10-Q 1 kpti-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission file number: 001-36167

Karyopharm Therapeutics Inc.

(Exact name of registrant as specified in its charter)

Delaware

 

26-3931704

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

 

85 Wells Avenue, 2nd Floor

Newton, MA

 

02459

(Address of principal executive offices)

 

(Zip Code)

 

(617) 658-0600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $0.0001 par value

 

KPTI

 

Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of May 3, 2024, there were 117,710,263 shares of Common Stock, $0.0001 par value per share, outstanding.

 

 


TABLE OF CONTENTS

 

 

 

PART I - FINANCIAL INFORMATION

 

2

 

 

 

 

 

Item 1.

 

Condensed Consolidated Financial Statements (Unaudited)

 

2

 

 

Condensed Consolidated Balance Sheets

 

2

 

 

Condensed Consolidated Statements of Operations

 

3

 

 

Condensed Consolidated Statements of Comprehensive Loss

 

4

 

 

Condensed Consolidated Statements of Cash Flows

 

5

 

 

Condensed Consolidated Statements of Stockholders’ Deficit

 

6

 

 

Notes to Condensed Consolidated Financial Statements

 

7

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

18

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

25

Item 4.

 

Controls and Procedures

 

25

 

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

26

 

 

 

 

Item 1A.

 

Risk Factors

 

26

Item 5.

 

Other Information

 

72

Item 6.

 

Exhibits

 

73

 

 

Signatures

 

74

 

1


PART I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited).

KARYOPHARM THERAPEUTICS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except per share amounts)

 

 

 

March 31,
2024

 

 

December 31,
2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

30,628

 

 

$

52,231

 

Investments

 

 

117,950

 

 

 

139,212

 

Accounts receivable, net

 

 

31,082

 

 

 

26,962

 

Inventory

 

 

2,769

 

 

 

3,043

 

Prepaid expenses and other current assets

 

 

15,478

 

 

 

11,813

 

Restricted cash

 

 

459

 

 

 

660

 

Total current assets

 

 

198,366

 

 

 

233,921

 

Property and equipment, net

 

 

719

 

 

 

606

 

Operating lease right-of-use assets

 

 

3,735

 

 

 

4,276

 

Restricted cash

 

 

304

 

 

 

301

 

Other assets

 

 

1,334

 

 

 

1,334

 

Total assets

 

$

204,458

 

 

$

240,438

 

Liabilities and stockholders’ deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

5,028

 

 

$

3,123

 

Accrued expenses

 

 

54,851

 

 

 

61,394

 

Operating lease liabilities

 

 

3,425

 

 

 

3,308

 

Other current liabilities

 

 

2,037

 

 

 

1,654

 

Total current liabilities

 

 

65,341

 

 

 

69,479

 

Convertible senior notes

 

 

171,127

 

 

 

170,919

 

Deferred royalty obligation

 

 

132,479

 

 

 

132,479

 

Operating lease liabilities, net of current portion

 

 

1,884

 

 

 

2,789

 

Other liabilities

 

 

2,582

 

 

 

978

 

Total liabilities

 

 

373,413

 

 

 

376,644

 

Stockholders’ deficit:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 5,000 shares authorized; none issued and outstanding

 

 

 

 

 

 

Common stock, $0.0001 par value; 400,000 shares authorized; 116,457 and 114,915 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

 

12

 

 

 

12

 

Additional paid-in capital

 

 

1,355,951

 

 

 

1,350,981

 

Accumulated other comprehensive loss

 

 

(518

)

 

 

(161

)

Accumulated deficit

 

 

(1,524,400

)

 

 

(1,487,038

)

Total stockholders’ deficit

 

 

(168,955

)

 

 

(136,206

)

Total liabilities and stockholders’ deficit

 

$

204,458

 

 

$

240,438

 

 

See accompanying notes to condensed consolidated financial statements.

2


KARYOPHARM THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)

 

 

 

For the Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Revenues:

 

 

 

 

 

 

Product revenue, net

 

$

26,006

 

 

$

28,288

 

License and other revenue

 

 

7,120

 

 

 

10,410

 

Total revenue

 

 

33,126

 

 

 

38,698

 

Operating expenses:

 

 

 

 

 

 

Cost of sales

 

 

1,911

 

 

 

1,351

 

Research and development

 

 

35,425

 

 

 

32,339

 

Selling, general and administrative

 

 

29,549

 

 

 

35,907

 

Total operating expenses

 

 

66,885

 

 

 

69,597

 

Loss from operations

 

 

(33,759

)

 

 

(30,899

)

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

2,156

 

 

 

2,849

 

Interest expense

 

 

(5,884

)

 

 

(5,758

)

Other income (expense), net

 

 

196

 

 

 

(264

)

Total other expense, net

 

 

(3,532

)

 

 

(3,173

)

Loss before income taxes

 

 

(37,291

)

 

 

(34,072

)

Income tax provision

 

 

(71

)

 

 

(54

)

Net loss

 

$

(37,362

)

 

$

(34,126

)

Net loss per share—basic and diluted

 

$

(0.32

)

 

$

(0.30

)

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

 

 

115,454

 

 

 

113,481

 

 

See accompanying notes to condensed consolidated financial statements.

3


KARYOPHARM THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

(in thousands)

 

 

For the Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Net loss

 

$

(37,362

)

 

$

(34,126

)

Other comprehensive (loss) income

 

 

 

 

 

 

Unrealized (loss) gain on investments

 

 

(39

)

 

 

33

 

Foreign currency translation adjustment

 

 

(318

)

 

 

186

 

Comprehensive loss

 

$

(37,719

)

 

$

(33,907

)

 

See accompanying notes to condensed consolidated financial statements.

4


KARYOPHARM THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

 

 

 

For the Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(37,362

)

 

$

(34,126

)

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

4,970

 

 

 

5,389

 

Depreciation and amortization

 

 

85

 

 

 

290

 

Amortization of debt issuance costs

 

 

208

 

 

 

201

 

Net amortization of premiums and discounts on investments

 

 

(911

)

 

 

(1,126

)

Other

 

 

 

 

 

4

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(4,120

)

 

 

11,886

 

Inventory

 

 

274

 

 

 

397

 

Prepaid expenses and other assets

 

 

(3,665

)

 

 

1,537

 

Operating lease right-of-use assets

 

 

541

 

 

 

462

 

Accounts payable

 

 

1,905

 

 

 

6,272

 

Accrued expenses and other liabilities

 

 

(4,862

)

 

 

(9,414

)

Operating lease liabilities

 

 

(788

)

 

 

(682

)

Net cash used in operating activities

 

 

(43,725

)

 

 

(18,910

)

Investing activities

 

 

 

 

 

 

Proceeds from maturities of investments

 

 

53,743

 

 

 

27,944

 

Purchases of investments

 

 

(31,608

)

 

 

(60,332

)

Purchases of property and equipment

 

 

(195

)

 

 

 

Net cash provided by (used in) investing activities

 

 

21,940

 

 

 

(32,388

)

Effect of exchange rate on cash, cash equivalents and restricted cash

 

 

(16

)

 

 

(45

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(21,801

)

 

 

(51,343

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

53,192

 

 

 

136,885

 

Cash, cash equivalents and restricted cash at end of period

 

$

31,391

 

 

$

85,542

 

Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets

 

 

 

 

 

 

Cash and cash equivalents

 

$

30,628

 

 

$

84,062

 

Short-term restricted cash

 

 

459

 

 

 

846

 

Long-term restricted cash

 

 

304

 

 

 

634

 

Total cash, cash equivalents and restricted cash

 

$

31,391

 

 

$

85,542

 

Supplemental disclosures:

 

 

 

 

 

 

Cash paid for amounts included in the measurement of operating lease liabilities

 

$

948

 

 

$

923

 

Cash paid for interest on deferred royalty obligation

 

$

4,103

 

 

$

4,076

 

 

See accompanying notes to condensed consolidated financial statements.

5


KARYOPHARM THERAPEUTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(unaudited)

(in thousands)

 

 

 

Common Shares

 

 

Additional
Paid-In
Capital

 

 

Accumulated
Other
Comprehensive (Loss)
Income

 

 

Accumulated
Deficit

 

 

Total
Stockholders’
Deficit

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2023

 

 

114,915

 

 

$

12

 

 

$

1,350,981

 

 

$

(161

)

 

$

(1,487,038

)

 

$

(136,206

)

Vesting of restricted stock

 

 

1,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,970

 

 

 

 

 

 

 

 

 

4,970

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

(39

)

 

 

 

 

 

(39

)

Foreign currency cumulative translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(318

)

 

 

 

 

 

(318

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(37,362

)

 

 

(37,362

)

Balance at March 31, 2024

 

 

116,457

 

 

$

12

 

 

$

1,355,951

 

 

$

(518

)

 

$

(1,524,400

)

 

$

(168,955

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

 

 

113,213

 

 

$

12

 

 

$

1,327,909

 

 

$

(638

)

 

$

(1,343,939

)

 

$

(16,656

)

Vesting of restricted stock

 

 

758

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,389

 

 

 

 

 

 

 

 

 

5,389

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

33

 

 

 

 

 

 

33

 

Foreign currency cumulative translation adjustment

 

 

 

 

 

 

 

 

 

 

 

186

 

 

 

 

 

 

186

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34,126

)

 

 

(34,126

)

Balance at March 31, 2023

 

 

113,971

 

 

$

12

 

 

$

1,333,298

 

 

$

(419

)

 

$

(1,378,065

)

 

$

(45,174

)

 

See accompanying notes to condensed consolidated financial statements.

6


KARYOPHARM THERAPEUTICS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Basis of Presentation

Nature of Business

Karyopharm Therapeutics Inc., a Delaware corporation (collectively with its subsidiaries, the “Company,” “we,” “us,” or “our”), is a commercial-stage pharmaceutical company pioneering novel cancer therapies and dedicated to the discovery, development and commercialization of first-in-class drugs directed against nuclear export for the treatment of cancer and other diseases. We were incorporated in Delaware on December 22, 2008 and have a principal place of business in Newton, Massachusetts.

Our scientific expertise is based upon an understanding of the regulation of intracellular communication between the nucleus and the cytoplasm. We have discovered and are developing and commercializing novel, small molecule Selective Inhibitor of Nuclear Export compounds that inhibit the nuclear export protein exportin 1. Our primary focus is on marketing XPOVIO® (selinexor) in its currently approved indications, as well as developing and seeking regulatory approval of selinexor as an oral agent targeting multiple high unmet cancer indications, including our core programs in endometrial cancer, multiple myeloma, and myelofibrosis.

Our lead asset, XPOVIO, received its initial U.S. approval from the U.S. Food and Drug Administration (the “FDA”) in July 2019 and is currently approved and marketed for the following indications: (i) in combination with bortezomib and dexamethasone for the treatment of adult patients with multiple myeloma who have received at least one prior therapy; (ii) in combination with dexamethasone for the treatment of adult patients with relapsed or refractory multiple myeloma who have received at least four prior therapies and whose disease is refractory to at least two proteasome inhibitors, at least two immunomodulatory agents, and an anti-CD38 monoclonal antibody; and (iii) for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (“DLBCL”), not otherwise specified, including DLBCL arising from follicular lymphoma, after at least two lines of systemic therapy. The commercialization of XPOVIO and NEXPOVIO (the brand name for selinexor in Europe and the United Kingdom) outside of the U.S. is managed by our partners in their respective territories. XPOVIO/NEXPOVIO has received regulatory approval in various indications in over 40 countries outside the U.S. and is commercially available in a growing number of countries as our partners continue to secure reimbursement approvals.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. When preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2024. For further information, refer to the financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission on February 29, 2024 (“Annual Report”).

Basis of Consolidation

The condensed consolidated financial statements at March 31, 2024 include the accounts of Karyopharm Therapeutics Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The significant accounting policies used in preparation of these condensed consolidated financial statements in this Form 10-Q are consistent with those discussed in Note 2, “Summary of Significant Accounting Policies,” in our Annual Report.

7


2. Product Revenue

To date, our only source of product revenue has been from the U.S. sales of XPOVIO. Net product revenue, including provisions primarily consisting of distribution fees and cash discounts, as well as reserves for chargebacks, rebates and returns, were as follows (in thousands):

 

 

 

For the Three Months
Ended March 31,

 

 

 

2024

 

 

2023

 

Gross product revenue

 

$

36,763

 

 

$

37,065

 

Provisions for product revenue

 

 

(10,757

)

 

 

(8,777

)

Total product revenue, net

 

$

26,006

 

 

$

28,288

 

 

As of March 31, 2024 and December 31, 2023, net product revenue of $23.1 million and $17.8 million, respectively, were included in accounts receivable. To date, we have had no bad debt write-offs and we do not currently have credit issues with any customers. There were no credit losses associated with accounts receivable as of March 31, 2024 and December 31, 2023.

3. Inventory

The following table presents our inventory (in thousands), all of which was related to XPOVIO:

 

 

 

As of March 31, 2024

 

 

As of December 31, 2023

 

Raw materials

 

$

553

 

 

$

553

 

Work in process

 

 

1,589

 

 

 

1,732

 

Finished goods

 

 

627

 

 

 

758

 

Total inventory

 

$

2,769

 

 

$

3,043

 

 

XPOVIO was initially approved by the FDA in July 2019 at which time we began to capitalize costs to manufacture XPOVIO.

4. License Agreements

In prior periods, we entered into license agreements with Berlin-Chemie AG, an affiliate of the Menarini Group (“Menarini”) and Antengene Therapeutics Limited (“Antengene”), both of which are accounted for within the scope of Accounting Standards Codification 606, Revenue from Contracts with Customers. For further details on the terms and accounting treatment considerations for these contracts, please refer to Note 5, “License and Asset Purchase Agreements,” to our consolidated financial statements contained in Item 8 of our Annual Report.

The following table presents information about our license and other revenue (in thousands):

 

 

For the Three Months
Ended March 31,

 

 

 

2024

 

 

2023

 

Menarini

 

$

6,406

 

 

$

8,737

 

Antengene

 

 

511

 

 

 

1,112

 

Other

 

 

203

 

 

 

561

 

Total license and other revenue

 

$

7,120

 

 

$

10,410

 

 

During the three months ended March 31, 2024, we recognized $5.8 million of revenue for the reimbursement of development-related expenses from Menarini.

During the three months ended March 31, 2023, we recognized $4.8 million of revenue for the reimbursement of development-related expenses and $3.5 million of license-related revenue from Menarini.

At March 31, 2024, license and other revenue of $8.0 million and $1.0 million were included in accounts receivable and other current assets, respectively. At December 31, 2023, license and other revenue of $9.1 million and $1.0 million were included in accounts receivable and other current assets, respectively.

8


5. Fair Value Measurements

Financial instruments, including cash, cash equivalents, accounts receivable, net, other current assets, other assets, restricted cash, accounts payable, and accrued expenses, are presented at amounts that approximate fair value at March 31, 2024 and December 31, 2023.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value and is not a measure of credit quality. The hierarchy defines three levels of valuation inputs:

Level 1 - Quoted prices in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 - Unobservable inputs that reflect the assumptions market participants would use in pricing the asset or liability

Items classified as Level 2 consist of corporate debt securities, commercial paper and U.S. government and agency securities. We estimate the fair value of these marketable securities by taking into consideration valuations obtained from third-party pricing sources. These pricing sources utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include market pricing based on real-time trade data for the same or similar securities, issuer credit spreads, benchmark yields, and other observable inputs. We validate the prices provided by our third-party pricing sources by understanding the models used, obtaining market values from other pricing sources and analyzing pricing data in certain instances.

In certain cases where there is limited activity or less transparency around inputs to valuation, the related assets or liabilities are classified as Level 3. The embedded derivative liability associated with a Revenue Interest Financing Agreement (the “Revenue Interest Agreement”) we entered into with HealthCare Royalty Partners III, L.P. and HealthCare Royalty Partners IV, L.P. (“HCRx”) in September 2019 and as amended in June 2021 and August 2023 (as amended, the “Amended Revenue Interest Agreement”), as discussed further in Note 10, “Long-Term Obligations”, is measured at fair value and is included as a component of the deferred royalty obligation on our condensed consolidated balance sheets. The embedded derivative liability is subject to remeasurement at the end of each reporting period, with changes in fair value recognized as a component of other income (expense), net on the condensed consolidated statements of operations. The valuation method incorporates certain unobservable Level 3 key inputs including: (i) the probability-weighted net sales of XPOVIO and any of our other future products, including worldwide net product sales, upfront payments, milestones and royalties; (ii) our risk-adjusted discount rate; and (iii) the probability of a change in control occurring during the term of the instrument.

The following tables present information about our financial assets and liability that have been measured at fair value and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):

 

Description

 

As of March 31, 2024

 

 

Quoted
Prices
in Active
Markets for Identical Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

8,535

 

 

$

8,535

 

 

$

 

 

$

 

Commercial paper

 

 

1,490

 

 

 

 

 

 

1,490

 

 

 

 

U.S. government and agency securities

 

 

4,045

 

 

 

 

 

 

4,045

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

89,356

 

 

 

 

 

 

89,356

 

 

 

 

Commercial paper

 

 

13,626

 

 

 

 

 

 

13,626

 

 

 

 

U.S. government and agency securities

 

 

14,968

 

 

 

 

 

 

14,968

 

 

 

 

 

$

132,020

 

 

$

8,535

 

 

$

123,485

 

 

$

 

Financial liability

 

 

 

 

 

 

 

 

 

 

 

 

Embedded derivative liability

 

$

2,800

 

 

$

 

 

$

 

 

$

2,800

 

 

9


 

Description

 

As of December 31, 2023

 

 

Quoted
Prices
in Active
Markets for Identical Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

27,963

 

 

$

27,963

 

 

$

 

 

$

 

U.S. government and agency securities

 

 

1,998

 

 

 

 

 

 

1,998

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

77,961

 

 

 

 

 

 

77,961

 

 

 

 

Commercial paper

 

 

13,744

 

 

 

 

 

 

13,744

 

 

 

 

U.S. government and agency securities

 

 

47,507

 

 

 

 

 

 

47,507

 

 

 

 

 

$

169,173

 

 

$

27,963

 

 

$

141,210

 

 

$

 

Financial liability

 

 

 

 

 

 

 

 

 

 

 

 

Embedded derivative liability

 

$

2,800

 

 

$

 

 

$

 

 

$

2,800

 

 

6. Investments

The following tables summarize our investments, which are classified as available-for-sale and recorded at fair value (in thousands):

 

 

 

As of March 31, 2024

 

 

 

Amortized
Cost

 

 

Total
Unrealized
Gains

 

 

Total
Unrealized
Loss

 

 

Aggregate Fair Value

 

Corporate debt securities

 

$

89,444

 

 

$

27

 

 

$

(115

)

 

$

89,356

 

Commercial paper

 

 

13,639

 

 

 

3

 

 

 

(16

)

 

 

13,626

 

U.S. government and agency securities

 

 

14,974

 

 

 

 

 

 

(6

)

 

 

14,968

 

Total

 

$

118,057

 

 

$

30

 

 

$

(137

)

 

$

117,950

 

 

 

 

As of December 31, 2023

 

 

 

Amortized
Cost

 

 

Total
Unrealized
Gains

 

 

Total
Unrealized
Loss

 

 

Aggregate Fair Value

 

Corporate debt securities

 

$

78,004

 

 

$

79

 

 

$

(122

)

 

$

77,961

 

Commercial paper

 

 

13,734

 

 

 

13

 

 

 

(3

)

 

 

13,744

 

U.S. government and agency securities

 

 

47,543

 

 

 

4

 

 

 

(40

)

 

 

47,507

 

Total

 

$

139,281

 

 

$

96

 

 

$

(165

)

 

$

139,212

 

We determine the appropriate classification of our investments at the time of purchase. All of our investments are reported as short-term as they are available for use during the normal cycle of business. We review any investment when its fair value is less than its amortized cost and when evidence indicates that the investment’s carrying amount is not recoverable within a reasonable period. We evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the investment is compared to its amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded on our condensed consolidated balance sheet, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that is not related to a credit loss is recognized in other comprehensive (loss) income.

Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when we believe the uncollectability of an investment is confirmed or when either of the criteria regarding intent or requirement to sell is met. We held 55 and 41 debt securities at March 31, 2024 and December 31, 2023, respectively, that were in an unrealized loss position. The unrealized losses at March 31, 2024 and December 31, 2023 were attributable to changes in interest rates, and we do not believe any unrealized losses represent credit losses.

10


We do not intend to sell the investments before recovery of their amortized cost bases, which may be at maturity. All of our investments mature within two years from March 31, 2024. The following tables summarize our investments in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by investment type and length of time in a continuous unrealized loss position (in thousands):

 

 

 

As of March 31, 2024

 

 

 

Less than 12 Months

 

 

12 Months or Longer

 

 

Total

 

 

 

Aggregate Related Fair Value

 

 

Unrealized
Losses

 

 

Aggregate Related Fair Value

 

 

Unrealized
Losses

 

 

Aggregate Related Fair Value

 

 

Unrealized
Losses

 

Corporate debt securities

 

$

69,829

 

 

$

(105

)

 

$

6,851

 

 

$

(10

)

 

$

76,680

 

 

$

(115

)

Commercial paper

 

 

10,703

 

 

 

(16

)

 

 

 

 

 

 

 

 

10,703

 

 

 

(16

)

U.S. government and agency securities

 

 

12,968

 

 

 

(5

)

 

 

2,000

 

 

 

(1

)

 

 

14,968

 

 

 

(6

)

Total

 

$

93,500

 

 

$

(126

)

 

$

8,851

 

 

$

(11

)

 

$

102,351

 

 

$

(137

)

 

 

 

As of December 31, 2023

 

 

 

Less than 12 Months

 

 

12 Months or Longer

 

 

Total

 

 

 

Aggregate Related Fair Value

 

 

Unrealized
Losses

 

 

Aggregate Related Fair Value

 

 

Unrealized
Losses

 

 

Aggregate Related Fair Value

 

 

Unrealized
Losses

 

Corporate debt securities

 

$

50,322

 

 

$

(112

)

 

$

4,279

 

 

$

(10

)

 

$

54,601

 

 

$

(122

)

Commercial paper

 

 

6,952

 

 

 

(3

)

 

 

 

 

 

 

 

 

6,952

 

 

 

(3

)

U.S. government and agency securities

 

 

27,191

 

 

 

(37

)

 

 

1,997

 

 

 

(3

)

 

 

29,188

 

 

 

(40

)

Total

 

$

84,465

 

 

$

(152

)

 

$

6,276

 

 

$

(13

)

 

$

90,741

 

 

$

(165

)

 

7. Net Loss Per Share

Basic net loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per common share is calculated by dividing the diluted net loss by the weighted average number of common shares outstanding, including potential dilutive common shares assuming the dilutive effect of outstanding stock options and unvested restricted stock units. For periods in which we have reported net losses, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not included if their effect is anti-dilutive.

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

 

 

 

As of March 31,

 

 

 

2024

 

 

2023

 

Outstanding stock options

 

 

8,472

 

 

 

11,851

 

Unvested restricted stock units

 

 

12,775

 

 

 

8,085

 

As discussed further in Note 10, “Long-Term Obligations”, we have the option to settle the conversion obligation for our 3.00% convertible senior notes due 2025 (the “2025 Notes”) in cash, shares or any combination of the two. Based on our net loss position, there was no impact on the calculation of dilutive loss per common share during the three months ended March 31, 2024 and 2023.

As discussed further in Note 9, “Stockholders’ Equity”, warrants to purchase up to 9,787,563 shares of our common stock are outstanding as of March 31, 2024. These warrants were excluded from the calculation of basic and diluted net loss per common share during the three months ended March 31, 2024 and 2023 as the warrant holders do not have an obligation to share in our losses.

 

8. Stock-based Compensation Expense

The following table summarizes stock-based compensation expense included in operating expenses (in thousands):

 

 

 

For the Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cost of sales

 

$

54

 

 

$

81

 

Research and development

 

 

1,421

 

 

 

1,938

 

Selling, general and administrative

 

 

3,495

 

 

 

3,370

 

Total

 

$

4,970

 

 

$

5,389

 

 

11


 

9. Stockholders’ Equity

Common Share Warrants

On December 5, 2022, we issued to certain institutional investors, in a private placement offering of securities, warrants to purchase up to 9,537,563 shares of common stock at an exercise price of $6.36 per share. The warrants are exercisable through December 7, 2027. As of March 31, 2024, none of these warrants have been exercised.

On August 1, 2023, in connection with the Second Amendment to the Revenue Interest Agreement dated as of August 1, 2023, we issued warrants to HCRx to purchase up to 250,000 shares of common stock at an exercise price of $2.25 per share. The warrants are exercisable through August 1, 2030. As of March 31, 2024, none of these warrants have been exercised.

Open Market Sale Agreement

On February 17, 2023, we entered into an Open Market Sale Agreement (the “2023 Open Market Sale Agreement”) with Jefferies LLC, as agent (“Jefferies”). Under the 2023 Open Market Sale Agreement, we may issue and sell shares of our common stock having an aggregate offering price of up to $100.0 million (the “Shares”) from time to time through Jefferies (the “2023 Open Market Offering”).

Under the 2023 Open Market Sale Agreement, Jefferies may sell the Shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the “Securities Act”). We may sell the Shares in amounts and at times to be determined by us from time to time subject to the terms and conditions of the 2023 Open Market Sale Agreement, but we have no obligation to sell any of the Shares in the 2023 Open Market Offering.

We or Jefferies may suspend or terminate the offering of Shares upon notice to the other party and subject to other conditions. We have agreed to pay Jefferies commissions for its services in acting as agent in the sale of the Shares in the amount of up to 3.0% of gross proceeds from the sale of the Shares pursuant to the 2023 Open Market Sale Agreement. We have also agreed to provide Jefferies with customary indemnification and contribution rights.

We did not sell any Shares under the 2023 Open Market Sale Agreement during the three months ended March 31, 2024 and 2023. As of March 31, 2024, $100.0 million of Shares was available for issuance and sale under the 2023 Open Market Sale Agreement.

10. Long-Term Obligations

3.00% Convertible Senior Notes due 2025

On October 16, 2018, we completed an offering of $150.0 million aggregate principal amount of the 2025 Notes. In addition, on October 26, 2018, we issued an additional $22.5 million aggregate principal amount of the 2025 Notes pursuant to the full exercise of the option to purchase additional 2025 Notes granted to the initial purchasers in the offering. The 2025 Notes were sold in a private offering to qualified institutional buyers in reliance on Rule 144A under the Securities Act. In connection with the issuance of the 2025 Notes, we incurred approximately $5.6 million of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees. Debt issuance costs are being amortized to interest expense using the effective interest method over seven years.

The 2025 Notes are senior unsecured obligations and bear interest at a rate of 3.00% per year payable semiannually in arrears on April 15 and October 15 of each year, beginning on April 15, 2019. Upon conversion, the 2025 Notes will be converted into cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. As of October 15, 2022, the 2025 Notes are subject to redemption at our option, in whole or in part, if the conditions described below are satisfied. Holders may require us to repurchase their 2025 Notes following a fundamental change (as defined within the indenture governing the 2025 Notes) at a cash repurchase price generally equal to the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest. The 2025 Notes will mature on October 15, 2025, unless earlier converted, redeemed or repurchased in accordance with their terms. Subject to satisfaction of certain conditions and during the periods described below, the 2025 Notes may be converted at an initial conversion rate of 63.0731 shares of common stock per $1,000 principal amount of the 2025 Notes (equivalent to an initial conversion price of approximately $15.85 per share of common stock).

Holders of the 2025 Notes may convert all or any portion of their 2025 Notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding June 15, 2025 only under the following circumstances:

12


(1)
during any calendar quarter commencing after the calendar quarter ending on December 31, 2018 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2025 Notes on each applicable trading day;
(2)
during the five-business day period immediately after any five consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of 2025 Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;
(3)
if we call the 2025 Notes for redemption, until the close of business on the business day immediately preceding the redemption date; or
(4)
upon the occurrence of specified corporate events as described within the indenture governing the 2025 Notes.

As of March 31, 2024, none of the above circumstances had occurred and as such, the 2025 Notes could not have been converted.

As of October 15, 2022, we may redeem for cash all or part of the 2025 Notes at our option if the last reported sale price of our common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending within five trading days prior to the date on which we send any notice of redemption. The redemption price will be 100% of the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any. In addition, calling any convertible note for redemption will constitute a make-whole fundamental change with respect to that convertible note, in which case the conversion rate applicable to the conversion of that convertible note, if it is converted in connection with the redemption, will be increased in certain circumstances. We did not redeem any of the 2025 Notes as of March 31, 2024.

The outstanding balances of the 2025 Notes consisted of the following (in thousands):

 

 

As of March 31, 2024

 

 

As of December 31, 2023

 

Principal

 

$

172,500

 

 

$

172,500

 

Less: debt issuance costs

 

 

(1,373

)

 

 

(1,581

)

Net carrying amount

 

$

171,127

 

 

$

170,919

 

We determined the expected life of the 2025 Notes was equal to its seven-year term and the effective interest rate was 3.53%. As of March 31, 2024, the “if-converted value” did not exceed the remaining principal amount of the 2025 Notes. The fair value of the 2025 Notes was determined based on data points other than quoted prices that are observable, either directly or indirectly, and has been classified as Level 2 within the fair value hierarchy. The fair value of the 2025 Notes, which differs from their carrying value, is influenced by market interest rates, our stock price and stock price volatility. The estimated fair value of the 2025 Notes as of March 31, 2024 and December 31, 2023 was approximately $93.0 million and $87.9 million, respectively.

The following table sets forth total interest expense recognized related to the 2025 Notes (in thousands):

 

 

For the Three Months
Ended March 31,

 

 

 

2024

 

 

2023

 

Contractual interest expense

 

$

1,294

 

 

$

1,294

 

Amortization of debt issuance costs

 

 

208

 

 

 

201

 

Total

 

$

1,502

 

 

$

1,495

 

Future minimum payments on the 2025 Notes as of March 31, 2024 were as follows (in thousands):

Years ended December 31,

 

Future Minimum
Payments

 

2024

 

$

5,175

 

2025

 

 

177,675

 

Total minimum payments

 

 

182,850

 

Less: interest expense and issuance costs

 

 

(11,723

)

Convertible senior notes

 

$

171,127

 

 

13


Following completion of the transactions discussed below under “Refinance of Long-Term Obligations,” we expect that $24.5 million aggregate principal amount of Notes will remain outstanding.

Deferred Royalty Obligation

In September 2019, we entered into the Revenue Interest Agreement with HCRx, which was subsequently amended in June 2021 and August 2023. We received $75.0 million, less certain transaction expenses, upon closing of the Revenue Interest Agreement (the “First Investment Amount”) and $60.0 million in June 2021 (the “Second Investment Amount” and together with the First Investment Amount, the “Investment Amounts”).

In exchange for the above payments, HCRx receives payments from us at a tiered percentage (the “Applicable Tiered Percentage”) of net revenues of selinexor and any of our other future products, including worldwide net product sales and upfront payments, milestones, and royalties. The Applicable Tiered Percentage is subject to reduction in the future if a target based on cumulative U.S. net sales of selinexor is met. Total payments to HCRx are capped at 195% of the Investment Amounts (the “Payment Cap”). As described in more detail below, as of May 2024, HCRx will receive payments from us at a fixed royalty percentage for the remainder of the Revenue Interest Agreement, as amended.

If HCRx has not received 100% of the First Investment Amount and 65% of the Second Investment Amount by June 30, 2025 (the “First Minimum Aggregate Payment”), or 100% of both the First Investment Amount and the Second Investment Amount by September 30, 2026, we must make a cash payment sufficient to gross up the payments to such minimum amounts. As described in more detail below, HCRx received 100% of the First Investment Amount and Second Investment Amount in May 2024 and as such, these gross payments are no longer applicable.

As the repayment of the funded amount is contingent upon worldwide net product sales and upfront payments, milestones, and royalties, the repayment term may be shortened or extended depending on actual worldwide net product sales and upfront payments, milestones, and royalties. The repayment period commenced on October 1, 2019 for the First Investment Amount and on July 1, 2021 for the Second Investment Amount, and expires on the earlier of (i) the date in which HCRx has received cash payments totaling an aggregate of 195% of the Investment Amounts or (ii) the legal maturity date of October 1, 2031. If HCRx has not received payments equal to 195% of the Investment Amounts by the twelve-year anniversary of the initial closing date, we will be required to pay an amount equal to the Investment Amounts plus a specific annual rate of return less payments previously paid to HCRx. In the event of a change of control, we are obligated to pay HCRx an amount equal to 195% of the Investment Amounts less payments previously paid to HCRx. In addition, upon the occurrence of an event of default, including, among others, our failure to pay any amounts due to HCRx, insolvency, our failure to pay indebtedness when due, the revocation of regulatory approval of XPOVIO in the U.S. or our breach of any covenant contained in the Amended Revenue Interest Agreement and our failure to cure the breach within the prescribed time frame, we are obligated to pay HCRx an amount equal to 195% of the Investment Amounts less payments previously paid to HCRx. In addition, upon an event of default, HCRx may exercise all other rights and remedies available under the Amended Revenue Interest Agreement, including foreclosing on the collateral that was pledged to HCRx, which consists of all of our present and future assets. As of March 31, 2024, we have made $65.8 million in payments to HCRx.

We have evaluated the terms of the Amended Revenue Interest Agreement and concluded that the features of both the First Investment Amount and Second Investment Amount are similar to those of a debt instrument. Accordingly, we have accounted for the transaction as long-term debt and presented it as a deferred royalty obligation on our condensed consolidated balance sheets.

We have also determined that the repayment of 195% of the Investment Amounts, less any payments made to date, upon a change of control is an embedded derivative that requires bifurcation from the debt instrument and fair value recognition as further described in Note 5, “Fair Value Measurements” to our condensed consolidated financial statements.

The effective interest rate as of March 31, 2024 was approximately 14%. We have incurred debt issuance costs totaling $1.7 million. Debt issuance costs have been netted against the debt and are being amortized over the estimated term of the debt using the effective interest method, adjusted on a prospective basis for changes in the underlying assumptions and inputs.

The carrying value of the deferred royalty obligation at both March 31, 2024 and December 31, 2023 was $129.7 million, based on $135.0 million of proceeds, net of the fair value of the bifurcated embedded derivative liability upon receipt of the First Investment Amount and Second Investment Amount, and debt issuance costs incurred.