What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-07 compared with 2023-11-07 · 225 added, 212 removed, 341 unchanged (56% of the section changed)

3 unchanged sentences

(In thousands)

September 30, 2023

March 31, 2024

December 31, 2023 (1)

6 unchanged sentences

Property and equipment, net

Intangible asset, net

Intangible assets, net

Operating lease right-of-use assets

4 unchanged sentences

Accrued research and development

Acquisition-related liabilities

Revenue reserves and refund liability

Loans payable, net, current portion

Other accrued liabilities

Lease liabilities, current portion

Deferred revenue

Lease liabilities, current portion

Other long-term liabilities, current portion

1 unchanged sentence

Long-term portion of lease liabilities

Loans payable, net of discount

Long-term portion of loans payable, net

Other long-term liabilities

3 unchanged sentences

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive (loss) income

Accumulated deficit

8 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Product sales, net

Contract revenues from collaborations

Government contract

Total revenues

13 unchanged sentences

(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive gain (loss):

Net unrealized gain (loss) on short-term investments

Three Months Ended March 31,

Other comprehensive (loss) gain:

Net unrealized (loss) gain on short-term investments

Comprehensive loss

1 unchanged sentence

RIGEL PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF STOCK HOLDERS’ (DEFICIT) EQUITY

CONDENSED STATEMENTS OF STOCK HOLDERS’ DEFICIT

(In thousands, except share amounts)

2 unchanged sentences

Stockholders’

Income (Loss)

Balance as of January 1, 2024

( 1,407,550 )

Net change in unrealized gain on short-term investments

Net change in unrealized loss on short-term investments

Issuance of common stock upon exercise of options

3 unchanged sentences

( 1,415,797 )

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 )

Net change in unrealized gain on short-term investments

Issuance of common stock upon exercise of options

Stock-based compensation expense

Balance as of September 30, 2023

( 1,408,287 )

Accumulated Other

1 unchanged sentence

Stockholders’

Equity (Deficit)

Balance as of January 1, 2023

( 1,382,459 )

Net unrealized loss on short-term investments

Net change in unrealized gain on short-term investments

Issuance of common stock upon exercise of options

3 unchanged sentences

( 1,395,995 )

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 )

Net unrealized gain on short-term investments

Stock-based compensation expense

Balance as of September 30, 2022

( 1,383,860 )

See Accompanying Notes to Condensed Financial Statements

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities

1 unchanged sentence

Stock-based compensation expense

Loss (gain) on sale and disposal of fixed assets

Loss on sale and disposal of fixed assets

Depreciation and amortization

Non-cash interest expense

Net amortization and accretion of discount on short-term investments and term loan

Net amortization of discount on short-term investments and term loan

Changes in assets and liabilities:

8 unchanged sentences

Lease liability

Deferred revenue

Other current and long-term liabilities

Net cash provided by (used in) operating activities

Net cash used in operating activities

Investing activities

1 unchanged sentence

Purchases of short-term investments

Purchases of intangible asset

Payments for acquisition of intangible assets

Proceeds from sale of property and equipment

Purchases of property and equipment

Net cash provided by investing activities

1 unchanged sentence

Net proceeds from term loan financing

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

Net proceeds from issuances of common stock upon exercise of options

Cost share payments to a collaboration partner

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

2 unchanged sentences

Interest paid

Intangible assets included within acquisition-related liabilities

See Accompanying Notes to Condensed Financial Statements

4 unchanged sentences

Description of Business

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.

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

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

3 unchanged sentences

We began our commercialization of REZLIDHIA in December 2022.

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

(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.

W e in-licensed olutasidenib from Forma Therapeutics, Inc., now Novo Nordisk (Forma), with exclusive, worldwide rights for its development, manufacturing and commercialization.

In February 2024, we entered into an Asset Purchase Agreement with Blueprint Medicines Corporation (Blueprint) to purchase certain assets comprising the right to research, develop, manufacture and commercialize GAVRETO ® (pralsetinib) in the US.

GAVRETO (pralsetinib) is a once daily, small molecule, oral, kinase inhibitor of wild-type rearranged during transfection (RET) and oncogenic RET fusions.

GAVRETO is approved by the FDA for the treatment of adult patients with metastatic RET fusion-positive non-small cell lung cancer (NSCLC) as detected by an FDA-approved test.

GAVRETO is also approved under accelerated approval based on overall response rate and duration response rate, for the treatment of adult and pediatric patients 12 years of age and older with advanced or metastatic RET fusion-positive thyroid cancer who require systemic therapy and who are radioactive iodine-refractory (if radioactive iodine is appropriate).

We intend to distribute and market GAVRETO for approved indications in RET fusion-positive NSCLC and advanced thyroid cancers, and we expect to complete the transition of the asset and start recognizing product sales in July of 2024.

We continue to advance the development of our interleukin receptor-associated kinases 1 and 4 (IRAK1/4) 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.

We have strategic development collaborations with the University of Texas MD Anderson Cancer Center (MDACC) to expand our evaluation of REZLIDHIA (olutasidenib) in AML and other hematologic cancers, and with Collaborative Network for Neuro-Oncology Clinical Trials (CONNECT) to conduct a Phase 2 clinical trial to evaluate REZLIDHIA (olutasidenib) in combination with temozolomide in patients with high-grade glioma (HGG) harboring an IDH1 mutation.

We have a receptor-interacting serine/threonine-protein kinase 1 (RIPK1) inhibitor program in clinical development with our partner Eli Lilly and Company (Lilly).

1 unchanged sentence

Basis of Presentation

Our accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (US GAAP), for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Act of 1933, as amended (Securities Act).

instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Act of 1933, as amended (Securities Act).

Accordingly, they do not include all the information and notes required by US GAAP for complete financial statements.

2 unchanged sentences

The balance sheet as of December 31, 2023 has been derived from audited financial statements at that date but does not include all disclosures required by US GAAP for complete financial statements.

Because certain disclosures required by US GAAP for complete financial statements are not included herein, these interim unaudited condensed financial statements and the notes accompanying them should be read in conjunction with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 7, 2023.

Use of Estimates

4 unchanged sentences

Our significant accounting policies are described in “Note 1 – Description of Business and Summary of Significant Accounting Policies” to our “Notes to Financial Statements” contained in Part II, Item 8, “Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2023.

There have been no material changes to these accounting policies.

As of September 30, 2023, we had approximately $ 62.4 million in cash, cash equivalents and short-term investments.

There have been no material changes to these accounting policies except for the accounting consideration related to the Asset Purchase Agreement with Blueprint as discussed in “Note 5 – In-licensing and Acquisition.”

As of March 31, 2024, we had approximately $ 49.6 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.

1 unchanged sentence

Recently Issued Accounting Standards

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

In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This update expands public entities’ segment disclosures, among others, requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss;

an amount and description of its composition for other segment items;

and interim disclosures of a reportable segment’s profit or loss and assets.

All disclosure requirements under this update are also required for public entities with a single reportable segment.

This update is effective for our Annual Report on Form 10-K for the fiscal year ending December 31, 2024, and interim periods thereafter.

Early adoption is permitted.

The update should be applied retrospectively to all periods presented in the financial statements.

We are currently evaluating the impact of adopting this update on our financial statements and disclosures.

In December 2023, FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , which enhance the annual disclosure requirements regarding the tax rate reconciliation and incomes taxes paid information.

This update is effective for our fiscal year ending December 31, 2025, and maybe adopted on a prospective or retrospective basis.

Early adoption is permitted.

We are currently assessing the impact of adopting this guidance but does not expect to have a significant impact to our financial statements and disclosures.

Other recently issued accounting guidance not discussed in this Quarterly Report on Form 10-Q are either not applicable or did not have, or are not expected to have, a material impact on us.

Net Loss Per Share

5 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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Outstanding stock options

1 unchanged sentence

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Product sales:

3 unchanged sentences

Revenues from collaborations:

License revenues

Development milestones

Royalty, delivery of drug supplies and others

Delivery of drug supplies, royalty and others

Total revenues from collaborations

Government contract

Total revenues

Revenue from product sales are related to sales of our commercial products, TAVALISSE and REZLIDHIA, to our specialty distributors.

For detailed discussions of our revenues from collaboration and government contract, see “Note 4 – Sponsored Research and License Agreements and Government Contract.”

For detailed discussions of our revenues from collaborations, see “Note 4 – Sponsored Research, License Agreements and Government Contracts.”

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 nine months ended September 30, 2023 and 2022, $ 29.7 million and $ 19.7 million, respectively, was accounted for as additions to revenue reserves and refund liability, and $ 0.8 million and $ 2.4 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.

Of the total discounts and allowances from gross product sales for the three months ended March 31, 2024 and 2023, $ 12.3 million and $ 9.2 million, respectively, was accounted for as additions to revenue reserves and refund liability, and $ 0.1 million and $ 0.3 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 September 30, 2023

Balance as of March 31, 2024

Discounts and

2 unchanged sentences

Credit or payments made during the period

Balance as of September 30, 2022

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,

Balance as of March 31, 2023

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

Three Months Ended March 31,

McKesson Specialty Care Distribution Corporation

Cardinal Healthcare

ASD Healthcare and Oncology Supply

Sponsored Research and License Agreements and Government Contract

(formerly ASD Healthcare)

Sponsored Research, License Agreements and Government Contracts

Sponsored Research and License Agreements

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

As of September 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;

As of March 31, 2024, 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.

(Grifols) to commercialize fostamatinib for human diseases in all indications, including chronic ITP and autoimmune hemolytic anemia (AIHA), in Grifols territory which includes Europe, the UK, Turkey, the Middle East, North Africa and Russia (including Commonwealth of Independent States);

(Grifols) to commercialize fostamatinib for human diseases in all indications in Grifols territory which includes Europe, the UK, Turkey, the Middle East, North Africa and Russia (including Commonwealth of Independent States);

with Kissei Pharmaceutical Co., Ltd.

1 unchanged sentence

with Medison Pharma Trading AG (Medison Canada) and Medison Pharma Ltd.

(Medison Israel and, together with Medison Canada, Medison) to commercialize fostamatinib in all indications, including chronic ITP and AIHA, in Medison territory which includes Canada and Israel;

and with Knight Therapeutics International SA (Knight) to commercialize fostamatinib in all indications, including chronic ITP and AIHA, in Knight territory which includes Latin America, consisting of Mexico, Central and South America, and the Caribbean (Knight territory).

(Medison Israel and, together with Medison Canada, Medison) to commercialize fostamatinib in all indications, in Medison territory which includes Canada and Israel;

and with Knight Therapeutics International SA (Knight) to commercialize fostamatinib in all indications, in Knight territory which includes Latin America, consisting of Mexico, Central and South America, and the Caribbean (Knight territory).

Further, we are also a party to collaboration agreements, but do not have ongoing performance obligations with BerGenBio for the development and commercialization of AXL receptor tyrosine kinase ( AXL) inhibitors in oncology, and with Daiichi to pursue research related to murine double minute 2 ( MDM2) inhibitors, a novel class of drug targets called ligases.

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 September 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.

As of March 31, 2024, 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.

1 unchanged sentence

Future events that may trigger payments to us under the agreements are based solely on our partners’ future efforts and achievements of specified development, regulatory and/or commercial events.

We account for the milestone payments when such milestones are considered probable of being achieved, and estimate the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

Milestone payments that are not within our or the licensee’s control, such as regulatory approvals, are not considered

probable of being achieved until uncertainty associated with the approvals has been resolved.

The transaction price is then allocated to each performance obligation, on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied.

At the end of each subsequent reporting period, we re-evaluate the probability of achieving such milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, and recorded as part of contract revenues from collaborations during the period of adjustment.

Global Exclusive License Agreement with Lilly

7 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 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.

Under the Lilly Agreement, we are responsible for performing and funding initial discovery and identification of CNS disease development candidates.

4 unchanged sentences

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 the co-funding of R552 development, upon us providing notice to Lilly within 30 days of certain events as specified in the Lilly Agreement, and as a result receive greater royalties from sales.

Following the amendment to the Lilly Agreement, on September 29, 2023, we provided the first opt-out notice to Lilly.

We continued 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.

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.

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

6 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 nine months ended September 30, 2023, and $ 0.7 million of interest was accreted during the nine months ended September 30, 2022.

Through September 30, 2023, Lilly billed us $ 17.7 million for our share of development costs, and the amount was fully paid as of September 30, 2023.

As of September 30, 2023 and December 31, 2022, the outstanding liability to Lilly was $ 43.6 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 three months ended March 31, 2024 and 2023.

Through March 31, 2024, Lilly billed us $ 20.3 million for our share of development costs incurred as of the fourth quarter of 2023, and the amount was fully paid as of March 31, 2024.

As of March 31, 2024 and December 31, 2023, the outstanding liability to Lilly was $ 41.0 million and $ 43.6 million, respectively, and included within other long-term liabilities, current portion, and other long-term liabilities in the condensed balance sheet.

As discussed above, following the amendment to the Lilly Agreement, and us providing the first opt-out notice to Lilly, our cumulative share of the R552 development cost is now capped at $ 22.6 million through April 1, 2024.

3 unchanged sentences

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

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 nine months ended September 30, 2022, we recognized no revenue and $ 0.5 million of revenue, respectively, associated with the delivery of CNS penetrant IP.

No such revenue was recognized in the three and nine months ended September 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.

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

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

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

There was no outstanding deferred revenue related to Lilly Agreement as of March 31, 2024 and December 31, 2023.

Grifols License Agreement

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

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

Under the agreement, we received an upfront payment of $ 30.0 million, with the potential for $ 297.5 million in total regulatory and commercial milestones.

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

The agreement also required us to continue to conduct our long-term open-label extension study on patients with ITP through European Medicines Agency (EMA) approval of ITP in Europe or until the study ends as well as conduct the Phase 3 trial of fostamatinib in AIHA.

In January 2020, the European Commission (EC) granted a centralized Marketing Authorization (MA) for fostamatinib valid throughout the European Union (EU) and in the UK after the departure of the UK from the EU for the treatment of chronic ITP in adult patients who are refractory to other treatments.

4 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.

As of September 30, 2023, there was no outstanding deferred revenue.

In the three and nine months ended September 30, 2022, we recognized $ 0.2 million and $ 0.7 million, respectively, of revenue associated with such remaining performance obligation.

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.

We are recognizing revenues related to the research and regulatory services throughout the term of the respective clinical programs using the input method.

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

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

No outstanding deferred revenue related to Grifols license agreement as of March 31, 2024 and December 31, 2023.

We entered into a Commercial Supply Agreement with Grifols in October 2020 to supply and sell our drug product priced at a certain markup specified in the agreement, in quantities Grifols order from us pursuant to and in accordance with the agreement.

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

During the three and nine months ended September 30, 2023, we recognized no revenue and $ 2.8 million of revenue, respectively, related to delivery of drug supply to Grifols.

D uring the three and nine months ended September 30, 2022, we recognized $ 0.4 million and $ 1.6 million of revenue, respectively, related to delivery of drug supply to Grifols .

We began recognizing royalty revenue from Grifols included within contract revenues from collaboration beginning in the third quarter of 2022.

For the three and nine months ended September 30, 2023, we recognized $ 0.8 million and $ 2.3 million, respectively, of royalty revenue from Grifols.

For the three and nine months ended September 30, 2022, we recognized $ 0.1 million of royalty revenue from Grifols.

For the three months ended March 31, 2024 and 2023, no revenue and $ 1.6 million of revenue, respectively, was recognized related to delivery of drug supply to Grifols.

We recognize royalty revenue from Grifols included within contract revenues from collaboration.

For the three months ended March 31, 2024 and 2023, we recognized royalty revenue of $ 1.1 million and $ 0.7 million, respectively.

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 September 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 nine months ended September 30, 2022, we recognized an immaterial amount of revenue and $ 2.6 million of revenue, respectively, related to the delivery of fostamatinib supply to Kissei mainly for commercial use.

No such revenue was recognized during the three and nine months ended September 30, 2023.

As of March 31, 2024 and December 31, 2023, the remaining deferred revenue was related to the material right associated with discounted fostamatinib supply which amounted to $ 1.4 million.

No revenue was recognized during the three months ended March 31, 2024 and 2023 associated with the remaining performance obligation.

For the three months ended March 31, 2024 and 2023, $ 2.3 million of revenue, and no revenue, respectively, was recognized related to the delivery of fostamatinib supply to Kissei mainly for commercial use.

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

3 unchanged sentences

The amount was subsequently collected in January 2023.

The remaining variable consideration related to future development and 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.

For sales-based milestones and tiered, escalated net sales-based payments for the supply of fostamatinib, we determined that the license is the predominant item to which the sales-based milestones relate to.

Accordingly, we will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the allocated costs for the tiered, escalated net sales-based payments has been satisfied (or partially satisfied).

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

Medison Commercial and License Agreements

2 unchanged sentences

(a) granting of the license and (b) obtaining regulatory approval in Canada of fostamatinib in ITP.

We determined that the non-refundable upfront fee of $ 5.0 million represented the transaction price.

However, under the agreement, we have the option to buy back all rights to the product in Canada within six months from obtaining regulatory approval for the treatment of AIHA in Canada.

The buyback option precludes us from transferring control of the license to Medison under ASC 606.

We believed that the buyback provision, if exercised, will require us to repurchase the license at an amount equal to or more than the upfront $ 5.0 million.

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

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

We also billed Medison for the delivery of drug 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 on 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 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.

Based on management’s assessment, the likelihood of exercising the buy-back option right was remote.

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 September 30, 2023 and December 31, 2022.

During the three and nine months ended September 30, 2023, we recognized $ 0.2 million of revenue related to the delivery of drug supplies to Medison and a milestone pursuant to the commercial and license agreement.

No such revenue was recognized during the three and nine months ended September 30, 2022.

We determined that the non-refundable upfront fee represented the transaction price, however, due to the buyback provision, we accounted this upfront payment as financing arrangement under ASC 606.

In 2022, management concluded that the likelihood of exercising the buyback option right was remote considering the top-line results from our Phase 3 trial of fostamatinib in warm auto immune hemolytic anemian (wAIHA) which showed that the trial did not demonstrate statistical significance in the primary efficacy endpoint, and the guidance received from the

As such, in accordance with ASC 606, we relieved the outstanding financing liability which includes the upfront payment and accreted interest, and recognized such amount as revenue in 2022.

There was no outstanding deferred revenue related to Medison license agreement as of March 31, 2024 and December 31, 2023.

For the three months ended March 31, 2024, we recognized $ 0.1 million of revenue from Medison related to the delivery of drug supplies and royalty revenue.

For the three months ended March 31, 2023, we recognized $ 0.1 million of revenue related to the delivery of drug supplies.

Knight Commercial License and Supply Agreement

3 unchanged sentences

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

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

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

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

We are also responsible for the exclusive manufacture and supply of fostamatinib for all future development and commercialization activities under the agreement.

Government Contract - US Department of Defense’s JPEO-CBRND

In January 2021, we were awarded up to $ 16.5 million by the US Department of Defense to support our ongoing Phase 3 clinical trial to evaluate the safety and efficacy of fostamatinib for the treatment of hospitalized high-risk patients with COVID-19.

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.

We recognized no revenue and $ 1.0 million of revenue for three and nine months ended September 30, 2023, respectively, and $ 2.5 million of revenue for the three and nine months ended September 30, 2022, related to this grant upon achievement of certain milestones.

Through September 30, 2023, we received $ 16.0 million of the award which we recognized as revenue in the respective periods, with remaining $ 0.5 million available, subject to us meeting a 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.

Government Contracts

US Department of Defense (DOD)

In January 2021, we were awarded up to $ 16.5 million by the DOD to support our ongoing Phase 3 clinical trial to evaluate the safety and efficacy of fostamatinib for the treatment of hospitalized high-risk patients with COVID-19.

No revenue was recognized during the three months ended March 31, 2024 and 2023.

Through March 31, 2024, we received $ 16.0 million of the award.

Biomedical Advanced Research and Development (BARDA)

In August 2023, we were awarded up to $ 0.8 million by BARDA, part of the Office of the Assistant Secretary for the Preparedness and Response at the US Department of Health and Human Services (DHHS), for our evaluation of fostamatinib in mitigating the impact of long-term respiratory distress.

No revenue was recognized during the three months ended March 31, 2024 and 2023.

Through March 31, 2024, we received $ 0.1 million of the award.

Strategic Development Collaborations with MDACC and CONNECT

In December 2023, we entered into a Strategic Collaboration Agreement with MDACC, a comprehensive cancer research, treatment, and prevention center.

The collaboration will expand our evaluation of REZLIDHIA (olutasidenib) in AML and other hematologic cancers.

Under the collaboration, we will provide MDACC the study materials and $ 15.0 million in time-based milestone payments as compensation for services to be provided for the studies, over the five-year collaboration term, unless terminated earlier as provided for in the agreement.

Through March 31, 2024, we provided $ 2.0 million funding to MDACC.

In January 2024, we announced our collaboration with CONNECT, an international collaborative network of pediatric cancer centers, to conduct a Phase 2 clinical trial to evaluate REZLIDHIA (olutasidenib) in glioma.

Under the collaboration, we will provide funding up to $ 3.0 million and study material over the four-year collaboration.

We account for the funding we provide under the above research collaboration agreements as prepaid research and development in the balance sheet to the extent the payment is made in advance of services being rendered, and recognize such amount as research and development expense within the statements of operations as the collaborative partners render the services under the respective agreement.

In-licensing and Acquisition

Asset Purchase Agreement with Blueprint

On February 22, 2024, we acquired the US rights to research, develop, manufacture and commercialize GAVRETO (pralsetinib) from Blueprint pursuant to an Asset Purchase Agreement.

The acquired assets include, among other things, applicable intellectual property related to pralsetinib in the US, including patents, copyrights and trademarks, as well as clinical regulatory and commercial data and records.

Pursuant to the Asset Purchase Agreement, we agreed to pay a purchase price of $ 15.0 million, $ 10.0 million of which is payable upon our first commercial sale of GAVRETO (pralsetinib) and an additional $ 5.0 million of which is payable on the first anniversary of the closing date of the agreement, subject to certain conditions.

Blueprint is also eligible to receive up to $ 97.5 million in future commercial milestone payments and up to $ 5.0 million in future regulatory milestone payments.

The potential regulatory milestones include full regulatory approval of pralsetinib (or related compounds) for the treatment of adult RET-fusion positive thyroid cancer, and maintenance of the current regulatory approval of pralsetinib for the treatment of adult RET-fusion positive thyroid cancer during the period beginning on February 22, 2024 and ending on the third anniversary of the first commercial sale of pralsetinib subject to certain conditions.

Subject to the terms and conditions of the Asset Purchase Agreement, Blueprint would be entitled to tiered royalty payments on net sales of products containing pralsetinib (or related compounds) ranging from 10 % to 30 %, subject to certain reductions and offsets.

In accordance with ASC 805 Business Combinations (ASC 805) , the transaction was accounted for as an asset acquisition, because substantially all of the fair value of the gross assets acquired is concentrated in a single asset, which is the GAVRETO product rights.

The GAVRETO product rights comprised developed technology, customers, trademarks and trade name, and are considered a single asset as they are inextricably linked.

ASC 805 provides for a screen test, wherein if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the assets acquired are not considered to be a business.

The following table summarizes the total purchase consideration in connection with the asset acquisition (in thousands):

Closing purchase price

Transaction costs

Total purchase consideration

The closing purchase price was recorded within acquisition-related liabilities in the condensed balance sheet.

The transaction cost of $ 0.2 million was also recorded within acquisition-related liabilities, and the remaining $ 0.1 million has been paid in cash as of March 31, 2024.

The contingent considerations relating to future commercial and regulatory milestones were not included in the total purchase price consideration, and will be accounted for when the contingency is resolved and the consideration becomes payable.

Royalties will be recognized within cost of sales, as revenue from GAVRETO product sales is recognized.

In an asset acquisition, the acquiring entity should recognize the assets acquired at cost to the acquiring entity which includes transaction costs and consideration given, allocated based on a relative fair value of the assets acquired measured at acquisition date.

The fair value of the developed technology, customers, trademarks and trade name was estimated using a multi-period excess earnings income approach that discounts expected cash flows to present value by applying discount rate that represents the estimated rate that market participants would use to value such assets.

The relative fair value are based on estimates that required judgement and certain assumptions, categorized as Level 3 in the fair value hierarchy.

Since we acquired a single asset, the total purchase consideration was recorded as intangible assets.

The related intangible assets is being amortized on a straight-line basis over the estimated useful life of 12 years , and the related amortization is recorded within cost of sales.

Simultaneously and in connection with entering into the Asset Purchase Agreement, we also entered into certain supporting agreements, including a customary transition agreement, pursuant to which, during the transition period, Blueprint will transition regulatory and distribution responsibility for GAVRETO (pralsetinib) to us.

We also agreed to purchase certain drug product inventories from Blueprint amounting to approximately $ 7.0 million under a Material Transfer Agreement.

As of March 31, 2024, we received inventories amounting to approximately $ 3.1 million,

and the remaining inventories are expected to be delivered to us in the second quarter of 2024.

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, 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.

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.

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

1 unchanged sentence

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 three and nine months ended September 30, 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.

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 statements of operations in 2022.

Under the accounting guidance, we account for contingent payments when a contingency is resolved, and the consideration becomes payable.

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.

The amount recorded as intangible asset is amortized over the estimated useful life of the acquired licensed asset.

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

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.

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 assets when the event requiring payment of the milestones occurs.

Prior to the FDA approval of REZLIDHIA in December 2022, a certain regulatory milestone was met which entitled Forma 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.

1 unchanged sentence

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 (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.

The $ 15.0 million in milestone payment obligation was outstanding as of

December 31, 2022 and included within accounts payable in our condensed balance sheet.

Such amount was paid in the first quarter of 2023 .

During the three and nine months ended September 30, 2023, we recognized amortization of intangible asset of $ 0.3 million and $ 0.8 million, respectively, and royalty expense of $ 0.4 million and $ 1.0 million, respectively, 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 and nine months ended September 30, 2022.

With this FDA approval and first commercial sale of the product, Forma 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 assets on our condensed balance sheet in the fourth quarter of 2022.

No new milestone was met in 2023 and during the three months ended March 31, 2024.

The amount recorded as intangible asset is being amortized on a straight-line basis over the estimated useful life of 14 years , and the related amortization is recorded within cost of sales .

Royalties are recognized within cost of sales, as revenue from REZLIDHIA product sales is recognized.

Stock-Based Compensation

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Selling, general and administrative

1 unchanged sentence

Total stock-based compensation expense

Stock-based compensation expense within research and development in the nine months ended September 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 nine months ended September 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 nine months ended September 30, 2023, we granted stock options to purchase 3,186,000 shares of common stock with weighted-average grant-date fair value of $ 1.34 per share, and 24,837 stock options were exercised.

As of September 30, 2023, there were 34,283,826 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 September 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 September 30, 2023.

During the three months ended March 31, 2024, we granted stock options to purchase 5,410,890 shares of common stock with weighted-average grant-date fair value of $ 0.97 per share, and 90,544 stock options were exercised.

The stock options granted during the three months ended March 31, 2024 generally vest over 3 years.

As of March 31, 2024, there were 37,135,396 stock options outstanding, of which, 1,322,500 are outstanding performance-based stock options wherein the achievement of the corresponding corporate-based milestones were assessed not probable as of March 31, 2024.

Accordingly, none of the $ 2.5 million grant date fair value for these awards has been recognized as stock-based compensation expense as of March 31, 2024.

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 September 30,

Nine Months Ended September 30,

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

Three Months Ended March 31,

Risk-free interest rate

2 unchanged sentences

Expected volatility

During the nine months ended September 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 September 30, 2023, there were 1,937,064 RSUs outstanding.

As of September 30, 2023, there was approximately $ 12.6 million of unrecognized stock-based compensation cost which is expected to be recognized over a remaining weighted-average period of 2.45 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 and July 2023, our Board of Directors approved additional 356,000 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 September 30, 2023, there were 13,145,511 shares of common stock available for future grant under our Equity Incentive Plans.

During the three months ended March 31, 2024, we granted 2,763,979 RSUs with a grant-date weighted-average fair value of $ 1.27 per share, and 489,992 RSUs were released.

The RSUs granted during the three months ended March 31, 2024 generally vest over 3 years .

As of March 31, 2024, there were 4,071,854 RSUs outstanding.

As of March 31, 2024, there was approximately $ 16.2 million of unrecognized stock-based compensation cost which is expected to be recognized over a remaining weighted-average period of 2.49 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 March 2024, our Board of Directors approved additional 375,000 shares of common stock reseved for issuance under our Inducement Plan.

As of March 31, 2024, there were 7,129,161 shares of common stock available for future grant under our Equity Incentive Plans.

Employee Stock Purchase Plan

5 unchanged sentences

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 September 30, 2023, unrecognized stock-based compensation cost related to our Purchase Plan amounted to $ 0.3 million, which is expected to be recognized over the remaining weighted average period of 0.49 years.

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

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

As of March 31, 2024, unrecognized stock-based compensation cost related to our Purchase Plan amounted to $ 0.1 million, which is expected to be recognized over the remaining weighted average period of 0.24 years.

During the three months ended March 31, 2024, there were no shares purchased under the Purchase Plan.

As of March 31, 2024, there were 2,495,835 shares reserved for future issuance under the Purchase Plan.

Other Balance Sheet Components

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

September 30, 2023

March 31, 2024

December 31, 2023

2 unchanged sentences

Finished goods

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

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

We provide reserves for potential excess, dated or obsolete inventories based upon assumptions about future demand and market conditions, as well as product shelf life.

There were no material inventory reserves as of September 30, 2023 and December 31, 2022.

Inventories that are not expected to be consumed beyond our normal operating cycle are classified as non-current inventories and included within other assets in the condensed balance sheet.

Non-current inventories primarily consist of active pharmaceutical ingredient classified as raw materials, which have multi-year shelf life.

Inventories as of March 31, 2024 and December 31, 2023 include inventories acquired from Forma pursuant to the license and transition services agreement.

Inventories as of March 31, 2024 also include inventories acquired from Blueprint pursuant to a Material Transfer Agreement as discussed in Note 5 – In-licencing and Acquisition.

As of March 31, 2024, advance payments to the manufacturer of our raw materials were included within prepaid and other current assets in the condensed balance sheet amounted to $ 0.7 million.

No such advance payment was included within prepaid and other current assets as of December 31, 2023.

Non-current inventories consist of active pharmaceutical ingredient classified as raw materials which have multi-year shelf life, as well as certain work in process and finished goods inventories that are not expected to be consumed beyond our normal operating cycle.

Intangible assets

Intangible assets consist of the following (in thousands):

March 31, 2024

December 31, 2023

Intangible asset cost

Accumulated amortization

Intangible asset, net

See “Note 5 – In-licensing and Acquisition” for related discussions of capitalized intangible assets.

For the three months ended March 31, 2024 and 2023, amortization expense recorded within cost of sales in the statements of operations were $ 0.4 million and $ 0.3 million, respectively.

The following table presents the estimated future amortization expense of intangible assets as of March 31, 2024 (in thousands):

Remainder of 2024

Cash, Cash Equivalents and Short-Term Investments

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

September 30, 2023

March 31, 2024

December 31, 2023

6 unchanged sentences

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

As of September 30, 2023

As of March 31, 2024

US treasury bills

5 unchanged sentences

Corporate bonds and commercial paper

As of September 30, 2023 and December 31, 2022, our cash equivalents and short-term investments had a weighted-average time to maturity of approximately 82 days and 89 days , respectively.

As of March 31, 2024 and December 31, 2023, our cash equivalents and short-term investments had a weighted-average time to maturity of approximately 58 days and 82 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 September 30, 2023, we had no investments that had been in a continuous unrealized loss position for more than 12 months.

As of September 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.

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

As of March 31, 2024, we had no investments that had been in a continuous unrealized loss position for more than 12 months.

As of March 31, 2024, a total of 31 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 September 30, 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 September 30, 2023

As of March 31, 2024

Unrealized Losses

3 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 September 30, 2023

Assets at Fair Value as of March 31, 2024

Money market funds

7 unchanged sentences

Corporate bonds and commercial paper

We have a Credit and Security Agreement (Credit Agreement) with MidCap Financial Trust (MidCap) entered on September 27, 2019 (Closing Date) and amended on March 29, 2021 (First Amendment), February 11, 2022 (Second Amendment) and July 27, 2022 (Third Amendment).

The following table summarizes loans payable, net (in thousands):

March 31, 2024

December 31, 2023

Principal outstanding

Unamortized debt issuance costs

Principal outstanding, net of unamortized debt issuance costs

Loans payable, net, current portion

Long-term portion of loans payable, net

The outstanding loans payable as of the periods presented was related to our Credit and Security Agreement (Credit Agreement) with MidCap Financial Trust (MidCap) entered on September 27, 2019 (Closing Date) and amended on March 29, 2021 (First Amendment), February 11, 2022 (Second Amendment) and July 27, 2022 (Third Amendment).

On April 11, 2024, we entered into Fourth Amendment to the Credit Agreement.

See “Note 12 – Subsequent Events” for further discussions.

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 in March 2023, an additional $ 20.0 million was funded (Tranche 5).

As of September 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.

As of March 31, 2024, 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.

The interest rate applicable to the term loans under the amended Credit Agreement is the sum of one-month Secured Overnight Financing Rate (SOFR) , plus an adjustment of 0.11448% , subject to 1.50 % applicable floor, plus applicable margin of 5.65 % .

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

Prior to the Third Amendment, the outstanding principal balance of the loan bore interest at an annual rate of one-month London Interbank Offered Rate (LIBOR), or a comparable applicable index rate, plus applicable margin of 5.65 % , subject to a LIBOR floor of 1.50 % and is payable monthly in arrears.

Following the Third Amendment but prior to the Fourth Amendment to the Credit Agreement in April 2024 as discussed in “Note 12 – Subsequent Events”, the term loans would mature on September 1, 2026, and the interest-only period was through October 1, 2024.

The term loans bore interest equal to the sum of one-month Secured Overnight Financing Rate (SOFR) , plus an adjustment of 0.11448% , subject to 1.50 % applicable floor, plus applicable margin of 5.65 % , and a final payment fee of 2.5 % of principal due at maturity date.

We may make voluntary prepayments, in whole or in part, subject to certain prepayment premiums and additional interest payments.

1 unchanged sentence

The obligations under the amended Credit Agreement are secured by a perfected security interest in all of our assets including our intellectual property.

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

As of September 30, 2023 and December 31, 2022, the unamortized issuance costs and debt discounts amounted to $ 0.3 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 September 30, 2023 and 2022 was $ 1.9 million and $ 0.8 million, respectively, and for the nine months ended September 30, 2023 and 2022 was $ 5.0 million and $ 1.9 million, respectively.

Accrued interest of $ 1.4 million was included within other accrued liabilities in the condensed balance sheet as of September 30, 2023.

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

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, 2024 and 2023 was $ 1.9 million and $ 1.2 million, respectively.

Accrued interest of $ 1.6 million was included within other accrued liabilities in the condensed balance sheet as of March 31, 2024.

The following table presents the future minimum principal payments of the outstanding loan as of March 31, 2024 (in thousands):

Remainder of 2024

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

As of March 31, 2024, we were not in violation of any covenants.

We have a sublease agreement with Atara Biotherapeutics, Inc.

2 unchanged sentences

This leased facility is currently held as our new Headquarters following the expiration of our previously leased facility in January 2023.

The weighted average remaining term of our leases as of September 30, 2023 was 1.67 years.

The weighted average remaining term of our leases as of March 31, 2024 was 1.17 years.

We previously leased our prior headquarter space located in South San Francisco, California with Healthpeak Properties, Inc.

2 unchanged sentences

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Fixed operating lease expense

2 unchanged sentences

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Fixed sublease expense

1 unchanged sentence

Sublease income

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

The following table presents the future lease payments as of March 31, 2024 (in thousands):

Remainder of 2024

Total minimum payments required

Subsequent Events

Fourth Amendment to the Credit Agreement with MidCap

On April 11, 2024, we entered into Fourth Amendment to the Credit Agreement with MidCap, pursuant to which the parties agreed to , among other things, (i) extend the maturity date for the term loans to September 1, 2027, (ii) extend the interest only period for the term loans to October 1, 2025, (iii) revise the interest rate payable on the term loans to SOFR plus an adjustment of 0.11448% , subject to 4.00 % applicable floor, plus applicable margin of 6.50 % , (iv) reset the prepayment fee applicable to the term loans, (v) increase the exit fee payable on the term loans to 4.25 % , and (vi) update certain financial covenants in connection with the new maturity date.

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