What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-07 compared with 2023-08-01 · 139 added, 118 removed, 532 unchanged (33% 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 six months ended June 30, 2023 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 and nine months ended September 30, 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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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;

risks that the FDA, EMA, the Medicines and Healthcare Products Regulatory Agency (MHRA) 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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We continue to advance the development of our 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 MDS who are refractory or resistant to prior therapies.

Our other ongoing clinical programs include a fostamatinib Phase 2/3 trial, the ACTIV-4 Host Tissue Trial, for the treatment of hospitalized high-risk patients with COVID-19 being conducted and sponsored by the NIH/ NHLBI, and

a RIPK1 inhibitor program in clinical development with our partner Lilly.

We have a RIPK1 inhibitor program in clinical development with our partner Lilly.

We also have product candidates in clinical development with partners BerGenBio and Daiichi.

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TAVALISSE IN ITP

For the six months ended June 30, 2023, net product sales of TAVALISSE were $43.6 million, a 26% 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.

For the nine months ended September 30, 2023, net product sales of TAVALISSE were $68.1 million, a 26% increase compared to the same period in 2022.

The increase in our TAVALISSE net product sales was primarily driven by the increase in quantities sold as a result of increased number of patients under therapy, and increase in price per bottle, partly offset by the increase in revenue reserves mainly due to higher government 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.

REZLIDHIA in R/R AML with mIDHI

For the six months ended June 30, 2023, we recognized $4.0 million of net product sales of REZLIDHIA.

For the nine months ended September 30, 2023, we recognized $6.7 million of net product sales of REZLIDHIA.

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

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

No new milestone was met during the six months ended June 30, 2023.

No new milestone was met during the nine months ended September 30, 2023.

For further discussions, 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.

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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, target enrollment in the second cohort of the trial has been completed and we expect to begin enrollment in the third cohort in the near future.

To date, target enrollment in the second cohort of the trial has been completed and we are currently enrolling patients in the third cohort.

Preliminary results are expected by mid-year 2024.

Global Strategic Partnership with Lilly

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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.

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 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.

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.

Under the Lilly Agreement, 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), 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 June 30, 2023, Lilly billed us $16.9 million of the funding development costs and the amounts were fully paid as of June 30, 2023.

Under the Lilly Agreement (prior to an amendment as discussed below), 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 and as a result receive lesser royalties from sales.

Prior to us providing our first opt-out notice as discussed below, under the Lilly Agreement, we were 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.

On September 28, 2023, we entered into an amendment to the Lilly Agreement which provides, among others, that if we exercise our first opt-out right, we have the right to opt-in to co-funding of R552 development, upon us providing notice to Lilly within 30 days of certain events, as specified in the Lilly Agreement.

If we decide to exercise our opt-in right, we will be required to continue to share in global development costs, and if we later exercise our second opt-out right (no later than April 1, 2025), our share in global development costs will be up to a specified cap through December 31, 2025, as provided for in the Lilly Agreement.

On September 29, 2023, we provided the first opt-out notice to Lilly.

We will continue to fund our share of the R552 development activities up to $22.6 million through April 1, 2024 as provided for in the amended Lilly Agreement.

Through September 30, 2023, Lilly billed us $17.7 million of the funding development costs and the amounts were fully paid as of September 30, 2023.

Fostamatinib in Hospitalized COVID-19 patients

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Further, fostamatinib showed significance or trend towards significance in all secondary endpoints of reducing mortality and morbidity compared to placebo after correcting for the error.

These results, which we intend to publish, have been accepted for oral presentation at IDWeek 2023.

During our continued analysis regarding fostamatinib in hospitalized COVID-19 patients, we provided the updated analysis to the FDA and our partner, the US Department of Defense.

The results were recently presented at the IDWeek 2023 held on October 11-15, 2023 in Boston, Massachusetts.

During our continued analysis regarding fostamatinib in hospitalized COVID-19

patients, we provided the updated analysis to the FDA and our partner, the US Department of Defense.

Given the end of the federal COVID-19 Public Health Emergency (PHE) in May 2023 , and based on feedback from the FDA, US Department of Defense and other advisors regarding the program’s regulatory requirements, costs, timeline and potential for success, we decided not to submit an Emergency Use Authorization (EUA) or sNDA.

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 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.

The Accelerating COVID-19 Therapeutic Inventions and Vaccines Phase 2/3 trial (ACTIV-4 Host Tissue Trial), conducted and sponsored by the National Institute of Health (NIH)/National Heart, Lung, and Blood Institute (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 evaluated fostamatinib in a targeted population of approximately 600 hospitalized patients with COVID-19, 300 fostamatinib versus 300 placebo.

During the first quarter of 2023, an interim analysis of the trial was completed by the Data and Safety Monitoring Board (DSMB) with a recommendation for the trial to continue.

In September 2023, the DSMB recommended that the fostamatinib study arm of the ACTIV-4 Host Tissue Trial platform cease enrollment.

Based on the DSMB’s review of a conditional power analysis, the DSMB determined that there was an extremely low likelihood of fostamatinib providing benefits related to the primary outcome (oxygen free days) or other secondary outcomes in patients hospitalized and on oxygen therapy for COVID-19.

No safety concerns were identified.

The NIH/NHLBI concurs with the DSMBs recommendation and has asked the trial investigators to cease enrollment, complete follow-up for participants already enrolled, and complete study closeout.

The full study data will be analyzed and disseminated as previously planned.

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

The COVID-19 pandemic has adversely impacted our business and operations.

Although the World Health Organization declared end of COVID-19 global public health emergency in May 2023, the degree to which another global 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.

Although the World Health Organization declared the end of COVID-19 PHE in May 2023, the degree to which another global 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.

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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, 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.

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.

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.

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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 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.

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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.

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.

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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.

In November 2022, Medison Israel made its first commercial sale of TAVALISSE and obtained its national reimbursement in February 2023.

Fostamatinib in Latin America

In May 2022, we entered into commercial license agreement with Knight for the commercialization of fostamatinib for approved indications in Latin America, consisting of Mexico, Central and South America, and the Caribbean (Knight territory).

Pursuant to such commercial license agreement, we received a $2.0 million one-time, non-refundable, and non-creditable upfront payment, with potential for up to an additional $20.0 million in regulatory and sales-based commercial milestone payments, and will receive twenty- to mid-thirty percent, tiered, escalated net-sales based royalty payments for products sold in the Knight territory.

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 August 2023, Knight submitted MAA for regulatory approval in Mexico and Colombia for fostamatinib for the treatment of adult patients with ITP who had insufficient response to a previous treatment.

REZLIDHIA in R/R AML with mIDH1

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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.

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

Olutasidenib, an oral, small molecule drug designed to selectively bind to and inhibit mIDH1, is a treatment option with durable remissions, reduced QTc potential, and a stable pharmacokinetics profile that enables a consistent drug exposure over time.

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

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

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.

Olutasidenib was designated by the FDA as an orphan drug for the treatment of AML, which provides orphan drug market exclusivity from the time of marketing approval on December 1, 2022.

REZLIDHIA (olutasidenib) is 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.

Olutasidenib was designated by the FDA as an orphan drug for the treatment of AML, which provides orphan drug market exclusivity from the time of marketing approval on December 1, 2022.

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.

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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 (now Novo Nordisk) , that had a PDUFA action date for the application of February 15, 2023.

The FDA approval was based on the NDA

for olutasidenib for the treatment of m1DH1 R/R AML submitted by Forma (now Novo Nordisk) , that had a PDUFA action date for the application of February 15, 2023.

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

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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 complete remission (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 .

While a median duration of CR/CRh was not yet reached, a sensitivity analysis (with a hematopoietic stem cell transplant 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 overall response rate (ORR) was 11.7 months.

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The review concluded that the approval of REZLIDHIA is a critical addition to the mIDH1 AML treatment landscape.

Further, the available data support the use of REZLIDHIA as monotheraphy in R/R AML patients who have failed intensive chemotheraphy or venetoclax plus hypomethylating agents (HMA) combination therapy.

Further, the available data support the use of REZLIDHIA as monotheraphy in R/R AML

patients who have failed intensive chemotheraphy or venetoclax plus hypomethylating agents (HMA) combination therapy.

In June 2023, we announced presentation of data from an analysis from the Phase 2 study of REZLIDHIA in 17 patients with mIDH1 AML who were previously treated with venetoclax.

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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.

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

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.

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To date, target enrollment in the second cohort of the trial has been completed and we expect to begin enrollment in the third cohort in the near future.

To date, target enrollment in the second cohort of the trial has been completed and and we are currently enrolling patients in the third cohort.

Preliminary results are expected by mid-year 2024.

Fostamatinib in Hospitalized COVID-19 Patients

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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.

We previously announced in November 2022 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 did not meet statistical significance in the primary efficacy endpoint of the number of days on oxygen through Day 29.

We previously announced in November 2022 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 did not meet statistical significance in the primary efficacy endpoint of the number of days on oxygen through Day 29.

Upon further analysis, we discovered an error by the CRO in the application of a statistical stratification factor.

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Further, fostamatinib showed significance or trend towards significance in all secondary endpoints of reducing mortality and morbidity compared to placebo after correcting for the error.

These results, which we intend to publish, have been accepted for oral presentation at IDWeek 2023.

During our continued analysis regarding fostamatinib in hospitalized COVID-19 patients, we provided the updated analysis to the FDA and our partner, the US Department of Defense.

The results were recently presented at the IDWeek 2023 held on October 11-15, 2023 in Boston, Massachusetts.

continued analysis regarding fostamatinib in hospitalized COVID-19 patients, we provided the updated analysis to the FDA and our partner, the US Department of Defense.

Given the end of the federal COVID-19 PHE in May 2023 , and based on feedback from the FDA, US Department of Defense and other advisors regarding the program’s regulatory requirements, costs, timeline and potential for success, we decided not to submit an EUA or sNDA.

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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.

During the first quarter of 2023, an interim analysis of the trial was completed by the DSMB with a recommendation for the trial to continue.

In September 2023, the DSMB recommended that the fostamatinib study arm of the ACTIV-4 Host Tissue Trial platform cease enrollment.

No safety concerns were identified.

The NIH/NHLBI concurs with the DSMBs recommendation and has asked the trial investigators to cease enrollment, complete follow-up for participants already enrolled, and complete study closeout.

The full study data will be analyzed and disseminated as previously planned.

Imperial College of London Phase 2 Trial.

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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 SoC arm

did not meet the prespecified criteria for continuation to the next stage of the trial.

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.

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Fostamatinib in wAIHA

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.

AIHA 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.

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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.

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 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.

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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.

We plan on closing this study by the end of the year.

Partnered Clinical Programs

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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 patients with unresectable or metastatic dedifferentiated liposarcoma, a rare cancer originating from fat cells located in the soft tissues of the body, and announced the completion of enrollment in August 2022.

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 patients with unresectable or metastatic dedifferentiated liposarcoma, a rare cancer originating from fat cells located in the soft tissues of the body, and announced the completion of enrollment in August 2022.

In May 2023, Rain announced that the trial did not meet its primary endpoint of progression free survival by blinded independent central review compared to the standard of care.

Based on the topline results, Rain does not expect to pursue further development of milademetan in dedifferentiated liposarcoma.

Based on the topline results, Rain does not expect

to pursue further development of milademetan in dedifferentiated liposarcoma.

In late 2021, Rain commenced its second clinical trial of milademetan in patients with MDM2-amplified solid tumors.

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Results of Operations

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(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 of the total net product sales and revenues from collaborations:

Three Months Ended June 30,

Six Months Ended June 30,

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,

McKesson Specialty Care Distribution Corporation

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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 and six months ended June 30, 2023, net product sales increased by 29% and 37%, respectively, compared to the same periods in 2022.

For the three and nine months ended September 30, 2023, net product sales increased by 41% and 39%, respectively, compared to the same periods 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 $2.8 million or 15% in the three months ended June 30, 2023, and $8.9 million or 26% in the six months ended June 30, 2023, compared to the same periods in 2022, primarily as a result of increased quantities sold and higher price per bottle.

In the three and six months ended June 30, 2023, we recognized $2.6 million and $4.0 million, respectively, of net product sales from REZLIDHA.

TAVALISSE net product sales increased by $5.3 million or 27% in the three months ended September 30, 2023, and $14.1 million or 26% in the nine months ended September 30, 2023, compared to the same periods in 2022, primarily as a result of increased quantities sold as a result of increased number of patients under therapy, and higher price per bottle, partly offset by the increase in revenue reserves mainly due to higher government rebates.

We began our commercialization of REZLIDHIA in December 2022.

Contract revenues from collaborations in the three and six months ended June 30, 2023 consisted primarily of revenue from Grifols related to the delivery of drug supplies of $1.2 million and $2.8 million, respectively, and royalty revenue of $0.8 million and $1.5 million, respectively.

Contract revenues from collaborations in the three and six months ended June 30, 2022 were consisted primarily of $7.5 million and $7.6 million, respectively, in revenue from Kissei related to a milestone payment and delivery of fostamatinib supply, $2.0 million for each of the periods in revenue related to our license agreement with Knight, $1.4 million and $1.7 million, respectively, in revenue from Grifols related delivery of fostamatinib supply and research and development services, and $0.3 million and $0.5 million, respectively, in revenue from Lilly related to delivery of CNS penetrant IP.

Government contract revenue in the three and six months ended June 30, 2023 was related to the income we recognized upon achievement of certain milestones 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 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 as specified in the agreement.

In the three and nine months ended September 30, 2023, we recognized $2.7 million and $6.7 million, respectively, of net product sales from REZLIDHA.

Contract revenues from collaborations in the three and nine months ended September 30, 2023 include royalty revenue from Grifols of $0.8 million and $2.3 million, respectively, and revenue from Medison of $0.2 million for each of the respective periods, related to the delivery of drug supplies and a milestone pursuant to the commercial license agreement.

In addition, the nine months ended September 30, 2023 consisted of revenue from Grifols of $2.8 million related to the delivery of drug supplies.

Contract revenues from collaborations in the three and nine months ended September 30, 2022 include $0.7 million and $2.4 million, respectively, in revenue from Grifols related delivery of drug supplies, deferred revenue recognized associated with the remaining performance obligation to research and development services, and royalty revenue.

In addition, the nine months ended September 30, 2022 also include $7.6 million of revenue from Kissei related to a milestone payment and delivery of drug supplies, $2.0 million in revenue related to our license agreement with Knight, and $0.5 million of revenue from Lilly related to the delivery of CNS penetrant IP.

Government contract revenue in the respective periods presented above were related to the income we recognized upon achievement of certain milestones 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, 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 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 June 30, 2023, we had deferred revenues of $1.4 million, which we will recognize as revenue upon satisfaction of our remaining performance obligations under our collaboration agreement with Kissei.

As of September 30, 2023, we had deferred revenues of $1.4 million, which we will recognize as revenue upon satisfaction of our remaining performance obligations under our collaboration agreement with Kissei.

Cost of Product Sales

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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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 reflect the full cost of acquiring or producing such products.

Cost of product sales may also include reserves for potential excess, dated or obsolete inventories based upon assumptions about future demand and market conditions, as well as product shelf life.

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

Cost of product sales in the three and six months ended June 30, 2023 increased compared to the same periods in 2022 primarily due to amortization of capitalized intangible asset recorded in the three and six months ended June 30, 2023 of $0.3 million and $0.5 million, respectively, and royalty expense of $0.4 million and $0.6 million, respectively.

Cost of product sales in the three and nine months ended September 30, 2023 increased compared to the same periods in 2022 primarily due to amortization of capitalized intangible asset recorded in the three and nine months ended September 30, 2023 of $0.3 million and $0.8 million, respectively, and royalty expense of $0.4 million and $1.0 million, respectively.

In addition, during the three and nine months ended September 30, 2023, we recorded $0.4 million of inventory reserves.

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

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Research and Development Expense

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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Stock-based compensation expense included in research and development expense

Stock-based compensation expense in the six months ended June 30, 2023 above 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.

The decrease in research and development expense in three months ended June 30, 2023 compared to the same period in 2022 was mainly due to timing of activities related to our IRAK 1/4 inhibitor program of $2.6 million, and timing of trial completion activities of our Phase 3 clinical trials of fostamatinib for the treatment of hospitalized high-risk patients with COVID-19 of $1.3 million and for the treatment of w AIHA of $1.8 million.

In addition, personnel-related costs decreased by $0.7 million, consultants and third party services decreased by $0.7 million, and other research and development expense including allocated facilities and laboratory costs decreased by $2.9 million.

The decrease in research and development expense in six months ended June 30, 2023 compared to the same period in 2022 was mainly due to timing of activities related to our IRAK 1/4 inhibitor program of $4.0 million, and timing of trial completion activities of our Phase 3 clinical trials of fostamatinib for the treatment of hospitalized high-risk patients with COVID-19 of $3.7 million and for the treatment of w AIHA of $3.1 million.

In addition, personnel-related costs decreased by $1.1 million, consultants and third party services decreased by $0.7 million, and other research and development expense including allocated facilities and laboratory costs decreased by $3.3 million.

These decreases were partially offset by the increase in stock-based compensation expense of $0.5 million mainly due to stock option modification as discussed above.

Stock-based compensation expense in the nine months ended September 30, 2023 above 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.

The decrease in research and development expense in three months ended September 30, 2023 compared to the same period in 2022 was partly due to timing of trial completion activities of our Phase 3 clinical trials of fostamatinib for the treatment of hospitalized high-risk patients with COVID-19 of $2.3 million and for the treatment of w AIHA of $1.7 million.

In addition, research and development expense in the three months ended September 30, 2022 included a

$2.0 million upfront payment to Forma (now Novo Nordisk) that was recorded as acquired IPR&D.

Further, personnel-related costs decreased by $0.9 million, consultants and third party services decreased by $0.8 million, and other research and development expense, including allocated facilities and laboratory costs, decreased by $1.6 million.

These decreases were partially offset by the increase in our research and development expense of our IRAK 1/4 inhibitor program of $1.1 million.

The decrease in research and development expense in the nine months ended September 30, 2023 compared to the same period in 2022 was partly due to timing of trial completion activities of our Phase 3 clinical trials of fostamatinib for the treatment of hospitalized high-risk patients with COVID-19 of $6.1 million and for the treatment of w AIHA of $4.8 million, and timing of activities related to our IRAK 1/4 inhibitor program of $2.8 million.

In addition, research and development expense in the nine months ended September 30, 2022 included $2.0 million upfront payment to Forma (now Novo Nordisk) that was recorded as acquired IPR&D.

Further, personnel-related costs decreased by $2.0 million, consultants and third party services decreased by $1.9 million, and other research and development expense including allocated facilities and laboratory costs decreased by $4.0 million.

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 (now Novo Nordisk).

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Given the end of the federal COVID-19 PHE in May 2023, and based on feedback from the FDA, US Department of Defense and other advisors regarding the program’s regulatory requirements, costs, timeline and potential for success, we decided not to submit an EUA or sNDA.

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

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.

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

Three Months Ended June 30,

Six Months Ended

Three Months Ended September 30,

Nine Months Ended September 30,

From January 1, 2007*

to June 30, 2023

to September 30, 2023

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

“Other” expenses for the three months ended June 30, 2023 and 2022 consisted of allocated facilities costs of $0.1 million and $1.0 million, respectively, and stock-based compensation expense of $0.4 million and $0.5 million, respectively.

For the six months ended June 30, 2023 and 2022, allocated facilities costs was $0.8 million and $2.3 million, respectively, and allocated stock-based compensation expense was $1.4 million and $0.9 million, respectively.

For the three and six months ended June 30, 2023, a major portion of our total research and development expense was associated with our IRAK 1/4 program.

For the three and six months ended June 30, 2022, a major portion of our total research and development expense was associated with our COVID-19, AIHA and IRAK 1/4 inhibitor program.

“Other” expenses in the three and nine months ended September 30, 2023 consisted of allocated facilities costs of $0.1 million and $0.9 million, respectively, and allocated stock-based compensation expense of $0.3 million and $1.7 million, respectively.

“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 (now Novo Nordisk) for each of the respective periods.

The major portion of our total research and development expense in the three and nine months ended September 30, 2023 was associated with our IRAK 1/4 inhibitor program.

In the three and nine months ended September 30, 2022, the major portion of our total research and development expense was associated with our COVID-19, AIHA and IRAK 1/4 inhibitor program.

Selling, General and Administrative Expense

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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

Stock-based compensation expense in the six months ended June 30, 2022 above 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.

The decrease in selling, general and administrative expense in the three months ended June 30, 2023 compared to the same period in 2022 was mainly due to decreased expenses on consulting and third party services of $1.5 million, partially offset by increased commercial related expenses of $0.7 million and increased other various sales, general and administrative costs of $0.1 million.

The decrease in selling, general and administrative expense in the six months ended June 30, 2023 compared to the same period in 2022 was mainly due to decreased stock-based compensation expense of $1.1 million, partly due to stock option modification as discussed above, and decreased other various sales, general and administrative costs of $0.3 million.

These decreases we partially offset by the increase in commercial related expenses of $1.0 million.

Stock-based compensation expense in the nine months ended September 30, 2022 above 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.

The decrease in selling, general and administrative expense in the three months ended September 30, 2023 compared to the same period in 2022 was mainly due to lower stock-based compensation expense of $0.5 million and lower other various sales, general and administrative costs including allocated facilities of $0.5 million.

The decrease in selling, general and administrative expense in the nine months ended September 30, 2023 compared to the same period in 2022 was mainly due to lower stock-based compensation expense of $1.7 million partly due to stock option modification as discussed above, and lower other various sales, general and administrative costs including allocated facilities of $1.7 million.

These decreases we partially offset by higher commercial-related expenses of $1.0 million and higher travel-related expenses of $1.0 million.

We expect to incur significant selling, general and administrative expenses, as we expect our commercial related 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.

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Interest Income and Interest Expense

Three Months Ended June 30,

Three Months Ended September 30,

September 30,

(in thousands)

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

The increase interest income in the three and six months ended June 30, 2023, compared to the same periods in 2022, was primarily driven by higher interest rates.

The increase interest income in the three and nine months ended September 30, 2023, compared to the same periods in 2022, was primarily driven by higher interest rates.

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

The increase in interest expense in the three and six months ended June 30, 2023, compared to the same periods in 2022, was primarily due to higher interest expense on our term loan with Midcap of $1.3 million and $2.0 million, respectively, driven by higher outstanding term loan balance, as well as higher interest rates.

The increase interest expense in the six months ended June 30, 2023 compared to the same period of 2022 was partly offset by the interest expense recognized in first quarter of 2022 related to the accretion of financing liability with Lilly of $0.7 million.

The increase in interest expense in the three and nine months ended September 30, 2023, compared to the same periods in 2022, was primarily due to higher interest expense on our term loan with Midcap of $1.1 million and $3.1 million, respectively, driven by higher outstanding term loan balance, as well as higher interest rates.

The increase interest expense in the nine months ended September 30, 2023 compared to the same period of 2022 was partly offset by the interest expense recognized in first quarter of 2022 related to the accretion of financing liability with Lilly of $0.7 million.

Critical Accounting Policies and Use of Estimates

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Liquidity and Capital Resources

As of June 30, 2023 and December 31, 2022, we had approximately $64.4 million and $58.2 million, respectively, in cash, cash equivalents and short-term investments.

As of September 30, 2023 and December 31, 2022, we had approximately $62.4 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, US treasury bills, government-sponsored enterprise securities, and corporate bonds and commercial paper.

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Following summarizes our cash flow activity for the periods presented:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Net increase in cash and cash equivalents

Net cash provided in operating activities for the six months ended June 30, 2023 was primarily due the proceeds from sales of our products (TAVALISSE and REZLIDHIA), cash receipt from our collaboration partners, including the $20.0 million regulatory milestone payment from Kissei received in January 2023, and cash received from the awards granted by the US Department of Defense, partially offset by the payments of our operating expenses.

Net cash used in operating activities for the six months ended June 30, 2022 was primarily due to payments for our operating expenses, partially offset by the proceeds from sales of our product (TAVALISSE), and cash received from collaboration partners.

Net cash provided by investing activities for the six months ended June 30, 2023 comprises net maturities of short-term investments of $18.6 million and proceeds from sale of property and equipment of $0.1 million, partially offset by the payment of milestone obligations to Forma (now Novo Nordisk) recorded as intangible assets of $15.0 million.

Net cash provided by investing activities for the six months ended June 30, 2022 comprises net maturities of short-term investments of $43.6 million and proceeds from sale of property and equipment of $0.3 million, partially offset by purchases of property and equipment of $0.2 million.

Net cash provided by financing activities for the six months ended June 30, 2023 was primarily due to the net cash proceeds from term loan financing (Tranche 5) of $20.0 million and proceeds from exercise of stock options and participation in the Purchase Plan of $0.6 million, partially offset by our cost share payments to Lilly of $1.8 million.

Net cash provided by financing activities for the six months ended June 30, 2022 was primarily due to the net cash proceeds from term loan financing (Tranche 3) of $9.9 million and proceeds from exercise of stock options and participation in the Purchase Plan of $1.5 million, partially offset by our payment of cost share to Lilly of $8.3 million.

Net cash provided in operating activities for the nine months ended September 30, 2023 was primarily due the proceeds from sales of our products (TAVALISSE and REZLIDHIA), cash receipt from our collaboration partners, including the $20.0 million regulatory milestone payment from Kissei received in January 2023, and cash received from the awards granted by the US Department of Defense, partially offset by the payments of our operating expenses.

Net cash used in operating activities for the nine months ended September 30, 2022 was primarily due to payments for our operating expenses, partially offset by the proceeds from sales of our product (TAVALISSE), and cash received from collaboration partners.

Net cash provided by investing activities for the nine months ended September 30, 2023 comprises net maturities of short-term investments of $17.4 million and proceeds from sale of property and equipment of $0.1 million, partially offset by the payment of milestone obligations to Forma (now Novo Nordisk) recorded as intangible assets of $15.0 million.

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 sale of property and equipment of $0.5 million, partially offset by purchases of property and equipment of $0.4 million.

Net cash provided by financing activities for the nine months ended September 30, 2023 was primarily due to the net cash proceeds from term loan financing (Tranche 5) of $20.0 million and proceeds from exercise of stock options and participation in the Purchase Plan of $0.6 million, partially offset by our cost share payments to Lilly of $2.6 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) of $19.5 million and proceeds from exercise 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.

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.

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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 June 30, 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.

As of September 30, 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.

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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.

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 June 30, 2023, we have not sold any shares of common stock under such Open Market Sale Agreement.

As of September 30, 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 June 30, 2023.

The Credit Agreement provides for $60.0 million term loan credit facility, which was fully funded as of September 30, 2023.

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

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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 global pandemics, 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.

However, certain external factors such as global pandemics, the global tensions arising from the Russia-Ukraine war and Hamas-Israel war, political and economic legislations, and other factors may continue to rapidly evolve which could significantly disrupt the global financial

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.

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● the progress and success of our clinical trials and preclinical activities (including studies and manufacture of materials) of our product candidates conducted by us;

● our ability to secure and maintain our patent protection and regulatory rights;

● our ability to meet operating covenants under our current and future credit facilities, if any;

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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.

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 commercialization of our products.

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In addition, these agreements may, from time to time, be subjected to amendments as a result of any change orders executed by the parties.

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 June 30, 2023, Lilly billed us $16.9 million of the funding development costs and the amounts were fully paid as of June 30, 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.

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 the amended Lilly Agreement, and us providing the first opt-out notice to Lilly on September 29, 2023, we are responsible for funding the development costs for R552 in the US, Europe, and Japan, up to $22.6 million through April 1, 2024.

Through September 30, 2023, Lilly billed us $17.7 million of the funding development costs and the amounts were fully paid as of September 30, 2023.

The amended Lilly Agreement, however, provides us the right to opt- -in to co-funding the R552 development, upon us providing notice to Lilly within 30 days of certain events, as specified in the Lilly Agreement.

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, Forma (now Novo Nordisk) 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 (now Novo Nordisk) 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 six months ended June 30, 2023.

As of June 30, 2023, we have a contractual commitment related to our leased facilities of $1.4 million, with approximately $0.7 million payable within 12 months.

No new milestone was met during the nine months ended September 30, 2023.

As of September 30, 2023, we have a contractual commitment related to our leased facilities of $1.2 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.

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

As of June 30, 2023, the outstanding principal amount of the loan was $60.0 million, and no principal payments are due within 12 months.

As of September 30, 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 June 30, 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 $11.7 million, with approximately $4.4 million payable within 12 months.

As of September 30, 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 $10.5 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.

3 unchanged sentences

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