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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-06 · 172 added, 144 removed, 419 unchanged (43% of the section changed)

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This discussion and analysis should be read in conjunction with our financial statements and the accompanying notes included in this report and the audited financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 5, 2024.

Our financial results for the three and six months ended June 30, 2024 are not necessarily indicative of results that may occur in future interim periods or for the full fiscal year.

Our financial results for the three and nine months ended September 30, 2024 are not necessarily indicative of results that may occur in future interim periods or for the full fiscal year.

This Quarterly Report on Form 10-Q contains statements indicating expectations about future performance and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties.

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our corporate collaborations and revenues that may be received from our collaborations and the timing of those potential payments;

our expectations with respect to obligations to entities party to commercial or licensing agreements with us and the timing of those obligations;

our expectations with respect to timing of recognizing product sales;

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

We continue to advance the development of R289, our IRAK 1/4 inhibitor program, in an open-label, Phase 1b trial to determine the tolerability and preliminary efficacy of the drug in patients with lower-risk MDS who are relapsed, refractory or resistant to prior therapies.

We have strategic development collaborations with MDACC to expand our evaluation of REZLIDHIA in AML and other hematologic cancers with IDH1 mutations, and with CONNECT to conduct a Phase 2 clinical trial to evaluate REZLIDHIA in combination with temozolomide in patients with HGG harboring an IDH1 mutation.

We continue to advance the development of R289, our dual IRAK 1/4 inhibitor program, in an open-label, Phase 1b study to determine the tolerability and preliminary efficacy of the drug in patients with lower-risk MDS who are relapsed, refractory or resistant to prior therapies.

We have strategic development collaborations with MDACC to expand our evaluation of olutasidenib in AML and other hematologic cancers with IDH1 mutations, and with CONNECT to conduct a Phase 2 clinical trial to evaluate olutasidenib in combination with temozolomide in patients with HGG harboring an IDH1 mutation.

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

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TAVALISSE IN ITP

For the six months ended June 30, 2024, net product sales of TAVALISSE were $47.5 million, increased by $3.8 million or 9% compared to $43.6 million net product sales in the same period in 2023.

The increase was primarily due to increased quantities sold, as well as increased price per bottle.

This increase was partially offset by the increase in revenue reserves driven by higher government and private payor rebates.

REZLIDHIA in R/R AML with mIDHI

For the six months ended June 30, 2024, net product sales of REZLIDHIA were $10.0 million, increased by $6.0 million or 150% compared to $4.0 million net product sales in the same period in 2023.

The increase was primarily due to increased quantities sold primarily driven by increased number of patients under therapy, partially offset by the increase in revenue reserves primarily due to higher government rebates.

For the nine months ended September 30, 2024, net product sales of TAVALISSE were $73.8 million, increased by $5.7 million or 8% compared to $68.1 million net product sales in the same period in 2023.

The increase was primarily due to increased quantities sold, as well as increased price per bottle, partially offset by higher revenue reserves driven by increased government and private payor rebates.

REZLIDHIA in R/R AML with mIDH1

For the nine months ended September 30, 2024, net product sales of REZLIDHIA were $15.6 million, increased by $8.9 million or 133% compared to $6.7 million net product sales in the same period in 2023.

The increase was primarily due to increased quantities sold primarily driven by increased number of patients under therapy, partially offset by higher revenue reserves primarily due to increased government rebates.

GAVRETO in metastatic RET fusion-positive NSCLC and advanced thyroid cancers

We began our commercialization and started recognizing revenue from product sales of GAVRETO in June 2024.

We recognized approximately $1.9 million of net product sales for the sale of GAVRETO to our distributors at the end of June 2024.

For the nine months ended September 30, 2024, we recognized $9.0 million net product sales of GAVRETO.

We believe GAVRETO is highly synergistic with our current product portfolio, and we expect to continue to leverage our existing commercial infrastructure to ensure current and newly prescribed GAVRETO patients have continued access to this important treatment option.

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Simultaneously and in conjunction 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 to us.

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.

In October 2024, we issued a Dear Healthcare Provider Letter for GAVRETO related to a new safety signal identified in an ongoing Phase 3 clinical trial of pralsetinib in first-line treatment of RET fusion-positive, metastatic NSCLC patients, being conducted by Roche.

The letter advises healthcare providers to apply certain measures to protect patient safety, including enhanced ongoing monitoring for signs and symptoms of infection as well as guidance for withholding treatment to patients in the presence of active infection.

R289, an Oral IRAK 1/4 Inhibitor for LR-MDS

We advanced the development of our IRAK 1/4 inhibitor program, following further evaluation of single and multiple ascending doses of R289 in healthy subjects.

The Phase 1b open-label, multicenter trial evaluates the safety, tolerability and preliminary efficacy of R289 in patients with R/R lower-risk MDS.

This Phase 1b trial is expected to enroll approximately 40 patients (up to 30 participants in the dose escalation phase, and up to 10 participants in the dose expansion phase).

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

The safety and efficacy data from this Phase 1b trial is intended to inform the recommended dose of R289 for further clinical evaluation in lower-risk MDS.

To date, enrollment in the fourth dose level (250 mg twice daily) of the trial is underway.

Preliminary data are expected by the end of 2024.

REZLIDHIA in AML, Other Hematologic Cancers and HGG

We advanced the development of our dual IRAK 1/4 inhibitor program, following evaluation of single and multiple ascending doses of R289 in healthy subjects.

The Phase 1b open-label, multicenter study evaluates the safety, tolerability and preliminary efficacy of R289 in patients with R/R lower-risk MDS.

This Phase 1b study is expected to enroll approximately 40 patients (up to 30 participants in the dose escalation phase, and up to 10 participants in the dose expansion phase).

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

The safety and efficacy data from this Phase 1b study is intended to inform the recommended dose of R289 for further clinical evaluation in lower-risk MDS.

Enrollment in the fifth dose level (500 mg / 250mg split dose) is underway.

The initial data from the ongoing Phase 1b study will be presented at the 66 th American Society of Hematology (ASH) Annual

Meeting and Exposition.

Initial data indicate that R289 was generally well tolerated in a heavily pretreated LR-MDS patient population, the majority of whom were high transfusion burden at study entry.

As of the data cutoff date (July 15, 2024), 14 of 19 patients were evaluable for efficacy;

4/11 patients receiving R289 doses ≥500 mg/daily achieved transfusion independence/hematologic improvement (HI-E) responses.

Olutasidenib in AML, Other Hematologic Cancers and HGG

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 in AML and other hematologic cancers with IDH1 mutations.

The collaboration will expand our evaluation of olutasidenib in AML and other hematologic cancers with IDH1 mutations.

Under the Strategic Collaboration Agreement, we will jointly lead the clinical development efforts with MDACC to evaluate the potential of olutasidenib to treat newly diagnosed and R/R patients with AML, higher-risk MDS, and advanced myeloproliferative neoplasms, in combination with other agents.

The collaboration will also support the evaluation of olutasidenib as monotherapy in patients with IDH1 mutated clonal cytopenia of undermined significance and lower-risk MDS, as well as maintenance therapy following hematopoietic stem cell transplant.

The collaboration will also support the evaluation of olutasidenib as monotherapy in patients with IDH1 mutated clonal cytopenia of undermined significance (CCUS) and lower-risk MDS, as well as maintenance therapy following hematopoietic stem cell transplant.

Under the Strategic Collaboration Agreement, 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 early August 2024, MDACC, with our support, opened enrollment for a Phase 1b/2 trial of decitabine and venetoclax in combination with olutasidenib in patients with IDH1-mutated AML.

Through September 30, 2024, we provided $2.0 million funding to MDACC.

In early August 2024, MDACC opened enrollment for a Phase 1b/2 triplet therapy trial of decitabine and venetoclax in combination with olutasidenib in patients with IDH1-mutated AML.

In September 2024, we announced the first patient was enrolled.

This is the first trial in our multi-year strategic development collaboration with MDACC.

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The primary objective of the Phase 2 part of the trial is to determine the complete remission rate in both newly diagnosed and R/R patients.

In January 2024, we announced our collaboration with Collaborative Network for Neuro-Oncology Clinical Trials (CONNECT), an international collaborative network of pediatric cancer centers, to conduct a Phase 2 clinical trial to evaluate REZLIDHIA in combination with temozolomide in patients with HGG harboring an IDH1 mutation.

Under the collaboration, CONNECT will include olutasidenib in CONNECT’s TarGet-D, a molecularly guided Phase 2 umbrella clinical trial for HGG.

In our sponsored arm, adolescents and young adult patients (<39 years old) with newly-diagnosed IDH1-mutation positive HGG will receive maintenance therapy with of olutasidenib in combination with temozolomide for the first year after radiotherapy, followed by olutasidenib monotherapy for the second year.

In January 2024, we announced our collaboration with Collaborative Network for Neuro-Oncology Clinical Trials (CONNECT), an international collaborative network of pediatric cancer centers, to conduct a Phase 2 clinical trial to evaluate olutasidenib in combination with temozolomide in patients with HGG harboring an IDH1 mutation (TarGet-D).

Under the collaboration, CONNECT will include the olutasidenib treatment arm (TarGet-D) within CONNECT’s TarGet study, a molecularly guided Phase 2 umbrella clinical trial for HGG.

In our sponsored arm, adolescents and young adult patients (<39 years old) with newly-diagnosed IDH1-mutation positive HGG will receive maintenance therapy with olutasidenib in combination with temozolomide for the first year after radiotherapy, followed by olutasidenib monotherapy for the second year.

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

Collaboration and License Agreement with Kissei

In September 2024, we announced the expansion of our relationship with Kissei, granting exclusive rights to develop and commercialize olutasidenib in all human diseases in Japan, Korea and Taiwan, pursuant to a collaboration and license agreement.

Under the terms of the agreement, we received a one-time, non-creditable upfront cash payment of $10.0 million from Kissei, with the potential for up to an additional $152.5 million in development, regulatory and commercial milestone payments, and will receive mid twenty to lower thirty percent, tiered, escalated net sales-based payments for the supply of olutasidenib, subject to certain customary reductions and offsets.

Pursuant to the agreement, Kissei is responsible for companion diagnostic development in Japan, for which we will share fifty percent of the costs incurred by Kissei, up to $3.0 million, which are creditable against future milestones and transfer price payments owed to us.

We remain responsible for the manufacture and supply of olutasidenib for all development and commercialization activities under the agreement.

Pursuant to the concurrently executed supply agreement, we will supply Kissei with bulk drug product for use under the collaboration and license agreement.

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

Under the agreement with Forma, Forma is entitled to a certain portion of sublicensing revenue, which include, but are not limited to, upfront payments, milestone payments and royalties, that we receive from a third party sublicensee.

Following the collaboration and license agreement with Kissei, Forma is entitled to a portion of the sublicensing revenue from Kissei , including $2.3 million upon our receipt of the $10.0 million upfront cash payment which we expect to pay in the fourth quarter of 2024.

Global Strategic Partnership with Lilly

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

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

In October 2016, we

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

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

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

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

In the longer term, we may eventually face competition from

potential manufacturers of generic versions of our marketed products, including the proposed generic version of TAVALISSE that is the subject of an ANDA submitted to the FDA by Annora, which, if approved and allowed to enter the market, it could result in significant decreases in the revenue derived from sale of TAVALISSE and thereby materially harm our business and financial condition.

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

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

Commercial activities, including sales and marketing

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

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

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

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

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

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

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

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Fostamatinib in EU and in the UK

We have a commercialization license agreement with Grifols S.A.

(Grifols) entered in January 2019, for exclusive rights to commercialize fostamatinib for human diseases, and non-exclusive rights to develop, fostamatinib in their territory.

We have a commercialization license agreement with Grifols for exclusive rights to commercialize fostamatinib for human diseases, and non-exclusive rights to develop, fostamatinib in their territory.

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

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Fostamatinib in Asia

We have an exclusive license and supply agreement with Kissei Pharmaceutical Co., Ltd.

(Kissei) entered in October 2018, to develop and commercialize fostamatinib in all current and potential indications in Kissei’s territory, which includes Japan, China, Taiwan and the Republic of Korea.

We have an exclusive license and supply agreement with Kissei to develop and commercialize fostamatinib in all current and potential indications in Japan, China, Taiwan and Korea.

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

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

Kissei initiated a Phase 3 trial in Japan of fostamatinib in adult Japanese patients with chronic ITP in September 2019, and reported positive top-line results meeting its primary end point in December 2021.

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

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

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

In December 2022, Japan’s PMDA approved TAVALISSE for the treatment of chronic ITP, and in April 2023, Kissei launched TAVALISSE for chronic ITP in Japan.

Fostamatinib in Canada/Israel

We have two exclusive commercial and license agreements with Medison Pharma Trading AG (Medison Canada) and Medison Pharma Ltd.

(Medison Israel, and together with Medison Canada, Medison) entered in October 2019, to commercialize fostamatinib in all potential indications in Canada and Israel.

Pursuant to this exclusive commercialization license agreement, in August 2020, we entered into a commercial supply agreement with Medison.

We have exclusive commercial and license agreements with Medison to commercialize fostamatinib in all potential indications in Canada and Israel.

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

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Fostamatinib in Latin America

We have a commercial license agreement with Knight Therapeutics International SA ( Knight) entered in May 2022, to commercialize fostamatinib for approved indications in Latin America, consisting of Mexico, Central and South America, and the Caribbean (Knight territory).

We have a commercial license agreement with Knight to commercialize fostamatinib for approved indications in Latin America, consisting of Mexico, Central and South America, and the Caribbean.

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

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In accordance with 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 additional payments upon achievement of specified development and regulatory milestones and up to $165.5 million additional payments upon achievement of certain commercial milestones.

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

In 2022, certain milestones were met which entitled Forma to receive a $17.5 million milestone payments.

No new milestone was met in 2023 and during the six months ended June 30, 2024.

No new milestone was met in 2023 and during the nine months ended September 30, 2024.

In December 2022, the FDA approved REZLIDHIA capsules for the treatment of adult patients with R/R AML with IDH1 mutation as detected by an FDA-approved test, and we began the commercialization of REZLIDHIA and made it available to patients.

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

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

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

In November 2022, we announced the presentation of an updated interim analysis from the Phase 2 registrational trial of olutasidenib in patients with R/R AML demonstrated robust efficacy and safety results.

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

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

The primary endpoint was a CR/CRh defined as less than 5% blasts in the bone marrow, no evidence of disease, and partial recovery of peripheral blood counts (platelets >50,000/microliter and absolute neutrophil count >500/microliter).

The primary endpoint was a CR/CRh defined

as less than 5% blasts in the bone marrow, no evidence of disease, and partial recovery of peripheral blood counts (platelets >50,000/microliter and absolute neutrophil count >500/microliter).

The results from the updated interim analysis of patients with mIDH1 R/R AML demonstrated a 35% CR+CRh rate with a median duration of 25.9 months.

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

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

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

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

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

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

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

In June 2023, we announced the second REZLIDHIA publication in Blood Advances , a review

article examining the preclinical and clinical development, and the positioning of REZLIDHIA in the mIDH1 AML treatment landscape.

In June 2023, we announced the second REZLIDHIA publication in Blood Advances , a review article examining the preclinical and clinical development, and the positioning of REZLIDHIA in the mIDH1 AML treatment landscape.

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

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

The FDA granted approval to TIBSOVO ® (ivosidenib), an oral targeted IDH1 mutation inhibitor, (i) in July 2018, for adult patients with R/R AML with a susceptible IDH1 mutation, (ii) in May 2019, for newly diagnosed AML with a susceptible IDH1 mutation who are at least 75 years old or who have comorbidities that preclude use of intensive induction chemotherapy, (iii) in August 2021, for adult patients with previously treated, locally advanced or metastatic cholangiocarcinoma with an IDH1 mutation as detected by an FDA-approved test, (iv) in May 2022, in combination with azacitidine (azacitidine for injection) for newly diagnosed AML with a susceptible IDH1 mutation, as detected by an FDA-approved test in adults 75 years or older, or who have comorbidities that preclude use of intensive induction chemotherapy, and (v) in October 2023, for adult patients with R/R MDS with a susceptible IDH1 mutation, as detected by an FDA-approved test.

mutation who are at least 75 years old or who have comorbidities that preclude use of intensive induction chemotherapy, (iii) in August 2021, for adult patients with previously treated, locally advanced or metastatic cholangiocarcinoma with an IDH1 mutation as detected by an FDA-approved test, (iv) in May 2022, in combination with azacitidine (azacitidine for injection) for newly diagnosed AML with a susceptible IDH1 mutation, as detected by an FDA-approved test in adults 75 years or older, or who have comorbidities that preclude use of intensive induction chemotherapy, and (v) in October 2023, for adult patients with R/R MDS with a susceptible IDH1 mutation, as detected by an FDA-approved test.

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

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Our commercial effort focuses on growing awareness of REZLIDHIA within key institutions, and among targeted HCPs who manage patients with R/R AML with mIDH1.

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

We retain the global rights, excluding Asian countries as discussed below, to develop and commercialize olutasidenib for all indications, and we are currently exploring other ex-US partnership opportunities.

Olutasidenib in Asia

In September 2024, we entered into a collaboration and license agreement with Kissei, pursuant to which Kissei was granted exclusive rights to develop and commercialize olutasidenib in all human diseases in Japan, Korea and Taiwan.

Kissei will initially seek approval for REZLIDHIA in Japan for R/R mIDH1 AML and will be responsible for conducting clinical studies as required by the Japanese PMDA.

We remain responsible for the manufacture and supply of olutasidenib for all development and commercialization activities and will supply Kissei with bulk drug product for use under the license and supply agreements.

Under the license and services agreement with Forma as discussed in “Note 5, In-licensing and Acquisition”, Forma is entitled to a certain portion of sublicensing revenue, which include, but are not limited to upfront payment, milestone payments and royalties, that we receive from a third party sublicensee.

Following the license agreement with Kissei as discussed above, Forma is entitled to a portion of the sublicensing revenue we receive from Kissei.

GAVRETO in metastatic RET fusion-positive NSCLC and advanced thyroid cancers

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RET can be activated by mutation or when a portion of the RET gene that encodes the kinase domain is joined to part of another gene creating a fusion gene that encodes an aberrantly activated RET fusion protein.

alterations, such as fusions or mutations, drive the growth of multiple tumor types.

RET alterations, such as fusions or mutations, drive the growth of multiple tumor types.

It is estimated that over 230,000 adult patients in the US will be diagnosed with lung cancer in 2024.

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R289, an Oral IRAK 1/4 Inhibitor for Hematology-Oncology, Autoimmune, and Inflammatory Diseases

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

During the second quarter of 2018, we selected R835, a proprietary molecule from our dual IRAK 1/4 inhibitor program, for human clinical trials.

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

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

In October 2019, we announced results from a Phase 1 randomized, placebo-controlled, double-blind clinical trial evaluating the safety, tolerability, pharmacokinetics (PK) and pharmacodynamics of R835 in 91 healthy adult subjects.

The Phase 1 trial showed that R835 had a favorable safety, tolerability and PK profile and established proof-of-mechanism by demonstrating the inhibition of inflammatory cytokine production in response to a lipopolysaccharide (LPS) challenge.

We advanced the development of our IRAK 1/4 inhibitor program, following further evaluation of single and multiple ascending doses of R289, a new pro-drug formulation of R835 in healthy subjects.

In January 2022, we received clearance from the FDA to initiate a Phase 1b open-label, multicenter trial to evaluate the safety, tolerability and preliminary efficacy of R289 in patients with R/R lower-risk MDS.

In October 2019, we announced results from a Phase 1 randomized, placebo-controlled, double-blind clinical study evaluating the safety, tolerability, pharmacokinetics (PK) and pharmacodynamics of R835 in 91 healthy adult subjects.

The Phase 1 study showed that R835 had a favorable safety, tolerability and PK profile and established proof-of-mechanism by demonstrating the inhibition of inflammatory cytokine production in response to a lipopolysaccharide (LPS) challenge.

We advanced the development of our IRAK 1/4 inhibitor program, following evaluation of single and multiple ascending doses of R289, a new pro-drug formulation of R835 in healthy subjects.

In January 2022, we received clearance from the FDA to initiate a Phase 1b open-label, multicenter study to evaluate the safety, tolerability and preliminary efficacy of R289 in patients with R/R lower-risk MDS.

In December 2022, we announced the dosing of the first patient.

This Phase 1b trial is expected to enroll approximately 40 patients (up to 30 participants in the dose escalation phase, and up to 10 participants in the dose expansion phase).

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

The safety and efficacy data from this Phase 1b trial is intended to inform the recommended dose of R289 for further clinical evaluation in lower-risk MDS.

To date, enrollment in the fourth dose level (250 mg twice daily) of the trial is underway.

Preliminary data are expected by the end of 2024.

This Phase 1b study is expected to enroll approximately 40 patients (up to 30 participants in the dose escalation phase, and up to 10 participants in the dose expansion phase).

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

The safety and efficacy data from this Phase 1b study is intended to inform the recommended dose of R289 for further clinical evaluation in lower-risk MDS.

Enrollment in the fifth dose level (500 mg / 250mg split dose) is underway.

The initial data from the ongoing Phase 1b study will be presented at the 66 th ASH Annual Meeting and Exposition.

Initial data indicate that R289 was generally well tolerated in a heavily pretreated LR-MDS patient population, the majority of whom were high transfusion burden at study entry.

As of the data cutoff date (July 15, 2024), 14 of 19 patients were evaluable for efficacy;

4/11 patients receiving R289 doses ≥500 mg/daily achieved transfusion independence/hematologic improvement (HI-E) responses.

Olutasidenib for mIDH1 AML

We have a strategic collaboration agreement with MDACC to expand our evaluation of olutasidenib in AML and other hematologic cancers with IDH1 mutations.

Under such collaboration agreement, we will jointly lead the clinical development efforts with MDACC to evaluate the potential of olutasidenib to treat newly diagnosed and R/R patients with AML, higher-risk MDS, and advanced myeloproliferative neoplasms, in combination with other agents.

In early August 2024, MDACC opened enrollment for a Phase 1b/2 triplet therapy trial of decitabine and venetoclax in combination with olutasidenib in patients with IDH1-mutated AML.

In September 2024, we announced the first patient was enrolled.

This is the first trial in our multi-year strategic development collaboration with MDACC.

The Phase 1b part of the trial seeks to determine the safety and tolerability and recommended Phase 2 dose of decitabine and venetoclax in combination with olutasidenib.

The primary objective of the Phase 2 part of the trial is to determine the complete remission rate in both newly diagnosed and R/R patients.

Partnered Clinical Programs

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

In March 2024, BerGenBio announced initiation of the Phase 2a portion of the study following a positive decision by the Data and Safety Monitoring Board following review of the Phase 1b safety data.

In March 2024, BerGenBio announced initiation of the Phase 2a portion of the study following a positive decision by the Data and Safety Monitoring Board (DSMB) following review of the Phase 1b safety data.

In July 2024, BerGenBio announced that the DSMB confirmed acceptable safety at the highest dose tested in Phase 1b and recommended that under the study protocol, no additional patients will be required for Phase

In October 2024, BerGenBio announced the preliminary safety data from dose escalation Phase 1b in first-line NSCLC patients.

Milademetan – Daiichi

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

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

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

In January 2024, Pathos Al, Inc.

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

We also have strategic development collaborations with MDACC and CONNECT to conduct evaluation of REZLIDHIA (olutasidenib) in AML, other hematologic cancers and glioma.

We also have strategic development collaborations with MDACC and CONNECT to conduct evaluation of olutasidenib in AML, other hematologic cancers and glioma.

Commercialization and Sponsored Research and License Agreements

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Results of Operations

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

McKesson Corporation

Cardinal Health, Inc.

(formerly ASD Healthcare)

Cardinal Health, Inc.

* Denotes less than 10%

Revenue from product sales is related to our sale of our products in the US, net of chargebacks, discounts and fees, government and other rebates and returns.

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

TAVALISSE net product sales for the three and six months ended June 30, 2024 were $26.4 million and $47.5 million, respectively, increased by 24% and 9%, respectively, compared to $21.3 million and $43.6 million net product sales for the three and six months ended June 30, 2023, respectively.

The increase was primarily due to increased quantities sold, as well as increased price per bottle.

This increase was partially offset by the increase in revenue reserves driven by higher government and private payor rebates.

REZLIDHIA net product sales in the three and six months ended June 30, 2024 were $5.2 million and $10.0 million, respectively, increased by 102% and 150% compared to $2.6 million and $4.0 million net product sales for the three and six months ended June 30, 2023, respectively.

Following the commercialization of GAVRETO on June 27, 2024, we started recognizing revenue from shipments to our distributors.

During the three and six months ended June 30, 2024, we recognized $1.9 million of GAVRETO net product sales.

Contract revenues from collaborations in the three and six months ended June 30, 2024 consisted primarily of revenue from Kissei of $2.2 million and $4.5 million, respectively, related to the delivery of drug supplies, and revenue from Grifols of $1.1 million and $2.2 million, respectively, related to earned royalty.

Contract revenues from collaborations in the three and six months ended June 30, 2023 consisted primarily of revenue from Grifols of $2.0 million and $4.3 million, respectively, related to earned royalty and delivery of drug supplies.

Government contract revenue in the three and six months ended June 30, 2023 was related to the income we recognized upon achievement of certain milestones from the award granted to us by the DOD.

No government contract revenue was recognized during the three and six months ended June 30, 2024.

TAVALISSE net product sales for the three and nine months ended September 30, 2024 were $26.3 million and $73.8 million, respectively, increased by 8% for each period, compared to $24.5 million and $68.1 million net product sales for the three and nine months ended September 30, 2023, respectively.

REZLIDHIA net product sales in the three and nine months ended September 30, 2024 were $5.5 million and $15.6 million, respectively, increased by 107% and 133% compared to $2.7 million and $6.7 million net product sales for the three and nine months ended September 30, 2023, respectively.

The increase was primarily due to increased quantities sold primarily driven by increased number of patients under therapy, partially offset by the higher revenue reserves primarily due to increased government rebates.

Following the commercialization of GAVRETO in June 2024, we started recognizing revenue from shipments to our distributors.

For the three and nine months ended September 30, 2024, we recognized $7.1 million and $9.0 million, respectively, of GAVRETO net product sales.

Contract revenues from collaborations in the three and nine months ended September 30, 2024 consisted primarily of revenue from Kissei of $13.0 million and $17.5 million, respectively, $10.0 million of which was the upfront fee we received from sublicensing olutasidenib, and the remainder was related to the delivery of drug supplies.

In addition, we recognized revenue from Grifols of $3.3 million and $5.5 million in the three and nine months ended September 30, 2024, respectively, related to earned royalty and delivery of drug supplies.

Contract revenues from collaborations in the three and nine months ended September 30, 2023 consisted primarily of revenue from Grifols of $0.8 million and $5.1 million, respectively, related to earned royalty and delivery of drug supplies.

No government contract revenue was recognized during the three and nine months ended September 30, 2024, and three months ended September 30, 2023.

Government contract revenue in the nine months ended September 30, 2023 was related to the income we recognized upon achievement of certain milestones from the award granted to us by the DOD.

We expect that our future revenues to include product sales of our existing commercial products and product sales from new commercial products we may have in the future.

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In addition, our future revenues may include payments from our existing and new collaboration partners and government grants.

As of June 30, 2024, we had $1.4 million of deferred revenue relating to our collaboration agreement with Kissei which we will recognize as revenue upon satisfaction of our remaining performance obligations.

As of September 30, 2024, we had $1.4 million of deferred revenue relating to our collaboration agreement with Kissei which we will recognize as revenue upon satisfaction of our remaining performance obligations.

Cost of Product Sales

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Cost of product sales

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

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

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

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

Cost of product sales also includes amortization of intangible assets acquired from in-licensing or acquisition of commercialized products, as well as sublicensing revenue fees and royalty expense.

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

We recognize amortization of intangible assets acquired from in-licensing or acquisition of commercialized products as well as royalty expense within cost of sales.

The increase in cost of product sales in the three and six months ended June 30, 2024 compared to the same periods in 2023 was partly due to increased royalty expense and amortization of intangible assets of approximately $0.9 million and $1.5 million, respectively.

The increase in cost of product sales in the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to increased royalty expense and sublicensing revenue fee of $3.4 million and $4.5 million, respectively, and increased amortization of intangible assets of $0.3 million and $0.7 million, respectively.

Further, the increase in cost of product sales was also partly due to increased product sales, and increased delivery of drug supplies pursuant to our supply agreements with our collaborative partners.

Research and Development Expense

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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Stock-based compensation expense included in research and development expense

The increase in research and development expense in the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to increased various research and development expenses of $1.6 million due to progress of trial activities of R289, our IRAK 1/4 inhibitor program and other clinical activities.

The increase was partly offset by decreased clinical trial costs of $0.8 million due to reduced trial activities of our completed Phase 3 clinical trials of fostamatinib in patients with COVID-19 and wAIHA.

The decrease in research and development expense in six months ended June 30, 2024 compared to the same period in 2023 was partly due to decreased clinical trial activities of $1.8 million due to reduced trial activities of our completed Phase 3 clinical trials of fostamatinib in patients with COVID-19 and wAIHA, as well as $1.2 million decreased clinical trial related expenses due to progress of trial activities of R289, our IRAK 1/4 inhibitor program .

Research and development expense in the three months ended September 30, 2024 decreased compared to the same period in 2023.

The decrease in research and development expense primarily due to timing of progress of trial activities of our IRAK 1/4 inhibitor program of $1.7 million and in other various research and development costs of $0.2 million, were partially offset by the increase in our research and development expense related to our ongoing clinical development programs for olutasidenib of approximately $1.6 million.

The decrease in research and development expense in the nine months ended September 30, 2024 compared to the same period in 2023 was partly due to decreased clinical trial related expenses of $2.8 million due to the progress of trial activities of our IRAK 1/4 inhibitor program, as well as $1.8 million due to timing of trial activities of our completed Phase 3 clinical trials of fostamatinib in patients with COVID-19 and wAIHA.

Other research and development expense including allocated facilities and laboratory costs also decreased by $1.0 million.

These decreases

were partially offset by the increase in our research and development activities of $2.0 million related to our ongoing clinical development programs for olutasidenib .

Our research and development expenditures include costs related to preclinical and clinical trials, scientific personnel, supplies, equipment, consultants, sponsored research, stock-based compensation, and allocated facility costs.

W e expect to continue to incur significant research and development expense as we continue our activities in our clinical studies including R289, our IRAK 1/4 inhibitor program;

our collaborative partnerships with MDACC and CONNECT to evaluate REZLIDIHIA (olutasidenib) in AML, other hematologic cancers and glioma;

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

our collaborative partnerships with MDACC and CONNECT to evaluate olutasidenib in AML, other hematologic cancers and glioma;

and any other clinical programs we may pursue in the future.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

From January 1, 2007*

to June 30, 2024

to September 30, 2024

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

“Other” expenses in the three months ended June 30, 2024 and 2023 consisted of allocated facilities costs of $0.2 million and $0.1 million, respectively, and allocated stock-based compensation expense of $0.3 million and $0.4 million, respectively.

For the six months ended June 30, 2024 and 2023, allocated facilities costs was $0.3 million and $0.8 million, respectively, and allocated stock-based compensation expense was $1.0 million and $1.4 million, respectively.

The major portion of our total research and development expense in the three and six months ended June 30, 2024 and 2023 was associated with R289, our IRAK 1/4 inhibitor program.

“Other” expenses in the three months ended September 30, 2024 and 2023 consisted of allocated facilities costs of $0.1 million for each of the periods, and allocated stock-based compensation expense of $0.3 million and $0.4 million, respectively.

For the nine months ended September 30, 2024 and 2023, allocated facilities costs was $0.4 million and $0.9 million, respectively, and allocated stock-based compensation expense was $1.2 million and $1.7 million, respectively.

Selling, General and Administrative Expense

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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

The increase in selling, general and administrative expense in the three months ended June 30, 2024 compared to the same period in 2023 was primarily due to the increase in personnel-related costs of $1.1 million, increase in stock-based compensation expense of $0.4 million, and increase in other various sales, general and administrative costs of $0.2 million.

The increase in selling, general and administrative expense in the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to the increase of $3.2 million in stock-based compensation expense primarily from our performance-based stock awards, and increase in personnel-related costs of $1.3 million.

This was partially offset by the decrease of $2.0 million in other various sales, general and administrative costs primarily due to lower facilities cost.

We expect to incur significant selling, general and administrative expenses, as we expect our commercial related expenses to increase as we continue to expand our commercial activities for TAVALISSE, REZLIDHIA, and our recently commercialized product, GAVRETO.

The increase in selling, general and administrative expense in the three months ended September 30, 2024 compared to the same period in 2023 was primarily due to increases in commercial related expenses of $1.9 million and in personnel-related costs and stock-based compensation expense of $1.5 million, partially offset by the decrease in other various sales, general and administrative costs of $1.2 million.

The increase in selling, general and administrative expense in the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to increases of $5.9 million in personnel-related costs and stock-based compensation expense, and in commercial related expenses of $1.7 million, partially offset by the decrease in other various sales, general and administrative costs primarily due to lower facilities cost of $3.0 million.

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

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Interest Income and Interest Expense

Three Months Ended June 30,

Three Months Ended September 30,

September 30,

(in thousands)

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

The increase interest income in the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily driven by higher interest rates.

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

Increased interest expense in the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily due to higher interest on our term loan with Midcap.

Also contributing to higher interest expense for the six months ended June 30, 2024 compared to the same period in 2023 was the higher outstanding principal balance of the term loan throughout the respective periods as the Tranche 5 ($20.0 million) term loan was funded in March 2023.

The decrease in interest income in the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily driven by lower investment balances throughout the respective periods, partially offset by higher interest rates.

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

Increased interest expense in the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to higher interest on our term loan with Midcap.

Also contributing to higher interest expense for the nine months ended September 30, 2024 compared to the same period in 2023 was the higher outstanding principal balance of the term loan throughout the respective periods as the Tranche 5 ($20.0 million) term loan was funded in March 2023.

Critical Accounting Policies and Use of Estimates

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Liquidity and Capital Resources

As of June 30, 2024 and December 31, 2023, we had approximately $49.1 million and $56.9 million, respectively, in cash, cash equivalents and short-term investments.

As of September 30, 2024 and December 31, 2023, we had approximately $61.1 million and $56.9 million, respectively, in cash, cash equivalents and short-term investments.

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

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Following summarizes our cash flow activity for the periods presented:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Net increase in cash and cash equivalents

Net cash used in operating activities for the six months ended June 30, 2024 was primarily due to payments of our operating expenses, partially offset by proceeds received from sales of our existing commercial products, and cash received from our collaboration partners.

Net cash provided by operating activities for the six months ended June 30, 2023 was primarily due the proceeds from sales of our products, cash received from our collaboration partners including the $20.0 million regulatory milestone payment from Kissei received in January 2023, as well as cash received from government grants, partially offset by the payments of our operating expenses.

Net cash provided by investing activities for the six months ended June 30, 2024 comprised net maturities of short-term investments of $11.6 million, partially offset by payments for acquisition of intangible assets of $0.4 million.

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

Net cash used in financing activities for the six months ended June 30, 2024 comprised cost share payments to a collaboration partner of $3.6 million, partially offset by the net proceeds from issuance of common stock upon exercise of stock options and participation in the Purchase Plan of $0.3 million.

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

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

Net cash provided by operating activities for the nine months ended September 30, 2024 was primarily due the proceeds from sales of our products, and cash received from our collaboration partners including the $10.0 million upfront payment from Kissei pursuant to the collaboration and license agreement, partially offset by the payments of operating expenses.

Net cash provided by operating activities for the nine months ended September 30, 2023 was primarily due to the proceeds from sales of our products, cash received from our collaboration partners including the $20.0 million regulatory milestone payment from Kissei received in January 2023, as well as cash received from government grants, partially offset by payments of operating expenses.

Net cash provided by investing activities for the nine months ended September 30, 2024 comprised primarily of net maturities of short-term investments of $15.4 million, partially offset by payments for acquisition of intangible assets of $0.4 million.

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

Net cash used in financing activities for the nine months ended September 30, 2024 comprised payment of the closing purchase price to Blueprint of $10.0 million and cost share payments to a collaboration partner of $3.6 million, partially offset by the net proceeds from issuance of common stock upon exercise of stock options and participation in the Purchase Plan of $0.5 million.

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

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

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Capital Resources

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

We finance our operations primarily through sales of our products, and contract payments under our collaboration agreements, as well as through equity securities and debt financing.

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

As of June 30, 2024, total future contingent payments to us under our existing agreements could exceed $1.3 billion if all potential product candidates achieved all of the payment triggering events under all of our current agreements.

As of September 30, 2024, total future contingent payments to us under our existing agreements could exceed $1.4 billion if all potential product candidates achieved all of the payment triggering events under all of our current agreements.

This estimated future contingent amount does not include any estimated royalties that could be due to us if the partners successfully commercialize any of the licensed products.

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Pursuant to such Open Market Sale Agreement, we may sell from time to time, through Jefferies, shares of our common stock in sales deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act, subject to conditions specified in the Open Market Sale Agreement, including maintaining an effective registration statement covering the sale of shares under the Open Market Sale Agreement.

We have a shelf registration statement (the Prior Registration Statement) filed with the SEC that includes a base prospectus registering the offering, issuance, and sale by us of up to $250.0 million in the aggregate of the securities identified from time to time in one or more offerings, which include the $100.0 million of shares of our common stock that may be offered, issued and sold under the Open Market Sale Agreement.

As of June 30, 2024, we have not sold any shares of common stock under such Open Market Sale Agreement.

The Prior Registration Statement was set to expire on August 3, 2024.

As of September 30, 2024, we have not sold any shares of common stock under such Open Market Sale Agreement.

We had a shelf registration statement (the Prior Registration Statement) filed with the SEC that expired on August 3, 2024.

The Prior Registration Statement included a base prospectus registering the offering, issuance, and sale by us of up to $250.0 million in the aggregate of the securities identified from time to time in one or more offerings, including the $100.0 million of shares of our common stock that may be offered, issued and sold under the Open Market Sale Agreement.

On August 2, 2024, we filed a new shelf registration statement (the New Registration Statement) with the SEC to replace the Prior Registration Statement.

The New Registration Statement was declared effective on August 9, 2024 by the SEC.

The New Registration Statement includes a base prospectus to register the offering, issuance and sale by us of up to $250.0 million in the aggregate of securities identified from time to time in one or more offerings, including up to $100.0 million of shares of our common stock that may be offered, issued and sold under the Open Market Sale Agreement.

Under Rule 415(a)(5) under the Securities Act, we may offer and sell any unsold securities under the Prior Registration Statement until the SEC declares the New Registration Statement effective.

Once the New Registration Statement is declared effective, all offerings under the Prior Registration Statement will be terminated.

We have a Credit Agreement with MidCap that provides for $60.0 million term loan credit facility, which was fully funded as of June 30, 2024.

We have a Credit Agreement with MidCap that provides for $60.0 million term loan credit facility, which was fully funded as of September 30, 2024.

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

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As discussed in detail in “Note 4 – Sponsored Research, License Agreements and Government Contracts” of our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, pursuant to the amended Lilly Agreement, and us providing the first opt-out notice to Lilly on September 29, 2023, we were responsible for funding the development costs for ocadusertib (previously R552) in the US, Europe, and Japan, through April 1, 2024, capped at a specified amount.

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

Lilly billed us $21.4 million of the funding development costs

incurred through April 1, 2024 and the amount was fully paid as of September 30, 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, under the Lilly Agreement, we have the right to opt-in to co-funding the ocadusertib development, upon us providing notice to Lilly within 30 days of certain events, as specified in the Lilly Agreement.

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

As discussed in detail in “Note 5 – In-licensing and Acquisition” of our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, pursuant to an Asset Purchase Agreement with Blueprint entered in February 2024, we agreed to pay Blueprint a purchase price of $15.0 million, of which, $10.0 million was paid in July 2024 following our first commercial sale of GAVRETO at end of June 2024, 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, in addition to tiered royalties ranging from 10% to 30%.

Additionally, as discussed in detail in “Note 5 – In-licensing and Acquisition” of our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, pursuant to our license and transition services agreement, Forma is entitled to potential development and regulatory milestone payments of up to $67.5 million, commercial milestone payments of up to $165.5 million, and tiered royalty payments.

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

No new milestone was met in 2023 and during the six months ended June 30, 2024.

As of June 30, 2024, we have a contractual commitment related to our leased facilities of $0.7 million and the amount is payable within 12 months.

As discussed in detail in “Note 5 – In-licensing and Acquisition” of our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, pursuant to an Asset Purchase Agreement with Blueprint entered in February 2024, we agreed to pay Blueprint a purchase price of $15.0 million, of which, $10.0 million was paid in July 2024, 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, up to $5.0 million in future regulatory milestone payments, and tiered royalty payments ranging from 10% to 30%.

Certain milestones were met in 2022 which entitled Forma to receive $17.5 million milestone payments that was paid in the fourth quarter of 2022 and first quarter of 2023.

No additional milestone was met through September 30, 2024.

As discussed in “Note 4 – Sponsored Research, License Agreements and Government Contracts” of our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, Forma is entitled to a portion of the sublicensing revenue we receive from Kissei related to our collaboration and license agreement of olutasidenib.

With the receipt of the upfront payment of $10.0 million from Kissei in September 2024, Forma is entitled to $2.3 million sublicense revenue fee, which we expect to pay in the fourth quarter of 2024.

As of September 30, 2024, we have a contractual commitment related to our leased facilities of $0.5 million and the amount is payable within 12 months.

See “Note 11 – Leases” to our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussions of our leases.

As discussed above, we have a contractual commitment with respect to our credit facility with MidCap, and as of June 30, 2024, the outstanding principal amount of the loan was $60.0 million.

As discussed above, we have a contractual commitment with respect to our credit facility with MidCap, and as of September 30, 2024, the outstanding principal amount of the loan was $60.0 million.

As discussed in detail in “Note 10 – Debt” to our “Notes to Condensed Financial Statements” contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, the term loans mature on September 1, 2027, and the interest-only period is through October 1, 2025.

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

As of June 30, 2024, no principal payments are due within 12 months.

As of June 30, 2024, future interest calculated using the base interest rate as per the amended Credit Agreement, and the final fee payments associated with the credit facility amounted to $17.6 million, of which, approximately $6.6 million is payable within 12 months.

As of September 30, 2024, no principal payments are due within 12 months.

As of September 30, 2024, future interest calculated using the base interest rate as per the amended Credit Agreement, and the final fee payments associated with the credit facility amounted to $16.0 million, of which, approximately $6.6 million is payable within 12 months.

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

3 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis