What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-14 compared with 2023-03-14 · 388 added, 472 removed, 793 unchanged (52% of the section changed)

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Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and our Vice President, Finance evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report.

Based on that evaluation, our Chief Executive Officer and our Vice President, Finance concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective.

Our Chief Executive Officer and our Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report.

Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting.

Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as the process designed by, or under the supervision of, our Chief Executive Officer and our Vice President of Finance and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S.

generally accepted accounting principles (“GAAP”), and includes those policies and procedures that:

Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as the process designed by, or under the supervision of, our Chief Executive Officer and our Chief Financial Officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S.

GAAP, and includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets;

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(3) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Vice President, Finance, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework provided in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework provided in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).

Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2023.

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Other Information

Trading Plans of Our Directors and Officers

During our fiscal quarter ended December 31, 2023, n o n e of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) entered into, modified (as to amount, price or timing of trades) or terminated (i) contracts, instructions or written plans for the purchase or sale of our securities that are intended to satisfy the conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense against liability for trading in securities on the basis of material nonpublic information or (ii) non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K) .

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on January 25, 2023)

Certificate of Amendment to the Restated Certificate of Incorporation of Verastem, Inc.

(incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on May 31, 2023)

Specimen certificate evidencing shares of common stock (incorporated by reference to Exhibit 4.1 to Amendment No.

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333-177677) filed by the Registrant on January 13, 2012)

Indenture, dated as of October 17, 2018, by and between the Registrant and Wilmington Trust, National Association (incorporated by reference to Exhibit 4.1 to Form 8-K filed by the Registrant on October 17, 2018)

First Supplemental Indenture, dated as of October 17, 2018, by and between the Registrant and Wilmington Trust, National Association (incorporated by reference to Exhibit 4.2 to Form 8-K filed by the Registrant on October 17, 2018)

Form of 5.00% Convertible Note due 2048 (2018 Notes) (included in Exhibit 4.3)

D escription of Securities

2010 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-1 (File No.

333-177677) filed by the Registrant on November 3, 2011)

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 on December 20, 2018)

D escription of Securities (incorporated by reference to Exhibit 4.5 to the Form 10-K filed by the Registrant with the Securities and Exchange Commission on March 14, 2023)

Form of Pre-Funded Warrant.

(incorporated by reference to Exhibit 4.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on June 21, 2023).

Form of Incentive Stock Option Agreement under 2012 Incentive Plan (incorporated by reference to Exhibit 10.3 to Amendment No.

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Form of Inducement Award Restricted Stock Unit Agreement (incorporated by reference to Exhibit 4.3 of the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, filed by the Registrant with the Securities and Exchange Commission on November 7, 2018)

2018 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed by the Registrant on December 20, 2018)

Form of Indemnification Agreement between the Registrant and each director and executive officer (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by the Registrant on August 8, 2017)

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First Amendment of Lease Agreement, dated February 15, 2018, between the Registrant and 117 Kendrick DE, LLC, as successor-in-interest to Intercontinental Fund III 117 Kendrick Street, LLC (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by the Registrant on May 3, 2018)

Employment Agreement, dated March 1, 2012, between the Registrant and Daniel Paterson (incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K filed by the Registrant on March 26, 2013)

Employment Agreement, dated August 2, 2023, by and between Verastem, Inc.

and Daniel W.

Paterson (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on August 4, 2023).

License Agreement, dated July 11, 2012, by and between the Registrant and Pfizer Inc.

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(incorporated by reference to Exhibit 10.31 to the Annual Report on Form 10-K filed by the Registrant on March 6, 2014)

Employment Agreement between the Registrant and Brian Stuglik, dated July 29, 2019 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed by the Registrant on August 1, 2019)

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

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Form of Inducement Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed by the Registrant on May 7, 2020)

Form of Incentive Stock Option Agreement under the 2012 Incentive Plan (Form of Restricted Stock Unit Agreement under the 2012 Incentive Plan (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed by the Registrant on May 7, 2020)

Form of Incentive Stock Option Agreement under the 2012 Incentive Plan (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed by the Registrant on May 7, 2020)

Form of Nonstatutory Stock Option Agreement under the 2012 Incentive Plan (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q filed by the Registrant on May 7, 2020)

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 May 7, 2020)

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)

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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)

Section 203 Agreement entered into as of March 28, 2022 by and between Baker Bros.

Advisors LP and Verastem, Inc.

(incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on March 30, 2022).

Exchange Agreement, dated November 4, 2022, by and among Verastem, Inc.

and B iotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS LP and MSI BVF SPV, LLC (incorporated by reference to Exhibit 10.1 to for the form 8-K filed by the Registrant with the Securities and Exchange Commission on November 7, 2022)

Securities Purchase Agreement, dated January 24, 2023, by and among Verastem, Inc.

and each purchaser party thereto (incorporated by reference to Exhibit 10.1 to the form 8-K filed by the Registrant with the Securities and Exchange Commission on January 25, 2023)

Employment Agreement, dated October 24, 2023 by and between Verastem, Inc.

and Daniel Calkins (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on October 27, 2023).

First Amendment to Loan and Security Agreement, dated as of January 4, 2024, among Verastem, Inc., as borrower, Oxford Finance LLC, as collateral agent and a lender, and the other lenders party thereto.

(incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on January 8, 2024)

Amended and Restated 2018 Employee Stock Purchase Plan.

(incorporated by reference to Exhibit 10.1 to Form 10-Q by the Registrant with the Securities and Exchange Commission on August 8, 2023)

Amended and Restated 2012 Incentive Plan .

(incorporated by reference to Exhibit 10.2 to Form 10-Q by the Registrant with the Securities and Exchange Commission on August 8, 2023)

Amended and Restated 2021 Equity Incentive Plan.

(incorporated by reference to Exhibit 10.3 to Form 10-Q by the Registrant with the Securities and Exchange Commission on August 8, 2023)

Exchange Agreement, dated November 4, 2022, by and among Verastem, Inc.

Subsidiaries of the Registrant

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Certification of the Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)

Certification of the Vice President, Finance pursuant to Exchange Act Rule 13a-14(a)

Certification of the Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)

Certification of the Chief Executive Officer pursuant to 18 U.S.C.

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

Certification of the Vice President, Finance pursuant to 18 U.S.C.

Certification of the Chief Financial Officer pursuant to 18 U.S.C.

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

Policy for Recoupment of Incentive Compensation

Press Release issued by Verastem, Inc.

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VERASTEM, INC.

Chief Executive Officer

/s/ Daniel W.

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Chief Executive Officer and Director

/s/ Daniel W.

President, Chief Executive Officer and Director

(Principal Executive Officer)

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Daniel Calkins

Vice President, Finance

Chief Financial Officer

(Principal Financial and Accounting officer)

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March 14, 2024

/s/ L ESLEY S OLOMON

Lesley Solomon

/s/ B RIAN S TUGLIK

Brian Stuglik

March 14, 2024

/s/ Karin Tollefson

Karin Tollefson

March 14, 2024

Verastem, Inc.

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We have audited the accompanying consolidated balance sheets of Verastem, Inc.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

The Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, has a working capital deficiency, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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Description of the Matter

As summarized in Note 4 to the consolidated financial statements, the Company’s accrued research and development expenses were $8.5 million at December 31, 2022, which included the estimated obligation for clinical trial expenses incurred as of December 31, 2022 but not paid as of that date.

As summarized in Note 4 to the consolidated financial statements, the Company’s accrued clinical expenses were $6.5 million at December 31, 2023, which included the estimated

obligation for clinical trial expenses incurred as of December 31, 2023 but not paid as of that date.

In addition, the Company’s total prepaid expenses and other current assets were $6.5 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.

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 services 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.

As discussed in Note 2 to the consolidated financial statements, the Company records clinical trial expenses as incurred.

The Company’s determination of costs incurred for certain devel opment 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.

Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the consolidated balance sheets as prepaid expenses and other current assets or accrued expenses.

Auditing the Company’s accrued and prepaid clinical trial expenses was especially challenging due to the volume of information received from vendors that perform services 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 is required to make an estimate for additional costs incurred.

Additionally, due to the long duration of clinical trials and the timing of vendor invoices, the actual amounts incurred are not typically known at the time the financial statements are issued.

How We Addressed the Matter in Our Audit

To evaluate the Company’s estimate of services incurred as of period end pursuant to its accrued and prepaid clinical trials expenses, our audit procedures included, among others, assessing the accuracy and completeness of the underlying third-party and internally generated data used in determining the accrued and prepaid clinical trial expenses and evaluating the assumptions/estimates used by management.

For example, to assess the nature and extent of the services incurred, we corroborated the progress of clinical trials with the Company’s research and development personnel that oversee the clinical trials and confirmed cost incurred and payments made to date directly with the Company’s primary clinical research organization.

To evaluate the completeness/existence and valuation of the recorded balances, we also tested subsequent payments and invoices received and inspected the Company’s contracts with vendors and any pending change orders to assess the impact.

We also performed analytical reviews over fluctuations in accruals by study throughout the period subject to audit.

To evaluate the accrued and prepaid clinical trial expenses, our audit procedures included, among others, testing the accuracy and completeness of the underlying data used in the estimates and evaluating the significant assumptions used by management to estimate the recorded accruals and prepayments.

We obtained third party confirmation from the Company’s primary contract research organization to validate the underlying data used in management’s estimate.

We corroborated the progress of research and development activities associated with clinical trials through discussion with the Company’s research and development personnel that oversee the clinical activities.

In addition, we performed analytics over fluctuations in accruals and prepaids by vendor throughout the period subject to audit and compared subsequent invoices received from third parties to amounts accrued.

/s/ Ernst & Young LLP

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Restricted cash

Liabilities and stockholders’ equity

Liabilities, convertible preferred stock and stockholders’ equity

Current liabilities:

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Non-current liabilities:

Convertible senior notes

Long-term debt

Lease liability, long-term

Preferred stock tranche liability

Total liabilities

Convertible preferred stock:

Series B Convertible Preferred Stock, $ 0.0001 par value;

2,144 and 0 shares designated at December 31, 2023 and December 31, 2022, respectively;

1,200 and 0 shares issued and outstanding at December 31, 2023 and 2022, respectively

Stockholders’ equity:

Preferred Stock, $ 0.0001 par value;

5,000 shares authorized, 1,000 and 0 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively

5,000 shares authorized:

Series A Convertible Preferred Stock, $ 0.0001 par value;

1,000 shares designated, 1,000 shares issued and outstanding at December 31, 2023 and December 31, 2022

Common stock, $ 0.0001 par value;

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Additional paid-in capital

Accumulated other comprehensive income/(loss)

Accumulated other comprehensive income

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

Total liabilities, convertible preferred stock and stockholders’ equity

See accompanying notes to the consolidated financial statements.

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Year Ended December 31,

Product revenue, net

License and collaboration revenue

Sale of COPIKTRA license and related assets

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Operating expenses:

Cost of sales - product

Cost of sales - intangible amortization

Cost of sales - sale of COPIKTRA license and related assets

Research and development

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Interest expense

Loss on debt extinguishment

Net loss before income taxes

Income tax expense

Change in fair value of preferred stock tranche liability

Net loss per share—basic and diluted

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Verastem, Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

(in thousands, except share data)

comprehensive

Series A Preferred Stock

Series B Convertible Preferred Stock

Series A Convertible Preferred Stock

stockholders'

Balance at December 31, 2020

Unrealized gain on available-for-sale marketable securities

Unrealized loss on available-for-sale marketable securities

Conversion of Notes into common stock

Change in fair value of conversion option of Notes on exchange

Issuance of common stock under Employee Stock Purchase Plan

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Issuance of common stock resulting from exercise of stock options

Issuance of common stock resulting from at-the-market transactions, net of issuance costs of $ 55

Issuance of common stock resulting from private investment in public equity offering, net of issuance costs of $ 6,171

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

Stock-based compensation expense

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Unrealized loss on available-for-sale marketable securities

Conversion of Notes into common stock

Issuance of Series A Convertible Preferred Stock in exchange for common stock

Issuance of common stock under Employee Stock Purchase Plan

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Balance at December 31, 2022

Unrealized loss on available-for-sale marketable securities

Issuance of Series A Preferred Stock in exchange for common stock

( 10,000,000 )

Unrealized gain on available-for-sale marketable securities

Issuance of Series B Convertible Preferred Stock, net of issuance costs of $ 1,901 and preferred stock tranche liability of $ 6,940

Issuance of common stock, and pre-funded warrants, net of issuance cost of $ 6,351

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

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

Amortization of acquired intangible asset

Amortization of right-of-use asset and lease liability

Stock-based compensation expense

Loss on debt extinguishment

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 for 2019 Notes

Change in fair value of preferred stock tranche liability

Changes in operating assets and liabilities:

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Deferred liabilities

Other long-term liabilities

Intangible assets & property, plant and equipment

Net cash used in operating activities

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Financing activities

Proceeds from issuance of Series B Convertible Preferred Stock, net

Proceeds from long-term debt, net

Repayment of long-term debt, net

Interest make-whole payments on the 2019 Notes

Repayment of 2018 Notes

Proceeds from insurance premium financing

Payments on insurance premium financing

Proceeds from the exercise of stock options and employee stock purchase program

Settlement of restricted stock for tax withholdings

Proceeds from the issuance of common stock, net

Proceeds from the issuance of common stock and pre-funded warrants, net

Net cash provided by financing activities

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Supplemental disclosure of non-cash investing and financing activities

Common stock issuance costs included in accounts payable and accrued expenses

Conversion of 2019 Notes into common stock

Issuance of preferred stock tranche liability

Conversion of 2020 Notes into common stock

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

Change in fair value of conversion option of 2020 Notes on exchange

Settlement of restricted stock for tax withholdings included in accrued expenses

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

See accompanying notes to the consolidated financial statements.

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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, avutometinib (VS-6766) and defactinib, are being investigated in both preclinical and clinical studies for the treatment of various solid tumors, including, low-grade serous ovarian cancer (“LGSOC”), non-small cell lung cancer (“NSCLC”), colorectal cancer (“CRC”), pancreatic cancer, and melanoma.

The Company’s most advanced product candidates, avutometinib and defactinib, are being investigated in both preclinical and clinical studies for the treatment of various solid tumors, including, but not limited to low-grade serous ovarian cancer (“LGSOC”), non-small cell lung cancer (“NSCLC”), pancreatic cancer, colorectal cancer (“CRC”), and melanoma.

The Company believes that avutometinib 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.

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If the Company does not obtain marketing approval and successfully commercialize its product candidates, avutometinib and defactinib, following regulatory approval, it will be unable to generate product revenue or achieve profitability and may need to raise additional capital.

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

As of December 31, 2022, the Company had cash, cash equivalents, and investments of $ 87.9 million, and an accumulated deficit of $ 737.5 million.

The Company expects its existing cash resources along with $ 30.0 million of gross proceeds raised through the Series B Preferred Stock issuance in January 2023, and expected $ 15.0 million debt drawdown through its loan and security agreement with Oxford Finance LLC (“Oxford”) expected in March 2023 will be sufficient to fund its planned operations through at least 12 months from the date of issuance of these consolidated financial statements.

Subsequent events for detailed description of the Series B Preferred Stock issuance.

The Company expects to finance the future development costs of its clinical product portfolio with its existing cash, cash equivalents and investments, through potential future milestones and royalties received pursuant to the Secura APA, through the loan and security agreement with Oxford, or through other 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.

If the Company fails to obtain additional future capital, it may be unable to complete its planned preclinical studies and clinical trials and obtain approval of certain investigational product candidates from the FDA or foreign regulatory authorities.

As of December 31, 2023, the Company had cash, cash equivalents, and investments of $137.1 million.

In accordance with applicable accounting standards, the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within 12 months after the date of the issuance of these consolidated financial statements.

The Company anticipates operating losses may continue for the foreseeable future since the Company does not yet have regulatory approval to sell any of its product candidates, and the Company continues to incur operating costs to execute its strategic plan, including costs related to research and development of its product candidates and commercial readiness activities.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern for 12 months after the date the consolidated financial statements are issued.

The Company expects to finance its operations with its existing cash, cash equivalents and investments, through potential future milestones and royalties received pursuant to the Secura APA, through the loan and security agreement with Oxford Finance LLC (“Oxford”), or through other strategic financing opportunities that could include, but are not limited to collaboration agreements, future offerings of its equity, or the incurrence of debt.

However, given the risk associated with these potential strategic or financing opportunities, they are not deemed probable for purposes of the going concern assessment.

If the Company fails to obtain additional future capital, it may be unable to complete its planned preclinical studies and clinical trials and obtain approval of certain

investigational product candidates from the FDA or foreign regulatory authorities.

Therefore, there is substantial doubt about the Company’s ability to continue as a going concern.

Reverse Stock Split

On May 30, 2023, the Company filed a Certificate of Amendment to the Company’s Restated Certificate of Incorporation, as amended to date, with the Secretary of State of the State of Delaware to effect a reverse stock split of the Company’s issued and outstanding common stock, par value $ 0.0001 at a ratio of 1-for-12 (the “Reverse Stock Split”), as authorized at the Company’s 2023 annual meeting of stockholders held on May 15, 2023.

The Company effected the Reverse Stock Split on May 31, 2023.

No fractional shares were issued in connection with the Reverse Stock Split.

Stockholders who otherwise were entitled to a fractional share of common stock were entitled to receive a price equal to the closing price of the common stock on the Nasdaq Capital Market on the date immediately preceding the Reverse Stock Split, as adjusted by the ratio of one share of common stock for every 12 shares of common stock, multiplied by the applicable fraction of a share.

The number of shares of common stock that the Company is authorized to issue remains at 300,000,000 shares and the par value of its common stock remains unchanged at $ 0.0001 per share.

The Company has retroactively restated the share and per share amounts in the consolidated financial statements as of December 31, 2022 and the 12 months ended December 31, 2023, 2022 and 2021, to give retroactive effect to the Reverse Stock Split.

Proportionate adjustments were made to the per share exercise price and number of shares of common stock issuable under all outstanding stock options, convertible notes and preferred stock.

In addition, proportionate adjustments have been made to the number of shares of common stock issuable upon vesting of the restricted stock units and the number of shares of common stock reserved for the Company’s equity incentive compensation plans.

The consolidated statements of convertible preferred stock and stockholders’ equity and balance sheets reflect the impact of the Reverse Stock Split by reclassifying from “common stock” to “additional paid-in capital” in an amount equal to the par value of the decreased shares resulting from the Reverse Stock Split.

Significant accounting policies

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The accompanying financial statements of the Company have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) under the assumption that the Company will continue as a going concern for the next twelve months.

generally accepted accounting principles (“GAAP”) under the assumption that the Company will continue as a going concern for the next 12 months.

Accordingly, they do not include any adjustments that might result from the uncertainty related to the Company’s ability to continue as a going concern.

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The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

On an ongoing basis, management evaluates its estimates, including estimates related to revenue recognition, including returns, rebates, and other pricing adjustments, accrued and prepaid clinical trial expense and other general accruals and stock-based compensation expense.

On an ongoing basis, management evaluates its estimates, including but not limited to estimates related to revenue recognition, accrued and prepaid clinical trial expense and other general accruals, stock-based compensation expense and its preferred stock tranche liability.

The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable.

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Proceeds from grants

During the year ended December 31, 2022, the Company was awarded the “Therapeutic Accelerator Award” grant from Pancreatic Cancer Network (“PanCAN”) for up to $ 3.8 million (the “PanCAN Grant”).

In May 2022 the Company was awarded the “Therapeutic Accelerator Award” grant from Pancreatic Cancer Network (“PanCAN”) for up to $ 3.8 million (the “PanCAN Grant”).

In August 2022, PanCAN agreed to provide the Company with an additional $ 0.5 million for the collection and analysis of patient samples.

The grant is expected to support a Phase 1b/2 clinical trial of GEMZAR (gemcitabine) and ABRAXANE (Nab-paclitaxel) in combination with avutometinib and defactinib entitled RAMP 205.

The RAMP 205 trial will evaluate whether combining avutometinib (to target mutant KRAS which is mutated in more than 90% of pancreatic tumors) and defactinib (to reduce stromal density and adaptive resistance to avutometinib) to the standard GEMZAR/ABRAXANE regimen improves outcomes for patients with pancreatic cancer.

The Company received $ 1.0 million of cash proceeds in July 2022 which was initially recorded as deferred liabilities on the balance sheet.

The grant is supporting a Phase 1b/2 clinical trial of GEMZAR (gemcitabine) and ABRAXANE (Nab-paclitaxel) in combination with avutometinib and defactinib entitled RAMP 205.

The RAMP 205 study is evaluating whether combining avutometinib (to target mutant KRAS which is found in more than 90% of pancreatic adenocarcinomas) and defactinib (to reduce stromal density and adaptive resistance to avutometinib) to the standard GEMZAR/ABRAXANE regimen improves outcomes for patients with such pancreatic cancers.

Through December 31, 2023, the Company has received $ 2.7 million of cash proceeds which was initially recorded as deferred liabilities on the balance sheet.

The Company recognizes grants as contra research and development expense in the consolidated statement of operations and comprehensive loss on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate.

The Company recorded $ 0.3 million of the proceeds as a reduction of research and development expense during the year ended December 31, 2022.

As of December 31, 2022, the Company recorded $ 0.7 million as deferred liabilities in the consolidated balance sheet related to the PanCAN Grant.

The Company recorded $ 2.0 million and $ 0.3 million of the proceeds as a reduction of research and development expense during the years ended December 31, 2023 and December 31, 2022, respectively.

As of December 31, 2023 and December 31, 2022, the Company recorded $ 0.3 million and $ 0.7 million, respectively, as deferred liabilities in the consolidated balance sheet related to the PanCAN Grant.

Cash, cash equivalents and restricted cash

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Total cash, cash equivalents and restricted cash

Amounts included in restricted cash as of December 31, 2022 represent (i) cash received pursuant to the PanCAN Grant restricted for future expenditures for specific research and development activities and (ii) 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 amounts of $ 0.6 million and $ 0.2 million, respectively.

Amounts included in restricted cash as of December 31, 2021 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.

Cash received pursuant to the PanCAN Grant is included in prepaid expenses and other current assets on the consolidated balance sheet as of December 31, 2022.

Amounts included in restricted cash as of December 31, 2023 and December 31, 2022 represent (i) cash received pursuant to the PanCAN Grant restricted for future expenditures for specific research and development activities in the amounts of $ 0.9 million and $ 0.6 million, respectively, and (ii) 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.

Cash held pursuant to the PanCAN Grant is included in prepaid expenses and other current assets on the consolidated balance sheet as of December 31, 2023, and December 31, 2022.

The letters of credit are included in non-current restricted cash on the consolidated balance sheets as of December 31, 2023 and December 31, 2022.

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Total financial assets

Preferred stock tranche liability

December 31, 2022

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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, 2023 and 2022.

A preferred stock tranche liability was recorded as a result of the entry into the Series B Convertible Preferred Stock Securities Purchase Agreement (defined herein) (see Note 7.

Capital Stock) .

The fair value measurement of the preferred stock tranche liability is classified as Level 3 under the fair value hierarchy.

The fair value of the preferred stock tranche liability was determined using a Monte-Carlo simulation.

The inputs to the Monte-Carlo include the risk-free rate, stock price volatility, expected dividends and remaining term.

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

Below are the inputs used to value the preferred stock tranche liability at December 31, 2023 and January 24, 2023:

December 31, 2023

January 24, 2023

Risk-free interest rate

Dividend yield

Remaining term (years)

The following table represents a rollforward for the year ended December 31, 2023 of the preferred stock right liability recorded in connection with the entry into the Series B Convertible Preferred Stock Securities Purchase Agreement (in thousands):

January 1, 2023

Fair value recognized upon entering into Securities Purchase Agreement

Fair value adjustment

December 31, 2023

Fair Value of Financial Instruments

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, 2022, which equals the carrying value of the 2018 Notes as of December 31, 2022.

The fair value of the 2018 Notes was approximately $ 0.3 million as of December 31, 2021, which differed from the carrying value of the 2018 Notes of $ 0.2 million as of December 31, 2021.

During the year ended December 31, 2023, the Company repaid the 2018 Notes and no 2018 Notes remain outstanding.

Convertible Senior Notes for additional discussion on the 2018 Notes.

The fair value of the 2018 Notes is influenced by the Company’s stock price, stock price volatility, and current market yields and was determined using Level 3 inputs.

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 date.

The carrying value of the Company’s long-term debt as of December 31, 2022, was approximately $ 24.5 million.

The Company estimates that the fair value of its long-term debt was approximately $ 24.9 million as of December 31, 2022.

There was no long-term debt outstanding as of December 31, 2021.

The carrying value of the Company’s long-term debt as of December 31, 2023 and December 31, 2022, was approximately $ 40.1 million and $ 24.5 million, respectively.

The Company estimates that the fair value of its long-term debt as of December 31, 2023 and December 31, 2022, was approximately $ 39.6 million and $ 24.9 million, respectively.

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

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Government money market funds, overnight repurchase agreements collateralized by government agency securities or U.S.

Treasury securities, corporate bonds and commercial paper of publicly traded companies that are classified as available-for-sale pursuant to Accounting Standards Codification (ASC) Topic 320, Investments—Debt and Equity Securities .

Treasury securities, corporate bonds and commercial paper of publicly traded companies that are classified as available-for-sale pursuant to ASC Topic 320, Investments—Debt and Equity Securities .

The Company classifies investments available to fund current operations as current assets on its consolidated balance sheets.

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The fair value of these securities is based on quoted prices for identical or similar assets.

If a decline in the fair value is considered other-than-temporary, based on available evidence, the unrealized loss is transferred from other comprehensive loss to the consolidated statements of operations and comprehensive loss.

The Company reviews investments for other-than-temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time.

To determine whether an impairment is other-than-temporary, the Company considers the intent to sell, or whether it is more likely than not that the Company will be required to sell, the investment before recovery of the investment’s amortized cost basis.

Evidence considered in this assessment includes reasons for the impairment, compliance with the Company’s investment policy, the severity and the duration of the impairment and changes in value subsequent to year end.

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.

The Company reviews investments for impairment whenever the fair value of a investment is less than the amortized cost and evidence indicates that a investment’s carrying amount is not recoverable.

Unrealized losses are evaluated for impairment under ASC 326, Financial Instruments - Credit Losses (“ASC 326”), to determine if the impairment is credit-related or noncredit-related.

Credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings, and noncredit-related impairment is recognized in other comprehensive income (loss).

Evidence considered in this assessment includes reasons for the impairment, compliance with our investment policy, the severity of the impairment, collectability of the security, and any adverse conditions specifically related to the security, an industry, or geographic area.

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, 2023, 2022 or 2021.

There were two debt securities and three debt securities in an unrealized loss position as of December 31, 2022 and December 31, 2021, respectively.

None of these investments had been in an unrealized loss position for more than 12 months as of December 31, 2022, or December 31, 2021.

The fair value of these securities as of December 31, 2022, and December 31, 2021, was $ 6.0 million and $ 15.8 million, respectively, and the aggregate unrealized loss was immaterial.

The Company considered the decline in the market value for these securities to be primarily attributable to current economic conditions.

As it was not more likely than not that the Company would be

required to sell these securities before the recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired as of December 31, 2022, and December 31, 2021, respectively.

Accrued interest receivable is excluded from the amortized cost and estimated fair value of the Company’s investments.

Accrued interest receivable of $0.1 million is presented within prepaid expenses and other current assets on the consolidated balance sheets as of December 31, 2023 and December 31, 2022.

There were two debt securities in an unrealized loss position at each of December 31, 2023, and December 31, 2022.

None of these investments had been in an unrealized loss position for more than 12 months as of December 31, 2023 and December 31, 2022.

The Company considered the decline in the market value for these securities to be primarily attributable to current economic conditions and not credit related.

At both December 31, 2023 and December 31, 2022, the Company had the intent and ability to hold such securities until recovery.

As a result, the Company did not record any charges for credit-related impairments for its investments as of December 31, 2023 and December 31, 2022.

The following is a summary of available-for-sale securities with unrealized losses for less than 12 months as of December 31, 2023 and 2022 (in thousands):

December 31, 2023

December 31, 2022

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

Total available-for-sale securities in an unrealized loss position

Cash, cash equivalents, restricted cash and investments consist of the following (in thousands):

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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:

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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 and commercial paper (due within 1 year )

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

Total investments

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The management of the Company’s investments is not discretionary on the part of these financial institutions.

As of December 31, 2022, 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, 2022, and 2021, there was one customer, Secura, that made up more than 60 % of the Company’s trade accounts receivable balance.

As of December 31, 2023, the Company’s cash, cash equivalents and investments were deposited at four 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.

There was no accounts receivable balance as of December 31, 2023.

As of December 31, 2022, there was one customer, Secura, that made up more than 60 % 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, 2022 and 2021, one customer, Secura, individually accounted for all of the Company’s total revenue.

For the year ended December 31, 2023, the Company did not record any revenue.

For the year ended December 31, 2022 one customer, Secura, individually accounted for all of the Company’s total revenue.

Refer to Note 13.

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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.

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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Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term.

However, certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

However, certain

adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

The interest rate implicit in lease contracts is typically not readily determinable.

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The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Product revenue, net

Product Revenue, Net – The Company sold COPIKTRA to a limited number of specialty pharmacies and specialty distributors in the United States.

These customers subsequently resold COPIKTRA either directly to patients or to community hospitals or oncology clinics with in-office dispensaries who in turn distribute COPIKTRA to patients.

In addition to distribution agreements with customers, the Company also entered into arrangements with (1) certain government agencies and various private organizations (Third-Party Payers), which may provide for chargebacks or discounts with respect to the purchase of COPIKTRA, and (2) Medicare and Medicaid, which may provide for certain rebates with respect to the purchase of COPIKTRA.

The Company recognized revenue on sales of COPIKTRA when a customer obtains control of the product, which occurs at a point in time (typically upon delivery).

Product revenues are recorded at the wholesale acquisition costs, net of applicable reserves for variable consideration.

Components of variable consideration include trade discounts and allowances, Third-Party Payer chargebacks and discounts, government rebates, other incentives, such as voluntary co-pay assistance, product returns, and other allowances that are offered within contracts between the Company and customers, payors, and other indirect customers relating to the Company’s sale of COPIKTRA.

These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable or a current liability.

These estimates take into consideration a range of possible outcomes based upon relevant factors such as customer contract terms, information received from third parties regarding the anticipated payor mix for COPIKTRA, known market events and trends, industry data, and forecasted customer buying and payment patterns.

Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled with respect to sales made.

The amount of variable consideration which is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under contracts will not occur in a future period.

The Company’s analyses contemplate the application of the constraint in accordance with ASC 606.

For the year ended December 31, 2020, 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 and 2022.

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

However, as of December 31, 2022, there are not any reserve balances associated with product revenue, net.

Trade Discounts and Allowances:

The Company generally provided customers with invoice discounts on sales of COPIKTRA for prompt payment, which are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized.

In addition, the Company compensated its specialty distributor customers for sales order management, data, and distribution services.

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 year ended December 31, 2020.

There were no amounts recorded for the years ended December 31, 2022 and 2021.

Third-Party Payer Chargebacks, Discounts and Fees:

The Company executed contracts with Third-Party Payers which allowed for eligible purchases of COPIKTRA at prices lower than the wholesale acquisition cost charged to customers who directly purchase the product from the Company.

In some cases, customers charged the Company for the difference between what they paid for COPIKTRA and the ultimate selling price to the Third-Party Payers.

These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable, net.

Chargeback amounts are generally determined at the time of resale to the qualified Third-Party Payer by customers, and the Company generally issues credits for such amounts within a few weeks of the customer’s notification to the Company of the resale.

Reserves for chargebacks consist of credits that the Company expects to issue for units that remain in the distribution channel inventories at the end of each reporting period that the Company expects will be sold to Third-Party Payers, and chargebacks that customers have claimed, but for which the Company has not yet issued a credit.

In addition, the Company compensated certain Third-Party Payers for administrative services, such as account management and data reporting.

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 year ended December 31, 2020.

There were no amounts recorded for the years ended December 31, 2022 and 2021.

Government Rebates:

The Company was subject to discount obligations under state Medicaid programs and Medicare.

These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses on the consolidated balance sheets.

For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the Company will owe an additional liability under the Medicare Part D program.

The Company’s liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel inventories at the end of each reporting period.

Other Incentives:

Other incentives which the Company offered include voluntary co-pay assistance programs, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payors.

The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive for product that has been recognized as revenue but remains in the distribution channel inventories at the end of each reporting period.

The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included as a component of accrued expenses on the consolidated balance sheets.

Product Returns:

Consistent with industry practice, the Company generally offers customers a limited right of return for product that has been purchased from the Company.

The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized.

The Company estimates product return liabilities using available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel.

Subject to certain limitations, the Company’s return policy allows for eligible returns of COPIKTRA for credit under the following circumstances:

● Receipt of damaged product;

● Shipment errors that were a result of an error by the Company;

● Expired product that is returned during the period beginning three months prior to the product’s expiration and ending six months after the expiration date;

● Product subject to a recall;

● Product that the Company, at its sole discretion, has specified can be returned for credit.

If taxes should be collected from customers relating to product sales and remitted to governmental authorities, they will be excluded from product revenue.

The Company expenses incremental costs of obtaining a contract when incurred if the expected amortization period of the asset that the Company would have recognized is one year or less.

Licenses and sales of intellectual property

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.

Payments pursuant to these arrangements typically include non-refundable, upfront payments, milestone payments upon the achievement of significant development events, research and development reimbursements, sales milestones, and royalties on product sales.

The amount of variable consideration is constrained until it is probable that the revenue is not at a significant risk of reversal in a future period.

The contracts into which the Company enters generally do not include significant financing components.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its collaboration and license agreements, the Company performs the following steps:

(i) identification of the promised goods or services in the contract within the scope of ASC 606;

(ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations;

and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

As part of the accounting for these arrangements, the Company must use significant judgment to determine:

a) the number of performance obligations based on the determination under step (ii) above;

b) the transaction price under step (iii) above;

c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above;

and d) the measure of progress in step (v) above.

The Company uses judgment to determine whether milestones or other variable consideration, except for royalties on license arrangements, should be included in the transaction price as described further below.

If a license to the Company’s intellectual property is determined to be distinct from the other promises or performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

In assessing whether a promise or performance obligation is distinct from the other elements, the Company considers factors such as the research, development, manufacturing and commercialization capabilities of the collaboration partner and the availability of its associated expertise in the general marketplace.

In addition, the Company considers whether the collaboration partner can benefit from a promise for its intended purpose without the receipt of the remaining elements, whether the value of the promise is dependent on the unsatisfied promise, whether there are other vendors that could provide the remaining promise, and whether it is separately identifiable from the remaining promise.

For licenses that are combined with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue.

The Company evaluates the measure as of progress of each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

The measure of progress, and thereby periods over which revenue should be recognized, is subject to estimates by management and may change over the course of the arrangement.

Such a change could have a material impact on the amount of revenue the Company records in future periods.

Customer Options:

If an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services such as research and development services or manufacturing services, the goods and services underlying the customer options are not considered to be performance obligations at the inception of the arrangement;

rather, such goods and services are contingent on exercise of the option, and the associated option fees are not included in the transaction price.

The Company evaluates customer options for material rights or options

to acquire additional goods or services for free or at a discount.

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.

Milestone Payments:

At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method.

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

Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the respective milestone in making this assessment.

There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur.

At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

For license arrangements that include sales-based royalties, including milestone payments based on a level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements.

Sales of intellectual property

For sales of license and intellectual property, that include sale-based royalties, including milestone payments based on a level of sales, the Company evaluates whether the royalties and sales-based milestones are considered probable of being achieved and estimates the amount of royalties to include over the contractual term using the expected value method and estimates the sales-based milestones using the most likely amount method.

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Collaborative Arrangements:

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

(i) the parties to the contract must actively participate in the joint operating activity and (ii) the joint operating activity must expose the parties to the possibility of significant risk and rewards, based on whether or not the activity is successful.

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

(i) the parties to the contract must actively participate in the joint operating activity and (ii) the joint operating activity must expose the parties to the

possibility of significant risk and rewards, based on whether or not the activity is successful.

Payments received from or made to a partner that are the result of a collaborative relationship with a partner, instead of a customer relationship, such as co-development activities, are recorded as a reduction or increase to research and development expense, respectively.

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Accounts receivable have standard payments that generally require payment within 30 to 90 days .

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

becomes doubtful.

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, 2022.

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

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

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The resolution of its uncertain income tax positions is dependent on uncontrollable factors such as law changes, new case law, and the willingness of the income tax authorities to settle, including the timing thereof and other factors.

Although the Company does not anticipate significant changes to its uncertain income tax positions in the next twelve months, items outside of its control could cause its uncertain income tax positions to change in the future, which would be recorded in its statements of operations.

Although the Company does not anticipate significant changes to its uncertain income tax positions in the next 12 months, items outside of its control could cause its uncertain income tax positions to change in the future, which would be recorded in its statements of operations.

Interest and/or penalties related to income tax matters are recognized as a component of income tax expense.

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Basic net loss per common share is calculated by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period.

Diluted net loss per common share is calculated by increasing the denominator by the weighted-average number of additional shares that could have been outstanding from securities convertible into common stock, such as stock options, restricted stock units and warrants (using the “treasury stock” method), Notes and Series A Preferred Stock (using the “if-converted” method), unless their effect on net loss per share is antidilutive.

The effect of computing diluted net loss per common share was antidilutive for any potentially issuable shares of common stock from the conversion of stock options, restricted stock units and warrants and, as such, have been excluded from the calculation.

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

Additionally, the effects of any interest expense and changes in fair value of bifurcated derivatives shall be added back to the numerator of the diluted net loss per share calculation.

Weighted-average number of common shares outstanding includes the weighted average effect of the pre-funded warrants issued in June 2023, as the exercise of which requires little or no consideration for the delivery of shares of common stock.

Diluted net loss per common share is calculated by increasing the denominator by the weighted-average number of additional shares that could have been outstanding from securities convertible into common stock, such as stock options, restricted stock units, and ESPP (using the “treasury stock” method), the Notes (defined herein) , Series A Convertible Preferred Stock, and Series B Convertible Preferred Stock (using the “if-converted” method), unless their effect on net loss per share is antidilutive.

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

Additionally, the effects of any interest expense and changes in fair value of any bifurcated derivatives shall be added back to the numerator of the diluted net loss per share calculation.

Refer to Note 10.

Net Loss per share for further details related to the calculation of net loss per share.

Recently issued accounting standards updates

In June 2016, the FASB issued Accounting Standard Update (“ASU”) No.

Recently Adopted Accounting Standards Updates

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) No.

2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

ASU 2016-13 will replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

In November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives (Topic 815), and Leases (Topic 842).

This ASU delayed the required adoption for SEC filers that are smaller reporting companies as of their determination on November 15, 2019, until annual and interim periods beginning after December 15, 2022, with early adoption permitted.

The Company has determined that as of November 15, 2019, it is a smaller reporting company and has not elected to early adopt this standard.

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

ASU 2016-13 replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

Effective January 1, 2023, the Company adopted the provisions of ASU 2016-13.

The adoption did not have a material impact on the Company's consolidated financial statements or related financial statement disclosures.

In August 2020, the FASB issued No.

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More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity.

The ASU also simplifies the diluted earnings per share (“EPS”) calculation in certain areas.

For smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

The Company is currently evaluating the impact ASU 2020-06 will have on its consolidated financial statements and related disclosures.

The ASU also simplifies the diluted earnings per share calculation in certain areas.

The Company elected to adopt this standard on January 1, 2023 under the modified retrospective transition method.

The adoption did not have a material impact on the Company's consolidated financial statements or related financial statement disclosures.

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”).

ASU 2022-04 requires the buyer in a supplier finance program to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented.

This guidance is effective for fiscal years beginning after December 15, 2022.

We adopted this guidance as of January 1, 2023, on a prospective basis.

The adoption of the standard only resulted in new disclosures and did not affect the Company’s recognition, measurement, or financial statement presentation of supplier finance program obligations on the consolidated financial statements.

For additional information on the new disclosures, see Note 14.

Notes Payable .

Recently issued accounting standards updates

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

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and by extending the disclosure requirements to entities with a single reportable segment.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

ASU 2023-07 is to be applied retrospectively to all prior periods presented in the financial statements.

We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

The guidance in ASU 2023-09 improves the transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction.

The standard is effective for public companies for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements.

Other recent accounting pronouncements issued, but not yet effective, are not expected to be applicable to the Company or have a material effect on the consolidated financial statements upon future adoption.

Property and equipment, net

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Computer equipment

Assets not yet placed in service

accumulated depreciation

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December 31, 2022

Research and development expenses

Compensation and related benefits

Professional fees

Consulting fees

Commercialization costs

Accrued clinical trial expenses

Accrued contract manufacturing expenses

Accrued other research and development expenses

Accrued compensation and related benefits

Accrued professional fees

Accrued consulting fees

Accrued interest

Accrued commercialization costs

Accrued other

Total accrued expenses

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On March 25, 2022 (the “Closing Date”), the Company entered into a loan and security agreement (the “Loan Agreement”) with Oxford, as collateral agent and a lender, and Oxford Finance Credit Fund III LP, as a lender (“OFCF III” and together with Oxford, the “Lenders”), pursuant to which the Lenders have agreed to lend the Company up to an aggregate principal amount of $ 150.0 million in a series of term loans (the “Term Loans”).

Pursuant to the Loan Agreement, the Company received an initial Term Loan of $ 25.0 million on the Closing Date and may borrow an additional $ 125.0 million of Term Loans at its option upon the satisfaction of certain conditions as follows:

$ 15.0 million (the “Term B Loan”), when the Company has either (a) received the Regulatory Milestone Payment (as defined in the Secura APA) from Secura of $ 35.0 million which is due upon receipt of regulatory approval of COPIKTRA in the United States for the treatment of peripheral T-cell lymphoma (“PTCL”) or (b) received at least $ 50.0 million in unrestricted cash proceeds from the sale or issuance of equity securities after the Closing Date (the “Term B Milestones”).

The Company may draw the Term B Loan within 60 days after the occurrence of one of the Term B Milestones, but no later than March 31, 2023.

On January 4, 2024, the Company amended the Loan Agreement to extend the date by which it may draw down the Term C Loan from March 31, 2024 to March 31, 2025.

Pursuant to the Loan Agreement, as amended, the Company received an initial Term Loan of $ 25.0 million on the Closing Date, and drew down the second term loan of $ 15.0 million (the “Term B Loan”) on March 22, 2023 and may borrow an additional $ 110.0 million of Term Loans at its option upon the satisfaction of certain conditions as follows:

$ 25.0 million (the “Term C Loan”), when the Company has received accelerated or full approval from the FDA of avutometinib for the treatment of LGSOC (the “Term C Milestone”).

The Company may draw the Term C Loan within 60 days after the occurrence the Term C Milestone, but no later than March 31, 2024.

The Company may

draw the Term C Loan within 60 days after the occurrence the Term C Milestone, but no later than March 31, 2025.

$ 35.0 million (the “Term D Loan”), when the Company has achieved at least $ 50.0 million in gross product revenue calculated on a trailing six-month basis (the “Term D Milestone”).

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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 either (A) avutometinib h as received FDA approval for the treatment of LGSOC or (B) COPIKTRA has received FDA approval for the treatment of PTCL, the Company shall repay the Term Loans in consecutive equal monthly payments of principal, together with applicable interest, in arrears.

As a result of the Term B Loan drawdown, beginning (i) April 1, 2025, or (ii) April 1, 2026, if either (A) avutometinib has received FDA approval for the treatment of LGSOC or (B) COPIKTRA has received FDA approval for the treatment of PTCL, 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.

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The debt issuance costs and the Final Payment Fee have been recorded as a debt discount which are being accreted to interest expense through the maturity date of the Term Loan using the effective interest method.

The components of the carrying value of the debt as of December 31, 2022 (in thousands):

The components of the carrying value of the debt as of December 31, 2023, and 2022 (in thousands):

December 31, 2023

December 31, 2022

Principal loan balance

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Long-term debt, net of discount

The following table sets forth total interest expense for the years ended December 31, 2023, 2022, and 2021 (in thousands):

Year ended December 31,

Contractual Interest

Amortization of debt discount and issuance costs

Amortization of Final Payment Fee

As of December 31, 2023, future principal payments due are as follows (in thousands):

Total principal payments

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

(“Hercules”).

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 $ 25.0 million to up to $ 75.0 million, pursuant to certain conditions of funding.

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 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.

All liens on substantially all of the Company’s assets to secure the loans under the Amended Loan Agreement have been terminated and released.

The Payoff Amount, excluding accrued interest, exceeded the carrying amount of the Hercules debt on November 9, 2020 by $ 1.6 million.

As a result, the Company recorded a loss on debt extinguishment of $ 1.6 million included in the statements of operations and comprehensive loss for the year ended December 31, 2020.

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.

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The Amended Lease Agreement extends the expiration date of the lease from September 2019 through June 2025.

Pursuant to the Amended Lease Agreement, the initial annual base rent amount is approximately $ 0.7 million, which increases during the lease term to $ 1.1 million for the last twelve-month period.

Pursuant to the Amended Lease Agreement, the initial annual base rent amount is approximately $ 0.7 million, which increases during the lease term to $ 1.1 million for the last 12-month period.

The Company has accounted for its Needham, Massachusetts office space as an operating lease.

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Lease Liability

As of December 31, 2022 and 2021, the Company had reserved the following shares of common stock for the issuance of common stock for vested restricted stock units, the exercise of stock options, employee stock purchase plan, 2018 Notes and Series A Preferred Stock conversions to shares of common stock (in thousands):

Capital Stock

Under the amended and restated certificate of incorporation, the Company’s board of directors has the authority, without further action by the stockholders, to issue up to 5,000,000 shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the rights, preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereon and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding.

As of December 31, 2023 and 2022, the Company had reserved the following shares of common stock for the issuance of common stock for vested restricted stock units, the exercise of stock options, employee stock purchase plan, 2018 Notes, Series A Convertible Preferred Stock conversions to shares of common stock, the issuance and conversion of Series B Convertible Preferred Stock, and exercise of Pre-Funded Warrants (in thousands):

Shares reserved under equity compensation plans

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Shares reserved for ESPP

Shares reserved for Series A Preferred Stock

Shares reserved for Series A Convertible Preferred Stock

Shares reserved for Series B Convertible Preferred Stock

Shares reserved for Pre-Funded Warrants

Total shares reserved

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The holders of the common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors.

Series A Preferred Stock

LP and MSI BVF SPV, LLC (collectively referred to as “BVF”), pursuant to which BVF exchanged 10,000,000 shares of the Company’s common stock for 1,000,000 shares of newly designated Series A convertible preferred stock, par value $ 0.0001 per share (the “Series A Preferred Stock”) (the “Exchange”).

Each share of the Series A Preferred Stock is convertible into 10 shares of common stock at the option of the holder at any time, subject to certain limitations, including that the holder will be prohibited from converting Preferred Stock into common stock if, as a result of such conversion, the holder, together with its affiliates, would beneficially own a number of shares of common stock above a conversion blocker, which is initially set at 9.99 % (the “Conversion Blocker”) of the total common stock then issued and outstanding immediately following the conversion of such shares of Preferred Stock.

Holders of the Series A Preferred Stock are permitted to increase the Conversion Blocker to an amount not to exceed 19.99 % upon 60 days ’ notice.

Shares of Series A Preferred Stock will generally have no voting rights, except as required by law and except that the consent of a majority of the holders of the outstanding Series A Preferred Stock will be required to amend the terms of the Series A Preferred Stock.

In the event of the Company’s liquidation, dissolution or winding up, holders of Series A Preferred Stock will participate pari passu with any distribution of proceeds to holders of common stock.

Holders of Series A Preferred Stock are entitled to receive when, as and if dividends are declared and paid on the common stock, an equivalent dividend, calculated on an as-converted basis.

Shares of Series A Preferred Stock are otherwise not entitled to dividends.

The Series A Preferred Stock ranks (i) senior to any class or series of capital stock of the Company hereafter created specifically ranking by its terms junior to the Series A Preferred Stock;

(ii) on parity with the common stock and any class or series of capital stock of the Company created specifically ranking by its terms on parity with the Series A Preferred Stock;

and (iii) junior to any class or series of capital stock of the Company created specifically ranking by its terms senior to any Series A Preferred Stock, in each case, as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily.

June 2023 Public Offering

On June 15, 2023, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with RBC Capital Markets, LLC and Cantor Fitzgerald & Co.

(“Cantor”), as representatives of several underwriters (the “Underwriters”) to offer 7,181,409 shares of the Company’s common stock, at a price to the public of $ 9.75 per share, less the underwriting discounts and commissions, and, in lieu of shares of common stock to certain investors, pre-funded warrants to purchase up to an aggregate of 1,538,591 shares of common stock at a price to the public of $ 9.749 (the “Pre-Funded Warrants”) per Pre-Funded Warrant, which represents the per share public offering price for the shares of common stock less the $ 0.001 per share exercise price for each such Pre-Funded Warrant (the “June 2023 Offering”).

In addition, the Company granted the Underwriters an option to purchase, at the public offering price less any underwriting discounts and commissions, an additional 1,308,000 shares of common stock, exercisable for 30 days from the date of the Underwriting Agreement, which the Underwriters exercised in full on June 16, 2023.

The June 2023 Offering closed on June 21, 2023.

The Company may not effect the exercise of any Pre-Funded Warrant, and a holder will not be entitled to exercise any portion of any Pre-Funded Warrant if, upon giving effect to such exercise, the aggregate number of shares of common stock beneficially owned by the holder (together with its affiliates) would exceed 9.99 % of the number of shares of common stock outstanding immediately after giving effect to the exercise, which percentage may be increased or decreased at the holder’s election upon 61 days ’ notice to the Company subject to the terms of such Pre-Funded Warrants, provided that such percentage may in no event exceed 19.99 % .

Each Pre-Funded Warrant has an exercise price equal to $ 0.001 per share of common stock.

The exercise price and the number of shares of common stock issuable upon exercise of each Pre-Funded Warrant is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock as well as upon any distribution of assets, including cash, stock or other property, to the Company’s stockholders.

The Pre-Funded Warrants are exercisable as of June 21, 2023, do not expire and are exercisable in cash or by means of a cashless exercise.

In addition, upon the consummation of an acquisition (as described in the Pre-Funded Warrant agreements), each Pre-Funded Warrant will automatically be converted into the right of the holder of such Pre-Funded Warrant to receive the kind and amount of securities, cash or other property that such holders would have received had they exercised such Pre-Funded Warrant immediately prior to such acquisition, without regard to any limitations on exercise contained in the Pre-Funded Warrants

The Pre-Funded Warrants cannot require cash settlement, are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, and do not embody an obligation for the Company to repurchase its common stock shares and permit the holders to receive a fixed number of shares of common stock upon exercise.

Additionally, the Pre-Funded Warrants do not provide any guarantee of value or return.

Accordingly, the Pre-Funded Warrants are classified as a component of permanent equity.

After deducting for commissions and other offering expenses, the Company received net proceeds of approximately $ 91.4 million from the sale of 8,489,409 shares of common stock and 1,538,591 Pre-Funded Warrants.

Series B Convertible Preferred Stock

On January 24, 2023, the Company entered into a Securities Purchase Agreement (the “Series B Convertible Preferred Stock Securities Purchase Agreement”) with certain purchasers pursuant to which the Company agreed to sell and issue to the purchasers in a private placement (the “Private Placement”) up to 2,144,160 shares of its Series B convertible preferred stock, par value $ 0.0001 per share (the “Series B Convertible Preferred Stock”), in two tranches.

On January 24, 2023, the Company filed the Certificate of Designation of the Preferences, Rights and Limitations of the Series B Convertible Preferred Stock (the “Series B Convertible Preferred Stock Certificate of Designation”) setting forth the preferences, rights and limitations of the Series B Convertible Preferred Stock with the Secretary of State of the State of Delaware.

The Series B Convertible Preferred Stock Certificate of Designation became effective upon filing.

Each share of the Series B Convertible Preferred Shares is convertible into 3.5305 shares of the Company’s common stock, such conversion rate reflects an adjustment to account for the Reverse Stock Split, at the option of the holders at any time, subject to certain limitations, including that the holder will be prohibited from converting Series B Convertible Preferred Stock into common stock if, as a result of such conversion, the holder, together with its affiliates, would beneficially own a number of shares of common stock above a conversion blocker, which is initially set at 9.99 % (the “Conversion Blocker”) of the total common stock then issued and outstanding immediately following the conversion of such shares of Series B Convertible Preferred Stock.

Holders of the Series B Convertible Preferred Stock are permitted to increase the Conversion Blocker to an amount not to exceed 19.99 % upon 60 days ’ notice.

The Company agreed to sell and issue in the first tranche of the Private Placement 1,200,000 shares of Series B Convertible Preferred Stock at a purchase price of $ 25.00 per share of Series B Convertible Preferred Stock (equivalent to $ 7.0812 per share of common stock on a post-Reverse Stock Split basis).

The first tranche of the Private Placement closed on January 27, 2023.

The Company received gross proceeds from the first tranche of the Private Placement of approximately $ 30.0 million, before deducting fees to the placement agent and other offering expenses payable by the Company (“Series B Convertible Preferred Stock Proceeds”).

In addition, the Company agreed to sell and issue in the second tranche of the Private Placement 944,160 shares of Series B Convertible Preferred Stock at a purchase price of $ 31.77 per share of Series B Convertible Preferred Stock (equivalent to $ 9.00 per share of common stock on a post-Reverse Stock Split basis) if at any time within 18 months following the closing of the first tranche the 10-day volume weighted average price of the Company’s common stock (as quoted on Nasdaq and as calculated by Bloomberg) should reach at least $ 13.50 per share, such threshold reflects an adjustment to account for the Reverse Stock Split (which may be further adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction as needed) with aggregate trading volume during the same 10-day period of at least $ 25 million (the “Second Tranche Right”).

The second tranche of the Private Placement is expected to close within seven trading days of meeting the second tranche conditions and will be subject to additional, customary closing conditions.

If the Second Tranche Right conditions are satisfied, the Company anticipates receiving gross proceeds from the second tranche of the Private Placement of approximately $ 30.0 million, before deducting fees to the placement agent and other offering expenses payable by the Company.

The Series B Convertible Preferred Stock ranks (i) senior to the common stock;

(ii) senior to all other classes and series of equity securities of the Company that by their terms do not rank senior to the Series B Convertible Preferred Stock;

(iii) senior to all shares of the Company’s Series A Convertible Preferred Stock the equity securities described in (i)-(iii), the “Junior Stock”);

(iv) on parity with any class or series of capital stock of the Company hereafter created specifically ranking by its terms on parity with the Series B Convertible Preferred Stock (the “Parity Stock”);

(v) junior to any class or series of capital stock of the Company hereafter created specifically ranking by its terms senior to any Series B Convertible Preferred Stock (“Senior Stock”);

and (vi) junior to all of the Company’s existing and future debt obligations, including convertible or exchangeable debt securities, in each case, as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily and as to the right to receive dividends.

In the event of the liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Company, and subject to the prior and superior rights of any Senior Stock, each holder of shares of Series B Convertible Preferred Stock will be entitled to receive, in preference to any distributions of any of the assets or surplus funds of the Company to the holders of the common stock and any of the Company’s securities that are Junior Stock and pari passu with any distribution to the holders of any Parity Stock, an amount equal to $ 1.00 per share of Series B Convertible Preferred Stock, plus an additional amount equal to any dividends declared but unpaid on such shares, before any payments shall be made or any assets distributed to holders of the common stock or any of our securities that Junior Stock.

So long as any shares of the Series B Convertible Preferred Stock remain outstanding, the Company cannot without the affirmative vote or consent of the holders of majority of the shares of the Series B Convertible Preferred Stock then-outstanding, in which the holders of the Series B Convertible Preferred Stock vote separately as a class:

(a) amend, alter, modify or repeal (whether by merger, consolidation or otherwise) the Series B Convertible Preferred Stock Certificate of Designation, the Company’s certificate of incorporation, or the Company’s bylaws in

any manner that adversely affects the rights, preferences, privileges or the restrictions provided for the benefit of, the Series B Convertible Preferred Stock;

(b) issue further shares of Series B Convertible Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series B Convertible Preferred Stock;

or (d) enter into any agreement to do any of the foregoing that is not expressly made conditional on obtaining the affirmative vote or written consent of the majority of then-outstanding Series B Convertible Preferred Stock.

Holders of Series B Convertible Preferred Stock are entitled to receive when, as and if dividends are declared and paid on the common stock, an equivalent dividend, calculated on an as-converted basis.

Shares of Series B Convertible Preferred Stock are otherwise not entitled to dividends.

The Company classified the first tranche of the Series B Convertible Preferred Stock as temporary equity in the consolidated balance sheets as the Company could be required to redeem the Series B Convertible Preferred Stock if the Company cannot convert the Series B Convertible Preferred Stock into shares of common stock for any reason including due to any applicable laws or by the rules or regulations of any stock exchange, interdealer quotation system, or other self-regulatory organization with jurisdiction over the Company which is not solely in the control of the Company.

If the Company were required to redeem the Series B Convertible Preferred Stock, it would be based upon the volume-weighted-average price of common stock on an as converted basis on the date the holders provided a conversion notice to the Company.

As of December 31, 2023, the Company did not adjust the carrying value of the Series B Convertible Preferred Stock since it was not probable the holders would be unable to convert the Series B Convertible Preferred Stock into shares of common stock due to any reason including due to any applicable laws or by the rules or regulations of any stock exchange, interdealer quotation system, or other self-regulatory organization with jurisdiction over the Company.

The Company evaluated the Second Tranche Right under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and determined that it met the requirements for separate accounting from the initial issuance of Series B Convertible Preferred Stock as a freestanding financial instrument.

The Company then determined the Second Tranche Right should be liability classified pursuant to ASC 480.

As a result, the Company classified the Second Tranche Right as a non-current liability within the consolidated balance sheets and the Second Tranche Right was initially recorded at fair value and is subsequently re-measured at fair value at the end of each reporting period.

The fair value of the Second Tranche Right on the date of issuance was determined to be $6.9 million based on a Monte-Carlo valuation and the Company allocated $ 6.9 million of the Series B Convertible Preferred Stock Proceeds to this liability and recorded this amount as preferred stock tranche liability.

On December 31, 2023, the fair value of the Second Tranche Right was determined to be $ 4.2 million, and the Company recorded this amount as preferred stock tranche liability on the consolidated balance sheets.

The Company recorded the mark-to-market adjustment of $ 2.8 million for the year ended December 31, 2023, under change in fair value of preferred stock tranche liability within the consolidated statements of operations and loss.

The Company determined that all other features of the securities offered pursuant to the Series B Convertible Preferred Stock Securities Purchase Agreement were clearly and closely associated with the equity host and did not require bifurcation 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, 2023.

Series A Convertible Preferred Stock

On November 4, 2022, the Company e ntered into an exchange agreement (the “Exchange Agreement”) with Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS LP and MSI BVF SPV, LLC (collectively referred to as “BVF”), pursuant to which BVF exchanged 833,333 shares of the Company’s common stock (as adjusted to account for the Reverse Stock Split) for 1,000,000 shares of newly designated Series A convertible preferred stock, par value $ 0.0001 per share (the “Series A Convertible Preferred Stock”) (the “Exchange”).

Each share of the Series A Convertible Preferred Stock is convertible into 0.833 shares of the Company’s common stock (as adjusted to account for the Reverse Stock Split) at the option of the holder at any time, subject to certain limitations, including that the holder will be prohibited from converting Preferred Stock into common stock if, as a result of such conversion, the holder, together with its affiliates, would beneficially own a number of shares of

common stock above the Conversion Blocker, initially set at 9.99 % , of the total common stock then issued and outstanding immediately following the conversion of such shares of Preferred Stock.

Holders of the Series A Convertible Preferred Stock are permitted to increase the Conversion Blocker to an amount not to exceed 19.99 % upon 60 days ’ notice.

Shares of Series A Convertible Preferred Stock generally have no voting rights, except as required by law and except that the consent of a majority of the holders of the outstanding Series A Convertible Preferred Stock will be required to amend the terms of the Series A Convertible Preferred Stock.

In the event of the Company’s liquidation, dissolution or winding up, holders of Series A Convertible Preferred Stock will participate pari passu with any distribution of proceeds to holders of common stock.

Holders of Series A Convertible Preferred Stock are entitled to receive when, as and if dividends are declared and paid on the common stock, an equivalent dividend, calculated on an as-converted basis.

Shares of Series A Convertible Preferred Stock are otherwise not entitled to dividends.

The Series A Convertible Preferred Stock (i) senior to any class or series of capital stock of the Company hereafter created specifically ranking by its terms junior to the Series A Convertible Preferred Stock;

(ii) on parity with the common stock and any class or series of capital stock of the Company created specifically ranking by its terms on parity with the Series A Convertible Preferred Stock;

and (iii) junior to the Series B Convertible Preferred Stock and to any class or series of capital stock of the Company created specifically ranking by its terms senior to any Series A Convertible Preferred Stock, in each case, as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily.

The Company evaluated the Series A Preferred Stock for liability or equity classification under ASC 480, Distinguishing Liabilities from Equity , and determined that equity treatment was appropriate because the Series A Preferred Stock did not meet the definition of the liability under ASC 480.

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At-the-market equity offering programs

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 Fitzgerald & Co.

(“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).

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 (the “August 2021 ATM”).

During the year-ended December 31, 2022 and 2021, the Company sold 23,573,403 shares and 2,930,585 shares, respectively, under the August 2021 ATM for net proceeds of approximately $ 27.4 million and $ 6.8 million, respectively, (after deducting commissions and other offering expenses).

Private Investment in Public Equity (PIPE)

On February 27, 2020, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors in which the Company agreed to sell 46,511,628 shares of common stock at a purchase price of $ 2.15 per share, which represents 12.6 % premium to the last reported sale price of the Company’s common stock of $ 1.91 per share on February 27, 2020.

On March 3, 2020, the closing occurred.

The aggregate proceeds net of underwriting discounts and offering costs, were approximately $ 93.8 million.

During the years ended December 31, 2023, 2022, and 2021, the Company sold 0 shares, 1,964,448 shares and 244,209 shares, respectively, under the August 2021 ATM for net proceeds of approximately $ 0.0 million, $ 27.4 million and $ 6.8 million, respectively, (after deducting commissions and other offering expenses) .

Stock-based compensation

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

As of December 31, 2022 and 2021, there were 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.

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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.

The number of shares of common stock initially reserved for issuance under the 2021 Plan was (i) 1,991,666 which is the sum of 1,104,177 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 ( 887,489 shares) plus (ii) the number of shares of the Company’s common stock underlying awards under the 2012 Plan and the 2010 Equity Incentive Plan (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, 2023, under the 2021 Plan, the Company has granted stock options for 1,398,762 shares of common stock, of which 52,013 have been forfeited and 0 have been exercised, and granted RSUs for 269,349 shares of common stock, of which 18,594 have been forfeited and 80,367 have vested.

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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.

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

The 2012 Plan became effective immediately upon the closing of the Company’s initial public offering 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 285,714 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 2,508 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 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 107,412 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.

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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, 2022, under the 2012 Plan, the Company has granted stock options for 22,098,207 shares of common stock, of which 11,915,465 have been forfeited and 2,296,645 have been exercised, and granted RSUs for 6,678,621 shares of common stock, of which 1,049,068 have been forfeited and 5,302,060 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, 2023, under the 2012 Plan, the Company has granted stock options for 1,841,188 shares of common stock, of which 814,357 have been forfeited, 213,901 have expired, and 191,342 have been exercised, and granted RSUs for 556,432 shares of common stock, of which 87,458 have been forfeited and 455,878 have vested.

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

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

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In December 2017, the Board of Directors authorized and reserved 208,333 additional shares of common stock under this program.

In June and December 2018, the Board of Directors authorized and reserved 1,700,000 and 1,250,000 additional shares of common stock under this program, respectively.

In June and December 2018, the Board of Directors authorized and reserved 141,666 and 104,166 additional shares of common stock under this program,

respectively.

In February 2020, the Board of Directors authorized the reduction of 169,447 shares available for issuance under this program.

In September 2023, the Board of Directors authorized and reserved 500,000 additional shares of common stock under this program.

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, 2022, the Company had granted options for 7,875,009 shares of common stock under the program, of which 5,439,075 have been forfeited and 584,016 have been exercised, and granted RSUs for 873,063 shares, of which 243,294 have been forfeited and 160,280 have vested.

As of December 31, 2023, the Company had granted options for 825,562 shares of common stock under the program, of which 472,880 have been forfeited, 1,997 have expired and 48,663 have been exercised, and granted RSUs for 80,804 shares, of which 24,871 have been forfeited and 30,128 have vested.

As of December 31, 2023, 482,667 shares remain available for future issuance.

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Forfeited/cancelled

( 3,695,310 )

Outstanding at December 31, 2023

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The Company recorded stock-based compensation expense associated with employee and non-employee stock options of $ 4.2 million, $ 4.2 million, and $ 4.1 million, for the years ended December 31, 2023, 2022, and 2021, respectively.

The weighted-average grant date fair value of options granted in the years ended December 31, 2022, 2021, and 2020 was $ 0.69 , $ 1.82 , and $ 1.62 per share, respectively.

The fair value of options that vested during the years ended December 31, 2022, 2021, and 2020 was $ 4.4 million, $ 3.8 million, and $ 7.4 million, respectively.

The aggregate intrinsic value of options exercised (i.e., the difference between the market price at exercise and the price paid by employees to exercise the option) during the years ended December 31, 2022 and 2021 was less than $ 0.1 million and $ 0.8 million, respectively.

The weighted-average grant date fair value of stock options granted in the years ended December 31, 2023, 2022, and 2021 was $ 6.16 , $ 8.28 , and $ 21.84 per stock option, respectively.

The fair value of stock options that vested during the years ended December 31, 2023, 2022, and 2021 was $ 3.1 million, $ 4.4 million, and $ 3.8 million, respectively.

The aggregate intrinsic value of options exercised (i.e., the difference between the market price at exercise and the price paid by employees to exercise the option) during the years ended December 31, 2023, 2022, and 2021 was $ 0.0 million, less than $ 0.1 million, and $ 0.8 million, respectively.

At December 31, 2023 there was $ 9.2 million of total unrecognized compensation cost related to unvested stock options and the Company expects to recognize this cost over a remaining weighted-average period of 2.6 years.

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At December 31, 2023, there was $ 3.1 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 2.1 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 resulted in incremental stock compensation expense of $ 0.2 million that was recognized over the remaining requisite service period for each award.

The modification resulted in incremental stock compensation expense of $ 0.0 million, $ 0.1 million, and $ 0.1 million recognized in the years ended December 31, 2022, 2021 and 2020, respectively.

The Company modified all unvested equity awards held by 41 employees included in the August 2020 Restructuring discussed in Note 14.

Restructurings .

On September 30, 2020, the Company accelerated all unvested awards held by employees included in the August 2020 Restructuring to be fully vested on September 30, 2020.

As a result of the modification, the Company recognized incremental stock compensation cost of approximately $ 0.5 million during year ended December 31, 2020 within selling, general and administrative expense in the consolidated statements of operations and comprehensive loss.

Employee stock purchase plan

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Expected term (years)

The Company has recognized $ 0.1 million of stock-based compensation expense under the Amended and Restated 2018 ESPP, for each of the years ended December 31, 2022, 2021, and 2020.

For the years ended December 31, 2023, 2022, and 2021, the Company has recognized less than $ 0.1 million, $ 0.1 million, and $ 0.1 million, respectively, of stock-based compensation expense under the Amended and Restated 2018 ESPP.

During the year ended December 31, 2023, 2022, and 2021, the Company issued 14,270 shares, 10,194 shares and 9,172 shares, respectively, of common stock for proceeds of $ 0.1 million, $ 0.2 million and $ 0.2 million, respectively under the Amended and Restated 2018 ESPP.

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On October 17, 2018, the Company closed a registered direct public offering of $ 150.0 million aggregate principal amount of the Company’s 2018 Notes for net proceeds of approximately $ 145.3 million.

The 2018 Notes are governed by the terms of a base indenture for senior debt securities (the “2018 Base Indenture”), as supplemented by the first supplemental indenture thereto (the “Supplemental Indenture” and together with the “2018 Base Indenture”, the “2018 Indenture”), each dated October 17, 2018, by and between the Company and Wilmington Trust, National Association, (“Wilmington”) as trustee.

The 2018 Notes are senior unsecured obligations of the Company and bear interest at a rate of 5.00 % per annum, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2019.

The 2018 Notes were governed by the terms of a base indenture for senior debt securities (the “2018 Base Indenture”), as supplemented by the first supplemental indenture thereto (the “Supplemental Indenture” and together with the “2018 Base Indenture”, the “2018 Indenture”), each dated October 17, 2018, by and between the Company and Wilmington Trust, National Association, (“Wilmington”) as trustee.

The 2018 Notes were senior unsecured obligations of the Company and bore interest at a rate of 5.00 % per annum, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2019.

The 2018 Notes will mature on November 1, 2048, unless earlier repurchased, redeemed or converted in accordance with their terms.

The 2018 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 139.5771 shares of common stock per $ 1,000 principal amount of the 2018 Notes, which corresponds to an initial conversion price of approximately $ 7.16 per share of common stock and represents a conversion premium of approximately 15.0 % above the last reported sale price of the common stock of $ 6.23 per share on October 11, 2018.

Upon conversion, converting noteholders will be entitled to receive accrued interest on their converted 2018 Notes.

To the extent the Company has insufficient authorized but unissued shares to settle conversions in shares of common stock, the Company would be required to settle the deficiency in cash.

The Company will have the right, exercisable at its option, to cause all Notes then outstanding to be converted automatically if the “Daily VWAP” (as defined in the 2018 Indenture) per share of the Company’s common stock equals or exceeds 130 % of the conversion price on each of at least 20 VWAP Trading Days (as defined in the 2018 Indenture), whether or not consecutive, during any 30 consecutive VWAP Trading Day period commencing on or after the date the Company first issued the 2018 Notes.

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.

Prior to November 1, 2022, the Company will not have the right to redeem the 2018 Notes.

Prior to November 1, 2022, the Company did not have the right to redeem the 2018 Notes.

On or after November 1, 2022, the Company may elect to redeem the 2018 Notes, in whole or in part, at a cash redemption price equal to the principal amount of the 2018 Notes to be redeemed, plus accrued and unpaid interest, if any.

Unless the Company has previously called all outstanding 2018 Notes for redemption, the 2018 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 2018 Notes to be repurchased, plus accrued and unpaid interest, if any.

If a “Fundamental Change” (as defined in the 2018 Indenture) occurs at any time, subject to certain conditions, holders may require the Company to purchase all or any portion of their 2018 Notes at a purchase price equal to 100 % of the principal amount of the 2018 Notes to be purchased, plus accrued and unpaid interest.

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 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.

The Company assessed all terms and features of the 2018 Notes in order to identify any potential embedded features that would require bifurcation.

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

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.

There have been no changes to the Company’s original assessment through December 31, 2022.

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

In the fourth quarter of 2023, the Company repaid the remaining outstanding balance of 2018 Notes of $ 0.3 million in exchange for principal amount plus accrued and unpaid interest of a total of $ 0.3 million.

As a result there are no outstanding 2018 Notes as of December 31, 2023.

The components of the carrying value of the 2018 Notes as of December 31, 2022 are detailed below (in thousands):

December 31, 2022

2018 Notes principal balance

Debt discount and issuance costs, net of accretion

2018 Notes, net

On November 14, 2019 and December 23, 2019, the Company entered into privately negotiated agreements to exchange approximately $ 114.3 million and $ 7.4 million, respectively, aggregate principal amount of the 2018 Notes for (i) approximately $ 62.9 million and $ 4.0 million, respectively, aggregate principal amount of newly issued 5.00 % Convertible Senior Second Lien Notes due 2048 (the “2019 Notes”), (ii) an aggregate of $ 11.4 million and $ 0.7 million, respectively, in 2018 Notes principal repayment and (iii) accrued interest on the 2018 Notes through November 14, 2019 and December 23, 2019, respectively.

The 2019 Notes are governed by the terms of an indenture (the “2019 Indenture”).

The 2019 Notes are senior secured obligations of the Company and bear interest at 5.00 % per annum, payable semi-annually in arrears on May 1 and November 1 of each year.

The 2019 Notes will mature on November 1, 2048, unless earlier repurchased, redeemed or converted in accordance with the terms.

The Company determined 2019 Notes exchange met the definition of a troubled debt restructuring under ASC 470-60, Troubled Debt Restructurings by Debtors , as the Company was experiencing financial difficulties and the lenders granted a concession.

The future undiscounted cash flows of the 2019 Notes after the exchange exceeded the carrying value of the converted 2018 Notes prior to the exchange.

As such no gain was recognized as a result of the exchange.

The Company reduced the carrying value of the 2019 Notes by the cash given and the change in fair value of the conversion option driven by the reduction in conversion price.

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

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.

In addition, if the holders converted the 2019 Notes with a conversion date that is on or prior to November 1, 2020, 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 Company assessed all terms and features of the 2019 Notes in order to identify any potential embedded features that would require bifurcation.

As part of this analysis, the Company assessed the economic characteristics and risks of the 2019 Notes, including the conversion, put and call features.

In consideration of the 2019 Notes Interest Make-Whole Provision, the Company concluded the provision required bifurcation as a derivative.

value of the 2019 Interest Make-Whole Provision was determined using a Monte Carlo model.

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, $ 0.4 million of cash for 2019 Interest Make-Whole Provision payments, and accrued interest.

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

As of March 31, 2020, all 2019 Notes had converted into shares of common stock and are no longer outstanding.

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” and together with the 2018 Notes and 2019 Notes referred to as the “Notes”).

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

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 (the “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 .

The Company reduced the carrying value of the 2020 Notes by the change in fair value of the conversion option driven by the reduction in conversion price.

The change in fair value of the conversion option was determined to be $ 2.3 million.

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.

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 717,949 shares of common stock.

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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 .

The Company determined that the expected life of the Notes was equal to the period through November 1, 2023, as this represents the point at which the Notes were 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 options upon exchanges, was amortized using the effective interest method through November 1, 2023.

The effective interest utilized to amortize 2018 Notes and 2020 Notes was 15.65 % and 20.31 %, respectively.

For the year ended December 31, 2023, the Company recognized less than $ 0.1 million of interest expense related to the 2018 Notes.

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Basic EPS excludes dilution and is computed by dividing net loss by the weighted average number of shares outstanding for the period.

For the years ended December 31, 2022, 2021, and 2020 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 years ended December 31, 2023, 2022, and 2021 net loss, basic and diluted EPS are the same as the assumed exercise of stock options, RSUs, ESPP, the 2018 Notes, Series A Convertible Preferred Stock, and Series B Convertible Preferred Stock are anti-dilutive.

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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Employee stock purchase plan

Series A Preferred Stock

Series A Convertible Preferred Stock

Series B Convertible Preferred Stock

Total potentially dilutive securities

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The NOL and tax credit carryforwards will expire at various dates through 2043, except for $ 277.9 million of federal NOL carryforwards which may be carried forward indefinitely.

During the year ended December 31, 2020, the Company recorded income tax expense of $ 0.2 million, which primarily related to state income tax as a result of the sale of COPIKTRA license and related assets to Secura.

Refer to Note 13.

License, collaboration and commercial agreements for further discussion of the sale to Secura.

For the years ended December 31, 2022, 2021, and 2020 income tax expense consisted of the following (in thousands):

Year ended December 31,

Current tax expense:

Current income tax expense

Deferred income tax expense

Total income tax expense

A reconciliation of income taxes computed using the U.S.

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Change in the valuation allowance

Tax law change

NOL and tax credit expiration under Section 382

On October 4, 2023, Massachusetts enacted tax law changes which included the adoption of a single sales apportionment factor effective on January 1, 2025.

As required under ASC 740, the Company has accounted for the deferred tax impacts of this tax law change in the period the tax law was enacted, which has the impact of reducing its state deferred tax assets.

The impact of the tax law change is offset by a change in valuation allowance.

The principal components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

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The Tax Cuts and Jobs Act (“TCJA”) requires taxpayers to capitalize and amortize research and development (“R&D”) expenditures under section 174 for tax years beginning after December 31, 2021.

This rule became effective for the Company during 2022 and resulted in capitalized R&D costs of $ 44.5 million as of December 31, 2022.

This rule became effective for the Company during 2022.

The Company will amortize these costs for tax purposes over 5 years for R&D performed in the U.S.

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The Company would recognize both accrued interest and penalties related to unrecognized benefits in income tax expense.

The Company’s uncertain tax positions are related to years that remain

subject to examination by relevant tax authorities.

The Company’s uncertain tax positions are related to years that remain subject to examination by relevant tax authorities.

Since the Company is in a loss carryforward position, the Company is generally subject to examination by the U.S.

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Commitments and contingencies

The Company has entered into a lease agreement for approximately 27,810 square feet of office space in Needham, Massachusetts.

The Company entered into a lease agreement for approximately 27,810 square feet of office space in Needham, Massachusetts.

Please refer to Note 6.

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License, collaboration and commercial agreements

GenFleet Therapeutics (Shanghai), Inc.

On August 24, 2023, the Company entered into a collaboration and option agreement (“GenFleet Agreement”) with GenFleet Therapeutics (Shanghai), Inc.

(“GenFleet”), pursuant to which GenFleet granted the Company the option to obtain exclusive development and commercialization rights worldwide outside of mainland China, Hong Kong, Macau, and Taiwan (the “Territory”) for up to three oncology programs targeting RAS pathway driven cancers (the “GenFleet Options”).

The Company may exercise its GenFleet Options on a program-by-program basis.

The Company made an upfront payment of $ 2.0 million to GenFleet in September 2023 and will provide $ 1.5 million of research support (“GenFleet R&D Support Fee”) over the first three years of the GenFleet Agreement.

In addition, pursuant to the GenFleet Agreement, upon achievement of certain development and commercial milestones, and upon the Company exercising its GenFleet Options, GenFleet will be entitled to receive payments of up to $ 622.0 million.

The Company has also agreed to pay GenFleet royalties on net sales of licensed products in the Territory ranging from the mid to high single digits.

The Company may terminate the GenFleet Agreement in its entirety or on a program-by-program basis by providing 90 days written notice to GenFleet.

Either party may terminate the GenFleet Agreement in its entirety or on a program-by-program and country-by-country basis, with 60 days ’ written notice for the other party’s material breach if such party fails to cure the breach.

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

During the year ended December 31, 2023, the Company expensed $ 2.0 million related to the upfront payment and $ 0.2 million related to the GenFleet R&D Support Fee within research and development expense in the consolidated statements of operations and comprehensive loss.

The future milestone payments are contingent in nature and will be recognized if and when the respective contingencies are resolved.

If the Company elects to exercise its GenFleet Options, the related payment will be recognized if and when each respective GenFleet Option is elected.

Secura Bio, Inc.

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Additionally, Secura assumed all royalty payment obligations due under the amended and restated license agreement with Infinity Pharmaceuticals, Inc.

(“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.

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”).

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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.

The Company determined $ 0.1 million of future potential royalties the Company expects to receive pursuant to the Secura APA were not constrained as of December 31, 2022.

The Company determined less than $ 0.1 million of future potential royalties the Company expects to receive pursuant to the Secura APA were not constrained as of December 31, 2023.

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.

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

As of December 31, 2022, the $ 0.1 million contract asset has been recorded within prepaid and other current assets on the consolidated balance sheet.

As of December 31, 2023, and 2022, the contract asset has been recorded within prepaid and other current assets on the consolidated balance sheets.

The following table presents changes in the Company’s contract asset for the year ended December 31, 2023 (in thousands):

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Contract asset - Secura

During the year ended December 31, 2022, one regulatory milestone was achieved by Secura’s sublicensee, CSPC, of which 50 % of the milestone or $ 2.5 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, 2022.

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.

During the year ended December 31, 2023, the Company determined all future potential milestones were excluded from the transaction price, as all other milestone amounts were fully constrained under the guidance as of December 31, 2023.

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.

Those factors included:

the likelihood and magnitude of revenue reversals related to future milestones, the amount of variable consideration that 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.

All 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, 2022, the Company recognized $ 2.6 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, 2022 related to one regulatory milestone for $ 2.5 million achieved by Secura’s sublicensee, CSPC, and $ 0.1 million related to royalties on COPIKTRA sales in the year ended December 31, 2022, and future royalties expected to be received pursuant to the Secura APA that were not constrained.

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.

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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 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)

On January 7, 2020, the Company entered into a license agreement with Chugai (the “Chugai Agreement”) whereby Chugai granted the Company an exclusive worldwide license for the development, commercialization and manufacture of products containing avutometinib, a dual RAF/MEK inhibitor.

Under the terms of the Chugai Agreement, the Company received an exclusive right to develop and commercialize products containing avutometinib at the Company’s own cost and expense.

The Company is required to pay Chugai a non-refundable payment of $ 3.0 million which was paid in February 2020.

The Company is further obligated to pay Chugai double-digit royalties on net sales of products containing avutometinib, subject to reduction in certain circumstances.

Chugai also obtained opt back rights to develop and commercialize avutometinib (a) in the European Union, which option may be exercised through the date the Company submits a NDA to the FDA for a product which contains avutometinib as the sole active pharmaceutical ingredient and (b) in Japan and Taiwan, which option may be exercised through the date the Company receives marketing authorization from the FDA for a product which contains avutometinib as the sole active pharmaceutical ingredient.

As consideration for executing either option, Chugai would have to make a payment to the Company calculated on the Company’s development costs to date.

Chugai has communicated their intention not to exercise their opt back rights for Japan, Taiwan, or the European Union.

Chugai and the Company have made customary representations and warranties and have agreed to certain customary covenants, including confidentiality and indemnification.

Unless earlier terminated, the Chugai Agreement will expire upon the fulfillment of the Company’s royalty obligations to Chugai for the sale of any products containing avutometinib, 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 or (b) 12 years from the first commercial sale of such product in such country.

The Company may terminate the Chugai Agreement upon 180 days ’ written notice.

Subject to certain limitations, Chugai may terminate the Chugai Agreement upon written notice if the Company challenges any patent licensed by Chugai to the Company under the Chugai Agreement.

Either party may terminate the license agreement in its entirety with 120 days ’ written notice for the other party’s material breach if such party fails to cure the breach.

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.

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.

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.

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 and Purdue Pharmaceutical Products L.P.

During the year ended December 31, 2022, 2021, and 2020, the Company recorded royalty expense of $ 0.0 million, $ 0.0 million, and $ 1.3 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.

(“Secura”) as of September 30, 2020, Secura has assumed from the Company all responsibilities and obligations under the Infinity License Agreement.

All royalties due pursuant to the Infinity License Agreement are the sole responsibility of Secura.

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.

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

The Company is also entitled to receive aggregate payments of up to $ 42.0 million if certain regulatory and commercial milestones are successfully achieved.

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.

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.

For the year ended December 31, 2020, the Company recognized $ 2.5 million of license revenue upon achievement of two development milestones which were paid in the year ended December 31, 2020.

As discussed above under heading Secura Bio, Inc.

(“Secura”) as of September 30, 2020, Secura has assumed from the Company all responsibilities and obligations under the Sanofi Agreement.

After September 30, 2020, the Company is entitled to 50 % of future milestone payments and royalties pursuant to the Secura APA

discussed under heading Secura Bio, Inc.

(“Secura”) above.

Future milestone and royalty payments pursuant to the Sanofi Agreement will be paid by Sanofi to Secura.

The Company’s portion of such milestone and royalty payments will be subsequently remitted to the Company by Secura.

Yakult Honsha Co., Ltd.

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.

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.

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.

As discussed above under heading Secura Bio, Inc.

(“Secura”) as of September 30, 2020, Secura has assumed from the Company all responsibilities and obligations under the Yakult Agreement.

After September 30, 2020, the Company is entitled to 50 % of future milestone payments and royalties pursuant to the Secura APA discussed under heading Secura Bio, Inc.

(“Secura”) above.

Payments pursuant to the Yakult Agreement will be paid by Yakult to Secura.

The Company’s portion of such milestone and royalty payments will be subsequently remitted to the Company by Secura.

CSPC Pharmaceutical Group Limited (CSPC)

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.

The Company is also entitled to receive aggregate payments of up to $ 160.0 million if certain development, regulatory and commercial milestones are successfully achieved.

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.

As discussed above under heading Secura Bio, Inc.

(“Secura”) as of September 30, 2020 Secura has assumed from the Company all responsibilities and obligations under the CSPC Agreement.

After September 30, 2020, the Company is entitled to 50 % of future milestone payments and royalties pursuant to the Secura APA discussed under heading Secura Bio, Inc.

(“Secura”) above.

Payments pursuant to the CSPC Agreement will be paid by CSPC to Secura.

The Company’s portion of such milestone and royalty payments will be subsequently remitted to the Company by Secura.

Restructurings

On February 27, 2020, following further analysis of the Company’s strategy, the Company committed to an operational plan to reduce overall operating expenses, including the elimination of approximately 31 positions across the Company and other cost-saving measures (the “February 2020 Restructuring”).

The February 2020 Restructuring is designed to streamline operations, speed execution of the Company’s clinical development of avutometinib and defactinib, and reflect a focused, account-based approach in the field.

In August 2020, in connection with the duvelisib sale to Secura pursuant to the Secura APA, the Company committed to a strategic restructuring (the “August 2020 Restructuring”).

The restructuring included a workforce reduction of approximately 41 positions primarily in the Company’s commercial operations department.

During the year-ended December 31, 2020, the Company recorded an aggregate expense of $ 4.6 million for the February 2020 Restructuring and August 2020 Restructuring for one-time termination benefits for employee severance, benefits, and related costs.

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 years ended December 31, 2022 and 2021.

Notes Payable

In February 2023, the Company entered into a finance agreement with AFCO Premium Credit LLC (“AFCO”).

Pursuant to the terms of the agreement, AFCO loaned the Company the principal amount of $ 1.4 million, which accrues interest at 7.4 % per annum, to fund a portion of the Company’s insurance policies.

The Company is required to make monthly payments of $ 0.1 million through October 2023 including principal and interest.

The agreement assigns AFCO a security interest in (i) all unearned premiums and dividends which may become payable under the insurance policies financed pursuant to this agreement, (ii) loss payments which reduce the unearned premiums, and (iii) the Company’s interest in any state insurance guarantee fund related to any of the insurance policies financed pursuant to this agreement.

The outstanding balance at December 31, 2023 was $ 0.0 million.

Employee benefit plan

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The 401(k) Plan allows employees to make pre-tax or post-tax contributions up to the maximum allowable amount set by the Internal Revenue Service.

Under the 401(k) Plan, the Company may make discretionary contributions as approved by the board of directors.

The Company made contributions to the 401(k) Plan of approximately $ 0.8 million, $ 0.8 million, and $ 0.9 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Under the 401(k) Plan, the Company may make discretionary

contributions as approved by the board of directors.

The Company made contributions to the 401(k) Plan of approximately $ 0.8 million in each of the years ended December 31, 2023, 2022, and 2021.

Subsequent events

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

Securities Purchase Agreement

On January 24, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with BVF, pursuant to which the Company agreed to sell and issue to BVF in a private placement (the “Private Placement”) up to 2,144,160 shares of its Series B convertible preferred stock, par value $ 0.0001 per share (the “Series B Preferred Stock”), in two tranches.

The Series B Preferred Shares will be convertible into the Company’s common stock at the option of the holders at any time, subject to certain limitations, at a conversion rate equal to $ 0.5901 per share.

The Company agreed to sell and issue in the first tranche of the Private Placement 1,200,000 shares of Preferred Stock at a purchase price of $ 25.00 per share of Preferred Stock (equivalent to $ 0.5901 per share of common stock).

The first tranche of the Private Placement closed on January 27, 2023 and the Company received gross proceeds from the first tranche of the Private Placement of approximately $ 30.0 million, before deducting fees to the placement agent and other offering expenses.

In addition, the Company agreed to sell and issue in the second tranche of the Private Placement 944,160 shares of Series B Preferred Stock at a purchase price of $ 31.77 per share of Preferred Stock (equivalent to $ 0.75 per share of common stock) if at any time within 18 months following the closing of the first tranche the 10 -day volume weighted average price of the Company’s Common Stock (as quoted on Nasdaq and as calculated by Bloomberg) should reach at least $ 1.125 per share (adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction as needed) with aggregate trading volume during the same 10 -

day period of at least $ 25 million within 18 months from the closing date of the initial tranche.

The second tranche of the Private Placement is expected to close within seven trading days of meeting the second tranche conditions and will be subject to additional, customary closing conditions.

If the second tranche conditions are satisfied, the Company anticipates receiving gross proceeds from the second tranche of the Private Placement of approximately $ 30.0 million, before deducting fees to the placement agent and other offering expenses payable by the Company.

Silicon Valley Bank

On March 10, 2023, Silicon Valley Bank (“SVB”), based in Santa Clara, California, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver.

On March 12, 2023, the Department of the Treasury, the Federal Reserve, and the FDIC announced that all depositors of SVB will be fully protected and have access to all their money starting March 13, 2023.

As of March 13, 2023, the Company’s deposit balance at SVB was approximately $ 2 million.

The Company is continually monitoring developments related to the recovery of its uninsured funds at SVB.

Oxford Loan Agreement

On January 4, 2024, the Company amended its Loan Agreement to extend the outside date for the period during which the Company may draw the Term C Loan from March 31, 2024, to March 31, 2025.

Refer to Note 5.

Long-term debt for additional details on the Loan Agreement.

Option Exchange

On January 17, 2024, the Company’s stockholders, upon recommendation of the board of directors, approved a one-time stock option exchange program (the “Option Exchange Program”) for certain employees, executive officers and non-employee directors of the Company who held certain underwater options and remained employed or otherwise engaged by the Company through the completion of the Exchange Offer.

The Company’s offer to participate in the Option Exchange Program commenced on February 8, 2024, and expired on March 8, 2024 (the “Exchange Offer”).

Pursuant to the Exchange Offer, 42 eligible holders elected to exchange, and the Company accepted for cancellation, eligible options to purchase an aggregate of 603,330 shares of the Company’s common stock.

On March 11, 2024, promptly following the expiration of the Exchange Offer, the Company granted new options to purchase 603,330 shares of common stock, pursuant to the terms of the Exchange Offer and the 2021 Plan.

The exercise price of the new options granted pursuant to the Option Exchange Offer was $ 11.44 per share, which was the closing price of the common stock on the Nasdaq Capital Market on the grant date of the new options.

The stock option exchange is considered a modification of those options exchanged.

The incremental compensation expense will be measured as the excess, if any, of the fair value of each new option granted measured as of the date the new options are granted, over the fair value of the eligible options surrendered, measured immediately prior to the grant of the new options.

This incremental compensation expense will be recognized ratably over the remaining requisite service period of the new options subject to continued employment or service with the Company.

Unrecognized compensation cost associated with stock options surrendered will be recognized in future periods subject to continued employment or service with the Company.

The Company is continuing to evaluate the incremental compensation cost associated with the Option Exchange Program.

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