What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-05 compared with 2025-05-06 · 116 added, 87 removed, 464 unchanged (30% of the section changed)

1 unchanged sentence

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, 2024 filed with the SEC on March 4, 2025.

Our financial results for the three months ended March 31, 2025 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 six months ended June 30, 2025 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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TAVALISSE is the only approved oral SYK inhibitor for the treatment of adult patients with chronic ITP who have had an insufficient response to a previous treatment.

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

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

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

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TAVALISSE IN ITP

For the three months ended March 31, 2025, net product sales of TAVALISSE were $28.5 million, increased by $7.4 million or 35% compared to $21.1 million net product sales in the same period in 2024.

The increase was primarily due to increased quantities sold and higher price per bottle, and partially due to lower revenue reserves rate.

For the six months ended June 30, 2025, net product sales of TAVALISSE were $68.5 million, increased by $21.1 million or 44% compared to $47.5 million net product sales in the same period in 2024.

The increase was primarily due to increased quantities sold and higher price per bottle, and partly due to lower revenue reserves rate.

REZLIDHIA in R/R AML with mIDH1

For the three months ended March 31, 2025, net product sales of REZLIDHIA were $6.1 million, increased by $1.2 million or 25% compared to $4.9 million net product sales in the same period in 2024.

The increase was primarily due to increased quantities sold as well as higher price per bottle, partially offset by higher revenue reserves rate.

For the six months ended June 30, 2025, net product sales of REZLIDHIA were $13.1 million, increased by $3.1 million or 31% compared to $10.0 million net product sales in the same period in 2024.

The increase was primarily due to increased quantities sold and higher price per bottle, which were partially offset by higher revenue reserves rate.

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.

For the three months ended March 31, 2025, we recognized $9.0 million net product sales of GAVRETO.

For the six months ended June 30, 2025, net product sales of GAVRETO were $20.8 million, compared to $1.9 million in the same period in 2024.

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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The median duration of RBC-TI was 29 weeks (range 12.7-51.9 weeks).

One HTB patient receiving 500 mg QD achieved a minor hematologic improvement-erythroid (HI-E) response, with a 64% reduction in RBC transfusions compared to baseline.

The three patients that achieved RBC-TI had peak hemoglobin increases exceeding 2.0 g/dL compared to baseline.

To date, enrollment in the sixth dose level (500 mg twice daily) is ongoing.

We also reported that one HTB patient receiving 500 mg QD achieved a minor hematologic improvement-erythroid (HI-E) response, with a 64% reduction in RBC transfusions compared to baseline;

however, in the July 15, 2025 data cut, we determined that this patient had received blood transfusions that were not captured in the database at the time of the initial data analysis.

Accordingly, this patient was subsequently determined to be a non-responder.

As the study is ongoing, interim results represent information at the time of the data cut, and final study results will be available after the database lock at the end of the study.

Enrollment in the dose escalation part of the study was completed in July 2025.

We expect to share updated data from the study and plan to initiate the dose expansion part of the study in the second half of 2025.

The FDA granted R289 Orphan Drug designation for the treatment of myelodysplastic syndromes in January 2025 and Fast Track designation for the treatment of previously-treated transfusion dependent lower-risk myelodysplastic syndrome in November 2024.

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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 March 31, 2025, we provided $5.3 million funding to MDACC.

Through June 30, 2025, we provided $5.3 million funding to MDACC.

T he four studies outlined in the multi-year strategic development alliance are open for enrollment.

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

The TarGet-D study is now open for enrollment.

The TarGet-D study is open for enrollment.

Incrementally, we plan on initiating a Phase 2 clinical study in recurrent glioma in 2025.

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Lilly is continuing to advance ocadusertib (previously R552), an investigational, potent and selective RIPK1 inhibitor.

Lilly has initiated the Phase 2 trial studying ocadusertib in adult patients with moderately to severely active rheumatoid arthritis.

The Phase 2a enrollment is advancing well, with preliminary analysis of results in April 2025.

Enrollment in Lilly’s Phase 2a clinical trial studying ocadusertib in adult patients with moderately to severely active rheumatoid arthritis is ongoing, with preliminary analysis of results in April 2025.

RIPK1 is implicated in a broad range of key inflammatory cellular processes and plays a key role in tumor necrosis factor signaling, especially in the induction of pro-inflammatory necroptosis.

The program also includes RIPK1 compounds that cross the blood-brain barrier (CNS-penetrants) to address neurodegenerative diseases such as Alzheimer’s disease and amyotrophic lateral sclerosis.

Under the Lilly Agreement, we are responsible for 20% of the development costs for 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.

Under the Lilly Agreement, we were 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.

Under 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.

Following us providing the first opt-out notice to Lilly in September 2023, our cost share obligation for ocadusetib development ended on April 1, 2024.

Following us providing the first opt-out notice to Lilly in September 2023, our cost share obligation for ocadusertib development ended on April 1, 2024.

We paid Lilly a total of $21.4 million for our share of development costs incurred through April 1, 2024.

Under the Lilly Agreement as amended, we have the right to opt-in to co-funding of ocadusertib development, upon us providing notice to Lilly within 30 days of certain events, as specified in the Lilly Agreement.

Under the Lilly Agreement as amended, we had the right to opt-in to co-funding of ocadusertib development, upon us providing notice to Lilly within 30 days of certain events, as specified in the Lilly Agreement.

On April 30, 2025, we provided notice to Lilly of our decision not to exercise our opt-in right following our evaluation of certain events specified in the Lilly Agreement.

Following this notification, we are no longer obligated to share in any future global development costs, which resulted in the release of the $40.0 million remaining cost share liability currently on our condensed balance sheet.

Following this notification, we are no longer obligated to share in any future global development costs.

As such, we released the $40.0 million remaining cost share liability and recognized the amount as contract revenues from collaboration in the second quarter of 2025.

Patent Infringement Lawsuit

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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).

Grifols territory includes EU, the UK, Turkey, the Middle East, North Africa and Russia (including CIS).

In January 2020, the European Commission (EC) granted a centralized MA for fostamatinib (TAVLESSE) valid throughout the EU and which has been grandfathered 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.

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In January 2025, Kissei announced the Korean Ministry of Food and Drug Safety approved TAVALISSE for the treatment of thrombocytopenia in adult patients with chronic idiopathic thrombocytopenic purpura who have had an insufficient response to a previous treatment.

In July 2025, Kissei announced that its licensing partner, JW Pharmaceutical Corporation, commercially launched TAVALISSE in Korea.

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

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REZLIDHIA was also effective in achieving remission in patients with mIDH1 R/R AML and served as a bridging strategy towards potentially curative allogeneic transplantation in a substantial subset of these previously ineligible patients.

Additionally, REZLIDHIA was well tolerated in a subset of patients with myeloproliferative neoplasms mlDH1 AML, a patient population often associated with poor responses to available therapies.

Additionally, REZLIDHIA was well tolerated in a subset of patients with myeloproliferative neoplasms mIDH1 AML, a patient population often associated with poor responses to available therapies.

Competitive landscape for REZLIDHIA

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Olutasidenib outside of the US

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

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.

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GAVRETO was co-marketed by Blueprint and Genentech, a member of Roche Group (Roche), to patients in the US since September 2020 pursuant to a collaboration agreement between Blueprint and Roche, which agreement was terminated effective in February 2024.

The FDA granted GAVRETO new chemical entity exclusivity until September 2025 and orphan drug exclusivity until September 2027 with respect to the approval for treatment of adult patients with metastatic RET fusion-positive NSCLC as detected by an FDA-approved test.

The NCCN Guidelines for NSCLC recommends pralsetinib as a preferred first-line treatment option for RET+ patients, including for patients identified during first-line treatment with systemic therapy.

positive NSCLC as detected by an FDA-approved test.

The FDA also granted GAVRETO two orphan drug exclusivities until December 2027 with respect to FDA approval 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), and for the treatment of adult and pediatric patients 12 years of age and older with advanced or metastatic RET-mutant medullary thyroid carcinoma who require systemic therapy.

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In summary, R289 was generally well tolerated with preliminary signs of efficacy in this heavily pretreated lower-risk MDS patient population, the majority of whom were HTB at baseline.

RBC-TI ≥8 weeks was achieved by three patients (1 at 500 mg QD and 2 at 750 mg QD);

RBC-TI ≥8 weeks was achieved by

three patients (1 at 500 mg QD and 2 at 750 mg QD);

two HTB patients achieved RBC-TI >24 weeks.

The median duration of RBC-TI was 29 weeks (range 12.7-51.9 weeks).

One HTB patient receiving 500 mg QD achieved a minor HI-E response, with a 64% reduction in RBC transfusions compared to baseline.

The three patients that achieved RBC-TI had peak hemoglobin increases exceeding 2.0 g/dL compared to baseline.

To date, the enrollment in the sixth dose level (500 mg twice daily) is ongoing.

We also reported that one HTB patient receiving 500 mg QD achieved a minor HI-E response, with a 64% reduction in RBC transfusions compared to baseline;

however, in the July 15, 2025 data cut, we determined that this patient had received blood transfusions that were not captured in the database at the time of the initial data analysis.

Accordingly, this patient was subsequently determined to be a non-responder.

As the study is ongoing, interim results represent information at the time of the data cut, and final study results will be available after the database lock at the end of the study.

Enrollment in the dose escalation part of the study was completed in July 2025.

We expect to share updated data from the study and plan to initiate the dose expansion part of the study in the second half of 2025.

R289 was granted Fast Track designation by the FDA for the treatment of patients with previously-treated transfusion dependent lower-risk MDS in November 2024.

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In our sponsored arm, TarGet-D, 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.

The TarGet-D study is now opened for enrollment.

The TarGet-D study is open for enrollment.

Partnered Clinical Programs

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Lilly is continuing to advance ocadusertib (previously R552) and has initiated the Phase 2 trial studying ocadusertib in adult patients with moderately to severely active rheumatoid arthritis.

The Phase 2a enrollment is advancing well, with preliminary analysis of results in April 2025.

RIPK1 is implicated in a broad range of key inflammatory cellular processes and plays a key role in tumor necrosis factor signaling, especially in the induction of pro-inflammatory necroptosis.

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Other Partnered Programs

We also have product candidates in clinical development with BerGenBio for the development and commercialization of AXL receptor tyrosine kinase inhibitor, R428 (now referred to as bemcentinib (BGB324)), and with Daiichi to pursue research related to MDM2 inhibitor, DS-3032 (now referred as melademetan).

The worldwide rights to melademetan were out-licensed from Daiichi to Rain Oncology Inc.

The worldwide rights to milademetan were out-licensed from Daiichi to Rain Oncology Inc.

(Rain), which is now Pathos Al, Inc.

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Results of Operations

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

McKesson Corporation

(formerly ASD Healthcare)

Optime Care, Inc.

Cencora, Inc.

Cardinal Health, Inc.

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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 months ended March 31, 2025 were $28.5 million, increased by 35% compared to $21.1 million for the same period in 2024.

The increase was primarily due to increased quantities sold and higher price per bottle, and partially due to lower revenue reserves rate.

REZLIDHIA net product sales in the three months ended March 31, 2025 were $6.1 million, increased by 25% compared to $4.9 million for the same period in 2024.

The increase was primarily due to increased quantities sold as well as higher price per bottle, partially offset by higher revenue reserves rate.

TAVALISSE net product sales for the three and six months ended June 30, 2025 were $40.1 million and $68.5 million, respectively, increased by 52% and 44%, respectively, compared to $26.4 million and $47.5 million for the three and six months ended June 30, 2024, respectively.

The increase was primarily due to increased quantities sold and higher price per bottle, and partly due to lower revenue reserves rate.

REZLIDHIA net product sales for the three and six months ended June 30, 2025 were $7.0 million and $13.1 million, respectively, increased by 36% and 31%, respectively, compared to $5.2 million and $10.0 million for the three and six months ended June 30, 2024, respectively.

The increase was primarily due to increased quantities sold and higher price per bottle, which were partially offset by higher revenue reserves rate.

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

For the three months ended March 31, 2025, we recognized $9.0 million of GAVRETO net product sales.

Contract revenues from collaborations in the three months ended March 31, 2025 comprised primarily of revenue from Grifols of $4.7 million related to earned royalty and delivery of drug supplies, as well as revenue from Kissei of $4.6 million related to a milestone payment and delivery of drug supplies.

Contract revenues from collaborations in the three months ended March 31, 2024 comprised primarily of revenue from Kissei of $2.3 million related to the delivery of drug supplies, and revenue from Grifols of $1.1 million related to earned royalty.

For the three and six months ended June 30, 2025, we recognized $11.8 million and $20.8 million of GAVRETO net product sales, compared to $1.9 million net product sales for the three and six months ended June 30, 2024.

Contract revenues from collaborations for the three and six months ended June 30, 2025 primarily consisted of $40.0 million of non-cash revenue related to the release of cost share liability from our collaboration with Lilly.

In addition, for the three and six months ended June 30, 2025, contract revenues from collaborations includes revenue from Grifols of $2.0 million and $6.7 million, respectively, related to earned royalty and delivery of drug supplies, as well as revenue from Kissei of $0.4 million and $5.1 million, respectively, related to delivery of drug supplies and a milestone payment in the first quarter of 2025.

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.

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 March 31, 2025, 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 June 30, 2025, 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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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We rely and will continue to rely on certain third parties, including those located outside the US to manufacture our products.

The imposition or threat of imposition of trade policies, tariffs (including retaliatory tariffs), taxes and other cross boarder operations could result in higher cost of product sales.

The imposition or threat of imposition of trade policies, tariffs (including retaliatory tariffs), taxes and other cross-border operations could result in higher cost of product sales.

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.

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.

The increase in cost of product sales in the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to increased royalties and amortization expense of $1.2 million.

In addition, cost of product sales also increased by $1.2 million due to the increase in product sales and delivery of drug supplies to our collaboration partners.

Cost of product sales increased in the three and six months ended June 30, 2025 compared to the same periods in 2024, primarily due to increased royalties of $1.3 million and $2.2 million, respectively, as well as increased cost of products and other increases of $0.4 million and $1.9 million, respectively, generally due to the increase in product sales and delivery of drug supplies to our collaboration partners.

Research and Development Expense

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 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 March 31, 2025 compared to the same period in 2024 was primarily driven by the increase in clinical trial related expenses of $1.9 million due to the timing of study progress activities on our ongoing IRAK 1/4 inhibitor program, and clinical development programs for olutasidenib.

In addition, other various research and development expenses also increased by $0.6 million.

The increase in research and development expense in the three months ended June 30, 2025 compared to the same period in 2024 was primarily driven by the increase in clinical trial related expenses of $0.9 million due to timing of clinical development programs for olutasidenib study, and the progress activities on our ongoing IRAK 1/4 inhibitor program.

In addition, other various research and development expenses increased by $0.4 million.

The increase in research and development expense in the six months ended June 30, 2025 compared to the same period in 2024 was primarily driven by the increase in clinical trial related expenses of $2.7 million due to timing of clinical development programs for olutasidenib study, and the progress activities on our ongoing IRAK 1/4 inhibitor program.

In addition, other various research and development expenses increased by $1.0 million.

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

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Our development group leads the implementation of our clinical and regulatory strategies and prioritizes disease indications in which our compounds may be studied in clinical trials.

“Development” expenses relate primarily to clinical trials, personnel expenses, costs related to our regulatory filings, lab supplies and fees to third-

party research consultants.

“Development” expenses relate primarily to clinical trials, personnel expenses, costs related to our regulatory filings, lab supplies and fees to third-party research consultants.

“Other” expenses primarily consist of allocated facilities costs and allocated stock-based compensation expense relating to personnel in research and development groups.

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

From January 1, 2007*

to March 31, 2025

to June 30, 2025

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

“Other” expenses in the three months ended March 31, 2025 and 2024 consisted of allocated facilities costs of $0.1 million and $0.1 million, respectively, and allocated stock-based compensation expense of $0.9 million and $0.7 million, respectively.

“Other” expenses in the three months ended June 30, 2025 and 2024 consisted of allocated facilities costs of $0.1 million and $0.2 million, respectively, and allocated stock-based compensation expense of $0.5 million and $0.3 million, respectively.

For the six months ended June 30, 2025 and 2024, allocated facilities costs were $0.2 million and $0.3 million, respectively, and allocated stock-based compensation expense was $1.4 million and $1.0 million, respectively.

Selling, General and Administrative Expense

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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

The decrease in selling, general and administrative expense in the three months ended March 31, 2025 compared to the same period in 2024 was primarily due to decreased stock-based compensation expense of $2.0 million primarily from our performance-based stock awards, and decreased other various sales, general and administrative expenses of $0.4 million.

These decreases were partially offset by increased personnel-related costs of $1.5 million and increased commercial related expenses of $0.2 million.

The increase in selling, general and administrative expense in the three months ended June 30, 2025 compared to the same period in 2024 was primarily due to increased personnel-related costs and stock-based compensation expense of $1.5 million, and increased other various sales, general and administrative expenses of $0.6 million.

These increases were partially offset by decreased consulting and third-party services of $0.9 million.

The increase in selling, general and administrative expense in the six months ended June 30, 2025 compared to the same period in 2024 was primarily due to increased personnel-related costs of $2.5 million and increased other various sales, general and administrative expenses of $1.0 million.

These increases were partially offset by decreased consulting and third-party services of $1.5 million, and decreased stock-based compensation expense of $1.5 million primarily related to our performance-based stock awards.

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

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Interest Income and Interest Expense

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands)

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Interest expense comprised interest on our outstanding term loans with MidCap.

Provision for income Tax

Three Months Ended March 31,

Provision for income Taxes

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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We update our estimate of our annual effective tax rate at the end of each quarterly period.

For the three months ended March 31, 2025, we recorded $0.1 million of provision for income tax primarily related to estimated state taxes.

We do not expect to owe federal income tax due to sufficient net operating loss carryforwards that were generated prior to the enactment of the Tax Cuts and Jobs Act, as well as significant research and development credit carryforwards.

We continue to record a full valuation allowance on our deferred tax assets considering our cumulative losses in prior years.

For the three months ended March 31, 2024, we did not record a provision for income taxes due to our pre-tax book loss.

The provision for income taxes for the three and six months ended June 30, 2025 was primarily related to estimated state taxes.

For the three and six months ended June 30, 2024, we did not record a provision for income taxes due to our pre-tax book loss.

We do not expect to owe federal income tax due to sufficient net operating loss carryforwards that were generated prior to the enactment of the TCJA, as well as significant research and development credit carryforwards.

As of June 30, 2025, we continue to record a full valuation allowance on our deferred tax assets.

The realization of deferred tax assets is dependent upon demonstrating sufficient positive evidence to conclude that it is more-likely-than-not that our deferred tax assets will be realized.

This assessment requires significant judgment.

In making this determination, all available evidence, both positive and negative, is considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed.

If sufficient positive evidence becomes available to allow us to reach a conclusion that a portion of the valuation allowance against the deferred tax assets may be reversed, the reversal would result in an income tax benefit for the quarterly and annual fiscal period in which we determine to release such valuation allowance.

In July 2025, the OBBBA was enacted, which includes a broad array of measures affecting corporations and other business entities, including locking in a key set of business tax provisions.

These include incentives designed to promote innovation-driven investment, such as a permanent and immediate deduction for domestic research and development costs.

The legislation also locks in 100% expensing for qualified equipment purchases and makes permanent the deduction of up to 20% for qualified business income.

ASC 740, “ Income Taxes ”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted.

Consequently, we are evaluating the impact of the OBBBA on our financial statements and an estimate of the financial impact cannot be made at this time.

Critical Accounting Policies and Use of Estimates

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Liquidity and Capital Resources

As of March 31, 2025 and December 31, 2024, we had approximately $77.1 million and $77.3 million, respectively, in cash, cash equivalents and short-term investments.

As of June 30, 2025 and December 31, 2024, we had approximately $108.4 million and $77.3 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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We continue to monitor the impact of the changes in the conditions of the credit and financial markets to our investment portfolio and assess if future changes in our investment strategy are necessary.

Following summarizes our cash flow activity for the periods presented:

Three Months Ended March 31,

The following table summarizes our cash flow activity for the periods presented:

Six Months Ended June 30,

(in thousands)

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Financing activities

Net decrease in cash, cash equivalents and restricted cash

Net cash used in operating activities for the three months ended March 31, 2025 comprised net cash outflows from changes in assets and liabilities of $16.1 million, partially offset by net cash inflows from net income adjusted for non-cash items of $15.2 million.

Cash outflows from changes in assets and liabilities during the three months ended March 31, 2025 were primarily due to timing of advance payments to our contract manufacturers and strategic development collaboration partner, as well as timing of payments of salaries and annual cash bonuses.

Net cash used in operating activities for the three months ended March 31, 2024 comprised net cash outflows from changes in assets and liabilities of $2.1 million, and cash outflows from net loss adjusted for non-cash items of $2.9 million.

Cash outflows from changes in assets and liabilities during the three months ended March 31, 2024 were primarily due to timing of inventory build-up and advance payments to our contract manufacturers, as well as timing of payments of salaries and annual cash bonuses .

Net cash used in investing activities for the three months ended March 31, 2025 comprised net purchases of short-term investments of $10.6 million.

Net cash provided by investing activities for the three months ended March 31, 2024 comprised primarily of net maturities of short-term investments of $0.5 million, partially offset by payment for acquisition of intangible assets of $0.1 million .

Net cash provided by financing activities for the three months ended March 31, 2025 comprised proceeds from issuance of common stock upon exercise of stock options of $0.5 million.

Net cash used in operating activities for the three months ended March 31, 2024 comprised cost share payments to a collaboration partner of $2.6 million, partially offset by the net proceeds from issuance of common stock upon exercise of stock options of $0.1 million.

Net (decrease) increase in cash, cash equivalents and restricted cash

Net cash provided by operating activities for the six months ended June 30, 2025 comprised net cash inflows from net income adjusted for non-cash items, partially offset by net cash outflows from changes in assets and liabilities.

Net cash used in operating activities for the six months ended June 30, 2024 comprised net cash outflows from net loss adjusted for non-cash items, and net cash outflows from changes in assets and liabilities.

Net cash flows from changes in assets and liabilities for the six months ended June 30, 2025 and 2024 were primarily due to timing of inventory build-up, timing of advance payments to our contract manufacturers and strategic development collaboration partners, timing of payment of liabilities, and timing of collection of accounts receivable.

Net cash used in investing activities for the six months ended June 30, 2025 primarily comprised net purchases of short-term investments of $33.8 million.

Net cash provided by investing activities for the six months ended June 30, 2024 comprised primarily of 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 financing activities for the six months ended June 30, 2025 comprised net proceeds from issuance of common stock from equity plans of $0.9 million.

Net cash used in operating 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 from equity plans of $0.3 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 this Form 10-Q filing date.

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

As of March 31, 2025, total future contingent payments to us under our existing agreements with our collaboration partners was approximately $1.5 billion, if all potential product candidates achieved all of the payment triggering events under all of our current agreements.

As of June 30, 2025, total future contingent payments to us under our existing agreements with our collaboration partners was approximately $1.5 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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We have an active Registration Statement filed with the SEC, which registered, among other securities, a base prospectus which covers the offering, issuance, and sale by us of up to $250.0 million in the aggregate of the securities identified from time to time in one or more offerings, which include the $100.0 million of shares of our common stock that may be offered, issued and sold under the Open Market Sale Agreement.

As of March 31, 2025, we have not sold any shares of common stock under such Open Market Sale Agreement.

We have a Credit Agreement with MidCap that provides for $60.0 million term loan credit facility, which was fully funded as of March 31, 2025.

As of June 30, 2025, we have not sold any shares of common stock under such Open Market Sale Agreement.

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, 2025.

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

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● expenses associated with any unforeseen litigation, including any arbitration and securities class action lawsuits;

● pressures on and uncertainty surrounding the US federal government policies, and potential changes in budgetary priorities.

Insufficient funds may require us to delay, scale back or eliminate some or all of our commercial efforts and/or research or development programs, to lose rights under existing licenses or to relinquish greater or all rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose or may adversely affect our ability to operate as a going concern.

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Although the agreements generally provide a termination clause with or without cause, we may still be subjected to payment of cancellation fees.

The level of cancellation fees is generally dependent on the timing of the written notice in relation to the commencement of work, with the maximum cancellation fees equal to the full price of

the work order.

The level of cancellation fees is generally dependent on the timing of the written notice in relation to the commencement of work, with the maximum cancellation fees equal to the full price of the work order.

In October 2024, we entered into an agreement with a third-party contract manufacturer to manufacture TAVALISSE that is expected to be delivered starting in 2026 through 2029.

As of March 31, 2025, the contractual obligation not included in our financial statements related an agreement that may potentially be subjected to cancellation fees amounted to approximately $20.8 million, with approximately $2.8 million due in the remainder of 2025 and $9.7 million due in 2026 and 2027.

As of March 31, 2025, we have not incurred any cancellation fees under our agreements with contract manufacturers.

As of June 30, 2025, the contractual obligation not included in our financial statements related to an agreement that may potentially be subjected to cancellation fees amounting to approximately $22.5 million, with approximately $3.0 million due in the remainder of 2025 and $10.5 million due in 2026 and 2027.

As of June 30, 2025, we have not incurred any cancellation fees under our agreements with contract manufacturers.

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, under the Lilly Agreement, although our co-funding obligation for development of ocadusertib (previously R552) in the US, Europe, and Japan ended on April 1, 2024, we have the right to opt-in to co-funding, upon us providing notice to Lilly within 30 days of certain events, as specified in the agreement.

On April 30, 2025, we provided notice to Lilly of our decision not to exercise our opt-in right following our evaluation of certain events specified in the Lilly Agreement.

Following this notification, we are no longer obligated to share in any future global development costs, which resulted in the release of the $40.0 million remaining cost share liability.

Also, as discussed in detail in “Note 4 – Sponsored Research, License Agreements and Government Contracts” and “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 with Forma, Forma is entitled to potential development and regulatory milestone payments and tiered royalty payments on net sales as well as certain portion of sublicensing revenue.

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Under the amended Credit Agreement, the term loans mature on September 1, 2027, and the interest-only period is through October 1, 2025.

As of March 31, 2025, the outstanding principal amount of the loan was $60.0 million, of which $15.0 million principal payments are due within 12 months.

As of March 31, 2025, 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 $12.7 million, with approximately $6.2 million payable within 12 months.

As of March 31, 2025, we have a contractual commitment related to our sublease agreement with Atara which sublease will expire in May 2025.

In February 2025, we entered into a lease agreement with 611 Gateway to lease the same office space currently subleased from Atara.

As of March 31, 2025, our contractual commitment related to the lease agreements was $1.5 million, of which $0.6 million is payable in the next 12 months.

As of June 30, 2025, the outstanding principal amount of the loan was $60.0 million, of which $22.5 million principal payments are due within 12 months.

As of June 30, 2025, 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 $11.0 million, with approximately $5.8 million payable within 12 months.

As of June 30, 2025, we have a contractual commitment related to our lease agreement with 611 Gateway which lease will expire in July 2027.

As of June 30, 2025, our contractual commitment related to the lease agreements was $1.4 million, of which $0.6 million is payable in the next 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.

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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