comprised primarily of interest on the outstanding term loan with MidCap.

Interest expense on our term loan with Midcap increased by approximately $0.7 million in the three months ended March 31, 2023, compared to the same period in 2022, primarily due to the increase in the outstanding term loan balance, as well as higher interest rate.

This increase was offset by the interest expense recognized in the three months ended March 31, 2022 related to the accretion of financing liability with Lilly amounting to $0.7 million.

Critical Accounting Policies and Use of Estimates

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Our significant accounting policies are described in “Note 1 – Description of Business and Summary of Significant Accounting Policies” to our “Notes to Financial Statements” contained in “Part II, Item 8, Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2022.

There have been no material changes to these accounting policies except for our accounting associated with our in-license agreement with Forma as discussed in detail in “Note 4 - Sponsored Research and License Agreements and Government Contract” to our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

There have been no material changes to these accounting policies.

Recent Accounting Pronouncements

No new accounting guidance adopted during the period.

No new accounting guidance was adopted during the period.

Recently issued accounting guidance is not applicable or did not have, or is not expected to have, a material impact to us.

Liquidity and Capital Resources

As of September 30, 2022, we had approximately $81.6 million in cash, cash equivalents and short-term investments, as compared to approximately $125.0 million as of December 31, 2021.

We continue to maintain investment portfolios primarily in money market funds, US treasury bills, government-sponsored enterprise securities, and corporate bonds and commercial paper.

As of March 31, 2023 and December 31, 2022, we had approximately $58.7 million and $58.2 million, respectively, in cash, cash equivalents and short-term investments.

We continue to maintain investment portfolios primarily in money market funds, government-sponsored enterprise securities, and corporate bonds and commercial paper.

Cash in excess of immediate requirements is invested with regard to liquidity and capital preservation.

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We continue to monitor the impact of the changes in the conditions of the credit and financial markets to our investment portfolio and assess if future changes in our investment strategy are necessary.

We maintain a depository relationship with SVB.

On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver.

On March 12, 2023, federal regulators announced that the FDIC would complete its resolution of SVB in a manner that fully protects all depositors.

On March 27, 2023, FCB announced that it entered into an agreement with FDIC to purchase all of the asset and

liabilities of SVB.

Customers of SVB automatically become customers of FCB following the acquisition.

To date and as of March 31, 2023, the amount of our cash held on deposit with SVB/FVB was not material with respect our total cash, cash equivalents and short-term investments.

All of our cash deposits with SVB/FCB are accessible to us, and we do not anticipate any losses with respect to such funds.

Following summarizes our cash flow activity for the periods presented:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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Net increase in cash and cash equivalents

Net cash used in operating activities for the nine months ended September 30, 2022 was primarily related to payments for our research and development programs and other operating expenses, partially offset by the proceeds from sales of TAVALISSE, and the timing of cash receipt from our collaboration partners and cash grant from the US Department of Defense.

Net cash provided by operating activities for the nine months ended September 30, 2021 was primarily due to the cash received from Lilly for the portion allocated as net transaction price of $67.1 million, proceeds from sales of TAVALISSE, and timing of cash receipt from our collaboration partners and cash grant from the US Department of Defense.

These increases were partially offset by payments of our research and development programs and other operating expenses.

Net cash provided by investing activities for the nine months ended September 30, 2022 comprises net maturities of short-term investments of $54.0 million and proceeds from disposal of assets of $0.5 million, partially offset by capital expenditures of $0.4 million.

Net cash used in investing activities for the nine months ended September 30, 2021 comprises net purchases of short-term investments of $85.9 million and capital expenditures of $0.6 million.

Net cash provided by financing activities for the nine months ended September 30, 2022 was primarily due to the net cash proceeds from term loan financing (Tranche 3 and 4) of $19.5 million and proceeds from exercises of stock options and participation in the Purchase Plan of $1.5 million, partially offset by our payment of cost share to Lilly of $12.4 million.

N et cash provided by financing activities for the nine months ended September 30, 2021 was primarily due to the cash received from Lilly for the portion allocated as financing component amounting to $57.9 million, and proceeds from exercise of stock options and participation in the Purchase Plan of $3.7 million.

We believe that our existing capital resources will be sufficient to support our current and projected funding requirements, including the continued commercialization of TAVALISSE as well as the potential commercial launch of olutasidenib, through at least the next 12 months from the Form 10-Q filing date.

Net cash used in operating activities for the three months ended March 31, 2023 was primarily related to payments for our operating expenses, partially offset by the proceeds from sales of our products (TAVALISSE and REZLIDHIA), and the timing of cash receipt from our collaboration partners, including the $20.0 million regulatory milestone payment from Kissei received in January 2023.

Net cash used in operating activities for the three months ended March 31, 2022 was primarily related to payments for our operating expenses, partially offset by the proceeds from sales of our product (TAVALISSE), cash received from collaboration partners, and cash received from the award granted by the US Department of Defense.

Net cash provided by investing activities for the three months ended March 31, 2023 comprises maturities of short-term investments of $15.7 million and proceeds from sale of property and equipment of $0.1 million, partially offset by the payment of milestone obligations to Forma recorded as intangible assets of $15.0 million.

Net cash provided by investing activities for the three months ended March 31, 2022 comprises net maturities of short-term investments of $22.9 million, partially offset by purchases of property and equipment of $0.2 million.

Net cash provided by financing activities for the three months ended March 31, 2023 was primarily due to the net cash proceeds from term loan financing (Tranche 5) of $20.0 million, partially offset by our cost share payments to Lilly of $0.8 million.

Net cash provided by financing activities for the three months ended March 31, 2022 was primarily due to the net cash proceeds from term loan financing (Tranche 3) of $10.0 million and proceeds from exercise of stock options of $0.9 million, partially offset by our payment of cost share to Lilly of $2.1 million.

We believe that our existing capital resources will be sufficient to support our current and projected funding requirements, including the continued commercialization of our products, through at least the next 12 months from the Form 10-Q filing date.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.

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Capital Resources

Since inception, we have financed our operations primarily through sales of equity securities, debt financing, from sales of TAVALISSE beginning in May 2018, and contract payments under our collaboration agreements.

Since inception, we have financed our operations primarily through sales of equity securities, debt financing, from sales of our products, and contract payments under our collaboration agreements.

Under our existing collaboration agreements that we entered 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.

As of September 30, 2022, total future contingent payments to us under our existing agreements, excluding terminated agreements, could exceed $1.3 billion if all potential product candidates achieved all of the payment triggering events under all of our current agreements.

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.

As of March 31, 2023, total future contingent payments to us under our existing agreements, excluding terminated agreements, could exceed $1.3 billion if all potential product candidates achieved all of the payment triggering events under all of our current agreements.

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.

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Under the agreement with the US Department of Defense, we are entitled to receive such award based on the agreed-upon payment schedule, subject to submission of proper documentation as evidence of completion of certain clinical trial events or milestones as specified in the agreement, and approval by the US Department of Defense that such events or milestones have been met.

Through September 30, 2022, we recognized $13.0 million in revenue from this award and expect to receive the remaining awards of $3.5 million throughout the period of which we conduct our clinical trial, subject to us meeting certain clinical trial events or milestones and approval by the US Department of Defense as specified in the agreement.

In August 2020, we entered into an Open Market Sale Agreement SM with Jefferies LLC, as a sole agent, pursuant to which we may sell from time to time, through Jefferies, shares of our common stock in sales deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act, subject to conditions specified in the Open Market Sale Agreement, including maintaining an effective registration statement covering the sale of shares under the Open Market Sale Agreement.

In April 2021, the registration statement registering the sale of shares under the Open Market Sale Agreement expired.

From the time of implementation of the Open Market Sale Agreement through expiration of the registration statement, no sales of shares occurred.

On August 3, 2021, we filed a new automatic shelf registration statement as a qualified well-known seasoned issuer (WKSI), such term as defined in Rule 405 of the Securities Act.

The automatic shelf registration statement was filed to register, among other securities, the sale of up to a maximum aggregate offering price of $100.0 million of shares of our common stock that may be issued and sold from time to time under the Open Market Sale Agreement;

and a base prospectus which covers the offering, issuance, and sale by us of the securities identified from time to time in one or more offerings .

On March 1, 2022, we filed a post-

effective amendment to the automatic shelf registration statement immediately after filing our Annual Report on Form 10-K for the year ended December 31, 2021, because we no longer qualified as a WKSI upon filing of such Annual Report.

The post-effective amendment was declared effective on May 3, 2022.

The post-effective amendment registers, among other securities, a base prospectus which covers the offering, issuance, and sale by us of up to $250.0 million in the aggregate of the securities identified from time to time in one or more offerings, which include the $100.0 million of shares of our common stock that may be offered, issued and sold under the Open Market Sale Agreement.

We have a Credit Agreement with MidCap entered in September 2019, and subsequently amended in March 2021, February 2022 and July 27, 2022.

The Credit Agreement provides for $60.0 million term loan credit facility.

As of September 30, 2022, we have a principal term loan outstanding with MidCap amounting to $40.0 million and the facility gives us the ability to access an additional $20.0 million at our option through March 31, 2023, subject to the achievement of certain customary conditions.

We have a sublease agreement originally entered in December 2014, and subsequently amended in February 2017 and July 2017, with an unrelated third party to occupy a portion of our research and office space which expire in January 2023.

As of September 30, 2022, we expect to receive approximately $1.6 million in future sublease income (excluding our subtenant’s share of facility’s operating expenses) through January 2023.

Our operations will require significant additional funding for the foreseeable future.

Unless and until we are able to generate a sufficient amount of product, royalty or milestone revenue, we expect to opportunistically finance future cash needs through public and/or private offerings of equity securities, debt financings and/or collaboration and licensing arrangements, and to a much lesser extent through the proceeds from exercise of stock options and interest income earned on the investment of our excess cash balances and short-term investments.

However, the COVID-19 pandemic continues to rapidly evolve and has already resulted in a significant disruption of global financial markets.

Our ability to raise additional capital may be adversely impacted by potential worsening of global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the US and worldwide resulting from the pandemic.

If the disruption persists and deepens, we could experience an inability to access additional capital, which could in the future negatively affect our capacity for certain corporate development transactions or our ability to make important, opportunistic investments.

In addition, any additional capital we raise by issuing equity securities, our stockholders could at that time experience substantial dilution.

Our current credit facility with MidCap and any debt financing that we are able to obtain in the future may involve operating covenants that may restrict our business.

In August 2020, we entered into an Open Market Sale Agreement with Jefferies LLC (Jefferies), as a sole agent, pursuant to which we may sell from time to time, through Jefferies, shares of our common stock in sales deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act, subject to conditions specified in the Open Market Sale Agreement, including maintaining an effective registration statement covering the sale of shares under the Open Market Sale Agreement.

We have a shelf registration statement filed with the SEC that was declared effective on May 3, 2022, which registered, among other securities, a base prospectus which covers the offering, issuance, and sale by us of up to $250.0 million in the aggregate of the securities identified from time to time in one or more offerings, which include the $100.0 million of shares of our common stock that may be offered, issued and sold under the Open Market Sale Agreement.

As of March 31, 2023, we have not sold any shares of common stock under such Open Market Sale Agreement.

We have a Credit Agreement with MidCap entered in September 2019, and subsequently amended in March 2021 (First Amendment), in February 2022 (Second Amendment) and in July 2022 (Third Amendment).

The Credit Agreement provides for $60.0 million term loan credit facility, which was fully funded as of March 31, 2023.

To date, no remaining funds are available for draw under the term loan credit facility with Midcap.

Our operations will require significant additional funding in the foreseeable future.

Unless and until we can generate sufficient cash from our operating activities, we may choose to raise additional funds through public and/or private offerings of equity securities, debt financings, or from other sources.

However, certain external factors such as COVID-19, conflicts in Russia and Ukraine, political and economic legislations, and other factors may continue to rapidly evolve which could significantly disrupt the global financial markets.

Our ability to raise additional funds may be adversely impacted by potential worsening of global economic conditions and volatility in the credit and financial markets in the US and worldwide.

We could experience an inability to access additional funds, which could in the future negatively affect our capacity for certain corporate development transactions or our ability to make important, opportunistic investments.

To the extent that we raise additional funds through the sale of equity, our shareholders’ ownership interest may experience substantial dilution .

Our current credit facility with MidCap and any debt financing that we can obtain in the future may involve operating covenants that may restrict our business.

To the extent that we raise additional funds through collaboration and licensing arrangements, we may be required to relinquish some of our rights to our technologies or product candidates or grant licenses on terms that are not favorable to us.

Our future funding requirements will depend upon many factors, including, but not limited to:

● the ongoing costs to commercialize TAVALISSE for the treatment of ITP in the US, or any other future product candidates, if any such candidate receives regulatory approval for commercial sale;

● the ongoing costs to commercialize our products, or any other future product candidates, if any such candidate receives regulatory approval for commercial sale;

● our ability to generate expected revenue from our commercialization efforts;

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Material Cash Requirements

We conduct our commercial activities and research and development programs internally and through third parties that include, among others, arrangements with vendors, consultants, contract research organizations (CRO) and universities.

We have contractual arrangements with these parties, however our contracts with them are cancelable generally on reasonable notice within one year and our obligations under these contracts are primarily based on services performed.

We do not have any purchase commitments under any collaboration arrangements.

We have agreements with certain clinical research organizations to conduct our clinical trials and with third parties relative to our commercialization of TAVALISSE.

We have agreements with certain clinical research organizations to conduct our clinical trials and with third parties relative to our commercialization of our products.

The timing of payments for any amounts owed under the respective agreements will depend on various factors including, but not limited to, patient enrollment and other progress of the clinical trial and various activities related to commercial launch.

We expect we will continue to enter into contracts in the normal course of business with various third parties who support our clinical trials, support our preclinical research studies, and provide other services related to our operating purposes as well as our commercial launch of TAVALISSE.

We can terminate these agreements at any time, and if terminated, we would not be liable for the full amount of the respective agreements.

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As discussed in detail in “Note 4 – Sponsored Research and License Agreements and Government Contract” of our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, pursuant to our global exclusive license agreement and strategic collaboration agreement with Lilly, we are responsible for funding the development costs for R552 in the US, Europe, and Japan, up to $65.0 million through April 1, 2024.

Through September 30, 2022, Lilly billed us $12.4 million of the funding development costs and the amounts were fully paid as of September 30, 2022.

Through March 31, 2023, Lilly billed us $15.9 million of the funding development costs and the amounts were fully paid as of March 31, 2023.

We have the right to opt-out of co-funding of development costs at two different specified times.

If we decide not to exercise our opt-out rights, we will be required to share in global development costs up to certain amounts at a specified cap, as set forth in the agreement.

Pursuant to such agreement, we paid Forma an upfront fee of $2.0 million, with potential for an additional development and regulatory milestone payments of up to $67.5 million, commercial milestone payments of up to $165.5 million, and tiered royalty payments.

As of September 30, 2022, no milestone payment was met.

In October 2022, a regulatory milestone was met which entitles Forma to receive a $2.5 million milestone payment.

As of September 30, 2022, we have a contractual commitment related to our facilities lease which will expire in January 2023 amounting to $3.5 million.

This amount excludes the expected sublease income as discussed above.

As discussed in “Note 12 – Subsequent Events” of our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, o n October 28, 2022, we entered into a sublease agreement with Atara to sublease approximately 13,670 rentable square feet of office space located in South San Francisco, California.

Subject to the terms of the sublease agreement, the lease term shall commence no sooner than November 1, 2022 and shall expire on May 24, 2025.

The future lease payments associated with this sublease agreement are approximately $1.7 million.

We expect this new leased facility will be held as our new headquarters following the expiration of our current leased facility

in South San Francisco, California in January 2023.

Additionally, as discussed in detail in “Note 4 – Sponsored Research and License Agreements and Government Contract” of our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, pursuant to our license and transition services agreement with Forma entered in July 2022, Forma is entitled to potential development and regulatory milestone payments of up to $67.5 million, commercial milestone payments of up to $165.5 million, and tiered royalty payments.

As of December 31, 2022, certain milestones were met which entitled Forma to receive $17.5 million milestone payments, of which, $2.5 million was paid in the fourth quarter of 2022 and $15.0 million was paid in the first quarter of 2023.

No new milestone was met during the three months ended March 31, 2023.

As of March 31, 2023, we have a contractual commitment related to our leased facilities of $1.6 million, with approximately $0.7 million payable within 12 months.

See “Note 10 – Leases” to our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussions of our leases.

As discussed above, we have a contractual commitment with respect to our credit facility with MidCap.

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A final payment fee of 2.5% of principal is due at maturity date of the term loans.

As of September 30, 2022, the outstanding principal amount of the loan was $40.0 million, and no principal payments are due within 12 months.

We are also obligated to pay annual administrative fees and a final fee due at maturity.

Future interest and final fee payments associated with the credit facility amounted to $9.6 million, with approximately $3.0 million is payable within 12 months.

As of March 31, 2023, the outstanding principal amount of the loan was $60.0 million, and no principal payments are due within 12 months.

We are also obligated to pay annual administrative fees.

As of March 31, 2023, future interest calculated using the base interest rate as per the Credit Agreement, and the final fee payments associated with the credit facility amounted to $12.8 million, with approximately $4.4 million payable within 12 months.

We are also subject to claims related to the patent protection of certain of our technologies, as well as purported securities class action lawsuit, other litigations, and other contractual agreements.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis