What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-28 compared with 2021-03-18 · 219 added, 497 removed, 984 unchanged (42% of the section changed)

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Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

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Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report on Form 10-K:

(1) Consolidated Financial Statements

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and each purchaser party thereto (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed by the Registrant on February 28, 2020)

Consulting Agreement, dated June 27, 2019, between Joseph Lobacki and Verastem, Inc.

(incorporated by reference to Exhibit 10.37 to the Annual Report on Form 10-K filed by the Registrant on March 11, 2020)

License Agreement for CKI27, dated January 7, 2020, between Verastem, Inc.

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Amended and Restated 2012 Incentive Plan (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed by the Registrant with the Securities and Exchange Commission on May 21, 2020)

2021 Equity Incentive Plan (incorporated by reference to Appendix A of the Registrant’s Proxy Statement, filed by the Registrant with the Securities and Exchange Commission on April 8, 2021)

Form of Incentive Stock Option Agreement under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by the Registrant on August 2, 2021)

Form of Nonstatutory Stock Option Agreement (Employees) under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed by the Registrant on August 2, 2021)

Form of Nonstatutory Stock Option Agreement (Non-Employees) under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed by the Registrant on August 2, 2021)

Form of Restricted Stock Unit Agreement under the 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q filed by the Registrant on August 2, 2021)

Form of Inducement Nonstatutory Stock Option Agreement (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed by the Registrant on August 2, 2021)

Form of Inducement Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.7 to the Quarterly Report on Form 10-Q filed by the Registrant on August 2, 2021)

Asset Purchase Agreement by and between Secura Bio, Inc.

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and Highbridge Tactical Credit Master Fund, L.P., dated November 6, 2020 (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by the Registrant on November 9, 2020)

Loan and Security Agreement, dated as of March 25, 2022, among Verastem, Inc., as borrower, Oxford Finance LLC, as collateral agent and a lender, and Oxford Finance Credit Fund III LP, as a lender (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed by the Registrant with the Securities and Exchange Commission on March 27, 2022)

Subsidiaries of the Registrant

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Press Release issued by Verastem, Inc.

on March 18, 2021 (furnished herewith)

Inline XBRL Instance Document

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March 28, 2022

/s/ Gina Consylman

Gina Consylman

/s/ P AUL B UNN, M.D

Paul Bunn, M.D.

March 28, 2022

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March 28, 2022

/s/ JOHN JOHNSON

/s/ J OHN J OHNSON

March 28, 2022

/s/ M ICHELLE R OBERTSON

Michelle Robertson

March 28, 2022

/s/ Eric Rowinsky, M.D.

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March 28, 2022

/s/ Bruce Wendel

/s/ L ESLEY S OLOMON

Lesley Solomon

March 28, 2022

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

T he Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

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Description of the Matter

As summarized in Note 6 to the consolidated financial statements, the Company’s total accrued expenses were $14.7 million at December 31, 2020, which included the estimated obligation for clinical trial expenses incurred as of December 31, 2020 but not paid as of that date.

As summarized in Note 4 to the consolidated financial statements, the Company’s accrued research and development expenses were $9.3 million at December 31, 2021, which included the estimated obligation for clinical trial expenses incurred as of December 31, 2021 but not paid as of that date.

In addition, the Company’s total prepaid expenses and other current assets were $5.0 million, which included amounts that were paid in advance of services incurred pursuant to clinical trials.

As discussed in Note 2 to the consolidated financial statements, the Company records research and

development expenses as incurred.

The Company’s determination of costs incurred to conduct research, such as the discovery and development of the Company’s product candidates as well as the related accrued expenses at each reporting period incorporates judgment and utilizes various assumptions, including an evaluation of the information provided to the Company by third parties on actual cost incurred but not yet billed, estimated time period over which services will be performed, and the level of effort to be expended in each period.

As discussed in Note 2 to the consolidated financial statements, the Company records research and development expenses as incurred.

The Company’s determination of costs incurred to conduct research, such as the discovery and development of the Company’s product

candidates as well as the related accrued expenses at each reporting period incorporates judgment and utilizes various assumptions, including an evaluation of the information provided to the Company by third parties on actual cost incurred but not yet billed, estimated time period over which services will be performed, and the level of effort to be expended in each period.

Payments for these activities are based on the terms of the individual arrangements, which often differ from the pattern of costs incurred.

Auditing the Company’s accrued and prepaid clinical trial expenses was especially challenging due to the large volume of information received from multiple vendors that perform service on the Company’s behalf.

While the Company’s estimates of accrued and prepaid clinical trial expenses are primarily based on information received from its vendors for each study, the Company may need to make an estimate for additional costs incurred.

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Right-of-use asset, net

Intangible assets, net

Restricted cash

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Lease liability, short-term

Derivative liability, short-term

Total current liabilities

Non-current liabilities:

Long-term debt

Convertible senior notes

Lease liability, long-term

Other non-current liabilities

Total liabilities

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Common stock, $ 0.0001 par value;

300,000 and 200,000 shares authorized, 170,456 and 80,118 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively

300,000 shares authorized, 185,286 and 170,456 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

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Loss from operations

Other (expense)/ income

Other expense

Interest income

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Income tax expense

Net loss per share—basic

Net loss per share—diluted

Weighted average common shares outstanding used in computing:

Net loss per share—basic

Net loss per share—diluted

Unrealized gain (loss) on available-for-sale securities

Net loss per share—basic and diluted

Weighted average common shares outstanding used in computing net loss per share - basic and diluted

Unrealized (loss) gain on available-for-sale securities

Comprehensive loss

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Balance at December 31, 2018

Unrealized gain on available-for-sale marketable securities

Issuance of common stock resulting from follow-on offering, net of issuance costs of $ 361

Issuance of common stock resulting from at-the-market transactions, net of issuance costs of $ 0

Issuance of common stock resulting from exercise of stock options

Stock-based compensation expense

Reclassification of derivative liability to equity

Balance at December 31, 2018

Unrealized loss on available-for-sale marketable securities

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Balance at December 31, 2020

Unrealized loss on available-for-sale marketable securities

Conversion of Notes into common stock

Issuance of common stock under Employee Stock Purchase Plan

Issuance of common stock resulting from vesting of restricted stock units

Issuance of common stock resulting from exercise of stock options

Issuance of common stock resulting from at-the-market transactions, net

Stock-based compensation expense

Balance at December 31, 2021

See accompanying notes to the consolidated financial statements.

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Amortization of deferred financing costs, debt discounts and premiums and discounts on available-for-sale marketable securities

Change in fair value of interest make whole provision and conversion option for Notes

Gain on sale of fixed assets

Change in fair value of interest make whole provision for 2019 Notes

Changes in operating assets and liabilities:

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Purchases of property and equipment

Sales of property and equipment

Acquisition of intangible asset

Purchases of investments

Maturities of investments

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

Financing activities

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Repayment of long-term, debt

Proceeds from issuance of convertible senior notes, net of issuance costs

Principal payments on the convertible senior notes

Principal payments on the 2019 Notes

Interest make-whole payments on the 2019 Notes

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Net cash provided by (used in) financing activities

(Decrease) increase in cash, cash equivalents and restricted cash

Decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

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Common stock issuance costs included in accounts payable and accrued expenses

Conversion of 2019 Notes into common stock

Conversion of 2020 Notes into common stock

Purchases of property and equipment included in accounts payable and accrued expenses

Settlement of restricted stock units for tax withholdings included in accrued expenses

Change in fair value of conversion option of Notes on exchange

Conversion of 2019 Notes into common stock

Settlement of restricted stock units for tax withholdings included in accrued expenses

See accompanying notes to the consolidated financial statements.

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Verastem, Inc.

(the Company) is a development-stage biopharmaceutical company committed to the development and commercialization of new medicines to improve the lives of patients diagnosed with cancer.

The Company’s pipeline is focused on novel small molecule drugs that inhibit critical signaling pathways in cancer that promote cancer cell survival and tumor growth, particularly RAF/MEK inhibition and FAK inhibition.

The Company’s most advanced product candidates, VS-6766 and defactinib, are being investigated in both preclinical and clinical studies for treatment of various solid tumors, including, low-grade serous ovarian cancer, non-small cell lung cancer, colorectal cancer, pancreatic cancer, uveal melanoma, and endometrial cancer.

The Company believes that these compounds may be beneficial as therapeutics either as single agents or when used together in combination with other agents, other pathway inhibitors or other current and emerging standard of care treatments in cancers that do not adequately respond to currently available therapies.

(the Company) is a late stage development-stage biopharmaceutical company, with ongoing registration directed trials, committed to advancing new medicines for patients battling cancer.

The Company’s pipeline is focused on novel anticancer agents that inhibit critical signaling pathways in cancer that promote cancer cell survival and tumor growth, particularly RAF/MEK inhibition and FAK inhibition.

The Company’s most advanced product candidates, VS-6766 and defactinib, are being investigated in both preclinical and clinical studies for treatment of various solid tumors, including, low-grade serous ovarian cancer (LGSOC), non-small cell lung cancer (NSCLC), colorectal cancer (CRC), pancreatic cancer, uveal melanoma, and endometrial cancer.

The Company believes that VS-6766 may be beneficial as a therapeutic as a single agent or when used together in combination with defactinib, other agents, other pathway inhibitors or other current and emerging standard of care treatments in cancers that do not adequately respond to currently available therapies.

On September 24, 2018, the Company’s first commercial product, COPIKTRA® (duvelisib), was approved by the U.S.

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The Company has historical losses from operations and anticipates that it will continue to incur losses as it continues the research and development of its product candidates.

As of December 31, 2020, the Company had cash, cash equivalents, restricted cash, and investments of $ 147.5 million, and accumulated deficit of $ 592.5 million.

As of December 31, 2021, the Company had cash, cash equivalents, and investments of $ 100.3 million, and accumulated deficit of $ 663.7 million.

The Company expects its existing cash resources will be sufficient to fund its planned operations through 12 months from the date of issuance of these consolidated financial statements.

The Company expects to finance the future development costs of its clinical product portfolio with its existing cash, cash equivalents and short-term investments, through future milestones and royalties received through the Secura APA or through strategic financing opportunities that could include, but are not limited to collaboration agreements, future offerings of its equity, or the incurrence of debt.

The Company expects to finance the future development costs of its clinical product portfolio with its existing cash, cash equivalents and investments, through future milestones and royalties received through the Secura APA or through strategic financing opportunities that could include, but are not limited to collaboration agreements, future offerings of its equity, or the incurrence of debt.

However, there is no guarantee that any of these strategic or financing opportunities will be executed or executed on favorable terms, and some could be dilutive to existing stockholders.

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Total cash, cash equivalents and restricted cash

Amounts included in restricted cash as of December 31, 2020 represents cash held to collateralize outstanding letters of credit provided as a security deposit for the Company’s office space located in Needham, Massachusetts in the amount of $ 0.2 million.

Amounts included in restricted cash as of December 31, 2019 represent (i) cash that the Company was contractually obligated to maintain in accordance with the terms of the Amended Term Loan Agreement, (ii) cash received pursuant to a funded research and development agreement with the Leukemia and Lymphoma Society (the LLS Research Funding Agreement) which is restricted for future expenditures for specific R&D studies and (iii) cash held to collateralize outstanding letters of credit provided as a security deposit for the Company’s office space located in Needham, Massachusetts in the amount of approximately $ 35.0 million, $ 0.5 million, and $ 0.2 million respectively.

Restricted cash related to Amended Term Loan Agreement is included in non-current restricted cash on the consolidated balance sheet at December 31, 2019.

Restricted cash related to the LLS Research Funding Agreement is included in prepaid expenses and other current assets on the consolidated balance sheet at December 31, 2019 .

Letters of credit are included in non-current restricted cash on the consolidated balance sheets at December 31, 2020 and December 31, 2019.

Amounts included in restricted cash as of December 31, 2021 and 2020 represent cash held to collateralize outstanding letters of credit provided as a security deposit for the Company’s office space located in Needham, Massachusetts in the amount of $ 0.2 million.

Fair value of financial instruments

The Company determines the fair value of its financial instruments based upon the fair value hierarchy, which prioritizes valuation inputs based on the observable nature of those inputs.

The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality.

The fair value hierarchy applies

only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality.

The hierarchy defines three levels of valuation inputs:

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Short-term investments

Long-term investments

Total financial assets

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Short-term investments

Long-term investments

Total financial assets

Derivative liability

The investments and cash equivalents have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third party pricing services or other market observable data.

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These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, current spot rates and other industry and economic events.

The Company validates the prices provided by third party pricing services by reviewing their pricing methods and matrices, obtaining market values from other pricing sources, analyzing pricing data in certain instances and confirming that the relevant markets are active.

confirming that the relevant markets are active.

After completing its validation procedures, the Company did not adjust or override any fair value measurements provided by the pricing services as of December 31, 2021 and 2020.

During the year ended December 31, 2019, a derivative liability was recorded as a result of the issuance of 5.00 % Convertible Senior Second Lien Notes due 2048 (2019 Notes) (see Note 12 Convertible Senior Notes ).

The Company initially determined fair value of the liability upon issuance, and then again at the balance sheet date.

The fair value measurement of the derivative liability is classified as Level 3 under the fair value hierarchy and it has been valued using unobservable inputs.

These inputs include:

(1) a simulated share price at the time of conversion of the 2019 Notes, (2) assumed timing of conversion of the 2019 Notes, (3) risk-adjusted discount rate to present value the probability-weighted cash flows, and (4) entity specific cost of equity.

Significant increases or decreases in any of those inputs in isolation could result in a significantly lower or higher fair value measurement.

The fair value of the derivative liability was determined using a Monte-Carlo simulation by calculating fair value of the 2019 Interest Make-Whole Payment to 2019 Note holders based on assumed timing of conversion of the 2019 Notes.

At November 14, 2019, the date the 2019 Notes were issued, the risk-adjusted discount rate was determined to be 12.06 % and entity specific cost of equity was determined to be 17.05 %.

At December 31, 2019, the risk-adjusted discount rate was determined to be 13.08 % and entity specific cost of equity was determined to be 16.54 %.

The following table represents a reconciliation of the derivative liability recorded in connection with the issuance of the 2019 Notes (in thousands):

January 1, 2019

Fair value recognized upon issuance of 2019 Notes

Fair value adjustment

Derivative liability extinguished upon conversion

December 31, 2019

Fair value adjustment

Derivative liability extinguished upon conversion

December 31, 2020

During the year ended December 31, 2020 the derivative liability has been settled upon conversion of all 2019 Notes into shares of common stock (see Note 12.

Convertible Senior Notes ).

Fair Value of Financial Instruments

The fair value of the Company’s long-term debt is determined using a discounted cash flow analysis with current applicable rates for similar instruments as of the consolidated balance sheet dates.

The carrying value of the Company’s long-term debt, including the current portion, at December 31, 2020 and 2019, was approximately $ 0.0 million and $ 35.1 million, respectively.

At December 31, 2020 and 2019, the Company estimates that the fair value of its long-term debt, including the current portion, was approximately $ 0.0 and $ 37.0 million, respectively.

The fair value of the Company’s long-term debt was determined using Level 3 inputs.

The fair value of the 2018 Notes and 2020 Notes (together with the 2019 Notes referred to as the Notes) was approximately $ 0.3 million and $ 30.0 million, respectively, as of December 31, 2020 which differs from the aggregate carrying value of the Notes of $ 19.1 million.

The fair value of the 2018 Notes and 2019 Notes was approximately $ 12.5 million and $ 50.5 million, respectively, as of December 31, 2019 which differs from the aggregate carrying value of the Notes of $ 68.6 million.

The fair value of the Notes is influenced by the Company’s

stock price, stock price volatility, and current market yields.

The fair value of the Notes was determined using Level 3 inputs.

The fair value of the Company’s 2018 issued 5.00 % Convertible Senior Notes due 2048 (the 2018 Notes) was approximately $ 0.3 million, as of December 31, 2021, which differs from the aggregate carrying value of the 2018 Notes of $ 0.2 million as of December 31, 2021.

The fair value of the 2018 Notes and the 2020 issued 5.00 % Convertible Senior Notes due 2048 (the 2020 Notes, together with the 2018 Notes referred to as the Notes) was approximately $ 0.3 million and $ 30.0 million, respectively, as of December 31, 2020, which differs from the aggregate carrying value of the Notes of $ 19.1 million as of December 31, 2020.

During the year ended December 31, 2021, all 2020 Notes have converted into shares of common stock (see Note 10.

Convertible Senior Notes ).

The fair value of the Notes is influenced by the Company’s stock price, stock price volatility, and current market yields and was determined using Level 3 inputs.

Investments and cash equivalents consist of investments in a U.S.

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Realized gains and losses are determined using the specific identification method and are included in interest income in the consolidated statements of operations and comprehensive loss.

There were no realized gains or losses on investments for the years ended December 31, 2020, 2019 or 2018 There were one debt security and two debt securities in an unrealized loss position as of December 31, 2020 and December 31, 2019, respectively.

There were no realized gains or losses on investments for the years ended December 31, 2021, 2020 or 2019.

There were three debt securities and one debt security in an unrealized loss position as of December 31, 2021 and December 31, 2020, respectively.

None of these investments had been in an unrealized loss position for more than 12 months as of December 31, 2021, or December 31, 2020, respectively.

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Cash and money market accounts

Corporate bonds, agency bonds and commercial paper (due within 90 days )

Total cash, cash equivalents & restricted cash:

Corporate bonds, agency bonds and commercial paper (due within 1 year )

Corporate bonds, agency bonds and commercial paper (due between 1 and 5 years )

Total investments

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Corporate bonds and commercial paper (due within 1 year )

Corporate bonds and commercial paper (due between 1 and 5 years )

Total investments

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As of December 31, 2021, the Company’s cash, cash equivalents and investments were deposited at three financial institutions and it has no significant off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

As of December 31, 2020 and 2019, there were two customers, that cumulatively made up more than 50 % of the Company’s trade accounts receivable balance.

As of December 31, 2021, and 2020, there was one customer, Secura, and two customers, respectively that cumulatively made up more than 50 % of the Company’s trade accounts receivable balance.

The Company assesses the creditworthiness of all its customers and sets and reassesses customer credit limits to ensure collectability of any trade accounts receivable balances are assured.

For the year ended December 31, 2020 and 2019, four customers, individually accounted for greater than 10 % of the Company’s total product revenue, net and license and collaboration revenue.

For the year ended December 31, 2021 and 2020, one customer, Secura, individually accounted for greater than 10 % of the Company’s total revenues.

Property and equipment

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No impairment losses have been recorded through December 31, 2021.

Other assets primarily consisted of prepayments made to contract research organizations (CROs).

As of December 31, 2020 and 2019, other assets were primarily comprised of approximately $ 0.0 million and $ 0.8 million respectively, of prepaid CRO expenses that the Company assumed and paid to Infinity pursuant to the license agreement between the Company and Infinity.

As part of the sale of COPIKTRA to Secura, the prepaid balance was transferred to Secura and included in cost of sales - sale of COPIKTRA license and related assets in the statement of operations and comprehensive loss for the year ended December 31, 2020.

Research and development costs

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● facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of equipment, and laboratory supplies;

● costs associated with COPIKTRA prior to the Company concluding that regulatory approval is probable and that its net realizable value is recoverable.

Costs for certain development activities, such as clinical trial expenses, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, and information provided to the Company by its vendor on their actual costs incurred or level of effort expended.

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Stock-based compensation

The Company recognizes stock-based compensation expense for stock options, and restricted stock units (RSUs) issued to employees and directors based on the grant date fair value of the awards on a straight- line basis over the requisite service period, which typically is the vest period.

The Company recognized stock-based compensation for shares issued to employees under the Company’s employee stock purchase plan (ESPP) plan Historically, the Company recorded stock ‑based compensation expense for stock options and RSUs issued to non‑employees based on the estimated fair value of the services received or of the equity instruments issued, whichever is more reliably measured, based on the vesting date fair value of the awards on a straight‑ line basis over the vesting period.

Effective January 1, 2019, the Company recognizes stock-based compensation expense for stock options and RSUs issued to non-employees based on the grant date fair value of the awards on the straight-line basis over the requisite service period.

Awards subject to performance-based vesting requirements are expensed utilizing an accelerated attribution model if achievement of the performance criteria is determined to be probable.

The Company accounts for forfeitures as they occur.

For service-based equity awards, the Company recognizes stock-based compensation expense for stock options, and restricted stock units (RSUs) issued to employees, directors, and consultants based on the grant date fair value of the awards on a straight-line basis over the requisite service period, which typically is the vest period.

The Company recognized stock-based compensation for shares issued to employees under the Company’s employee stock purchase plan (ESPP) plan.

The Company has granted performance-based RSUs and stock options with terms that allow the recipients to vest in a specific number of shares based upon the achievement of performance-based milestones as specified in the grants.

Stock-based compensation expense associated with these performance-based RSUs and stock options is recognized if the performance condition is considered probable of achievement using the Company’s best estimates of the time to vesting for the achievement of the performance-based milestones.

Awards subject to performance-

based vesting requirements are expensed utilizing an accelerated attribution model if achievement of the performance criteria is determined to be probable.

The grant date fair value of stock options is estimated using the Black-Scholes option pricing model that takes into account the fair value of its common stock, the exercise price, the expected life of the option, the expected volatility of its common stock, expected dividends on its common stock, and the risk-free interest rate over the expected life of the option.

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The Company has not paid and do not anticipate paying cash dividends on the Company’s shares of common stock;

therefore, the

expected dividend yield is assumed to be zero.

therefore, the expected dividend yield is assumed to be zero.

The computation of expected volatility is based on the historical volatility of the Company’s common stock.

The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options.

The Company accounts for forfeitures as they occur.

The Company issues shares under the Company’s employee stock purchase plan (ESPP) to employees.

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For the years ended December 31, 2020 and 2019, the Company determined a material reversal of revenue would not occur in a future period for the estimates detailed below and, therefore, the transaction price was not reduced further.

There was no t any product revenue, net recorded for the year ended December 31, 2021.

Actual amounts of consideration ultimately received may differ from the Company’s estimates.

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The Company has determined such services are not distinct from the Company’s sale of COPIKTRA to the specialty distributor customers and, therefore, these payments have also been recorded as a reduction of revenue within the consolidated statements of operations and comprehensive loss for the years ended December 31, 2020 and 2019.

There were no amounts recorded for the year ended December 31, 2021.

Third-Party Payer Chargebacks, Discounts and Fees:

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These administrative service fees have also been recorded as a reduction of product revenue within the consolidated statements of operations and comprehensive loss for the years ended December 31, 2020 and 2019.

There were no amounts recorded for the year ended December 31, 2021.

Government Rebates:

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Licenses and Sales of Intellectual Property

Exclusive Licenses of Intellectual Property - The Company may enter into collaboration and licensing arrangements for research and development, manufacturing, and commercialization activities with collaboration partners for the development and commercialization of its product candidates, which have components within the scope of ASC 606.

Licenses of Intellectual Property - The Company may enter into collaboration and licensing arrangements for research and development, manufacturing, and commercialization activities with collaboration partners for the development and commercialization of its product candidates, which have components within the scope of ASC 606.

The arrangements generally contain multiple elements or deliverables, which may include (i) licenses, or options to obtain licenses, to the Company’s intellectual property or sale of the Company’s license, (ii) research and development activities performed for the collaboration partner, (iii) participation on joint steering committees, and (iv) the manufacturing of commercial, clinical or preclinical material.

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If a customer option is determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement.

The Company allocates the transaction price to material rights based on the relative standalone selling price, which is determined based on the identified discount and the estimated probability that the customer will exercise the option.

Amounts allocated to a material right are not recognized as revenue until, at the earliest, the option is exercised.

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Collaborative Arrangements

Collaborative Arrangements:

Contracts are considered to be collaborative arrangements when they satisfy the following criteria defined in ASC Topic 808, Collaborative Arrangements (ASC 808):

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The Company analyzes accounts that are past due for collectability and provides an allowance for receivables when collection becomes doubtful.

Given the nature and limited history of collectability of the Company’s accounts receivable, an allowance for doubtful accounts is not deemed necessary at December 31, 2020.

The Company capitalizes inventories manufactured in preparation for initiating sales of a product candidate when the related product candidate is considered to have a high likelihood of regulatory approval and the related costs are expected to be recoverable through sales of the inventories.

In determining whether or not to capitalize such inventories, the Company evaluates, among other factors, information regarding the product candidate’s safety and efficacy, the status of regulatory submissions and communications with regulatory authorities and the outlook for commercial sales, including the existence of current or anticipated competitive drugs and the availability of reimbursement.

In addition, the Company evaluates risks associated with manufacturing the product candidate, including the ability of the Company’s third-party suppliers to complete the validation batches and the remaining shelf life of the inventories.

Costs associated with manufacturing product candidates prior to satisfying the inventory capitalization criteria are charged to research and development expense as incurred.

The Company values its inventories at the lower of cost or estimated net realizable value.

The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis.

The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and it writes down any excess and obsolete inventories to their estimated realizable value in the period in which the impairment is first identified.

Such impairment charges, should they occur, are recorded within cost of sales - product.

The determination of whether inventory costs will be realizable requires estimates by management.

If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required which would be recorded as a cost of sales - product in the consolidated statements of operations and comprehensive loss.

Shipping and handling costs for product shipments are recorded as incurred in cost of sales - product along with costs associated with manufacturing the product, and any inventory write-downs.

Intangible Assets

The Company records finite-lived intangible assets related to certain capitalized milestone payments related to commercial products at their fair value.

These assets are amortized on a straight-line basis over their remaining useful lives, which are estimated based on the shorter of the remaining underlying patent life or the estimated useful life of the underlying product.

The Company assesses its finite-lived intangible assets for impairment if indicators are present or changes in circumstance suggest that impairment may exist.

Events that could result in an impairment include the receipt of additional clinical or nonclinical data regarding one of the Company’s drug candidates or a potentially competitive drug candidate, changes in the clinical development program for a drug candidate, or new information regarding potential sales for the drug.

If impairment indicators are present or changes in circumstance suggest that impairment may exist, the Company performs a recoverability test by comparing the sum of the estimated undiscounted cash flows of each finite-lived intangible asset to its carrying value on the consolidated balance sheets.

If the undiscounted cash flows used in the recoverability test are less than the carrying value, the Company would determine the fair value of the finite-lived intangible asset and recognize an impairment loss if the carrying value of the finite-lived intangible asset exceeds its fair value.

Given the nature and credit profile of the Company’s limited number of customers, an allowance for doubtful accounts is not deemed necessary at December 31, 2021.

The Company accounts for income taxes under the asset and liability method.

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Subsequent ownership changes may further affect the limitation in future years.

The Company experienced a greater than 50% change in ownership during the year ended December 31, 2020.

For more details please Note 14.

The Company experienced a greater than 50% change in ownership as defined under Section 382 and 383 of the Internal Revenue Code as well as similar state provisions during the year ended December 31, 2020.

For more details please refer to Note 12.

Income Taxes.

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The Company is currently evaluating the impact the adoption of the standard will have on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU No 2019-12, Simplifying Accounting for Income Taxes (ASU 2019-12).

ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocations, calculating income taxes in interim periods, and adds certain guidance to remove complexity in certain areas.

ASU 2019-12 is effective for all entities for annual and interim periods beginning after December 15, 2020.

An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements.

The Company has not elected to early adopt this standard and is currently evaluating the impact the adoption of the standard will have on its consolidated financial statements and related disclosures.

In August 2020, the FASB issued No.

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Recently Adopted Accounting Standards Updates

In November 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-18, Collaborative Arrangements (ASU 2018-18):

Clarifying the Interaction between ASC 808 and ASC 606, which makes targeted improvements for collaborative arrangements to clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606 when the collaborative arrangement participant is a customer in the context of a unit of account, adds unit of account guidance in ASC 808 to align with guidance in ASC 606, and clarifies presentation of certain revenues with a collaborative arrangement participant which are not directly related to a third party.

ASU 2018-18 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted.

This guidance requires entities to adopt on a retrospective basis to the date the Company adopted ASC 606.

The Company adopted ASU 2018-18 as of January 1, 2020 on a retrospective basis to January 1, 2018, the date at which the Company adopted ASC 606, and it did not have a material impact on the Company’s consolidated financial statements or disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software:

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

ASU 2018-15 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted.

The Company adopted this standard effective January 1, 2020 on a prospective basis.

The adoption of this ASU did not have an effect on the Company’s financial statements or disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements.

In December 2019, the FASB issued Accounting Standard Update (ASU) No 2019-12, Simplifying Accounting for Income Taxes (ASU 2019-12).

ASU 2019-12 is effective for all entities for annual and interim periods beginning after December 15, 2020.

The Company adopted this standard effective January 1, 2020 on a prospective basis.

The adoption of this ASU did not have an effect on the Company’s financial statements or disclosures.

Inventory consists of the following (in thousands):

December 31, 2020

December 31, 2019

Raw materials

Work in process

Finished goods

Total inventories

Pursuant to the Secura APA, discussed further in Note 16.

License, collaboration and commercial agreements , the Company sold its exclusive worldwide license for the research, development, commercialization, and manufacture in oncology indications of products containing COPIKTRA (duvelisib) and certain existing duvelisib inventory.

In connection with the sale to Secura, the Company expensed approximately $ 6.0 million of existing duvelisib inventory transferred to Secura as cost of sales – sale of COPIKTRA license and related assets for the year ended December 31, 2020.

In the first quarter of 2021, the Company adopted ASU 2019-12.

The provisions related to intraperiod tax allocation and interim recognition of enactment of tax laws are being adopted on a prospective basis.

The adoption of ASU 2019-12 did not have an effect on the Company’s consolidated financial statements or disclosures.

Property and equipment, net

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Total property and equipment, net

During the year ended December 31, 2018, an amendment to the Company’s existing office space lease was executed whereby the Company relocated from its previous 15,197 rentable square foot location to an adjacent 27,810 rentable square foot location within the same building.

As a result of this amendment, the Company shortened the useful life of the leasehold improvements related to the original location and depreciated this balance through the date which it vacated the original space.

Upon vacating the original 15,197 rentable office space, the Company disposed of the leasehold improvements related to this location.

No gain or loss from the disposal of leasehold improvements was recognized during the year ended December 31, 2018.

The Company recorded approximately $ 0.2 million, $ 0.5 million, and $ 0.4 million in depreciation expense for the years ended December 31, 2021, 2020, and 2019, respectively .

Intangible assets

Intangible assets consisted of a $ 22.0 million milestone payment which became payable upon the FDA marketing approval for COPIKTRA on September 24, 2018, pursuant to the amended and restated license agreement with Infinity Pharmaceuticals, Inc.

The Company made the milestone payment of $ 22.0 million to Infinity in November 2018.

The Company recorded approximately $ 0.8 million, $ 1.6 million, and $ 0.4 million in amortization expense related to finite-lived intangible assets during the year ended December 31, 2020, December 31, 2019, and December 31, 2018, respectively, using the straight-line methodology.

On July 2, 2020, the Company’s intangible asset met the Held for Sale criteria and the Company ceased amortization.

Pursuant to the Secura APA, discussed further in Note 16.

License, collaboration and commercial agreements the Company sold its exclusive worldwide license for the research, development, commercialization, and manufacture in oncology indications of products containing COPIKTRA (duvelisib) to which the Company’s intangible asset related thereto.

In connection with the sale the Company expensed the remaining balance of $ 19.2 million as cost of sales – sale of COPIKTRA license and related assets during the year ended December 31, 2020.

Accrued expenses

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December 31, 2020

Compensation and related benefits

Research and development expenses

Commercialization costs

Consulting fees

Compensation and related benefits

Professional fees

Consulting fees

Commercialization costs

Total accrued expenses

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On March 21, 2017, the Company entered into a term loan facility of up to $ 25.0 million with Hercules Capital, Inc.

The term loan facility is governed by a loan and security agreement, dated March 21, 2017 (the Original Loan Agreement).

The term loan facility was governed by a loan and security agreement, dated March 21, 2017 (the Original Loan Agreement).

The Original Loan Agreement was amended on January 4, 2018, March 6, 2018, October 11, 2018, April 23, 2019, and November 14, 2019 (the Amended Loan Agreement) to increase the total borrowing limit under the Original Loan Agreement from up to $ 25.0 million to up to $ 75.0 million, pursuant to certain conditions of funding.

Per the terms of the Amended Loan Agreement, the Company may borrow up to an aggregate of $ 75.0 million, of which $ 35.0 million was outstanding immediately as of April 23, 2019 (Fourth Amendment Date) (Amended Term A Loan) as a result of the existing outstanding principal of term loans of $ 25.0 million being converted into the Amended Term A Loan, and an additional $ 10.0 million being drawn on the Fourth Amendment Date.

The remaining $ 40.0 million of borrowing capacity may be drawn in multiple tranches comprised of (i) a term loan in an amount of up to $ 15.0 million upon the Company generating cumulative net product revenues (as defined in the Amended Loan Agreement) of either (a) $ 37.5 million on or before April 30, 2020 or (b) $ 50.0 million on or before June 30, 2020 (Amended Term B Loan), and (ii) a term loan in an amount of up to $ 25.0 million available through December 31, 2021, subject to Hercules’ approval and certain other conditions specified in the Amended Loan Agreement (the Amended Term C Loan, and together with the Amended Term A Loan and Amended Term B Loan, the Amended Term Loan).

The funding conditions for the Amended Term B Loan have not been met and expired on June 30, 2020.

Per the Amended Loan Agreement, the Company was required to maintain unrestricted and unencumbered cash in accounts subject to control agreements in favor of Hercules of an aggregate amount greater than or equal to 100 % of the outstanding debt obligations under the Amended Term Loan Agreement, unless and until the Company receives of Net Product Revenues (as defined in the Amended Loan Agreement) of at least $ 20 million on or before December 31, 2020, measured on a trailing six month basis (Initial Net Product Revenue Threshold).

The Company recorded a total $ 35.0 million in restricted cash on the consolidated balance sheet as of December 31, 2019.

The Amended Term Loan was scheduled to mature on December 1, 2022 (Amended Term Loan Maturity Date).

Each advance accrued interest at a floating per annum rate equal to the greater of (a) 9.75 % or (b) the lesser of (i) 12.00 % and (ii) the sum of (x) 9.75 % plus (y) (A) the prime rate (as defined in the Amended Loan Agreement) minus (B) 5.50 % .

The Amended Term Loan provided for interest-only payments until April 1, 2021, which could have been extended to December 1, 2021 subject to the Company generating $ 40.0 million in net product revenue on a trailing six-month basis on or prior to December 31, 2020 provided that no event of default has occurred.

The Amended Term Loan was secured by a lien on substantially all of the Company’s assets, other than intellectual property and contains customary covenants and representations, including a liquidity covenant, minimum net revenue covenant, financial reporting covenant and limitations on dividends, indebtedness, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, deposit accounts, and subsidiaries.

The Company assessed all terms and features of the Amended Loan Agreement in order to identify any potential embedded features that would require bifurcation or any beneficial conversion features.

As part of this analysis, the Company assessed the economic characteristics and risks of the Amended Loan Agreement, including put and call features.

The Company determined that all features of the Amended Loan Agreement were clearly and closely associated with a debt host and did not require bifurcation as a derivative liability, or the fair value of the feature was immaterial to the Company's consolidated financial statements.

The Company reassesses the features on a quarterly basis to determine if they require separate accounting.

There have been no changes to the Company’s original assessment

The Amended Term Loan was scheduled to mature on December 1, 2022.

On November 9, 2020, the Company repaid in full all principal, accrued and unpaid interest, fees, and expenses under the Amended Loan Agreement with Hercules in an aggregate amount of $ 37.4 million (the Payoff Amount).

The Payoff Amount includes the principal balance of $ 35.0 million, final payment fee of $ 1.8 million, prepayment penalty fee of $ 0.5 million, and accrued and unpaid interest of $ 0.1 million.

The Payoff Amount included the principal balance of $ 35.0 million, final payment fee of $ 1.8 million, prepayment penalty fee of $ 0.5 million, and accrued and unpaid interest of $ 0.1 million.

On November 9, 2020 the Amended Loan Agreement was terminated along with Hercules’ commitment to provide funding under any future term loans.

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Product revenue reserves and allowances

As of December 31, 2020, the Company’s sole source of product revenue has been from sales of COPIKTRA in the United States, which it began shipping to customers on September 25, 2018.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the year ended December 31, 2020 and December 31, 2019 (in thousands):

Beginning Balance at December 31, 2018

From September 24, 2018 (the date of the Company’s U.S.

commercial launch of COPIKTRA) through September 30, 2020 (the date the Company sold COPIKTRA to Secura), the Company’s sole source of product revenue was from the gross sales of COPIKTRA in the United States less provisions for product sales allowances and accruals.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the years ended December 31, 2021 and December 31, 2020 (in thousands):

Balance at December 31, 2019

Provision related to sales in the current year

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On April 15, 2014, the Company entered into a lease agreement for approximately 15,197 square feet of office and laboratory space in Needham, Massachusetts.

The lease term commenced on April 15, 2014 and was scheduled to expire on September 30, 2019.

The lease term commenced on April 15, 2014 and it was scheduled to expire on September 30, 2019.

Effective February 15, 2018, the Company amended its lease agreement to relocate within the facility to another location consisting of 27,810 square feet of office space (the Amended Lease Agreement).

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Shares reserved for 2020 Notes

Employee Stock Purchase Plan

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At-the-market equity offering programs

On March 30, 2017, the Company established an at-the-market equity offering program (ATM) pursuant to which it was able to offer and sell up to $ 35.0 million of its common stock at then-current market prices from time

to time through Cantor, as sales agent.

On August 28, 2017, the Company amended its sales agreement with Cantor to increase the maximum aggregate offering price of shares of common stock that can be sold under the ATM to $ 75.0 million.

On March 30, 2017, the Company established an at-the-market equity offering program pursuant to which it was able to offer and sell up to $ 35.0 million of its common stock at then-current market prices from time to time

through Cantor, as sales agent.

On August 28, 2017, the Company amended its sales agreement with Cantor to increase the maximum aggregate offering price of shares of common stock that can be sold under the at-the-market equity offering program to $ 75.0 million.

The Company did no t make any sales under this program during the year ended December 31, 2021.

During the year ended December 31, 2020, the Company sold 6,769,559 shares under this program for net proceeds of approximately $ 12.2 million (after deducting commissions and other offering expenses).

Through December 31, 2021, the Company has sold a total of 18,287,913 shares under this program for net proceeds of approximately $ 59.6 million (after deducting commissions and other offering expenses).

Equity offering

On May 16, 2018, the Company entered into an underwriting agreement with Cantor relating to the underwritten offering of 7,777,778 shares (the Shares) of the Company’s common stock (the Underwriting Agreement).

Cantor agreed to purchase the Shares pursuant to the Underwriting Agreement at a price of $ 4.31 per share.

In addition, the Company granted Cantor an option to purchase, at the public offering price less any underwriting discounts and commissions, an additional 1,166,666 shares of the Company’s common stock, exercisable for 30 days from the date of the prospectus supplement.

The option was exercised by Cantor in full on May 23, 2018.

The aggregate proceeds from Cantor, net of underwriting discounts and offering costs, were approximately $ 38.3 million.

On June 14, 2018, the Company entered into a purchase agreement with Consonance Capital Master Account L.P.

and P Consonance Opportunities Ltd.

(collectively, Consonance) relating to the registered offering of 7,166,666 shares of its common stock at a price of $ 6.00 per share.

The aggregate proceeds from Consonance, net of offering costs, were approximately $ 42.9 million.

In August 2021, the Company entered into a sales agreement with Cantor pursuant to which the Company can offer and sell up to $ 100.0 million of its common stock at the current market prices from time to time through Cantor as sales agent (August 2021 ATM).

During the year-ended December 31, 2021, the Company sold 2,930,585 shares under the August 2021 ATM for net proceeds of approximately $ 6.8 million (after deducting commissions and other offering expenses).

Stock-based compensation

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All of the $ 7.7 million, $ 8.1 million, and $ 8.5 million of stock-based compensation expense recorded during the years ended December 31, 2021, 2020, and 2019, respectively, was recorded to additional paid-in capital.

The Company has awards outstanding under two equity compensation plans, the Amended and Restated 2012 Incentive Plan (the Amended 2012 Plan) and the 2010 Equity Incentive Plan (the 2010 Plan), as well as the inducement award program.

The Company has awards outstanding under two equity compensation plans, the 2021 Equity Incentive Plan (2021 Plan), and the Amended and Restated 2012 Incentive Plan (the 2012 Plan), as well as the inducement award program.

As of December 31, 2021, there are no awards outstanding under the 2010 Equity Incentive Plan (the 2010 Plan).

Terms of stock award agreements, including vesting requirements, are determined by the board of directors, subject to the provisions of the individual plans.

To date, most options granted by the Company vest twenty-five percent ( 25 %) one year from vesting start date and six and a quarter percent ( 6.25 %) for each successive three-month period, thereafter (subject to acceleration of vesting in the event of certain change of control transactions) and are exercisable for a period of ten years from the date of grant.

2012 Incentive Plan

During 2021, the Company’s stockholders approved the 2021 Plan.

Upon effectiveness of the 2021 Plan, the Company ceased making awards under the 2012 Plan.

The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, RSUs and other stock-based awards.

The number of shares of common stock initially reserved for issuance under the 2021 Plan is (i) 23,900,000 which is the sum of 13,250,124 shares plus the number of shares available for issuance under the 2012 Plan as of the date the Company’s Board of Directors approved the 2021 Plan ( 10,649,876 shares) plus (ii) the number of shares of the Company’s common stock underlying awards under the 2012 Plan and the 2010 Plan that expire, terminate or are surrendered without delivery of shares, are forfeited to or repurchased by the Company, or otherwise become available again for grant under the terms of the 2012 Plan or the 2010 Plan, as applicable.

As of December 31, 2021, under the 2021 Plan, the Company has granted stock options for 3,717,822 shares of common stock, of which 14,584 have been forfeited and 0 have been exercised, and granted RSUs for 1,971,097 shares of common stock, of which 0 have been forfeited and 0 have vested.

As of December 31, 2021, 18,286,651 , shares remain available for future issuance.

The 2012 Plan became effective immediately upon the closing of the Company’s IPO in February 2012.

Upon effectiveness of the 2012 Plan, the Company ceased making awards under the 2010 Plan.

The 2012 Plan initially allowed the Company to grant awards for up to 3,428,571 shares of common stock, plus the number of shares of common stock available for grant under the 2010 Plan as of the effectiveness of the 2012 Plan (which was an additional 30,101 shares), plus that number of shares of common stock related to awards outstanding under the 2010 Plan which terminate by expiration, forfeiture, cancellation or otherwise.

The 2012 Plan

initially allowed the Company to grant awards for up to 3,428,571 shares of common stock, plus the number of shares of common stock available for grant under the 2010 Plan as of the effectiveness of the 2012 Plan (which was an additional 30,101 shares), plus that number of shares of common stock related to awards outstanding under the 2010 Plan which terminate by expiration, forfeiture, cancellation or otherwise.

The 2012 Plan included an “evergreen provision” that allowed for an annual increase in the number of shares of common stock available for issuance under the 2012 Plan.

The annual increase was added on the first day of each year from 2013 through 2018

and was equal to the lesser of 1,285,714 shares of common stock and 4.0 % of the number of shares of common stock outstanding, or a lesser amount as determined by the board of directors.

The annual increase was added on the first day of each year from 2013 through 2018 and was equal to the lesser of 1,285,714 shares of common stock and 4.0 % of the number of shares of common stock outstanding, or a lesser amount as determined by the board of directors.

On each of January 1, 2018, January 1, 2017 and January 1, 2016, the number of shares available for issuance under the 2012 Plan increased by 1,285,714 under this provision.

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Awards under the 2012 Plan may include the following award types:

incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units (RSUs), other stock-based or cash-based awards and any combination of the foregoing.

As of December 31, 2020, under the 2012 Plan, the Company has granted stock options for 21,727,798 shares of common stock, of which 8,496,099 have been forfeited and 1,735,524 have been exercised, and granted restricted stock units for 6,371,656 shares of common stock, of which 922,801 have been forfeited and 2,847,038 have vested.

incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSUs, other stock-based or cash-based awards and any combination of the foregoing.

As of December 31, 2021, under the 2012 Plan, the Company has granted stock options for 22,098,207 shares of common stock, of which 8,837,324 have been forfeited and 2,198,469 have been exercised, and granted RSUs for 6,678,621 shares of common stock, of which 1,021,941 have been forfeited and 5,028,711 have vested.

The exercise price of each option has been equal to the closing price of a share of the Company’s common stock on the grant date.

As of December 31, 2020, 10,947,871 shares remain available for future issuance.

Upon adoption of the 2021 Plan, the Company ceased issuing awards from the 2012 Plan.

Inducement Award Program

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The program is governed by the terms of the 2021 Plan, but shares issued pursuant to the program are not issued under the 2021 Plan.

As of December 31, 2020, the Company had granted options for 6,392,134 shares of common stock under the program, of which 4,722,689 have been forfeited and 543,446 have been exercised, and granted restricted stock units for 184,700 shares, of which 62,200 have been forfeited and 70,000 have vested.

As of December 31, 2021, the Company had granted options for 7,294,634 shares of common stock under the program, of which 5,212,127 have been forfeited and 584,016 have been exercised, and granted RSUs for 535,950 shares, of which 232,200 have been forfeited and 97,812 have vested.

As of December 31, 2021, 2,285,421 shares remain available for future issuance.

Stock Options

Most options granted by the Company vest twenty-five percent ( 25 %) one year from vesting start date and six and a quarter percent ( 6.25 %) for each successive three-month period, thereafter (subject to acceleration of vesting in the event of certain change of control transactions) subject to the employee’s continued employment with, or service to, the Company on such vesting date and are exercisable for a period of ten years from the date of grant.

A summary of the Company’s stock option activity and related information for the year ended December 31, 2021, is as follows:

Weighted-average

exercise price per

contractual term

intrinsic value

(in thousands)

Weighted-average exercise price per share

Weighted-average remaining contractual term (years)

Aggregate intrinsic value (in thousands)

Outstanding at December 31, 2020

( 1,498,355 )

Forfeited/cancelled

( 5,361,239 )

Outstanding at December 31, 2021

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Restricted Stock Units (RSUs)

The Company awards RSUs to employees under its 2012 Incentive Plan and Inducement Award Program.

Each RSU entitles the holder to receive one share of the Company’s common stock when the RSU vests.

The RSUs generally vest in either (i) four substantially equal installments on each of the first four anniversaries of the vesting commencement date, or (ii) 100 percent on the first anniversary of the vesting commencement date, subject to the employee’s continued employment with, or service to, the Company on such vesting date.

The RSUs generally vest (i) twenty-five percent ( 25 %) one year from vesting start date and six and a quarter percent ( 6.25 %) for each successive three-month period, thereafter, (ii) two tranches for 50 % of the award with the second and final vesting date on the one year anniversary of the vesting commencement date and (iii) 100 percent within two years of the vesting commencement date.

The RSUs are subject to acceleration of vesting in the event of certain change of control transactions and subject to the employee’s continued employment with, or service to, the Company on such vesting date.

Compensation expense is recognized on a straight-line basis.

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At December 31, 2021, there was $ 6.0 million of total unrecognized compensation cost related to unvested RSUs and the Company expects to recognize this cost over a remaining weighted-average period of 3.7 years.

On March 27, 2020, the Company amended all outstanding stock options and RSUs awards held by employees (including executive officers), other than certain performance-based awards, to provide that, in the event of a change of control, such equity awards currently held by employees that are outstanding and unvested immediately prior to a change of control of the Company will become fully vested and, if applicable, exercisable

immediately prior to, and subject to the consummation of, such change of control.

The amendment was implemented to provide assurance to the Company’s existing employees and not in response to any change of control offer for the Company.

The modification affected 93 employees and will result in incremental stock compensation expense of $ 0.2 million to be recognized over the remaining requisite service period for each award.

The modification resulted in incremental stock compensation expense of $ 0.1 million recognized in the year ended December 31, 2020.

The modification resulted in incremental stock compensation expense of $ 0.1 million recognized in the year ended December 31, 2021, and 2020.

The Company modified all unvested equity awards held by employees included in the August 2020 Restructuring discussed in Note.

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Expected term (years)

The Company has recognized $ 0.1 million and $ 0.4 million of stock-based compensation expense under the Amended and Restated 2018 ESPP, for the years ended December 31, 2020 and December 31, 2019 respectively.

During the year ended December 31, 2020 and December 31, 2019, the Company issued 358,193 shares and 341,701 shares, respectively, of common stock for proceeds of $ 0.4 million in each year under the Amended and Restated 2018 ESPP.

The Company has recognized $ 0.1 million, $ 0.1 million and $ 0.4 million of stock-based compensation expense under the Amended and Restated 2018 ESPP, for the years ended December 31, 2021, 2020, and 2019 respectively.

During the year ended December 31, 2021, 2020, and 2019, the Company issued 110,060 shares, 358,193 shares and 341,701 shares, respectively, of common stock for proceeds of $ 0.2 million, $ 0.4 million and $ 0.4 million, respectively under the Amended and Restated 2018 ESPP.

Convertible Senior Notes

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If a “Fundamental Change” occurs on or before November 1, 2022 and a holder elects to convert its Notes in connection with such change, such holder may be entitled to an increase in the conversion rate in certain circumstances as set forth in the Indenture.

The 2018 Notes are the Company’s senior, unsecured obligations and will be senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the 2018 Notes;

equal in right of payment with the Company’s existing and future indebtedness that is not so subordinated, and effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness.

The 2018 Notes are structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.

The 2018 Indenture includes customary covenants and set forth certain events of default after which the 2018 Notes may be declared immediately due and payable and set forth certain types of bankruptcy or insolvency events of default involving the Company or certain of its subsidiaries after which the 2018 Notes become automatically due and payable

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As part of this analysis, the Company assessed the economic characteristics and risks of the 2018 Notes, including the conversion, put and call features.

Per the terms of the 2018 Indenture, upon conversion of the 2018 Notes, a portion of the principal may be settled in cash until the date upon which the Company’s stockholders approve an increase in the number of authorized shares of common stock, or the Authorized Share Effective Date, as defined.

In consideration of this provision, the Company concluded the conversion feature required bifurcation as a derivative.

The fair value of the conversion feature derivative was

determined based on the difference between the fair value of the 2018 Notes with the conversion option and the fair value of the 2018 Notes without the conversion option.

The Company determined that the fair value of the derivative upon issuance of the 2018 Notes was $ 51.5 million and recorded this amount as a derivative liability and the offsetting amount as a debt discount as a reduction to the carrying value of the 2018 Notes on the closing date, or October 17, 2018 .

On December 18, 2018, the Authorized Share Effective Date was achieved as the Company’s stockholders approved an increase in the number of authorized shares of Common Stock.

Following this approval, no portion of the 2018 Notes are settleable in cash upon conversion.

As such, the Company determined that the conversion feature no longer met the definition of a derivative following the increase in the number of authorized shares of common stock.

As of December 18, 2018, the Company determined the fair value of the conversion feature was $ 25.9 million.

The Company recorded the change in the fair value of the conversion feature for the period from October 17, 2018 to December 18, 2018 of $ 25.6 million as other income on the consolidated statements of operations and comprehensive loss.

As of December 18, 2018, the fair value of the conversion option was reclassified to additional paid-in capital on the consolidated balance sheets as it qualified for a scope exception from derivative accounting.

Accordingly, the conversion feature will no longer be measured at fair value on the Company’s financial statements.

The Company determined that all other features of the 2018 Notes were clearly and closely associated with a debt host and did not require bifurcation as a derivative liability, or the fair value of the feature was immaterial to the Company's consolidated financial statements.

The conversion feature was initially bifurcated as an embedded derivative but subsequently qualified for a scope exception to derivative accounting upon the Company’s stockholders approving an increase in the number of authorized shares of Common Stock in December 2018.

The Company determined that all other features of the 2018 Notes were clearly and closely associated with the debt host and did not require bifurcation as a derivative liability, or the fair value of the feature was immaterial to the Company’s consolidated financial statements.

The Company reassesses the features on a quarterly basis to determine if they require separate accounting.

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The change in fair value of the conversion option was determined to be $ 13.6 million.

The 2019 Notes are convertible into shares of the Company’s common stock, par value $ 0.0001 per share, together, if applicable, with cash in lieu of any fractional share, at an initial conversion rate of 606.0606 shares of common stock per $1,000 principal amount of the 2019 Notes, which corresponds to an initial conversion price of approximately $ 1.65 per share of common stock and represents a conversion premium of approximately 52.8 % above the last reported sale price of the Company’s common stock of $ 1.08 per share on November 11, 2019.

The Company will have the right, exercisable at the Company’s option, to cause all 2019 Notes then outstanding to be converted automatically if the “Daily VWAP” (as defined in the 2019 Indenture) per share of the Company’s common stock equals or exceeds 121 % of the conversion price on each of at least 20 VWAP Trading Days, whether or not consecutive, during any 30 consecutive VWAP Trading Day period commencing on or after the date the Company first issued the 2019 Notes.

(Company’s Mandatory Conversion Option).

Upon conversion, converting noteholders will be entitled to receive accrued interest on their converted 2019 Notes.

In addition, if the 2019 Notes are converted with a conversion date that is on or prior to November 1, 2020, other than in connection with the Company’s exercise of the Company’s Mandatory Conversion Option then the consideration due upon any such conversion will also include a cash interest make-whole payment for all future scheduled interest payments on the converted 2019 Notes through November 1, 2020 (2019 Notes Interest Make-Whole Provision).

The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends, but will not be adjusted for any accrued and unpaid interest.

The 2019 Notes were convertible into shares of the Company’s common stock, par value $ 0.0001 per share, together, if applicable, with cash in lieu of any fractional share, at an initial conversion rate of 606.0606 shares of common stock per $1,000 principal amount of the 2019 Notes, which corresponds to an initial conversion price of approximately $ 1.65 per share of common stock.

The Company assessed all terms and features of the 2019 Notes in order to identify any potential embedded features that would require bifurcation.

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It was determined that the fair value of the derivative upon the November 14, 2019 and December 23, 2019 issuance of the 2019 Notes was $ 0.2 million in aggregate;

and recorded this amount as a derivative liability and the offsetting amount as a debt discount as a reduction to the carrying value of the 2019 Notes on the closing dates.

During the period November 14, 2019 to December 31, 2019, 2019 Note holders converted $ 9.5 million aggregate principal of 2019 Notes in exchange for 5,767,872 shares of common stock and $ 0.4 million of cash for 2019 Interest Make-Whole Provision payments.

and recorded this amount as a derivative liability and the offsetting amount as a debt

discount as a reduction to the carrying value of the 2019 Notes on the closing dates.

During the period November 14, 2019 to December 31, 2019, 2019 Note holders converted $ 9.5 million aggregate principal of 2019 Notes in exchange for 5,767,872 shares of common stock, $ 0.4 million of cash for 2019 Interest Make-Whole Provision payments, and accrued interest.

As of December 31, 2019, the Company determined the fair value of the 2019 Interest Make-Whole Provision was $ 0.5 million.

The Company recorded the change in the fair value of the 2019 Interest Make-Whole Provision for the period from November 14, 2019 to December 31, 2019 of $ 0.6 million as other expense on the consolidated statements of operations and comprehensive loss.

During the first three months of the year ended December 31, 2020, 2019 Note holders converted $ 57.4 million aggregate principal of 2019 Notes in exchange for 34,796,350 shares of common stock and $ 1.8 million of cash for the 2019 Note Interest Make-Whole Provision.

During the first quarter of 2020, 2019 Note holders converted $ 57.4 million aggregate principal of 2019 Notes in exchange for 34,796,350 shares of common stock, $ 1.8 million of cash for the 2019 Note Interest Make-Whole Provision, and accrued interest.

The Company recorded $ 1.3 million for the year ended December 31, 2020, as other expense for the change in fair value of the 2019 Notes Interest Make-Whole Provision in the consolidated statements of operations and comprehensive loss.

The Company determined that all other features of the 2019 Notes were clearly and closely associated with a debt host and did not require bifurcation as a derivative liability, or the fair value of the feature was immaterial to the Company's consolidated financial statements.

As of December 31, 2020, all 2019 Notes have converted into shares of common stock..

On November 6, 2020, the Company entered into a privately negotiated agreement with an investor who is a holder of the Company’s 2018 Notes to exchange approximately $ 28.0 million aggregate principal amount of 2018 Notes for approximately $ 28.0 million aggregate principal amount of newly issued 5.00 % Convertible Senior Notes due 2048 (the 2020 Notes).

As of March 31, 2020, all 2019 Notes have converted into shares of common stock.

On November 6, 2020, the Company entered into a privately negotiated agreement with an investor who was a holder of the Company’s 2018 Notes to exchange approximately $ 28.0 million aggregate principal amount of 2018 Notes for approximately $ 28.0 million aggregate principal amount of newly issued 5.00 % Convertible Senior Notes due 2048 (the 2020 Notes).

The issuance of the 2020 Notes closed on November 13, 2020.

The 2020 Notes are governed pursuant to the Base Indenture between the Company and Wilmington dated as of October 17, 2018 as supplemented by the second supplemental indenture thereto dated as of November 13, 2020 (the Supplemental Indenture and together with the Base Indenture, the 2020 Indenture).

The Company will have the right, exercisable at its option, to cause all 2020 Notes then outstanding to be converted automatically if the “Daily VWAP” (as defined in the 2020 Indenture) per share of the Company’s common stock equals or exceeds 123.08 % of the conversion price on each of at least 20 “VWAP Trading Days” (as defined in the 2020 Indenture), whether or not consecutive, during any 30 consecutive VWAP Trading Day period commencing on or after the date the Company first issued the 2020 Notes.

The initial conversion rate for the 2020 Notes is 307.6923 shares of the Company’s common stock per $1,000 principal amount of the 2020 Notes, which is equivalent to an initial conversion price of approximately $ 3.25 per share, representing an approximately 153.9 % premium to the sale price of $ 1.28 per share of the Company’s common stock on November 5, 2020, as reported on the Nasdaq Global Market.

Prior to November 1, 2023, the Company will not have the right to redeem the 2020 Notes.

On or after November 1, 2023, the Company may elect to redeem the 2020 Notes, in whole or in part, at a cash redemption price equal to the principal amount of the 2020 Notes to be redeemed, plus accrued and unpaid interest, if any.

Unless the Company has previously called all outstanding 2020 Notes for redemption, the 2020 Notes will be subject to repurchase by the Company at the holders’ option on each of November 1, 2023, November 1, 2028, November 1, 2033, November 1, 2038 and November 1, 2043 (or, if any such date is not a business day, on the next business day) at a cash repurchase price equal to the principal amount of the 2020 Notes to be repurchased, plus accrued and unpaid interest, if any.

If a Fundamental Change (as defined in the 2020 Indenture) occurs at any time, subject to certain conditions, holders may require the Company to purchase all or any portion of their 2020 Notes at a purchase price equal to 100 % of the principal amount of the 2020 Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the “Fundamental Change Repurchase Date” (as defined in the 2020 Indenture).

If a “Make-Whole Fundamental Change” (as defined in the 2020 Indenture) occurs on or before November 1, 2022 and a holder elects to convert its 2020 Notes in connection with such Make-Whole Fundamental Change, such holder may be entitled to an increase in the conversion rate in certain circumstances as set forth in the 2020 Indenture.

Upon conversion of the 2020 Notes, holders will receive a cash payment equal to the accrued and unpaid interest on the converted 2020 Notes.

The 2020 Notes are the Company’s senior unsecured obligations and will be senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the 2020 Notes, and equal in right of payment with the Company’s existing and future indebtedness that is not so subordinated, and effectively subordinated to the Company’s existing and future indebtedness, to the extent of the value of the collateral securing such indebtedness.

The 2020 Notes are structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.

The 2020 Notes were governed pursuant to the Base Indenture between the Company and Wilmington, as trustee and collateral agent, dated as of October 17, 2018 as supplemented by the second supplemental indenture thereto dated as of November 13, 2020 (the 2020 Notes Supplemental Indenture and together with the Base Indenture, the 2020 Indenture).

The Company had the right, exercisable at its option, to cause all 2020 Notes then outstanding to be converted automatically if the “Daily VWAP” (as defined in the 2020 Indenture) per share of the Company’s common stock equaled or exceeded 123.08 % of the conversion price on each of at least 20 “VWAP Trading Days” (as defined in the 2020 Indenture), whether or not consecutive, during any 30 consecutive VWAP Trading Day period commencing on or after the date the Company first issued the 2020 Notes (2020 Notes Mandatory Conversion Option).

The initial conversion rate for the 2020 Notes was 307.6923 shares of the Company’s common stock per $1,000 principal amount of the 2020 Notes, which is equivalent to an initial conversion price of approximately $ 3.25 per share.

The conversion rate was subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends, but was not subject to adjustment for any accrued and unpaid interest.

Prior to November 1, 2023, the Company did not have the right to redeem the 2020 Notes.

On or after November 1, 2023, the Company had the option to redeem the 2020 Notes, in whole or in part, at a cash redemption price equal to the principal amount of the 2020 Notes to be redeemed, plus accrued and unpaid interest, if any.

Unless the Company had previously called all outstanding 2020 Notes for redemption, the 2020 Notes were subject to repurchase by the Company at the holders’ option on each of November 1, 2023, November 1, 2028, November 1, 2033, November 1, 2038 and November 1, 2043 (or, if any such date is not a business day, on the next business day) at a cash repurchase price equal to the principal amount of the 2020 Notes to be repurchased, plus accrued and unpaid interest, if any.

The Company determined the 2020 Notes exchange met the definition of a debt modification under ASC 470-50, Modifications and Extinguishments .

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The Company determined that all features of the 2020 Notes were clearly and closely associated with a debt host and did not require bifurcation as a derivative liability, or the fair value of the feature was immaterial to the Company's consolidated financial statements

The Company reassesses the features on a quarterly basis to determine if they require separate accounting.

There have been no changes to the Company’s original assessment through December 31, 2020.

The Company determined that the expected life of the 2018 Notes and 2020 was equal to the period through November 1, 2023 as this represents the point at which the 2018 Notes and 2020 Notes are initially subject to repurchase by the Company at the option of the holders.

Accordingly, the total debt discount, inclusive of the fair value of the embedded conversion feature derivative at issuance and change in fair value of conversion option upon exchange is being amortized using the effective interest method through November 1, 2023.

ended December 31, 2020, the Company recognized an aggregate of $ 12.1 million of interest expense related to the 2018 Notes, 2019 Notes and 2020 Notes.

On July 1, 2021, the Company exercised the Company’s 2020 Notes Mandatory Conversion Option for the aggregate principal amount of $ 28.0 million of the Company’s 2020 Notes.

On July 16, 2021, the aggregate principal of $ 28.0 million of 2020 Notes was converted into 8,615,384 shares of common stock.

As a result, as of September 30, 2021, all 2020 Notes have converted into shares of common stock.

Upon conversion of the 2020 Notes, holders received a cash payment equal to the accrued and unpaid interest on the converted 2020 Notes.

Pursuant to ASC 815-15-40-1, upon conversion, the Company recorded the remaining discount on the 2020 Notes of $ 7.8 million as interest expense in the statements of operations and comprehensive loss during the year ended December 31, 2021.

The Company determined that the expected life of the 2018 Notes, 2019 Notes, and 2020 Notes was equal to the period through November 1, 2023, as this represents the point at which the 2018 Notes, 2019 Notes, and 2020 Notes were initially subject to repurchase by the Company at the option of the holders.

Accordingly, for the 2018 Notes, the total debt discount, inclusive of the fair value of the embedded conversion feature derivative at issuance is being amortized using the effective interest method through November 1, 2023.

For the 2019 Notes and 2020 Notes, the total debt discount, inclusive of the fair value of the embedded conversion feature derivative at issuance and change in fair value of conversion option upon exchange, was being amortized using the effective interest method through November 1, 2023.

Pursuant to ASC 815-15-40-1, upon conversion of the 2019 Notes and 2020 Notes into common stock, the remaining debt discount on the conversion date was recorded to interest expense in the s tatements of operations and comprehensive loss .

For the year ended December 31, 2021, the Company recognized an aggregate of $ 10.0 million of interest expense related to the 2018 Notes, and 2020 Notes.

Net Loss per Share

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For the years ended December 31, 2021, 2020, and 2019 net loss, basic and diluted EPS are the same as the assumed exercise of stock options, restricted stock units, and the Notes are anti-dilutive.

For the year ended December 31, 2018, the dilutive effect of the outstanding 2018 Notes issued by the Company is reflected in diluted EPS using the if-converted method.

The computation of basic and diluted net loss per share attributable to common stockholders consists of the following:

Year Ended December 31,

Interest expense

Adjusted diluted net loss

Weighted average shares outstanding - basic

Effect of dilutive securities:

Weighted average shares outstanding - diluted

Net loss per share - basic

Net loss per share - diluted

For the year ended December 31, 2018, in calculating the effect of the 2018 Notes on diluted net loss per share, the change in fair value of the bifurcated derivative of $ 25.6 million is subtracted while the interest expense of $ 3.1 million is added to the Company’s net loss.

As of December 31, 2018, upon conversion of all outstanding 2018 Notes, the Company would be required to issue 20,936,548 shares.

Under the “if-converted” method, convertible instruments are assumed to have been converted as of the beginning of the period or when issued, if later.

Accordingly, the weighted average number of potentially issuable shares upon conversion of the 2018 Notes was determined by weighting the number of shares potentially issuable as of December 31, 2018, 20,936,548 shares, over the total number of days the 2018 Notes were outstanding for the period, 76 days , to calculate an additional 4,359,391 shares to be added to the denominator.

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

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Research and development tax credits

Cancellation of debt

Permanent items

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Installment sale

Lease liability

Other deferred tax assets

Total deferred tax assets

Deferred tax liabilities:

Right-of-use asset

Debt discount

Other deferred tax liability

Total deferred tax liabilities

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The Company has recorded a valuation allowance against its deferred tax assets at December 31, 2021 and 2020 because the Company’s management believes that it is more likely than not that these assets will not be fully realized.

The decrease in the valuation allowance of approximately $ 25.5 million in the year ended December 31, 2020 primarily relates to the loss of NOL carryforwards and research and development credits due to Section 382 of the Internal Revenue Code and similar provisions under state law discussed in the next paragraph

The increase in the valuation allowance of approximately $ 15.1 .

million in the year ended December 31, 2021, primarily relates to the generation of net operating losses and research and development credits.

Section 382 of the Internal Revenue Code and similar provisions under state law limit the utilization of U.S.

and state NOL carryforwards following certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%.

Based on the Company’s analysis under Section 382, the Company believes that $ 41.4 million of its federal NOL carryforwards and $ 168.0 million of its state NOL carryforwards are limited by Section 382 and similar provisions under state law as of December 31, 2020 and have been written off in the year ended December 31, 2020.

Due to limitations under Section 382 the Company believes that its Research & Development (R&D) and Orphan Drug (OD) Credits will be limited as of December 31, 2020.

The portion of R&D and OD credits that were determined to be limited by Section 382 have been written off as of December 31, 2020.

NOL carryforwards, state NOL carryforwards, Research and Development (R&D) credits, and Orphan Drug (OD) credits following certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%.

Based on the Company’s analysis under Section 382, the Company believes that its federal NOL carryforwards, its state NOL carryforwards, R&D credits, and OD credits are limited by Section 382 and similar provisions under state law as of December 31, 2021.

The portion of federal NOL carryforwards, state NOL carryforwards, R&D credits, and OD credits that were determined to be limited have been written off as of December 31, 2021.

The remaining unused carryforwards and credits remain available for future periods.

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The Company’s reserves related to taxes are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related to the tax benefit.

From inception and through December 31, 2020, the

Company had no unrecognized tax benefits or related interest and penalties accrued.

From inception and through December 31, 2021, the Company had no unrecognized tax benefits or related interest and penalties accrued.

The Company has not conducted a study of R&D credit carryforwards.

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Leases for further details regarding the minimum aggregate future lease commitments as of December 31, 2021.

In conjunction with the execution of the Amended Lease Agreement, the Company has provided a security deposit in the form of a letter of credit in the amount of $ 0.2 million as of December 31, 2020 and December 31, 2019.

The amount is included in non-current restricted cash on the consolidated balance sheets as of December 31, 2020.

The amount is included in non-current restricted cash on the consolidated balance sheets as of December 31, 2021, and 2020.

Pursuant to the terms of various agreements, the Company may be required to pay various development, regulatory and commercial milestones.

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Additionally, Secura assumed all royalty payment obligations due under the amended and restated license agreement with Infinity (Infinity License Agreement).

Pursuant to the terms of the Secura APA, Secura has paid the Company an up-front payment of $ 70.0 million in September 2020 and has agreed to pay the Company (i) regulatory milestone payments up to $ 45.0 million, consisting of a payment of $ 35.0 million upon receipt of regulatory approval of COPIKTRA in the United States for the treatment of peripheral T-cell lymphoma and a payment of $ 10.0 million upon receipt of the first regulatory approval for the commercial sale of COPIKTRA in the European Union for the treatment of peripheral T-cell lymphoma, (ii) sales milestone payments of up to $ 50.0 million, consisting of $ 10.0 million when total worldwide net sales of COPIKTRA exceed $ 100.0 million, $ 15.0 million when total worldwide net sales of COPIKTRA exceed $ 200.0 million and $ 25.0 million when total worldwide net sales of COPIKTRA exceed $ 300.0 million, (iii) low double-digit royalties on the annual aggregate net sales above $ 100.0 million in the United States, European Union, and the United Kingdom of Great Britain and Northern Ireland and (iv) 50 % of all royalty, milestone and sublicense revenue payments payable to Secura under the Company’s existing license agreements

with Sanofi, Yakult, and CSPC, and 50 % of all royalty and milestone payments payable to Secura under any license or sublicense agreement entered into by Secura in certain jurisdictions.

In connection with the Secura APA, the Company and Secura entered into a transition services agreement (Secura TSA).

Under the terms of the Secura TSA, the Company will provide certain support functions at Secura’s direction for a term of less than one year from the date of execution, unless earlier terminated or extended according to the terms of the Secura TSA (Secura TSA Services).

Secura may cancel the Secura TSA at sole discretion for any or no reason with five days ' notice.

Services performed are paid at a mutually agreed upon rate.

Under the terms of the Secura TSA, the Company provided certain support functions at Secura’s direction for a term of less than one year from the date of execution (Secura TSA Services).

Services performed were paid at a mutually agreed upon rate.

The Company evaluated the Secura APA and Secura TSA in accordance with ASC 606 as the Company concluded that the counterparty, Secura, is a customer.

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Consideration allocated to the Secura TSA Services will be recognized as such services are provided over the performance period using an output method based on the amount to which the Company has a right to invoice.

Future potential milestones and royalties were excluded from the transaction price, as all milestone amounts and royalties were fully constrained under the guidance.

As part of the Company’s evaluation of the constraint, the Company considered a number of factors in determining whether there is significant uncertainty associated with the future events that would result in the milestone payments and royalties.

The Company determined $ 0.2 million of future potential royalties the Company expects to receive pursuant to the Secura APA were not constrained as of December 31, 2021.

When estimating the amount of royalties to be received that were not constrained, the Company used the expected value method as there are a range of possible outcomes.

When estimating royalties to be received, the Company used a combination of internal projections and forecasts and data from external sources.

The Company determined that all other future potential royalties were constrained under the guidance as of December 31, 2021.

As part of the Company’s evaluation of the constraint on future royalties, the Company considered a number of factors in determining whether there is significant uncertainty associated with the future events that would result in royalty payments.

Those factors include:

the amount of variable consideration is highly susceptible to factors outside of the Company’s influence, the uncertainty about the consideration is not expected to be resolved for a long period of time, with respect to future global royalties the Company considered that there is no history of selling COPIKTRA outside of the United States to be able to forecast results reliably.

Future potential milestone payments and royalties were fully constrained as the risk of significant revenue reversal related to these amounts has not yet been resolved.

the likelihood and magnitude of revenue reversals related to future royalties, the amount of variable consideration is highly susceptible to factors outside of the Company’s influence, the amount of time to resolve the uncertainty, and lack of significant history of selling COPIKTRA outside of the United States.

In addition, the Company has recognized less than $ 0.1 million of sale of COPIKTRA license and related assets revenue for royalties earned on sales that occurred during the year ended December 31, 2021.

As the consideration for future royalties is conditional, the Company recorded a corresponding contract asset for the expected future royalties.

Portions of the contract asset are reclassified to accounts receivable when the right to consideration becomes unconditional.

As of December 31, 2021, the $ 0.2 million contract asset has been recorded within prepaid and other current assets on the consolidated balance sheet.

The following table presents changes in the Company’s contract asset for the year ended December 31, 2021 (in thousands):

Contract Asset:

December 31, 2020

Reclassification to receivable

December 31, 2021

Contract asset - Secura

During the year ended December 31, 2021, two regulatory milestones were achieved by Secura’s sublicensee, Sanofi, of which 50 % of the milestone or $ 1.3 million was paid to the Company pursuant to the Secura APA.

The Company determined all other future potential milestones were excluded from the transaction price, as all other milestone amounts were fully constrained under the guidance as of December 31, 2021.

Those factors

the likelihood and magnitude of revenue reversals related to future milestones, the amount of variable consideration is highly susceptible to factors outside of the Company’s influence and the uncertainty about the consideration is not expected to be resolved for a long period of time.

All other future potential milestone payments were fully constrained as the risk of significant revenue reversal related to these amounts has not yet been resolved.

During the year ended December 31, 2021, the Company recognized $ 1.4 million of sale of COPIKTRA license and related assets revenue within the statements of operations and comprehensive loss.

The sale of COPIKTRA license and related assets revenue for the year ended December 31, 2021 primarily related to two regulatory milestone for $ 1.3 million achieved by Secura’s sublicensee and $ 0.2 million related to royalties received and expected to be received pursuant to the Secura APA.

During the year ended December 31, 2021, the Company also recognized $ 0.6 million in transition services revenue within the statements of operations and comprehensive loss.

During the year ended December 31, 2020, the Company recognized $ 70.0 million as sale of COPIKTRA license and related assets revenue related to delivery of the Bundled Secura Performance Obligation and $ 0.4 million in transition services revenue within the statements of operations and comprehensive loss.

The Company recognized approximately $ 31.2 million of cost of sales – sale of COPIKTRA license and related assets within the statements of operations and comprehensive income (loss) which consisted of $ 19.2 million, $ 6.0 million, $ 5.8 million and $ 0.2 million for the intangible asset, certain duvelisib inventory, net duvelisib contract prepaid balances and manufacturing equipment, respectively, which were delivered to Secura as part of the sale.

The Company recognized approximately $ 31.2 million of cost of sales – sale of COPIKTRA license and related assets within the statements of operations and comprehensive loss which consisted of $ 19.2 million, $ 6.0 million, $ 5.8 million and $ 0.2 million for the intangible asset, certain duvelisib inventory, net duvelisib contract prepaid balances and manufacturing equipment, respectively, which were delivered to Secura as part of the sale.

Chugai Pharmaceutical Co., Ltd (Chugai)

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Either party may also terminate the Chugai Agreement in its entirety upon certain insolvency events involving the other party.

The Company evaluated the license agreement with Chugai under ASC Topic 805, Business Combinations (ASC 805 ) and concluded that as the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets, the transaction did not meet the requirements to be accounted for as a business combination and therefore was accounted for as an asset acquisition.

combination and therefore was accounted for as an asset acquisition.

The Company recorded the up-front payment of $ 3.0 million as research and development expense within the consolidated statement of operations and comprehensive loss for the year ended December 31, 2020.

On July 11, 2012, the Company entered into a license agreement with Pfizer Inc.

(Pfizer), under which Pfizer granted the Company worldwide, exclusive rights to research, develop, manufacture and commercialize products containing certain of Pfizer’s inhibitors of focal adhesion kinase (the FAK Products) for all therapeutic, diagnostic and prophylactic uses in humans.

The Company is solely responsible, at its expense, for the clinical development of the FAK Products, which is to be conducted in accordance with an agreed upon development plan.

The Company is also responsible for all manufacturing and commercialization activities at its own expense.

Pfizer is required to provide the Company with an initial quantity of clinical supply of one of the FAK Products for an agreed upon price.

Under the agreement, the Company made a one-time cash payment to Pfizer in the amount of $ 1.5 million and issued 192,012 shares of its common stock.

Pfizer is also eligible to receive up to $ 2.0 million in developmental milestones and up to an additional $ 125.0 million based on the successful attainment of regulatory and commercial sales milestones.

Pfizer is also eligible to receive high single to mid-double-digit royalties on future net sales of the FAK Products.

The Company’s royalty obligations with respect to each FAK Product in each country begin on the date of first commercial sale of the FAK Product in that country, and end on the later of 10 years after the date of first commercial sale of the FAK Product in that country or the date of expiration or abandonment of the last claim contained in any issued patent or patent application licensed by Pfizer to the

Company that covers the FAK Product in that country.

The Company accounted for the license agreement as the licensing of in process research and development with no alternative future use.

Infinity Pharmaceuticals, Inc.

In November 2016, the Company entered into the Infinity License Agreement with Infinity under which the Company acquired an exclusive worldwide license for the research, development, commercialization, and manufacture of products in oncology indications containing duvelisib.

In connection with the license agreement, the Company assumed operational and financial responsibility for certain activities that were part of Infinity’s duvelisib program, including the DUO study for patients with relapsed/refractory CLL, and Infinity maintained a portion of the financial responsibility for the shutdown of certain other clinical studies.

The Company was obligated to use diligent efforts to develop and commercialize a product in an oncology indication containing duvelisib.

During the term of the Infinity License Agreement, Infinity has agreed not to research, develop, manufacture or commercialize duvelisib in any other indication in humans or animals.

Pursuant to the terms of the Infinity License Agreement, the Company was required to make the following payments to Infinity in cash or, at the Company’s election, in whole or in part, in shares of the Company’s common stock:

(i) $ 6.0 million upon the completion of the DUO study if the results of the DUO study met certain pre-specified criteria, which was paid in cash by the Company to Infinity in October 2017 and recorded as research and development expense in the consolidated statements of operations and comprehensive loss, and (ii) $ 22.0 million upon the approval of a NDA in the United States or an application for marketing authorization with a regulatory authority outside of the United States for a product in an oncology indication containing duvelisib, which was paid in cash by the Company to Infinity in November 2018 and was recorded as an intangible asset in the consolidated balance sheets.

The Company was also obligated to pay Infinity royalties on worldwide net sales of any products in an oncology indication containing duvelisib ranging from the mid-single digits to the high single-digits.

The royalties will expire on a product-by-product and country-by-country basis until the latest to occur of (i) the last-to-expire patent right covering the applicable product in the applicable country, (ii) the last-to-expire patent right covering the manufacture of the applicable product in the country of manufacture of such product, (iii) the expiration of non-patent regulatory exclusivity in such country and (iv) ten years following the first commercial sale of a product in a country, provided that if royalties on net sales for a product in the United States are payable solely on the basis of non-patent regulatory exclusivity, the applicable royalty on net sales for such product in the United States will be reduced by 50 %.

The royalties are also subject to reduction by 50 % of certain third-party royalty payments or patent litigation damages or settlements which might be required to be paid by the Company if litigation were to arise, with any such reductions capped at 50 % of the amounts otherwise payable during the applicable royalty payment period.

Pursuant to the terms of the Infinity License Agreement, the Company was obligated to pay Infinity royalties on worldwide net sales of any products in an oncology indication containing duvelisib ranging from the mid-single digits to the high single-digits.

In addition to the foregoing, the Company was obligated to pay Infinity an additional royalty of 4 % on worldwide net sales of any products in an oncology indication containing duvelisib to cover the reimbursement of research and development costs owed by Infinity to Mundipharma International Corporation Limited (MICL) and Purdue Pharmaceutical Products L.P.

Once Infinity has fully reimbursed MICL and Purdue, the royalty obligations will be reduced to 1 % of net sales in the United States.

These trailing MICL royalties are payable until the later to occur of the last-to-expire of specified patent rights and the expiration of non-patent regulatory exclusivities in a country.

Each of the above royalty rates is reduced by 50 % on a product-by-product and country-by-country basis if the applicable royalty is payable solely on the basis of non-patent regulatory exclusivity.

In addition, the trailing MICL royalties are subject to reduction by 50 % of certain third-party royalty payments or patent litigation damages or settlements which might be required to be paid by the Company if litigation were to arise, with any such reductions capped at 50 % of the amounts otherwise payable during the applicable royalty payment period.

On March 5, 2019, Infinity and Healthcare Royalty Partners III, L.P.

(HCR) entered into a purchase and sale agreement, in which HCR paid Infinity a $ 30.0 million upfront payment and is entitled to receive up to $ 20.0 million in potential milestone payments from Infinity.

In exchange HCR has received the right to receive the royalties due to Infinity from us under the license agreement.

As a result, the Company paid royalties previously due to Infinity to HCR.

The royalties due to MICL and Purdue described above are still paid to Infinity.

The Company evaluated the license agreement with Infinity under ASC 805 and concluded that as substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets, the transaction did not meet the requirements to be accounted for as a business combination and therefore was accounted for as an asset acquisition.

All consideration to be paid under the license agreement is contingent in nature and will be recognized when the respective contingency is resolved.

During the year ended December 31, 2020, 2019, and 2018, the Company recorded royalty expense of $ 1.3 million, $ 1.0 million, and $ 0.1 million, respectively related to the HCR, Infinity, MICL, and Purdue royalty payments, which are included in costs of sales - product within the consolidated statements of operation and comprehensive loss.

During the year ended December 31, 2021, 2020, and 2019, the Company recorded royalty expense of $ 0.0 million, $ 1.3 million, and $ 1.0 million, respectively related to the Infinity License Agreement, which are included in costs of sales - product within the consolidated statements of operation and comprehensive loss.

As discussed above under heading Secura Bio, Inc.

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On July 25, 2019, the Company entered into a license and collaboration agreement with Sanofi (the Sanofi Agreement), under which the Company granted exclusive rights to Sanofi to develop and commercialize products containing duvelisib in Russia, the Commonwealth of Independent States (CIS), Turkey, the Middle East and Africa (collectively the “Sanofi Territory”) for the treatment, prevention, palliation or diagnosis of any oncology indication in humans or animals.

Under the terms of the Sanofi Agreement, Sanofi received the exclusive right to develop and commercialize products containing duvelisib in the Sanofi Territory under mutually agreed upon development and commercialization plans at Sanofi’s own cost and expense.

In addition, Sanofi received certain limited manufacturing rights in the event the Company is unable to manufacture or supply sufficient quantities of duvelisib or products containing duvelisib to Sanofi during the term of the Sanofi Agreement.

The Company retained all rights to duvelisib outside the Sanofi Territory, except for those territories previously and exclusively licensed to other partners.

Sanofi paid the Company an upfront, non-refundable payment of $ 5.0 million in August 2019.

1 unchanged sentence

Sanofi is obligated to pay the Company double-digit royalties on net sales of products containing duvelisib in the Sanofi Territory, subject to reduction in certain circumstances.

Unless earlier terminated by either party, the Sanofi Agreement will expire upon the fulfillment of Sanofi’s royalty obligations to the Company for the sale of any products containing duvelisib in the Sanofi Territory, which royalty obligations expire, on a product-by-product and country-by-country basis, upon the last to occur, in each specific country, of (a) expiration of valid patent claims covering such product, (b) expiration of regulatory exclusivity for such product or (c) 10 years from the first commercial sale of such product in such country.

Sanofi may terminate the Sanofi Agreement on a product-by-product basis or on a country-by country basis at any time with 180 days ’ written notice.

Either party may terminate the Sanofi Agreement in its entirety with 60 days ’ written notice for the other party’s material breach if such party fails to cure the breach.

Subject to certain limitations, the Company may terminate the Sanofi Agreement immediately if Sanofi challenges any patent covering a product or compound licensed by the Company to Sanofi under the Sanofi Agreement.

The Company also has the right to terminate Sanofi’s rights to products containing duvelisib in any specific country if Sanofi fails to use certain efforts to develop and commercialize products containing duvelisib in such country.

Either party may terminate the Sanofi Agreement in its entirety upon certain insolvency events involving the other party.

The Company first assessed the Sanofi Agreement under ASC 808 to determine whether the Sanofi Agreement (or part of the Sanofi Agreement) represents a collaborative arrangement based on the respective risks, rewards and activities of the parties.

The Company accounts for collaborative arrangements (or elements within the contract that are deemed part of a collaborative arrangement), which represent a collaborative relationship and not a customer relationship, outside the scope of ASC 606.

The Company concluded that the Sanofi Agreement (or part of the Sanofi Agreement) does not represent a collaborative arrangement under ASC 808.

The Company then

considered each component in the Sanofi Agreement to determine if ASC 606 should be applied to those components.

Generally, the component in the Sanofi Agreement that falls under potential research and development activities is the development of duvelisib specifically in the Sanofi Territory.

For development of duvelisib specifically in the Sanofi Territory, the Company has concluded that Sanofi is a customer with regard to this component in the context of the Sanofi Agreement.

As such, the Sanofi Territory component and all related payments are within the scope of ASC 606.

The Company determined that there were two material promises associated with the Sanofi territory-specific activities:

(i) an exclusive license to develop and commercialize duvelisib in the Sanofi Territory and (ii) the initial technology transfer.

The Company determined that the exclusive license and initial technology transfer were not distinct from one another, as the license has limited value without the initial technology transfer.

Therefore, the exclusive license and initial technology transfer are combined as a single performance obligation.

The Company evaluated the option rights for manufacturing and supply services to determine whether they represent material rights to Sanofi and concluded that the options were not issued at a significant and incremental discount and therefore do not represent material rights.

As such, they are not performance obligations at the outset of the arrangement.

Based on this assessment, the Company concluded that one performance obligation exists at the outset of the Sanofi Agreement, which is the exclusive license combined with the initial technology transfer.

The Company has determined that the upfront payment of $ 5.0 million constituted the transaction price at the outset of the Sanofi Agreement.

Future potential milestone payments were fully constrained as the risk of significant revenue reversal related to these amounts has not yet been resolved.

The achievement of the future potential milestones is not within the Company’s control and is subject to certain regulatory approvals and therefore carry significant uncertainty.

The Company will reevaluate the likelihood of achieving future milestones at the end of each reporting period.

As all performance obligations have been satisfied, if the risk of significant revenue reversal is resolved, any future milestone revenue from the arrangement will be added to the transaction price (and thereby recognized as revenue) in the period the risk is relieved.

The Company satisfied the performance obligation upon delivery of the license and initial technology transfer and recognized the upfront payment of $ 5.0 million as license and collaboration revenue during the year ended December 31, 2019.

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On June 5, 2018, the Company entered into a license and collaboration agreement (the Yakult Agreement) with Yakult, under which the Company granted exclusive rights to Yakult to develop and commercialize products containing duvelisib in Japan for the treatment, prevention, palliation or diagnosis of all oncology indications in humans or animals.

Under the terms of the Yakult Agreement, Yakult received an exclusive right to develop and commercialize products containing duvelisib in Japan under mutually agreed upon development and commercialization plans at its own cost and expense.

Yakult also received certain limited manufacturing rights in the event that the Company is unable to manufacture or supply sufficient quantities of duvelisib or products containing duvelisib to Yakult during the term of the Yakult Agreement.

The Company retained all rights to duvelisib outside of Japan.

Yakult paid the Company an upfront, non-refundable payment of $ 10.0 million in June 2018.

The Company is also entitled to receive aggregate payments of up to $ 90.0 million if certain development, regulatory

and commercial milestones are successfully achieved.

The Company is also entitled to receive aggregate payments of up to $ 90.0 million if certain development, regulatory and commercial milestones are successfully achieved.

Yakult is obligated to pay the Company a double-digit royalty on net sales of products containing duvelisib in Japan, subject to reduction in certain circumstances, and to fund certain global development costs related to worldwide clinical trials conducted by the Company in which Yakult has opted to participate (Global Clinical Trials) on a pro-rata basis.

Unless earlier terminated by either party, the Yakult Agreement will expire upon the fulfillment of Yakult’s royalty obligations to the Company for the sale of any products containing duvelisib in Japan, which royalty obligations expire, on a product-by-product basis, upon the last to occur of (a) expiration of valid claims covering such product, (b) expiration of regulatory exclusivity for such product or (c) 10 years from first commercial sale of such product.

Yakult may terminate the Yakult Agreement in its entirety at any time with 180 days ’ written notice.

Either party may terminate the Yakult Agreement in its entirety with 60 days ’ written notice for the other party’s material breach if such party fails to cure the breach.

The Company may terminate the Yakult Agreement if (i) Yakult fails to use commercially reasonable efforts to develop and commercialize products containing duvelisib in Japan or (ii) Yakult challenges any patent licensed by the Company to Yakult under the Yakult Agreement.

Either party may terminate the Yakult Agreement in its entirety upon certain insolvency events involving the other party.

The Company first assessed the Yakult Agreement under ASC 808 to determine whether the Yakult Agreement (or part of the Yakult Agreement) represents a collaborative arrangement based on the risks and rewards and activities of the parties pursuant to the Yakult Agreement.

For a component of the Yakult Agreement, the Company concluded that both the Company and Yakult are exposed to significant risks while developing duvelisib and ultimately would share in the reward upon successful commercialization of duvelisib.

The Company then considered each remaining component in the Yakult Agreement to determine if ASC 606 should be applied to those components.

Generally, the components in the Yakult Agreement fall under one of two potential research and development activities:

(i) the parties’ joint participation in Global Clinical Trials and (ii) the territory-specific development of duvelisib.

For the parties’ participation in the Global Clinical Trials, the Company concluded that the research and development activities and payments related to such activities are not within the scope of ASC 606 as Yakult is not a customer of the Company with regards to these activities in the context of the Yakult Agreement.

As such, costs incurred to execute the Global Clinical Trials will be recorded as research and development expense and payments received from Yakult related to such will be recorded as a reduction of research and development expense.

For Territory-specific activities, the Company concluded that Yakult is a customer with regard to this component in the context of the Yakult Agreement.

As such, the Territory-specific component and all related payments are within the scope of ASC 606.

The Company determined that there were two material promises associated with the territory-specific activities:

(i) an exclusive license to develop and commercialize duvelisib in the territory and (ii) the initial technology transfer.

The Company determined that the exclusive license and initial technology transfer were not distinct from another, as the license has limited value without the initial technology.

Therefore, the exclusive license and initial technology transfer are combined as a single performance obligation.

The Company evaluated the option rights for manufacturing and supply services to determine whether they represent material rights to Yakult and concluded that the options were not issued at a significant and incremental discount and therefore do not represent material rights.

As such, they are not performance obligations at the outset of the arrangement.

Based on this assessment, the Company concluded one performance obligation exists at the outset of the Yakult Agreement:

the exclusive license combined with the initial technology transfer.

The Company determined that the upfront payment of $ 10.0 million constitutes the transaction price as of the outset of the Yakult Agreement.

Future potential milestone payments were fully constrained as the risk of significant revenue reversal related to these amounts has not yet been resolved.

The achievement of the future potential milestones is not within the Company’s control and is subject to certain research and development success or regulatory approvals and therefore carry significant uncertainty.

The Company will reevaluate the likelihood of achieving future milestones at the end of each reporting period.

As all performance obligations have been satisfied,

if the risk of significant revenue reversal is resolved, any future milestone revenue from the arrangement will be added to the transaction price (and thereby recognized as revenue) in the period the risk is relieved.

For the year ended December 31, 2020 and 2019 there have been no additional milestones achieved under the Yakult Agreement.

The Company satisfied the performance obligation upon delivery of the license and initial technology transfer and recognized the upfront payment of $ 10.0 million as license revenue during year ended December 31, 2018.

As discussed above under heading Secura Bio, Inc.

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CSPC Pharmaceutical Group Limited (CSPC)

On July 26, 2018, the Company and CSPC entered into an Exclusivity Agreement which granted CSPC the exclusive right to negotiate a licensing agreement with the Company for duvelisib in China.

CSPC paid the Company a non-refundable exclusivity fee of $ 5.0 million in August 2018 (Exclusivity Fee) which was creditable against any payments agreed to under the terms of a potential definitive license agreement.

Subsequently, on September 25, 2018, the Company entered into a license and collaboration agreement with CSPC (the CSPC Agreement), under which the Company granted exclusive rights to CSPC to develop and commercialize products containing duvelisib in the People’s Republic of China (China), Hong Kong, Macau and Taiwan (collectively, the CSPC Territory) for the treatment, prevention, palliation or diagnosis of all oncology indications in humans.

Under the terms of the CSPC Agreement, CSPC received an exclusive right to develop and commercialize products containing duvelisib in the CSPC Territory under mutually agreed upon development and commercialization plans at its own cost and expense.

CSPC also received certain limited manufacturing rights in the event that the Company is unable to manufacture or supply sufficient quantities of duvelisib or products containing duvelisib to CSPC during the term of the CSPC Agreement.

The Company retained all rights to duvelisib outside of the CSPC Territory .

On September 25, 2018, the Company entered into a license and collaboration agreement with CSPC (the CSPC Agreement), under which the Company granted exclusive rights to CSPC to develop and commercialize products containing duvelisib in the People’s Republic of China (China), Hong Kong, Macau and Taiwan (collectively, the CSPC Territory) for the treatment, prevention, palliation or diagnosis of all oncology indications in humans.

CSPC paid the Company an aggregate upfront, non-refundable payment of $ 15.0 million, less the previously paid $ 5.0 million Exclusivity Fee.

1 unchanged sentence

CSPC is obligated to pay the Company a double-digit royalty on net sales of products containing duvelisib in the CSPC Territory , subject to reduction in certain circumstances, and to fund certain global development costs related to worldwide clinical trials conducted by the Company in which CSPC has opted to participate (Global Clinical Trials) on a pro-rata basis.

Unless earlier terminated by either party, the CSPC Agreement will expire upon the fulfillment of CSPC’s royalty obligations to the Company for the sale of any products containing duvelisib in the CSPC Territory , which royalty obligations expire, on a product-by-product basis, upon the last to occur of (a) expiration of valid claims covering such product, (b) expiration of regulatory exclusivity for such product or (c) 10 years from first commercial sale of such product.

CSPC may terminate the CSPC Agreement in its entirety at any time with 180 days ’ written notice.

Either party may terminate the CSPC Agreement in its entirety with 60 days ’ written notice for the other party’s material breach if such party fails to cure the breach.

The Company may terminate the CSPC Agreement if (i) CSPC fails to use commercially reasonable efforts to develop and commercialize products containing duvelisib in the CSPC Territory or (ii) CSPC challenges any patent licensed by the Company to CSPC under the CSPC Agreement.

Either party may terminate the CSPC Agreement in its entirety upon certain insolvency events involving the other party.

The Company first assessed the CSPC Agreement under ASC 808 to determine whether the CSPC Agreement (or part of the CSPC Agreement) represents a collaborative arrangement based on the risks and rewards and activities of the parties pursuant to the CSPC Agreement.

For a component of the CSPC Agreement, the Company concluded that both the Company and CSPC are exposed to significant risks while developing duvelisib and ultimately would share in the reward upon successful commercialization of duvelisib.

The Company then considered each remaining component in the CSPC Agreement to determine if ASC 606 should be applied to those components.

Generally, the components in the CSPC Agreement fall under one of two potential research and development activities:

(i) the parties’ joint participation in Global Clinical Trials and (ii) the territory-specific development of duvelisib.

For the parties’ participation in the Global Clinical Trials, the Company concluded that the research and development activities and payments related to such activities are not within the scope of ASC 606 as CSPC is not a customer of the Company with regards to these activities in the context of the CSPC Agreement.

As such, costs incurred to execute the Global Clinical Trials will be recorded as research and development expense and payments received from CSPC related to such will be recorded as a reduction of research and development expense.

For CSPC Territory-specific activities, the Company concluded that CSPC is a customer with regard to this component in the context of the CSPC Agreement.

As such, the CSPC Territory-specific component and all related payments are within the scope of ASC 606.

The Company determined that there were two material promises associated with the territory-specific activities:

(i) an exclusive license to develop and commercialize duvelisib in the territory and (ii) the initial technology transfer.

The Company determined that the exclusive license and initial technology transfer were not distinct from another, as the license has limited value without the initial technology.

Therefore, the exclusive license and initial technology transfer are combined as a single performance obligation.

The Company evaluated the option rights for manufacturing and supply services to determine whether they represent material rights to CSPC and concluded that the options were not issued at a significant and incremental discount and therefore do not represent material rights.

As such, they are not performance obligations at the outset of the arrangement.

Based on this assessment, the Company concluded one performance obligation exists at the outset of the CSPC Agreement:

the exclusive license combined with the initial technology transfer.

The Company determined that the upfront payment of $ 15.0 million constitutes the transaction price as of the outset of the CSPC Agreement.

Future potential milestone payments were fully constrained as the risk of significant revenue reversal related to these amounts has not yet been resolved.

The Company will reevaluate the likelihood of achieving future milestones at the end of each reporting period.

For the year ended December 31, 2020 and 2019 there have been no additional milestones achieved under the CSPC Agreement.

The Company satisfied the performance obligation upon delivery of the license and initial technology transfer and recognized the upfront payment of $ 15.0 million as license revenue during the year ended December 31, 2018.

As discussed above under heading Secura Bio, Inc.

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This expense is reflected in the consolidated statements of operation and comprehensive loss as selling general, and administrative expense for $ 4.1 million, and research and development expense for $ 0.5 million.

There were no restructuring expenses for the year ended December 31, 2021.

The following table summarizes the accrued liabilities activity recorded in connection with the restructurings for the year ended December 31, 2021 (in thousands):

2 unchanged sentences

December 31, 2021

October 2019 Restructuring

February 2020 Restructuring

August 2020 Restructuring

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The Company made contributions to the 401(k) Plan of approximately $ 0.8 million, $ 0.9 million, and $ 1.3 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Quarterly financial information (unaudited, in thousands, except per share data)

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

September 30,

Product revenue, net

License and collaboration revenue

Sale of COPIKTRA license and related assets

Transition services revenue

Total revenue

Operating expenses:

Cost of sales - product

Cost of sales - intangible amortization

Cost of sales - sale of COPIKTRA license and related assets

Research and development

Selling, general and administrative

Total operating expenses

(Loss) income from operations

Other income/(expense)

Interest income

Interest expense

Loss on debt extinguishment

Net (loss) income before income taxes

Income tax expense

Net (loss) income

Net (loss) income per share —basic

Net (loss) income per share —diluted

Weighted-average number of common shares used in net loss per share —basic and diluted

Net (loss) income per share —basic

Net (loss) income per share —diluted

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

September 30,

Product revenue, net

License and collaboration revenue

Total revenue

Operating expenses:

Cost of sales - product

Cost of sales - intangible amortization

Research and development

Selling, general and administrative

Total operating expenses

Loss from operations

Interest income

Interest expense

Net loss per share —basic

Net loss per share —diluted

Weighted-average number of common shares used in net loss per share —basic and diluted

Net loss per share —basic

Net loss per share —diluted

Subsequent events

The Company reviews all activity subsequent to year end but prior to the issuance of the consolidated financial statements for events that could require disclosure or that could impact the carrying value of assets or liabilities as of the consolidated balance sheet date.

The Company is not aware of any material subsequent events.

The Company is not aware of any material subsequent events other than the following:

Loan and Security Agreement

On March 25, 2022, the Company entered into a Loan and Security Agreement (Loan Agreement) with Oxford Finance, LLC (Oxford) pursuant to which it may obtain a loan of up to $ 150.0 million (Term Loans) in five tranches.

Contemporaneously with executing the Loan Agreement, the Company drew down the first $ 25.0 million tranche (Term Loan A).

The second, third and fourth tranches (Term Loan B, Term Loan C, and Term Loan D, respectively) may be drawn at the Company’s option upon the achievement of certain pre-determined milestones.

The fifth tranche of $ 50.0 million (Term Loan E) will only be available at the sole discretion of the lender.

The Term Loans will bear interest at a floating rate equal to (a) the greater of (i) the one-month CME Secured Overnight Financing Rate and (ii) 0.13 % plus (b) 7.37 %, which is subject to an overall floor and cap.

Interest is payable monthly in arrears on the first calendar day of each calendar month.

Beginning (i) April 1, 2024, if the Term B Loan is not made, (ii) April 1, 2025, if the Term B Loan is made, or (iii) April 1, 2026, if the Term B Loan is made and an additional predetermined milestone is met, the Company shall repay the Term Loans in consecutive equal monthly payments of principal, together with applicable interest, in arrears.

All unpaid principal and accrued and unpaid interest with respect to each Term Loan is due and payable in full on March 1, 2027.

The Company will be required to make a final payment of 5.0 % of the original principal amount of the Term Loans that were drawn, payable at maturity or upon any earlier acceleration or prepayment of the Term Loans.

The Company may prepay all, but not less than all, of the Term Loans, subject to a prepayment fee equal to (i) 3.0 % of the principal amount of the applicable Term Loan if prepaid on or before the first anniversary date of the funding date of such Term Loan, (ii) 2.0 % of the principal amount of the applicable Term Loan if prepaid after the first anniversary and on or before the second anniversary of the funding date of such Term Loan, and (iii) 1.0 % of the principal amount of the applicable Term Loan if prepaid after the second anniversary of the applicable funding date of such Term Loan.

All Term Loans will be subject to a facility fee of 0.5 % of the principal amount.

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-K

Item 9A. Controls and Procedures