What changed in this filing

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Item 1. Financial Statements

2023-08-01 compared with 2023-05-02 · 146 added, 129 removed, 387 unchanged (42% of the section changed)

3 unchanged sentences

(In thousands)

March 31, 2023

June 30, 2023

December 31, 2022 (1)

37 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Product sales, net

Contract revenues from collaborations

Government contract

Total revenues

13 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Other comprehensive gain (loss):

16 unchanged sentences

( 1,395,995 )

Net change in unrealized gain on short-term investments

Issuance of common stock upon exercise of options and participation in Purchase Plan

Issuance of common stock upon vesting of RSUs

Stock-based compensation expense

Balance as of June 30, 2023

( 1,402,595 )

Accumulated Other

1 unchanged sentence

Stockholders’

Equity (Deficit)

Balance as of January 1, 2022

6 unchanged sentences

( 1,351,331 )

Net unrealized loss on short-term investments

Issuance of common stock upon exercise of options and participation in Purchase Plan

Issuance of common stock upon vesting of RSUs

Stock-based compensation expense

Balance as of June 30, 2022

( 1,364,823 )

See Accompanying Notes to Condensed Financial Statements

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities

1 unchanged sentence

Stock-based compensation expense

Loss on sale and disposal of fixed assets

Loss (gain) on sale and disposal of fixed assets

Depreciation and amortization

13 unchanged sentences

Other current and long-term liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

Investing activities

7 unchanged sentences

Cost share payments to a collaboration partner

Net proceeds from issuances of common stock upon exercise of options

Net proceeds from issuances of common stock upon exercise of options and participation in Purchase Plan

Net proceeds from term loan financing

12 unchanged sentences

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.

We focus on products that address signaling pathways that are critical to disease mechanisms.

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

3 unchanged sentences

W e in-licensed olutasidenib from Forma Therapeutics, Inc.

(Forma), with exclusive, worldwide rights for its development, manufacturing and commercialization.

We conducted a Phase 3 clinical trial evaluating fostamatinib for the treatment of warm autoimmune hemolytic anemia (wAIHA) and announced that we did not file a supplemental New Drug Application (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 a National Institute of Health (NIH)/National Heart, Lung, and Blood Institute (NHLBI) sponsored Accelerating COVID-19 Therapeutic Inventions and Vaccines Phase 2/3 trial (ACTIV-4 Host Tissue Trial) for the treatment of COVID-19 in hospitalized patients.

Our other clinical programs include our interleukin receptor-associated kinase (IRAK) inhibitor program, and a receptor-interacting serine/threonine-protein kinase (RIPK1) inhibitor program in clinical development with partner Eli Lilly and Company (Lilly).

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

(now Novo Nordisk), with exclusive, worldwide rights for its development, manufacturing and commercialization.

We continue to advance the development of our interleukin receptor-associated kinase (IRAK) 1/4 inhibitor program, in an open-label, Phase 1b trial to determine the tolerability and preliminary efficacy of the drug in patients with lower-risk myelodysplastic syndrome (MDS) who are refractory or resistant to prior therapies.

Our other ongoing clinical programs include a fostamatinib Phase 2/3 trial, the Accelerating COVID-19 Therapeutic Inventions and Vaccines Phase 2/3 trial (ACTIV-4 Host Tissue Trial), for the treatment of hospitalized high-risk patients with COVID-19 being conducted and sponsored by the National Institute of Health (NIH)/National Heart, Lung, and Blood Institute (NHLBI), and a receptor-interacting serine/threonine-protein kinase 1 (RIPK1) inhibitor program in clinical development with our partner Eli Lilly and Company (Lilly).

We also have product candidates in clinical development with partners BerGenBio ASA (BerGenBio) and Daiichi Sankyo (Daiichi).

Basis of Presentation

12 unchanged sentences

There have been no material changes to these accounting policies.

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

As of June 30, 2023, we had approximately $ 64.4 million in cash, cash equivalents and short-term investments.

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

9 unchanged sentences

The potential shares of common stock that were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive are as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Outstanding stock options

Purchase Plan

Revenues disaggregated by category were as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Product sales:

4 unchanged sentences

License revenues

Development milestones

Royalty, delivery of drug supplies and others

5 unchanged sentences

Our net product sales include gross product sales, net of chargebacks, discounts and fees, government and other rebates and returns.

Of the total discounts and allowances from gross product sales for the six months ended June 30, 2023 and 2022, $ 18.6 million and $ 13.0 million, respectively, was accounted for as additions to revenue reserves and refund liability, and $ 0.4 million and $ 1.3 million, respectively, as reductions in accounts receivable (as it relates to allowance for prompt pay discount) and prepaid and other current assets (as it relates to certain chargebacks and other fees that were prepaid) in the condensed balance sheet.

The following tables summarize the activities in chargebacks, discounts and fees, government and other rebates and returns that were accounted for within revenue reserves and refund liability, for each of the periods presented (in thousands):

3 unchanged sentences

Credit or payments made during the period

Balance as of March 31, 2023

Balance as of June 30, 2023

Discounts and

2 unchanged sentences

Credit or payments made during the period

Balance as of March 31, 2022

Of the $ 9.5 million discounts and allowances from gross product sales for the three months ended March 31, 2023, $ 9.2 million was accounted for as additions to revenue reserves and refund liability and $ 0.3 million as reductions in accounts receivable (as it relates to allowance for prompt pay discount) and prepaid and other current assets (as it relates to certain chargebacks and other fees that were prepaid) in the condensed balance sheet.

Of the $ 6.4 million discounts and allowances from gross product sales for the three months ended March 31, 2022, $ 6.1 million was accounted for as additions to revenue reserves and refund liability and $ 0.3 million as reductions in accounts receivable (as it relates to allowance for prompt pay discount) and prepaid and other current assets (as it relates to certain chargebacks and other fess that were prepaid) in the condensed balance sheet.

Balance as of June 30, 2022

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,

Three Months Ended June 30,

Six Months Ended June 30,

McKesson Specialty Care Distribution Corporation

4 unchanged sentences

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

As of March 31, 2023, we are a party to collaboration agreements with Lilly to develop and commercialize R552, a RIPK1 inhibitor, for the treatment of non-central nervous system (non-CNS) diseases and collaboration aimed at developing additional RIPK1 inhibitors for the treatment of central nervous system (CNS) diseases;

As of June 30, 2023, we are a party to collaboration agreements with Lilly to develop and commercialize R552, a RIPK1 inhibitor, for the treatment of non-central nervous system (non-CNS) diseases and collaboration aimed at developing additional RIPK1 inhibitors for the treatment of central nervous system (CNS) diseases;

with Grifols S.A.

7 unchanged sentences

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

As of March 31, 2023, total future contingent payments to us under all of above 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.

As of June 30, 2023, total future contingent payments to us under all of the above 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.

Of this amount, $ 279.5 million relates to the achievement of development events, $ 263.1 million relates to the achievement of regulatory events and $ 796.0 million relates to the achievement of certain commercial events.

6 unchanged sentences

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

We are responsible for 20 % of 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.

We have the right to opt-out of co-funding the R552 development activities in the US, Europe and Japan at two different specified times.

If we exercise our first opt-out right (no later than September 30, 2023), under the Lilly Agreement, 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.

If we decide not to exercise our opt-out rights, we will be required to share in global development costs of up to certain amounts at a specified cap, as provided for in the Lilly Agreement.

We are responsible for performing and funding initial discovery and identification of CNS disease development candidates.

Following candidate selection, Lilly will be responsible for performing and funding all future development and commercialization of the CNS disease development candidates.

Under the terms of the Lilly 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.

2 unchanged sentences

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.

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

(a) granting of the license rights over the non-CNS penetrant intellectual property (IP), and (b) granting of the license rights over the CNS penetrant IP which will be delivered to Lilly upon completion of the additional research and development efforts specified in the agreement.

We concluded each of these performance obligations is distinct.

We based our assessment on the assumption that Lilly can benefit from each of the licenses on its own by developing and commercializing the underlying product using its own resources.

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

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.

We are responsible for performing and funding initial discovery and identification of CNS disease development candidates.

Following candidate selection, Lilly will be responsible for performing and funding all future development and commercialization of the CNS disease development candidates.

Under the Lilly Agreement, we are responsible for 20 % of development costs for R552 in the US, Europe, and Japan, up to a specified cap, and Lilly is responsible for funding the remainder of all development activities for R552 and other non-CNS disease development candidates.

Pursuant to the terms of the Lilly Agreement, we have the right to opt-out of co-funding the R552 development activities at two different specified times.

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 up to a maximum funding commitment of $ 65.0 million through April 1, 2024.

If we decide not to exercise our opt-out rights, we will be required to share in global development costs of up to certain amounts at a specified cap, as provided for in the Lilly Agreement.

Given our rights to opt-out from the development of R552, we believe at the minimum, we have a commitment to fund the development costs up to $ 65.0 million as discussed above.

2 unchanged sentences

Interest expense is accreted on such liability over the expected commitment period, adjusted for timing of expected cost share payments.

No interest was accreted during the three months ended March 31, 2023 and $ 0.7 million of interest was accreted during the three months ended March 31, 2022.

Through March 31, 2023, Lilly billed us $ 15.9 million for our share of development costs under this agreement, and the amount was fully paid as of March 31, 2023.

As of March 31, 2023 and December 31, 2022, the outstanding financing liability to Lilly was $ 45.4 million and $ 46.2 million, respectively, and included within other long-term liabilities, current portion, and other long-term liabilities in the condensed balance sheet.

No interest was accreted during the six months ended June 30, 2023, and $ 0.7 million of interest was accreted during the six months ended June 30, 2022.

Through June 30, 2023, Lilly billed us $ 16.9 million for our share of development costs under this agreement, and the amount was fully paid as of June 30, 2023.

As of June 30, 2023 and December 31, 2022, the outstanding financing liability to Lilly was $ 44.5 million and $ 46.2 million, respectively, and included within other long-term liabilities, current portion, and other long-term liabilities in the condensed balance sheet.

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

We concluded each of these performance obligations is distinct.

We based our assessment on the assumption that Lilly can benefit from each of the licenses on its own by developing and commercializing the underlying product using its own resources.

We allocated the net transaction price of $ 67.1 million to each performance obligation based on our best estimate of its relative standalone selling price using the adjusted market assessment approach.

We concluded that the license rights over the non-CNS penetrant IP represents functional IP that is not expected to change over time, and we have no ongoing or undelivered obligations relative to such IP that Lilly will benefit from the use of such IP on the delivery date.

As such, the transaction price allocated to the non-CNS penetrant IP of $ 60.4 million was recognized as revenue during the first quarter of 2021 upon delivery of the non-CNS penetrant IP to Lilly in March 2021.

For the delivery of license rights over the CNS penetrant IP, we were obligated to perform additional research and development efforts before Lilly can accept the license.

The allocated transaction price to the CNS penetrant IP of $ 6.7 million was recognized as revenue from the effective date of the Lilly Agreement through the eventual acceptance by Lilly using the input method.

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.

As such, we recognized the remaining outstanding deferred revenue related to delivery of the CNS penetrant IP in the second quarter of 2022.

For the three months ended March 31, 2022, we recognized $ 0.2 million of revenue associated with the delivery of CNS penetrant IP.

No such revenue was recognized in the three months ended March 31, 2023.

The transaction price allocated to the non-CNS penetrant IP of $ 60.4 million was recognized as revenue upon delivery of the non-CNS penetrant IP to Lilly during the first quarter of 2021.

The transaction price allocated to the CNS penetrant IP of $ 6.7 million was recognized as revenue from the effective date of the Lilly Agreement through the eventual acceptance by Lilly using the input method, since we were required to perform additional research and development efforts before the final acceptance of the license by Lilly.

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.

As such, we recognized the remaining outstanding deferred revenue in the second quarter of 2022.

For the three and six months ended June 30, 2022, we recognized $ 0.3 million and $ 0.5 million, respectively, of revenue associated with the delivery of CNS penetrant IP.

No such revenue was recognized in the three and six months ended June 30, 2023.

The remaining future variable consideration related to future milestone payments as discussed above were fully constrained because we cannot conclude that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur, given the inherent uncertainty of success with these future milestones.

13 unchanged sentences

We allocated the transaction price to the distinct performance obligations in our collaboration agreement based on our best estimate of the relative standalone selling price, and recognized the corresponding revenue in the periods we satisfied the performance obligations.

During the three months ended March 31, 2023 and 2022, no revenue and $ 0.3 million of revenue, respectively, was recognized associated with the remaining performance obligation to perform research services.

During the three and six months ended June 30, 2022, we recognized $ 0.2 million and $ 0.5 million, respectively, of revenue associated with the remaining performance obligation to perform research services.

No such revenue was recognized during the three and six months ended June 30, 2023.

The remaining variable consideration related to future regulatory and commercial milestones were fully constrained because we cannot conclude that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, given the inherent uncertainty of success with these future milestones.

5 unchanged sentences

Prior to the Commercial Supply Agreement, we had a Drug Product Purchase Agreement with Grifols entered in December 2019.

For the three months ended March 31, 2023, we recognized revenue of $ 1.6 million related to delivery of drug supply to Grifols for its commercialization.

No such revenue was recognized during the three months ended March 31, 2022.

During the three and six months ended June 30, 2023, we recognized $ 1.2 million and $ 2.8 million, respectively, of revenue related to delivery of drug supply to Grifols.

D uring the three and six months ended June 30, 2022, we recognized $ 1.2 million of revenue related to delivery of drug supply to Grifols .

We began recognizing royalty revenue from Grifols beginning in the third quarter of 2022.

For the three months ended March 31, 2023, we recognized $ 0.7 million of royalty revenue from Grifols, and such amount was included within contract revenues from collaboration.

No such revenue was recognized for the three months ended March 31, 2022.

For the three and six months ended June 30, 2023, we recognized $ 0.8 million and $ 1.5 million, respectively, of royalty revenue from Grifols, and such amount was included within contract revenues from collaboration.

No such revenue was recognized for the three and six months ended June 30, 2022.

Kissei License Agreement

9 unchanged sentences

We determined that the upfront fee of $ 33.0 million represented the transaction price and was allocated to the performance obligations based on our best estimate of the relative standalone selling price and recognized the corresponding revenue in the period we satisfied the performance obligations.

As of March 31, 2023 and December 31, 2022, the remaining deferred revenue was related to the material right associated with discounted fostamatinib supply which amounted to $ 1.4 million.

As of June 30, 2023 and December 31, 2022, the remaining deferred revenue was related to the material right associated with discounted fostamatinib supply which amounted to $ 1.4 million.

For the three and six months ended June 30, 2022, we recognized $ 2.5 million and $ 2.6 million, respectively, of revenue related to the delivery of fostamatinib supply to Kissei mainly for commercial use.

No such revenue was recognized during the three and six months ended June 30, 2023.

In April 2022, Kissei announced that an NDA was submitted to Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) for fostamatinib in chronic ITP.

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

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

14 unchanged sentences

As such, this arrangement was accounted for as a financing arrangement.

Interest expense was accreted on such liability over the expected buyback period.

Interest expense

was accreted on such liability over the expected buyback period.

We also billed Medison for the delivery of fostamatinib supplies for clinical use which we previously deferred and included within the outstanding financing liability considering the buy-back provision.

The decision to exercise the buyback option is dependent of many factors including management’s cost and benefit assessments and the success of obtaining regulatory approval for the treatment of AIHA in Canada.

In June 2022, we reported the top-line results from our Phase 3 trial of fostamatinib in wAIHA which showed that the trial did not demonstrate statistical significance in the primary efficacy endpoint in the overall study population.

We also announced in early October 2022 that we will not file an sNDA for wAIHA indication considering the top-line data results and the guidance received from the FDA.

In June 2022, we reported the top-line results from our Phase 3 trial of fostamatinib in warm autoimmune hemolytic anemia (wAIHA) which showed that the trial did not demonstrate statistical significance in the primary efficacy endpoint in the overall study population.

We also announced in early October 2022 that we will not file a supplemental new drug application (sNDA) for wAIHA indication considering the top-line data results and the guidance received from the FDA.

With these developments, we assessed our options path forward, including our buyback option right with regards to the Medison license agreement.

1 unchanged sentence

As such, during the fourth quarter of 2022, we relieved the outstanding financing liability to Medison amounting to $ 5.7 million and recognized such amount as collaboration revenue in accordance with ASC 606.

There was no outstanding financing liability to Medison as of March 31, 2023 and December 31, 2022.

There was no outstanding financing liability to Medison as of June 30, 2023 and December 31, 2022.

Knight Commercial License and Supply Agreement

2 unchanged sentences

We accounted for this agreement under ASC 606 and identified that the upfront payment was a consideration for granting Knight the license to commercialize fostamatinib for approved indication in the Knight territory, and no further material deliverables associated to such upfront payment.

As such, we recognized the upfront payment as revenue during the second quarter of 2022.

As such, we recognized the upfront payment as revenue during the three and six months ended June 30, 2022.

Variable consideration related to future regulatory milestones was fully constrained because we cannot conclude that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, given the inherent uncertainty of success with these future milestones.

6 unchanged sentences

The amount of award we will receive from the US Department of Defense is 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.

We record government contract revenue in the statement of operations in the period when it is probable that we will receive

the award, which is when we comply with the conditions associated with the award and obtain approval from the US Department of Defense that such conditions have been met.

No revenue was recognized during the three months ended March 31, 2023 and 2022.

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.

License and Transition Services Agreement with Forma

We have a license and transition services agreement with Forma entered in July 2022, for an exclusive license to develop, manufacture and commercialize olutasidenib, Forma’s proprietary inhibitor of mutated IDH1 (mIDH1), for any uses worldwide, including for the treatment of AML and other malignancies.

Forma became a wholly owned subsidiary of Novo Nordisk A/S following the closing of the acquisition of Forma in October 2022.

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 of additional payments upon achievement of specified development and regulatory milestones and up to $ 165.5 million of 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 portion of our sublicensing revenue, subject to certain standard reductions and offsets.

We record government contract revenue in the statement of operations in the period when it is probable that we will receive the award, which is when we comply with the conditions associated with the award and obtain approval from the US Department of Defense that such conditions have been met.

For the three and six months ended June 30, 2023, we recognized $ 1.0 million of revenue related to this grant upon achievement of certain milestones.

Through June 30, 2023, we received $ 16.0 million of the awards which we recognized as revenue in the respective periods, with remaining $ 0.5 million available, subject to us meeting certain milestone and approval by the US Department of Defense that such milestone has been met, as specified in the agreement.

License and Transition Services Agreement with Forma (now Novo Nordisk)

We have a license and transition services agreement with Forma (now Novo Nordisk) entered in July 2022, for an exclusive license to develop, manufacture and commercialize olutasidenib, a proprietary inhibitor of mutated IDH1 (mIDH1), for any uses worldwide, including for the treatment of AML and other malignancies.

Forma became a wholly owned subsidiary of Novo Nordisk following the closing of its acquisition by Novo Nordisk in October 2022.

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

In addition, subject to the terms and conditions of the license and transition services agreement, Forma (now Novo Nordisk) 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 portion of our sublicensing revenue, subject to certain standard reductions and offsets.

The transaction was accounted for as an acquisition of asset under ASC 730, Research and Development .

In accordance with the guidance, in a transaction accounted for as an asset acquisition, any acquired IPR&D that does not have alternative future use is charged to expense at the acquisition date.

At the acquisition date, the acquired license asset was accounted for as IPR&D, and we do not anticipate any economic benefit to be derived from such acquired licensed asset other than the primary indications.

As such, we accounted for the upfront fee of $ 2.0 million paid to Forma as IPR&D and recorded such cost within research and development expenses in the condensed statements of operations in the third quarter of 2022.

Under the accounting guidance, we account for contingent cash payments when it is probable that a liability has been incurred and the amount can be reasonably estimated.

We account for m ilestone payment obligations incurred at development stage and prior to a regulatory approval of an indication associated with the acquired licensed asset as research and development expenses when the event requiring payment of the milestone occurs.

At the acquisition date, the acquired license asset was accounted for as IPR&D, and we anticipated no other economic benefit to be derived from such acquired licensed asset other than the primary indications.

As such, we accounted for the upfront fee of $ 2.0 million as IPR&D and recorded such cost within research and development expense in the condensed statements of operations in the third quarter of 2022.

Under the accounting guidance, we account for contingent cash payments when it is probable that a liability is incurred and the amount can be reasonably estimated.

We account for m ilestone payment obligations incurred at development stage and prior to a regulatory approval of an indication associated with the acquired licensed asset as research and development expense when the event requiring payment of the milestone occurs.

Milestone payment obligations incurred upon and after a regulatory approval of an indication associated with the acquired licensed asset, and at the commercial stage, are recorded as intangible asset when the event requiring payment of the milestones occurs.

1 unchanged sentence

Royalty payments related to the acquired licensed asset is recorded as cost of sales when incurred.

During the fourth quarter of 2022 prior to the approval of FDA on December 1, 2022, a near-term regulatory milestone was met which entitled Forma to receive a $ 2.5 million milestone payment.

Since such milestone payment obligation was incurred prior to a regulatory approval of an indication associated with the acquired licensed asset, we recorded such amount as research and development expense in the fourth quarter of 2022.

Prior to the FDA approval of REZLIDHIA in December 2022, we achieved certain regulatory milestone which entitled Forma (now Novo Nordisk) to receive a $ 2.5 million milestone payment.

Because such milestone payment obligation was incurred prior to a regulatory approval of an indication associated with the acquired licensed asset, we recorded such amount as research and development expense in the fourth quarter of 2022.

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

Following the FDA approval, we launched REZLIDHIA and made first shipments of the product to our customers in December 2022.

With this FDA approval and first commercial sale of the product, Forma were entitled to receive a total of $ 15.0 million milestone payments.

With this FDA approval and first commercial sale of the product, Forma (now Novo Nordisk) was entitled to receive a total of $ 15.0 million milestone payments.

Since such milestone payment obligations were incurred upon and after regulatory approval of the product, we recorded such amount as intangible asset on our condensed balance sheet in the fourth quarter of 2022.

1 unchanged sentence

Such amount was paid in the first quarter of 2023 .

During the three months ended March 31, 2023, we recognized $ 0.3 million of amortization of intangible asset and $ 0.2 million of royalty expense related to Forma as discussed above.

During the three and six months ended June 30, 2023, we recognized $ 0.3 million and $ 0.5 million, respectively, of amortization of intangible asset, and $ 0.4 million and $ 0.6 million, respectively, of royalty expense related to the license and transition services agreement as discussed above.

Such costs were included within cost of sales in our condensed statements of operations.

No such expenses were recognized during the three months ended March 31, 2022.

No such expenses were recognized during the three and six months ended June 30, 2022.

Stock-Based Compensation

Stock-based compensation for the periods presented was as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Selling, general and administrative

1 unchanged sentence

Total stock-based compensation expense

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.

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.

During the three months ended March 31, 2023, we granted stock options to purchase 2,620,000 shares of common stock with weighted-average grant-date fair value of $ 1.42 per share, and 952 stock options were exercised.

As of March 31, 2023, there were 35,909,499 stock options outstanding, of which, 2,870,000 are outstanding performance-based stock options wherein the achievement of the corresponding corporate-based milestones were not considered probable as of March 31, 2023.

Accordingly, none of the $ 5.3 million grant date fair value for these awards has been recognized as stock-based compensation expense as of March 31, 2023.

Stock-based compensation expense within research and development in the six months ended June 30, 2023 include an incremental charge of approximately $ 0.5 million from stock option modifications recorded in the first quarter of 2023 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.

Stock-based compensation expense within selling, general and administrative in the six months ended June 30, 2022 include an incremental charge of approximately $ 0.8 million from stock option modifications recorded in the first quarter of 2022 related to the extension of the exercise period of the stock option grants made to our two former Board of Directors whose terms expired in May 2022.

During the six months ended June 30, 2023, we granted stock options to purchase 2,938,600 shares of common stock with weighted-average grant-date fair value of $ 1.37 per share, and 15,557 stock options were exercised.

As of June 30, 2023, there were 35,244,121 stock options outstanding, of which, 2,870,000 are outstanding performance-based stock options wherein the achievement of the corresponding corporate-based milestones were not considered probable as of June 30, 2023.

Accordingly, none of the $ 5.3 million grant date fair value for these awards has been recognized as stock-based compensation expense as of June 30, 2023.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model.

The following table summarizes the weighted-average assumptions relating to options granted pursuant to our Equity Incentive Plans (2018 Equity Incentive Plan and Inducement Plan) for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Risk-free interest rate

2 unchanged sentences

Expected volatility

During the three months ended March 31, 2023, we granted 1,207,600 RSUs with a grant-date weighted-average fair value of $ 1.87 per share, and 266,256 RSUs were released.

During the six months ended June 30, 2023, we granted 1,387,600 RSUs with a grant-date weighted-average fair value of $ 1.80 per share, and 435,006 RSUs were released.

The RSUs granted generally vest over 4 years .

As of March 31, 2023, there were 1,988,498 RSUs outstanding.

As of March 31, 2023, there was approximately $ 16.5 million of unrecognized stock-based compensation cost which is expected to be recognized over a remaining weighted-average period of 2.65 years, related to time-based stock options, performance-based stock options wherein achievement of the corresponding corporate-based milestones was considered as probable, and RSUs.

As of March 31, 2023, there were 7,646,459 shares of common stock available for future grant under our Equity Incentive Plans.

As of June 30, 2023, there were 1,963,487 RSUs outstanding.

As of June 30, 2023, there was approximately $ 14.6 million of unrecognized stock-based compensation cost which is expected to be recognized over a remaining weighted-average period of 2.68 years, related to time-based stock options, performance-based stock options wherein achievement of the corresponding corporate-based milestones was considered as probable, and RSUs.

In April 2023, our Board of Directors approved additional 108,600 shares of common stock reserved for issuance under our Inducement Plan.

In May 2023, our stockholders approved an amendment to our 2018 Plan, to, among other items, add an additional 4,000,000 shares to the number of shares of common stock authorized for issuance under our 2018 Plan.

As of June 30, 2023, there were 12,186,098 shares of common stock available for future grant under our Equity Incentive Plans.

Employee Stock Purchase Plan

3 unchanged sentences

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

Our previous twenty-four -month offering period under our Purchase Plan ended on June 30, 2022, and a new twenty-four-month offering period started on July 1, 2022.

Our previous 24 -month offering period under our Purchase Plan ended on June 30, 2022, and a new twenty-four-month offering period started on July 1, 2022.

The fair value of awards under our Purchase Plan is estimated on the date of our new offering period using the Black-Scholes option pricing model, which is being amortized over the requisite service periods.

As of March 31, 2023, unrecognized stock-based compensation cost related to our Purchase Plan amounted to $ 0.7 million, which is expected to be recognized over the remaining weighted average period of 0.74 years.

As of March 31, 2023, there were 3,437,633 shares reserved for future issuance under the Purchase Plan.

As of June 30, 2023, unrecognized stock-based compensation cost related to our Purchase Plan amounted to $ 0.4 million, which is expected to be recognized over the remaining weighted average period of 0.74 years.

During the six months ended June 30, 2023, there were 509,190 shares purchased under the Purchase Plan.

As of June 30, 2023, there were 2,928,443 shares reserved for future issuance under the Purchase Plan.

Inventories for the periods presented consist of the following (in thousands):

March 31, 2023

June 30, 2023

December 31, 2022

2 unchanged sentences

Finished goods

Inventories as of March 31, 2023 and December 31, 2022 include inventories acquired from Forma pursuant to the license and transition agreement.

As of March 31, 2023 and December 31, 2022, we have $ 0.7 million and $ 0.8 million, respectively, in advance payments to the manufacturer of our raw materials, which was included within prepaid and other current assets in the condensed balance sheet.

Inventories as of June 30, 2023 and December 31, 2022 include inventories acquired from Forma (now Novo Nordisk) pursuant to the license and transition agreement.

As of June 30, 2023 and December 31, 2022, we have $ 0.7 million and $ 0.8 million, respectively, in advance payments to the manufacturer of our raw materials, which were included within prepaid and other current assets in the condensed balance sheet.

Cash, Cash Equivalents and Short-Term Investments

Cash, cash equivalents and short-term investments for the periods presented consist of the following (in thousands):

March 31, 2023

June 30, 2023

December 31, 2022

6 unchanged sentences

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

As of March 31, 2023

As of June 30, 2023

US treasury bills

Government-sponsored enterprise securities

4 unchanged sentences

Corporate bonds and commercial paper

We maintain a depository relationship with Silicon Valley Bank (SVB).

On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (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, First Citizens BancShares, Inc.

(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/FCB 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.

As of March 31, 2023 and December 31, 2022, our cash equivalents and short-term investments had a weighted-average time to maturity of approximately 58 days and 89 days , respectively.

As of June 30, 2023 and December 31, 2022, our cash equivalents and short-term investments had a weighted-average time to maturity of approximately 72 days and 89 days , respectively.

Our short-term investments are classified as available-for-sale securities.

Accordingly, we have classified certain securities as short-term investments on our condensed balance sheets as they are available for use in the current operations.

As of March 31, 2023, we had no investments that had been in a continuous unrealized loss position for more than 12 months.

As of March 31, 2023, a total of 16 individual securities had been in an unrealized loss position for 12 months or less, and the losses were determined to be temporary.

As of June 30, 2023, we had no investments that had been in a continuous unrealized loss position for more than 12 months.

As of June 30, 2023, a total of 19 individual securities had been in an unrealized loss position for 12 months or less, and the losses were determined to be temporary.

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

Based on our review of these securities, including the assessment of the duration and severity of the unrealized losses, we have no t recognized any credit losses on these securities as of March 31, 2023 and December 31, 2022.

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

As of March 31, 2023

As of June 30, 2023

Unrealized Losses

2 unchanged sentences

The table below summarizes the fair value of our cash equivalents and short-term investments measured at fair value on a recurring basis, and are categorized based upon the lowest level of significant input to the valuations (in thousands):

Assets at Fair Value as of March 31, 2023

Assets at Fair Value as of June 30, 2023

Money market funds

US treasury bills

Government-sponsored enterprise securities

7 unchanged sentences

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

At the Closing Date, $ 10.0 million was funded (Tranche 1), in May 2020, an additional $ 10.0 million was funded (Tranche 2), at the Second Amendment, an additional $ 10.0 million was funded (Tranche 3), at the Third Amendment, an additional $ 10.0 million was funded (Tranche 4), and on March 28, 2023, an additional $ 20.0 million was funded (Tranche 5).

As of March 31, 2023, the outstanding principal balance of the loan was $ 60.0 million, and no remaining funds are available for draw under the term loan credit facility.

The First Amendment to the Credit Agreement entered in March 2021 extended the period through which Tranche 3 was available to us.

The Second Amendment to the Credit Agreement entered in February 2022, among other things, amended the applicable funding conditions, applicable commitments and certain other terms relating to available credit facilities (Tranches 3 and 4), added additional term loan credit facility (Tranche 5), and revised certain terms related to the financial covenants.

At the Closing Date, $ 10.0 million was funded (Tranche 1), in May 2020, an additional $ 10.0 million was funded (Tranche 2), at the Second Amendment, an additional $ 10.0 million was funded (Tranche 3), at the Third Amendment, an additional $ 10.0 million was funded (Tranche 4), and in March 2023, an additional $ 20.0 million was funded (Tranche 5).

As of June 30, 2023, the outstanding principal balance of the loan was $ 60.0 million, and no remaining funds are available for draw under the term loan credit facility.

The First Amendment to the Credit Agreement extended the period through which Tranche 3 was available to us.

The Second Amendment to the Credit Agreement, among other things, amended the applicable funding conditions, applicable commitments and certain other terms relating to available credit facilities (Tranches 3 and 4), added additional term loan credit facility (Tranche 5), and revised certain terms related to the financial covenants.

Following the Third Amendment, the maturity date for the term loans is on September 1, 2026, and the interest-only period is through October 1, 2024.

6 unchanged sentences

Debt issuance costs are recorded as a direct deduction from the outstanding principal balance of the term loan.

As of March 31, 2023 and December 31, 2022, the unamortized issuance costs and debt discounts amounted to $ 0.5 million and $ 0.6 million, respectively.

Interest expense, including amortization of the debt discount and accretion of the final fees related to the Credit Agreement for the three months ended March 31, 2023 and 2022 was $ 1.2 million and $ 0.5 million, respectively.

Accrued interest of $ 0.9 million was included within other accrued liabilities in the condensed balance sheet as of March 31, 2023.

The following table presents the future minimum principal payments of the outstanding loan as of March 31, 2023 (in thousands):

As of June 30, 2023 and December 31, 2022, the unamortized issuance costs and debt discounts amounted to $ 0.4 million and $ 0.6 million, respectively.

Interest expense, including amortization of the debt discount and accretion of the final fees related to the Credit Agreement for the three months ended June 30, 2023 and 2022 was $ 1.9 million and $ 0.6 million, respectively, and for the six months ended June 30, 2023 and 2022 was $ 3.1 million and $ 1.1 million, respectively.

Accrued interest of $ 1.2 million was included within other accrued liabilities in the condensed balance sheet as of June 30, 2023.

The following table presents the future minimum principal payments of the outstanding loan as of June 30, 2023 (in thousands):

Remainder of 2023

1 unchanged sentence

The amended Credit Agreement contains certain covenants which, among others, require us to deliver financial reports at designated times of the year and maintain minimum unrestricted cash and trailing net revenues.

As of March 31, 2023, we were not in violation of any covenants.

As of June 30, 2023, we were not in violation of any covenants.

We have a sublease agreement with Atara Biotherapeutics, Inc.

3 unchanged sentences

At lease measurement date in the fourth quarter of 2022, we recognized the operating lease right-of-use asset and lease liability of approximately $ 1.3 million.

As of March 31, 2023, we recorded $ 0.2 million of lease incentives from our sublease with Atara, which we recorded as a reduction to operating lease right-of-use asset and lease liability until the lease ends and the asset is transferred.

The weighted average remaining term of our leases as of March 31, 2023 was 2.17 years.

As of June 30, 2023, we recorded $ 0.2 million of lease incentives from our sublease with Atara, which we recorded as a reduction to operating lease right-of-use asset and lease liability until the lease ends and the asset is transferred.

The weighted average remaining term of our leases as of June 30, 2023 was 1.92 years.

We had a lease agreement with Healthpeak Properties, Inc.

2 unchanged sentences

The components of our operating lease expense were as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Fixed operating lease expense

Variable operating lease expense

Variable operating lease expense (net credit)

Total operating lease expense

Supplemental information related to our operating lease were as follow (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cash payments included in the measurement of operating lease liabilities

Supplemental information related to our operating sublease was as follow (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Fixed sublease expense

1 unchanged sentence

Sublease income

The following table presents the future lease payments as of March 31, 2023 (in thousands):

The following table presents the future lease payments as of June 30, 2023 (in thousands):

Remainder of 2023

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements