What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-05-07 · 190 added, 155 removed, 411 unchanged (46% of the section changed)

3 unchanged sentences

(In thousands)

March 31, 2024

June 30, 2024

December 31, 2023 (1)

26 unchanged sentences

Stockholders’ deficit:

Preferred stock

Common stock (2)

Additional paid-in capital (2)

6 unchanged sentences

(1) The balance sheet as of December 31, 2023 has been derived from the audited financial statements included in Rigel’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (SEC) on March 5, 2024 .

(2) Common stock and additional paid-in capital have been restated to reflect the 1-for-10 reverse stock split effected on June 27, 2024 on a retroactive basis for the periods presented.

See Accompanying Notes to Condensed Financial Statements

2 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Product sales, net

Contract revenues from collaborations

Government contracts

Total revenues

4 unchanged sentences

Total costs and expenses

Loss from operations

Income (loss) from operations

Interest income

2 unchanged sentences

Weighted average shares used in computing net loss per share, basic and diluted (1)

(1) Share and per share amounts have been restated to reflect the 1-for-10 reverse stock split effected on June 27, 2024 on a retroactive basis for all periods presented.

See Accompanying Notes to Condensed Financial Statements

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Other comprehensive (loss) gain:

6 unchanged sentences

Accumulated Other

Common Stock (1)

Comprehensive

Stockholders’

Income (Loss)

(Loss) Income

Balance as of January 1, 2024

6 unchanged sentences

( 1,415,797 )

Net change in 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, 2024

( 1,416,827 )

Accumulated Other

Common Stock (1)

Comprehensive

8 unchanged sentences

( 1,395,995 )

Net change in unrealized gain on short-term investments

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

Issuance of common stock upon vesting of RSUs

Stock-based compensation expense

Balance as of June 30, 2023

( 1,402,595 )

(1) All share amounts in this column, including appropriate reclassifications between common stock and additional paid-in capital, have been restated to reflect the 1-for-10 reverse stock split effected on June 27, 2024 on a retroactive basis for all periods presented.

See Accompanying Notes to Condensed Financial Statements

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Stock-based compensation expense

1 unchanged sentence

Depreciation and amortization

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

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

Changes in assets and liabilities:

Accounts receivable, net

Prepaid and other current assets

Prepaid and other current and non-current assets

Right-of-use assets

5 unchanged sentences

Lease liability

Deferred revenue

Other current and long-term liabilities

Net cash used in operating activities

Net cash (used in) provided by operating activities

Investing activities

9 unchanged sentences

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

11 unchanged sentences

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

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

TAVALISSE ® (fostamatinib disodium hexahydrate) is our first product approved by the US Food and Drug Administration (FDA).

TAVALISSE is the only approved oral spleen tyrosine kinase (SYK) inhibitor for the treatment of adult patients with chronic immune thrombocytopenia (ITP) who have had an insufficient response to a previous treatment.

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

Our second FDA-approved product is REZLIDHIA ® (olutasidenib) capsules for the treatment of adult patients with relapsed or refractory (R/R) acute myeloid leukemia (AML) with a susceptible isocitrate dehydrogenase-1 (IDH1) mutation as detected by an FDA-approved test.

We began our commercialization of REZLIDHIA in December 2022.

W e in-licensed olutasidenib from Forma 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.

REZLIDHIA ® (olutasidenib) is o ur second FDA-approved product.

REZLIDHIA capsules are indicated for the treatment of adult patients with relapsed or refractory (R/R) acute myeloid leukemia (AML) with a susceptible isocitrate dehydrogenase-1 (IDH1) mutation as detected by an FDA-approved test.

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

GAVRETO ® (pralsetinib) is our third FDA-approved product which we began commercializing on June 27, 2024.

GAVRETO 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 acquired the rights to research, develop, manufacture and commercialize GAVRETO in the US from Blueprint Medicines Corporation (Blueprint) pursuant to an Asset Purchase Agreement entered in February 2024.

We continue to advance the development of R289, our interleukin receptor-associated kinases 1 and 4 (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 relapsed, 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 in AML and other hematologic cancers with IDH1 mutations, and with Collaborative Network for Neuro-Oncology Clinical Trials (CONNECT) to conduct a Phase 2 clinical trial to evaluate REZLIDHIA 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).

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

Reverse Stock Split

We filed with the Secretary of State of the State of Delaware a certificate of amendment to our Amended and Restated Certificate of Incorporation, to effect a 1-for-10 reverse stock split, effective June 27, 2024.

As a result of the reverse stock split, every ten issued and outstanding shares of our common stock were automatically combined into one issued and outstanding share of common stock.

Accordingly, an amount equal to the par value of the decreased shares

resulting from the reverse stock split was reclassified from common stock to additional paid-in capital on the condensed balance sheet and statement of changes in stockholders’ deficit.

No fractional shares were issued in connection with the reverse stock split.

Stockholders who otherwise would be entitled to receive fractional shares of common stock were entitled to receive the cash value equal to the fraction to which the stockholder would otherwise be entitled, multiplied by the closing price of the common stock as reported by Nasdaq on the last trading day prior to the effective date of the split.

As a result of the reverse stock split, proportionate adjustments were made to the number of shares underlying (and as applicable, the exercise or conversion prices of) our outstanding equity awards and to the number of shares of common stock issuable under our equity incentive plans.

The reverse stock split did not change the par value of our common stock, which remains $ 0.001 , or the authorized number of shares of our common stock.

All share amounts and per share amounts disclosed in this Quarterly Report on Form 10-Q have been adjusted to reflect the reverse stock split on a retroactive basis for all periods presented.

Basis of Presentation

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

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).

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

9 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 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.

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 below in “Note 5 – In-licensing and Acquisition.”

As of June 30, 2024, we had approximately $ 49.1 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.

5 unchanged sentences

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

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

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.

15 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Outstanding stock options

Purchase Plan

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Product sales:

5 unchanged sentences

Total revenues from collaborations

Government contracts

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 collaborations, see “Note 4 – Sponsored Research, License Agreements and Government Contracts.”

Revenue from product sales are related to sales of our commercial products to our specialty distributors.

For detailed discussions of our revenues from collaborations and government contracts, 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 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.

Of the total discounts and allowances from gross product sales for the six months ended June 30, 2024 and 2023, $ 27.6 million and $ 18.6 million, respectively, was accounted for as additions to revenue reserves and refund liability, and $ 0.4 million and $ 0.4 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.

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

3 unchanged sentences

Credit or payments made during the period

Balance as of March 31, 2024

Balance as of June 30, 2024

Discounts and

2 unchanged sentences

Credit or payments made during the period

Balance as of March 31, 2023

Balance as of June 30, 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

Three Months Ended June 30,

Six Months Ended June 30,

McKesson Corporation

Cardinal Health, Inc.

(formerly ASD Healthcare)

2 unchanged sentences

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

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;

As of June 30, 2024, we are a party to collaboration agreements with Lilly to develop and commercialize ocadusertib (previously R552), a RIPK1 inhibitor, for the treatment of non-central nervous system (non-CNS) diseases and collaboration aimed at developing additional RIPK1 inhibitors for the treatment of central nervous system (CNS) diseases;

with Grifols S.A.

7 unchanged sentences

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

As of March 31, 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.

As of June 30, 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.

3 unchanged sentences

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.

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.

2 unchanged sentences

Global Exclusive License Agreement with Lilly

We have a global exclusive license agreement and strategic collaboration with Lilly (Lilly Agreement) entered in February 2021, which became effective on March 27, 2021, upon clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, to develop and commercialize R552 for the treatment of non-CNS diseases.

We have a global exclusive license agreement and strategic collaboration with Lilly (Lilly Agreement) entered in February 2021, which became effective in March 2021, upon clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, to develop and commercialize ocadusertib (previously R552) for the treatment of non-CNS diseases.

In addition, the collaboration is aimed at developing additional RIPK1 inhibitors for the treatment of CNS diseases.

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

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

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

1 unchanged sentence

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

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

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

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

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

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

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

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

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

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

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

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

Pursuant to the terms of the Lilly Agreement, we have the right to opt-out of co-funding the ocadusertib 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 ocadusertib development activities up to a maximum funding

commitment of $ 65.0 million through April 1, 2024.

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

2 unchanged sentences

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

At the inception of the Lilly Agreement, given our rights to opt-out from the development of R552, we believed at the minimum, we had a commitment to fund the development costs up to $ 65.0 million as discussed above.

At the inception of the Lilly Agreement, given our rights to opt-out from the development of ocadusertib, we believed at the minimum, we had a commitment to fund the development costs up to $ 65.0 million as discussed above.

We considered this commitment to fund the development costs as a significant financing component of the contract, which we accounted for as a reduction of the upfront fee to derive the transaction price.

This financing component was recorded as a liability at its net present value of approximately $ 57.9 million using a 6.4 % discount rate.

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

No interest was accreted during the three months ended March 31, 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.

Although our cumulative share of the development cost is now at the specified cap that is less than our outstanding recorded liability at the balance sheet date, such excess amount has not been recognized as revenue because we cannot conclude that it is probable that a significant reversal of the amount of revenue, if recognized, will not occur until the likelihood of us exercising our opt-in right becomes remote, or when the opt-in right period lapses.

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

No interest was accreted during the three and six months ended June 30, 2024 and 2023.

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

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

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

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

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

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

There was no outstanding deferred revenue related to Lilly Agreement as of June 30, 2024 and December 31, 2023.

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 ocadusertib 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, and our share on the ocadusertib development cost was capped to $ 22.6 million through April 1, 2024.

If we 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.

Lilly billed us $ 21.4 million for our share of development costs incurred through April 1, 2024, and the amount was fully paid as of June 30, 2024.

The outstanding liability to Lilly reported within other long-term liabilities (current and non-current) in the condensed balance sheet as of June 30, 2024 and December 31, 2023 amounted to $ 40.0 million and $ 43.6 million, respectively.

As discussed above, following the amendment to the Lilly Agreement, and us providing the first opt-out notice to Lilly, our cost share obligation for ocadusertib development ended on April 1, 2024.

Although currently we are no longer obligated to pay Lilly for our share in the ocadusertib development cost incurred subsequent to April 1, 2024, the outstanding liability reported in our condensed balance sheet as of June 30, 2024 amounting to $ 40.0 million has not been recognized as revenue because we cannot conclude that it is probable that a significant reversal of the amount of revenue, if recognized, will not occur until the likelihood of us exercising our opt-in right becomes remote, or when the opt-in right period lapses.

Grifols License Agreement

2 unchanged sentences

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 autoimmune hemolytic anemia (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.

With this approval, in February 2020, we received $ 20.0 million non-refundable payment, composed of a $ 17.5 million payment due upon Marketing Authorization Application (MAA) approval by the EMA of fostamatinib for the first indication and a $ 2.5 million creditable advance royalty payment, based on the terms of our collaboration agreement with Grifols.

Agency (EMA) of fostamatinib for the first indication and a $ 2.5 million creditable advance royalty payment, based on the terms of our collaboration agreement with Grifols.

The above milestone payment was allocated to the distinct performance obligations in the collaboration agreement with Grifols.

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

(a) granting of the license, (b) performance of research and regulatory services related to our long-term open-label extension study on patients with ITP, and (c) performance of research services related to our Phase 3 study in AIHA.

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

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.

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

There was no outstanding deferred revenue related to the Grifols license agreement as of June 30, 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.

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.

There was no revenue recognized related to the delivery of drug supply to Grifols for the three and six months ended June 30, 2024.

For the three and six month ended June 30, 2023, we recognized revenue of $ 1.2 million and $ 2.8 million, respectively, from the 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.

Royalty revenue recognized for the three months ended June 30, 2024 and 2023 was $ 1.1 million and $ 0.8 million, respectively, and for the six months ended June 30, 2024 and 2023 was $ 2.2 million and $ 1.5 million, respectively.

Kissei License Agreement

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

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

(a) granting of the license, (b) supply of fostamatinib for clinical use and (c) material right associated with discounted fostamatinib that is supplied for use other than clinical or commercial.

In addition, we will provide commercial product supply if the product is approved in the licensed territory.

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

We concluded that each of these performance obligations is distinct.

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

As of March 31, 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.

We determined that the upfront fee 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 June 30, 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 and six months ended June 30, 2024 and 2023 associated with the remaining performance obligation.

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

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The amount was subsequently collected in January 2023.

For the three and six months ended June 30, 2024, we recognized $ 2.2 million and $ 4.5 million, respectively, of revenue related to the delivery of drug supply to Kissei mainly for commercial use.

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

Medison Commercial and License Agreements

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

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.

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 auto immune hemolytic anemia in Canada.

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.

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 anemia (wAIHA) which showed that the trial did not demonstrate statistical significance in the primary efficacy endpoint, and the guidance received from the FDA.

As such, in accordance with ASC 606, we relieved the outstanding financing liability which included 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 June 30, 2024 and December 31, 2023.

For the three and six months ended June 30, 2024, we recognized revenue from Medison of $ 0.1 million and $ 0.2 million, respectively, related to the delivery of drug supply and earned royalties.

There was no material revenue recognized in the three and six months ended June 30, 2023 related to the delivery of drug supply and earned royalties.

Knight Commercial License and Supply Agreement

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

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

As such, we recognized the upfront payment as revenue in 2022.

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

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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.

Government contract revenue for the three and six months ended June 30, 2023 of $ 1.0 million was from an award we received from DOD to support our 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 and six months ended June 30, 2024 from this grant.

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.

No revenue was recognized during the three and six months ended June 30, 2024 from this grant.

Through June 30, 2024, we have received $ 0.1 million of the award.

Strategic Development Collaborations with MDACC and CONNECT

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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 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 June 30, 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 in glioma.

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

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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.

Pursuant to the Asset Purchase Agreement, we agreed to pay a purchase price of $ 15.0 million, of which, $ 10.0 million was payable upon our first commercial sale of GAVRETO and an additional $ 5.0 million 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.

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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 closing purchase price was recorded within acquisition-related liabilities in the condensed balance sheet and was outstanding as of June 30, 2024, of which, $ 10.0 million was paid in July 2024 following our first commercial sale of GAVRETO at the end of June 2024.

The transaction costs have been paid in cash as of June 30, 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.

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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 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.

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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.

We also agreed to purchase certain drug product inventories from Blueprint under a Material Transfer Agreement, and received such inventories amounting to approximately $ 6.5 million during the six months ended June 30, 2024.

License and Transition Services Agreement with Forma

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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.

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

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Selling, general and administrative

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Total stock-based compensation expense

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.

During the six months ended June 30, 2024, we granted stock options to purchase 599,772 shares of common stock with weighted-average grant-date fair value of $ 9.64 per share, and 9,294 stock options were exercised.

The stock options granted during the six months ended June 30, 2024 generally vest over 3 years .

As of June 30, 2024, there were 3,691,139 stock options outstanding, of which, 132,250 are outstanding performance-based stock options wherein the achievement of the corresponding corporate-based milestones were assessed not probable as of June 30, 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 June 30, 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 (our 2018 Equity Incentive Plan and Inducement Plan, as amended) for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Risk-free interest rate

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Expected volatility

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.

During the six months ended June 30, 2024, we granted 291,373 RSUs with a grant-date weighted-average fair value of $ 12.52 per share, and 66,408 RSUs were released.

The RSUs granted during the six months ended June 30, 2024 generally vest over 3 years .

As of June 30, 2024, there were 387,729 RSUs outstanding.

As of June 30, 2024, there was approximately $ 14.0 million of unrecognized stock-based compensation cost which is expected to be recognized over a remaining weighted-average period of 2.15 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 and April 2024, our Board of Directors approved additional 78,232 shares of common stock reserved for issuance under our Inducement Plan.

In May 2024, our stockholders approved an amendment to our 2018 Plan, to, among other items, add an additional 650,000 shares to the number of shares of common stock authorized for issuance under our 2018 Plan.

As of June 30, 2024, there were 1,412,669 shares of common stock available for future grant under our Equity Incentive Plans.

Employee Stock Purchase Plan

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

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

Our 24 -month offering period under our Purchase Plan ended on June 30, 2024, and a new 24 -month offering period started on July 1, 2024.

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

As of March 31, 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.

As of June 30, 2024, there was no unrecognized stock-based compensation cost related to our Purchase Plan.

During the six months ended June 30, 2024, there were 35,902 shares purchased under the Purchase Plan.

As of June 30, 2024, there were 213,681 shares reserved for future issuance under the Purchase Plan.

Other Balance Sheet Components

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

March 31, 2024

June 30, 2024

December 31, 2023

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Finished goods

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.

Inventories as of June 30, 2024 and December 31, 2023 include inventories acquired from Forma pursuant to the license and transition services agreement.

Inventories as of June 30, 2024 also include inventories acquired from Blueprint pursuant to a Material Transfer Agreement as discussed in Note 5 – In-licensing and Acquisition.

As of June 30, 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 $ 2.2 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.

Non-current inventories consist primarily of active pharmaceutical ingredients 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

June 30, 2024

December 31, 2023

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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):

Amortization expense recorded within cost of sales in the statements of operations for the three months ended June 30, 2024 and 2023 was $ 0.6 million and $ 0.3 million, respectively, and for the six months ended June 30, 2024 and 2023 was $ 1.0 million and $ 0.5 million, respectively.

The following table presents the estimated future amortization expense of intangible assets as of June 30, 2024 (in thousands):

Remainder of 2024

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

March 31, 2024

June 30, 2024

December 31, 2023

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

As of March 31, 2024

As of June 30, 2024

US treasury bills

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Corporate bonds and commercial paper

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.

As of June 30, 2024 and December 31, 2023, our cash equivalents and short-term investments had a weighted-average time to maturity of approximately 68 days and 82 days , respectively.

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

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 March 31, 2024 and December 31, 2023.

As of June 30, 2024, we had no investments that had been in a continuous unrealized loss position for more than 12 months.

As of June 30, 2024, a total of 26 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.

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

As of March 31, 2024

As of June 30, 2024

Unrealized Losses

US treasury bills

Government-sponsored enterprise securities

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

Assets at Fair Value as of March 31, 2024

Assets at Fair Value as of June 30, 2024

Money market funds

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

March 31, 2024

June 30, 2024

December 31, 2023

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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 outstanding loans payable as of the periods presented was related to our Credit and Security Agreement (Credit Agreement) with MidCap Financial Trust (MidCap) entered into on September 27, 2019 (Closing Date) and amended on March 29, 2021 (First Amendment), February 11, 2022 (Second Amendment), July 27, 2022 (Third Amendment), and on April 11, 2024 (Fourth Amendment).

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 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.

As of June 30, 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 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.

Following the Third Amendment but prior to the Fourth Amendment to the Credit Agreement in April 2024 as discussed below, 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.

Following the Fourth Amendment to the Credit Agreement in April 2024, the term loans mature on September 1, 2027, and the interest-only period is through October 1, 2025.

The term loans bear interest equal to the sum of one-month SOFR plus an adjustment of 0.11448% , subject to a 4.00 % applicable floor, plus applicable margin of 6.50 % .

A final payment fee of 4.25 % of principal is due at maturity date.

The amendment was accounted for as debt modification in accordance with the standards.

The unamortized debt issuance costs are continuously being amortized as interest expense through maturity using the effective interest rate method.

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

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

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):

Interest expense, including amortization of the debt discount and accretion of the final fees related to the Credit Agreement for the three months ended June 30, 2024 and 2023 was $ 2.0 million and $ 1.9 million, respectively, and for the six months ended June 30, 2024 and 2023 was $ 3.9 million and $ 3.1 million, respectively.

Accrued interest of $ 1.8 million was included within other accrued liabilities in the condensed balance sheet as of June 30, 2024.

The following table presents the future minimum principal payments of the outstanding loan as of June 30, 2024 (in thousands):

Remainder of 2024

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

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

As of June 30, 2024, we were not in violation of any covenants.

We have a sublease agreement with Atara Biotherapeutics, Inc.

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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 March 31, 2024 was 1.17 years.

The weighted average remaining term of our leases as of June 30, 2024 was 0.92 years.

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

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Fixed operating lease expense

Variable operating lease expense

Variable operating lease expense (net credit)

Total operating lease expense

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cash payments included in the measurement of operating lease liabilities

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Fixed sublease expense

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Sublease income

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

The following table presents the future lease payments as of June 30, 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