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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2022
☐ 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
(State or other jurisdiction of
incorporation or organization)
26-3931704
(I.R.S. Employer
Identification No.)
85 Wells Avenue, 2nd Floor, Newton, Massachusetts 02459
(Address of principal executive offices) (zip code)
Registrant’s telephone number, including area code: (617) 658-0600
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Common Stock, $0.0001 par value
KPTI
Securities registered pursuant to Section 12(g) of the Act: None
Name of each exchange on which listed
Nasdaq Global Select Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 ☐
Non-accelerated filer ☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the registrant’s voting and non-voting common stock held by non-affiliates of the registrant (without admitting that any person
whose shares are not included in such calculation is an affiliate) computed by reference to the price at which the common stock was last sold on June 30, 2022 was
approximately $351.3 million. Shares of common stock held by each executive officer and director and by each holder of 10% or more of the outstanding common
stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for
other purposes.
Number of shares outstanding of the registrant’s Common Stock as of February 10, 2023: 113,342,130.
Documents incorporated by reference:
Portions of the registrant’s Proxy Statement for its 2023 Annual Meeting of Stockholders, which the registrant intends to file with the Securities and Exchange
Commission no later than 120 days after the registrant’s fiscal year end of December 31, 2022, are incorporated by reference into Part III of this Annual Report on Form
10-K.
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TABLE OF CONTENTS
Item 5.
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9A.
Item 9B.
Item 9C.
PART I........................................................................................................................................................................................
Business ...........................................................................................................................................
Risk Factors......................................................................................................................................
Unresolved Staff Comments ............................................................................................................
Properties .........................................................................................................................................
Legal Proceedings ............................................................................................................................
Mine Safety Disclosures ..................................................................................................................
PART II ......................................................................................................................................................................................
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities ..............................................................................................................................
[Reserved] ........................................................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of Operations .........
Quantitative and Qualitative Disclosures about Market Risk ..........................................................
Financial Statements and Supplementary Data................................................................................
Controls and Procedures ..................................................................................................................
Other Information ............................................................................................................................
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.............................................
PART III .....................................................................................................................................................................................
Directors, Executive Officers and Corporate Governance...............................................................
Executive Compensation..................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters .............................................................................................................................................
Certain Relationships and Related Transactions, and Director Independence ................................
Principal Accountant Fees and Services ..........................................................................................
PART IV.....................................................................................................................................................................................
Exhibits and Financial Statement Schedules ...................................................................................
Form 10-K Summary .......................................................................................................................
SIGNATURES ...........................................................................................................................................................................
Item 10.
Item 11.
Item 12.
Item 15.
Item 16.
Item 13.
Item 14.
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Forward-Looking Information
This Annual Report on Form 10-K contains forward-looking statements regarding the expectations of Karyopharm
Therapeutics Inc., herein referred to as “Karyopharm,” the “Company,” “we,” or “our,” with respect to the possible achievement of
discovery and development milestones, our future discovery and development efforts, including regulatory submissions and approvals,
our commercialization efforts, our partnerships and collaborations with third parties, our future operating results and financial
position, our business strategy, and other objectives for future operations. We often use words such as “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,”
“continue,” and other words and terms of similar meaning to help identify forward-looking statements, although not all forward-
looking statements contain these identifying words. You also can identify these forward-looking statements by the fact that they do not
relate strictly to historical or current facts. There are a number of important risks and uncertainties that could cause actual results or
events to differ materially from those indicated by forward-looking statements. These risks and uncertainties include, but are not
limited to, those described in “Part I—Item 1A. Risk Factors” of this Annual Report on Form 10-K and under the heading “Summary
of Risk Factors” below. As a result of these and other factors, we may not actually achieve the plans, intentions, expectations or
results disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our
forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or
investments we may make. We do not assume any obligation to update any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law.
References to XPOVIO® (selinexor) also refer to NEXPOVIO® (selinexor) when discussing its approval and commercialization
in certain countries or territories outside of the U.S.
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Summary of Risk Factors
Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary
does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other
risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other
information in this Annual Report on Form 10-K and our other filings with the SEC, before making an investment decision regarding
our common stock.
•
If we or our collaborators are unable to successfully commercialize current and future indications of XPOVIO or other
products or product candidates, our business, financial condition and future profitability will be materially harmed.
• XPOVIO faces substantial competition.
•
If our clinical trials fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise
produce positive results, we may incur additional costs, experience delays or be unable to complete the development of
such product candidates.
Serious adverse or unacceptable side effects related to XPOVIO, our product candidates or future products may delay or
prevent their regulatory approval, cause us to suspend or discontinue clinical trials, or limit the commercial value of our
approved indications.
The COVID-19 pandemic has adversely disrupted, and may in the future adversely disrupt, our or our collaborators’
operations.
The results of previous clinical trials may not be predictive of future trial results and interim or top-line data may be
subject to change or qualification.
•
•
•
• We may not be successful in our efforts to identify or discover additional potential product candidates, or our decisions
to prioritize the development of certain product candidates over others may later prove wrong.
• We may not be able to maintain or expand our sales, marketing and distribution capabilities in order to successfully
commercialize XPOVIO or any of our products or product candidates, if approved.
• Any business that we or our collaborators conduct outside of the U.S. may be adversely affected by international risks
and uncertainties.
• We or our collaborators may not receive regulatory approvals for the commercialization of some or all of our or their
product candidates in a timely manner, or at all.
• We or our collaborators may not be able to utilize accelerated development pathways to obtain regulatory approval,
orphan drug exclusivity or certain other designations for our or their product candidates, which may result in delays
receiving necessary marketing approvals.
• Our or our collaborators’ ability to commercialize our or their products may be limited by the terms of their respective
regulatory approvals and ongoing regulation of our products.
• Our failure to comply with post-approval development and regulatory requirements, reporting and payment obligations
under governmental drug pricing programs, applicable healthcare, privacy and data security laws and environmental,
health and safety laws and regulations may have a material adverse effect on our business, financial condition or results
of operations.
• We may never achieve or maintain profitability and will need additional funding to achieve our business objectives.
• We may not be able to satisfy our indebtedness, on a timely basis or at all.
• Our business, financial condition and stock price may be impacted by unstable market and economic conditions.
• Our dependence on third parties for certain aspects of our business, such as clinical development, manufacturing,
•
marketing, distribution and/or commercialization of XPOVIO and/or our product candidates, could negatively impact
our development and commercialization plans.
If we are unable to obtain and maintain patent protection for our product candidates and other discoveries, or the scope
of the patent protection obtained is not sufficiently broad, our ability to successfully commercialize our product
candidates may be adversely affected.
• We may become involved in lawsuits to protect or enforce our intellectual property rights, or third parties may initiate
•
•
•
•
legal proceedings against us alleging our infringement of their intellectual property rights.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be
harmed.
Information technology system failures or security breaches may materially adversely affect our business and operations.
The price of our common stock has been and may continue to be volatile.
Securities or other litigation could result in substantial costs and may divert management’s time and attention from our
business.
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Item 1. Business
Overview
PART I
We are 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. 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 (“SINE”) compounds that inhibit the nuclear export protein exportin 1 (“XPO1”). These SINE compounds represent a new
class of drug candidates with a novel mechanism of action that have the potential to treat a variety of diseases with high unmet
medical need. Our lead asset, XPOVIO®(selinexor), was the first oral XPO1 inhibitor to receive marketing approval, receiving its
initial U.S. approval from the U.S. Food and Drug Administration (“FDA”) in July 2019, and is currently approved and marketed in
the U.S. for the following indications:
•
•
•
In combination with bortezomib and dexamethasone for the treatment of adult patients with multiple myeloma who have
received at least one prior therapy. Approval in this indication was based on the results from the BOSTON (Bortezomib,
Selinexor and Dexamethasone) study (the “BOSTON Study”);
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
(“PIs”), at least two immunomodulatory agents (“IMiDs”), and an anti-CD38 monoclonal antibody (“mAb”). We refer to
myeloma that is refractory to these five agents as penta-refractory. Approval in this indication was based on the results
from the STORM (Selinexor Treatment of Refractory Myeloma) study (the “STORM Study”); and
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. This
indication was approved under accelerated approval based on response rate and was based on the results from the
SADAL (Selinexor Against Diffuse Aggressive Lymphoma) study (the “SADAL Study”). Continued approval for this
indication may be contingent upon verification and description of clinical benefit in a confirmatory trial.
The commercialization of XPOVIO in the U.S., for both the multiple myeloma and DLBCL indications, is currently supported
by sales representatives, nurse liaisons, and a market access team, as well as KaryForward™, an extensive patient and healthcare
provider support program. Our commercial efforts are also supplemented by patient support initiatives coordinated by our dedicated
network of participating specialty pharmacy providers. We plan to continue to educate physicians, other healthcare providers and
patients about XPOVIO’s clinical profile and unique mechanism of action as we continue to expand XPOVIO use.
The commercialization of XPOVIO and NEXPOVIO® (selinexor) (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, as described under “Collaborations” below.
XPOVIO/ NEXPOVIO has received regulatory approval in various indications in approximately 40 countries outside the U.S.,
including the European Union (“EU”), United Kingdom, Singapore, Mainland China, South Korea, Australia, Canada, Taiwan and
Israel and is commercially available in a growing number of countries.
In July 2022, the European Commission (“EC”) granted full marketing authorisation for NEXPOVIO in combination with once-
weekly Velcade® (bortezomib) and low-dose dexamethasone for the treatment of adult patients with multiple myeloma who have
received at least one prior therapy. This approval for the extension of NEXPOVIO’s indication in the EU converted the previously
received conditional marketing authorisation to a full approval. The marketing authorisation, which marks the second indication for
NEXPOVIO, is valid in all 27 member states of the EU as well as Iceland, Liechtenstein, Norway, and Northern Ireland. Stemline
Therapeutics B.V., a wholly owned subsidiary of the Menarini Group (“Menarini”), is responsible for all commercialization activities
relating to NEXPOVIO in Europe. This indication is based on the results from the Phase 3 BOSTON Study, which evaluated once-
weekly administration of selinexor in combination with once-weekly administration of Velcade® and low-dose dexamethasone
compared to standard twice-weekly administration of Velcade® plus low-dose dexamethasone in patients with multiple myeloma who
have received one to three prior lines of therapy.
Our primary focus is on marketing XPOVIO in its currently approved indications as well as developing and seeking the
regulatory approval of selinexor as an oral agent in multiple myeloma, endometrial cancer, and myelofibrosis (“MF”); eltanexor as an
oral agent in myelodysplastic neoplasms (“MDS”); and in additional cancer indications with significant unmet medical need. We plan
to continue to conduct clinical trials and to seek additional approvals for the use of selinexor and eltanexor as single agents or in
combination with other oncology therapies to expand the patient populations that are eligible for treatment with selinexor or eltanexor.
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Our Strategy
At Karyopharm we are passionate about our mission to positively impact patient lives and defeat cancer. With our first-in-class
SINE technology, our foundation is in our science. Our vision is to be a leading innovator that develops and commercializes
transformative medicines for patients and society. There are four key pillars that we believe will drive our underlying value and
provide significant market opportunities for us.
• Maximize the Commercial Value of XPOVIO in Multiple Myeloma. We are building upon our existing U.S. multiple
myeloma foundation as we continue to expand the breadth and depth of XPOVIO’s use with earlier line patients. We
expect to focus on growing sales in our approved U.S. indications by establishing XPOVIO as a new effective modality
that can become a standard of care in the second to fourth-line treatment setting following treatment with anti-CD38
therapy. With our global partners, we plan to maximize the global opportunity to bring XPOVIO to patients worldwide.
•
•
Focus on our Prioritized Clinical Pipeline. Our science enables us to potentially make a big difference in the lives of
patients and we are focused on four priority clinical programs: multiple myeloma, endometrial cancer, MF, and MDS.
Our clinical pipeline has been consciously and strategically focused to target cancers with high unmet need and a high
probability of success based on the potential to provide meaningful clinical benefit to patients, potential regulatory
approval, and supportive data. We will also continue to expand our understanding of the role nuclear transport plays in
the underlying biology of cancer through focused signal seeking activities to identify future opportunities in other
oncology indications for our SINE technology that may provide support for additional clinical investigation.
Provide Strong Leadership. We believe we have the right people in place and a strong leadership team with the ability
to help position us to achieve scientific, clinical and commercial goals and to execute on our key corporate objectives.
We strive to be a top-talent destination for those who desire to make a difference in patients’ lives.
• Maintain a Well-capitalized Business to Execute our Core Objectives. We are focused on maintaining a well-
capitalized business that will enable the advancement of our clinical development opportunities.
Our Programs to Treat Cancer
Overview
Cancer cells develop when DNA inside the nucleus of normal cells accumulates damage in genes that regulate critical cellular
behaviors, such as cell growth and survival. Proteins called tumor suppressor proteins can monitor DNA for damage, and if damage is
detected, the tumor suppressor proteins will direct the cell to attempt to repair it, or if the DNA damage is too severe, the tumor
suppressor proteins will direct the cell to die in a process called apoptosis. In this way tumor suppressor proteins can prevent healthy
cells that acquire DNA damage from turning into cancer cells, and thus cancer cells need to functionally inactivate tumor suppressor
proteins in order to survive.
Many tumor suppressor proteins can only function properly when they are located inside of a cell’s nucleus. Proteins, however,
are not made inside the nucleus but rather are made outside of the nucleus in an area called the cytoplasm. A membrane, called the
nuclear membrane, separates the nucleus from the cytoplasm. Larger nuclear proteins, including many tumor suppressor proteins,
must be transported from the cytoplasm into the nucleus to perform their functions in keeping a cell healthy. Similarly, these proteins
can also be exported back into the cytoplasm. Proteins move from the nucleus to the cytoplasm through a protein complex embedded
in the nuclear membrane called the nuclear pore. The nuclear pore works like a gate through which large molecules, including many
other proteins and ribonucleic acids (“RNAs”), enter and exit the nucleus. When molecules enter the nucleus from the cytoplasm, the
process is called import, and when molecules exit from the nucleus to the cytoplasm, the process is called export. The import and
export of most proteins and other large molecules between the nucleus and cytoplasm require specific carrier proteins to chaperone
their cargo molecules through the nuclear pore complex. Carrier proteins, which mediate the import of macromolecules into the
nucleus, are called importins, and those which mediate the export of macromolecules out of the nucleus are called exportins.
Therefore, the processes of import and export are carried out separately and are typically regulated independently.
One way that cancers functionally inactivate tumor suppressor proteins is via overproduction of a specific chaperone protein
called XPO1. XPO1 is one of eight exportins that have been identified in human cells, and it exports over 220 proteins referred to as
its “cargo proteins.” In particular, XPO1 appears to be the sole exporter for many critical tumor suppressor proteins that function in
the cell nucleus, including p53, p73, p21, p27, APC, FOXO, pRB and survivin. In addition to exporting tumor suppressor proteins out
of the nucleus, XPO1 mediates the nuclear export of a protein called eukaryotic initiation factor 4E, which itself binds to the mRNAs
that encode many growth-regulating proteins, including c-myc, bcl-2, bcl-6 and cyclin D. XPO1 carries these growth-promoting
mRNAs from the nucleus into the cytoplasm where they are translated into proteins that promote cancer cell growth. XPO1 also
exports the anti-inflammatory (and anti-tumor) protein IκB, which inhibits a protein called NF-κB. NF-κB is found in the nucleus of
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most cancer cells and plays a role in cancer metastasis and chemotherapy resistance, as well as in many inflammatory and
autoimmune diseases.
In cancer cells, XPO1 levels are reported to be elevated when compared to their healthy cell counterparts. Therefore, these
elevated levels of XPO1 in cancer cells mediate the rapid export of tumor suppressor proteins as well as IκB and eIF4E out of the
nucleus and can lead to reduced monitoring for DNA damage, the normal triggering of apoptosis and increased inflammation activity.
Higher levels of XPO1 expression in cancer cells has also been correlated with resistance to chemotherapy and poor prognosis in
patients.
Mechanism of Action of Our SINE Compounds - Inhibition of XPO1
Selinexor and eltanexor are novel therapies that are oral SINE compounds specifically designed to force nuclear accumulation
of multiple tumor suppressor proteins that function in the nucleus. Selinexor and eltanexor also force nuclear accumulation of growth
promoting mRNAs, which prevents the translation of these mRNAs and thereby lowers expression of the growth promoting proteins
that the mRNAs encode. The forced nuclear retention of these proteins can counteract a multitude of the oncogenic pathways that
allow cancer cells with severe DNA damage to continue to grow and divide in an unrestrained fashion. Because normal cells have
little or no DNA damage, accumulation of tumor suppressor proteins in their nucleus generally does not lead to apoptosis. The figure
below depicts the process by which our SINE compounds inhibit the XPO1-mediated nuclear export of tumor suppressor proteins and
oncoprotein mRNAs.
We believe that the novel mechanism of action, oral administration and low levels of major organ toxicities observed to date in
patients treated with our SINE compounds, along with encouraging efficacy data, support the potential for their broad use across many
cancer types, including both hematological and solid tumor malignancies. Unlike many other targeted therapeutic approaches that only
work for a specific set of cancers or in a specific subgroup of patients, we believe that by restoring tumor suppressor proteins to the
nucleus where they can access a cell’s DNA, our SINE compounds may provide therapeutic benefits across a broad range of cancer
types and can potentially benefit a wider range of patients. Additionally, and as supported by their unique mechanism of action, and
preclinical, clinical and post-approval data, we believe that our SINE compounds have shown additive or synergistic benefit with
approved and experimental therapies in treating cancer patients and, therefore, have the potential to serve as a backbone therapy across
multiple hematological and solid tumor malignancies as part of a variety of combination therapies.
Our Pipeline and Key Clinical Trials
Oral selinexor and eltanexor are being evaluated in multiple early, mid and late-stage clinical trials in patients with
hematological and solid tumor malignancies, often in the relapsed and/or refractory setting. In general, relapsed disease refers to
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disease that progresses following the expiration of a specified period of time after discontinuation of therapy and refractory disease
refers to disease that progresses while the patient is on therapy or within a specified period of time after discontinuation of therapy.
Key clinical trials of selinexor and eltanexor are summarized in the chart below. In addition to these studies, there are several ongoing
investigator-sponsored clinical trials being conducted in a variety of hematological and solid tumor malignancies and there are
additional ongoing or planned signal seeking studies to further expand our development program in the future.
OUR SELINEXOR PROGRAM
We are currently evaluating selinexor in certain hematological and solid tumor malignancies, including multiple myeloma,
endometrial cancer, MF and DLBCL.
Multiple Myeloma
Overview
Multiple myeloma is a hematological malignancy characterized by the accumulation of monoclonal plasma cells in the bone
marrow, the presence of monoclonal immunoglobulin, also known as M protein, in the serum or urine, bone destruction, kidney
disease and immunodeficiency. Multiple myeloma is the second most common blood cancer in the world and there is currently no
cure. The American Cancer Society (the “ACS”) estimates that nearly 36,000 new cases of multiple myeloma will be diagnosed in the
U.S. in 2023. Myeloma occurs most commonly in people over age 65 and the risk of developing multiple myeloma increases with age.
The treatment of multiple myeloma has improved over the last 20 years due to the use of high-dose chemotherapy and
autologous stem cell transplantation, which is restricted to healthier, often younger patients. Treatment decisions are based on
physician and patient choice rather than clear treatment guidelines, with the current standard of care being to switch drug classes once
a regimen stops working. In addition to our SINE compounds, a number of non-chemotherapy drugs such as PIs, IMiDs, mAbs,
bispecific antibodies, and CAR-T therapy, have also emerged as treatment options within the last decade. The introduction of these
non-chemotherapeutic novel agents has led to a significant increase in the survival of patients with multiple myeloma. However,
despite the wide variety of newly approved or experimental therapies that are being used to treat patients with relapsed and/or
refractory disease either alone or in combination, nearly all patients will eventually succumb to their disease. With nearly 12,600
deaths from multiple myeloma in the U.S. alone estimated for 2023 according to the ACS, we believe that there remains a need for
therapies for patients whose disease has relapsed after, or is refractory to, available therapy.
XPOVIO is currently approved to treat multiple myeloma in adult patients who have received at least one prior therapy based on
data from the BOSTON Study and in adult patients with penta-refractory multiple myeloma based on data from the STORM Study.
The BOSTON Study
The December 2020 FDA approval of XPOVIO in combination with bortezomib and dexamethasone for the treatment of adult
patients with multiple myeloma who have received at least one prior therapy was based on the results of the BOSTON Study, a multi-
center, Phase 3, randomized study conducted at over 150 clinical sites internationally. The BOSTON Study evaluated 402 adult
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patients with relapsed or refractory multiple myeloma who had received one to three prior lines of therapy. The study was designed to
compare the efficacy, safety and certain health-related quality of life parameters of once-weekly oral selinexor in combination with
once-weekly administration of Velcade® plus low-dose dexamethasone (the “XVd Arm”) versus twice-weekly administration of
Velcade® plus dexamethasone (the “Vd Arm”). The primary endpoint of the study was progression-free survival (“PFS”) and key
secondary endpoints included overall response rate (“ORR”) and the rate of peripheral neuropathy (“PN”), among others.
Additionally, the BOSTON Study allowed for patients on the Vd Arm to crossover to the XVd Arm following objective (quantitative)
progression of disease verified by an Independent Review Committee (“IRC”).
Despite the study having a high proportion of patients with high-risk cytogenetics (approximately 50%), the median PFS in the
XVd Arm was 13.9 months compared to 9.5 months in the Vd Arm, representing a 4.4 month (47%) increase in median PFS (hazard
ratio (“HR”) of 0.70; p=0.0075). The XVd Arm also demonstrated a significantly greater ORR compared to the Vd Arm (76.4% vs.
62.3%, p=0.0012).
Further, XVd therapy demonstrated a significantly higher rate of deep responses, defined as ≥ Very Good Partial Response
(“VGPRs”) compared to Vd therapy (44.6% vs. 32.4%) as well as a longer median duration of response (“DOR”) (20.3 months vs.
12.9 months). Additionally, 17% of patients on the XVd arm achieved a Complete Response (“CR”) or a Stringent Complete
Response (“sCR”) as compared to 10% of patients receiving Vd therapy. All responses were confirmed by an IRC. Rates of PN were
significantly lower for patients receiving XVd therapy compared to those receiving Vd therapy (32% vs. 47%). In addition, PN rates ≥
grade 2 were also significantly lower in the XVd Arm compared to the Vd Arm (21% vs. 34%).
The most common adverse reactions (≥20%) in patients who received XVd were fatigue (59%), nausea (50%), decreased
appetite (35%), diarrhea (32%), peripheral neuropathy (32%), upper respiratory tract infection (29%), decreased weight (26%),
cataract (22%) and vomiting (21%). Grade 3-4 laboratory abnormalities (≥10%) were thrombocytopenia, lymphopenia,
hypophosphatemia, anemia, hyponatremia and neutropenia. In the BOSTON Study, fatal adverse reactions occurred in 6% of patients
within 30 days of last treatment. Serious adverse reactions occurred in 52% of patients who received XVd. Treatment discontinuation
rate due to adverse reactions was 19%.
The STORM Study
The July 2019 FDA approval of XPOVIO 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 PIs, at
least two IMiDs, and an anti-CD38 mAb was based on the results of the STORM Study. This indication was approved under
accelerated approval. As the BOSTON Study served as the confirmatory trial for accelerated approval for the STORM Study, the
BOSTON supplemental New Drug Application (“sNDA”) approval in December 2020 fulfilled the requirement of an accelerated
approval.
The STORM Study was a global, multi-center, single-arm Phase 2b clinical trial evaluating oral selinexor in combination with
standard, low-dose dexamethasone (“Xd”) in patients with heavily pretreated, relapsed or refractory multiple myeloma. These heavily
pretreated patients had a median of seven prior therapeutic regimens, including a median of 10 unique anti-myeloma agents.
Specifically, the myeloma patients who were eligible for the study had prior treatment with the two PIs, Velcade® and Kyprolis®
(carfilzomib), the two IMiDs, Revlimid® (lenalidomide) and Pomalyst®(pomalidomide), and the anti-CD38 mAb Darzalex®
(daratumumab), as well as alkylating agents, and their disease was refractory to glucocorticoids, at least one PI, at least one IMiD,
Darzalex®, and their most recent therapy. In all patients, this myeloma was considered “triple-class refractory.”
The FDA’s accelerated approval of XPOVIO was based upon the efficacy and safety in a pre-specified subgroup analysis of the
83 patients in the STORM Study with documented penta-refractory myeloma, as the benefit-risk ratio appeared to be greater in this
more heavily pre-treated population than in the overall trial population. In addition to multiple-refractory disease, patients in the
STORM Study had rapidly progressing myeloma, with a median 22% increase in disease burden in the 12 days from screening to
initial therapy. The ORR in this patient population was 25.3%.
For the STORM Study’s primary endpoint, selinexor achieved an ORR of 26%, including two (2%) sCRs, six (5%) VGPRs, and
24 (20%) partial responses (“PRs”) and the trial therefore met its primary endpoint. Both patients who had relapsed after CAR-T
therapy achieved PRs. Minimal response per International Myeloma Working Group criteria was observed in 16 (13%) patients and
48 (39%) patients had stable disease. Median time to PR or better was 4.1 weeks. The clinical benefit rate, meaning a minimal
response or better, was 39%. All responses were adjudicated by an IRC consisting of four independent experts in the treatment of
multiple myeloma.
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Median DOR was 4.4 months. PFS was 3.7 months and overall survival (“OS”) was 8.6 months. In the 39% of patients who
achieved a minimal response or better, median OS was 15.6 months, compared to a median OS of 1.7 months in patients whose
disease progressed or where response was not evaluable.
The most common adverse reactions (≥20%) in patients who received Xd were thrombocytopenia (74%), fatigue (73%), nausea
(72%), anemia (59%), decreased appetite (53%), decreased weight (47%), diarrhea (44%), vomiting (41%), hyponatremia (39%),
neutropenia (34%), leukopenia (28%), constipation (25%), dyspnea (24%) and upper respiratory tract infection (21%). In the STORM
Study, fatal adverse reactions occurred in 9% of patients. Serious adverse reactions occurred in 58% of patients. Treatment
discontinuation rate due to adverse reactions was 27%.
The XPORT-MM-031/EMN29 Study
EMN29 is a randomized global Phase 3 study evaluating selinexor in combination with pomalidomide and dexamethasone
(“SPd”) versus elotuzumab, pomalidomide, and dexamethasone (“EloPd”) in patients with relapsed or refractory multiple myeloma
(NCT05028348). The first patient was enrolled in May 2022. Under the current protocol, patients in this Phase 3 study have received
one to four prior lines of therapy, including a PI, lenalidomide and an anti-CD38 mAb and are randomized to either SPd or EloPd. The
primary endpoint of this study is PFS, and secondary endpoints include ORR, OS and DOR. This global study is sponsored by the
European Myeloma Network.
The determination to initiate EMN029 was based on data from an all-oral arm of the Phase 1b/2 STOMP Study (NCT02343042)
and the Phase 2 Study XPORT-MM-028 (NCT04414475) in which selinexor was evaluated in combination with Pomalyst® and low-
dose dexamethasone in patients with relapsed or refractory multiple myeloma who received at least two prior lines of therapy,
including a PI and an IMiD.
Endometrial Cancer
Overview
Endometrial cancer, also called uterine cancer, occurs when cells in the endometrium, which is the inner lining of uterus, begin
to grow out of control. In the U.S., endometrial cancer is the most common gynecological cancer. The ACS estimates that there will
be approximately 60,000 new cases of endometrial cancer diagnosed in 2023 in the U.S. Approximately 14,000 women are expected
to be diagnosed with advanced or metastatic disease each year in the U.S. with approximately 50% of those patients having TP53
wild-type endometrial cancer. Endometrial cancer affects mainly post-menopausal women and the average age of women diagnosed
with endometrial cancer is 60 years. Endometrial cancer is often detected at an early stage because it frequently produces abnormal
vaginal bleeding. There are currently five different types of standard treatments for patients with endometrial cancer based on the
stage of the disease at diagnosis and the grade of the tumor; surgery, radiation therapy, chemotherapy, hormone therapy and targeted
therapy. Surgery is the first treatment for almost all women with endometrial cancer. Following chemotherapy for advanced or
recurrent endometrial cancer, the National Comprehensive Cancer Network (“NCCN”) Guidelines recommend a “watch and wait”
approach until the disease relapses. There are currently no FDA approved therapies post-chemotherapy in the maintenance setting.
Clinical and non-clinical mechanism of action studies have shown that inhibition of XPO1 by selinexor leads to the nuclear
accumulation of p53, a well-established tumor suppressor protein, which we believe allows p53 to carry out its tumor suppressor
function.
The EC-042 Study
In the fourth quarter of 2022, we initiated a global, Phase 3, randomized, double-blind study evaluating selinexor as a
maintenance therapy following systemic therapy in patients with TP53 wild-type advanced or recurrent endometrial cancer (the “EC-
042 Study”; NCT05611931). The EC-042 Study is expected to enroll up to 220 patients who will be randomized in a 1:1 manner to
receive either a 60 mg, once-weekly, administration of oral selinexor or placebo until disease progression. The primary endpoint of the
study is PFS, as assessed by an investigator and OS as the key secondary endpoint. Further, in connection with the EC-042 Study, we
entered into a global collaboration with Foundation Medicine, Inc. to develop FoundationOne®CDx, a tissue-based next generation
sequencing test to identify and enroll patients whose tumors are TP53 wild-type.
The SIENDO Study
Our evaluation of selinexor to treat patients with TP53 wild-type advanced or recurrent endometrial cancer is supported by data
from an exploratory subgroup analysis from our ongoing SIENDO Study. The SIENDO Study is a multicenter, randomized, double-
blinded Phase 3 study evaluating the efficacy and safety of oral selinexor versus placebo as a front-line maintenance therapy in
patients with advanced or recurrent endometrial cancer following at least one prior platinum-based combination chemotherapy
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treatment (NCT03555422). Participants in this study with advanced or recurrent disease who had a PR or CR after at least 12 weeks of
standard of care taxane-platinum combination chemotherapy were randomized in a 2:1 manner to receive either maintenance therapy
of 80 mg of selinexor or placebo taken once per week, until disease progression. The primary endpoint in the study was PFS from time
of randomization until death or disease progression as assessed by an investigator, with the goal of the study demonstrating a HR of
0.6.
In the first quarter of 2022, we presented top-line data from the SIENDO study, including exploratory subgroup analyses.
Selinexor-treated patients had a median PFS of 5.7 months compared to 3.8 months for patients on placebo, representing an
improvement of 50%, (eCRF HR of 0.70 (CI: 0.4993-0.9957), p=0.0486; IRT HR of 0.76 (CI: 0.5428-1.0759), p=0.1266) in the full
trial population, while patients with TP53 wild-type advanced or recurrent endometrial cancer treated with selinexor had a median
PFS of 13.7 months compared to 3.7 months for patients on placebo. We believe that selinexor was well tolerated in the SIENDO
study with no new safety signals identified, and a discontinuation rate of 10.5% due to adverse events (“AEs”). The most common
treatment-emergent AEs in the SIENDO study of any grade were: nausea (84%), vomiting (52%), constipation (37%) and
thrombocytopenia (37%). The most common grade 3 treatment-emergent AEs were nausea (10%), neutropenia (9%),
thrombocytopenia (7%) and asthenia (6%).
Myelofibrosis
Overview
MF is a rare blood cancer in which excessive scar tissue (fibrosis) forms in the bone marrow and impairs its ability to produce
normal blood cells and can cause scarring in bone marrow, leading to severe anemia, low platelet counts, and abnormal white blood
cell production. In addition, blood cell production may move to the spleen (causing spleen enlargement) or to other areas of the body.
It is estimated that there are approximately 5,000 cases of MF each year in the U.S. Although MF can occur at any age, it is more
common in older patients, with a median age at diagnosis of approximately 65 years. During the course of the disease, MF patients
could experience abdominal discomfort from increasing spleen and liver size, itching, night sweats, abnormal bleeding, fever, bone or
joint pain and involuntary weight loss. The underlying cause of primary MF has not yet been determined; however, it is associated
with DNA changes in certain genes.
There is currently no drug therapy that can cure MF. Allogeneic hematopoietic stem cell transplantation (“HSCT”) is currently
the only treatment for MF that can provide a clinical cure; patients who are not good candidates for HSCT are treated with a JAK2
inhibitor (“JAKi”), such as ruxolitinib, fedratinib, or pacritinib to reduce spleen volume and improve symptoms. Not all patients
respond adequately to a JAKi, and some patients cannot tolerate treatment or develop rapid progression on this treatment. As there is
currently no effective treatment for patients who are resistant to JAKi, we believe there is a high unmet need for a treatments with a
different mechanism of action to overcome resistance and provide improvement in primary disease management.
In May 2022, the FDA granted selinexor Orphan Drug Designation for the treatment of MF, and in October 2022, the EC
granted Orphan Medicinal Product Designation for selinexor for the treatment of MF.
The XPORT-MF-034 Study
In July 2021, we initiated a Phase 1 open-label, multicenter study of selinexor to evaluate the safety and efficacy of selinexor in
combination with ruxolitinib in treatment-naïve patients with MF (NCT04562389). In August 2022, enrollment was completed for this
Phase 1 study. In the Phase 1a dose escalation portion of the study, we evaluated selinexor at both the 40 mg and 60 mg doses in
combination with ruxolitinib in treatment-naïve patients with MF. The primary endpoints of the Phase 1a portion of the study are the
maximum tolerated dose, identification of the recommended Phase 2 dose (“RP2D”) and evaluation of safety and tolerability.
Secondary endpoints included various efficacy parameters of spleen volume reduction (“SVR”) of at least 35% from baseline
(“SVR35”), total symptom score reduction of ≥50% (“TSS50”), OS, as well as anemia response and hemoglobin stabilization. We
expect to report updated results from this Phase 1 study in the first half of 2023.
In December 2022, we presented updated data on the Phase 1 study at the 64th American Society of Hematology 2022 Annual
Meeting and Exposition. The data presented were based on results as of October 21, 2022, at which time 24 patients had been assigned
to either a 40 mg or 60 mg once weekly dose of selinexor, in combination with ruxolitinib 15/20 mg BID (twice daily). At week 24,
92% of efficacy evaluable patients (11 out of 12) demonstrated SVR35 at week 24. Ongoing reductions in SVR were seen from
baseline to week 12 and week 24, with a 45% median reduction at week 12 and a 49% median reduction at week 24. 67% of the
evaluable patients for symptom response (4 out of 6) at week 24 achieved TSS50. 57% of transfusion-independent patients (13 out of
23) maintained or improved their hemoglobin levels. The safety population was comprised of 24 patients, all of whom received at
least one dose of selinexor. The most common AEs were nausea (75%), anemia (62%) and fatigue (58%), the majority of which were
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grades 1-2. The most common reported grade 3-4 treatment-emergent AEs were anemia (38%) and thrombocytopenia (21%), both of
which were reversible.
Subject to regulatory feedback from the FDA, we plan to initiate a pivotal Phase 3 study in front-line MF in the first half of
2023.
The XPORT-MF-035 Study
In December 2021, we enrolled the first patient in a Phase 2 study evaluating single-agent selinexor versus physician’s choice in
patients with previously treated MF (NCT04562870) (the “MF-035 Study”). This Phase 2, randomized, open-label, multicenter study
is designed to evaluate the safety and efficacy of single agent selinexor versus treatment of physician’s choice in patients with MF
previously treated for at least six months with a JAK 1/2 inhibitor. The MF-035 Study is expected to enroll up to 112 patients who will
be randomized 1:1 to receive either once-weekly administration of oral selinexor or physician’s standard treatment choice (per clinical
practice). The primary endpoint of the study is the percentage of patients with SVR of ≥35% from baseline as assessed by an IRC.
Secondary endpoints include the percentage of patients who achieve TSS50, the percentage of patients with SVR of ≥25% from
baseline, OS and anemia response, among several others. We have temporarily paused enrollment of this study in order to facilitate an
optimized development plan for our MF program, on which we expect to provide an update in the first half of 2023.
The ESSENTIAL Study
Our evaluation of selinexor to treat MF is supported by data from the ongoing Phase 2 ESSENTIAL Study, an investigator-
sponsored open-label, prospective study evaluating single-agent selinexor at a dose of 80 mg, 60 mg or 40 mg once weekly in adult
patients with primary or secondary MF with resistance or intolerance to JAKi therapy (NCT03627403). The primary endpoint of the
ESSENTIAL Study is to assess the efficacy of selinexor on SVR. As of November 2021, the data cutoff, selinexor was administered
to 12 patients. Median duration of prior JAKi therapy was 22 months (range 0.5 to 96 months), and 92% (11 of 12) patients had MF
refractory to ruxolitinib. the median duration of treatment was 11 months (range 2.8 to 28.8 months). Of the ten patients who were on
treatment for at least 24 weeks, four (40%) patients achieved SVR of ≥35% and six (60%) patients achieved SVR of ≥25%. Of the five
patients who were transfusion dependent at screening, two (40%) achieved transfusion independence. Of the three patients with
hemoglobin <10g/dL at screening, improvement in hemoglobin level of >2g/dl was observed in two (67%) patients. Reduction in
marrow reticulin fibrosis from MF grade 3 to MF grade 1 was observed in a patient who had an assessment at week 72 demonstrating
disease modification potential with longer treatment. While median OS was not yet reached, the two-year survival probability was
assessed to be 91.7%. This compares favorably with a historical survival of 13 to 14 months in this population. The most common
grade ≥3 treatment emergent AEs were anemia (33%) and fatigue (33%). These were manageable with treatment interruption and dose
reduction, except in one patient who discontinued treatment.
Diffuse Large B-Cell Lymphoma
Overview
DLBCL is the most common type of Non-Hodgkin’s lymphoma, a cancer that starts in cells called lymphocytes, which are part
of the body’s immune system. Lymphocytes are found in the lymph nodes and other lymphoid tissues, such as the spleen and bone
marrow, as well as in the blood. According to the Lymphoma Research Foundation, over 18,000 people are diagnosed with DLBCL
annually in the U.S. Although DLBCL can occur at any age, approximately half of DLBCL patients are over 60 years of age, with
approximately 30% over the age of 75 years. Up to two-thirds of all newly diagnosed patients are cured using front-line chemotherapy
(typically “R-CHOP”). Poor outcomes for patients who failed a R-CHOP regimen prompted efforts to discover new treatment
approaches for DLBCL, both up-front and at the time of relapse. Despite the availability of CAR-T therapy, many patients with
relapsed or refractory DLBCL are not medically stable enough to undergo this type of treatment. In addition, various other targets
have been studied in the treatment of DLBCL but may also not be well tolerated in heavily pretreated patients.
The SADAL Study
In June 2020, the FDA approved XPOVIO under accelerated approval as a single-agent oral treatment of adult patients with
relapsed or refractory DLBCL, not otherwise specified, including DLBCL arising from follicular lymphoma, after at least two lines of
systemic therapy. This approval was based on the results of the SADAL Study, an open-label Phase 2b clinical trial evaluating single-
agent oral selinexor (60 mg, twice weekly) in patients that had relapsed or refractory DLBCL after at least two prior multi-agent
therapies and who were ineligible for transplantation, including high dose chemotherapy with stem cell rescue. In this population,
selinexor demonstrated an ORR of 29%, including a CR rate of 13%. Responses were seen in all subgroups evaluated regardless of
age, gender, prior therapy, DLBCL subtype or prior stem cell transplant therapy. Patient responses were durable with a median DOR
of 9.3 months (23.0 months for patients who achieved a CR). Importantly, responses were associated with longer survival,
underscoring the potential of oral XPO1 inhibition as an oral, non-chemotherapeutic option for patients with relapsed or refractory
DLBCL. Part 2 of the study is ongoing to evaluate alternate dosing (40 mg, twice weekly; 60 mg QW).
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The most common adverse reactions (≥20%) in patients who received selinexor were fatigue (63%), nausea (57%), diarrhea
(37%), decreased appetite (37%), decreased weight (30%), constipation (29%), vomiting (28%), and pyrexia (22%). Grade 3-4
laboratory abnormalities (≥15%) are thrombocytopenia, lymphopenia, neutropenia, anemia, and hyponatremia. In the SADAL Study,
fatal adverse reactions occurred in 3.7% of patients within 30 days of last treatment. Serious adverse reactions occurred in 46% of
patients who received selinexor. Treatment discontinuation rate due to adverse reactions was 17%.
The XPORT-DLBCL-030 Study
The XPORT-DLBCL-030 Study, which will serve as the confirmatory study to the accelerated approval of XPOVIO in DLBCL
granted by the FDA in June 2020, is a Phase 2/3 multi-center, randomized study evaluating the combination of selinexor and
rituximab, gemcitabine and dexamethasone (“R-GDP”) in patients with relapsed or refractory DLBCL (NCT04442022). The Phase 2
portion of the study is evaluating efficacy, safety and tolerability of R-GDP plus either selinexor 40 mg or 60 mg. The Phase 3 portion
of the study will evaluate the selected dose (as identified in the Phase 2 study) of selinexor or matching placebo given with the
standard combination immunochemotherapy R-GDP to patients with at least one prior therapy and who are not intended for stem cell
transplant and CAR-T cell therapy. The primary endpoint of the Phase 3 portion of the XPORT-DLBCL-030 Study is PFS. The study
is currently in the Phase 2 portion of the evaluation.
OUR ELTANEXOR PROGRAM
Myelodysplastic Neoplasms
Overview
MDS are a group of hematologic malignancies whereby the bone marrow does not make enough healthy blood cells (white
blood cells, red blood cells, and platelets). In addition, the contents of the blood and bone marrow are abnormal and there is an
elevated risk of progression to acute myeloid leukemia. The median age of diagnosis for patients with MDS is 70 years, with
approximately 15,000 intermediate to high-risk patients diagnosed in the U.S. annually. General symptoms associated with MDS
include fatigue, dizziness, weakness, easy bruising or bleeding, frequent infections, and headaches, all of which are related to the
abnormal and low levels of blood cells. Hypomethylating agents (“HMAs”) are the current standard of care for patients newly
diagnosed with high-risk MDS. Despite the use of HMAs, only approximately 40% to 50% of patients respond to treatment, with
responses frequently lasting less than two years. The prognosis in HMA-refractory disease is poor with an expected survival rate of
four to six months. There is currently no other class of therapy approved for relapsed or refractory MDS patients; the current standard
of care is participation in a clinical trial or best supportive care, such as transfusions and symptomatic treatment for cytopenias.
Therefore, we believe there is an unmet need for the treatment of HMA-refractory MDS patients due to the few currently available
treatment options.
We are currently evaluating eltanexor, a novel, oral SINE compound that, like selinexor, selectively blocks the nuclear export
protein XPO1. The mechanism of action for the biological (anti-cancer) activity of eltanexor is similar to selinexor. However,
eltanexor differs from selinexor primarily related to its minimal central nervous system penetration allowing for more frequent dosing
of eltanexor, which allows for a longer exposure to SINE inhibition. Based on the data described below, we have observed single-
agent clinical activity of eltanexor to treat patients with HMA-refractory MDS and we believe there is a strong rationale to explore the
use of eltanexor in other solid tumors and hematologic cancers.
In January 2022, the FDA granted Orphan Drug Designation for eltanexor for the treatment of MDS. In addition, in July 2022,
the FDA granted Fast Track designation for eltanexor as monotherapy for the treatment of patients with relapsed or refractory
intermediate, high-, or very high-risk MDS and the EC adopted the Committee for Orphan Medicinal Products opinion to designate
eltanexor as an orphan medicinal product for the treatment of MDS in the EU.
The KCP-8602-801 Study
In September 2021, we initiated a Phase 2 expansion study of an ongoing open-label Phase 1/2 study investigating eltanexor as a
single-agent or in combination with approved and investigational agents in patients with several types of hematologic and solid tumor
cancers (NCT02649790). The Phase 2 expansion study is designed to evaluate eltanexor monotherapy in 83 patients with HMA-
refractory, intermediate or high-risk MDS. The primary endpoint for this Phase 2 expansion study is ORR with PFS and OS, among
others, as secondary endpoints. We have completed recruitment for our planned interim analysis and expect to be able to provide data
from the interim analysis in the first half of 2023.
The initiation of the Phase 2 expansion study was supported by results from the Phase 1 portion of the study where single-agent
eltanexor showed activity in patients with high-risk, relapsed MDS that was primary refractory to HMAs. In that study (Sangmin, et
al. EHA 2021), eltanexor demonstrated a 53% ORR, as defined by the International Working Group 2006 criteria, and a median OS of
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9.9 months in efficacy evaluable patients, comparing favorably to historical controls. At the dose of 10 mg, eltanexor monotherapy
was well tolerated with low incidence and grade of gastrointestinal events.
OUR OTHER PIPELINE PROGRAMS
In addition to selinexor and eltanexor, we are also advancing a pipeline of novel drug candidates including our other oral SINE
compound verdinexor, KPT-9274 and IL-12.
Verdinexor (KPT-335)
It is widely known that canine lymphomas are similar in many ways to the non-Hodgkin’s lymphomas in humans, display a
comparable genetic profile and respond to chemotherapy in a fashion similar to their human counterparts. Lymphomas are one of the
most common tumors in dogs and are very aggressive where, without treatment, the tumors are often fatal within weeks. The majority
of canine lymphomas are DLBCL and most of the others are T-cell lymphomas. Given the similarities of dog and human lymphomas,
prior to initiating clinical trials of selinexor in humans, we investigated verdinexor, a closely related, orally available SINE compound,
in dogs with lymphomas.
In May 2017, we entered into an exclusive licensing agreement with Anivive Lifesciences Inc. (“Anivive”), a privately-held
biotech company focused on innovations in the veterinary drug and bioinformatics space, pursuant to which Anivive received
worldwide rights to research, develop and commercialize verdinexor for the treatment of cancer in companion animals. In January
2021, Anivive received conditional FDA approval of LAVERDIA™-CA1 (verdinexor), an oral treatment for dogs with lymphoma.
We do not have any current plans to pursue the study of verdinexor in humans.
KPT-9274
KPT-9274 is our first-in-class dual inhibitor of p21-activated kinase 4 (“PAK4”) and nicotinamide phosphoribosyltransferase
(“NAMPT”). Co-inhibition of PAK4 and NAMPT may lead to synergistic anti-tumor effects through energy depletion, inhibition of
DNA repair, cell cycle arrest, inhibition of proliferation, and ultimately apoptosis. Normal cells are more resistant to inhibition by
KPT-9274 due in part to their relative genomic stability and lower metabolic rates. Hematologic and solid tumor cells that have
become dependent on both PAK4 and NAMPT pathways may be susceptible to single-agent cytotoxicity of KPT-9274.
KPT-9274 has shown broad evidence of anti-cancer activity against hematological and solid tumor malignant cells while
showing minimal toxicity to normal cells in vitro. In mouse xenograft studies, oral KPT-9274 has shown evidence of anti-cancer
activity and tolerability. To our knowledge, we are the only company with an allosteric PAK4 modulator and/or NAMPT specific
inhibitor currently in clinical development. We do not have any current plans to pursue the study of KPT-9274 outside of investigator
sponsored trials.
KPT-1200
In November 2020, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Neumedicines Inc.
(“Neumedicines”), which was closed in July 2021. Pursuant to the Asset Purchase Agreement, we agreed to acquire certain assets
from Neumedicines, including a proprietary recombinant human interleukin 12. Contemporaneously with the closing, we entered into
a license agreement with Libo Pharma Corp. (“Libo”) under which we granted to Libo an exclusive license to manufacture, develop
and commercialize IL-12 products in certain countries in Asia, Africa and Oceania.
IL-12 is produced very early in immune responses, playing a vital role in regulating the innate response and determining the
type of adaptive immune response to infections, developing tumors or other causes of tissue damage. The pro-inflammatory responses
to IL-12 are mediated through the activation of T and natural killer lymphocytes to produce IFNγ. In addition, IL-12 also stimulates
hematopoietic precursor cells leading to the proliferation of all major types of peripheral blood cells.
Early trials have demonstrated that IL-12 has potential in the treatment of cutaneous T-cell lymphoma, non-Hodgkin lymphoma
and surgical wounds. We are evaluating development options for KPT-1200.
Collaboration, License and Other Strategic Agreements
We have formed, and intend to continue to form, strategic alliances to develop and commercialize our products and product
candidates. We enter into collaborations when there is a strategic advantage to us and when we believe the financial terms of the
collaboration are favorable for meeting our short- and long-term strategic objectives. Currently, we maintain complete commercial
rights to our products and product candidates in the U.S. and Japan and have entered into the following key agreements:
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Menarini
In December 2021, we entered into a license agreement with Menarini (the “Menarini Agreement”), pursuant to which we
granted Menarini a non-exclusive license to develop, and an exclusive license to commercialize, products containing selinexor (the
“Product”) for all human oncology indications in the European Economic Area, United Kingdom, Switzerland, Armenia, Azerbaijan,
Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan, Ukraine, Turkey, Mexico, all Central
America countries and all South America countries (collectively, the “Menarini Territory”). In addition, we granted to Menarini a non-
exclusive license to package and label the Product in or outside of the Menarini Territory for all human oncology indications solely to
enable Menarini to commercialize the Product within the Menarini Territory.
We received an upfront cash payment of $75.0 million in December 2021 and are entitled to receive up to $202.5 million in
milestone payments from Menarini if certain development and sales performance milestones are achieved. We are further eligible to
receive tiered royalties ranging from the mid-teens to mid-twenties based on future net sales of the Product in the Menarini Territory.
The payments owed by Menarini to us are subject to reduction in specified circumstances. Menarini will reimburse us for 25% of all
documented expenses we incur for the global development of the Product during 2022 through 2025, provided that such
reimbursements shall not exceed $15.0 million per calendar year.
Antengene
In May 2020, we entered into an amendment of our May 2018 license agreement with Antengene Therapeutics Limited
(“Antengene”) (the “Original Antengene Agreement”, and, as amended, the “Amended Antengene Agreement”). Antengene is a
corporation organized and existing under the laws of Hong Kong, and a subsidiary of Antengene Corporation Co. Ltd., a corporation
organized and existing under the laws of the People’s Republic of China. Under the terms of the Amended Antengene Agreement,
Antengene has the exclusive rights to develop and commercialize, at its own cost, selinexor, eltanexor, KPT-9274, each for the
diagnosis, treatment and/or prevention of all human oncology indications, and verdinexor for the diagnosis, treatment and/or
prevention of certain human non-oncology indications in mainland China, Taiwan, Hong Kong, Macau, South Korea, Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, Australia and New Zealand (the
“Antengene Territory”).
Under the terms of the Original Antengene Agreement, we received an upfront cash payment in 2018 of $11.7 million. In June
2020, we received an additional $11.7 million upfront payment upon execution of the Amended Antengene Agreement. In addition,
we recognized approximately $7.8 million, $29.3 million and $9.8 million of development/regulatory milestone revenue from
Antengene in 2022, 2021 and 2020, respectively. We are further entitled to receive additional milestone payments from Antengene if
certain other regulatory and commercialization goals are achieved in the future. Finally, we are eligible to receive tiered double-digit
royalties based on future net sales of selinexor and eltanexor, and tiered single- to double-digit royalties based on future net sales of
verdinexor and KPT-9274 in the Antengene Territory.
FORUS
In December 2020, we entered into an exclusive distribution agreement for the commercialization of XPOVIO in Canada with
FORUS Therapeutics Inc. (“FORUS”), a Canadian biopharmaceutical company. Under the terms of the agreement, we received an
upfront payment of $5.0 million in December 2020 and are eligible to receive additional payments if certain prespecified regulatory
and commercial milestones are achieved by FORUS. We are also eligible to receive double-digit royalties on future net sales of
XPOVIO in Canada. FORUS received the exclusive rights to commercialize XPOVIO in Canada and is responsible for all regulatory
filings and obligations required for registering XPOVIO. We have retained the exclusive production rights and will supply finished
product to FORUS for commercial use in Canada.
Promedico
In February 2020, we entered into an exclusive distribution agreement with Promedico Ltd. (“Promedico”) for the
commercialization of XPOVIO in Israel, the West Bank, Gaza Strip and the territories under control of the Palestinian Authority (the
“Promedico Territory”). We will receive certain prespecified payments and are eligible to receive additional payments if certain
regulatory and commercial milestones are achieved by Promedico. We are also eligible to receive double-digit royalties on future net
sales in the Promedico Territory. Promedico received the exclusive rights to commercialize XPOVIO in the Promedico Territory and
is responsible for all regulatory filings and obligations required for registering XPOVIO. We have retained exclusive production rights
and will supply finished product for commercial use in the Promedico Territory.
Other
In addition to the above agreements, we have other collaborations related to the development or commercialization of our
products and product candidates, such as the Cooperative Research and Development Agreement with the National Cancer Institute’s
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Cancer Therapy Evaluation Program to collaborate with us on studies to investigate the safety and efficacy of selinexor in various
oncology indications; the European Myeloma Network, with which we have a collaboration, as discussed above; and arrangements
with academic and private non-academic institutions, which conduct investigator-sponsored clinical trials in a variety of hematological
and solid tumor malignancies.
Intellectual Property
Our commercial success depends in part on our ability to obtain and maintain proprietary or intellectual property protection for
our products and product candidates, our core technologies, and other know-how, to operate without infringing on the proprietary
rights of others and to prevent others from infringing our proprietary or intellectual property rights. Our policy is to seek to protect our
proprietary and intellectual property position by, among other methods, filing patent applications in the U.S. and in foreign
jurisdictions related to our proprietary technology and products and product candidates. We also rely on trade secrets, know-how and
continuing technological innovation to develop and maintain our proprietary and intellectual property position.
We file patent applications directed to the composition of matter and methods of use and manufacture for our products and
product candidates. As of February 10, 2023, we were the sole owner of 32 patents in the U.S. and we had 12 pending patent
applications in the U.S., four pending international applications filed under the Patent Cooperation Treaty (“PCT”), 112 granted
patents and 92 pending patent applications in foreign jurisdictions. The PCT is an international patent law treaty that provides a
unified procedure for filing a single initial patent application to seek patent protection for an invention simultaneously in each of the
member states. Although a PCT application is not itself examined and cannot issue as a patent, it allows the applicant to seek
protection in any of the member states through national-phase applications.
The intellectual property portfolios for our key products and product candidates as of February 10, 2023 are summarized below.
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Selinexor (KPT-330): Our selinexor patent portfolio covers the composition of matter and methods of use of selinexor
and verdinexor, as well as methods of making both, and consists of nine issued U.S. patents (three patents are specific to
selinexor, two patents are specific to verdinexor, two patents cover both selinexor and verdinexor and the remaining
patents cover polymorphs of selinexor and methods of making the polymorphs), 46 issued foreign patents, 54 pending
foreign patent applications, three pending U.S. non-provisional applications and one pending PCT application. The PCT
application provides the opportunity to seek protection in all PCT member states. Any patents that may issue in the U.S.
as part of our selinexor patent portfolio will expire no earlier than 2032, not including any terminal disclaimer, patent
term adjustment due to administrative delays by the U.S. Patent and Trademark Office (“USPTO”) or patent term
extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the
Hatch-Waxman Act. Any patents that may issue in foreign jurisdictions will likewise expire no earlier than 2032. Any
patents that may issue in the U.S. directed to the polymorphs of selinexor or methods of making the polymorphs will
expire in 2035, absent any terminal disclaimer, patent term adjustment due to administrative delays by the USPTO or
patent term extension under the Hatch-Waxman Act. Any patents issued in foreign jurisdictions will likewise expire in
2035. Any patents that may issue in the U.S. based on the pending PCT application will expire in 2041, not including
any terminal disclaimer, patent term adjustment due to administrative delays by the USPTO or patent term extension
under the Hatch-Waxman Act. Any patents issued in foreign jurisdictions will likewise expire in 2041.
Supplementary Protection Certificates: We have filed applications for Supplementary Protection Certificates
(“SPCs”) based on European Patent No. 2,736,887 directed to the composition of matter and use of selinexor. Some
applications have granted and others are pending.
Selinexor (Wound Healing): Our patent portfolio covering selinexor for wound healing, including acute and chronic
wounds, covers methods of using selinexor or verdinexor for wound healing, including systemic and topical uses, and
consists of one issued U.S. patent and one granted European patent. The U.S. patent will expire in 2034, absent any
terminal disclaimer, patent term adjustment due to administrative delay by the USPTO or patent term extension under
the Hatch-Waxman Act. The European patent will likewise expire in 2034.
Eltanexor (KPT-8602): Our eltanexor patent portfolio covers both the composition of matter and methods of making
and using eltanexor, and consists of three issued U.S. patents, two pending non-provisional U.S. patent applications, 22
issued foreign patents, seven pending foreign patent applications, one pending U.S. provisional patent application and
one pending PCT application. The PCT application provides the opportunity for seeking protection in all PCT member
states. Any patents that may issue in the U.S. as part of our eltanexor patent portfolio will expire no earlier than 2034,
not including any terminal disclaimer, patent term adjustment due to administrative delays by the USPTO or patent term
extension under the Hatch-Waxman Act. Any patents issued in foreign jurisdictions will likewise expire no earlier than
2034.
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Biomarkers for XPO1 Inhibitors: Our patent portfolio also covers biomarkers related to treatment with XPO1
inhibitors, such as selinexor and eltanexor, and consists of one pending non-provisional U.S. patent application, one
pending provisional patent application and two pending PCT applications. The PCT applications provide the opportunity
for seeking protection in all PCT member states. Any patents that may issue in the U.S. based on the pending U.S. non-
provisional application will expire in 2040, absent any terminal disclaimer, patent term adjustment due to administrative
delays by the USPTO or patent term extension under the Hatch-Waxman Act. Any patents that may issue in the U.S.
based on the pending PCT Applications will expire no earlier than 2042, not including any terminal disclaimer, patent
term adjustment due to administrative delays by the USPTO or patent term extension under the Hatch-Waxman Act.
Any patents issued in foreign jurisdictions will likewise expire no earlier than 2042. If non-provisional patent
applications claiming the benefit of the pending U.S. provisional patent application referenced above are filed in 2024,
any patents that may issue from such applications will expire no earlier than 2044, not including any terminal disclaimer,
patent term adjustment due to administrative delays by the USPTO or patent term extension under the Hatch-Waxman
Act. Any patents issued in foreign jurisdictions will likewise expire in 2044.
In addition to the patent portfolios covering our key products and product candidates, as of February 10, 2023, our patent
portfolio also includes five patents (U.S. Patent Nos. 8,513,230, 9,428,490, 9,550,757, 10,526,295 and 10,709,606) and 17 granted
foreign patents and pending patent applications in the U.S. and foreign jurisdictions relating to other XPO1 inhibitors and their use in
targeted therapeutics and combination therapies for XPO1 inhibitors.
In the U.S., we have trademark registrations for our name, our logo in color, and a combination of the two, XPOVIO, PORE for
our online portal, and KARYFORWARD and our KARYFORWARD logo for our financial aid and charitable services. We also have
pending applications in the U.S. to register KARYOPHARM alone, and our logo in greyscale, for pharmaceuticals. Outside of the
U.S., XPOVIO is registered or pending in 46 additional jurisdictions, and is registered in Katakana in Japan, Hangul in South Korea,
and Chinese characters in Taiwan. KARYOPHARM, the greyscale logo, KARYOPHARM THERAPEUTICS with the color logo, and
the KARYFORWARD logo are each registered or pending in four jurisdictions outside of the U.S. We also have registrations or
applications for eight additional possible product names in numerous foreign jurisdictions.
The term of individual patents depends upon the legal term for patents in the countries in which they are obtained. In most
countries, including the U.S., the patent term is 20 years from the earliest filing date of a non-provisional patent application. In the
U.S., a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the
USPTO in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier filed patent. The
term of a patent that covers a drug may also be eligible for patent term extension when FDA approval is granted, provided statutory
and regulatory requirements are met. See “Government Regulation—Patent Term Restoration and Extension” below for additional
information on such extensions. We have filed applications for patent term extension in the U.S., Korea, Taiwan, Australia and China
based on the granted patent in each jurisdiction directed to the composition of matter of selinexor. We are awaiting determinations
from the relevant authorities in the U.S., Taiwan, Australia and China and have been awarded 150 days of patent term extension in
Korea, but there is no assurance that we will benefit from any patent term extension. In the future, if and when our product candidates
receive approval by the FDA or foreign regulatory authorities, we expect to apply for patent term extensions on issued patents
covering those drugs, depending upon the length of the clinical trials for each product candidate and other factors. There can be no
assurance that any of our pending patent applications will issue or that we will benefit from any patent term extension or favorable
adjustment to the term of any of our patents.
As with other biotechnology and pharmaceutical companies, our ability to maintain and solidify our proprietary and intellectual
property position for our products and product candidates and technologies will depend on our success in obtaining effective patent
claims and enforcing those claims if granted. However, patent applications that we may file or license from third parties may not result
in the issuance of patents. We also cannot predict the breadth of claims that may be allowed or enforced in our patents. Our issued
patents and any issued patents that we may receive in the future may be challenged, invalidated or circumvented. For example, we
cannot be certain of the priority of inventions covered by pending third-party patent applications. If third parties prepare and file
patent applications that also claim technology or therapeutics to which we have rights, we may have to participate in interference
proceedings to determine priority of invention, which could result in substantial costs to us, even if the eventual outcome is favorable
to us. In addition, because of the extensive time required for clinical development and regulatory review of a product candidate we
may develop, it is possible that, before any of our product candidates can be commercialized, any related patent may expire or remain
in force for only a short period following commercialization, thereby reducing any advantage of any such patent.
In addition to patents, we rely upon unpatented trade secrets and know-how and continuing technological innovation to develop
and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements with
our collaborators, scientific advisors, employees and consultants, and invention assignment agreements with our employees. We also
have agreements with selected consultants, scientific advisors and collaborators requiring assignment of inventions. The
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confidentiality agreements are designed to protect our proprietary information and, in the case of agreements or clauses requiring
invention assignment, to grant us ownership of technologies that are developed through our relationship with a third party.
With respect to our proprietary drug discovery and optimization platform, we consider trade secrets and know-how to be our
primary intellectual property. Trade secrets and know-how can be difficult to protect. We anticipate that with respect to this
technology platform, these trade secrets and know-how may over time be disseminated within the industry through independent
development, the publication of journal articles describing the methodology, and the movement of personnel skilled in the art from
academic to industry scientific positions.
Competition
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a
strong emphasis on proprietary products. While we believe that our technology, knowledge, experience and scientific resources
provide us with certain competitive advantages, we face competition from many different sources, including major pharmaceutical,
specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private
research institutions. Any product candidates that we successfully develop and commercialize will compete with existing therapies
and new therapies that may become available in the future.
There are numerous companies developing or marketing treatments for cancer, including many major pharmaceutical and
biotechnology companies. We are aware of several other XPO1 inhibitors in clinical development world-wide. For example, in June
2020, Menarini acquired Stemline Therapeutics, Inc., including its oral XPO1 inhibitor, felezonexor. Menarini has completed a Phase
1 dose-escalation trial to evaluate felezonexor in patients with advanced solid tumors. Additionally, in August 2022, Shanghai Junshi
Biosciences Co., Ltd announced FDA approval of its investigational new drug application (“IND”) application for JS110, an XPO1
inhibitor in development in solid tumors as well as a planned Phase 1 study in multiple myeloma.
Many of the companies against which we or our collaborators currently compete or which we may compete with in the future
have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing,
conducting clinical trials, obtaining regulatory approvals, marketing approved products and achieving ex-U.S. positive
coverage/reimbursement decisions than we or our collaborators do. Mergers and acquisitions in the pharmaceutical and biotechnology
industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage
companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established
companies. These competitors also compete with us or our collaborators in recruiting and retaining qualified scientific, commercial
and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring
technologies complementary to, or necessary for, our programs.
The key competitive factors affecting the success of any approved oncology drug product, including our products and product
candidates, if approved, are likely to be their efficacy, safety, tolerability, convenience and price, the availability of alternative cancer
therapies and the availability of reimbursement from government and other third-party payors. Our commercial opportunity could be
reduced or eliminated if our competitors develop and commercialize products, or commercialize existing products in new indications,
and those products are or are perceived to be safer, more effective, more convenient, less expensive or more tolerable than any
products that we have or may develop. Our competitors also may obtain FDA or other regulatory approval for their products more
rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we
are able to enter the market.
In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage
the use of generic drugs. Generic drugs for the treatment of cancer are on the market and additional products are expected to become
available on a generic basis over the coming years. If we obtain marketing approval for our product candidates or for XPOVIO in
other indications, we expect that they will be priced at a significant premium over generic versions of older chemotherapy agents and
other cancer therapies.
The most common methods of treating patients with cancer are surgery, radiation and drug therapy. There are numerous
available drug therapies marketed for cancer. In many cases, these drugs are administered in combination to enhance efficacy. While
our products and product candidates may compete with many existing drugs and other therapies, to the extent they are ultimately used
in combination with or as an adjunct to these therapies, our product candidates will be complimentary with them. Some of the
currently approved drug therapies are branded and subject to patent protection, and others are available on a generic basis. Many of
these approved products are well-established therapies and are widely accepted by physicians, patients and third-party payors.
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In addition to currently marketed therapies, there are also a number of products in late-stage clinical development to treat
cancer. These products in development may provide efficacy, safety, tolerability, convenience and other benefits that are not provided
by currently marketed therapies. As a result, they may represent significant competition for any of our products or product candidates
for which we obtain marketing approval.
XPOVIO competes with and, if approved, our core product candidates may compete with, currently marketed products and/or
investigational therapies as discussed below.
Multiple Myeloma
Many therapies are approved for use in patients with multiple myeloma in the U.S., Europe and other parts of the world.
Although XPOVIO is the only XPO1 inhibitor that has received marketing approval, we compete with multiple other treatment types
in our approved indication. The primary competitors of XPOVIO in multiple myeloma include those that currently treat patients
ranging from newly diagnosed patients to those with relapsed and/or refractory multiple myeloma and are indicated for use either as
single agent and/or as combination therapies. The current standard of care for the treatment of relapsed and/or refractory multiple
myeloma includes IMiDs (e.g., thalidomide, lenalidomide, pomalidomide), PIs (e.g., bortezomib, carfilzomib and ixazomib),
monoclonal antibodies (e.g., daratumamab, isatuximab, elotuzumab), B-cell maturation antigens including CAR-Ts (e.g. idecabtagene
vicleucel, ciltacabtagene autoleucel) and bispecific antibodies. New classes/types of therapies are being introduced to the market each
year. For example, TECVAYLI™ (teclistamab-cqyv), the first bispecific T-Cell engager, was approved by the FDA in October 2022.
Other T-cell engaging therapies, bispecifics with different targets, immunomodulators, and a BCL-2 inhibitor are in clinical
development and may be introduced into the multiple myeloma market in 2023 and beyond. In addition, future label expansions into
earlier lines of existing therapies by our competitors are anticipated in 2023.
Endometrial Cancer
The initial treatment for endometrial cancer is surgery, radiotherapy and, where applicable, taxane/platinum-based
chemotherapy. There are no products currently approved as a maintenance therapy. Upon disease progression, various chemotherapy
agents and targeted drugs are commonly used. Multiple products with differing mechanisms of action, including checkpoint inhibitors
(e.g. pembrolizumab, durvalumab and dostarlimab), PARP inhibitors, and VEGF tyrosine kinase inhibitors (eg. lenvatinib) are being
evaluated in clinical trials. In addition, for advanced endometrial cancer, pembrolizumab is approved as a single agent or in
combination with lenvatinib in a subgroup of patients with recurrent disease.
Other anti-cancer agents are in late-stage development for the treatment of patients with endometrial cancer, some of which
could receive approval earlier than selinexor, including products for the use of “maintenance” therapy following initial treatment, as in
our ongoing EC-042 Study, and/or in recurrent disease. These potential products include immune checkpoints inhibitors, kinase
inhibitors, and PARP inhibitors.
Myelofibrosis
The current standard of care for patients with MF who are not candidates for allogeneic HSCT, which is currently the only
treatment for MF that can provide a clinical cure, is to treat the patients with JAK inhibitors (“JAKi”), the only currently approved
drug therapy for treatment for MF to reduce spleen volume and improve symptoms. There are only three JAKis currently approved,
including ruxolitinib, fedratinib, and pacritinib.
In addition, there are a number of product candidates in late-stage development, some of which could receive approval earlier
than selinexor. Ongoing clinical trials, such as those involving momelotinib, pelabresib, navitoclax, imetelstat and parsaclisib, are
studying the treatment of MF either with JAKi therapy, non-JAKi therapy or a combination of JAKi and drug treatment.
MDS
If approved for the treatment of HMA refractory, intermediate or high-risk MDS, eltanexor will compete with the following
currently marketed HMAs or HMA combinations: azacytidine, decitabine, and decitabine/cedazuridine. In addition, there are a
number of product candidates that plan to file for approval in the next few years in combination with an HMA, primarily azacytidine,
in frontline MDS; magrolimab, an anti-CD47-mAb; evorpacept (ALX18), an anti-CD47 fusion protein; lemzoparlimab, another anti-
CD47 mAb; venetoclax, a BCL2 inhibitor; ivosidenib, an IDH1 inhibitor; tamibarotene, a RARA agonist; as well as sabatolimab, an
anti-TIM-mAb. Magrolimab and ivosidenib are also in development as monotherapy in the recurrent/refractory setting.
DLBCL
The initial therapy for DLBCL typically consists of multi-agent cytotoxic drugs in combination with the mAb rituximab (or a
rituximab biosimilar). In patients with DLBCL who are not elderly and who have good organ function, high dose chemotherapy with
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stem cell transplantation is often used at first relapse. Over the past five years, a number of therapeutic interventions have been
approved in the U.S., Europe and other parts of the world for the treatment of patients with relapsed or refractory DLBCL who have
received at least two prior therapies and/or are not eligible for ASCT/HSCT. In addition, certain currently approved therapeutic
interventions are also being evaluated in late-stage development in earlier lines of therapy for the treatment of patients with DLBCL,
such as CD19-directed CAR-T therapies (e.g., tisagenlecleucel, axicabtagene ciloleucel, and lisocabtagene maraleucel; liso-cel),
CD79b-directed antibody-drug conjugates (e.g., polatuzumab vedotin-piiq) and CD19-directed cytolytic antibody (e.g. tafasitamab-
cxix in combination with lenalidomide.
Other agents are listed in the NCCN Guidelines and/or the European Society for Medical Oncology guidelines for use after one
to two prior therapies, although they have not been formally approved by the FDA for treatment of DLBCL, including: lenalidomide,
ibrutinib, and generic multiagent chemotherapy, including gemcitabine, oxaliplatin, and bendamustine.
In addition, a number of anti-cancer agents are in mid to late-stage development for the treatment of patients with DLBCL,
including immune modulators (e.g., pembrolizumab and durvalumab), bispecific antibodies (e.g., mosunetuzumab, epcoritamab,
odronextomab, plamotamab and magrolimab), antibody drug conjugates (e.g., loncastuximab tesirine, brentuximab vedotin and
naratuximab emtansine, small molecules (e.g., enzastaurin, acalabrutinib, venetoclax and zanubrutinib and monoclonal antibodies
(e.g., umbralisib/ublituximab).
Sales and Marketing
Following the July 2019 U.S. commercial launch of XPOVIO in multiple myeloma and subsequent FDA approvals in 2020 in
both earlier stage multiple myeloma and DLBCL, our commercial team has focused its efforts on educating health care providers on
the efficacy and safety profile of XPOVIO with the goal of enabling cancer patients access to this important treatment. We are
commercializing XPOVIO in the U.S. with our own focused, customer-facing teams, including sales specialists, reimbursement and
access support specialists, and nurse liaisons, each typically with years of experience in hematology/oncology. We have
approximately 70 field-based employees in the U.S. who call on academic and community-based healthcare professionals who treat
multiple myeloma and DLBCL, as well as our reimbursement team. We believe that the current size of our sales force is appropriate at
this time to effectively reach our target audience in the specialty markets in which we currently operate. Continued growth of our
current marketed products and the launch of any future products may require further expansion of our field force and support
organization within and outside of the U.S. For the foreseeable future, we intend to develop and commercialize XPOVIO and our
product candidates alone in the U.S. and expect to rely on partners to develop and commercialize our products in territories outside of
the U.S. In executing our strategy, our goal is to retain oversight over the global development and commercialization of our products
by playing an active role in their commercialization or finding partners who share our vision, values, and culture.
Our sales force is supported by an experienced sales leadership team and professionals in marketing, reimbursement and market
access, market research and analytics, commercial operations, finance and human resources. Our sales and marketing organization
uses a variety of pharmaceutical marketing strategies to promote XPOVIO, including sales calls, peer-to-peer education, non-personal
promotional, and digital content. We employ third-party vendors, such as advertising agencies, market research firms and suppliers of
marketing and other sales support-related services, to assist with our commercial activities.
Our patient support program, KaryForward®, is dedicated to providing assistance and resources to our patients with multiple
myeloma and DLBCL and their caregivers throughout their XPOVIO treatment. KaryForward® offers support in navigating insurance
coverage issues and processes and enabling continuation of our patients’ ability to access XPOVIO in the case of delays or
interruptions in the insurance process. We also offer a copay card, which offers eligible commercial patients who have insurance to
receive their prescription for as little as $5.00 per prescription. Further, the KaryForward® program assists eligible patients who do not
have insurance or lack coverage to be able to access XPOVIO treatment through our Patient Assistance Program. Under our
KaryForward® program, patients are assigned a dedicated nurse case manager, who serves as a point of contact to help patients and
their caregivers navigate the treatment process, including by explaining prescription instructions, providing psychosocial support and
additional nonclinical education regarding XPOVIO, highlighting expectations when taking XPOVIO and providing referrals for
additional third-party support, such as transportation assistance.
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Manufacturing
We do not own or operate, and have no plans to establish, any manufacturing facilities for our products or product candidates.
We currently rely, and expect to continue to rely, on third-party contract manufacturers to manufacture our products and product
candidates for our commercial and clinical use.
We have long-term supply agreements with third-party contract manufacturers to manufacture clinical and commercial supplies
of the drug product for selinexor and obtain all other supplies or materials for our other compounds on a purchase order basis. At this
time, we rely on a single source supplier for our active pharmaceutical ingredient and drug product manufacturing requirements.
Selinexor and eltanexor are small molecules and are manufactured in reliable and reproducible synthetic processes from readily
available starting materials. The chemistry and formulation processes of selinexor and eltanexor have been developed to meet our
large-scale manufacturing needs and do not require unusual equipment in the manufacturing process. We maintain sufficient inventory
levels throughout our supply chain to exceed our two-year forecasts for XPOVIO in order to minimize the risks of supply disruption.
To support the commercialization and development of our products and product candidates, we have developed a fully
integrated manufacturing support system, including scientific oversight, quality assurance, quality control, regulatory affairs and
inventory control policies and procedures. These support systems are intended to enable us to maintain high standards of quality for
our products. We intend to continue to outsource the manufacture and distribution of our products for the foreseeable future, and we
believe this manufacturing strategy will enable us to direct more of our financial resources to the commercialization and development
of our products and product candidates.
Government Regulation
Government authorities in the U.S., at the federal, state and local level, and in other countries and jurisdictions, including the
EU, extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, packaging,
storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, post-approval monitoring and reporting, and import
and export of pharmaceutical products. The processes for obtaining regulatory approvals in the U.S. and in foreign countries and
jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory authorities, require the
expenditure of substantial time and financial resources. The regulatory requirements applicable to drug product development, approval
and marketing are subject to change, and regulations and administrative guidance often are revised or reinterpreted by the agencies in
ways that may have a significant impact on our business.
Review and Approval of Drugs in the U.S.
In the U.S., the FDA regulates drug products under the Federal Food, Drug, and Cosmetic Act (the “FDCA”) and implementing
regulations. The failure to comply with applicable requirements under the FDCA and other applicable laws at any time during the
product development process, approval process or after approval may subject a sponsor to a variety of administrative or judicial
sanctions, including refusal by the FDA to approve pending applications, withdrawal of an approval, imposition of a clinical hold,
issuance of warning letters and other types of letters, product recalls, product seizures, total or partial suspension of production or
distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or criminal investigations
and penalties brought by the FDA and the Department of Justice or other governmental entities.
The FDA must approve our product candidates for therapeutic indications before they may be marketed in the U.S. A sponsor
seeking approval to market and distribute a new drug in the U.S. generally must satisfactorily complete each of the following steps
before the product candidate will be approved by the FDA:
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completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good
laboratory practice (“GLP”) regulations, as applicable;
design of a clinical protocol and submission to the FDA of an IND, which must take effect before human clinical trials
may begin;
approval by an independent institutional review board (“IRB”) representing each clinical site before each clinical trial may
be initiated;
performance of adequate and well-controlled human clinical trials in accordance with good clinical practices (“GCP”) to
establish the safety and efficacy of the proposed drug product for each indication;
preparation and submission to the FDA of a marketing application;
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review of the product by an FDA advisory committee, where appropriate or if applicable;
satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or
components thereof, are produced to assess compliance with current Good Manufacturing Practices (“cGMP”)
requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity,
strength, quality and purity;
satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the
clinical data;
payment of user fees and securing FDA approval of the New Drug Application (“NDA”); and
compliance with any post-approval requirements, including Risk Evaluation and Mitigation Strategies (“REMS”) and
post-approval studies required by the FDA.
Preclinical Studies
Preclinical studies include laboratory evaluation of the purity and stability of the manufactured drug substance or active
pharmaceutical ingredient and the formulated drug or drug product, as well as in vitro and animal studies to assess the safety and
activity of the drug for initial testing in humans and to establish a rationale for therapeutic use. The conduct of the preclinical tests and
formulation of the compounds for testing must comply with federal regulations and requirements, including GLP regulations and
standards and the U.S. Department of Agriculture’s Animal Welfare Act, if applicable. The results of the preclinical tests, together
with manufacturing information, analytical data, any available clinical data or literature and plans for clinical trials, among other
things, are submitted to the FDA as part of an IND and are typically referred to as IND-enabling studies.
Some long-term preclinical testing, such as animal tests of reproductive AEs and carcinogenicity, may continue after the IND is
submitted and may be required to be included in a marketing application. With passage of the FDA’s Modernization Act 2.0 in
December 2022, Congress eliminated provisions in both the FDCA and the Public Health Service Act (“PHSA”) that required animal
testing in support of an NDA or a biologics license application (“BLA”). While animal testing may still be conducted, the FDA was
authorized to rely on alternative non-clinical tests, including cell-based assays, microphysiological systems, or bioprinted or computer
models.
In addition, companies usually must also develop additional information about the chemistry and physical characteristics of the
investigational product and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP
requirements. The manufacturing process must be capable of consistently producing quality batches of the candidate product and,
among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final product.
Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the
candidate product does not undergo unacceptable deterioration over its shelf life.
The IND and IRB Processes
An IND is an exemption from the FDCA that allows an unapproved product candidate to be shipped in interstate commerce for
use in an investigational clinical trial and a request for FDA authorization to administer such investigational product to humans. An
IND must be secured prior to interstate shipment and administration of any product candidate that is not the subject of an approved
NDA or BLA. In support of a request for an IND, a sponsor must submit a protocol for each clinical trial and any subsequent protocol
amendments must be submitted to the FDA as part of the IND. An IND automatically becomes effective 30 days after receipt by the
FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the trial
on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial may
proceed. As a result, submission of an IND may not result in the FDA allowing clinical trials to commence.
Following commencement of a clinical trial under an IND, the FDA may also place a clinical hold or partial clinical hold on that
trial. A clinical hold is an order issued by the FDA to the sponsor to delay a proposed clinical investigation or to suspend an ongoing
investigation. A partial clinical hold is a delay or suspension of only part of the clinical work requested under the IND. For example, a
partial clinical hold might state that a specific protocol or part of a protocol may not proceed, while other parts of a protocol or other
protocols may do so. No more than 30 days after the imposition of a clinical hold or partial clinical hold, the FDA will provide the
sponsor with a written explanation of the basis for the hold. Following the issuance of a clinical hold or partial clinical hold, a clinical
investigation may only resume once the FDA has notified the sponsor that the investigation may proceed. The FDA will base that
determination on information provided by the sponsor correcting the deficiencies previously cited or otherwise satisfying the FDA that
the investigation can proceed or recommence. Occasionally, clinical holds are imposed due to manufacturing issues that may present
safety issues for the clinical study subjects.
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A sponsor may choose, but is not required, to conduct a foreign clinical study under an IND. When a foreign clinical study is
conducted under an IND, all FDA IND requirements must be met unless waived. When the foreign clinical study is not conducted
under an IND, the sponsor must ensure that the study complies with certain FDA regulatory requirements in order to use the study as
support for an IND or application for marketing approval. The FDA’s regulations are intended to help ensure the protection of human
subjects enrolled in non-IND foreign clinical studies, as well as the quality and integrity of the resulting data. They further help ensure
that non-IND foreign studies are conducted in a manner comparable to that required for IND studies.
In addition to the foregoing IND requirements, an IRB representing each institution participating in the clinical trial must review
and approve the plan for any clinical trial before it commences at that institution, and the IRB must conduct a continuing review and
reapprove the study at least annually. The IRB must review and approve, among other things, the study protocol and informed consent
information to be provided to study subjects. An IRB must operate in compliance with FDA regulations. An IRB can suspend or
terminate approval of a clinical trial at its institution, or an institution it represents, if the clinical trial is not being conducted in
accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious harm to patients.
Additionally, some trials are overseen by a Data and Safety Monitoring Board, an independent group of qualified experts
organized by the trial sponsor. This group provides authorization for whether or not a trial may move forward at designated check
points based on access that only the group maintains to available data from the study. Suspension or termination of development
during any phase of clinical trials can occur if it is determined that the participants or patients are being exposed to an unacceptable
health risk. Other reasons for suspension or termination may be made by us based on evolving business objectives and/or competitive
climate.
Reporting Clinical Trial Results
Under the PHSA, sponsors of clinical trials of certain FDA-regulated products, including prescription drugs and biologics, are
required to register and disclose certain clinical trial information on a public registry (clinicaltrials.gov) maintained by the U.S.
National Institutes of Health (the “NIH”). In particular, information related to the product, patient population, phase of investigation,
study sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial.
Although sponsors are also obligated to disclose the results of their clinical trials after completion, disclosure of the results can be
delayed in some cases for up to two years after the date of completion of the trial. The NIH’s Final Rule on registration and reporting
requirements for clinical trials became effective in 2017, and with the issuance of several notices of non-compliance since April 2021,
both the FDA and the NIH have recently signaled the government’s willingness to begin enforcing those requirements against non-
compliant clinical trial sponsors.
Specifically, the PHSA grants the Secretary of Health and Human Services the authority to issue a notice of noncompliance to a
responsible party for failure to submit clinical trial information as required. The responsible party, however, is allowed 30 days to
correct the noncompliance and submit the required information. The failure to submit clinical trial information to clinicaltrials.gov, as
required, is also a prohibited act under the FDCA with violations subject to potential civil monetary penalties of up to $10,000 for
each day the violation continues. In addition to civil monetary penalties, violations may also result in other regulatory action, such as
injunction and/or criminal prosecution or disqualification from federal grants.
Expanded Access to an Investigational Drug for Treatment Use
Expanded access, sometimes called “compassionate use,” is the use of IND products outside of clinical trials to treat patients
with serious or immediately life-threatening diseases or conditions when there are no comparable or satisfactory alternative treatment
options. The rules and regulations related to expanded access are intended to improve access to investigational drugs for patients who
may benefit from investigational therapies. FDA regulations allow access to investigational drugs under an IND by the company or the
treating physician for treatment purposes on a case-by-case basis for: individual patients (single-patient IND applications for treatment
in emergency settings and non-emergency settings); intermediate-size patient populations; and larger populations for use of the drug
under a treatment protocol or treatment IND Application.
There is no obligation for a sponsor to make its investigational products available for expanded access; however, as required by
amendments to the FDCA included in the 21st Century Cures Act (the “Cures Act”), passed in 2016, if a sponsor has a policy
regarding how it responds to expanded access requests with respect to product candidates in development to treat serious diseases or
conditions, it must make that policy publicly available. Sponsors are required to make such policies publicly available upon the earlier
of initiation of a Phase 2 or Phase 3 study for a covered investigational product; or 15 days after the investigational product receives
designation from the FDA as a breakthrough therapy, fast track product, or regenerative medicine advanced therapy.
In addition, in May 2018, the Right to Try Act was signed into law. The law, among other things, provides a federal framework
for certain patients to access certain IND products that have completed a Phase I clinical trial and that are undergoing investigation for
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FDA approval. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without
obtaining FDA permission under the FDA expanded access program. There is no obligation for a drug manufacturer to make its drug
products available to eligible patients as a result of the Right to Try Act, but the manufacturer must develop an internal policy and
respond to patient requests according to that policy.
Human Clinical Trials in Support of an NDA
Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified
investigators in accordance with GCP requirements, which include, among other things, the requirement that all research subjects
provide their informed consent in writing before their participation in any clinical trial. Clinical trials are conducted under written
study protocols detailing, among other things, the inclusion and exclusion criteria, the objectives of the study, the parameters to be
used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol, and any subsequent material amendment to the
protocol, must be submitted to the FDA as part of the IND, and progress reports detailing the status of the clinical trials must be
submitted to the FDA annually.
Human clinical trials are typically conducted in four sequential phases, which may overlap or be combined:
Phase 1: The drug is initially introduced into a small number of healthy human subjects or patients with the target disease (e.g.,
cancer) or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if
possible, to gain an early indication of its effectiveness and to determine optimal dosage.
Phase 2: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to
preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and
optimal dosage.
Phase 3: The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites,
in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product
for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the
labeling of the product. These clinical trials are commonly referred to as “pivotal” studies, which denotes a study that
presents the data that the FDA or other relevant regulatory agency will use to determine whether or not to approve a
drug.
Phase 4: Post-approval studies may be conducted after initial marketing approval. These studies are used to gain additional
experience from the treatment of patients in the intended therapeutic indication.
A clinical trial may combine the elements of more than one phase and the FDA often requires more than one Phase 3 trial to
support marketing approval of a product candidate. A company’s designation of a clinical trial as being of a particular phase is not
necessarily indicative that the study will be sufficient to satisfy the FDA requirements of that phase because this determination cannot
be made until the protocol and data have been submitted to and reviewed by the FDA. Moreover, as noted above, a pivotal trial is a
clinical trial that is believed to satisfy FDA requirements for the evaluation of a product candidate’s safety and efficacy such that it can
be used, alone or with other pivotal or non-pivotal trials, to support regulatory approval. Generally, pivotal trials are Phase 3 trials, but
they may be Phase 2 trials if they are adequate and well-controlled studies to establish the evidence needed for regulatory approval.
In December 2022, with the passage of the Food and Drug Omnibus Reform Act (“FDORA”), Congress required sponsors to
develop and submit a diversity action plan for each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological
product. These plans are meant to encourage the enrollment of more diverse patient populations in late-stage clinical trials of FDA-
regulated products. Specifically, actions plans must include the sponsor’s goals for enrollment, the underlying rationale for those
goals, and an explanation of how the sponsor intends to meet them. In addition to these requirements, the legislation directs the FDA
to issue new guidance on diversity action plans.
Interactions with FDA During the Clinical Development Program
Following the clearance of an IND and the commencement of clinical trials, the sponsor will continue to have interactions with
the FDA. An annual report on the progress of the study must be submitted to the FDA and more frequently if serious AEs occur. In
addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse
reactions; findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the product; and
any clinically important increase in the occurrence of a serious suspected adverse reaction over that listed in the protocol or
investigator brochure. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, or at
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all. The FDA will typically inspect one or more clinical sites to assure compliance with GCP and the integrity of the clinical data
submitted.
In addition, sponsors are given opportunities to meet with the FDA at certain points in the clinical development program.
Specifically, sponsors may meet with the FDA prior to the submission of an IND (Pre-IND meeting), at the end of Phase 1 clinical
trial (EOP1 meeting), at the end of Phase 2 clinical trial (EOP2 meeting) and before an NDA or BLA is submitted (Pre-NDA or Pre-
BLA meeting). Meetings at other times may also be requested. There are four types of meetings that occur between sponsors and the
FDA. Type A meetings are those that are necessary for an otherwise stalled product development program to proceed or to address an
important safety issue. Type B meetings include pre-IND and pre-NDA/pre-BLA meetings, as well as end of phase meetings such as
EOP2 meetings. A Type C meeting is any meeting other than a Type A or Type B meeting regarding the development and review of a
product, including, for example, meetings to facilitate early consultations on the use of a biomarker as a new surrogate endpoint that
has never been previously used as the primary basis for product approval in the proposed context of use. Finally, a Type D meeting is
focused on a narrow set of issues and does not require input from more than three disciplines or divisions.
These meetings provide an opportunity for the sponsor to share information about the data gathered to date with the FDA and
for the FDA to provide advice on the next phase of development. For example, at an EOP2, a sponsor may discuss its Phase 2 clinical
results and present its plans for the pivotal Phase 3 clinical trial(s) that it believes will support the approval of the new product. Such
meetings may be conducted in person, via teleconference/videoconference or written response only with minutes reflecting the
questions that the sponsor posed to the FDA and the agency’s responses. The FDA has indicated that its responses, as conveyed in
meeting minutes and advice letters, only constitute mere recommendations and/or advice made to a sponsor and, as such, sponsors are
not bound by such recommendations and/or advice. Nonetheless, from a practical perspective, a sponsor’s failure to follow the FDA’s
recommendations for design of a clinical program may put the program at significant risk of failure.
FDA approval of companion diagnostics
In August 2014, the FDA issued final guidance clarifying the requirements that apply to the approval of therapeutic products
and in vitro companion diagnostics. According to the guidance, for novel drugs, a companion diagnostic device and its corresponding
therapeutic should be approved or cleared contemporaneously by the FDA for the use indicated in the therapeutic product’s labeling.
Approval or clearance of the companion diagnostic device will ensure that the device has been adequately evaluated and has adequate
performance characteristics in the intended population. In July 2016, the FDA issued a draft guidance intended to assist sponsors of
the drug therapeutic and in vitro companion diagnostic device on issues related to co-development of the products.
The 2014 guidance also explains that a companion diagnostic device used to make treatment decisions in clinical trials of a
biologic product candidate generally will be considered an investigational device, unless it is employed for an intended use for which
the device is already approved or cleared. If used to make critical treatment decisions, such as patient selection, the diagnostic device
generally will be considered a significant risk device under the FDA’s Investigational Device Exemption (“IDE”) regulations. Thus,
the sponsor of the diagnostic device will be required to comply with the IDE regulations. According to the guidance, if a diagnostic
device and a product are to be studied together to support their respective approvals, both products can be studied in the same
investigational study, if the study meets both the requirements of the IDE regulations and the IND regulations. The guidance provides
that depending on the details of the study plan and subjects, a sponsor may seek to submit an IND alone, or both an IND and an IDE.
In April 2020, the FDA issued additional guidance that describes considerations for the development and labeling of companion
diagnostic devices to support the indicated uses of multiple drug or biological oncology products, when appropriate. This guidance
builds upon existing policy regarding the labeling of companion diagnostics. In its 2014 guidance, the FDA stated that if evidence is
sufficient to conclude that the companion diagnostic is appropriate for use with a specific group of therapeutic products, the
companion diagnostic’s intended use or indications for use should name the specific group of therapeutic products, rather than specific
products. The 2020 guidance expands on the policy statement in the 2014 guidance by recommending that companion diagnostic
developers consider a number of factors when determining whether their test could be developed, or the labeling for approved
companion diagnostics could be revised through a supplement, to support a broader labeling claim such as use with a specific group of
oncology therapeutic products (rather than listing an individual therapeutic product(s)).
Under the FDCA, in vitro diagnostics, including companion diagnostics, are regulated as medical devices. In the U.S., the
FDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical
device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing,
manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import and post-market surveillance.
Unless an exemption applies, diagnostic tests require pre-notification marketing clearance or approval from the FDA prior to
commercial distribution.
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The FDA previously has required in vitro companion diagnostics intended to select the patients who will respond to the product
candidate to obtain pre-market approval (“PMA”) simultaneously with approval of the therapeutic product candidate. The PMA
process, including the gathering of clinical and preclinical data and the submission to and review by the FDA, can take several years
or longer. It involves a rigorous premarket review during which the applicant must prepare and provide the FDA with reasonable
assurance of the device’s safety and effectiveness and information about the device and its components regarding, among other things,
device design, manufacturing and labeling.
Manufacturing and Other Regulatory Requirements
Concurrently with clinical trials, sponsors usually complete additional animal safety studies, develop additional information
about the chemistry and physical characteristics of the product candidate and finalize a process for manufacturing commercial
quantities of the product candidate in accordance with cGMP requirements. Specifically, the FDA’s regulations require that
pharmaceutical products be manufactured in specific approved facilities and in accordance with cGMPs. The cGMP regulations
include requirements relating to organization of personnel, buildings and facilities, equipment, control of components and product
containers and closures, production and process controls, packaging and labeling controls, holding and distribution, laboratory
controls, records and reports and returned or salvaged products. Manufacturers and other entities involved in the manufacture and
distribution of approved pharmaceuticals are required to register their establishments with the FDA and some state agencies, and they
are subject to periodic unannounced inspections by the FDA for compliance with cGMPs and other requirements.
Inspections must follow a “risk-based schedule” that may result in certain establishments being inspected more frequently.
Manufacturers may also have to provide, on request, electronic or physical records regarding their establishments. Delaying, denying,
limiting, or refusing inspection by the FDA may lead to a product being deemed to be adulterated. Changes to the manufacturing
process, specifications or container closure system for an approved product are strictly regulated and often require prior FDA approval
before being implemented. The FDA’s regulations also require, among other things, the investigation and correction of any deviations
from cGMP and the imposition of reporting and documentation requirements upon the sponsor and any third-party manufacturers
involved in producing the approved product.
Pediatric Studies
Under the Pediatric Research Equity Act (the “PREA”) applications and certain types of supplements to applications must
contain data that are adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric
subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.
The sponsor must submit an initial Pediatric Study Plan (“PSP”) within 60 days of an end-of-phase 2 meeting or as may be agreed
between the sponsor and the FDA. Those plans must contain an outline of the proposed pediatric study or studies the sponsor plans to
conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not
including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the
requirement to provide data from pediatric studies along with supporting information. The sponsor and the FDA must reach agreement
on a final plan. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be
considered based on data collected from nonclinical studies, early phase clinical trials, and/or other clinical development programs.
The statute also directs the FDA, in consultation with the National Cancer Institute, members of the internal committee established
under section 505C of the FDCA and the Pediatric Subcommittee of the Oncologic Drugs Advisory Committee, to establish, publish,
and regularly update a list of molecular targets considered, on the basis of data the FDA determines to be adequate, to be substantially
relevant to the growth or progression of a pediatric cancer, and that may trigger PREA requirements.
The FDA may, on its own initiative or at the request of the sponsor, grant deferrals for submission of some or all pediatric data
until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements. A deferral may be
granted for several reasons, including a finding that the product or therapeutic candidate is ready for approval for use in adults before
pediatric trials are complete or that additional safety or effectiveness data needs to be collected before the pediatric trials begin. The
law now requires the FDA to send a PREA Non-Compliance letter to sponsors who have failed to submit their pediatric assessments
required under the PREA, have failed to seek or obtain a deferral or deferral extension or have failed to request approval for a required
pediatric formulation. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan
designation intended for a non-cancer indication, although the FDA has recently taken steps to limit what it considers abuse of this
statutory exemption in PREA by announcing that it does not intend to grant any additional Orphan Drug Designations for rare
pediatric subpopulations of what is otherwise a common disease. The FDA also maintains a list of diseases that are exempt from
PREA requirements due to low prevalence of disease in the pediatric population.
Fast Track, Breakthrough Therapy, Priority Review and Regenerative Advanced Therapy Designations
The FDA is authorized to designate certain products for expedited development and review if they are intended to address an
unmet medical need in the treatment of a serious or life-threatening disease or condition. These programs are referred to as Fast Track
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designation, Breakthrough Therapy designation, Priority Review designation and Regenerative Advanced Therapy designation. None
of these expedited programs change the standards for approval but they may help expedite the development or approval process of
product candidates.
Specifically, the FDA may grant a product Fast Track designation if it is intended, whether alone or in combination with one or
more other products, for the treatment of a serious or life-threatening disease or condition, and it demonstrates the potential to address
unmet medical needs for such a disease or condition. For fast track products, sponsors may have greater interactions with the FDA and
the FDA may initiate review of sections of a fast track product’s application before the application is complete. This rolling review
may be available if the FDA determines, after preliminary evaluation of clinical data submitted by the sponsor, that a fast track
product may be effective. The sponsor must also provide, and the FDA must approve, a schedule for the submission of the remaining
information and the sponsor must pay applicable user fees. However, the FDA’s time period goal for reviewing a fast track application
does not begin until the last section of the application is submitted. In addition, the Fast Track designation may be withdrawn by the
FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.
Second, a product may be designated as a breakthrough therapy if it is intended, either alone or in combination with one or more
other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product
may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial
treatment effects observed early in clinical development. The FDA may take certain actions with respect to breakthrough therapies,
including holding meetings with the sponsor throughout the development process; providing timely advice to the product sponsor
regarding development and approval; involving more senior staff in the review process; assigning a cross-disciplinary project lead for
the review team; and taking other steps to design the clinical trials in an efficient manner.
Third, the FDA may designate a product for priority review if it is a product that treats a serious condition and, if approved,
would provide a significant improvement in safety or effectiveness. The FDA determines, on a case-by-case basis, whether the
proposed product represents a significant improvement when compared with other available therapies. Significant improvement may
be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial reduction of a treatment-
limiting product reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, and
evidence of safety and effectiveness in a new subpopulation. A priority designation is intended to direct overall attention and resources
to the evaluation of such applications, and to shorten the FDA’s goal for taking action on a marketing application from ten months to
six months.
Finally, with passage of the Cures Act in December 2016, Congress authorized the FDA to accelerate review and approval of
products designated as regenerative advanced therapies. A product is eligible for this designation if it is a regenerative medicine
therapy (as defined in the Cures Act) that is intended to treat, modify, reverse or cure a serious or life-threatening disease or condition
and preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for such disease or
condition. The benefits of a regenerative advanced therapy designation include early interactions with FDA to expedite development
and review, benefits available to breakthrough therapies, potential eligibility for priority review and accelerated approval based on
surrogate or intermediate endpoints.
Accelerated Approval Pathway
The FDA may grant accelerated approval to a drug for a serious or life-threatening condition that provides meaningful
therapeutic advantage to patients over existing treatments based upon a determination that the drug has an effect on a surrogate
endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant accelerated approval for such a condition when
the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or
mortality (“IMM”) and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity,
rarity or prevalence of the condition and the availability or lack of alternative treatments. Drugs granted accelerated approval must
meet the same statutory standards for safety and effectiveness as those granted traditional approval.
For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic
image, physical sign or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. Surrogate
endpoints can often be measured more easily or more rapidly than clinical endpoints. An intermediate clinical endpoint is a
measurement of a therapeutic effect that is considered reasonably likely to predict the clinical benefit of a drug, such as an effect on
IMM. The FDA has limited experience with accelerated approvals based on intermediate clinical endpoints, but has indicated that
such endpoints generally may support accelerated approval where the therapeutic effect measured by the endpoint is not itself a
clinical benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to
predict the ultimate clinical benefit of a drug.
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The accelerated approval pathway is most often used in settings in which the course of a disease is long and an extended period
of time is required to measure the intended clinical benefit of a drug, even if the effect on the surrogate or intermediate clinical
endpoint occurs rapidly. Thus, accelerated approval has been used extensively in the development and approval of drugs for treatment
of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the
typical disease course requires lengthy and sometimes large trials to demonstrate a clinical or survival benefit.
The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, an additional
post-approval confirmatory study(ies) to verify and describe the drug’s clinical benefit or, in certain cases where the clinical endpoint
takes longer to mature, the completion of the study. As a result, a drug candidate approved on this basis is subject to rigorous post-
marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the
clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, would
allow the FDA to withdraw the drug from the market on an expedited basis. All promotional materials for drug candidates approved
under accelerated regulations are subject to prior review by the FDA.
With passage of the FDORA, in December 2022, Congress modified certain provisions governing accelerated approval of drug
and biologic products. Specifically, the new legislation authorized FDA to: require a sponsor to have its confirmatory clinical trial
underway before accelerated approval is awarded, require a sponsor of a product granted accelerated approval to submit progress
reports on its post-approval studies to FDA every six months (until the study is completed), and use expedited procedures to withdraw
accelerated approval of an NDA or BLA after the confirmatory trial fails to verify the product’s clinical benefit. Further, the FDORA
requires the agency to publish on its website “the rationale for why a post-approval study is not appropriate or necessary” whenever it
decides not to require such a study upon granting accelerated approval.
Acceptance and Review of NDAs
Assuming successful completion of the required clinical testing, the results of the preclinical studies and clinical trials, along
with information relating to the product’s chemistry, manufacturing, controls, safety updates, patent information, abuse information
and proposed labeling, are submitted to the FDA as part of an application requesting approval to market the product candidate for one
or more indications. Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a product’s use
or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data
submitted must be sufficient in quality and quantity to establish the safety and efficacy of a drug product. The fee required for the
submission and review of an application under the Prescription Drug User Fee Act (the “PDUFA”), is substantial (for example, for
fiscal year 2023 this application fee is approximately $3.25 million), and the sponsor of an approved application is also subject to an
annual program fee, currently more than $394,000 per eligible prescription product. These fees are typically adjusted annually, and
exemptions and waivers may be available under certain circumstances, such as where a waiver is necessary to protect the public
health, where the fee would present a significant barrier to innovation, or where the sponsor is a small business submitting its first
human therapeutic application for review.
The FDA conducts a preliminary review of all applications within 60 days of receipt and must inform the sponsor at that time or
before whether an application is sufficiently complete to permit substantive review. In pertinent part, the FDA’s regulations state that
an application “shall not be considered as filed until all pertinent information and data have been received” by the FDA. In the event
that FDA determines that an application does not satisfy this standard, it will issue a Refuse to File (“RTF”) determination to the
sponsor. Typically, a RTF will be based on administrative incompleteness, such as clear omission of information or sections of
required information; scientific incompleteness, such as omission of critical data, information or analyses needed to evaluate safety
and efficacy or provide adequate directions for use; or inadequate content, presentation, or organization of information such that
substantive and meaningful review is precluded. The FDA may request additional information rather than accept an application for
filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to
review before the FDA accepts it for filing.
After the submission is accepted for filing, the FDA begins an in-depth substantive review of the application. The FDA reviews
the application to determine, among other things, whether the proposed product is safe and effective for its intended use, whether it
has an acceptable purity profile and whether the product is being manufactured in accordance with cGMP. Under the goals and
policies agreed to by the FDA under PDUFA, the FDA has ten months from the filing date in which to complete its initial review of a
standard application that is a new molecular entity, and six months from the filing date for an application with “priority review.” The
review process may be extended by the FDA for three additional months to consider new information or in the case of a clarification
provided by the sponsor to address an outstanding deficiency identified by the FDA following the original submission. Despite these
review goals, it is not uncommon for FDA review of an application to extend beyond the PDUFA goal date.
In connection with its review of an application, the FDA will typically submit information requests to the sponsor and set
deadlines for responses thereto. The FDA will also conduct a pre-approval inspection of the manufacturing facilities for the new
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product to determine whether the manufacturing processes and facilities comply with cGMPs. The FDA will not approve the product
unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and are adequate to
assure consistent production of the product within required specifications. The FDA also may inspect the sponsor and one or more
clinical trial sites to assure compliance with IND and GCP requirements and the integrity of the clinical data submitted to the FDA. To
ensure cGMP and GCP compliance by its employees and third-party contractors, a sponsor may incur significant expenditure of time,
money and effort in the areas of training, record keeping, production and quality control.
Additionally, the FDA may refer an application, including applications for novel product candidates which present difficult
questions of safety or efficacy, to an advisory committee for review, evaluation and recommendation as to whether the application
should be approved and under what conditions. Typically, an advisory committee is a panel of independent experts, including
clinicians and other scientific experts that reviews, evaluates and provides a recommendation as to whether the application should be
approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it considers such
recommendations when making final decisions on approval. Data from clinical trials are not always conclusive, and the FDA or its
advisory committee may interpret data differently than the sponsor interprets the same data. The FDA may also re-analyze the clinical
trial data, which could result in extensive discussions between the FDA and the sponsor during the review process.
The FDA also may require submission of a REMS if it determines that a REMS is necessary to ensure that the benefits of the
product outweigh its risks and to assure the safe use of the product. The REMS could include medication guides, physician
communication plans, assessment plans and/or elements to assure safe use, such as restricted distribution methods, patient registries or
other risk minimization tools. The FDA determines the requirement for a REMS, as well as the specific REMS provisions, on a case-
by-case basis. If the FDA concludes a REMS is needed, the sponsor of the application must submit a proposed REMS and the FDA
will not approve the application without a REMS.
Decisions on NDAs
The FDA reviews a sponsor to determine, among other things, whether the product is safe and whether it is effective for its
intended use(s), with the latter determination being made on the basis of substantial evidence. The term “substantial evidence” is
defined under the FDCA as “evidence consisting of adequate and well-controlled investigations, including clinical investigations, by
experts qualified by scientific training and experience to evaluate the effectiveness of the product involved, on the basis of which it
could fairly and responsibly be concluded by such experts that the product will have the effect it purports or is represented to have
under the conditions of use prescribed, recommended, or suggested in the labeling or proposed labeling thereof.”
The FDA has interpreted this evidentiary standard to require at least two adequate and well-controlled clinical investigations to
establish effectiveness of a new product. Under certain circumstances, however, the FDA has indicated that a single trial with certain
characteristics and additional information may satisfy this standard. This approach was subsequently endorsed by Congress in 1998
with legislation providing, in pertinent part, that “If [FDA] determines, based on relevant science, that data from one adequate and
well-controlled clinical investigation and confirmatory evidence (obtained prior to or after such investigation) are sufficient to
establish effectiveness, the FDA may consider such data and evidence to constitute substantial evidence.” This modification to the law
recognized the potential for the FDA to find that one adequate and well controlled clinical investigation with confirmatory evidence,
including supportive data outside of a controlled trial, is sufficient to establish effectiveness. In December 2019, the FDA issued draft
guidance further explaining the studies that are needed to establish substantial evidence of effectiveness. It has not yet finalized that
guidance.
After evaluating the application and all related information, including the advisory committee recommendations, if any, and
inspection reports of manufacturing facilities and clinical trial sites, the FDA will issue either a Complete Response Letter (“CRL”) or
an approval letter. To reach this determination, the FDA must determine that the drug is effective and that its expected benefits
outweigh its potential risks to patients. This “benefit-risk” assessment is informed by the extensive body of evidence about the
product’s safety and efficacy in the NDA. This assessment is also informed by other factors, including: the severity of the underlying
condition and how well patients’ medical needs are addressed by currently available therapies; uncertainty about how the premarket
clinical trial evidence will extrapolate to real-world use of the product in the post-market setting; and whether risk management tools
are necessary to manage specific risks. In connection with this assessment, the FDA review team will assemble all individual reviews
and other documents into an “action package,” which becomes the record for FDA review. The review team then issues a
recommendation, and a senior FDA official makes a decision.
A CRL indicates that the review cycle of the application is complete, and the application will not be approved in its present
form. A CRL generally outlines the deficiencies in the submission and may require substantial additional testing or information in
order for the FDA to reconsider the application. The CRL may require additional clinical or other data, additional pivotal Phase 3
clinical trial(s) and/or other significant and time- consuming requirements related to clinical trials, preclinical studies or
manufacturing. If a CRL is issued, the sponsor will have one year to respond to the deficiencies identified by the FDA, at which time
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the FDA can deem the application withdrawn or, in its discretion, grant the sponsor an additional six-month extension to respond. The
FDA has committed to reviewing resubmissions in response to an issued CRL in either two or six months depending on the type of
information included. Even with the submission of this additional information, however, the FDA ultimately may decide that the
application does not satisfy the regulatory criteria for approval. The FDA has taken the position that a CRL is not final agency action
making the determination subject to judicial review.
An approval letter, on the other hand, authorizes commercial marketing of the product with specific prescribing information for
specific indications. That is, the approval will be limited to the conditions of use (e.g., patient population, indication) described in the
FDA-approved labeling. Further, depending on the specific risk(s) to be addressed, the FDA may require that contraindications,
warnings or precautions be included in the product labeling, require that post-approval trials, including Phase 4 clinical trials, be
conducted to further assess a product’s safety after approval, require testing and surveillance programs to monitor the product after
commercialization or impose other conditions, including distribution and use restrictions or other risk management mechanisms under
a REMS which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further
marketing of a product based on the results of post-marketing trials or surveillance programs. After approval, some types of changes to
the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further
testing requirements and FDA review and approval.
Under the Ensuring Innovation Act, which was signed into law in April 2021, the FDA must publish action packages
summarizing its decisions to approve new drugs within 30 days of approval of such products. To date, CRLs are not publicly available
documents.
Post-Approval Requirements
Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA,
including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution,
advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved
product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are
continuing, annual user fee requirements for any marketed products and the establishments at which such products are manufactured,
as well as new application fees for supplemental applications with clinical data.
In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to
register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and
these state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and often
require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations
from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the
sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and
quality control to maintain cGMP compliance.
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is
not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a
product, including AEs of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory
requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or
clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential
consequences include, among other things:
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restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or
product recalls;
fines, warning letters or holds on post-approval clinical trials;
refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product
license approvals;
product seizure or detention, or refusal to permit the import or export of products; or
injunctions or the imposition of civil or criminal penalties.
The FDA strictly regulates the marketing, labeling, advertising and promotion of prescription drug products placed on the
market. This regulation includes, among other things, standards and regulations for direct-to-consumer advertising, communications
regarding unapproved uses, industry-sponsored scientific and educational activities, and promotional activities involving the Internet
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and social media. Promotional claims about a drug’s safety or effectiveness are prohibited before the drug is approved. After approval,
a drug product generally may not be promoted for uses that are not approved by the FDA, as reflected in the product’s prescribing
information. In September 2021, the FDA published final regulations which describe the types of evidence that the agency will
consider in determining the intended use of a drug or biologic.
It may be permissible, under very specific, narrow conditions, for a manufacturer to engage in nonpromotional, non-misleading
communication regarding off-label information, such as distributing scientific or medical journal information. Moreover, with passage
of the Pre-Approval Information Exchange Act in December 2022, sponsors of products that have not been approved may proactively
communicate to payors certain information about products in development to help expedite patient access upon product approval.
Previously, such communications were permitted under FDA guidance but the new legislation explicitly provides protection to
sponsors who convey certain information about products in development to payors, including unapproved uses of approved products.
If a company is found to have promoted off-label uses, it may become subject to adverse public relations and administrative and
judicial enforcement by the FDA, the Department of Justice, or the Office of the Inspector General of the Department of Health and
Human Services (“HHS”), as well as state authorities. This could subject a company to a range of penalties that could have a
significant commercial impact, including civil and criminal fines and agreements that materially restrict the manner in which a
company promotes or distributes drug products. The federal government has levied large civil and criminal fines against companies
for alleged improper promotion, and has also requested that companies enter into consent decrees or permanent injunctions under
which specified promotional conduct is changed or curtailed.
In addition, the distribution of prescription pharmaceutical products is subject to a variety of federal and state laws, the most
recent of which is still in the process of being phased into the U.S. supply chain and regulatory framework. The Prescription Drug
Marketing Act (the “PDMA”) was the first federal law to set minimum standards for the registration and regulation of drug
distributors by the states and to regulate the distribution of drug samples. Today, both the PDMA and state laws limit the distribution
of prescription pharmaceutical product samples and impose requirements to ensure accountability in distribution. Congress more
recently enacted the Drug Supply Chain Security Act (the “DSCSA”), which made significant amendments to the FDCA, including by
replacing certain provisions from the PDMA pertaining to wholesale distribution of prescription drugs with a more comprehensive
statutory scheme. The DSCSA now requires uniform national standards for wholesale distribution and, for the first time, for third-
party logistics providers; it also provides for preemption of certain state laws in the areas of licensure and prescription drug
traceability.
Section 505(b)(2) NDAs
NDAs for most new drug products are based on two full clinical studies which must contain substantial evidence of the safety
and efficacy of the proposed new product. These applications are submitted under Section 505(b)(1) of the FDCA. The FDA is,
however, authorized to approve an alternative type of NDA under Section 505(b)(2) of the FDCA. This type of application allows the
sponsor to rely, in part, on the FDA’s previous findings of safety and efficacy for a similar product, or published literature.
Specifically, Section 505(b)(2) applies to NDAs for a drug for which the investigations made to show whether or not the drug is safe
for use and effective in use and relied upon by the sponsor for approval of the application “were not conducted by or for the sponsor
and for which the sponsor has not obtained a right of reference or use from the person by or for whom the investigations were
conducted.”
Section 505(b)(2) authorizes the FDA to approve an NDA based on safety and effectiveness data that were not developed by the
sponsor. NDAs filed under Section 505(b)(2) may provide an alternate and potentially more expeditious pathway to FDA approval for
new or improved formulations or new uses of previously approved products. If the Section 505(b)(2) sponsor can establish that
reliance on the FDA’s previous approval is scientifically appropriate, the sponsor may eliminate the need to conduct certain preclinical
or clinical studies of the new product. The FDA may also require companies to perform additional studies or measurements to support
the change from the approved product. The FDA may then approve the new drug candidate for all or some of the label indications for
which the referenced product has been approved, as well as for any new indication sought by the Section 505(b)(2) sponsor.
Generic Drugs and Regulatory Exclusivity
In 1984, with passage of the Hatch-Waxman Amendments to the FDCA, Congress authorized the FDA to approve generic drugs
that are the same as drugs previously approved by the FDA under the NDA provisions of the statute. To obtain approval of a generic
drug, a sponsor must submit an abbreviated new drug application (“ANDA”) to the agency. In support of such applications, a generic
manufacturer may rely on the preclinical and clinical testing previously conducted for a drug product previously approved under an
NDA, known as the reference-listed drug (“RLD”).
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Specifically, in order for an ANDA to be approved, the FDA must find that the generic version is identical to the RLD with
respect to the active ingredients, the route of administration, the dosage form, and the strength of the drug. At the same time, the FDA
must also determine that the generic drug is “bioequivalent” to the innovator drug. Under the statute, a generic drug is bioequivalent to
a RLD if “the rate and extent of absorption of the drug do not show a significant difference from the rate and extent of absorption of
the listed drug...”
Upon approval of an ANDA, the FDA indicates whether the generic product is “therapeutically equivalent” to the RLD in its
publication Approved Drug Products with Therapeutic Equivalence Evaluations, also referred to as the Orange Book. Clinicians and
pharmacists consider a therapeutic equivalent generic drug to be fully substitutable for the RLD. In addition, by operation of certain
state laws and numerous health insurance programs, the FDA’s designation of therapeutic equivalence often results in substitution of
the generic drug without the knowledge or consent of either the prescribing clinicians or patient.
Under the Hatch-Waxman Act, the FDA may not approve an ANDA or 505(b)(2) application until any applicable period of non-
patent exclusivity for the RLD has expired. The FDCA provides a period of five years of non-patent data exclusivity for a new drug
containing a new chemical entity (“NCE”). For the purposes of this provision, the FDA has consistently taken the position that an
NCE is a drug that contains no active moiety that has previously been approved by the FDA in any other NDA. This interpretation was
confirmed with enactment of the Ensuring Innovation Act in April 2021. An active moiety is the molecule or ion responsible for the
physiological or pharmacological action of the drug substance. In cases where such NCE exclusivity has been granted, a generic or
follow-on drug application may not be filed with the FDA until the expiration of five years unless the submission is accompanied by a
Paragraph IV certification, in which case the sponsor may submit its application four years following the original product approval.
The FDCA also provides for a period of three years of exclusivity if the NDA includes reports of one or more new clinical
investigations, other than bioavailability or bioequivalence studies, that were conducted by or for the sponsor and are essential to the
approval of the application. This three-year exclusivity period often protects changes to a previously approved drug product, such as a
new dosage form, route of administration, combination or indication. Three-year exclusivity would be available for a drug product that
contains a previously approved active moiety, provided the statutory requirement for a new clinical investigation is satisfied. Unlike
five-year NCE exclusivity, an award of three-year exclusivity does not block the FDA from accepting ANDAs seeking approval for
generic versions of the drug as of the date of approval of the original drug product. The FDA typically makes decisions about awards
of data exclusivity shortly before a product is approved.
The FDA must establish a priority review track for certain generic drugs, requiring the FDA to review a drug application within
eight months for a drug that has three or fewer approved drugs listed in the Orange Book and is no longer protected by any patent or
regulatory exclusivities, or is on the FDA’s drug shortage list. The new legislation also authorizes the FDA to expedite review of
competitor generic therapies or drugs with inadequate generic competition, including holding meetings with or providing advice to the
drug sponsor prior to submission of the application.
Hatch-Waxman Patent Certification and the 30-Month Stay
As part of the submission of an NDA or certain supplemental applications, NDA sponsors are required to list with the FDA each
patent with claims that cover the sponsor’s product or an approved method of using the product. Upon approval of a new drug, each of
the patents listed in the application for the drug is then published in the Orange Book. The FDA’s regulations governing patient
listings were largely codified into law with enactment of the Orange Book Modernization Act in January 2021. When an ANDA
sponsor files its application with the FDA, the sponsor is required to certify to the FDA concerning any patents listed for the reference
product in the Orange Book, except for patents covering methods of use for which the ANDA sponsor is not seeking approval. To the
extent that the Section 505(b)(2) sponsor is relying on studies conducted for an already approved product, the sponsor is required to
certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA
sponsor would.
Specifically, the sponsor must certify with respect to each patent that:
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the required patent information has not been filed;
the listed patent has expired;
the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or
the listed patent is invalid, unenforceable or will not be infringed by the new product.
A certification that the new product will not infringe the already approved product’s listed patents or that such patents are
invalid or unenforceable is called a Paragraph IV certification. If the sponsor does not challenge the listed patents or indicates that it is
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not seeking approval of a patented method of use, the ANDA application will not be approved until all the listed patents claiming the
referenced product have expired (other than method of use patents involving indications for which the ANDA sponsor is not seeking
approval).
If the ANDA sponsor has provided a Paragraph IV certification to the FDA, the sponsor must also send notice of the Paragraph
IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA and patent holders
may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent
infringement lawsuit within 45 days after the receipt of a Paragraph IV certification automatically prevents the FDA from approving
the ANDA until the earlier of 30 months after the receipt of the Paragraph IV notice, expiration of the patent, or a decision in the
infringement case that is favorable to the ANDA sponsor.
To the extent that the Section 505(b)(2) sponsor is relying on studies conducted for an already approved product, the sponsor is
required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an
ANDA sponsor would. As a result, approval of a Section 505(b)(2) NDA can be stalled until all the listed patents claiming the
referenced product have expired, until any non-patent exclusivity, such as exclusivity for obtaining approval of an NCE, listed in the
Orange Book for the referenced product has expired, and, in the case of a Paragraph IV certification and subsequent patent
infringement suit, until the earlier of 30 months, settlement of the lawsuit or a decision in the infringement case that is favorable to the
Section 505(b)(2) sponsor.
Orphan Drug Designation and Exclusivity
Orphan Drug Designation in the U.S. is designed to encourage sponsors to develop products intended for treatment of rare
diseases or conditions. In the U.S., a rare disease or condition is statutorily defined as a condition that affects fewer than 200,000
individuals in the U.S. or that affects more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that
the cost of developing and making available the product for the disease or condition will be recovered from sales of the product in the
U.S.
Orphan Drug Designation qualifies a company for tax credits and potentially market exclusivity for seven years following the
date of the product’s approval if granted by the FDA. An application for designation as an orphan product can be made any time prior
to the filing of an application for approval to market the product. A product becomes an orphan when it receives Orphan Drug
Designation from the Office of Orphan Products Development at the FDA based on acceptable confidential requests. The product
must then go through the review and approval process like any other product.
A sponsor may request Orphan Drug Designation of a previously unapproved product or new orphan indication for an already
marketed product. In addition, a sponsor of a product that is otherwise the same product as an already approved orphan drug may seek
and obtain Orphan Drug Designation for the subsequent product for the same rare disease or condition if it can present a plausible
hypothesis that its product may be clinically superior to the first approved product. More than one sponsor may receive Orphan Drug
Designation for the same product for the same rare disease or condition, but each sponsor seeking Orphan Drug Designation must file
a complete request for designation.
If a product with orphan designation receives the first FDA approval for the disease or condition for which it has such
designation or for a select indication or use within the rare disease or condition for which it was designated, the product generally will
receive orphan drug exclusivity. Orphan drug exclusivity means that the FDA may not approve another sponsor’s marketing
application for the same product for the same disease or condition for seven years, except in certain limited circumstances. If a product
designated as an orphan drug ultimately receives marketing approval for an indication broader than what was designated in its orphan
drug application, it may not be entitled to exclusivity.
The period of market exclusivity begins on the date that the marketing application is approved by the FDA and applies only to
the disease or condition for which the product has been designated. Orphan drug exclusivity will not bar approval of another product
under certain circumstances, including if the company with orphan drug exclusivity is not able to meet market demand or the
subsequent product is shown to be clinically superior to the approved product on the basis of greater efficacy or safety, or providing a
major contribution to patient care. This is the case despite an earlier court opinion holding that the Orphan Drug Act unambiguously
required the FDA to recognize orphan drug exclusivity regardless of a showing of clinical superiority. Under Omnibus legislation
signed by former President Trump in December 2020, the requirement for a product to show clinical superiority applies to drug
products that received Orphan Drug Designation before enactment of amendments to the FDCA in 2017 but have not yet been
approved by FDA.
In September 2021, the Court of Appeals for the 11th Circuit held that, for the purpose of determining the scope of market
exclusivity, the term “same disease or condition” in the statute means the designated “rare disease or condition” and could not be
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interpreted by the FDA to mean the “indication or use.” Thus, the court concluded, orphan drug exclusivity applies to the entire
designated disease or condition rather than the “indication or use.” It is unclear how this court decision will be addressed by the FDA
and Congress.
Pediatric Exclusivity
Pediatric exclusivity is a type of non-patent marketing exclusivity in the U.S. and, if granted, provides for the attachment of an
additional six months of exclusivity. For drug products, the six-month exclusivity may be attached to the term of any existing patent or
regulatory exclusivity, including the orphan exclusivity and regulatory exclusivities available under the Hatch-Waxman provisions of
the FDCA. For biologic products, the six-month period may be attached to any existing regulatory exclusivities but not to any patent
terms. The conditions for pediatric exclusivity include the FDA’s determination that information relating to the use of a new product
in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatric clinical
trials, and the sponsor agreeing to perform, and reporting on, the requested clinical trials within the statutory timeframe. This six-
month exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a written request from the FDA for
such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is
deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are
submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or
patents that cover the product are extended by six months. Although this is not a patent term extension, it effectively extends the
regulatory period during which the FDA cannot approve another application.
Patent Term Restoration and Extension
A patent claiming a new drug product may be eligible for a limited patent term extension under the Hatch-Waxman Act, which
permits a patent restoration of up to five years for patent term lost during product development and the FDA regulatory review. The
restoration period granted is typically one-half the time between the effective date of an IND and the submission date of an NDA, plus
the time between the submission date of an NDA and the ultimate approval date. Patent term restoration cannot be used to extend the
remaining term of a patent past a total of 14 years from the product’s approval date. Only one patent applicable to an approved drug
product is eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent in
question. A patent that covers multiple drugs for which approval is sought can only be extended in connection with one of the
approvals. The USPTO reviews and approves the application for any patent term extension or restoration in consultation with the
FDA.
Healthcare Compliance
In the U.S., biopharmaceutical manufacturers and their products are subject to extensive regulation at the federal and state level,
such as laws intended to prevent fraud and abuse in the healthcare industry. Healthcare providers and third-party payors play a
primary role in the recommendation and prescription of pharmaceutical products that are granted marketing approval. Arrangements
with providers, consultants, third-party payors, and customers are subject to broadly applicable fraud and abuse, anti-kickback, false
claims laws, reporting of payments to healthcare providers and patient privacy laws and regulations and other healthcare laws and
regulations that may constrain our business and/or financial arrangements. Restrictions under applicable federal and state healthcare
laws and regulations, including certain laws and regulations applicable only if we have marketed products, include the following:
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federal false claims, false statements and civil monetary penalties laws prohibiting, among other things, any person from
knowingly presenting, or causing to be presented, a false claim for payment of government funds or knowingly making, or
causing to be made, a false statement to get a false claim paid;
federal healthcare program anti-kickback law, which prohibits, among other things, persons from offering, soliciting,
receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for, or the
purchasing or ordering of, a good or service for which payment may be made under federal healthcare programs such as
Medicare and Medicaid;
the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which, in addition to privacy
protections applicable to healthcare providers and other entities, prohibits executing a scheme to defraud any healthcare
benefit program or making false statements relating to healthcare matters;
federal laws that require pharmaceutical manufacturers to report certain calculated product prices to the government or
provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement
under government healthcare programs;
federal Open Payments (or federal “sunshine” law), which requires pharmaceutical and medical device companies to
monitor and report certain financial interactions with certain healthcare providers to the Center for Medicare & Medicaid
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Services (the “CMS”), within the HHS for re-disclosure to the public, as well as ownership and investment interests held
by physicians and their immediate family members;
federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that
potentially harm consumers;
analogous state laws and regulations, including: state anti-kickback and false claims laws; state laws requiring
pharmaceutical companies to comply with specific compliance standards, restrict financial interactions between
pharmaceutical companies and healthcare providers or require pharmaceutical companies to report information related to
payments to health care providers or marketing expenditures; and state laws governing privacy, security and breaches of
health information in certain circumstances, many of which differ from each other in significant ways and often are not
preempted by HIPAA, thus complicating compliance efforts; and
laws and regulations prohibiting bribery and corruption such as the FCPA, which, among other things, prohibits U.S.
companies and their employees and agents from authorizing, promising, offering, or providing, directly or indirectly,
corrupt or improper payments or anything else of value to foreign government officials, employees of public international
organizations or foreign government-owned or affiliated entities, candidates for foreign public office, and foreign political
parties or officials thereof.
Violations of these laws are punishable by criminal and/or civil sanctions, including, in some instances, exclusion from
participation in federal and state health care programs, such as Medicare and Medicaid. Ensuring compliance is time consuming and
costly. Similar healthcare laws and regulations exist in the EU and other jurisdictions, including reporting requirements detailing
interactions with and payments to healthcare providers and laws governing the privacy and security of personal information.
Healthcare Reform
A primary trend in the U.S. healthcare industry and elsewhere is cost containment. There have been a number of federal and
state proposals during the last few years regarding the pricing of drug and biologic products, limiting coverage and reimbursement for
medical products and other changes to the healthcare system in the U.S.
In March 2010, the U.S. Congress enacted the Patient Protection and Affordable Care Act, as amended by the Health Care and
Education Reconciliation Act of 2010 (collectively, the “PPACA”), which, among other things, includes changes to the coverage and
payment for pharmaceutical products under government healthcare programs. Other legislative changes have been proposed and
adopted since the PPACA was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for
spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit
reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the
legislation’s automatic reduction to several government programs. These changes included aggregate reductions to Medicare
payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2031.
Pursuant to the Coronavirus Aid, Relief and Economic Security Act and subsequent legislation, these Medicare sequester reductions
were reduced and suspended, with the full 2% cut resuming in July 2022.
Since enactment of the PPACA, there have been, and continue to be, numerous legal challenges and Congressional actions to
repeal and replace provisions of the law. For example, with enactment of the Tax Cuts and Jobs Act of 2017 (the “TCJA”), which was
signed by former President Trump in December 2017, Congress repealed the “individual mandate.” The repeal of this provision,
which requires most Americans to carry a minimal level of health insurance, became effective in 2019. In December 2018, a U.S.
District Court judge in the Northern District of Texas ruled that the individual mandate portion of the PPACA is an essential and
inseverable feature of the PPACA, and therefore because the mandate was repealed as part of the TCJA, the remaining provisions of
the PPACA are invalid as well. The U.S. Supreme Court heard this case in November 2020 and, in June 2021, dismissed this action
after finding that the plaintiffs did not have standing to challenge the constitutionality of the PPACA. Litigation and legislation over
the PPACA are likely to continue, with unpredictable and uncertain results.
The Trump Administration also took executive actions to undermine or delay implementation of the PPACA, including
directing federal agencies with authorities and responsibilities under the PPACA to waive, defer, grant exemptions from, or delay the
implementation of any provision of the PPACA that would impose a fiscal or regulatory burden on states, individuals, healthcare
providers, health insurers, or manufacturers of pharmaceuticals or medical devices. In January 2021, however, President Biden
rescinded those orders and issued a new executive order that directs federal agencies to reconsider rules and other policies that limit
access to healthcare, and consider actions that will protect and strengthen that access. Under this order, federal agencies are directed to
re-examine: policies that undermine protections for people with pre-existing conditions, including complications related to COVID 19;
demonstrations and waivers under Medicaid and the PPACA that may reduce coverage or undermine the programs, including work
requirements; policies that undermine the Health Insurance Marketplace or other markets for health insurance; policies that make it
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more difficult to enroll in Medicaid and under the PPACA; and policies that reduce affordability of coverage or financial assistance,
including for dependents.
Pharmaceutical Prices
The prices of prescription pharmaceuticals have also been the subject of considerable discussion in the U.S. There have been
several recent U.S. congressional inquiries, as well as proposed and enacted state and federal legislation designed to, among other
things, bring more transparency to pharmaceutical pricing, review the relationship between pricing and manufacturer patient
programs, and reduce the costs of pharmaceuticals under Medicare and Medicaid. In 2020, former President Trump issued several
executive orders intended to lower the costs of prescription products and certain provisions in these orders have been incorporated into
regulations. These regulations include an interim final rule implementing a most favored nation model for prices that would tie
Medicare Part B payments for certain physician-administered pharmaceuticals to the lowest price paid in other economically advanced
countries, effective January 1, 2021. That rule, however, has been subject to a nationwide preliminary injunction and, in December
2021, CMS issued a final rule to rescind it. With issuance of this rule, CMS stated that it will explore all options to incorporate value
into payments for Medicare Part B pharmaceuticals and improve beneficiaries' access to evidence-based care.
In addition, in October 2020, HHS and the FDA published a final rule allowing states and other entities to develop a Section 804
Importation Program (“SIP”) to import certain prescription drugs from Canada into the U.S. The final rule is currently the subject of
ongoing litigation, but at least six states (Vermont, Colorado, Florida, Maine, New Mexico, and New Hampshire) have passed laws
allowing for the importation of drugs from Canada with the intent of developing SIPs for review and approval by the FDA. Further, in
November 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers
to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law. The
rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee
arrangements between pharmacy benefit managers and manufacturers, the implementation of which has been delayed until January 1,
2026 by the Infrastructure Investment and Jobs Act.
In July 2021, President Biden signed Executive Order 14063, which focuses on, among other things, the price of
pharmaceuticals. The Order directs the HHS to create a plan within 45 days to combat “excessive pricing of prescription
pharmaceuticals and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the federal government for such
pharmaceuticals, and to address the recurrent problem of price gouging.” In September 2021, HHS released its plan to reduce
pharmaceutical prices. The key features of that plan are to: (a) make pharmaceutical prices more affordable and equitable for all
consumers and throughout the health care system by supporting pharmaceutical price negotiations with manufacturers; (b) improve
and promote competition throughout the prescription pharmaceutical industry by supporting market changes that strengthen supply
chains, promote biosimilars and generic drugs, and increase transparency; and (c) foster scientific innovation to promote better
healthcare and improve health by supporting public and private research and making sure that market incentives promote discovery of
valuable and accessible new treatments.
More recently, on August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law by President Biden. The
new legislation has implications for Medicare Part D, which is a program available to individuals who are enrolled in Medicare Part A
and/or Medicare Part B to give them the option of paying a monthly premium for outpatient prescription drug coverage. Among other
things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices
that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that
outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program
(beginning in 2025). The IRA permits the Secretary of the HHS to implement many of these provisions through guidance, as opposed
to regulation, for the initial years.
Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for certain costly single-
source drug and biologic products that do not have competing generics or biosimilars and are reimbursed under Medicare Part B and
Part D. CMS may negotiate prices for ten high-cost drugs paid for by Medicare Part D starting in 2026, followed by 15 Part D drugs in
2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond. This provision applies to drug products
that have been approved for at least nine years and biologics that have been licensed for 13 years, but it does not apply to drugs and
biologics that have been approved for a single rare disease or condition. Further, the legislation subjects drug manufacturers to civil
monetary penalties and a potential excise tax for failing to comply with the legislation by offering a price that is not equal to or less
than the negotiated “maximum fair price” under the law or for taking price increases that exceed inflation. The legislation also
requires manufacturers to pay rebates for drugs in Medicare Part D whose price increases exceed inflation. The new law also caps
Medicare out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at $2,000 a year.
At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to
control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on
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certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage
importation from other countries and bulk purchasing. A number of states, for example, require drug manufacturers and other entities
in the drug supply chain, including health carriers, pharmacy benefit managers, wholesale distributors, to disclose information about
pricing of pharmaceuticals. In addition, regional healthcare organizations and individual hospitals are increasingly using bidding
procedures to determine what pharmaceutical products and which suppliers will be included in their prescription pharmaceutical and
other healthcare programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our
product pricing. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which
could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced
demand for our product candidates or additional pricing pressures.
Federal and State Data Privacy Laws
Under HIPAA, the HHS has issued regulations to protect the privacy and security of protected health information, used or
disclosed by covered entities including certain healthcare providers, health plans and healthcare clearinghouses. HIPAA also regulates
standardization of data content, codes and formats used in healthcare transactions and standardization of identifiers for health plans
and providers. HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and their
regulations, including the omnibus final rule published in January 2013, also imposes certain obligations on the business associates of
covered entities that obtain protected health information in providing services to or on behalf of covered entities. In addition to federal
privacy regulations, there are a number of state laws governing confidentiality and security of health information that are applicable to
our business. In addition to possible federal civil and criminal penalties for HIPAA violations, state attorneys general are authorized to
file civil actions for damages or injunctions in federal courts to enforce HIPAA and seek attorney’s fees and costs associated with
pursuing federal civil actions. Accordingly, state attorneys general (along with private plaintiffs) have brought civil actions seeking
injunctions and damages resulting from alleged violations of HIPAA’s privacy and security rules. New laws and regulations governing
privacy and security may be adopted in the future as well.
Additionally, California recently enacted legislation that has been dubbed the first “GDPR-like” law in the U.S. Known as the
California Consumer Privacy Act (the “CCPA”), it creates new individual privacy rights for consumers (as that word is broadly
defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or
households. The CCPA went into effect on January 1, 2020 and requires covered companies to provide new disclosures to California
consumers, provide such consumers new ways to opt-out of certain sales of personal information, and allow for a new cause of action
for data breaches. Additionally, effective on January 1, 2023, the California Privacy Rights Act (the “CPRA”) significantly modified
the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information. The CPRA also creates a
new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA. The CCPA and CPRA could
impact our business activities depending on how it is interpreted and exemplifies the vulnerability of our business to not only cyber
threats but also the evolving regulatory environment related to personal data and protected health information.
Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available under
such laws, it is possible that some of our current or future business activities, including certain clinical research, sales and marketing
practices and the provision of certain items and services to our customers, could be subject to challenge under one or more of such
privacy and data security laws. The heightening compliance environment and the need to build and maintain robust and secure
systems to comply with different privacy compliance and/or reporting requirements in multiple jurisdictions could increase the
possibility that a healthcare company may fail to comply fully with one or more of these requirements. If our operations are found to
be in violation of any of the privacy or data security laws or regulations described above that are applicable to us, or any other laws
that apply to us, we may be subject to penalties, including potentially significant criminal, civil and administrative penalties, damages,
fines, imprisonment, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements
and/or oversight if we become subject to a consent decree or similar agreement to resolve allegations of non-compliance with these
laws, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and
our results of operations. To the extent that any product candidates we may develop, once approved, are sold in a foreign country, we
may be subject to similar foreign laws.
Review and Approval of Drug Products in the European Union
In order to market any product outside of the U.S., a company must also comply with numerous and varying regulatory
requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical
trials, marketing authorization, commercial sales and distribution of drug products. Whether or not a company obtains FDA approval
for a product candidate, it must obtain approval by the comparable regulatory authorities of foreign countries or economic areas, such
as the 27-member EU, before it may commence clinical trials or market products in those countries or areas. As in the U.S., medicinal
products can be marketed only if a marketing authorization from the competent regulatory agencies has been obtained. Similar to the
U.S., the various phases of preclinical and clinical research in the EU are subject to significant regulatory controls.
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The EU/European Economic Area (“EEA”) applies harmonized regulatory rules for medicinal products, for the approval process
and requirements governing the conduct of clinical trials, and for the regulatory approval of medicinal products. However, pricing and
reimbursement for medicinal products varies greatly between countries and jurisdictions and can involve additional testing for health
technology assessments and additional administrative review periods. The time required to obtain approval in other countries and
jurisdictions might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country or
jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or
jurisdiction may negatively impact the regulatory process in others.
Clinical Trial Approval
Before the new Clinical Trials Regulation, (EU) No 536/2014 (the “Clinical Trials Regulation”) came into application in
January 2022, the Clinical Trials Directive 2001/20/EC, the Directive 2005/28/EC on GCP and the related national implementing
provisions of the individual EU Member States governed the system for the approval of clinical trials in the EU. Under this system, a
sponsor had to obtain prior approval from the competent national authority of the EU Member States in which the clinical trial is to be
conducted. Furthermore, the sponsor may only start a clinical trial at a specific study site after the competent ethics committee has
issued a favorable opinion. The clinical trial application must be accompanied by, among other documents, an IMPD (the Common
Technical Document) with supporting information prescribed by Directive 2001/20/EC, Directive 2005/28/EC, and where relevant the
implementing national provisions of the individual EU Member States and further detailed in applicable guidance documents. All
suspected unexpected serious adverse reactions to the investigational drug product that occur during the clinical trial have to be
reported to the competent national authority and the Ethics Committee of the Member State where they occurred.
In April 2014, the Clinical Trials Regulation was adopted to govern clinical trials in the EU. The Clinical Trials Regulation aims
to simplify and streamline the approval of clinical trials in the EU. The main characteristics of the regulation include: a streamlined
application procedure via a single entry point, the “EU portal”; a single set of documents to be prepared and submitted for the
application as well as simplified reporting procedures for clinical trial sponsors; and a harmonized procedure for the assessment of
applications for clinical trials, which is divided in two parts. Part I is assessed by the competent authorities of all EU Member States in
which an application for authorization of a clinical trial has been submitted (Member States concerned). Part II is assessed separately
by each Member State concerned. Strict deadlines have been established for the assessment of clinical trial applications. The role of
the relevant ethics committees in the assessment procedure will continue to be governed by the national law of the concerned EU
Member State. However, overall related timelines will be defined by the Clinical Trials Regulation.
The Clinical Trials Regulation new Regulation came into application on January 31, 2022, following confirmation of full
functionality of the Clinical Trials Information System (“CTIS”) through an independent audit by the EC in mid-2020. The Clinical
Trials Regulation came into application in all the EU Member States, repealing the current Clinical Trials Directive 2001/20/EC.
According to the transitional provisions, if a clinical trial continues for more than three years from the day on which the Clinical Trials
Regulation became applicable (i.e. beyond January 31, 2025), any clinical trials approved under the Clinical Trials Directive that
continue running will need to comply with the Clinical Trials Regulation. Under the Clinical Trials Regulation, EU Member States
and EEA countries use the CTIS to carry out their legal responsibilities to assess and oversee clinical trials. However, according to
transitional provisions, for the first year of implementation and until January 30, 2023, clinical trial sponsors could choose whether to
apply to start a clinical trial via the CTIS or under the old Clinical Trials Directive, but from January 31, 2023 onwards, clinical trial
sponsors need to apply to start a clinical trial via the CTIS.
Parties conducting certain clinical trials must, as in the U.S., post clinical trial information in the EU at the EudraCT website:
https://eudract.ema.europa.eu.
Procedures Governing Approval of Drug Products
To obtain marketing authorization of a product under EU regulatory systems, a sponsor must submit an MAA either under a
centralized or decentralized procedure/mutual recognition procedure (“MRP”). The centralized procedure provides for the grant of a
single marketing authorization by the EC that is valid for all EU member states. The centralized procedure is compulsory for specific
products, including for medicines produced by certain biotechnological processes, products designated as orphan medicinal products,
advanced therapy products and products with a new active substance indicated for the treatment of certain diseases. For products with
a new active substance indicated for the treatment of other diseases and products that are highly innovative or for which a centralized
process is in the interest of patients, the centralized procedure may be optional.
Under the centralized procedure, the EMA's Committee for Medicinal Products for Human Use (“CHMP”) established at the
EMA is responsible for conducting the initial assessment of a product. The CHMP is also responsible for several post-authorization
and maintenance activities, such as the assessment of modifications or extensions to an existing marketing authorization. Under the
centralized procedure in the EU, the maximum timeframe for the evaluation of an MAA is 210 days, excluding clock stops, when
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additional information or written or oral explanation is to be provided by the sponsor in response to questions of the CHMP.
Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is of major interest from the
point of view of public health and in particular from the viewpoint of therapeutic innovation. In this circumstance, the EMA ensures
that the opinion of the CHMP is given within 150 days.
The decentralized procedure or MRP is available to sponsors who wish to market a product in various EU member states where
such product has not received marketing approval in any EU member states before. The decentralized procedure provides for approval
by one or more other, or concerned, member states of an assessment of an application performed by one member state designated by
the sponsor, known as the reference member state (“RMS”). Under this procedure, a sponsor submits an application based on identical
dossiers and related materials, including a draft summary of product characteristics, and draft labeling and package leaflet, to the RMS
and concerned member states. The RMS prepares a draft assessment report and drafts of the related materials within 210 days after
receipt of a valid application. Within 90 days of receiving the RMS’s assessment report and related materials, each concerned member
state must decide whether to approve the assessment report and related materials. If a member state cannot approve the assessment
report and related materials on the grounds of potential serious risk to public health, the disputed points are subject to a dispute
resolution mechanism and may eventually be referred to the EC, whose decision is binding on all member states.
Within this framework, manufacturers may seek approval of hybrid medicinal products under Article 10(3) of Directive
2001/83/EC. Hybrid applications rely, in part, on information and data from a reference product and new data from appropriate
preclinical tests and clinical trials. Such applications are necessary when the proposed product does not meet the strict definition of a
generic medicinal product, or bioavailability studies cannot be used to demonstrate bioequivalence, or there are changes in the active
substance(s), therapeutic indications, strength, pharmaceutical form or route of administration of the generic product compared to the
reference medicinal product. In such cases the results of tests and trials must be consistent with the data content standards required in
the Annex to the Directive 2001/83/EC, as amended by Directive 2003/63/EC.
Hybrid medicinal product applications have automatic access to the centralized procedure when the reference product was
authorized for marketing via that procedure. Where the reference product was authorized via the decentralized procedure, a hybrid
application may be accepted for consideration under the centralized procedure if the sponsor shows that the medicinal product
constitutes a significant therapeutic, scientific or technical innovation, or the granting of a community authorization for the medicinal
product is in the interest of patients at the community level.
Approval of companion diagnostic devices
In the EU, medical devices such as companion diagnostics must comply with the General Safety and Performance Requirements
(“SPRs”) detailed in Annex I of the EU Medical Devices Regulation (Regulation (EU) 2017/745) (“MDR”), which came into force in
May 2021 and replaced the previously applicable EU Medical Devices Directive (Council Directive 93/42/EEC). Compliance with
SPRs and additional requirements applicable to companion medical devices is a prerequisite to be able to affix the Conformitè
Europëenne mark of conformity to medical devices, without which they cannot be marketed or sold. To demonstrate compliance with
the SPRs, a manufacturer must undergo a conformity assessment procedure, which varies according to the type of medical device and
its classification. The MDR is meant to establish a uniform, transparent, predictable, and sustainable regulatory framework across the
EU for medical devices.
Separately, the regulatory authorities in the EU also adopted a new In Vitro Diagnostic Regulation (Regulation (EU) 2017/746),
which became effective in May 2022. The new regulation replaces the In Vitro Diagnostics Directive (IVDD) 98/79/EC.
Manufacturers wishing to apply to a notified body for a conformity assessment of their in vitro diagnostic medical device had until
May 2022 to update their technical documentation to meet the requirements and comply with the new, more stringent regulation. The
new regulation will, among other things:
•
•
•
•
•
strengthen the rules on placing devices on the market and reinforce surveillance once they are available;
establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of
devices placed on the market;
improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique
identification number;
set up a central database to provide patients, healthcare professionals and the public with comprehensive information on
products available in the EU; and
strengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an
additional check by experts before they are placed on the market.
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Pediatric Studies
Prior to obtaining a marketing authorization in the EU, sponsors have to demonstrate compliance with all measures included in
an EMA-approved Pediatric Investigation Plan (“PIP”) covering all subsets of the pediatric population, unless the EMA has granted a
product-specific waiver, a class waiver or a deferral for one or more of the measures included in the PIP. The respective requirements
for all marketing authorization procedures are set forth in Regulation (EC) No 1901/2006, which is referred to as the Pediatric
Regulation. This requirement also applies when a company wants to add a new indication, pharmaceutical form or route of
administration for a medicine that is already authorized. The Pediatric Committee of the EMA (the “PDCO”) may grant deferrals for
some medicines, allowing a company to delay development of the medicine in children until there is enough information to
demonstrate its effectiveness and safety in adults. The PDCO may also grant waivers when development of a medicine in children is
not needed or is not appropriate because (a) the product is likely to be ineffective or unsafe in part or all of the pediatric population;
(b) the disease or condition occurs only in the adult population; or (c) the product does not represent a significant therapeutic benefit
over existing treatments for the pediatric population. Before a MAA can be filed, or an existing marketing authorization can be
amended, the EMA determines that companies actually comply with the agreed studies and measures listed in each relevant PIP.
PRIME Designation
In March 2016, the EMA launched an initiative to facilitate development of product candidates in indications, often rare, for
which few or no therapies currently exist. The PRIority MEdicines (“PRIME”) scheme is intended to encourage drug development in
areas of unmet medical need and provides accelerated assessment of products representing substantial innovation reviewed under the
centralized procedure. Products from small- and medium-sized enterprises may qualify for earlier entry into the PRIME scheme than
larger companies. Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early
and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program
elements, and accelerated MAA assessment once a dossier has been submitted. Importantly, a dedicated Agency contact and
rapporteur from the CHMP or Committee for Advanced Therapies are appointed early in PRIME scheme, facilitating increased
understanding of the product at EMA’s Committee level. A kick-off meeting initiates these relationships and includes a team of
multidisciplinary experts at the EMA to provide guidance on the overall development and regulatory strategies.
Periods of Authorization and Renewals
Marketing authorization is valid for five years in principle and the marketing authorization may be renewed after five years on
the basis of a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the authorizing member state. To
this end, the marketing authorization holder must provide the EMA or the competent authority with a consolidated version of the file
with respect to quality, safety and efficacy, including all variations introduced since the marketing authorization was granted, at least
six months before the marketing authorization ceases to be valid. Once renewed, the marketing authorization is valid for an unlimited
period, unless the EC or the competent authority decides, on justified grounds relating to pharmacovigilance, to proceed with one
additional five-year renewal. Any authorization which is not followed by the actual placing of the drug on the EU market (in case of
centralized procedure) or on the market of the authorizing member state within three years after authorization ceases to be valid (the
so-called sunset clause).
Regulatory Requirements after Marketing Authorization
As in the U.S., both marketing authorization holders and manufacturers of medicinal products are subject to comprehensive
regulatory oversight by the EMA and the competent authorities of the individual EU Member States both before and after grant of the
manufacturing and marketing authorizations. The holder of an EU marketing authorization for a medicinal product must, for example,
comply with EU pharmacovigilance legislation and its related regulations and guidelines which entail many requirements for
conducting pharmacovigilance or the assessment and monitoring of the safety of medicinal products. The manufacturing process for
medicinal products in the EU is also highly regulated and regulators may shut down manufacturing facilities that they believe do not
comply with regulations. Manufacturing requires a manufacturing authorization, and the manufacturing authorization holder must
comply with various requirements set out in the applicable EU laws, including compliance with EU cGMP standards when
manufacturing medicinal products and active pharmaceutical ingredients.
In the EU, the advertising and promotion of approved products are subject to EU Member States’ laws governing the promotion
of medicinal products, interactions with clinicians, misleading and comparative advertising and unfair commercial practices. In
addition, other legislation adopted by individual EU Member States may apply to the advertising and promotion of medicinal
products. These laws require that promotional materials and advertising in relation to medicinal products comply with the product’s
Summary of Product Characteristics (“SmPC”) as approved by the competent authorities. Promotion of a medicinal product that does
not comply with the SmPC is considered to constitute off-label promotion, which is prohibited in the EU.
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Data and Market Exclusivity
In the EU, NCEs qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market
exclusivity. This data exclusivity, if granted, prevents regulatory authorities in the EU from referencing the innovator’s data to assess a
generic (abbreviated) application for eight years, after which generic marketing authorizations can be submitted, and the innovator’s
data may be referenced, but not approved for two years. The overall ten-year period will be extended to a maximum of eleven years if,
during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new
therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit
in comparison with existing therapies. Even if a compound is considered to be a new chemical entity and the sponsor is able to gain
the prescribed period of data exclusivity, another company nevertheless could also market another version of the product if such
company can complete a full MAA with a complete database of pharmaceutical test, preclinical tests and clinical trials and obtain
marketing approval of its product.
Orphan Drug Designation and Exclusivity
The criteria for designating an orphan medicinal product in the EU are similar in principle to those in the U.S. Under Article 3
of Regulation (EC) 141/2000, a medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or
treatment of a life- threatening or chronically debilitating condition, (2) either (a) such condition affects no more than five in 10,000
persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would not
generate sufficient return in the EU to justify investment and (3) there exists no satisfactory method of diagnosis, prevention or
treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to
those affected by the condition. The term ‘significant benefit’ is defined in Regulation (EC) 847/2000 to mean a clinically relevant
advantage or a major contribution to patient care.
Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a
marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication. During this ten-year
market exclusivity period, the EMA or the competent authorities of the Member States of the EEA, cannot accept an application for a
marketing authorization for a similar medicinal product for the same indication. A similar medicinal product is defined as a medicinal
product containing a similar active substance or substances as contained in an authorized orphan medicinal product, and which is
intended for the same therapeutic indication. The application for orphan designation must be submitted before the application for
marketing authorization. The sponsor will receive a fee reduction for the MAA if the orphan designation has been granted, but not if
the designation is still pending at the time the marketing authorization is submitted. Orphan designation does not convey any
advantage in, or shorten the duration of, the regulatory review and approval process.
The ten-year market exclusivity in the EU may be reduced to six years if, at the end of the fifth year, it is established that the
product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify
maintenance of market exclusivity. Additionally, marketing authorization may be granted to a similar product for the same indication
at any time if: (1) the second sponsor can establish that its product, although similar, is safer, more effective or otherwise clinically
superior; (2) the sponsor consents to a second orphan medicinal product application; or (3) the sponsor cannot supply enough orphan
medicinal product.
Pediatric Exclusivity
If a sponsor obtains a marketing authorization in all EU Member States, or a marketing authorization granted in the centralized
procedure by the EC, and the study results for the pediatric population are included in the product information, even when negative,
the medicine is then eligible for an additional six-month period of qualifying patent protection through extension of the term of the
SPC, or alternatively a one year extension of the regulatory market exclusivity from ten to eleven years, as selected by the marketing
authorization holder.
Patent Term Extensions
The EU also provides for patent term extension through SPCs. The rules and requirements for obtaining a SPC are similar to
those in the U.S. An SPC may extend the term of a patent for up to five years after its originally scheduled expiration date and can
provide up to a maximum of fifteen years of marketing exclusivity for a drug. In certain circumstances, these periods may be extended
for six additional months if pediatric exclusivity is obtained. Although SPCs are available throughout the EU, sponsors must apply on
a country-by-country basis. Similar patent term extension rights exist in certain other foreign jurisdictions outside the EU.
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Reimbursement and Pricing Decisions for Approved Products
In the EU, pricing and reimbursement schemes vary widely from country to country. Some countries provide that products may
be marketed only after a reimbursement price has been agreed. Some countries may require the completion of additional studies that
compare the cost-effectiveness of a particular product candidate to currently available therapies or so-called health technology
assessments, in order to obtain reimbursement or pricing approval. For example, EU Member States have the option to restrict the
range of products for which their national health insurance systems provide reimbursement and to control the prices of medicinal
products for human use. EU Member States may approve a specific price for a product or it may instead adopt a system of direct or
indirect controls on the profitability of the company placing the product on the market. Other EU Member States allow companies to
fix their own prices for products, but monitor and control prescription volumes and issue guidance to physicians to limit prescriptions.
Recently, many countries in the EU have increased the amount of discounts required on pharmaceuticals and these efforts could
continue as countries attempt to manage health care expenditures, especially in light of the severe fiscal and debt crises experienced by
many countries in the EU. The downward pressure on health care costs in general, particularly prescription products, has become
intense. As a result, increasingly high barriers are being erected to the entry of new products. Political, economic and regulatory
developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been
obtained. Reference pricing used by various EU Member States, and parallel trade, i.e., arbitrage between low-priced and high-priced
EU Member States, can further reduce prices. There can be no assurance that any country that has price controls or reimbursement
limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any products, if approved in
those countries.
General Data Protection Regulation
Many countries outside of the U.S. maintain rigorous laws governing the privacy and security of personal information. The
collection, use, disclosure, transfer, or other processing of personal data, including personal health data, regarding individuals who are
located in the EEA, and the processing of personal data that takes place in the EEA, is subject to the GDPR, which became effective in
May 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, and it
imposes heightened requirements on companies that process health and other sensitive data, such as requiring in many situations that a
company obtain the consent of the individuals to whom the sensitive personal data relate before processing such data. Examples of
obligations imposed by the GDPR on companies processing personal data that fall within the scope of the GDPR include providing
information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of
personal data, appointing a data protection officer, providing notification of data breaches and taking certain measures when engaging
third-party processors.
The GDPR also imposes strict rules on the transfer of personal data to countries outside the EEA, including the U.S., and
permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million
or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer
associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting
from violations of the GDPR. Compliance with the GDPR is a rigorous and time-intensive process that may increase the cost of doing
business or require companies to change their business practices to ensure full compliance. In July 2020, the Court of Justice of the
EU (the “CJEU”) invalidated the EU-U.S. Privacy Shield framework, one of the mechanisms used to legitimize the transfer of
personal data from the EEA to the U.S. The CJEU decision also drew into question the long-term viability of an alternative means of
data transfer, the standard contractual clauses, for transfers of personal data from the EEA to the U.S. Additionally, in October 2022,
President Biden signed an executive order to implement the EU-U.S. Data Privacy Framework, which would serve as a replacement to
the EU-U.S. Privacy Shield. The EC initiated the process to adopt an adequacy decision for the EU-U.S. Data Privacy Framework in
December 2022. It is unclear if and when the framework will be finalized and whether it will be challenged in court. The uncertainty
around this issue may further impact our business operations in the EU. Following the withdrawal of the U.K. from the EU, the U.K.
Data Protection Act 2018 applies to the processing of personal data that takes place in the U.K. and includes parallel obligations to
those set forth by GDPR, including those relating to data transfers.
Additionally, in October 2022, President Biden signed an executive order to implement the EU-U.S. Data Privacy Framework,
which would serve as a replacement to the EU-US Privacy Shield. The EC initiated the process to adopt an adequacy decision for the
EU-US Data Privacy Framework in December 2022. It is unclear if and when the framework will be finalized and whether it will be
challenged in court. The uncertainty around this issue may further impact our business operations in the EU.
Brexit and the Regulatory Framework in the United Kingdom
The United Kingdom’s withdrawal from the EU took place on January 31, 2020. The EU and the U.K. reached an agreement on
their new partnership in the Trade and Cooperation Agreement (the “Agreement”), which was applied provisionally beginning on
January 1, 2021 and which entered into force on May 1, 2021. The Agreement focuses primarily on free trade by ensuring no tariffs or
quotas on trade in goods, including healthcare products such as medicinal products. Thereafter, the EU and the U.K. will form two
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separate markets governed by two distinct regulatory and legal regimes. As such, the Agreement seeks to minimize barriers to trade in
goods while accepting that border checks will become inevitable as a consequence that the U.K. is no longer part of the single market.
As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency (the “MHRA”), became responsible for supervising
medicines and medical devices in Great Britain, comprising England, Scotland and Wales under domestic law whereas Northern
Ireland continues to be subject to EU rules under the Northern Ireland Protocol. The MHRA will rely on the Human Medicines
Regulations 2012 (SI 2012/1916) (as amended) (the “HMR”), as the basis for regulating medicines. The HMR has incorporated into
the domestic law the body of EU law instruments governing medicinal products that pre-existed prior to the U.K.’s withdrawal from
the EU. Since a significant proportion of the regulatory framework for pharmaceutical products in the U.K. covering the quality,
safety, and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales, and distribution of
pharmaceutical products is derived from EU directives and regulations, Brexit may have a material impact upon the regulatory regime
with respect to the development, manufacture, importation, approval and commercialization of our product candidates in the U.K. For
example, the U.K. is no longer covered by the centralized procedures for obtaining EU-wide marketing authorization from the EMA,
and a separate marketing authorization will be required to market our product candidates in the U.K. However, until December 31,
2023, it is possible for the MHRA to rely on a decision taken by the EC/CHMP on the approval of MAA/variations via the centralized
procedure (so called Reliance Procedure).
Human Capital
We believe that the success of our business is fundamentally due to our greatest asset, our employees. To that end, we have
invested significant resources toward the attraction, retention and development of our people and the promotion of diversity in our
workforce. To support these goals, our human resources programs and initiatives underscore our core values (Innovation, Courage,
Alignment and Accountability, Resiliency and Energy) and are designed to prioritize employees’ well-being, support their career
development, offer competitive wages and benefits, and enhance our culture through efforts geared toward making the workplace
more enriching, engaging, and inclusive.
To attract, retain and reward our employees, we provide competitive total rewards aimed at supporting the financial, physical
and emotional health of our employees and their families. We currently offer all new employees equity in our company and as
incentive to all our employees in connection with our annual performance reviews. Our equity and cash incentive plans are designed
to increase stockholder value and the success of our company by motivating our employees to perform to the best of their abilities and
achieve our collective objectives. In addition, many of our employees are stockholders of our company through participation in our
Employee Stock Purchase Plan, which aligns the interests of our employees with our stockholders by providing stock ownership on a
tax-deferred basis. We also provide up to a 4% match of components of employee compensation to our Section 401(k) retirement
savings plan.
We strive to provide our employees with a safe and healthy work environment and believe that the overall health, safety and
wellness of our employees is critical to our long-term success and our growth as a business. As such, we provide our employees and
their families with access to a variety of innovative, flexible and convenient health and wellness programs, including benefits that
provide protection and security so they can have peace of mind concerning events that may require time away from work or that
impact their financial well-being. Our full-time employees are all eligible to participate in our health, vision, dental, life, and long-
term disability insurance plans. To encourage employees to keep up with routine medical care and participate in our wellness program,
we fund a Health Reimbursement Account for participating employees that partially covers employee deductibles and to help our
employees cover medical expenses pre-tax, we also offer employees a Flexible Spending Account in addition to providing a monthly
wellness fund designed to support broad well-being activities. In addition to the monthly wellness fund, our employees outside of the
U.S. receive competitive compensation and benefits that are regularly benchmarked to ensure market norms and reflect our standards.
All employees globally have access to complimentary virtual fitness programs, mental and emotional health support services, as well
as support programs to assist working parents with childcare and tutoring. This benefit also extends to eldercare, pet care, and other
needs facing our diverse global team.
We encourage and support the growth and development of our employees and, wherever possible, seek to fill positions
internally, through lateral and promotional advancements and by leveraging our employee referral process. Continual learning and
career development is encouraged through ongoing performance and development conversations with employees, a formal mentorship
program, tuition assistance, employee and leadership training programs targeting both technical and soft skills, and customized
corporate training engagements and seminars where employees are encouraged to attend in connection with current and future roles.
Employees at all levels have an opportunity to develop and hone their skillsets, which provides a critically important growth path and
continuity for our top performers.
Further, we strongly believe that diversity is a key driver of success. We strive to bring together employees with a wide variety
of backgrounds, skills and culture and encourage all our employees to maintain a work environment in which our differences are
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respected. We have implemented company-wide diversity initiatives in order to support greater awareness and understanding of the
behaviors we expect from our employees, such as our Dialogue on Diversity program, which provides a sense of belonging,
psychological safety and a stronger sense of community to our employees. We have partnered with the biotech industry's largest
LGBTQ professional group, as well as other local organizations, to access diverse talent in the biotech industry and gain visibility in
the community to build more diversity in the organization. We have also established key working relationships with local universities
where the majority of the student population have been identified as belonging to a minority group as we expand our successful,
annual internship program.
As of February 10, 2023, we had 385 employees. None of our employees are represented by a labor union or covered by a
collective bargaining agreement, nor have we experienced work stoppages. We believe that relations with our employees are good.
Corporate Responsibility
We are highly committed to policies and practices focused on environmental, social, and governance (“ESG”), positively
impacting our social community and maintaining and cultivating good corporate governance. By focusing on ESG policies and
practices, we believe we can affect a meaningful and positive change in our community and continue to cultivate our open and
inclusive collaborative culture. Some of the initiatives that we were most proud of in 2022 included continuing support for the
scientific, medical, patient, and local communities in which we operate, including patient education, public health, quality of
healthcare, and disease awareness, sponsoring local youth programs that focus on providing educational resources and career
development opportunities for members of underserved communities and schools with diverse populations, and supporting patient
community needs in response to natural disasters through both charitable giving to the community at large and specifically for patients
impacted by these disasters.
We also enable our employees to participate in various charity events, including walks, races, and other events that impact
change in the communities of the patients we serve. This allows our employees to support causes that are meaningful to them and their
families and aligns with our mission, goals, and vision.
Our ESG Report, which describes our approach to ESG programs, is available on our website at
https://investors.karyopharm.com/corporate-sustainability. Information in our ESG Report is not incorporated by reference into this
Form 10-K. We look forward to continuing our commitment to giving back to our local communities in 2023 and beyond.
Information about our Executive Officers
The following table lists the names, ages and positions of our executive officers as of February 10, 2023:
Name
Richard Paulson, M.B.A
Sohanya Cheng, M.B.A.
Michael Mano, J.D.
Michael Mason, C.P.A., M.B.A.
Stephen Mitchener, Pharm.D.
Stuart Poulton
Reshma Rangwala, M.D., Ph.D
Position
Age
55
40
46
48
President and Chief Executive Officer
Executive Vice President, Chief Commercial Officer
Senior Vice President, General Counsel and Secretary
Executive Vice President, Chief Financial Officer and
Treasurer
44
50
45
Senior Vice President, Chief Business Officer
Executive Vice President, Chief Development Officer
Executive Vice President, Chief Medical Officer
Richard Paulson, M.B.A. Mr. Paulson has served as our President and Chief Executive Officer since May 2021 and as a member
of our Board since February 2020. Prior to joining Karyopharm, Mr. Paulson was the Executive Vice President and Chief Executive
Officer of Ipsen North America, a biopharmaceutical company, from February 2018 to May 2021. Mr. Paulson was Vice President
and General Manager, U.S. Oncology Business Unit at Amgen Inc. (“Amgen”), a public biotechnology company, from 2015 to
February 2018 and prior to that was Vice President, Marketing for Amgen’s U.S. Oncology Business, General Manager, Amgen
Germany and General Manager of Amgen Central & Eastern. Prior to Amgen, Mr. Paulson held a number of global leadership
positions at Pfizer Inc. (“Pfizer”), including serving as General Manager of Pfizer South Africa and Pfizer Czech Republic. Mr.
Paulson also previously held a variety of sales, marketing, and market access roles with increasing seniority at GlaxoWellcome plc in
Canada. Mr. Paulson has an M.B.A. from the University of Toronto, Canada and an undergraduate degree in commerce from the
University of Saskatchewan, Canada.
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Sohanya Cheng, M.B.A. Ms. Cheng joined Karyopharm as Vice President, Sales and Commercial in June 2021 and has served
as our Executive Vice President, Chief Commercial Officer since December 2021. Prior to joining Karyopharm, Ms. Cheng served as
Vice President, Head of Marketing, at Arrowhead Pharmaceuticals, Inc., a public pharmaceutical company, from August 2020 to
December 2020. Prior to this role, Ms. Cheng spent ten years at Amgen, a public biotechnology company, where she held a variety of
sales and marketing leadership roles supporting the commercialization of key oncology brands, including as Executive Director, Head
of National Sales Force & Oncology Contracting Strategy from October 2019 to August 2020, Executive Director, Head of Marketing
& Sales for their multiple myeloma business from June 2018 to October 2019; and Chief of Staff to General Manager and Strategy &
Operations Director for their oncology business from June 2017 to June 2018. Ms. Cheng holds an M.B.A. from the MIT Sloan
School of Management and a BSc and MA in Biochemistry from the University of Cambridge, United Kingdom.
Michael Mano, J.D. Mr. Mano joined Karyopharm as Senior Vice President, General Counsel and Secretary in December 2020
with over 15 years of legal experience. Prior to joining Karyopharm, Mr. Mano served as Counsel, Business Development for Biogen
Inc., a public biotechnology company, from January 2018 to December 2020, where he supported Biogen’s global business
development platform. Prior to that he was Senior Counsel at Proskauer Rose LLP, an international law firm, from 2013 to January
2018 where he represented clients in a broad range of corporate matters. Prior to Proskauer Rose LLP, Mr. Mano was in private legal
practice where he represented clients in the life sciences industry in a broad range of corporate matters. Mr. Mano received a B.A. in
Political Science and Sociology from Saint Michael’s College and a Juris Doctor from Washington University School of Law.
Michael Mason, C.P.A., M.B.A. Mr. Mason joined Karyopharm in February 2019 as our Senior Vice President, Chief Financial
Officer and Treasurer and was appointed Executive Vice President, Chief Financial Officer and Treasurer in June 2021. Mr. Mason
served as Vice President of Finance and Treasurer of Alnylam Pharmaceuticals, Inc. (“Alnylam”), a public biopharmaceutical
company, from 2011 until February 2019, as its Principal Accounting Officer from 2011 to October 2018, and as its Principal
Financial Officer from 2011 to 2016 and from January 2017 to May 2017. From 2005 to 2011, Mr. Mason served as Alnylam’s
Corporate Controller. From 2000 through 2005, Mr. Mason served in several finance and commercial roles at Praecis Pharmaceuticals
Incorporated (“Praecis”), a public biotechnology company, including as Corporate Controller. Prior to Praecis, Mr. Mason worked in
the audit practice at KPMG LLP, a national audit, tax and advisory services firm. Mr. Mason received a B.A. in Business
Administration from Stetson University and an M.B.A. from Babson College and is a certified public accountant.
Stephen Mitchener, Pharm.D. Dr. Mitchener has served as our Senior Vice President, Chief Business Officer since December
2020. Prior to joining Karyopharm, Dr. Mitchener served as Chief Business Officer and Head, Strategic Finance from August 2019 to
December 2020 and as Senior Vice President, Chief Business Officer from September 2018 to August 2019 at Axcella Health Inc.
(“Axcella”), a public biotechnology company. Before joining Axcella, Dr. Mitchener spent 15 years at Novartis, a public
pharmaceutical company, in positions of increasing responsibility, in both U.S. and international roles within its Oncology Business.
He served as Head of Strategy, Partnering and Operations from 2016 to August 2018 and as Oncology Franchise Head for Australia
and New Zealand from 2013 to 2016. During his tenure at Novartis, he also held various commercial, medical and business
development roles, including Business Franchise Head, Oncology, Global Pharma Strategy Director, and Global New Product
Director. Dr. Mitchener received a Pharm.D. from the University of North Carolina at Chapel Hill.
Stuart Poulton. Mr. Poulton joined Karyopharm as Senior Vice President, Strategy and Portfolio Management in February 2022
and has served as our Executive Vice President, Chief Development Officer since August 2022. Mr. Poulton served as Vice President,
Clinical Development Operations at AbbVie Inc., a public biopharmaceutical company, from June 2019 to January 2022 and as Vice
President, Portfolio Program Management from 2016 to June 2019. Prior to that Mr. Poulton served in several roles at Amgen,
including as Executive Director, Global Program Management from 2013 to 2016; as Director, Global Program Management, Asia
Regional Management Team, from 2012 to 2013; as Director, Global Program Management, from 2007 to 2012 and as Senior
Manager, Clinical Study Planning from 2006 to 2007. Mr. Poulton started his career at Eli Lilly and Company in clinical operations.
Mr. Poulton received his B.Sc. in Pharmacology and Chemistry from the University of Sydney, Australia and a M.Com. in Marketing
from the University of New South Wales, Australia.
Reshma Rangwala, M.D., Ph.D. Dr. Rangwala joined Karyopharm in April 2022 as Executive Vice President, Chief Medical
Officer, with more than a decade of experience in oncology and drug development. Dr. Rangwala served as Chief Medical Officer of
Aravive, Inc., a public oncology company, from September 2020 to April 2022. Prior to that, Dr. Rangwala served as Vice President,
Medical, at Genmab Inc., an international biotechnology company, from 2017 to July 2020. Prior to that, Dr. Rangwala served as
Executive Clinical Director at Merck & Co., a biopharmaceutical company, from 2012 to 2017. Dr. Rangwala received her B.S. in
Biology from Duke University and her M.D./Ph.D. from the University of Cincinnati College of Medicine. She completed her internal
medicine residency at Barnes Jewish Hospital in St. Louis, Missouri and her medical oncology fellowship at the Hospital of the
University of Pennsylvania.
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Information about our Directors
The following table lists the names, ages and positions of our current directors:
Name
Richard Paulson, M.B.A.
Barry E. Greene
Garen G. Bohlin
Peter Honig, M.D., MPH
Mansoor Raza Mirza, M.D.
Christy J. Oliger
Deepa R. Pakianathan, Ph.D.
Chen Schor
Available Information
Age
55
59
Position
President and Chief Executive Officer of Karyopharm
Chief Executive Officer of Sage Therapeutics, Inc., a
biopharmaceutical company
75
Former Executive Vice President of Constellation
Pharmaceuticals, Inc., a biopharmaceutical company
66
Former Senior Vice President and Head of Global Regulatory
Affairs of Pfizer Inc., a pharmaceutical company
61
53
58
Chief Oncologist at the Department of Oncology, Rigshopitalet
– the Copenhagen University Hospital, Denmark and Medical
Director of the Nordic Society of Gynaecological Oncology
Former Senior Vice President of the Oncology Business Unit
at Genentech, Inc., a biotechnology company
Managing Member at Delphi Ventures, a venture capital firm
focused on biotechnology and medical device investments
50
President, Chief Executive Officer and Director of Adicet Bio,
Inc., a biotechnology company
Our Internet website is http://www.karyopharm.com. We make available free of charge through our website our annual report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended. We make these reports available through
our website as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the U.S.
Securities and Exchange Commission. In addition, we regularly use our website to post information regarding our business,
development programs and governance, and we encourage investors to use our website, particularly the information in the section
entitled “Investors” as a source of information about us. References to our website are inactive textual references only and the content
of our website should not be deemed incorporated by reference into this Annual Report on Form 10-K.
Our Code of Business Conduct and Ethics, Corporate Governance Guidelines and the charters of the Audit, Compensation,
Nominating, Corporate Governance & Compliance and Commercialization and Portfolio Committees of our Board of Directors are all
available on our website at http://www.karyopharm.com at the “Investors” section under “Corporate Governance.” Stockholders may
request a free copy of any of these documents by writing to Investor Relations, Karyopharm Therapeutics Inc., 85 Wells Avenue, 2nd
floor, Newton, Massachusetts 02459, U.S.A.
Item 1A. Risk Factors.
Careful consideration should be given to the following material risk factors, in addition to the other information set forth in this
Annual Report on Form 10-K and in other documents that we file with the U.S. Securities and Exchange Commission (“SEC”) in
evaluating us and our business. Investing in our common stock involves a high degree of risk. If any of the following risks and
uncertainties actually occurs, our business, prospects, financial condition and results of operations could be materially and adversely
affected. The risks described below are not intended to be exhaustive and are not the only risks we face. New risk factors can emerge
from time to time, and it is not possible to predict the impact that any factor or combination of factors may have on our business,
prospects, financial condition and results of operations.
References to XPOVIO® (selinexor) also refer to NEXPOVIO® (selinexor) when discussing its approval and commercialization
in certain countries or territories outside of the U.S.
Risks Related to Commercialization and Product Development
Our business is substantially dependent on the commercial success of XPOVIO. If we, either alone or with our collaborators, are
unable to successfully commercialize current and future indications of XPOVIO or other products or product candidates on a
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timely basis, including achieving widespread market acceptance by physicians, patients, third-party payors and others in the
medical community, our business, financial condition and future profitability will be materially harmed.
Our business and our ability to generate product revenue from the sales of drugs that treat cancer and other diseases in humans
depend heavily on our and our collaborators’ ability to successfully commercialize our lead drug, XPOVIO® (selinexor) on a global
basis, in currently approved and future indications and the level of market adoption for, and the continued use of, our products and
product candidates, if approved. XPOVIO is currently approved and marketed in the U.S. in multiple hematologic malignancy
indications, including in combination with Velcade® (bortezomib) and dexamethasone for the treatment of patients with multiple
myeloma after at least one prior therapy, in combination with dexamethasone for the treatment of patients with heavily pretreated
multiple myeloma and as a monotherapy for the treatment of patients with relapsed or refractory diffuse large B-cell lymphoma
(“DLBCL”). Efforts to drive adoption within the medical community and third-party payors based on the benefits of our products and
product candidates require significant resources and may not be successful. The success of XPOVIO and any current or future product
candidates, whether alone or in collaboration with third parties, including achieving and maintaining an adequate level of market
adoption, depends on several factors, including:
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our ability to successfully launch and achieve broad adoption of our approved products in earlier lines of therapy, any
future indications for which XPOVIO may be approved, or any product candidates for which we obtain marketing
approval;
the competitive landscape for our products, including the timing of new competing products entering the market and the
level and speed at which these products achieve market acceptance;
actual or perceived advantages or disadvantages of our products or product candidates as compared to alternative
treatments, including their respective safety, tolerability and efficacy profiles, the potential convenience and ease of
administration, access or cost effectiveness;
the effectiveness of our sales, marketing, manufacturing and distribution strategies and operations;
the consistency of any new data we collect and analyses we conduct with prior results, whether they support a favorable
safety, efficacy and effectiveness profile of XPOVIO and any potential impact on our U.S. Food and Drug Administration
(“FDA”) approvals and/or FDA package insert for XPOVIO and comparable foreign regulatory approvals and package
inserts;
our ability to comply with the FDA’s and comparable foreign regulatory authorities’ post-marketing requirements and
commitments, including through successfully conducting, on a timely basis, additional studies that confirm clinical
efficacy, effectiveness and safety of XPOVIO and acceptance of the same by the FDA or similar foreign regulatory
bodies, such as requirements in connection with the FDA’s June 2020 approval of XPOVIO based on the results of the
SADAL study to treat patients with DLBCL, which was approved under the FDA’s Accelerated Approval Program;
acceptance of current indications of XPOVIO and future indications of XPOVIO and other product candidates, if
approved, by patients, the medical community and third-party payors;
obtaining and maintaining coverage, adequate pricing and reimbursement by third-party payors, including government
payors, for XPOVIO and our product candidates, if approved;
the willingness of patients to pay out-of-pocket in the absence of third-party coverage or as co-pay amounts under third-
party coverage;
our ability to enforce intellectual property rights in and to our products to prohibit a third-party from marketing a
competing product and our ability to avoid third-party patent interference or intellectual property infringement claims;
current and future restrictions or limitations on our approved or future indications and patient populations or other adverse
regulatory actions;
the performance of our manufacturers, license partners, distributors, providers and other business partners, over which we
have limited control;
any significant misestimations of the size of the market and market potential for any of our products or product
candidates;
establishing and maintaining commercial manufacturing capabilities or making arrangements with third-party
manufacturers;
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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies, based,
in part, on their perception of our clinical trial data and/or the actual or perceived safety, tolerability and effectiveness
profile;
maintaining an acceptable safety and tolerability profile of our approved products, including the prevalence and severity
of any side effects;
the ability to offer our products for sale at competitive prices;
adverse publicity about our products or favorable publicity about competitive products;
our ability to maintain compliance with existing and new health care laws and regulations, including government pricing,
price reporting and other disclosure requirements related to such laws and regulations, and the potential impact of such
laws and regulations on physician prescribing practices and payor coverage; and
the impact of the novel coronavirus disease (“COVID-19”) pandemic on the above factors.
If we do not achieve one or more of these factors in a timely manner, or at all, either on our own or with our collaborators, we
could experience significant delays or an inability to successfully commercialize XPOVIO or our product candidates, if approved,
which would materially harm our business.
We face substantial competition, which may result in others discovering, developing or commercializing drugs before or more
successfully than we do.
The discovery, development and commercialization of new drugs is highly competitive, particularly in the cancer field. We and
our collaborators face competition with respect to XPOVIO and will face competition with respect to any product candidates that we
may seek to discover and develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical
companies, biotechnology companies, academic institutions and governmental agencies as well as public and private research
institutions worldwide, many of which have significantly greater financial resources and expertise in research and development,
manufacturing, preclinical studies, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we
do. There are a number of major pharmaceutical, specialty pharmaceutical and biotechnology companies that currently market and sell
drugs and/or are pursuing the development of drugs for the treatment of cancer and the other disease indications for which we, and our
collaborators, are developing our product candidates. Several new novel therapeutics have recently entered, and are expected to
continue to enter, the multiple myeloma treatment landscape. For example, TECVAYLI™ (teclistamab-cqyv), the first bispecific T-
Cell engager was approved by the FDA in October 2022. Other T-cell engaging therapies, bispecifics with different targets,
immunomodulators, and a BCL-2 inhibitor are in clinical development and may be introduced into the multiple myeloma market in
2023. In addition, future label expansions into earlier lines of existing therapies are anticipated in 2023 and beyond. The approval of
these anti-cancer agents, or any others which may receive regulatory approval, may have a significant impact on the therapeutic
landscape and our product revenues. See Item 1 under the heading Business - Competition in this Annual Report on Form 10-K for
more information on competition.
We are currently focused on developing and commercializing our current products and product candidates for the treatment of
cancer and there are a variety of available therapies marketed for cancer. In many cases, cancer drugs are administered in combination
to enhance efficacy. Some of these drugs are branded and subject to patent protection, and others are available on a generic basis.
Many of these approved drugs are well-established therapies and are widely accepted by physicians, patients and third-party payors.
Insurers and other third-party payors may also encourage the use of generic drugs. Our products are priced at a significant premium
over competitive generic drugs, which may make it difficult for us to achieve our business strategy of using our products in
combination with existing therapies or replacing existing therapies with our products.
Further, our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize drugs that
are or are perceived to be more effective, safer, more tolerable, more convenient and/or less costly than any of our currently approved
products or product candidates or that would render our products obsolete or non-competitive. Our competitors may also obtain
marketing approval from the FDA or other regulatory authorities for their products more rapidly than we, or our collaborators, may
obtain approval for ours, which could result in our competitors establishing a stronger market position before we, or our collaborators,
are able to enter the market or preventing us, or our collaborators, from entering into a particular indication at all.
Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being
concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant
competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with
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us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for
clinical trials, as well as in acquiring technologies complementary to, or that may be necessary for, our programs.
If we are not able to compete effectively against current or potential competitors, our business will not grow and our financial
condition and operations will suffer.
Clinical development is a lengthy and expensive process, with uncertain timelines and outcomes. If clinical trials of our product
candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive
results, we, or our collaborators, may incur additional costs or experience delays in completing, or ultimately be unable to
complete, the development and commercialization of such product candidates.
Our long-term success depends in a large part on our ability to continue to successfully develop new indications of selinexor,
our product candidates, including eltanexor, or any new product candidates we may develop or acquire. Clinical testing is expensive,
time consuming, difficult to design and implement, inherently uncertain as to outcome and can fail at any stage of testing.
Furthermore, the failure of any product candidates to demonstrate safety and efficacy in any clinical trial could negatively impact the
perception of selinexor, eltanexor or our other product candidates and/or cause the FDA or other regulatory authorities to require
additional testing before any of our product candidates are approved.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our or our
collaborators’ ability to receive marketing approval of our product candidates, including, but not limited to, the following:
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delays or failure to reach agreement with regulatory authorities on a trial design or the receipt of feedback requiring us to
modify the design of our clinical trials, perform additional or unanticipated clinical trials to obtain approval or alter our
regulatory strategy, as is the case in connection with the feedback we received from the FDA in February 2022 on our
SIENDO Study;
clinical trials of our product candidates may produce negative or inconclusive results or other patient safety concerns,
including undesirable side effects or other unexpected characteristics, and we may decide, or regulatory authorities may
require us, to conduct additional clinical trials, suspend ongoing clinical trials or abandon drug development programs,
including as a result of a finding that the participants are being exposed to unacceptable health risks;
enrollment in our clinical trials may be slower than we anticipate, including as a result of competition with other ongoing
clinical trials for the same indications as our product candidates;
regulators may revise the requirements for approving our product candidates, even after providing a positive opinion on or
otherwise reviewing and providing comments to a clinical trial protocol, or such requirements may not be as we
anticipate;
delays or failure in obtaining the necessary authorization from regulatory authorities or institutional review boards to
permit us or our investigators to commence a clinical trial, conduct a clinical trial at a prospective trial site, or the
suspension or termination of a clinical trial once commenced;
delays or failure to reach agreement on acceptable terms with prospective clinical trial sites or contract research
organizations (“CROs”);
the number of patients required for clinical trials of our product candidates may be larger than we anticipate or
participants may drop out of these clinical trials at a higher rate than we anticipate;
our third-party contractors, including manufacturers or CROs, may fail to comply with regulatory requirements, perform
effectively, or meet their contractual obligations to us in a timely manner, or at all;
we or our investigators might be found to be non-compliant with regulatory requirements;
the cost of clinical trials of our product candidates may be greater than we anticipate;
the supply or quality of our product candidates or other materials necessary to conduct clinical trials may be insufficient or
inadequate, for example, the global supply shortages of non-human primate subjects has impacted timing and execution of
certain pre-clinical research activities;
for any biomarker driven clinical trial, the potential regulatory requirement to utilize a companion diagnostic, for example
required use of a companion diagnostic our ongoing study evaluating selinexor in patients with TP53 wild-type advanced
or recurrent endometrial cancer;
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•
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any partners or collaborators that help us conduct clinical trials may face any of the above issues, and may conduct
clinical trials in ways they view as advantageous to them but that are suboptimal for us; and
negative impacts resulting from the ongoing COVID-19 pandemic, including impacts to healthcare systems and our trial
sites’ ability to conduct trials.
The COVID-19 pandemic has had and may continue to have an impact on our clinical trials. For more information, please see
the risk factor entitled, “The COVID-19 pandemic has adversely disrupted, and may in the future adversely disrupt, our or our
collaborators' operations, including our or their clinical trial activities and commercial operations, which could have an adverse
effect on our business and financial results.” At this time, however, we cannot fully forecast the scope of the impact that the COVID-
19 pandemic may continue to have on our ability to, among other things, initiate and oversee trial sites, enroll and assess patients,
supply study drug and report trial results. In addition, we have and may continue to experience delays in the regulatory process as a
result of the COVID-19 pandemic, which may impact our approval timelines.
If we, or our collaborators, are required to conduct additional clinical trials or other testing of our product candidates or a
companion diagnostic beyond those that we currently contemplate or are unable to successfully complete clinical trials of our product
candidates or other testing, on a timely basis or at all, and/or if the results of these trials or tests are not positive or are only modestly
positive or if there are safety concerns, we, or our collaborators, may:
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be delayed in obtaining, or not obtain at all, marketing approval for the indication or product candidate;
obtain marketing approval in some countries and not in others;
obtain approval for indications or patient populations that are not as broad as intended or desired;
obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed
warnings;
be subject to additional post-marketing testing requirements;
not receive royalty or milestone revenue under our collaboration agreements for several years, or at all; or
have the product removed from the market after obtaining marketing approval.
Further, we do not know whether clinical trials will begin as planned, will need to be restructured or will be completed on
schedule, or at all. Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to
commercialize our products, allow our competitors to bring products to market before we do or impair our ability to successfully
commercialize our products, which would harm our business and results of operations. In addition, many of the factors that cause, or
lead to, clinical trial delays may ultimately lead to the denial of regulatory approval of our product candidates.
Serious adverse or unacceptable side effects related to XPOVIO, our product candidates or future products may delay or prevent
their regulatory approval, cause us or our collaborators to suspend or discontinue clinical trials, limit the commercial value of
approved indications or result in significant negative financial consequences following any marketing approval.
We currently have two product candidates in clinical development as company sponsored trials for the treatment of human
disease: selinexor and eltanexor. Their risk of failure is high. If our current or future indications of XPOVIO, any of our product
candidates or future products are associated with undesirable side effects or have characteristics that are unexpected in clinical trials or
following approval and/or commercialization, we may need to abandon or limit their development or limit marketing to certain uses or
subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a
risk-benefit perspective.
Adverse events (“AEs”) in our clinical trials to date have been generally predictable and typically manageable, including
through prophylactic care or dose reductions, although some patients have experienced more serious AEs. The most common drug-
related AEs in our clinical trials for XPOVIO include fatigue, nausea, anorexia, diarrhea, peripheral neuropathy, upper respiratory
tract infection, vomiting, cytopenias, hyponatremia, weight loss, decreased appetite, cataract, dizziness, syncope, depressed level of
consciousness, and mental status changes. These side effects were generally mild or moderate in severity. The most common AEs that
are grade 3 or grade 4, meaning they are more than mild or moderate in severity, include thrombocytopenia, lymphopenia,
hypophosphatemia, anemia, hyponatremia and neutropenia. To date, the most common AEs in the multiple myeloma patient
population have been managed with supportive care and dose modifications. However, a number of patients have withdrawn from our
clinical trials as a result of AEs and some patients across our clinical trials have experienced serious AEs deemed by us and the
clinical investigator to be related to selinexor. Serious AEs generally refer to AEs that result in death, are life threatening, require
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hospitalization or prolonging of hospitalization, or cause a significant and permanent disruption of normal life functions, congenital
anomalies or birth defects, or require intervention to prevent such an outcome.
The occurrence of AEs in either our clinical trials or following regulatory approval could result in a more restrictive label for
any product candidates approved for marketing or could result in the delay or denial of approval to market any product candidates by
the FDA or comparable foreign regulatory authorities, which could prevent us from generating sufficient revenue from product sales
or ultimately achieving profitability. Treatment-related side effects could also affect patient recruitment or the ability of enrolled
patients to complete the trial, result in potential product liability claims or cause patients and/or healthcare providers to elect
alternative courses of treatment. In addition, these side effects may not be appropriately recognized or managed by the treating
medical staff. Inadequate training or education of healthcare professionals to recognize or manage the potential side effects of
XPOVIO or our product candidates, if approved, could result in increased treatment-related side effects and cause patients to
discontinue treatment. Any of these occurrences may harm our business, financial condition and prospects significantly.
Results of our trials could reveal an unacceptably high severity and prevalence of side effects. In such an event, our trials could
be suspended or terminated by us or the FDA or comparable foreign regulatory authorities could order us or our collaborators to cease
further development of or deny approval of our product candidates for any or all targeted indications. Many compounds that initially
showed promise in early-stage trials for treating cancer or other diseases have later been found to cause side effects that prevented
further development of the compound. If such an event occurs after any of our or our collaborators’ product candidates are approved
and/or commercialized, a number of potentially significant negative consequences may result, including:
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regulatory authorities may withdraw the approval of such drug;
regulatory authorities may require additional warnings on the label or impose distribution or use restrictions;
patients and/or healthcare providers may elect to utilize other treatment options that have or are perceived to have more
tolerable side effects;
regulatory authorities may require one or more post-marketing studies;
we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;
we could be sued and held liable for harm caused to patients; and
our reputation may suffer.
Further, we, our collaborators and our clinical trial investigators, currently determine if serious adverse or unacceptable side
effects are drug-related. The FDA or foreign regulatory authorities may disagree with our, our collaborators’ or our clinical trial
investigators’ interpretation of data from clinical trials and the conclusion by us, our collaborators or our clinical trial investigators that
a serious adverse effect or unacceptable side effect was not drug-related. The FDA or foreign regulatory authorities may require more
information related to the safety of our products or product candidates, including additional preclinical or clinical data to support
approval, which may cause us to incur additional expenses, delay or prevent the approval of one of our product candidates, and/or
delay or cause us to change our commercialization plans, or we may decide to abandon the development of the product candidate
altogether.
Any of these events could prevent us or our collaborators from achieving or maintaining market acceptance of the affected
product candidate, if approved, or could substantially increase costs and expenses of development or commercialization, which could
delay or prevent us from generating sufficient revenue from the sale of our products and harm our business and results of operations.
The COVID-19 pandemic has adversely disrupted, and may in the future adversely disrupt, our or our collaborators’ operations,
including our or their clinical trial activities and commercial operations, which could have an adverse effect on our business and
financial results.
As a result of the COVID-19 pandemic that has affected many segments of the global economy, we and our collaborators have
experienced, and may in the future experience, disruptions that could adversely impact our business, clinical trial activities and
commercial operations, including:
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negative impact to revenue for XPOVIO, which may continue as the COVID-19 pandemic evolves, including as a result
of decreased new patient starts due to the reduced ability of our sales force and our patients to meet with healthcare
professionals in person;
delays or difficulties in enrolling patients in our clinical trials;
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delays or difficulties in initiating new clinical studies, including clinical site initiation and oversight as well as difficulties
in recruiting clinical site investigators and clinical site staff;
interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed
or recommended by government officials or entities, employers and others or interruption of clinical trial patient visits and
study procedures (particularly any procedures that may be deemed non-essential), which may impact the integrity of
clinical trial data and clinical study endpoints;
interruptions or delays in the operations of the FDA and comparable foreign regulatory agencies, including the EMA,
which have and may impact regulatory review and approval timelines; and
negative impacts on any or all aspects of our operations due to business disruptions related to COVID-19 at our third-
party vendors who we rely upon in the conduct of our business, including supply chain disruptions.
Any future impact of the disruptions to our business, including commercial sales and clinical trials, as a result of the pandemic
will depend on the availability, administration rates and effectiveness of vaccines and their effectiveness against variants as new
strains of the virus evolve, and therapeutics and future developments, all of which are highly uncertain and cannot be predicted with
confidence, such as the duration and severity of the pandemic, and the effectiveness of actions taken in the U.S. and other countries to
contain and treat the disease. Due to the ongoing uncertainty regarding the severity and duration of the COVID-19 pandemic,
including the emergence of new variants of COVID-19, we cannot predict whether our response to date or the actions we may take in
the future will be effective in mitigating the effects of the COVID-19 pandemic on our business, results of operations or financial
condition. Accordingly, we are unable at this time to predict the future impact of the COVID-19 pandemic on our operations, liquidity,
and financial results.
The results of previous clinical trials may not be predictive of future trial results, and interim or top-line data may be subject to
change or qualification based on the complete analyses of data and, therefore, may not be predictive of the final results of a trial.
Clinical failure can occur at any stage of the clinical development process and, therefore, the outcome of preclinical studies and
early-stage clinical trials may not be predictive of the success of later stage clinical trials. For example, certain data from our Phase 1
and Phase 2 clinical trials of selinexor are based on unaudited data provided by our clinical trial investigators. Finalization and
cleaning of this data may change the conclusions drawn from this unaudited data provided by our clinical trial investigators indicating
less promising results than we currently anticipate. Further, there can be significant variability in safety and/or efficacy results
between different trials of the same product candidate due to numerous factors, including changes in trial protocols, differences in size
and type of the patient populations, adherence to the dosing regimen and other trial protocols and the dropout rate among clinical trial
participants. We do not know whether any Phase 2, Phase 3 or other clinical trials we may conduct will demonstrate consistent or
adequate efficacy and safety data sufficient to obtain regulatory approval to market our product candidates, if approved. Moreover,
preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies have suffered
significant setbacks in late-stage clinical trials after achieving positive results in earlier development, and we could face similar
setbacks.
We may publicly disclose preliminary, interim or top-line data from our clinical trials. These interim updates are based on a
preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change as further patient
data become available and following a more comprehensive review of the data related to the particular study or trial. For example, on
February 8, 2022, we announced positive top-line data results for the SIENDO Study. On February 25, 2022, we discussed these data
with the FDA in a pre-sNDA meeting. We and the FDA meeting participants had differing views on the statistical significance of the
study and the overall clinical benefit for the whole study population. For this study or any other that we report preliminary, interim or
top-line data, we make assumptions, estimations, calculations and conclusions as part of our analyses of data. We may not have
received or had the opportunity to fully and carefully evaluate all data or our conclusions may differ from those of the FDA or other
regulatory authorities. Consequently, the preliminary, interim or top-line data results that we report may differ from future results of
the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully
evaluated or based on differing views from regulatory agencies, such as in the SIENDO Study. Preliminary, interim or top-line data
also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary
data we previously published. As a result, these early data points should be viewed with caution until the final data are available.
Adverse differences between previous preliminary or interim data and future interim or final data could significantly harm our
business.
In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is typically selected from
a more extensive amount of available information. Furthermore, we may report interim analyses of only certain endpoints rather than
all endpoints. Investors may not agree with what we determine is the material or otherwise appropriate information to include in our
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disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions,
conclusions, views, activities or otherwise regarding a particular product, product candidate or our business.
If the interim or top-line data that we report differ from future or more comprehensive data, or if others, including regulatory
authorities, disagree with the conclusions reached, our ability to obtain approval for and commercialize our product candidates, our
business, operating results, prospects, or financial condition may be harmed.
We may not be successful in our efforts to identify or discover additional potential product candidates or our decisions to prioritize
the development of certain product candidates over others may later prove wrong.
Part of our strategy involves identifying and developing product candidates to build a pipeline of product candidates. Our drug
discovery efforts may not be successful in identifying compounds that are useful in treating cancer or other diseases. Our research
programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical
development for a number of reasons, including:
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the research methodology used may not be successful in identifying potential product candidates;
potential product candidates may, on further study, be shown to have harmful side effects or other characteristics that
indicate that they are unlikely to be drugs that will receive marketing approval and/or achieve market acceptance; or
potential product candidates may not be effective in treating their targeted diseases.
We are currently advancing multiple clinical development studies of selinexor and eltanexor, which may create a strain on our
limited human and financial resources. As a result, we may not be able to provide sufficient resources to any single product candidate
to permit the successful development and commercialization of such product candidate, which could result in material harm to our
business. Further, because we have limited financial and managerial resources, we focus on research programs and product candidates
that we identify for specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or
for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to
capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and
development programs and product candidates for specific indications may not yield any additional commercially-viable products. If
we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable
rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been
more advantageous for us to retain sole development and commercialization rights to such product candidate.
If we are unable to maintain or expand our sales, marketing and distribution capabilities, we may not be successful in
commercializing XPOVIO or any of our products or product candidates, if approved, that we may acquire or develop.
We have built a commercial infrastructure in the U.S. for XPOVIO, our first commercial product, in hematological
malignancies and our company did not previously have any prior experience in the sales, marketing or distribution of pharmaceutical
drugs. If XPOVIO or any of our product candidates is approved for additional indications beyond hematological malignancies, such as
solid tumors, we may need to evolve our sales, marketing and distribution capabilities and we may not be able to do so successfully or
on a timely basis. In the future, we may choose to expand our sales, marketing and distribution infrastructure to market or co-promote
one or more of our product candidates, if and when they are approved, or enter into additional collaborations with respect to the sale,
marketing and distribution of our product candidates. We are working with existing and potential partners to establish the commercial
infrastructure to support the sale of selinexor outside of the U.S. For example, in December 2021, we entered into a license agreement
with the Menarini Group (“Menarini”) to, among other things, develop and commercialize NEXPOVIO® (selinexor) for all human
oncology indications in Europe (including the United Kingdom (“UK”)), Latin America and other key countries. For additional risks
associated with commercializing our products outside of the U.S., please see the risk factor entitled “We depend on collaborations
with third parties for certain aspects of the development, marketing and/or commercialization of XPOVIO and/or our product
candidates. If those collaborations are not successful, or if we are not able to maintain our existing collaborations or establish
additional collaborations, we may have to alter our development and commercialization plans and may not be able to capitalize on
the market potential of XPOVIO or our product candidates” below.
There are risks involved with establishing and maintaining our own sales, marketing and distribution capabilities. For example,
recruiting and training a sales force is expensive and time-consuming and could delay any commercial launch of a product candidate
or negatively impact ongoing commercialization efforts for our approved products. Further, we may underestimate the size of the sales
force required for a successful product launch and we may need to expand our sales force earlier and at a higher cost than we
anticipated. If the commercial launch of any of our product candidates is delayed or does not occur for any reason, including if we do
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not receive marketing approval in the timeframe we expect, we may have prematurely or unnecessarily incurred commercialization
expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.
Factors that may inhibit our efforts to successfully commercialize XPOVIO or any product candidates, if approved, on our own
include:
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our inability to recruit, train and retain adequate numbers of effective sales, market access, market analytics, operations
and marketing personnel;
the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe
current or future products;
the lack of complementary drugs, which may put us at a competitive disadvantage relative to companies with more
extensive drug lines;
unforeseen costs and expenses associated with creating an independent sales, marketing and distribution organization;
our inability to obtain sufficient coverage and reimbursement from third-party payors and governmental agencies;
our ability to supply sufficient inventory of our products for commercial sale; and
existing or new competitors taking share from XPOVIO or any other future product or preventing XPOVIO or any other
future product from gaining share in its approved indications.
Even if we, or our collaborators, are able to effectively commercialize XPOVIO or any approved products that we may develop or
acquire, the products may not receive coverage or may become subject to unfavorable pricing regulations, third-party
reimbursement practices or healthcare reform initiatives, all of which would harm our business.
The legislation and regulations that govern marketing approvals, pricing and reimbursement for new drug products vary widely
from country to country. As a result, we or our collaborators might obtain marketing approval for a drug in a particular country, but
then be subject to price regulations that delay the commercial launch of the product, possibly for lengthy time periods, and negatively
impact the revenues we, or our collaborators, are able to generate from product sales in that country. In the U.S., approval and
reimbursement decisions are not linked directly, but there is increasing scrutiny from the Congress, regulatory authorities, payers,
patients and pathway organizations of the pricing of pharmaceutical products. Adverse pricing limitations may also hinder our ability
to recoup our investment in one or more product candidates, even if our product candidates obtain marketing approval.
Our, and our collaborators’, ability to successfully commercialize XPOVIO and any other products that we may develop or
acquire will depend, in part, on the extent to which reimbursement for these products is available from government health
administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as
private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement
levels. Obtaining and maintaining adequate reimbursement for XPOVIO and any of our product candidates, if approved, may be
difficult. Moreover, the process for determining whether a third-party payor will provide coverage for a product may be separate from
the process for setting the price of a product or for establishing the reimbursement rate that such a payor will pay for the product.
Further, one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage and
reimbursement for our products. Even with payer coverage, patients may be unwilling or unable to pay the copay required and may
choose not to take XPOVIO.
A primary trend in the healthcare industry in the U.S. and elsewhere is cost containment. Government authorities and third-party
payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly,
third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging
the prices charged for medical products. Third-party payors may also seek, with respect to an approved product, additional clinical
evidence that goes beyond the data required to obtain marketing approval. They may require such evidence to demonstrate clinical
benefits and value in specific patient populations or they may call for costly pharmaceutical studies to justify coverage and
reimbursement or the level of reimbursement relative to other therapies before covering our products. Accordingly, we cannot be sure
that reimbursement will be or will continue to be available for XPOVIO and any product that we, or our collaborators, commercialize
and, if reimbursement is available, we cannot be sure as to the level of reimbursement and whether it will be adequate. Coverage and
reimbursement may impact the demand for or the price of XPOVIO or any product candidate for which we, or our collaborators,
obtain marketing approval. If reimbursement is not available or is available only at limited levels, we, or our collaborators, may not be
able to successfully commercialize XPOVIO or any other approved products.
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There may be significant delays in obtaining reimbursement for newly-approved drugs, and coverage may be more limited than
the indications for which the drug is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for
reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research,
development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient
to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the drug and the clinical
setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into
existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government
healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries
where they may be sold at lower prices than in the U.S. Third-party payors often rely upon Medicare coverage policy and payment
limitations in setting their own reimbursement policies. Our inability to promptly obtain coverage and profitable payment rates from
both government-funded and private payors for any approved drugs that we develop could have a material adverse effect on our
operating results, our ability to raise capital needed to commercialize our products and our overall financial condition.
Product liability lawsuits against us could divert our resources, cause us to incur substantial liabilities and limit commercialization
of XPOVIO or any other products that we may develop or acquire.
We face an inherent risk of product liability exposure related to our commercialization of XPOVIO and the testing of our
product candidates in human clinical trials as the administration of our products to humans may expose us to liability claims, whether
or not our products are actually at fault for causing any harm or injury. As XPOVIO is used over longer periods of time by a wider
group of patients taking numerous other medicines or by patients with additional underlying conditions, the likelihood of adverse drug
reactions or unintended side effects, including death, may increase. For example, we may be sued if any drug we develop allegedly
causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing or sale. Any such product
liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the
product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we
cannot successfully defend ourselves against claims that our products or product candidates caused injuries, we will incur substantial
liabilities or be required to limit commercialization of our products. Regardless of merit or eventual outcome, liability claims may
result in:
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decreased demand for XPOVIO and any other products that we may develop or acquire;
injury to our reputation and significant negative media attention;
withdrawal of clinical trial participants;
initiation of investigations by regulators;
product recalls, withdrawals or labeling, marketing or promotional restrictions;
significant costs to defend the related litigation;
substantial monetary awards to trial participants or patients;
loss of revenue;
reduced resources of our management to pursue our business strategy; and
the inability to successfully commercialize XPOVIO and any other products that we may develop or acquire.
We currently hold clinical trial and general product liability insurance coverage, but that coverage may not be adequate to cover
any and all liabilities that we may incur. Insurance coverage is increasingly expensive. We may not be able to maintain insurance
coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
The business that we or our collaborators conduct outside of the U.S. may be adversely affected by international risks and
uncertainties.
Although our operations are primarily based in the U.S., we and our collaborators conduct business outside of the U.S. and
expect to continue to do so in the future. For instance, many of the sites at which our clinical trials are being conducted are located
outside of the U.S. In addition, we and our collaborators are seeking and continue to plan to seek approvals to sell our and their
products in foreign countries. Any business that we, or our collaborators, conduct outside of the U.S. is subject to additional risks that
may materially adversely affect our or their ability to conduct business in international markets, including:
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the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local
prices, opts to import goods from a foreign market (with low or lower prices) rather than buying them locally;
unexpected changes in tariffs, trade barriers or regulatory requirements;
economic weakness, including the uncertainty associated with current worldwide economic conditions as a result of the
COVID-19 pandemic, rising inflation, increasing interest rates, natural disasters and military conflicts, including the
conflict between Russia and Ukraine; volatility in currency exchange rates; or political instability in particular foreign
economies and markets;
workforce uncertainty in countries where labor unrest is more common than in the U.S.;
production shortages resulting from any events affecting a product candidate and/or finished drug product supply or
manufacturing capabilities abroad;
business interruptions resulting from pandemics (including the COVID-19 pandemic), geo-political actions, including war
and terrorism, such as the ongoing conflict between Russia and Ukraine, climate change or natural disasters, including
earthquakes, hurricanes, typhoons, floods and fires; and
failure to comply with Office of Foreign Asset Control rules and regulations and the Foreign Corrupt Practices Act
(“FCPA”).
Risks Related to Regulatory Matters
Even if we, or our collaborators, complete the necessary preclinical studies and clinical trials for our product candidates, the
regulatory approval process is expensive, time-consuming and uncertain and we or they may not receive approvals for the
commercialization of some or all of our or their product candidates in a timely manner, or at all.
Our long-term success and ability to sustain and grow revenue depends on our and our collaborators’ ability to continue to
successfully develop our product candidates and obtain regulatory approval to market our or their products both in and outside of the
U.S. In order to market and sell our products in the European Union (the “EU”) and many other jurisdictions, we and our collaborators
must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The FDA and comparable
foreign regulatory authorities, whose laws and regulations may differ from country to country, impose substantial requirements on the
development of product candidates to become eligible for marketing approval and have substantial discretion in the process and may
refuse to accept any application or may decide that the data are insufficient for approval and require additional preclinical studies,
clinical trials or other studies and testing. The time required to obtain approval outside of the U.S. may differ substantially from that
required to obtain FDA approval. For example, in many countries outside of the U.S., it is required that the drug be approved for
reimbursement before the drug can be approved for sale in that country. Approval by the FDA does not ensure approval by regulatory
authorities in other countries or jurisdictions, and approval by one regulatory authority outside of the U.S. does not ensure approval by
regulatory authorities in other countries or jurisdictions or by the FDA. However, a failure or delay in obtaining regulatory approval in
one country may have a negative effect on the regulatory process in other countries. For additional risks related to conducting business
outside of the U.S., please see the risk factor above entitled “The business that we or our collaborators conduct outside of the U.S.
may be adversely affected by international risks and uncertainties.”
In addition, the FDA and foreign regulatory authorities retain broad discretion in evaluating the results of our clinical trials and
in determining whether the results demonstrate that selinexor, eltanexor or any other product candidate is safe and effective. If we are
required to conduct additional clinical trials of selinexor, eltanexor or other product candidates prior to approval of additional
indications, in earlier lines of therapy or in combination with other drugs, including additional earlier phase clinical trials that may be
required prior to commencing any later phase clinical trials, or additional clinical trials following completion of our current and
planned later phase clinical trials, we may need substantial additional funds, and there is no assurance that the results of any such
additional clinical trials will be sufficient for approval.
The process of obtaining marketing approvals, both in the U.S. and abroad, is lengthy, expensive and uncertain. It may take
many years, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity
and novelty of the product candidates involved. Securing marketing approval requires the submission of extensive preclinical and
clinical data and supporting information, including manufacturing information, to regulatory authorities for each therapeutic indication
to establish the product candidate’s safety and efficacy.
The FDA or other regulatory authorities may determine that (i) our product candidates are not safe and effective, only
moderately effective or have undesirable or unintended side effects, toxicities or other characteristics that preclude our obtaining
marketing approval or prevent or limit commercial use; (ii) the dose used in a clinical trial has not been optimized and require us to
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conduct additional dose optimization studies; or (iii) the comparator arm in a trial is no longer the appropriate comparator due to the
evolution of the competitive landscape or subsequent data of the comparator product, even if the FDA or other regulatory authority
had previously approved the trial design, and we may be required to amend the trial or we may not receive approval of the indication.
Further, under the Pediatric Research Equity Act (“PREA”), an NDA or supplement to an NDA for certain drugs must contain
data to assess the safety and effectiveness of the drug in all relevant pediatric subpopulations and to support dosing and administration
for each pediatric subpopulation for which the product is safe and effective, unless the sponsor receives a deferral or waiver from the
FDA. A deferral may be granted for several reasons, including a finding that the product or therapeutic candidate is ready for approval
for use in adults before pediatric trials are complete or that additional safety or effectiveness data needs to be collected before the
pediatric trials begin. The law requires the FDA to send a PREA Non-Compliance letter to sponsors who have failed to submit their
pediatric assessments required under PREA, have failed to seek or obtain a deferral or deferral extension or have failed to request
approval for a required pediatric formulation. It further requires the FDA to publicly post the PREA Non-Compliance letter and
sponsor’s response. The applicable legislation in the EU also requires sponsors to either conduct clinical trials in a pediatric population
in accordance with a Pediatric Investigation Plan approved by the Pediatric Committee of the EMA or to obtain a waiver or deferral
from the conduct of these studies by this Committee. For any of our product candidates for which we are seeking regulatory approval
in the U.S. or the EU, we cannot guarantee that we will be able to obtain a waiver or alternatively complete any required studies and
other requirements in a timely manner, or at all, which could result in in issuance and publication of a PREA Non-Compliance letter
and associated reputational harm, our product candidate being considered misbranded and subject to relevant enforcement action,
invalidation of the marketing application, and/or financial penalties.
We have limited experience in conducting and managing the clinical trials necessary to obtain marketing approvals. The
approval of our and our collaborators’ current or future product candidates for commercial sale could be delayed, limited or denied or
we or they may be required to conduct additional studies for a number of reasons, including, but not limited to, the following:
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regulatory authorities may determine that our or our collaborators’ product candidates do not demonstrate safety and
effectiveness in accordance with regulatory agency standards based on a number of considerations, including AEs that are
reported during clinical trials;
regulatory authorities could analyze and/or interpret data from clinical trials and preclinical testing in different ways than
we, or our collaborators, interpret them and determine that our data is insufficient for approval;
regulatory authorities may require more information, including additional preclinical or clinical data or trials, to support
approval, as in the case of our new trial for selinexor in endometrial cancer following discussions with the FDA in early
2022 on our SIENDO Study;
regulatory authorities could determine that our manufacturing processes are not properly designed, are not conducted in
accordance with federal or other laws or otherwise not properly managed and we may be unable to obtain regulatory
approval for a commercially viable manufacturing process for our product candidates in a timely manner, or at all;
the supply or quality of our or our collaborators’ product candidates for our clinical trials may be insufficient, inadequate
or delayed;
the size of the patient population required to establish the efficacy of our or our collaborators’ product candidates to the
satisfaction of regulatory agencies may be larger than we or they anticipated;
our failure or the failure of clinical investigational sites and the records kept at the respective locations, including clinical
trial data, to be in compliance with the FDA’s current good clinical practices regulations (“GCP”) or comparable
regulations outside of the U.S., including the failure to pass inspections of our corporate site or our clinical trial sites;
regulatory authorities may change their approval policies or adopt new regulations;
regulatory authorities may not be able to undertake reviews, applicable inspections or approval processes in a timely
manner;
the results of our earlier clinical trials may not be representative of our future, larger trials;
regulatory authorities may not agree with our or our collaborators’ regulatory approval strategies or components of our or
their regulatory filings, such as the design or implementation of the relevant clinical trials; or
a product may not be approved for the indications that we, or our collaborators, request or may be limited or subject to
restrictions or post-approval commitments that render the approved drug not commercially viable.
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Further, we could face heightened risks with respect to seeking marketing approval in the UK as a result of the withdrawal of
the UK from the EU, commonly referred to as Brexit. The UK is no longer part of the European Single Market and EU Customs
Union. As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency (“MHRA”) became responsible for
supervising medicines and medical devices in Great Britain, comprising England, Scotland and Wales under domestic law, whereas
Northern Ireland will continue to be subject to EU rules under the Northern Ireland Protocol. The MHRA will rely on the Human
Medicines Regulations 2012 (SI 2012/1916) (as amended) (“HMR”) as the basis for regulating medicines. The HMR has incorporated
into the domestic law of the body of EU law instruments governing medicinal products that pre-existed prior to the UK’s withdrawal
from the EU. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, may force
us to restrict or delay efforts to seek regulatory approval in the UK for our product candidates, which could significantly and
materially harm our business.
We, or our collaborators, may not be able to file for marketing approvals and may not receive necessary approvals to
commercialize our or their products in any market. Any failure, delay or setback in obtaining regulatory approval for our or our
collaborators’ product candidates could materially adversely affect our or our collaborators’ ability to generate revenue from a
particular product candidate, which could result in significant harm to our financial position and adversely impact our stock price.
We, or our collaborators, may seek approval from the FDA or comparable foreign regulatory authorities to use accelerated
development pathways for our product candidates. If we, or our collaborators, are not able to use such pathways, we, or they, may
be required to conduct additional clinical trials beyond those that are contemplated, which would increase the expense of
obtaining, and delay the receipt of, necessary marketing approvals, if we, or they, receive them at all. In addition, even if an
accelerated approval pathway is available to us, or our collaborators, it may not lead to expedited approval of our product
candidates, or approval at all.
Under the Federal Food, Drug and Cosmetic Act (“FDCA”) and implementing regulations, the FDA may grant accelerated
approval to a product candidate to treat a serious or life-threatening condition that provides meaningful therapeutic benefit over
available therapies, upon a determination that the product has an effect on a surrogate endpoint or intermediate clinical endpoint that is
reasonably likely to predict clinical benefit. The FDA considers a clinical benefit to be a positive therapeutic effect that is clinically
meaningful in the context of a given disease, such as irreversible morbidity or mortality. For the purposes of accelerated approval, a
surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought
to predict clinical benefit, but is not itself a measure of clinical benefit. An intermediate clinical endpoint is a clinical endpoint that can
be measured earlier than an effect on irreversible morbidity or mortality that is reasonably likely to predict an effect on irreversible
morbidity or mortality or other clinical benefit measurement of a therapeutic effect that is considered reasonably likely to predict the
clinical benefit of a drug. The accelerated approval pathway may be used in cases in which the advantage of a new drug over available
therapy may not be a direct therapeutic advantage, but is a clinically important improvement from a patient and public health
perspective. Prior to seeking such accelerated approval, we, or our collaborators, will continue to seek feedback from the FDA or
comparable foreign regulatory agencies and otherwise evaluate our, or their, ability to seek and receive such accelerated approval.
There can be no assurance that the FDA or foreign regulatory agencies will agree with our, or our collaborators’, surrogate
endpoints or intermediate clinical endpoints in any of our, or their, clinical trials, or that we, or our collaborators, will decide to pursue
or submit any additional New Drug Applications (“NDA”) for accelerated approval or any other form of expedited development,
review or approval. Similarly, there can be no assurance that, after feedback from the FDA or comparable foreign regulatory agencies,
we, or our collaborators, will continue to pursue or apply for accelerated approval or any other form of expedited development, review
or approval. Furthermore, for any submission of an application for accelerated approval or application under another expedited
regulatory designation, there can be no assurance that such submission or application will be accepted for filing or that any expedited
development, review or approval will be granted on a timely basis, or at all.
A failure to obtain accelerated approval or any other form of expedited development, review or approval for our product
candidates, or withdrawal of a product candidate, would result in a longer time period until commercialization of such product
candidate, could increase the cost of development of such product candidate and could harm our competitive position in the
marketplace.
Under accelerated or conditional approval regulations of the FDA or comparable foreign regulatory authorities, we, and our
collaborators, must comply with post-approval development and regulatory requirements to maintain the approval of XPOVIO or
any future approved products and, if we, or our collaborators, fail to do so, the FDA or comparable foreign regulatory authorities
could withdraw its approval of XPOVIO or any future approved products for the indication that received accelerated or conditional
approval, which would lead to substantially lower revenues.
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For drugs approved under the FDA’s Accelerated Approval Program, the FDA typically requires post-marketing confirmatory
trials to evaluate the anticipated effect on irreversible morbidity or mortality or other clinical benefit. These confirmatory trials must
be completed with due diligence. For example, in June 2020, the FDA approved XPOVIO to treat DLBCL under the FDA’s
accelerated approval regulations and as a condition of the accelerated approval for this indication we are required to (i) complete and
submit a final report with full datasets from a randomized, double-blind, placebo-controlled Phase 3 trial that verifies and describes
the clinical benefit of selinexor in patients with relapsed or refractory DLBCL and (ii) provide the interim and final analyses of a
randomized Phase 2 clinical trial of selinexor to characterize the safety and efficacy of at least two different dosing regimens of
selinexor monotherapy in patients with relapsed or refractory DLBCL after at least two prior lines of systemic therapy. We intend to
satisfy the Phase 3 trial requirement though our XPORT-DLBCL-030 study and we may not be able to successfully and timely
complete this study or any other post-marketing confirmatory study as required to maintain approval or achieve full approval. If the
required post-approval studies fail to verify the clinical benefits of XPOVIO or confirm that the surrogate marker used for accelerated
approval of XPOVIO to treat DLBCL showed an adequate correlation with clinical outcomes, if a sufficient number of participants
cannot be enrolled, or if we fail to perform the required post-approval studies with due diligence or on a timely basis, the FDA has the
authority to withdraw approval of the drug following a hearing conducted under the FDA’s regulations, which could have a material
adverse impact on our business. We cannot be certain of the results of the confirmatory clinical studies for the DLBCL indication or
any other future conditional approval we receive or what action the FDA may take if the results of those studies are not as expected
based on clinical data that FDA has already reviewed.
Similar risks to those described above are also applicable to any application that we, or our collaborators, have submitted or may
submit to the EMA to support approval of selinexor to treat heavily pretreated multiple myeloma, relapsed or refractory DLBCL, or
any other cancer indication. For medicinal products where the benefit of immediate availability outweighs the risk of less
comprehensive data than normally required, based on the scope and criteria defined in legislation and guidelines, it is possible to
obtain a conditional marketing authorization in the EU with a 12-month validity period and annual renewal pursuant to Regulation No
507/2006. These are granted only if the EMA’s Committee for Medicinal Products for Human Use (“CHMP”) finds that all four of the
following requirements are met: (i) the benefit-risk balance of the product is positive; (ii) it is likely that the sponsor will be able to
provide comprehensive data; (iii) unmet medical needs will be fulfilled; and (iv) the benefit to public health of the medicinal product’s
immediate availability on the market outweighs the risks due to the need for further data. Once a conditional marketing authorization
has been granted, the marketing authorization holder must fulfil specific obligations within defined timelines. These obligations could
include completing ongoing or new studies or collecting additional data to confirm the medicine’s benefit-risk balance remains
positive. For example, the July 2022 marketing authorization from the European Commission (“EC”) for NEXPOVIO to treat adult
patients with multiple myeloma after at least one prior therapy satisfied the conditional approval obligation for NEXPOVIO for
patients with multiple myeloma who have received at least four prior therapies and whose disease is refractory to at least two
proteasome inhibitors, two immunomodulatory agents, and an anti-CD38 monoclonal antibody, and who have demonstrated disease
progression on the last therapy. Conditional marketing authorization is valid for a period of one year and can be renewed/prolonged if
the conditions set out in the conditional marketing authorization are met. If we, or our collaborators, are not able to fulfill the specific
obligations set out in any conditional marketing authorization requirements, the conditional marketing authorization may not be
prolonged and we, or our collaborators, will no longer be able to market the product for the indication receiving conditional approval.
XPOVIO and any of our product candidates for which we, or our collaborators, obtain marketing approval in the future are
subject to post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from the
market, and we, and our collaborators, may be subject to substantial penalties if we, or they, fail to comply with regulatory
requirements or if we, or they, experience unanticipated problems with our products following approval.
Once marketing approval has been granted, an approved product and its manufacturer and marketer are subject to ongoing
review and extensive regulation. XPOVIO and any of our product candidates for which we, or our collaborators, obtain marketing
approval in the future, as well as the manufacturing processes, post-approval studies and measures, labeling, advertising and
promotional activities for such drug, among other things, will be subject to continual requirements of and review by the FDA and
other U.S. and foreign regulatory authorities. These requirements include submissions of safety and other post-marketing information
and reports, registration and listing requirements, requirements relating to manufacturing, quality control, quality assurance and
corresponding maintenance of records and documents, and requirements regarding the distribution of samples to physicians and
recordkeeping. For example, as a condition of the XPOVIO approval by the FDA for the multiple myeloma and DLBCL indications,
we are required to complete certain post-marketing commitments. Even if marketing approval of a product candidate is granted, the
approval may be subject to limitations on the indicated uses for which the drug may be marketed or to the conditions of approval,
including the requirement to implement a Risk Evaluation and Mitigation Strategy, which could include requirements for a restricted
distribution system.
The FDA and comparable foreign regulatory authorities may also impose requirements for costly post-marketing studies or
clinical trials and surveillance to monitor the safety or efficacy of a drug. The FDA and other U.S. or foreign agencies, including the
Department of Justice (the “DOJ”), closely regulate and monitor the post-approval marketing and promotion of drugs to ensure that
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they are manufactured, marketed and distributed only for the approved indications and in accordance with the provisions of the
approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding off-label use, and if we, or
our collaborators communicate about any of our product candidates for which we, or they, receive marketing approval in a way that
regulators assert goes beyond their approved indications, we, or they, may be subject to warnings or enforcement action for off-label
marketing. Alleged violations of the FDCA or other statutes, including the False Claims Act (the “FCA”), relating to the promotion
and advertising of prescription drugs may lead to investigations or allegations of violations of federal and state health care fraud and
abuse laws and state consumer protection laws. In September 2021, the FDA published final regulations which describe the types of
evidence that the agency will consider in determining the intended use of a drug or biologic.
In addition, manufacturers of approved products and those manufacturers’ facilities are required to comply with extensive
requirements by the FDA and comparable foreign regulatory authorities, including ensuring that quality control and manufacturing
procedures conform to current Good Manufacturing Practice (“cGMP”), which include requirements relating to quality control and
quality assurance as well as the corresponding maintenance of records and documentation and reporting requirements. We, our
contract manufacturers, our collaborators and their contract manufacturers could be subject to periodic unannounced inspections by
the FDA or foreign regulatory authorities to monitor and ensure compliance with cGMPs or other regulations.
Post-approval discovery of previously unknown problems with our products, including AEs of unanticipated severity or
frequency, or relating to our manufacturing processes, data integrity issues with regulatory filings, or failure to comply with regulatory
requirements, may yield various results, including:
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litigation involving patients taking our drug;
restrictions on our manufacturers or manufacturing processes;
restrictions on the labeling or marketing of our products;
restrictions on the distribution or use of our products;
requirements to conduct post-marketing studies or clinical trials;
warning letters or untitled letters;
withdrawal, recall or seizure of our products from the market;
refusal to approve pending applications or supplements to approved applications that we submit;
fines, restitution or disgorgement of profits or revenues;
suspension or withdrawal of marketing approvals;
damage to relationships with our current or potential collaborators;
unfavorable press coverage and damage to our reputation;
refusal to permit the import or export of our products; or
injunctions or the imposition of civil or criminal penalties.
Similar restrictions apply to the approval of our products in the EU. The holder of the marketing authorization is required to
comply with a range of requirements applicable to the manufacturing, marketing, promotion and sale of medicinal products. These
include:
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compliance with the EU’s stringent pharmacovigilance or safety reporting rules, which can impose post-authorization
studies and additional monitoring obligations;
the manufacturing of authorized medicinal products, for which a separate manufacturer’s license is mandatory, must also
be conducted in strict compliance with the applicable EU laws, regulations and guidance, including Directive 2001/83/EC,
Directive 2003/94/EC, Regulation (EC) No 726/2004 and the EC Guidelines for Good Manufacturing Practice. These
requirements include compliance with EU cGMP standards when manufacturing medicinal products and active
pharmaceutical ingredients, including the manufacture of active pharmaceutical ingredients outside of the EU with the
intention to import the active pharmaceutical ingredients into the EU; and
the marketing and promotion of authorized drugs, including industry-sponsored continuing medical education and
advertising directed toward the prescribers of drugs and/or the general public, are strictly regulated in the EU notably
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under Directive 2001/83/EC, as amended, and are also subject to EU Member State laws. Direct-to-consumer advertising
of prescription medicines is prohibited across the EU.
Accordingly, in connection with our currently approved products and assuming we, or our collaborators, receive marketing
approval for one or more of our product candidates, we, and our collaborators, and our and their contract manufacturers will continue
to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance and
quality control. If we, and our collaborators, are not able to comply with post-approval regulatory requirements, our or our
collaborators’ ability to market any future products could be limited, which could adversely affect our ability to achieve or sustain
profitability. Further, the cost of compliance with post-approval regulations may have a negative effect on our operating results and
financial condition.
If we, or our collaborators, are required by the FDA or comparable foreign regulatory authorities to obtain clearance or approval
of a companion diagnostic in connection with approval of a product candidate, and we or they do not obtain or there are delays in
obtaining clearance or approval of a diagnostic device, we will not be able to commercialize the product candidate and our ability
to generate revenue will be materially impaired.
Under the FDCA, companion diagnostics are regulated as medical devices and the FDA has generally required companion
diagnostics intended to select the patients who will respond to cancer treatment to obtain premarket approval (“PMA”). In connection
with our ongoing development of a registration-enabling study of selinexor in patients whose endometrial cancer is TP53 wild-type,
we are utilizing a companion diagnostic. Consequently, we expect that this companion diagnostic, or any others we may utilize in the
future, may require us or our collaborators to obtain a PMA.
The PMA process, including the gathering of clinical and preclinical data and the submission to and review by the FDA,
involves a rigorous premarket review during which the sponsor must prepare and provide the FDA with reasonable assurance of the
device’s safety and effectiveness and information about the device and its components regarding, among other things, device design,
manufacturing and labeling. PMA approval is not guaranteed and may take considerable time, and the FDA may ultimately respond to
a PMA submission with a not approvable determination based on deficiencies in the application and require additional clinical trial or
other data that may be expensive and time-consuming to generate and that can substantially delay approval.
Similar risks to those described above are also applicable to any companion diagnostic that we, or our collaborators, utilize in
our clinical trials in connection with approval of a product candidate outside of the U.S. As a result, if we or our collaborators are
required by the FDA or comparable foreign regulatory authorities to obtain approval of a companion diagnostic for a candidate
therapeutic product, and we or our collaborators do not obtain or there are delays in obtaining approval of a diagnostic device, we will
not be able to commercialize the product candidate and our ability to generate revenue will be materially impaired.
We may seek certain designations for our product candidates in or outside of the U.S., including Breakthrough Therapy, Fast
Track and Priority Review designations, and PRIME Designation in the EU, but we might not receive such designations, and even
if we do, such designations may not lead to a faster development or regulatory review or approval process.
We may seek certain designations for one or more of our product candidates that could expedite review and approval by the
FDA. A Breakthrough Therapy product is defined as a product that is intended, alone or in combination with one or more other
products, to treat a serious condition, and preliminary clinical evidence indicates that the product may demonstrate substantial
improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed
early in clinical development. For products that have been designated as breakthrough therapies, interaction and communication
between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing
the number of patients placed in ineffective control regimens.
The FDA may also designate a product for Fast Track review if it is intended, whether alone or in combination with one or more
other products, for the treatment of a serious or life-threatening disease or condition, and it demonstrates the potential to address
unmet medical needs for such a disease or condition. For Fast Track products, sponsors may have greater interactions with the FDA
and the FDA may initiate review of sections of a Fast Track product’s application before the application is complete. This rolling
review may be available if the FDA determines, after preliminary evaluation of clinical data submitted by the sponsor, that a Fast
Track product may be effective.
We may also seek a Priority Review designation for one or more of our product candidates. If the FDA determines that a
product candidate offers major advances in treatment or provides a treatment where no adequate therapy exists, the FDA may
designate the product candidate for priority review. A Priority Review designation means that the goal for the FDA to review an
application is six months, rather than the standard review period of ten months.
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These designations are within the discretion of the FDA. Accordingly, even if we believe that one of our product candidates
meets the criteria for these designations, the FDA may disagree and instead determine not to make such designation. Further, even if
we receive a designation, such as the recent receipt of Fast Track designation for eltanexor to treat myelodysplastic neoplasms, the
receipt of such designation for a product candidate may not result in a faster development or regulatory review or approval process
compared to products considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA.
In addition, even if one or more of our product candidates qualifies for these designations, the FDA may later decide that the product
candidates no longer meet the conditions for qualification and rescind the designation or decide that the time period for FDA review or
approval will not be shortened.
In the EU, we or our collaborators may seek PRIME designation for some of our product candidates in the future. PRIME is a
voluntary program aimed at enhancing the EMA’s role to reinforce scientific and regulatory support in order to optimize development
and enable accelerated assessment of new medicines that are of major public health interest with the potential to address unmet
medical needs. The program focuses on medicines that target conditions for which there exists no satisfactory method of treatment in
the EU or even if such a method exists, it may offer a major therapeutic advantage over existing treatments. PRIME is limited to
medicines under development and not authorized in the EU and the sponsor intends to apply for an initial MAA through the
centralized procedure. To be accepted for PRIME, a product candidate must meet the eligibility criteria with respect to its major public
health interest and therapeutic innovation based on information that is capable of substantiating the claims. The benefits of a PRIME
designation include the appointment of a CHMP rapporteur to provide continued support and help to build knowledge ahead of a
MAA, early dialogue and scientific advice at key development milestones, and the potential to qualify products for accelerated review,
meaning reduction in the review time for an opinion on approvability to be issued earlier in the application process. PRIME enables a
sponsor to request parallel EMA scientific advice and health technology assessment advice to facilitate timely market access. Even if
we or our collaborators receive PRIME designation for any of our product candidates, the designation may not result in a materially
faster development process, review or approval compared to conventional EMA procedures. Further, obtaining PRIME designation
does not assure or increase the likelihood of the EMA’s grant of a marketing authorization.
We may not be able to obtain orphan drug exclusivity for any product candidates we may develop, and even if we do, that
exclusivity may not prevent the FDA or the EMA from approving other competing products.
Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug or biologic intended to treat a
rare disease or condition. A similar regulatory scheme governs approval of orphan products by the EMA in the EU. Generally, if a
product candidate with an Orphan Drug Designation subsequently receives the first marketing approval for the indication for which it
has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or the EMA, as applicable,
from approving another marketing application for the same product for the same therapeutic indication for that time period. The
applicable period is seven years in the U.S. and ten years in the EU. The exclusivity period in the EU can be reduced to six years if a
product no longer meets the criteria for Orphan Drug Designation, in particular if the product is sufficiently profitable so that market
exclusivity is no longer justified.
In order for the FDA to grant orphan drug exclusivity to one of our products, the agency must find that the product is indicated
for the treatment of a condition or disease with a patient population of fewer than 200,000 individuals annually in the U.S. The FDA
may conclude that the condition or disease for which we seek orphan drug exclusivity does not meet this standard. Even if we obtain
orphan drug exclusivity for a product, such as the recent receipt of orphan drug exclusivity for selinexor for the treatment of
myelofibrosis, that exclusivity may not effectively protect the product from competition because different products can be approved
for the same condition. In addition, even after an orphan drug is approved, the FDA and comparable foreign regulatory authorities,
such as the EMA, can subsequently approve the same product for the same condition if the FDA or such other authorities conclude
that the later product is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.
Orphan drug exclusivity may also be lost if the FDA or EMA determines that the request for designation was materially defective or if
the manufacturer is unable to assure sufficient quantity of the product to meet the needs of the patients with the rare disease or
condition.
In 2017, the Congress passed the FDA Reauthorization Act of 2017 (“FDARA”). FDARA, among other things, codified the
FDA’s pre-existing regulatory interpretation, to require that a drug sponsor demonstrate the clinical superiority of an orphan drug that
is otherwise the same as a previously approved drug for the same rare disease in order to receive orphan drug exclusivity. Under
omnibus legislation signed by former President Trump in December 2020, the requirement for a product to show clinical superiority
applies to drugs and biologics that received Orphan Drug Designation before the enactment of FDARA in 2017, but have not yet been
approved or licensed by the FDA.
The FDA and Congress may further reevaluate the Orphan Drug Act and its regulations and policies. This may be particularly
true in light of a decision from the Court of Appeals for the 11th Circuit in September 2021 finding that, for the purpose of
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determining the scope of exclusivity, the term “same disease or condition” means the designated “rare disease or condition” and could
not be interpreted by the FDA to mean the “indication or use.” Thus, the court concluded, orphan drug exclusivity applies to the entire
designated disease or condition rather than the “indication or use.” We do not know if, when, or how the FDA may change the orphan
drug regulations and policies in the future or whether Congress will take legislative action, and it is uncertain how any changes might
affect our business. Depending on what changes the FDA may make to its orphan drug regulations and policies, our business could be
adversely impacted.
Inadequate funding for the FDA, the SEC and other government agencies, including from government shut downs, or other
disruptions to these agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent
new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from
performing normal business functions on which the operation of our business may rely, which could negatively impact our
business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget
and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy
changes. Average review times at the agency have fluctuated in recent years as a result. Disruptions at the FDA and other agencies
may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies,
which would adversely affect our business. In addition, government funding of the SEC and other government agencies on which our
operations may rely, including those that fund research and development activities, is subject to the political process, which is
inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or
approved by necessary government agencies, which would adversely affect our business. For example, over the last several years the
U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough
critical employees and stop critical activities. On January 30, 2023, the Biden Administration announced that it will end the public
health emergency declarations related to COVID-19 on May 11, 2023. On January 31, 2023, the FDA indicated that it would soon
issue a Federal Register notice describing how the termination of the public health emergency will impact the agency’s COVID-19
related guidances. At this point, it is unclear how, if at all, these developments will impact our efforts to develop and commercialize
our products and product candidates. Nonetheless, if a prolonged government shutdown occurs, it could significantly impact the
ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our
business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in
order to properly capitalize and continue our operations.
Separately, in response to the COVID-19 pandemic, a number of companies in 2021 and 2022 announced receipt of complete
response letters due to the FDA’s inability to complete required inspections for their applications. Although the FDA has now resumed
domestic and foreign inspections, it may not be able to continue its current pace and review timelines could be extended, including
where a pre-approval inspection or an inspection of clinical sites is required. Regulatory authorities outside the U.S. may adopt similar
restrictions or other policy measures in response to the COVID-19 pandemic and may experience delays in their regulatory activities.
If a prolonged government shutdown or other disruption occurs, it could significantly impact the ability of the FDA to timely review
and process our regulatory submissions, which could have a material adverse effect on our business. Future shutdowns or other
disruptions could also affect other government agencies such as the SEC, which may also impact our business by delaying review of
our public filings, to the extent such review is necessary, and our ability to access the public markets.
Current and future legislation may increase the difficulty and cost for us, or any collaborators, to obtain marketing approval and
commercialize our or their product candidates, if approved, and affect the prices we, or they, may obtain.
In the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes
regarding the healthcare system that could, among other things, prevent or delay marketing approval of our or our collaborators’
product candidates, restrict or regulate post-approval activities and affect our ability, or the ability of any collaborators, to profitably
sell or commercialize XPOVIO or any product candidate for which we, or they, obtain marketing approval. We expect that current
laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and
in additional downward pressure on the price that we, or any collaborators, may receive for any approved products. If reimbursement
of our products is unavailable or limited in scope, our business could be materially harmed.
In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health
Care and Education Affordability Reconciliation Act (collectively the “PPACA”). In addition, other legislative changes have been
proposed and adopted since the PPACA was enacted. In August 2011, the Budget Control Act of 2011, among other things, created
measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted
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deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the
legislation’s automatic reduction to several government programs. These changes included aggregate reductions to Medicare
payments to providers of up to 2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2031.
Pursuant to the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and subsequent legislation, these Medicare
sequester reductions were reduced and suspended, with the full 2% cut resuming in July 2022. The American Taxpayer Relief Act of
2012, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the
government to recover overpayments to providers from three to five years. Further, with the passage of the Inflation Reduction Act
(the “IRA”) in August 2022, Congress extended the expansion of PPACA premium tax credits through 2025. These laws may result in
additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any of our products
or product candidates for which we may obtain regulatory approval or the frequency with which any such product is prescribed or
used.
Since enactment of the PPACA, there have been, and continue to be, numerous legal challenges and Congressional actions to
repeal and replace provisions of the law. For example, with the enactment of the Tax Cuts and Jobs Act of 2017 (the “TCJA”),
Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of
health insurance, became effective in 2019. Further, in December 2018, a U.S. District Court judge in the Northern District of Texas
ruled that the individual mandate portion of the PPACA is an essential and inseverable feature of the PPACA, and therefore because
the mandate was repealed as part of the TCJA, the remaining provisions of the PPACA are invalid as well. The U.S. Supreme Court
heard this case in November 2020 and, in June 2021, dismissed this action after finding that the plaintiffs do not have standing to
challenge the constitutionality of the PPACA. Litigation and legislation over the PPACA are likely to continue, with unpredictable and
uncertain results.
The Trump Administration also took executive actions to undermine or delay implementation of the PPACA, including
directing federal agencies with authorities and responsibilities under the PPACA to waive, defer, grant exemptions from, or delay the
implementation of any provision of the PPACA that would impose a fiscal or regulatory burden on states, individuals, healthcare
providers, health insurers, or manufacturers of pharmaceuticals or medical devices. In January 2021, however, President Biden issued
a new Executive Order which directs federal agencies to reconsider rules and other policies that limit Americans’ access to health
care, and consider actions that will protect and strengthen that access. Under this Executive Order, federal agencies are directed to re-
examine: policies that undermine protections for people with pre-existing conditions, including complications related to COVID-19;
demonstrations and waivers under Medicaid and the PPACA that may reduce coverage or undermine the programs, including work
requirements; policies that undermine the health insurance marketplace or other markets for health insurance; policies that make it
more difficult to enroll in Medicaid and the PPACA; and policies that reduce affordability of coverage or financial assistance,
including for dependents.
We expect that these healthcare reforms, as well as other healthcare reform measures that may be adopted in the future, may
result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria and new payment
methodologies that govern XPOVIO or any other approved product and/or the level of reimbursement physicians receive for
administering XPOVIO or any other approved product we, or our collaborators, might bring to market. Reductions in reimbursement
levels may negatively impact the prices we receive or the frequency with which our products are prescribed or administered. Any
reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private
payors. Accordingly, such reforms, if enacted, could have an adverse effect on anticipated revenue from XPOVIO or from product
candidates for which we may obtain marketing approval and may affect our overall financial condition and ability to develop or
commercialize product candidates.
The prices of prescription pharmaceuticals in the U.S. and foreign jurisdictions are subject to considerable legislative and
executive actions and could impact the prices we obtain for our products, if and when licensed.
The prices of prescription pharmaceuticals have also been the subject of considerable discussion in the U.S. There have been
several recent U.S. congressional inquiries, as well as proposed and enacted state and federal legislation designed to, among other
things, bring more transparency to pharmaceutical pricing, review the relationship between pricing and manufacturer patient
programs, and reduce the costs of pharmaceuticals under Medicare and Medicaid. In 2020, former President Trump issued several
executive orders intended to lower the costs of prescription products and certain provisions in these orders have been incorporated into
regulations. These regulations include an interim final rule implementing a most favored nation model for prices that would tie
Medicare Part B payments for certain physician-administered pharmaceuticals to the lowest price paid in other economically advanced
countries, effective January 1, 2021. That rule, however, has been subject to a nationwide preliminary injunction and, on December
29, 2021, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule to rescind it. With issuance of this rule, CMS
stated that it will explore all options to incorporate value into payments for Medicare Part B pharmaceuticals and improve
beneficiaries’ access to evidence-based care.
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In addition, in October 2020, the Department of Health and Human Services (the “HHS”) and the FDA published a final rule
allowing states and other entities to develop a Section 804 Importation Program (“SIP”) to import certain prescription drugs from
Canada into the U.S. The final rule is currently the subject of ongoing litigation, but at least six states (Vermont, Colorado, Florida,
Maine, New Mexico, and New Hampshire) have passed laws allowing for the importation of drugs from Canada with the intent of
developing SIPs for review and approval by the FDA. Further, in November 2020, the HHS finalized a regulation removing safe
harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through
pharmacy benefit managers, unless the price reduction is required by law. The rule also creates a new safe harbor for price reductions
reflected at the point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and
manufacturers, the implementation of which has been delayed until January 1, 2026 by the Infrastructure Investment and Jobs Act.
In July 2021, President Biden signed Executive Order 14063, which focuses on, among other things, the price of
pharmaceuticals. The Order directs the HHS to create a plan within 45 days to combat “excessive pricing of prescription
pharmaceuticals and enhance domestic pharmaceutical supply chains, to reduce the prices paid by the federal government for such
pharmaceuticals, and to address the recurrent problem of price gouging.” In September 2021, the HHS released its plan to reduce
pharmaceutical prices. The key features of that plan are to: (a) make pharmaceutical prices more affordable and equitable for all
consumers and throughout the health care system by supporting pharmaceutical price negotiations with manufacturers; (b) improve
and promote competition throughout the prescription pharmaceutical industry by supporting market changes that strengthen supply
chains, promote biosimilars and generic drugs, and increase transparency; and (c) foster scientific innovation to promote better
healthcare and improve health by supporting public and private research and making sure that market incentives promote discovery of
valuable and accessible new treatments.
More recently, on August 16, 2022, the IRA was signed into law by President Biden. The new legislation has implications for
Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in Medicare Part B to
give them the option of paying a monthly premium for outpatient prescription drug coverage. Among other things, the IRA requires
manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be negotiated
subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first
due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025). The IRA
permits the Secretary of the HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial
years.
Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for certain costly single-
source drug and biologic products that do not have competing generics or biosimilars and are reimbursed under Medicare Part B and
Part D. CMS may negotiate prices for ten high-cost drugs paid for by Medicare Part D starting in 2026, followed by 15 Part D drugs in
2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond. This provision applies to drug products
that have been approved for at least nine years and biologics that have been licensed for 13 years, but it does not apply to drugs and
biologics that have been approved for a single rare disease or condition. Further, the legislation subjects drug manufacturers to civil
monetary penalties and a potential excise tax for failing to comply with the legislation by offering a price that is not equal to or less
than the negotiated “maximum fair price” under the law or for taking price increases that exceed inflation. The legislation also
requires manufacturers to pay rebates for drugs in Medicare Part D whose price increases exceed inflation. The new law also caps
Medicare out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at 2,000 a year.
At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to
control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on
certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage
importation from other countries and bulk purchasing. In addition, regional healthcare organizations and individual hospitals are
increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their
prescription drug and other healthcare programs. These measures could reduce the ultimate demand for our products, once approved,
or put pressure on our product pricing. We expect that additional state and federal healthcare reform measures will be adopted in the
future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which
could result in reduced demand for our product candidates or additional pricing pressures.
Finally, outside of the U.S., in some nations, including those of the EU, the pricing of prescription pharmaceuticals is subject to
governmental control and access. In these countries, pricing negotiations with governmental authorities can take considerable time
after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we, or our
collaborators, may be required to conduct a clinical trial that compares the cost-effectiveness of our product to other available
therapies.
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These measures, as well as others adopted in the future, may result in additional downward pressure on the price that we receive
for XPOVIO or any other approved product we or our collaborators might bring to market. Accordingly, such reforms, if enacted,
could have an adverse effect on anticipated revenue from XPOVIO or from product candidates that we, or our collaborators, may
successfully develop and for which we, or they, may obtain marketing approval and may affect our overall financial condition and
ability to develop or commercialize product candidates.
Our relationships with healthcare providers, physicians and third-party payers will be subject to applicable anti-kickback, fraud
and abuse, and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual
damages, reputational harm and diminished profits and future earnings.
Healthcare professionals, including but not limited to physicians, nurses, medical directors, hospitals, pharmacies, pharmacy
benefit managers, group purchasing organizations, wholesalers, insurers, and all individuals employed by such entities (collectively,
“HCPs”), may influence the recommendation and prescription of our approved products. Our arrangements with HCPs and others who
have the ability to influence the recommendation and prescription of our products may expose us to broadly applicable fraud and
abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through
which we market, sell and distribute our medicines for which we obtain marketing approval. Restrictions under applicable federal and
state healthcare laws and regulations include the following:
•
•
•
•
•
•
the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting,
offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the
referral of an individual for, or the purchase, order, or recommendation of, any good or service, for which payment may
be made under federal and state healthcare programs such as Medicare and Medicaid;
the FCA imposes criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or
entities for knowingly presenting or causing to be presented, to the federal government, claims for payment or approval
from Medicare, Medicaid or other government payers that are false or fraudulent or making a false statement to avoid,
decrease or conceal an obligation to pay money to the federal government, with potential liability including mandatory
treble damages and significant per-claim penalties;
the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as further amended by the Health
Information Technology for Economic and Clinical Health Act, which imposes certain requirements, including mandatory
contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health
information without appropriate authorization by entities subject to the rule, such as health plans, healthcare
clearinghouses and healthcare providers;
the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or covering up a
material fact or making any materially false statement in connection with the delivery of or payment for healthcare
benefits, items or services;
the federal transparency requirements under the federal Physician Payment Sunshine Act, which requires manufacturers of
drugs, devices, biologics and medical supplies to report to the HHS, information related to payments and other transfers of
value to physicians, other healthcare providers and teaching hospitals and ownership and investment interests held by
physicians and their immediate family members and applicable group purchasing organizations; and
analogous state laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or
marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party
payers, including private insurers, and certain state laws that require pharmaceutical companies to comply with the
pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the
federal government in addition to requiring drug manufacturers to report information related to payments to physicians
and other healthcare providers or marketing expenditures.
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that
some of our business activities could be subject to challenge under one or more of such laws. If our operations are found to be in
violation of any of the laws described above or any other government regulations that apply to us, we may be subject to penalties,
including civil and criminal penalties, damages, fines, exclusion from participation in government healthcare programs, such as
Medicare and Medicaid, imprisonment and the curtailment or restructuring of our operations, any of which could adversely affect our
business, financial condition, results of operations and prospects.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations
will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply
with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If
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our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be
subject to significant civil, criminal and administrative penalties, damages, fines, exclusion from government funded healthcare
programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other
providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject
to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. Liabilities they incur
pursuant to these laws could result in significant costs or an interruption in operations, which could have a material adverse effect on
our business, financial condition, results of operations and prospects.
Our reporting and payment obligations under the Medicaid Drug Rebate Program and other governmental drug pricing programs
are complex and may involve subjective decisions. Any failure to comply with those obligations could subject us to penalties and
sanctions.
As a condition of reimbursement by various federal and state health insurance programs, we are required to calculate and report
certain pricing information to federal and state agencies. The regulations governing the calculations, price reporting and payment
obligations are complex and subject to interpretation by various government and regulatory agencies, as well as the courts. Reasonable
assumptions have been made where there is lack of regulations or clear guidance and such assumptions involve subjective decisions
and estimates. We are required to report any revisions to our calculation, price reporting and payment obligations previously reported
or paid. Such revisions could affect our liability to federal and state payers and also adversely impact our reported financial results of
operations in the period of such restatement. Further, a number of states have either implemented or are considering implementation of
drug price transparency legislation that may prevent or limit our ability to take price increases at certain rates or frequencies.
Requirements under such laws include advance notice of planned price increases, reporting price increase amounts and factors
considered in taking such increases, wholesale acquisition cost information disclosure to prescribers, purchasers, and state agencies,
and new product notice and reporting. Such legislation could limit the price or payment for certain drugs, and a number of states are
authorized to impose civil monetary penalties or pursue other enforcement mechanisms against manufacturers for the untimely,
inaccurate, or incomplete reporting of drug pricing information or for otherwise failing to comply with drug price transparency
requirements. If we are found to have violated state law requirements, we may become subject to significant penalties or other
enforcement mechanisms, which could have a material adverse effect on our business.
Uncertainty exists as new laws, regulations, judicial decisions, or new interpretations of existing laws, or regulations related to
our calculations, price reporting or payments obligations increases the chances of a legal challenge, restatement or investigation. If we
become subject to investigations, restatements, or other inquiries concerning our compliance with price reporting laws and regulations,
we could be required to pay or be subject to additional reimbursements, penalties, sanctions or fines, which could have a material
adverse effect on our business, financial condition and results of operations. In addition, it is possible that future healthcare reform
measures could be adopted, which could result in increased pressure on pricing and reimbursement of our products and thus have an
adverse impact on our financial position or business operations.
Further, state Medicaid programs may be slow to invoice pharmaceutical companies for calculated rebates resulting in a lag
between the time a sale is recorded and the time the rebate is paid. This results in us having to carry a liability on our consolidated
balance sheets for the estimate of rebate claims expected for Medicaid patients. If actual claims are higher than current estimates, our
financial position and results of operations could be adversely affected.
In addition to retroactive rebates and the potential for 340B Program refunds, if we are found to have knowingly submitted any
false price information related to the Medicaid Drug Rebate Program to CMS, we may be liable for civil monetary penalties. Such
failure could also be grounds for CMS to terminate our Medicaid drug rebate agreement, pursuant to which we participate in the
Medicaid program. In the event that CMS terminates our rebate agreement, federal payments may not be available under government
programs, including Medicaid or Medicare Part B, for our covered outpatient drugs.
Additionally, if we overcharge the government in connection with the Federal Supply Schedule pricing program or Tricare
Retail Pharmacy Program, whether due to a misstated Federal Ceiling Price or otherwise, we are required to refund the difference to
the government. Failure to make necessary disclosures and/or to identify contract overcharges can result in allegations against us
under the FCA and other laws and regulations. Unexpected refunds to the government, and responding to a government investigation
or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on our business, financial
condition, results of operations and growth prospects.
Our collaborators are also subject to similar requirements outside of the U.S. and thus the attendant risks and uncertainties. If
our collaborators suffer material and adverse effects from such risks and uncertainties, our rights and benefits for our licensed products
could be negatively impacted, which could have a material and adverse impact on our revenues.
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We are subject to stringent privacy laws, information security laws, regulations, policies and contractual obligations related to data
privacy and security and changes in such laws, regulations, policies, contractual obligations and failure to comply with such
requirements could subject us to significant fines and penalties, which may have a material adverse effect on our business,
financial condition or results of operations.
We are subject to data privacy and protection laws and regulations that apply to the collection, transmission, storage and use of
personally-identifying information, which among other things, impose certain requirements relating to the privacy, security and
transmission of personal information, including comprehensive regulatory systems in the U.S., EU, UK and other countries in which
we may conduct business. The legislative and regulatory landscape for privacy and data protection continues to evolve in jurisdictions
worldwide, and there has been an increasing focus on privacy and data protection issues with the potential to affect our business.
Failure to comply with any of these laws and regulations could result in enforcement action against us, including fines, imprisonment
of company officials and public censure, claims for damages by affected individuals, damage to our reputation and loss of goodwill,
any of which could have a material adverse effect on our business, financial condition, results of operations or prospects.
There are numerous U.S. federal and state laws and regulations related to the privacy and security of personal information. In
particular, regulations promulgated pursuant to HIPAA establish privacy and security standards that limit the use and disclosure of
individually identifiable health information, or protected health information, and require the implementation of administrative,
physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity
and availability of electronic protected health information. Determining whether protected health information has been handled in
compliance with applicable privacy standards and our contractual obligations can be complex and may be subject to changing
interpretation. These obligations may be applicable to some or all of our business activities now or in the future.
If we are unable to properly protect the privacy and security of protected health information, we could be found to have
breached our contracts. Further, if we fail to comply with applicable privacy laws, including applicable HIPAA privacy and security
standards, we could face civil and criminal penalties. HHS enforcement activity can result in financial liability and reputational harm,
and responses to such enforcement activity can consume significant internal resources. In addition, state attorneys general are
authorized to bring civil actions seeking either injunctions or damages in response to violations that threaten the privacy of state
residents. We cannot be sure how these regulations will be interpreted, enforced or applied to our operations in the future. In addition
to the risks associated with enforcement activities and potential contractual liabilities, our ongoing efforts to comply with evolving
laws and regulations at the federal and state level may be costly and require ongoing modifications to our policies, procedures and
systems.
In 2018, California passed into law the California Consumer Privacy Act (the “CCPA”), which took effect on January 1, 2020
and imposed many requirements on businesses that process the personal information of California residents. Many of the CCPA’s
requirements are similar to those found in the European General Data Protection Regulation (the “GDPR”), including requiring
businesses to provide notice to data subjects regarding the information collected about them and how such information is used and
shared, and providing data subjects the right to request access to such personal information and, in certain cases, request the erasure of
such personal information. The CCPA also affords California residents the right to opt-out of “sales” of their personal information.
The CCPA contains significant penalties for companies that violate its requirements. In November 2020, California voters passed a
ballot initiative for the California Privacy Rights Act (the “CPRA”), which went into effect on January 1, 2023 and significantly
expanded the CCPA to incorporate additional GDPR-like provisions including requiring that the use, retention, and sharing of
personal information of California residents be reasonably necessary and proportionate to the purposes of collection or processing,
granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents
regarding retention of information. The CPRA also created a new enforcement agency – the California Privacy Protection Agency –
whose sole responsibility is to enforce the CPRA, which will further increase compliance risk. The provisions in the CPRA may apply
to some of our business activities. In addition, other states, including Virginia, Colorado, Utah, and Connecticut already have passed
state privacy laws with potentially different requirements. Virginia’s privacy law also went into effect on January 1, 2023, and the
laws in the other three states will go into effect later in the year. Other states will be considering these laws in the future, and Congress
has also been debating passing a federal privacy law. In addition to compliance costs, these laws may impact our business activities,
including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of
our products.
Similar to the laws in the U.S., there are significant privacy and data security laws that apply in Europe and other countries. The
collection, use, disclosure, transfer, or other processing of personal data, including personal health data, regarding individuals who are
located in the European Economic Area (“EEA”), and the processing of personal data that takes place in the EEA, is regulated by the
GDPR, which went into effect in May 2018 and which imposes obligations on companies that operate in our industry with respect to
the processing of personal data and the cross-border transfer of such data. The GDPR imposes onerous accountability obligations
requiring data controllers and processors to maintain a record of their data processing and policies. If our or our partners’ or service
providers’ privacy or data security measures fail to comply with the GDPR requirements, we may be subject to litigation, regulatory
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investigations, enforcement notices requiring us to change the way we use personal data and/or fines of up to 20 million Euros or up to
4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, as well as compensation claims by
affected individuals, negative publicity, reputational harm and a potential loss of business and goodwill.
The GDPR places restrictions on the cross-border transfer of personal data from the EU to countries that have not been found by
the EC to offer adequate data protection legislation, such as the U.S. There are ongoing concerns about the ability of companies to
transfer personal data from the EU to other countries. In July 2020, the Court of Justice of the EU (the “CJEU”) invalidated the EU-
U.S. Privacy Shield, one of the mechanisms used to legitimize the transfer of personal data from the EEA to the U.S. The CJEU
decision also drew into question the long-term viability of an alternative means of data transfer, the standard contractual clauses, for
transfers of personal data from the EEA to the U.S. This CJEU decision may lead to increased scrutiny on data transfers from the EEA
to the U.S. generally and increase our costs of compliance with data privacy legislation as well as our costs of negotiating appropriate
privacy and security agreements with our vendors and business partners.
Additionally, in October 2022, President Biden signed an executive order to implement the EU-U.S. Data Privacy Framework,
which would serve as a replacement to the EU-US Privacy Shield. The EC initiated the process to adopt an adequacy decision for the
EU-US Data Privacy Framework in December 2022. It is unclear if and when the framework will be finalized and whether it will be
challenged in court. The uncertainty around this issue may further impact our business operations in the EU.
Following the withdrawal of the UK from the EU, the UK Data Protection Act 2018 applies to the processing of personal data
that takes place in the UK and includes parallel obligations to those set forth by GDPR. In relation to data transfers, both the UK and
the EU have determined, through separate “adequacy” decisions, that data transfers between the two jurisdictions are in compliance
with the UK Data Protection Act and the GDPR, respectively. Any changes or updates to these adequacy decisions have the potential
to impact our business.
Beyond GDPR, there are privacy and data security laws in a growing number of countries around the world. While many
loosely follow GDPR as a model, other laws contain different or conflicting provisions. These laws will impact our ability to conduct
our business activities, including both our clinical trials and the sale and distribution of commercial products, through increased
compliance costs, costs associated with contracting and potential enforcement actions.
While we continue to address the implications of the recent changes to data privacy regulations, data privacy remains an
evolving landscape at both the domestic and international level, with new regulations coming into effect and continued legal
challenges, and our efforts to comply with the evolving data protection rules may be unsuccessful. It is possible that these laws may be
interpreted and applied in a manner that is inconsistent with our practices. We must devote significant resources to understanding and
complying with this changing landscape. Failure to comply with laws regarding data protection would expose us to risk of
enforcement actions taken by data protection authorities in the EEA and elsewhere and carries with it the potential for significant
penalties if we are found to be non-compliant. Similarly, failure to comply with federal and state laws in the U.S. regarding privacy
and security of personal information could expose us to penalties under such laws. Any such failure to comply with data protection
and privacy laws could result in government-imposed fines or orders requiring that we change our practices, claims for damages or
other liabilities, regulatory investigations and enforcement action, litigation and significant costs for remediation, any of which could
adversely affect our business. Even if we are not determined to have violated these laws, government investigations into these issues
typically require the expenditure of significant resources and generate negative publicity, which could harm our business, financial
condition, results of operations or prospects.
Our employees, independent contractors, consultants, collaborators and vendors may engage in misconduct or other improper
activities, including non-compliance with regulatory standards and/or requirements and insider trading, which could cause
significant liability for us and harm our reputation.
We are exposed to the risk of fraud or other misconduct by our employees, independent contractors, consultants, collaborators
and vendors. Misconduct by these partners could include intentional, reckless and/or negligent conduct or unauthorized activities that
violate FDA regulations or similar regulations of comparable foreign regulatory authorities; provide inaccurate information to the
FDA or comparable foreign regulatory authorities; fail to comply with manufacturing standards, federal and state healthcare fraud and
abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities;
fail to comply with state drug pricing transparency filing requirements; fail to report financial information or data accurately; or fail to
disclose unauthorized activities to us. Employee misconduct could also involve the improper use of information obtained in the course
of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. This could include violations of
HIPAA, other U.S. federal and state laws, and requirements of foreign jurisdictions, including the GDPR. We are also exposed to risks
in connection with any insider trading violations by employees or others affiliated with us. It is not always possible to identify and
deter employee or third-party misconduct, and the precautions we take to detect and prevent these activities may not be effective in
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controlling unknown or unmanaged risks or losses or in protecting us from significant penalties, governmental investigations or other
actions or lawsuits stemming from a failure to be in compliance with such laws, standards, regulations, guidance or codes of conduct.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions
could have a significant impact on our business and results of operations, including the imposition of significant fines or other
sanctions.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or
incur costs that could have a material adverse effect on our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory
procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of
hazardous and flammable materials, including chemicals and biological and radioactive materials. Our operations also produce
hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate
the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous
materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur
significant costs associated with civil or criminal fines and penalties.
Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our
employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential
liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection
with our storage or disposal of biological, hazardous or radioactive materials.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and
regulations. These current or future laws and regulations may impair our research, development or commercialization efforts. Failure
to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.
Laws and regulations governing international operations we may have in the future may preclude us from developing,
manufacturing and selling certain products outside of the U.S. and require us to develop and implement costly compliance
programs.
We are subject to numerous laws and regulations in each jurisdiction outside of the U.S. in which we operate. The creation,
implementation and maintenance of international business practices compliance programs is costly and such programs are difficult to
enforce, particularly where reliance on third parties is required.
The FCPA prohibits any U.S. individual or business from paying, offering, authorizing payment or offering of anything of
value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the
foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies
whose securities are listed in the U.S. to comply with certain accounting provisions requiring us to maintain books and records that
accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an
adequate system of internal accounting controls. The FCPA is enforced by the DOJ and the SEC.
Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. In
addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals, clinics,
universities and similar institutions are operated by the government, and doctors and other healthcare professionals are considered
foreign officials. Certain payments to healthcare professionals in connection with clinical trials, regulatory approvals, sales and
marketing, and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement
actions. Because the FCPA applies to indirect payments, the use of third parties and other collaborators can increase potential FCPA
risk, as we could be held liable for the acts of third parties that do not comply with the FCPA’s requirements.
The failure to comply with laws governing international business practices may result in substantial penalties, including
suspension or debarment from government contracting. Violation of the FCPA can result in significant civil and criminal penalties.
Indictment alone under the FCPA can lead to suspension of the right to do business with the U.S. government until the pending claims
are resolved. Conviction of a violation of the FCPA can result in long-term disqualification as a government contractor. The
termination of a government contract or relationship as a result of our failure to satisfy any of our obligations under laws governing
international business practices would have a negative impact on our operations and harm our reputation and ability to procure
government contracts. The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the
FCPA’s accounting provisions.
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Like the FCPA, the UK Bribery Act and other anti-corruption laws throughout the world similarly prohibit offers and payments
made to obtain improper business advantages, including offers or payments to healthcare professionals and other government and non-
government officials. These other anti-corruption laws also can result in substantial financial penalties and other collateral
consequences.
Various laws, regulations and executive orders also restrict the use and dissemination outside of the U.S., or the sharing with
certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data
relating to those products. Our expansion outside of the U.S., has required, and will continue to require, us to dedicate additional
resources to comply with these laws, and these laws may preclude us from developing, manufacturing, or selling certain drugs and
product candidates outside of the U.S., which could limit our growth potential and increase our development costs.
With the passage of the CREATES Act, we are exposed to possible litigation and damages by competitors who may claim that we
are not providing sufficient quantities of our approved products on commercially reasonable, market-based terms for testing in
support of their ANDAs and 505(b)(2) applications.
In December 2019, former President Trump signed legislation intended to facilitate the development of generic and biosimilar
products. The bill, previously known as the CREATES Act, authorizes sponsors of abbreviated new drug applications (“ANDAs”) and
505(b)(2) applications to file lawsuits against companies holding NDAs that decline to provide sufficient quantities of an approved
reference drug on commercially reasonable, market-based terms. Drug products on FDA’s drug shortage list are exempt from these
new provisions unless the product has been on the list for more than six continuous months or the FDA determines that the supply of
the product will help alleviate or prevent a shortage.
To bring an action under the statute, an ANDA or 505(b)(2) sponsor must take certain steps to request the reference product,
which, in the case of products covered by a Risk Evaluation and Mitigation Strategy with elements to assure safe use, include
obtaining authorization from the FDA for the acquisition of the reference product. If the sponsor does bring an action for failure to
provide a reference product, there are certain affirmative defenses available to the NDA holder, which must be shown by a
preponderance of evidence. If the sponsor prevails in litigation, it is entitled to a court order directing the NDA holder to provide,
without delay, sufficient quantities of the applicable product on commercially reasonable, market-based terms, plus reasonable
attorney fees and costs.
Additionally, the new statutory provisions authorize a federal court to award the product developer an amount “sufficient to
deter” the NDA holder from refusing to provide sufficient product quantities on commercially reasonable, market-based terms if the
court finds, by a preponderance of the evidence, that the NDA holder did not have a legitimate business justification to delay
providing the product or failed to comply with the court’s order. For the purposes of the statute, the term “commercially reasonable,
market-based terms” is defined as (1) the nondiscriminatory price at or below the most recent wholesale acquisition cost for the
product, (2) a delivery schedule that meets the statutorily defined timetable, and (3) no additional conditions on the sale.
Although we intend to comply fully with the terms of these new statutory provisions, we are still exposed to potential litigation
and damages by competitors who may claim that we are not providing sufficient quantities of our approved products on commercially
reasonable, market-based terms for testing in support of ANDAs and 505(b)(2) applications. Such litigation would subject us to
additional litigation costs, damages and reputational harm, which could lead to lower revenues. The CREATES Act may enable
generic competition with XPOVIO and any of our product candidates, if approved, which could impact our ability to maximize
product revenue.
We are subject to governmental export and import controls that could impair our or our collaborators’ ability to compete in
international markets due to licensing requirements and subject us or them to liability if we or they are not in compliance with
applicable laws.
Our products are subject to export control and import laws and regulations, including the U.S. Export Administration
Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury
Department’s Office of Foreign Assets Controls. Exports of our products outside of the U.S. must be made in compliance with these
laws and regulations. If we or our collaborators fail to comply with these laws and regulations, we or they and certain of our or their
employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges; fines,
which may be imposed on us or our collaborators and the respective responsible employees or managers; and, in extreme cases, the
incarceration of responsible employees or managers.
In addition, changes in our products or changes in applicable export or import laws and regulations may create delays in the
introduction, provision, or sale of our products in international markets, prevent customers from using our products or, in some cases,
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prevent the export or import of our products to certain countries, governments or persons altogether. Any limitation on our ability to
export, provide, or sell our products could adversely affect our business, financial condition and results of operations.
Risks Related to Our Financial Position and Capital Requirements
We have incurred significant losses since inception, expect to continue to incur significant losses, and may never achieve or
maintain profitability.
Since inception, we have incurred significant operating losses. Our net loss was $165.3 million for the year ended December 31,
2022. As of December 31, 2022, we had an accumulated deficit of $1.3 billion. Although we received our first FDA-approval for
XPOVIO in July 2019, we may never attain profitability or positive cash flows from operations. We have historically financed our
operations principally through product sales, private placements of our preferred and common stock, proceeds from our initial public
offering and follow-on offerings of common stock, proceeds from the issuance of convertible debt, proceeds from a revenue interest
financing agreement, proceeds from sales of common stock under our “at the market offering” program and cash generated from our
business development activities. Substantially all of our operating losses have resulted from costs incurred in connection with our
research and development programs, the pursuit of regulatory approvals within and outside of the U.S., and the commercialization of
XPOVIO. We expect to continue to incur significant expenses and operating losses as we continue to commercialize XPOVIO in the
U.S. and engage in activities to prepare for the potential approval and commercialization of additional indications for selinexor and
eltanexor as well as our other product candidates. The net losses we incur may fluctuate significantly from quarter to quarter.
While we began to generate revenue from the sales of XPOVIO in July 2019 and have received revenue from our license
arrangements, such as the partnership we have with Antengene Therapeutics Limited (“Antengene”) for our programs across most of
the Asia-Pacific region, and with Menarini for our programs in Europe, Latin America and other key countries, there can be no
assurance as to the amount or timing of future product or license and other revenues, and we may not achieve profitability for several
years, if at all. Our ability to become and remain profitable depends significantly on our success in many areas, including:
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effectively commercializing XPOVIO or any future products either on our own or with a collaborator, including by
maintaining a full commercial organization required to market, sell and distribute our products, and achieving an adequate
level of market acceptance;
the impact of current or future competing products on product sales of XPOVIO or any of our future products;
obtaining sufficient pricing, coverage and reimbursement, including government pricing and reimbursement policies
effecting 340B Programs, Medicare and Medicaid, for XPOVIO and any of our other approved products from private and
government payers and the impact of any pricing changes;
initiating and successfully completing clinical trials required to file for, obtain and maintain marketing approval for our
product candidates;
obtaining and maintaining regulatory approvals, either by us or our collaborators, and the timing of such approvals;
manufacturing at commercial scale;
establishing and managing any collaborations for the development, marketing and/or commercialization of our products
and product candidates, including the level of success of our collaborators’ efforts and the timing and amount of any
milestone or royalty payments we may receive;
obtaining, maintaining and protecting our intellectual property rights; and
navigating the negative impacts resulting from the ongoing COVID-19 pandemic to the healthcare systems, the ability of
our clinical trial sites to conduct current or future trials and the regulatory review process.
We anticipate that our operating expenses will continue to be significant and increase as we continue to:
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commercialize XPOVIO in the U.S., including maintaining our commercial infrastructure;
obtain and/or maintain regulatory approval for XPOVIO and our product candidates, including completing any required
post-marketing requirements to the satisfaction of the FDA or other regulatory agencies;
expand our research and development programs, identify additional product candidates and initiate and conduct clinical
trials, including clinical trials required by the FDA or other regulatory agencies in addition to those that have been or are
currently expected to be conducted;
maintain, expand and protect our intellectual property portfolio;
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manufacture XPOVIO and our product candidates; and
acquire or in-license other products, product candidates or technologies.
Because of the numerous risks and uncertainties associated with pharmaceutical product development and commercialization,
we are unable to accurately predict the timing or amount of our revenue and expenses or when, or if, we will be able to achieve
profitability. We cannot be certain that our revenue from sales of XPOVIO alone, in the currently approved indications, will be
sufficient for us to become profitable for several years, if at all. We may never generate revenues that are significant or large enough
to achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or
annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to
raise capital, maintain our research and development and commercialization efforts, expand our business and/or continue our
operations. A decline in the value of our company could also cause our stockholders to lose all or part of their investment.
We will need additional funding to achieve our business objectives. If we are unable to raise capital when needed or on acceptable
terms, we would be forced to delay, reduce or eliminate our research and development programs and/or commercialization efforts.
Discovering, developing and commercializing products involve time-consuming, expensive and uncertain processes that take
years to complete. We have used substantial funds to develop XPOVIO and expect our operating expenses to continue to increase as
we continue to commercialize XPOVIO or any future approved product, conduct further research and development of our product
candidates, seek marketing approval and prepare for commercialization of selinexor in additional indications or for our other product
candidates, if approved, to the extent that such functions are not the responsibility of a collaborator. Furthermore, we will continue to
incur additional costs associated with operating as a public company, hiring additional personnel and expanding our geographical
reach. Although currently XPOVIO is commercially available in three indications, we do not anticipate that our revenue from product
sales of XPOVIO or any funds we may receive from our collaborators will be sufficient for us to become profitable for several years,
if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives.
As of December 31, 2022, we believe that our existing cash, cash equivalents and investments will enable us to fund our current
operating and capital expenditure plans for at least twelve months from the date of issuance of the financial statements contained in
this Annual Report on Form 10-K. The amount and timing of our future capital requirements will depend on many factors, including,
but not limited to:
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the scope, progress, results, timing and costs of our current and planned development efforts and regulatory review of our
product candidates;
the amount and timing of revenues from sales of XPOVIO, or any product candidate that we develop or acquire;
the cost of, and our ability to expand and maintain, the commercial infrastructure required to support the
commercialization of XPOVIO and any other product for which we receive marketing approval, including medical affairs,
manufacturing, marketing and distribution functions;
our ability to establish and maintain collaboration, partnership, licensing, marketing, distribution or other arrangements on
favorable terms and the level and timing of success of these arrangements;
the extent to which we acquire or in-license other products, product candidates and technologies; and
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual
property rights and defending intellectual property-related claims.
In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders. If we raise additional
funds by issuing equity securities, dilution to our existing stockholders will result. In addition, as a condition to providing additional
funding to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. Moreover, any debt
financing, if available, may involve restrictive covenants that could limit our flexibility in conducting future business activities and, in
the event of insolvency, would be paid before holders of equity securities received any distribution of corporate assets. Our ability to
satisfy and meet any future debt service obligations will depend upon our future performance, which will be subject to financial,
business and other factors affecting our operations, many of which are beyond our control.
Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital due to
favorable market conditions or strategic considerations. Any future fundraising efforts could divert our management’s attention away
from their day-to-day activities. Further, adequate additional financing may not be available to us on acceptable terms, or at all. In
addition, raising funds in the current economic environment may present additional challenges. For example, any sustained disruption
in the capital markets from adverse macroeconomic conditions, such as the disruption and uncertainty caused by the COVID-19
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pandemic, rising inflation, increasing interest rates and slower economic growth or recession, could negatively impact our ability to
raise capital and we cannot predict the extent or duration of such macro-economic disruptions. If adequate funds are not available to us
on a timely basis or on attractive terms, we may be required to delay, reduce or eliminate our research and development programs or
any current or future commercialization efforts for one or more of our products or product candidates, any of which could have a
material adverse effect on our business, operating results and prospects.
Our Revenue Interest Agreement with HCR, as amended, contains various covenants and other provisions, which, if violated,
could result in the acceleration of payments due under such agreement or the foreclosure on the pledged collateral, including all
of our present and future assets relating to selinexor.
In September 2019, we entered into the Revenue Interest Financing Agreement (the “Revenue Interest Agreement”) with
HealthCare Royalty Partners III, L.P. and HealthCare Royalty Partners IV, L.P. (“HCR”) and which was amended in June 2021 (the
“Amended Revenue Interest Agreement”). Pursuant to the Amended Revenue Interest Agreement, we are required to comply with
various covenants relating to the conduct of our business and the commercialization of XPOVIO, including obligations to use
commercially reasonable efforts to commercialize our products. In addition, the Amended Revenue Interest Agreement limits our
ability to incur or prepay indebtedness, create or incur liens, pay dividends on or repurchase outstanding shares of our capital stock or
dispose of assets. The Amended Revenue Interest Agreement also includes customary events of default upon the occurrence of
enumerated events, including non-payment of revenue interests, failure to perform certain covenants and the occurrence of insolvency
proceedings, specified judgments, specified cross-defaults or specified revocations, or withdrawals or cancellations of regulatory
approval for XPOVIO. Upon the occurrence of an event of default and in the event of a change of control, HCR may accelerate
payments due under the Amended Revenue Interest Agreement up to $249.8 million, less the aggregate of all of the payments
previously paid to HCR. Upon the occurrence of specified material adverse events or the material breach of specified representations
and warranties, which will not be considered events of default, HCR may elect to terminate the Amended Revenue Interest Agreement
and require us to make payments necessary for HCR to receive $135.0 million, less the aggregate of all of the payments made to date,
plus a specified annual rate of return. In the event that we are unable to make such payment, HCR may be able to foreclose on the
collateral that was pledged to HCR, which consists of all of our present and future assets relating to selinexor. Any such foreclosure
remedy would significantly and adversely affect us and could result in us losing our interest in such assets, which would have an
adverse material impact on our business.
Our indebtedness could limit cash flow available for our operations, expose us to risks that could adversely affect our business,
financial condition and results of operations and impair our ability to satisfy our obligations under the Convertible Senior Notes
due 2025 (the “Notes”).
We incurred $172.5 million of indebtedness as a result of the sale of the Notes, $75.0 million as a result of the initial closing
pursuant to the Revenue Interest Agreement and $60.0 million following the closing of the Amended Revenue Interest Agreement. We
may also incur additional indebtedness to meet future financing needs. Our indebtedness could have significant negative consequences
for our security holders and our business, results of operations and financial condition by, among other things:
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increasing our vulnerability to adverse economic and industry conditions;
limiting our ability to obtain additional financing;
requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which
would reduce the amount of cash available for other purposes;
limiting our flexibility to plan for, or react to, changes in our business;
diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the
Notes; and
placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to
capital.
Our ability to pay the principal of or interest on the Notes or to make cash payments in connection with any conversion of the
Notes depends on our future performance, which is subject, in part, to economic, financial, competitive and other factors beyond our
control. Our business may not generate cash flow from operations in the future sufficient to service the Notes or other future
indebtedness and make necessary capital expenditures.
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We may not have the ability to raise the funds necessary to settle conversions of the Notes in cash, to repurchase the Notes for cash
upon a fundamental change, to pay the redemption price for any Notes we redeem or to refinance the Notes, and any future debt
we incur may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.
Holders may require us to repurchase their Notes following a fundamental change at a cash repurchase price generally equal to
the principal amount of the Notes to be repurchased, plus accrued and unpaid interest. In addition, upon conversion, unless we elect to
deliver solely shares of our common stock to settle conversions (other than paying cash in lieu of delivering any fractional share), we
must satisfy the conversion in cash. If we do not have enough available cash at the time we are required to repurchase the Notes, pay
cash amounts due upon conversion or redemption of the Notes or refinance the Notes, we may be required to adopt one or more
alternatives, such as selling assets, restructuring indebtedness or obtaining additional debt financing or equity capital on terms that
may be onerous or highly dilutive. Our ability to refinance the Notes or other future indebtedness will depend on the capital markets,
our financial condition at such time and our obligations under any other existing indebtedness in effect at such time. We may not be
able to engage in any of these activities on desirable terms, or at all, which could result in a default on our debt obligations, including
the Notes. In addition, our ability to repurchase the Notes, to pay cash upon conversion or redemption of the Notes or to refinance the
Notes may be limited by law, regulatory authority or agreements governing any future indebtedness that we may incur. Our failure to
repurchase the Notes at a time when the repurchase is required by the indenture governing the Notes or to pay cash upon conversion of
the Notes as required by the indenture would constitute a default under the indenture. A default under the indenture or the fundamental
change itself could also lead to a default under agreements governing our future indebtedness, if any. Moreover, the occurrence of a
fundamental change under the indenture could constitute an event of default under any such agreements. If the repayment of the
related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the
indebtedness and repurchase the Notes or to pay cash upon conversion of the Notes.
The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.
In the event the conditional conversion feature of the Notes is triggered, holders of Notes will be entitled to convert the Notes at
any time during specified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our
conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional
share), we would be required to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity.
In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all
or a portion of the outstanding principal amount of the Notes as a current rather than long-term liability, which would result in a
material reduction of our net working capital.
The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect
on our reported financial results.
The Notes may be settled in cash or shares, or a combination of cash and shares. Under the if-converted method, the maximum
potential dilutive impact of the conversion of the Notes is assumed when calculating diluted earnings per share during periods of net
income. This could result in a material impact to diluted earnings per share. Diluted earnings per share is not impacted by the Notes
during periods of net loss.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our
product candidates.
Until such time, if ever, as we can generate substantial revenues from the sale of our products, we expect to finance our cash
needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and/or licensing arrangements. We
do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or
convertible debt securities, the ownership interests of stockholders will be diluted, and the terms of these securities may include
liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing, if available, may involve
agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making
capital expenditures or declaring dividends. For example, during the term of the Amended Revenue Interest Agreement, we cannot
make any voluntary or optional cash payment or prepayment on our existing convertible debt and cannot enter into any new debt
without the consent of HCR.
If we raise additional funds through further collaborations, strategic alliances or licensing arrangements with third parties, we
may have to relinquish valuable rights to our future revenue streams, research programs or product candidates or to grant licenses on
terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we
may be required to delay, limit, reduce or terminate our research and drug development or current or future commercialization efforts
or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
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Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock
price.
Global credit and financial markets have experienced extreme disruptions over the past several years. Such disruptions have
resulted, and could in the future result, in diminished liquidity and credit availability, declines in consumer confidence, declines in
economic growth, increases in unemployment rates and uncertainty about economic stability. Our general business strategy may be
compromised by economic downturns, a volatile business environment and unpredictable and unstable market conditions, such as the
current global situation resulting from the COVID-19 pandemic, the ongoing conflict between Russia and Ukraine, rising inflation,
increasing interest rates and slower economic growth or recession. If the equity and credit markets deteriorate, it may make any
necessary equity or debt financing more difficult to secure, more costly or more dilutive. Failure to secure any necessary financing in a
timely manner and on favorable terms could harm our growth strategy, financial performance and stock price and could require us to
delay or abandon plans with respect to our business, including clinical development plans. In addition, there is a risk that one or more
of our current service providers, manufacturers or other third parties with which we conduct business may not survive difficult
economic times, including the current global situation resulting from the COVID-19 pandemic, the ongoing conflict between Russia
and Ukraine and the uncertainty associated with current worldwide economic conditions, which could directly affect our ability to
attain our operating goals on schedule and on budget.
Risks Related to Our Dependence on Third Parties
We depend on collaborations with third parties for certain aspects of the development, marketing and/or commercialization of
XPOVIO and/or our product candidates. If those collaborations are not successful, or if we are not able to maintain our existing
collaborations or establish additional collaborations, we may have to alter our development and commercialization plans and may
not be able to capitalize on the market potential of XPOVIO or our product candidates.
Our drug development programs and the commercialization of our products and product candidates, if approved, require local
expertise and substantial additional cash to fund expenses. We expect to maintain our existing collaborations and collaborate with
additional pharmaceutical and biotechnology companies for certain aspects of the development, marketing and/or commercialization
of our products and product candidates. For example, we are parties to license arrangements with Antengene and Menarini and
distribution agreements with Promedico Ltd. and FORUS Therapeutics Inc. for the development, marketing and/or commercialization
of selinexor in certain geographies outside of the U.S., and we expect to rely on additional partners to develop and commercialize our
products outside of the U.S. In addition, we intend to seek one or more collaborators to aid in the further development, marketing
and/or commercialization of selinexor and our other compounds for indications both within and outside of oncology. All of the risks
relating to product development, regulatory approval and commercialization described in this Annual Report on Form 10-K also apply
to the activities of our collaborators.
Potential collaborators include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies
and biotechnology companies and we face significant competition in seeking appropriate collaborators, including as a result of a
significant number of recent business combinations among large pharmaceutical companies that have reduced the number of potential
collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon the assessment of
the potential collaborator’s expertise, its current and expected resources and competing priorities, the terms and conditions of the
proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or
results of clinical trials, the likelihood of approval by the FDA or foreign regulatory authorities, the potential market for the product or
product candidate, the costs and complexities of manufacturing and delivering such product or product candidate to patients, the
potential of competing products, the existence of uncertainty with respect to our ownership of intellectual property, which can exist if
there is a challenge to such ownership without regard to the merits of the challenge, and industry and market conditions generally. A
potential collaborator may also consider alternative product candidates or technologies for similar indications that may be available to
collaborate on and whether such a collaboration could be more attractive than the one with us.
Collaborations are complex and time-consuming to negotiate, document and manage. We may not be able to negotiate
collaborations on a timely basis, on acceptable terms, or at all, or we may be restricted under then-existing collaboration agreements
from entering into future agreements on certain terms with potential collaborators. If we are unable to maintain our current
collaboration agreements or enter into new collaboration agreements, we may have to curtail, reduce or delay the development or
commercialization programs for our products or product candidates, or increase our expenditures and undertake development or
commercialization activities at our own expense. If we elect to increase our expenditures to fund and undertake development or
commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be
available to us on acceptable terms, or at all. If we do not have sufficient funds or expertise to undertake the necessary development
and commercialization activities, we may not be able to further develop our product candidates or bring them to market and generate
product revenue.
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Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities to successfully perform the
functions assigned to them in these arrangements, and our collaboration agreements may not lead to the development or
commercialization of our products or product candidates in the most efficient manner, or at all, and may result in lower product
revenues or profitability to us than if we were to market and sell these products ourselves. In connection with any such arrangements
with third parties, we will likely have limited control over the amount and timing of resources that our collaborators dedicate to the
development, marketing and/or commercialization of our products or product candidates. Further, if our collaborations do not result in
the successful development and commercialization of our products or product candidates or if any one of our collaborators terminates
its agreement with us, we may not receive any future milestone or royalty payments under the collaboration. If we do not receive the
funding we expect under these agreements, the development and commercialization of our products or product candidates could be
delayed and we may need additional resources to develop product candidates.
Collaborations involving our products and product candidates pose the following risks to us:
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collaborators have significant discretion in determining the efforts and resources that they will apply to these
collaborations;
collaborators may not perform their obligations as expected or in compliance with applicable local and national laws and
regulatory requirements;
collaborators may not pursue development, marketing and/or commercialization of our products or product candidates or
may elect not to continue or renew development, marketing or commercialization programs based on clinical trial results,
changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition that diverts
resources or creates competing priorities;
collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or
abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for
clinical testing;
collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with
our products or product candidates if the collaborators believe that competitive products are more likely to be successfully
developed or can be commercialized under terms that are more economically attractive than ours;
a collaborator with marketing and distribution rights to one or more products or product candidates may not commit
sufficient resources to the marketing and distribution of our products or product candidates;
disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred
course of development or commercialization, might cause delays or termination of the research, development or
commercialization of products or product candidates, might lead to additional responsibilities for us with respect to our
products or product candidates, or might result in litigation or arbitration, any of which would be time-consuming and
expensive;
collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information
in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information
or expose us to potential litigation;
collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential
liability;
we may lose certain valuable rights under circumstances identified in any collaboration arrangement that we enter into,
such as if we undergo a change of control;
collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further
development, marketing and/or commercialization of the applicable products or product candidates or to enter into new
collaboration agreements;
collaborators may learn about our discoveries and use this knowledge to compete with us in the future; and
the number and type of our collaborations could adversely affect our attractiveness to other collaborators or acquirers.
If any of these events occurs, the market potential of our products and product candidates, if approved, could be reduced, and
our business could be materially harmed.
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If we are unable to establish and maintain our agreements with third parties to distribute XPOVIO to patients, our results of
operations and business could be adversely affected.
We rely on third parties to commercially distribute XPOVIO to patients. For example, we have contracted with a limited
number of specialty pharmacies, which sell XPOVIO directly to patients, and specialty distributors, which sell XPOVIO to healthcare
entities who then resell XPOVIO to patients. While we have entered into agreements with each of these pharmacies and distributors to
distribute XPOVIO in the U.S., they may not perform as agreed or they may terminate their agreements with us. We may also need to
enter into agreements with additional pharmacies or distributors, and there is no guarantee that we will be able to do so on a timely
basis, at commercially reasonable terms, or at all. If we are unable to maintain and, if needed, expand, our network of specialty
pharmacies and specialty distributors, we would be exposed to substantial distribution risk.
The use of specialty pharmacies and specialty distributors involves certain risks, including, but not limited to, risks that these
organizations will:
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not provide us accurate or timely information regarding their inventories, the number of patients who are using XPOVIO
or serious adverse reactions, events and/or product complaints regarding XPOVIO;
not effectively sell or support XPOVIO or communicate publicly concerning XPOVIO in a manner that is contrary to
FDA rules and regulations;
reduce their efforts or discontinue to sell or support, or otherwise not effectively sell or support, XPOVIO;
not devote the resources necessary to sell XPOVIO in the volumes and within the time frames that we expect;
be unable to satisfy financial obligations to us or others; or
cease operations.
Any such events may result in decreased product sales, which would harm our results of operations and business.
We rely on third parties as we conduct our clinical trials and some aspects of our research and preclinical studies, and those third
parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.
We rely on third parties, such as CROs, clinical data management organizations, medical institutions and clinical investigators,
as we conduct our clinical trials. We currently rely and expect to continue to rely on third parties to conduct some aspects of our
research and preclinical studies. Any of these third parties may terminate their engagements with us at any time. If we need to enter
into alternative arrangements, it would delay our drug development activities.
Our reliance on these third parties for research and development activities reduces our control over these activities but does not
relieve us of our responsibilities. For example, we remain responsible for ensuring that each of our clinical trials is conducted in
accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with GCP
standards when conducting, recording and reporting the results of clinical trials to ensure that data and reported results are credible
and accurate and that the rights, integrity and confidentiality of trial participants are protected. The EMA also requires us to comply
with comparable standards. Regulatory authorities ensure compliance with these requirements through periodic inspections of trial
sponsors, principal investigators and trial sites. If we or any of the third parties that we rely on in connection with our clinical trials fail
to comply with applicable requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, EMA
or other comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing
applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that
any of our clinical trials comply with such requirements. We also are required to register ongoing clinical trials and post the results of
completed clinical trials on a government-sponsored database, such as ClinicalTrials.gov, within certain timeframes. Failure to do so
can result in fines, adverse publicity and civil and criminal sanctions.
Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these
third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance
with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing
approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our
products. In such an event, our financial results and the commercial prospects for our products or product candidates, if approved,
could be harmed, our costs could increase and our ability to generate revenues could be delayed, impaired or foreclosed.
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We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure
on the part of such third parties could delay clinical development or marketing approval of our product candidates or
commercialization of our products, producing additional losses and depriving us of potential product revenue.
In addition, as discussed above, the third parties upon whom we rely to conduct our clinical trials could be negatively impacted
as a result of disruptions caused by the COVID-19 pandemic, including difficulties in initiating clinical sites or enrolling participants,
travel or quarantine policies, and other factors. If these third parties are so affected, our business prospects and results of operations
could be severely adversely impacted.
We rely on third parties to conduct investigator-sponsored clinical trials of selinexor and our other product candidates. Any failure
by a third party to meet its obligations with respect to the clinical development of our product candidates may delay or impair our
ability to obtain regulatory approval for selinexor and our other product candidates.
We rely on academic and private non-academic institutions to conduct and sponsor clinical trials relating to selinexor and our
other product candidates. We do not control the design or conduct of the investigator-sponsored trials, and it is possible that the FDA
or foreign regulatory authorities will not view these investigator-sponsored trials as providing adequate support for future clinical
trials, whether controlled by us or third parties, for any one or more reasons, including elements of the design, execution of the trials,
safety concerns or other trial results.
Such arrangements will provide us certain information rights with respect to the investigator-sponsored trials, such as access to
and the ability to use and reference the data, including for our own regulatory filings, resulting from the investigator-sponsored trials.
However, we do not have control over the timing and reporting of the data from investigator-sponsored trials, nor do we own the data
from the investigator-sponsored trials. If we are unable to confirm or replicate the results from the investigator-sponsored trials or if
negative results are obtained, we would likely be further delayed or prevented from advancing clinical development of our product
candidates. Further, if investigators or institutions breach their obligations with respect to the clinical development of our product
candidates, or if the data proves to be inadequate compared to the first-hand knowledge we might have gained had the investigator-
sponsored trials been sponsored and conducted by us, then our ability to design and conduct any future clinical trials ourselves may be
adversely affected.
Additionally, the FDA or foreign regulatory authorities may disagree with the sufficiency of our right to reference the
preclinical, manufacturing or clinical data generated by these investigator-sponsored trials, or our interpretation of preclinical,
manufacturing or clinical data from these investigator-sponsored trials. If so, the FDA or foreign regulatory authorities may require us
to obtain and submit additional preclinical, manufacturing, or clinical data before we may initiate our planned trials and/or may not
accept such additional data as adequate to initiate our planned trials.
We are completely dependent on third parties for the manufacture of our products and product candidates and any difficulties,
disruptions, delays or unexpected costs, or the need to find alternative sources, could adversely affect our results of operations,
profitability and future business prospects.
We do not own or operate, and currently have no plans to establish, any manufacturing facilities for our products or product
candidates. We currently rely, and expect to continue to rely, on third-party contract manufacturers to manufacture our products and
product candidates for our commercial and clinical use.
Facilities used by our third-party manufacturers may be inspected by the FDA after we submit a marketing application and
before potential approval of the product candidate and are also subject to ongoing periodic unannounced inspections by the FDA for
compliance with cGMP and other regulatory requirements following approval. Similar regulations apply to manufacturers of our
product candidates for use or sale in foreign countries. We do not control the manufacturing processes of, and are completely
dependent on, our third-party manufacturers for compliance with the applicable regulatory requirements for the manufacture of our
products and product candidates. Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory
requirements outside of the U.S. If our manufacturers cannot successfully manufacture material that conforms to our specifications
and the strict regulatory requirements of the FDA and any applicable foreign regulatory authority, they will not be able to secure
and/or maintain regulatory approval for their manufacturing facilities. If these facilities are not approved for commercial manufacture
or are not able to maintain approval, we may need to find alternative manufacturing facilities, which could significantly impact our
ability to develop, obtain regulatory approval for or market our products or product candidates as alternative qualified manufacturing
facilities may not be available on a timely or cost-efficient basis, or at all. Failure by any of our manufacturers to comply with
applicable cGMP regulations or other regulatory requirements could result in sanctions being imposed on us or the contract
manufacturer, including fines, injunctions, civil penalties, delays, suspensions or withdrawals of approvals, operating restrictions,
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interruptions in supply and criminal prosecutions, any of which could significantly and adversely affect supplies of our products or
product candidates and have a material adverse impact on our business, financial condition and results of operations.
We currently have long-term supply agreements with our third-party contract manufacturers to manufacture the clinical and
commercial supplies of the drug product for XPOVIO. Our ability to have our products manufactured in sufficient quantities and at
acceptable costs to meet our commercial demand and clinical development needs is dependent on the uninterrupted and efficient
operation of our third-party contract manufacturers’ facilities. Reliance on third-party manufacturers entails risks, including:
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•
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•
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reliance on the third party for regulatory compliance and quality assurance;
the possible breach, termination or nonrenewal of a manufacturing agreement by the third party, including at a time that is
costly or inconvenient to us;
the possible failure of the third party to manufacture our products or product candidates according to our schedule, or at
all, including if the third-party manufacturer gives greater priority to the supply of other products over our products and
product candidates, or otherwise does not satisfactorily perform according to the terms of the manufacturing agreement;
equipment malfunctions, power outages or other general disruptions experienced by our third-party manufacturers to their
respective operations and other general problems with a multi-step manufacturing process; and
the possible misappropriation or disclosure by the third party or others of our proprietary information, including our trade
secrets and know-how.
We currently rely on a single source supplier for our active pharmaceutical ingredient and our drug product manufacturing
requirements. Any performance failure on the part of our existing or future manufacturers could delay clinical development, marketing
approval or commercialization of our products or product candidates. If our suppliers or contract manufacturers are so affected, our
supply chain could be disrupted, our product shipments could be delayed, our costs could be increased and our business could be
adversely affected. If our current contract manufacturers cannot perform as agreed, we may be required to replace those
manufacturers. Although we believe that there are several potential alternative manufacturers who could manufacture our products and
product candidates, we could incur added costs and delays in identifying and qualifying any such replacement. Consequently, we may
not be able to reach agreement with third-party manufacturers on satisfactory terms, which could negatively impact our XPOVIO
revenues or delay commercialization of any product candidates that are subsequently approved.
If, because of the factors discussed above, we are unable to have our products manufactured on a timely or sufficient basis, we
may not be able to meet clinical development needs or commercial demand for our products or product candidates or we may not be
able to manufacture our products in a cost-effective manner. As a result, we may lose sales, fail to generate projected revenues or
suffer development or regulatory setbacks, any of which could have an adverse impact on our profitability and future business
prospects.
Risks Related to Our Intellectual Property
If we are unable to obtain and maintain patent protection for our products or product candidates and other discoveries, or if the
scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize drugs and other
discoveries similar or identical to ours, and our ability to successfully commercialize our products or product candidates and other
discoveries may be adversely affected.
Our success depends in large part on our ability to obtain and maintain patent protection in the U.S. and other countries with
respect to our proprietary products and product candidates and other discoveries. We seek to protect our proprietary position by filing
patent applications in the U.S. and abroad related to our novel products and product candidates and other discoveries that are
important to our business. As of February 10, 2023, 104 patents were in force that relate to XPO1 inhibitors, including composition of
matter patents for selinexor, verdinexor and eltanexor in the U.S., and their use in targeted therapeutics. In addition, 29 patents were in
force that relate to our PAK4/NAMPT inhibitors, including three composition of matter patents for KPT-9274 in the U.S. and its use
in targeted therapeutics. With respect to our KPT-1200 program, as of February 10, 2023, 21 patents were in force, 10 of which are
exclusively licensed to Karyopharm by the University of Southern California, that relate to IL-12 compositions and uses of IL-12 in
targeted therapeutics. We cannot be certain that any other patents will issue with claims that cover any of our key products, product
candidates or other discoveries.
The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or
desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable
aspects of our research and development output before it is too late to obtain patent protection.
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The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and
factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability
and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents
being issued which protect our product candidates or other discoveries, or which effectively prevent others from commercializing
competitive drugs and discoveries. Changes in either the patent laws or interpretation of the patent laws in the U.S. and other countries
may diminish the value of our patents or narrow the scope of our patent protection.
The laws of foreign countries may not protect our rights to the same extent as the laws of the U.S. For example, in some foreign
jurisdictions, our ability to secure patents based on our filings in the U.S. may depend, in part, on our ability to timely obtain
assignment of rights to the invention from the employees and consultants who invented the technology. Publications of discoveries in
the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically
not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to make
the inventions claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such
inventions.
Assuming the other requirements for patentability are met, prior to March 2013, in the U.S., the first to invent the claimed
invention was entitled to the patent, while outside of the U.S., the first to file a patent application is entitled to the patent. In March
2013, the U.S. transitioned to a first-inventor-to-file system in which, assuming the other requirements for patentability are met, the
first inventor to file a patent application is entitled to the patent. We may be subject to a third-party preissuance submission of prior art
to the U.S. Patent and Trademark Office (“USPTO”) or become involved in opposition, derivation, revocation, reexamination, or post-
grant or inter partes review or interference proceedings challenging our patent rights or the patent rights of others. An adverse
determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third
parties to commercialize our discoveries or drugs and compete directly with us, without payment to us, or result in our inability to
manufacture or commercialize drugs without infringing third-party patent rights.
Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful
protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors
may be able to circumvent our patents by developing similar or alternative discoveries or drugs in a non-infringing manner.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be
challenged in the courts or patent offices in the U.S. and abroad. Such challenges may result in loss of exclusivity or in patent claims
being narrowed, invalidated or held unenforceable, which could limit our ability to stop others from using or commercializing similar
or identical discoveries and drugs, or limit the duration of the patent protection of our products, product candidates and discoveries.
Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting
such candidates might expire before or shortly after such candidates are commercialized. As a result, our patent portfolio may not
provide us with sufficient rights to exclude others from commercializing drugs similar or identical to ours.
We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be
expensive, time-consuming and unsuccessful.
Competitors or commercial supply companies or others may infringe our patents and other intellectual property rights. For
example, we are aware of third parties selling a version of our lead product candidate for research purposes, which may infringe our
intellectual property rights. To counter such infringement, we may advise such companies of our intellectual property rights,
including, in some cases, intellectual property rights that provide protection for our lead product candidates, and demand that they stop
infringing those rights. Such demand may provide such companies the opportunity to challenge the validity of certain of our
intellectual property rights, or the opportunity to seek a finding that their activities do not infringe our intellectual property rights. We
may also be required to file infringement actions, which can be expensive and time-consuming. In an infringement proceeding, a
defendant may assert and a court may agree with a defendant that a patent of ours is invalid or unenforceable, or may refuse to stop the
other party from using the intellectual property at issue. An adverse result in any litigation could put one or more of our patents at risk
of being invalidated or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with
intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during
this type of litigation.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which
would be uncertain and could have a material adverse effect on the success of our business.
Our commercial success depends upon our ability and the ability of any current and future collaborators to develop,
manufacture, market and sell XPOVIO and our product candidates and use our proprietary technologies without infringing the
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proprietary rights of third parties. We may become party to, or threatened with, future adversarial proceedings or litigation regarding
intellectual property rights with respect to our products or product candidates and technology, including interference proceedings
before the USPTO. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in
the future. No litigation asserting such infringement claims is currently pending against us, and we have not been found by a court of
competent jurisdiction to have infringed a third party’s intellectual property rights. If we are found to infringe or think there is a risk
we may be found to infringe, a third party’s intellectual property rights, we could be required or choose to obtain a license from such
third party to continue developing, marketing and selling our products, product candidates and technology. However, we may not be
able to obtain any required license on commercially reasonable terms, or at all. Even if we were able to obtain a license, it could be
non-exclusive, thereby giving our competitors access to the same intellectual property licensed to us. We could be forced, including by
court order, to cease commercializing the infringing intellectual property or product or to cease using the infringing technology. In
addition, we could be found liable for monetary damages. A finding of infringement could prevent us from commercializing our
products or product candidates or force us to cease some of our business operations, which could materially harm our business. Claims
that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our
business.
We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies,
including our competitors or potential competitors. Although we try to ensure that our employees do not use the proprietary
information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or
disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer.
Although we have no knowledge of any such claims being alleged to date, if such claims were to arise, litigation may be necessary to
defend against any such claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose
valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in
substantial costs and be a distraction to management.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal
responsibilities.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur
significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there
could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities
analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.
Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development
activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to adequately
conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings
more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation
of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.
Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and
other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-
compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be
due to the USPTO and various foreign patent offices at various points over the lifetime of the patents and/or applications. We have
systems in place to remind us to pay these fees, and we rely on our outside counsel to pay these fees when due. Additionally, the
USPTO and various foreign patent offices require compliance with a number of procedural, documentary, fee payment and other
similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply
with such provisions, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance
with rules applicable to the particular jurisdiction. However, there are situations in which non-compliance can result in abandonment
or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If such an
event were to occur, it could have a material adverse effect on our business.
If our product candidates or any of our future product candidates obtain regulatory approval, additional competitors could enter
the market with generic versions of such products, which may result in a material decline in sales of our competing products.
Under the Drug Price Competition and Patent Term Restoration Act of 1984 (the “Hatch-Waxman Amendments”) to the FDCA,
a company may file an ANDA, seeking approval of a generic version of an approved innovator product. Under the Hatch-Waxman
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Amendments, a company may also submit an NDA under section 505(b)(2) of the FDCA that references the FDA’s prior approval of
the innovator product or preclinical studies and/or clinical trials that were not conducted by, or for, the sponsor and for which the
sponsor has not obtained a right of reference. A 505(b)(2) NDA product may be for a new or improved version of the original
innovator product. The Hatch-Waxman Amendments also provide for certain periods of regulatory exclusivity, which preclude FDA
approval (or in some circumstances, FDA filing and review) of an ANDA or 505(b)(2) NDA.
In certain circumstances, third parties may file an ANDA or NDA under Section 505(b)(2) as early as the so-called “NCE-1”
date that is one year before the expiry of the five-year period of New Chemical Entity exclusivity or more generally four years after
NDA approval. The third parties are allowed to rely on the safety and efficacy data of the innovator’s product, may not need to
conduct clinical trials and can market a competing version of a product after the expiration or loss of patent exclusivity or the
expiration or loss of regulatory exclusivity and often charge significantly lower prices. Upon the expiration or loss of patent protection
or the expiration or loss of regulatory exclusivity for a product, the major portion of revenues for that product may be dramatically
reduced in a very short period of time. If we are not successful in defending our patents and regulatory exclusivities, we will not
derive the expected benefit from them. For example, the NCE-1 date for selinexor is July 3, 2023 after which a third party could be
positioned to market an ANDA or Section 505(b)(2) product that competes with selinexor prior to the expiry of our patents if the third
party successfully challenged the validity of our patents protecting the product.
In addition to the benefits of regulatory exclusivity, an innovator NDA holder may have patents claiming the active ingredient,
product formulation or an approved use of the drug, which would be listed with the product in the FDA publication “Approved Drug
Products with Therapeutic Equivalence Evaluations,” known as the Orange Book. If there are patents listed in the Orange Book for the
applicable, approved innovator product, a generic or 505(b)(2) sponsor that seeks to market its product before expiration of the patents
must include in their applications what is known as a “Paragraph IV” certification, challenging the validity or enforceability, or
claiming non-infringement, of the listed patent or patents. Notice of the certification must be given to the patent owner and NDA
holder and if, within 45 days of receiving notice, either the patent owner or NDA holder sues for patent infringement, approval of the
ANDA or 505(b)(2) NDA is stayed for up to 30 months.
Accordingly, if any of our product candidates that are regulated as drugs are approved, competitors could file ANDAs for
generic versions of these products or 505(b)(2) NDAs that reference our products. If there are patents listed for such drug products in
the Orange Book, those ANDAs and 505(b)(2) NDAs would be required to include a certification as to each listed patent indicating
whether the ANDA sponsor does or does not intend to challenge the patent. We cannot predict which, if any, patents in our current
portfolio or patents we may obtain in the future will be eligible for listing in the Orange Book, how any generic competitor would
address such patents, whether we would sue on any such patents or the outcome of any such suit.
If we do not successfully extend the term of patents covering our product candidates under the Hatch-Waxman Amendments and
similar foreign legislation, our business may be materially harmed.
Depending upon the timing, duration and conditions of FDA marketing approval, if any, of our products or product candidates,
one or more of our U.S. patents may be eligible for patent term extension under the Hatch-Waxman Amendments. The Hatch-
Waxman Amendments permit a patent term extension of up to five years for one patent covering an approved product as
compensation for effective patent term lost during product development and the FDA regulatory review process. However, we may
not receive an extension if we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise
fail to satisfy applicable requirements. Moreover, the length of the extension could be less than we request. The total patent term,
including the extension period, may not exceed 14 years following FDA approval. Accordingly, the length of the extension, or the
ability to even obtain an extension, depends on many factors.
In the U.S., only a single patent can be extended for each qualifying FDA approval, and any patent can be extended only once
and only for a single product. Laws governing analogous patent term extensions in foreign jurisdictions vary widely, as do laws
governing the ability to obtain multiple patents from a single patent family. Because both selinexor and verdinexor are protected by a
single family of patents and applications, we may not be able to secure patent term extensions for both of these product candidates in
all jurisdictions where these product candidates are approved.
If we are unable to obtain a patent term extension for a product or product candidate or the term of any such extension is less
than we request, the period during which we can enforce our patent rights for that product or product candidate, if any, in that
jurisdiction will be shortened and our competitors may obtain approval to market competing products sooner. As a result, our revenue
could be materially reduced.
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If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition to seeking patents for our products, product candidates and other discoveries, we also rely on trade secrets, including
unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect these
trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our
employees, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors and other third parties. We also enter
into confidentiality and invention or patent assignment agreements with our employees and consultants. Despite these efforts, any of
these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able
to obtain adequate remedies for such breaches. To the extent that we are unable to timely enter into confidentiality and invention or
patent assignment agreements with our employees and consultants, our ability to protect our business through trade secrets and patents
may be harmed. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-
consuming, and the outcome is unpredictable. In addition, some courts inside and outside of the U.S. are less willing or unwilling to
protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would
have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be
disclosed to or independently developed by a competitor, our competitive position would be harmed. To the extent inventions are
made by a third party under an agreement that does not grant us an assignment of their rights in inventions, we may choose or be
required to obtain a license.
Not all of our trademarks are registered. Failure to secure those registrations could adversely affect our business.
As of February 10, 2023, we have trademark registrations in the U.S. for KARYOPHARM THERAPEUTICS, our color logo,
and a combination of the two, XPOVIO, PORE for our online research portal, and KARYFORWARD and our KARYFORWARD
logo for our financial aid and charitable services. We also have pending applications in the U.S. to register KARYOPHARM alone,
and our logo in greyscale, for pharmaceuticals. Outside of the U.S., XPOVIO is registered or pending in 46 additional jurisdictions,
and is registered in Katakana in Japan, Hangul in South Korea, and Chinese characters in Taiwan. KARYOPHARM, the greyscale
logo, KARYOPHARM THERAPEUTICS with the color logo, and the KARYFORWARD logo are each registered or pending in four
jurisdictions outside of the U.S. We also have registrations or applications for eight additional possible drug names in numerous
foreign jurisdictions. If we do not secure registrations for our trademarks, we may encounter more difficulty in enforcing them against
third parties than we otherwise would, which could adversely affect our business. During trademark registration proceedings in the
U.S. and foreign jurisdictions, we may receive rejections. We are given an opportunity to respond to those rejections, but we may not
be able to overcome such rejections. In addition, in the USPTO and in comparable agencies in many foreign jurisdictions, third parties
are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or
cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings.
In addition, any proprietary name we propose to use with our key product candidates in the U.S. must be approved by the FDA,
regardless of whether we have registered it, or applied to register it, as a trademark. The FDA typically conducts a review of proposed
drug names, including an evaluation of potential for confusion with other drug names. If the FDA objects to any of our proposed
proprietary drug names for any of our product candidates, if approved, we may be required to expend significant additional resources
in an effort to identify a suitable proprietary drug name that would qualify under applicable trademark laws, not infringe the existing
rights of third parties and be acceptable to the FDA.
Risks Related to Employee Matters and Managing Growth
Our future success depends on our ability to retain key members of our management team and to attract, retain and motivate
qualified personnel.
We are highly dependent on the management, technical and scientific expertise of principal members of our management and
scientific teams, including our President and Chief Executive Officer. Although we have entered into formal employment agreements
with our executive officers, these agreements do not prevent them from terminating their employment with us at any time. We do not
maintain “key person” insurance for any of our executives or other employees. The loss of the services of any of our key employees
could impede the achievement of our research, development, commercialization and other business objectives.
Recruiting and retaining qualified scientific, clinical, manufacturing and sales and marketing personnel is critical to our success.
We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical
and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel
from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors,
to assist us in formulating our research and development and commercialization strategies. Our consultants and advisors may be
employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may
limit their availability to us.
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Our business and operations may be materially adversely affected in the event of information technology system failures or
security breaches, and the costs and consequences of implementing data protection measures could be significant.
Despite the implementation of security measures, our internal computer systems, and those of our CROs and other third parties
on which we rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism, war and
telecommunication and electrical failures. Such systems are also vulnerable to service interruptions or to security breaches from
inadvertent or intentional actions by our employees, third-party vendors and/or business partners, or from cyber incidents initiated by
malicious third parties. Cyber incidents are increasing in their frequency, sophistication and intensity, and have become increasingly
difficult to detect, respond to and recover from. Cyber incidents could include the deployment of harmful malware, ransomware,
denial-of-service attacks, unauthorized access to or deletion of files, social engineering and other means to affect service reliability
and threaten the confidentiality, integrity and availability of information. Cyber incidents also could include phishing attempts or e-
mail fraud to cause payments or information to be transmitted to an unintended recipient. We could be subject to risks caused by
misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of information maintained in the
information systems and networks of our company, including personal data of our employees. In addition, we face other kinds of risks
related to our commercial and personal data, including lost or stolen devices or other systems (including paper records) that collect
and store our personal and commercial information.
If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our
development and commercialization programs and our business operations, whether due to a loss of our trade secrets or other
proprietary information or other similar disruptions. For example, the loss of clinical trial data from completed, ongoing or planned
clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the
data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or
inappropriate disclosure of confidential or proprietary information, we could incur liability, our reputation or competitive position
could be damaged, and the further development and commercialization of our products or product candidates could be delayed or
halted. In addition, we may in certain instances be required to provide notification to individuals or others in connection with the loss
of their personal or commercial information.
If a material breach of our security or that of our vendors occurs, our financial or other confidential information could be
compromised and could adversely affect our business or result in legal proceedings. In addition, the cost and operational consequences
of implementing further data protection measures could be significant. The development and maintenance of these systems, controls
and processes is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security
measures become more sophisticated. Moreover, the possibility of these events occurring cannot be eliminated entirely.
Risks Related to Our Common Stock
Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial
to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our corporate charter and our bylaws may discourage, delay or prevent a merger, acquisition or other change in
control of us that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a
premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of
our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is
responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our
stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our
board of directors. Among other things, these provisions:
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establish a classified board of directors such that not all members of the board are elected at one time;
allow the authorized number of our directors to be changed only by resolution of our board of directors;
limit the manner in which stockholders can remove directors from the board;
establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and
nominations to our board of directors;
require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our
stockholders by written consent;
limit who may call stockholder meetings;
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•
•
authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a
“poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing
acquisitions that have not been approved by our board of directors; and
require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to cast to amend
or repeal certain provisions of our charter or bylaws.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General
Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining
with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding
voting stock, unless the merger or combination is approved in a prescribed manner.
The price of our common stock has been and may continue to be volatile and your investment in our stock could decline in value
or fluctuate significantly, including as a result of analysts’ activities.
Our stock price has been, and may continue to be, volatile and your investment in our stock could decline or fluctuate
significantly. Our common stock price has ranged from $2.45 to $14.73 in the 52-week period ended February 10, 2023. On February
10, 2023, the closing sale price of our common stock on the Nasdaq Global Select Market was $3.24 per share. The stock market in
general and the market for pharmaceutical and biotechnology companies in particular have experienced extreme volatility that has
often been unrelated to the operating performance of particular companies, such as the response to world-wide economic disruptions
related to the ongoing COVID-19 pandemic, the conflict between Russia and Ukraine, rising inflation and increasing interest rates.
The market price for our common stock may be influenced by many factors, including:
•
•
•
•
•
•
•
•
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•
•
•
•
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our failure to successfully execute on our commercialization strategy for XPOVIO or our product candidates, if approved;
the level of success of competitive products or technologies;
results, delays in, or the halting of our clinical trials or those of our competitors, including reports of AEs related to the
use of our products;
announcements by us or our competitors of new products or data, significant mergers, acquisitions, licenses or joint
ventures;
commencement or termination of collaborations for our development programs and the commercialization of our
products;
adverse regulatory or legal developments in the U.S. and other countries;
developments or disputes concerning patent applications, issued patents or other proprietary rights;
additions or departures of key personnel;
the level of expenses related to the commercialization of XPOVIO and clinical development programs for any of our
product candidates;
the results of our efforts to discover, develop, acquire or in-license additional products or product candidates;
actual or anticipated changes in estimates of financial results or guidance, development timelines or recommendations by
securities analysts;
actual or anticipated fluctuations in our quarterly or annual financial results;
changes in healthcare laws affecting pricing, reimbursement or access;
market conditions in the pharmaceutical and biotechnology sectors, including as the result of uncertainties due to or
impacts from the ongoing COVID-19 pandemic;
general economic, industry and market conditions, such as those caused by the COVID-19 pandemic, the ongoing conflict
between Russia and Ukraine, inflation and fluctuations in interest rates;
our ability to raise additional capital and the terms on which we can raise it;
sales of large blocks of our common stock, including by our executive officers, directors and significant stockholders, or
substantial changes in short interest in our common stock; and
the other risks and uncertainties described in this “Risk Factors” section.
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The COVID-19 pandemic has caused significant disruptions in the financial markets, and may continue to cause such
disruptions, and has also impacted, and may continue to impact, the volatility of our stock price and trading in our stock. In addition,
U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the ongoing
conflict between Russia and Ukraine, rising inflation and increasing interest rates. A continuation or worsening of the levels of market
disruption and volatility could have an adverse effect on the market price of our common stock. Furthermore, the trading market for
our common stock relies, in part, on the research and reports that industry or financial analysts publish about us or our business. Our
stock price could decline significantly if we fail to meet or exceed analysts’ forecasts and expectations or if one or more of the
analysts covering our business downgrade their evaluations of our stock. Further, if one or more of these analysts cease to cover our
stock, we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.
Securities or other litigation could result in substantial costs and may divert management’s time and attention from our business.
Securities class action litigation is often brought against a company following a decline or periods of volatility in the market
price of its securities. This risk is especially relevant for us because pharmaceutical companies have experienced significant stock
price volatility in recent years, including as a result of the COVID-19 pandemic, and we are therefore a target of this type of litigation.
For example, we were subject to a class action lawsuit and a shareholder derivative lawsuit alleging federal securities laws violations,
both of which have been dismissed. We may face additional securities class action litigation or other litigation in the future, including
if we fail to successfully commercialize XPOVIO, or if we cannot obtain regulatory approvals for, or if we otherwise fail to
successfully commercialize and launch, our product candidates.
The outcome of litigation is necessarily uncertain, and we could be forced to expend significant resources in the defense of such
suits, and we may not prevail. Monitoring and defending against legal actions is time-consuming for our management and detracts
from our ability to fully focus our internal resources on our business activities. In addition, we may incur substantial legal fees and
costs in connection with any such litigation. We have not established any reserves for any potential liability relating to any such
potential lawsuits. It is possible that we could, in the future, incur judgments or enter into settlements of claims for monetary damages.
We currently maintain insurance coverage for some of these potential liabilities. Other potential liabilities may not be covered by
insurance, insurers may dispute coverage or the amount of insurance may not be enough to cover damages awarded. In addition,
certain types of damages may not be covered by insurance, and insurance coverage for all or certain forms of liability may become
unavailable or prohibitively expensive in the future. A decision adverse to our interests on one or more legal matters or litigation could
result in the payment of substantial damages, or possibly fines, and could have a material adverse effect on our reputation, financial
condition and results of operations.
We have broad discretion in the use of our cash, cash equivalents and investments and may not use them effectively.
Our management has broad discretion to use our cash, cash equivalents and investments to fund our operations and could spend
these funds in ways that do not improve our results of operations or enhance the value of our common stock. The failure by our
management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business,
cause the price of our common stock to decline and delay the development of our product candidates. Pending their use to fund our
operations, we may invest our cash and cash equivalents in a manner that does not produce income or that loses value.
If we identify a material weakness in our internal control over financial reporting, it could have an adverse effect on our business
and financial results and our ability to meet our reporting obligations could be negatively affected, each of which could negatively
affect the trading price of our common stock.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected
on a timely basis. Accordingly, a material weakness increases the risk that the financial information we report contains material errors.
We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies. In
addition, we are required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting.
Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only
reasonable, not absolute, assurances that the objectives of the system are met. If we, or our independent registered public accounting
firm, determine that our internal control over our financial reporting is not effective, or we discover areas that need improvement in
the future, or we experience high turnover of our personnel in our financial reporting functions, these shortcomings could have an
adverse effect on our business and financial results, and the price of our common stock could be negatively affected.
If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public
accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting,
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investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price. Failure to
comply with reporting requirements could also subject us to sanctions and/or investigations by the SEC, the Nasdaq Stock Market or
other regulatory authorities.
If the estimates we make, or the assumptions on which we rely, in preparing our consolidated financial statements, our projected
guidance and/or our projected market opportunities prove inaccurate, our actual results may vary from those reflected in our
projections and accruals.
Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates and
judgments that affect the reported amounts of our assets, liabilities, revenues and expenses, the amounts of charges accrued by us and
related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances.
We cannot assure you, however, that our estimates, or the assumptions underlying them, will be correct. Further, from time to
time we issue guidance on our expected financial performance for future periods, such as our expectations regarding our revenue, non-
GAAP research and development and selling, general and administrative expenses, and cash, cash equivalents and investments
available for operations, which guidance is based on estimates and the judgment of management. If, for any reason, our actual results
differ materially from our guidance, we may have to adjust our publicly announced financial guidance. If we fail to meet, or if we are
required to change or update any element of, our publicly disclosed financial guidance or other expectations about our business, our
stock price could decline.
Further our estimates of the potential market opportunities for XPOVIO and our product candidates include several key
assumptions based on our industry knowledge, industry publications, third-party research and other surveys, which may be based on a
small sample size and fail to accurately reflect market opportunities. While we believe that our internal assumptions are reasonable,
these assumptions involve the exercise of significant judgment on the part of our management, are inherently uncertain and the
reasonableness of these assumptions has not been assessed by an independent source. If any of our assumptions or estimates, or these
publications, research, surveys or studies prove to be inaccurate, then the actual market for XPOVIO or any other products or product
candidates may be smaller than we expect, and as a result our product revenue may be limited and it may be more difficult for us to
achieve profitability.
Our ability to use our net operating loss carryforwards and tax credit carryforwards to offset future taxable income may be subject
to certain limitations.
Under the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), our net operating loss and tax credit
carryforwards are subject to review and possible adjustment by the Internal Revenue Service (and state tax authorities under relevant
state tax rules). In addition, as described below in “Changes in tax laws or in their implementation or interpretation may adversely
affect our business and financial condition,” the TCJA, as amended by the CARES Act, includes changes to U.S. federal tax rates and
the rules governing net operating loss carryforwards that may significantly impact our ability to utilize our net operating losses to
offset taxable income in the future. Furthermore, the use of net operating loss and tax credit carryforwards may become subject to an
annual limitation under Sections 382 and 383 of the Code, respectively, and similar state provisions in the event of certain cumulative
changes in the ownership interest of significant stockholders in excess of 50 percent over a three-year period. This could limit the
amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual
limitation is determined based on the value of a company immediately prior to the ownership change. Subsequent ownership changes
may further affect the limitation in future years. Our company has completed several financings since its inception which resulted in
an ownership change under Sections 382 and 383 of the Code. In addition, future changes in our stock ownership, some of which are
outside of our control, could result in ownership changes in the future. For these reasons, we may not be able to use some or all of our
net operating loss and tax credit carryforwards, even if we attain profitability.
Changes in tax laws or in their implementation or interpretation may adversely affect our business and financial condition.
Changes in tax law may adversely affect our business or financial condition. The TCJA, as amended by the CARES Act,
significantly revises the Code. The TCJA, among other things, contains significant changes to corporate taxation, including reduction
of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21% and limitation of the deduction for net operating losses
to 80% of current year taxable income for losses arising in taxable years beginning after December 31, 2017 (though any such net
operating losses may be carried forward indefinitely). In addition, beginning in 2022, the TCJA eliminates the option to deduct
research and development expenditures currently and requires corporations to capitalize and amortize them over five years.
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In addition to the CARES Act, as part of Congress’ response to the COVID-19 pandemic, economic relief legislation was
enacted in 2020 and 2021 containing tax provisions. The IRA was also signed into law in August 2022. The IRA introduced new tax
provisions, including a one percent excise tax imposed on certain stock repurchases by publicly traded companies. The one percent
excise tax generally applies to any acquisition of stock by the publicly traded company (or certain of its affiliates) from a stockholder
of the company in exchange for money or other property (other than stock of the company itself), subject to a de minimis exception.
Thus, the excise tax could apply to certain transactions that are not traditional stock repurchases. Regulatory guidance under the TCJA
and such additional legislation is and continues to be forthcoming, and such guidance could ultimately increase or lessen their impact
on our business and financial condition. In addition, it is uncertain if and to what extent various states will conform to the TCJA and
additional tax legislation.
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Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Properties
Our headquarters are located in Newton, Massachusetts, where we lease 98,502 square feet of office and laboratory space. We
also lease approximately 3,681 square feet of office space in Munich, Germany and 4,736 square feet of office space in Tel Aviv-
Yafo, Israel.
Item 3. Legal Proceedings
The information required by this Item is provided under “Litigation” in Note 11 “Commitments and Contingencies” of the
Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock, $0.0001 par value per share, began trading on the Nasdaq Global Select Market on November 6, 2013,
where its prices are quoted under the symbol “KPTI.”
Holders
As of February 10, 2023, there were 18 holders of record of our common stock.
Dividends
We have never paid cash dividends on our common stock, and we do not expect to pay any cash dividends in the foreseeable
future.
Stock Performance Graph
The following graph shows a comparison from December 31, 2017 through December 31, 2022, of the cumulative total return
on an assumed investment of $100.00 in cash in our common stock as compared to the same investment in the NASDAQ Composite
Index and the NASDAQ Biotechnology Index. Such returns are based on historical results and are not intended to suggest future
performance. Data for the NASDAQ Composite Index and NASDAQ Biotechnology Index assume reinvestment of dividends.
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Cumulative Total Return Comparison
Karyopharm Therapeutics Inc.
NASDAQ Composite
NASDAQ Biotechnology
12/31/17
100.00
100.00
100.00
12/31/18
97.60
97.16
91.14
12/31/19
199.69
132.81
114.02
12/31/20
161.25
192.47
144.15
12/31/21
66.98
235.15
144.18
12/31/22
35.42
158.65
129.59
The performance graph in this Item 5 is not deemed to be “soliciting material” or to be “filed” with the SEC for purposes of
Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed incorporated by
reference into any filing of Karyopharm Therapeutics Inc. under the Securities Act or the Exchange Act, except to the extent we
specifically incorporate it by reference into such a filing.
Recent Sales of Unregistered Securities
During the period covered by this Annual Report on Form 10-K, we did not issue any unregistered equity securities other than
pursuant to transactions previously disclosed in our Current Reports on Form 8-K.
Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with our
consolidated financial statements and related notes included elsewhere in this report. Some of the information contained in this
discussion and analysis and set forth elsewhere in this report, including information with respect to our plans and strategy for our
business, includes forward-looking statements that involve risks and uncertainties. You should review the section titled “Risk Factors”
in Part I - Item 1A of this report for a discussion of important factors that could cause actual results to differ materially from the
results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are 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. 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 (“SINE”) compounds that inhibit the nuclear export protein exportin 1 (“XPO1”). These SINE compounds represent a new
class of drug candidates with a novel mechanism of action that have the potential to treat a variety of diseases with high unmet
medical need. Our lead asset, XPOVIO®(selinexor), was the first oral XPO1 inhibitor to receive marketing approval, receiving its
initial U.S. approval from the U.S. Food and Drug Administration (“FDA”) in July 2019, and is currently approved and marketed in
the U.S. for the following indications:
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•
In combination with bortezomib and dexamethasone for the treatment of adult patients with multiple myeloma who have
received at least one prior therapy. Approval in this indication was based on the results from the BOSTON (Bortezomib,
Selinexor and Dexamethasone) study;
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. Approval in this indication was based on the
results from the STORM (Selinexor Treatment of Refractory Myeloma) study; and
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. This indication
was approved under accelerated approval based on response rate and was based on the results from the SADAL (Selinexor
Against Diffuse Aggressive Lymphoma) study. Continued approval for this indication may be contingent upon
verification and description of clinical benefit in a confirmatory trial.
The commercialization of XPOVIO in the U.S., for both the multiple myeloma and DLBCL indications, is currently supported
by sales representatives, nurse liaisons, and a market access team, as well as KaryForward™, an extensive patient and healthcare
provider support program. Our commercial efforts are also supplemented by patient support initiatives coordinated by our dedicated
network of participating specialty pharmacy providers. We plan to continue to educate physicians, other healthcare providers and
patients about XPOVIO’s clinical profile and unique mechanism of action as we continue to expand XPOVIO use.
The commercialization of XPOVIO and NEXPOVIO® (selinexor) (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 approximately 40 countries outside the U.S., including the European Union (“EU”), United
Kingdom, Singapore, Mainland China, South Korea, Australia, Canada, Taiwan and Israel and is commercially available in a growing
number of countries.
In July 2022, the European Commission granted full marketing authorisation for NEXPOVIO in combination with once-weekly
Velcade® (bortezomib) and low-dose dexamethasone for the treatment of adult patients with multiple myeloma who have received at
least one prior therapy. This approval for the extension of NEXPOVIO's indication in the EU converted the previously received
conditional marketing authorisation to a full approval. The marketing authorisation, which marks the second indication for
NEXPOVIO, is valid in all 27 member states of the EU as well as Iceland, Liechtenstein, Norway, and Northern Ireland. Stemline
Therapeutics B.V., a wholly owned subsidiary of the Menarini Group (“Menarini”), is responsible for all commercialization activities
relating to NEXPOVIO in Europe. This indication is based on the results from the Phase 3 BOSTON Study, which evaluated once-
weekly administration of selinexor in combination with once-weekly administration of Velcade® and low-dose dexamethasone
compared to standard twice-weekly administration of Velcade® plus low-dose dexamethasone in patients with multiple myeloma who
have received one to three prior lines of therapy.
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Our primary focus is on marketing XPOVIO in its currently approved indications as well as developing and seeking the
regulatory approval of selinexor as an oral agent in multiple myeloma, endometrial cancer, and myelofibrosis; eltanexor as an oral
agent in myelodysplastic neoplasms; and in additional cancer indications with significant unmet medical need. We plan to continue to
conduct clinical trials and to seek additional approvals for the use of selinexor and eltanexor as single agents or in combination with
other oncology therapies to expand the patient populations that are eligible for treatment with selinexor or eltanexor.
As of December 31, 2022, we had an accumulated deficit of $1.3 billion. We had net losses of $165.3 million, $124.1 million,
and $196.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. We recognized total revenue of $157.1
million in 2022, including $120.4 million of XPOVIO net product revenue and $36.6 million of license revenue. License revenue
included $15.0 million of revenue related to the reimbursement of documented expenses for global development of the selinexor from
Menarini and $7.8 million of milestone-related revenue from Antengene Therapeutics Limited (“Antengene”). On December 5, 2022,
we entered into a securities purchase agreement with certain institutional investors pursuant to which we issued and sold, in a private
placement offering of securities, an aggregate of (i) 31,791,908 shares of common stock and (ii) accompanying warrants to purchase
up to 9,537,563 shares of common stock at an exercise price of $6.3578 per share. We received aggregate net proceeds of
approximately $154.7 million. As of December 31, 2022, we had $278.0 million in cash, cash equivalents and investments.
Uncertainty Relating to the COVID-19 Pandemic
The COVID-19 pandemic has and will continue to affect economies, healthcare systems, and businesses around the world. We
continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business, including the impact on our
employees, patients and business operations. We have experienced and may continue to experience disruptions that could impact
clinical trial enrollment and/or our results of operations, including product revenue and our financial condition. Uncertainties relating
to the COVID-19 pandemic include the availability, administration rates and effectiveness of vaccines and therapeutics against any
variants as new strains of the virus evolve, the continued duration and severity of the pandemic, governmental, business or other
actions, and changes to our operations, among others. We will continue to monitor the COVID-19 situation closely and intend to
follow health and safety guidelines as they evolve. Further, the impacts of a potential worsening of global economic conditions and the
continued disruptions to, and volatility in, the credit and financial markets, as well as other unanticipated consequences, remain
unknown. The situation surrounding the COVID-19 pandemic remains fluid and we are actively managing our response and assessing
potential impacts to our operating results and financial condition, as well as adverse developments in our business. For further
information regarding the impact of the COVID-19 pandemic on us, see Item 1A - Risk Factors included in this Annual Report on
Form 10-K.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial
statements, which we have prepared in accordance with U.S. generally accepted accounting principles. The preparation of these
consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts
of revenues and expenses during the reporting periods. We believe that the estimates and assumptions involved in the accounting
policies described below may have the greatest potential impact on our consolidated financial statements and, therefore, consider these
to be our critical accounting estimates. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from
these estimates under different assumptions and conditions. See Note 2 “Summary of Significant Accounting Policies” to the
consolidated financial statements included under Part II, Item 8 of this Annual Report on Form 10-K for information about our
significant accounting policies.
Product Revenue Reserves
We recognize product revenue, net of variable consideration related to certain allowances and accruals, when the customer takes
control of the product, which is typically upon delivery to the customer. Revenue from product sales is recorded at the net sales price,
which includes estimates of variable consideration for which reserves are reported. These reserves are based on the amounts earned, or
to be claimed on the related sales, and are generally classified as reductions of accounts receivable (if the amount is payable to the
customer) or a current liability (if the amount is payable to a party other than a customer). Certain amounts are known at the time of
sale based on contractual terms and are recorded pursuant to the most likely amount method, which is the single most likely amount in
a range of possible considerations. Other amounts are estimated pursuant to the expected value method, which is the sum of
probability-weighted amounts in a range of possible considerations. Relevant factors used in the expected value method include:
current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer
buying and payment patterns. These reserves reflect our best estimates of the variable consideration based on the terms of the
respective underlying contracts.
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The estimates for our product revenue allowances and accruals are most significantly affected by chargebacks, which are
contractual commitments to provide products to qualified healthcare entities at prices lower than the list prices charged to our
customers who purchase XPOVIO directly from us, and rebates that represent discount obligations under government programs,
including Medicaid, Medicare, the Department of Veterans Affairs, the Department of Defense, and others.
A 10% increase or decrease in these estimates would impact net product revenue by a corresponding increase or decrease of less
than $2.0 million.
License and Asset Purchase Agreements
We generate revenue from license or similar agreements with pharmaceutical companies for the development and
commercialization of certain of our products and product candidates.
At contract inception, we evaluate all goods or services in the agreement to determine if they are distinct. If they are not distinct,
they are combined with other promised goods or services to create a bundle of promised goods or services that are distinct. Distinct
goods or services and distinct bundles of goods or services are considered performance obligations. Optional future services where
any additional consideration paid to us reflects their standalone selling prices do not provide the customer with a material right and,
therefore, are not considered performance obligations. Optional future services that are priced in a manner which provides the
customer with a significant or incremental discount are considered performance obligations because they provide the customer with a
material right.
We utilize judgment to estimate the transaction price at contract inception. We evaluate contingent milestones to determine if
they should be included in the transaction price using the most likely amount method. Milestone payments that are not within our
control, such as regulatory approvals, are not considered likely of being achieved until those approvals are received and are excluded
from the transaction price using the most likely amount method. The transaction price is then allocated to each performance obligation
on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations are satisfied. At
the end of each reporting period, we re-evaluate our estimate of the transaction price including the probability of achieving milestone
payments that may not be subject to a material reversal and adjust the transaction price if necessary. Any such adjustments are
recorded on a cumulative catch-up basis, which would affect license and other revenue in the period of adjustment.
Accrued Research and Development Costs
We estimate our accrued research and development costs by reviewing quotes and contracts, identifying services that have been
performed on our behalf, and estimating the associated cost incurred for services performed when we have not yet been invoiced or
otherwise notified of the actual cost. Most of our service providers invoice us monthly in arrears for services performed or when
contractual milestones are met. We make estimates of our accrued research and development costs at each balance sheet date in our
financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates
with the service providers and make adjustments if necessary. The significant estimates in our accrued research and development costs
include fees to be paid to contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”) in connection
with research and development activities as well as fees to be paid to investigative sites in connection with clinical studies, for which
we have not yet been invoiced.
We base our expenses related to CROs and CMOs on our estimates of the services performed and efforts expended pursuant to
quotes and contracts with CROs and CMOs that conduct research and development activities on our behalf. The payment terms of
these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be
instances in which payments made to our service providers will exceed the level of services performed and result in a prepayment. In
accruing service fees, we estimate the time period over which the services will be performed and the level of effort to be expended in
each period. If the actual timing of the performance of services or the level of effort varies from our estimates, we adjust the accrual or
prepayment accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, if our
estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result
in us reporting amounts that are too high or too low in any particular period. To date, our estimates have not been materially different
than amounts actually incurred.
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Results of Operations
The following table summarizes our results of operations (in thousands):
Product revenue, net
License and other revenue
Total revenue
Operating expenses:
Cost of sales
Research and development
Selling, general and administrative
Loss from operations
Other expense, net
Loss before income taxes
Income tax provision
Net loss
2022
For the Years Ended December 31,
2021
2020
$
$
120,445
36,629
157,074
5,213
148,662
145,401
(142,202)
(22,720)
(164,922)
(369)
(165,291)
$
$
98,436
111,383
209,819
3,402
160,842
143,846
(98,271)
(25,549)
(123,820)
(268)
(124,088)
$
$
76,210
31,875
108,085
2,705
150,813
126,417
(171,850)
(24,114)
(195,964)
(309)
(196,273)
Product Revenue, net (in thousands, except for percentages)
Product revenue, net
For the Years Ended December 31,
2022 vs. 2021
2021 vs. 2020
2022
$ 120,445
2021
98,436
$
2020
76,210
$ Change
$ 22,009
$
% Change
$ Change
22% $ 22,226
% Change
29%
Net product revenue from U.S. commercial sales of XPOVIO for the year ended December 31, 2022 increased 22% as
compared to the year ended December 31, 2021 due to an increasing number of patients treated in earlier lines of therapy and
improved net price. We expect these trends to continue in 2023, resulting in an increase in net product revenue when compared to
2022.
License and Other Revenue (in thousands, except for percentages)
Antengene
Menarini
Other
Total license and other revenue
For the Years Ended December 31,
2022 vs. 2021
2021 vs. 2020
2022
13,353 $
15,672
7,604
36,629 $ 111,383 $
2021
30,429 $
75,000
5,954
$ Change
2020
23,749 $ (17,076)
— (59,328)
8,126
1,650
31,875 $ (74,754)
$
$
% Change
$ Change
6,680
(56)% $
75,000
(79)%
28%
(2,172)
(67)% $ 79,508
% Change
28%
100%
(27)%
249%
License and other revenue for the year ended December 31, 2022 decreased by $74.8 million as compared to the year ended
December 31, 2021 primarily due to the $75.0 million one-time upfront payment from Menarini recognized in 2021 and a $21.5
million decrease year over year in development/regulatory milestone revenue from Antengene. These decreases were partially offset
by $15.0 million in revenue earned from Menarini in 2022 for the reimbursement of selinexor development related expenses. The
license agreements with Menarini (“the Menarini Agreement”) and Antengene are each defined and described in Note 5 “License and
Asset Purchase Agreements”, to the consolidated financial statements included under Part II, Item 8 of this Annual Report on Form
10-K.
We expect license and other revenue to remain consistent in 2023 as compared to 2022 primarily due to increased royalties
related to the commercialization of selinexor outside the U.S., offset by a decrease in development/regulatory milestone revenue.
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Operating Costs and Expenses (in thousands, except for percentages)
Cost of sales
Research and development
Selling, general and administrative
Total operating expenses
Cost of Sales
For the Years Ended December 31,
2022 vs. 2021
2021 vs. 2020
2022
2021
2020
$
5,213
148,662
145,401
$ 299,276
$
3,402
160,842
143,846
$ 308,090
$
2,705
150,813
126,417
$ 279,935
$ Change
1,811
$
(12,180)
1,555
$ (8,814)
% Change
$ Change
697
53% $
10,029
(8)%
1%
17,429
(3)% $ 28,155
% Change
26%
7%
14%
10%
We began capitalizing XPOVIO inventory costs during the third quarter of 2019 subsequent to FDA approval as such costs are
recoverable through the commercialization of XPOVIO. Prior to the capitalization of XPOVIO inventory costs, such costs were
recorded as research and development expenses in the period incurred. Therefore, cost of sales recorded during the years ended
December 31, 2022, 2021 and 2020 only reflect a portion of the costs related to the manufacturing of XPOVIO and related materials,
since, prior to FDA approval, these costs were expensed. The manufacturing costs of XPOVIO on-hand upon approval were
approximately $2.8 million. At December 31, 2022, we had $0.3 million of this previously expensed XPOVIO and related material
on-hand.
We expect cost of sales to slightly increase in 2023 as compared to 2022 due primarily to an expected increase in net product
sales.
Research and Development Expenses (in thousands, except for percentages)
For the Years Ended December 31,
2022 vs. 2021
2021 vs. 2020
Personnel costs
Clinical trial and related costs
Consulting, professional and other
costs
Stock-based compensation
In-process research and development
Total research and development
expenses
$
2022
59,095 $
56,502
2021
52,001 $
68,473
2020
47,107 $
72,029
$ Change
7,094
(11,971)
% Change
$ Change
4,894
(3,556)
14% $
(17)%
18,714
14,351
—
21,171
11,842
7,355
21,462
10,215
—
(2,457)
2,509
(7,355)
(12)%
21%
(100)%
(291)
1,627
7,355
$ 148,662 $ 160,842 $ 150,813 $ (12,180)
(8)% $ 10,029
% Change
10%
(5)%
(1)%
16%
100%
7%
Research and development expenses for the year ended December 31, 2022 decreased by $12.2 million as compared to the year
ended December 31, 2021 primarily due to a $12.0 million decrease in clinical trial and related costs due to our prioritization of the
core programs in our clinical pipeline and the timing of the purchases of comparator drugs used in clinical trials, coupled with a $7.4
million decrease in in-process research and development costs related to the acquisition of certain assets from Neumedicines Inc.
(“Neumedicines”) in the third quarter of 2021, for which there were no similar costs in 2022. These decreases were partially offset by
an increase in personnel costs and stock-based compensation, which was largely attributable to $7.5 million of severance-related
expenses incurred during 2022 driven primarily by the departures of our former Chief Scientific Officer, Chief Medical Officer and
Chief Development Officer.
We expect our research and development expenses to remain relatively consistent in 2023 as compared to 2022, primarily due to
increased mid- and late-stage programs within our prioritized core development programs, offset by the cost saving measures we
initiated in 2022, which included an overall headcount reduction and continued focus on our prioritized pipeline.
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Selling, General and Administrative Expenses (in thousands, except for percentages)
For the Years Ended December 31,
2022 vs. 2021
2021 vs. 2020
Personnel costs
Consulting, professional and other
costs
Stock-based compensation
Total selling, general and
administrative expenses
2022
68,167
2021
66,465
2020
58,568
$ Change
1,702
$
$
$
$
% Change
$ Change
7,897
3% $
56,412
20,822
59,594
17,787
53,783
14,066
(3,182)
3,035
(5)%
17%
5,811
3,721
$ 145,401
$ 143,846
$ 126,417
$
1,555
1% $ 17,429
% Change
13%
11%
26%
14%
Selling, general and administrative expenses for the year ended December 31, 2022 increased by $1.6 million as compared to
the year ended December 31, 2021 due to an increase in personnel costs and stock-based compensation, which was primarily
attributable to $5.7 million of severance-related expenses incurred in 2022, largely in connection with the departure of our former
Chief Executive Officer. This increase was partially offset by a decrease in consulting, professional and other costs due to one-time
commercial-related activities incurred in 2021.
We expect our selling, general and administrative expenses to increase slightly in 2023 as compared to 2022 due to increased
personnel costs.
Other Expense, net (in thousands, except for percentages)
For the Years Ended December 31,
2022 vs. 2021
2021 vs. 2020
Interest expense
Interest income
Other income (expense):
Change in fair value of embedded
derivative
Foreign currency remeasurement
Other
Total other expense, net
2022
2021
2020
$ (24,996) $ (26,046) $ (27,140) $
2,359
582
2,820
$ Change
1,050
1,777
% Change
$ Change
1,094
(2,238)
(4)% $
305%
280
(376)
13
90
(216)
41
500
(404)
110
$ (22,720) $ (25,549) $ (24,114) $
190
(160)
(28)
2,829
(410)
211%
188
74%
(68)%
(69)
(11)% $ (1,435)
% Change
(4)%
(79)%
(82)%
(47)%
(63)%
6%
Other expense, net for the year ended December 31, 2022 decreased by $2.8 million as compared to the year ended
December 31, 2021, primarily due to an increase in interest income resulting from higher interest rates on our investments.
We expect other expense, net to decrease in 2023 as compared to 2022 primarily due to an increase in interest income from our
investments.
Results of Operations - Years Ended December 31, 2021 and 2020
Discussion and analysis of the results of operations for the year ended December 31, 2021 as compared to the results of
operations for the year ended December 31, 2020 is included under the heading “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 as filed
with the SEC on March 1, 2022 (“2021 Form 10-K”).
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Liquidity and Capital Resources
Cash flows
To date, we have financed our operations through a combination of product revenue sales, private placements of our common
and preferred stock, proceeds from public offerings of our common stock, proceeds from the issuance of convertible debt, proceeds
pursuant to the deferred royalty obligation, and cash generated from our business development activities.
As of December 31, 2022, our principal source of liquidity was $278.0 million of cash, cash equivalents and investments. We
have had recurring losses since inception and incurred a loss of $165.3 million for the year ended December 31, 2022. We expect that
our cash, cash equivalents and investments at December 31, 2022 will be sufficient to fund our current operating plans and capital
expenditure requirements for at least twelve months from the date of issuance of the financial statements contained in this Annual
Report on Form 10-K.
The following table provides information regarding our cash flows (in thousands):
Net cash used in operating activities
Net cash (used in) provided by investing activities
Net cash provided by financing activities
Effect of foreign exchange rates
Net (decrease) increase in cash, cash equivalents and restricted
cash
2022
For the Years Ended December 31,
2021
2020
$
(149,554)
(104,256)
193,738
(488)
$
(107,116)
141,840
73,648
(48)
(160,234)
(53,685)
172,083
268
(60,560)
$
108,324
$
(41,568)
$
$
Net Cash Used in Operating Activities
The $42.4 million increase in net cash used in operating activities during the year ended December 31, 2022 as compared to the
year ended December 31, 2021 was primarily driven by 2021 activity including the $75.0 million upfront payment we received from
Menarini. This was partially offset by increased cash receipts from increased net product sales in 2022 compared to 2021.
Net Cash (Used in) Provided by Investing Activities
The $246.1 million increase in net cash used in investing activities during the year ended December 31, 2022 as compared to the
year ended December 31, 2021 was primarily driven by a $180.8 million increase in purchases of investments and a $70.9 million
decrease in proceeds from the sales and maturities of investments, partially offset by the use of $5.5 million in 2021 to acquire in-
process research and development as a result of our acquisition of assets from Neumedicines.
Net Cash Provided by Financing Activities
The $120.1 million increase in net cash provided by financing activities during the year ended December 31, 2022 as compared
to the year ended December 31, 2021 was primarily driven by net proceeds of approximately $154.7 million from a private placement
offering of our common stock in 2022 and a $25.2 million increase in proceeds received from the sale of common stock under our “at
the market offering” program. This was partially offset by $60.0 million in proceeds received from the Amended Revenue Interest
Agreement (as defined below) in 2021.
A discussion of changes in our financial condition for the year ended December 31, 2021 as compared to the year ended
December 31, 2020 is included under the heading “Item 7. Management’s Discussion and Analysis of Financial Condition and Results
of Operations” in the 2021 Form 10-K.
Sources of Liquidity
On December 5, 2022, we entered into a securities purchase agreement with certain institutional investors pursuant to which we
issued and sold, in a private placement offering of securities, an aggregate of (i) 31,791,908 shares of common stock and (ii)
accompanying warrants to purchase up to 9,537,563 shares of common stock at an exercise price of $6.36 per share. We received
aggregate net proceeds of approximately $154.7 million.
During the year ended December 31, 2022, we received $3.6 million in milestone payments under our license and distribution
arrangements pursuant to which we are entitled to receive additional milestone payments, if certain development goals and sales
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milestones are achieved, as well as royalties on future net sales of the licensed and sold products in the territories under such
arrangements. In addition, under the Menarini Agreement, Menarini will reimburse us for 25% of all documented expenses we incur
for the global development of selinexor during 2022 through 2025, provided that such reimbursements shall not exceed $15.0 million
per calendar year. We received $15.0 million of reimbursements for development related expenses under the Menarini Agreement
during the year ended December 31, 2022.
In September 2019, we entered into the Revenue Interest Financing Agreement (the “Revenue Interest Agreement”) with
HealthCare Royalty Partners III, L.P. and HealthCare Royalty Partners IV, L.P. (“HCR”) and which was amended in June 2021 (the
“Amended Revenue Interest Agreement”). Pursuant to the Revenue Interest Agreement, HCR paid us $75.0 million, less certain
transaction expenses, on September 27, 2019 and pursuant to the Amended Revenue Interest Agreement, HCR paid us $60.0 million
on June 23, 2021. For additional information on the Amended Revenue Interest Agreement, see Note 10, “Long-Term Obligations”, to
the consolidated financial statements included under Part II, Item 8 of this Annual Report on Form 10-K.
On May 5, 2020, we entered into Amendment No. 1 to the Open Market Sale Agreement, dated August 17, 2018 (the “2018
Open Market Sale Agreement”), with Jefferies LLC, as agent (“Jefferies”), pursuant to which we increased the maximum aggregate
offering price of shares of our common stock that we may issue and sell from time to time through Jefferies, by $100.0 million from
$75.0 million to up to $175.0 million (the “Open Market Shares”). As of December 31, 2022, $64.0 million of Open Market Shares
remained available for issuance under the 2018 Open Market Sale Agreement. During the year ended December 31, 2022, we sold an
aggregate of 3,991,652 Open Market Shares under the 2018 Open Market Sale Agreement, for net proceeds of approximately $35.1
million. During the year ended December 31, 2021, we sold an aggregate of 638,341 Open Market Shares under the Open Market Sale
Agreement, for net proceeds of approximately $9.9 million.
On February 17, 2023, we entered into a new Open Market Sale Agreement (the “2023 Open Market Sale Agreement”) with
Jefferies, as agent. 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 from time to time through Jefferies. Upon entry into the 2023 Open Market Sale
Agreement, the 2018 Open Market Sale Agreement was terminated.
Funding Requirements
We expect our expenses to increase in 2023 as compared to 2022. We expect to continue to incur significant commercialization
expenses related to sales, marketing, manufacturing and distribution of any of our products, to the extent that these functions are not
the responsibility of our collaborators.
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and
uncertain process that takes years to complete. In addition, our product candidates for which we receive marketing approval may not
achieve commercial success. Our ability to become and remain profitable depends on our ability to generate revenue. There can be no
assurance as to the amount or timing of any such revenue, and we may not achieve profitability for several years, if at all, as described
more fully in the risk factor entitled “We have incurred significant losses since inception, expect to continue to incur significant losses,
and may never achieve or maintain profitability,” under the heading “Risk Factors” in this Annual Report on Form 10-K.
Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional
financing may not be available to us on acceptable terms, or at all. We may seek additional capital due to favorable market conditions
or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans. If we are unable to
raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development
programs or commercialization efforts.
We currently expect that cash, cash equivalents and investments at December 31, 2022 will be sufficient to fund our current
operating plans and capital expenditure requirements for at least twelve months from the date of issuance of the financial statements
contained in this Annual Report on Form 10-K while we continue to commercialize XPOVIO in the U.S. and continue the clinical
trials of our product candidates. Our future long-term capital requirements will depend on many factors, as described more fully in the
risk factor entitled “We will need additional funding to achieve our business objectives. If we are unable to raise capital when needed
or on acceptable terms, we would be forced to delay, reduce or eliminate our research and development programs and/or
commercialization efforts,” under the heading “Risk Factors” in this Annual Report on Form 10-K.
In addition to the expenses required to fund our operations described above, our funding requirements also include the
following:
•
Lease costs for our headquarters in Newton, Massachusetts with a term through September 30, 2025, which totaled $3.4
million in 2022 and increase annually; we expect total future lease costs to be approximately $10.5 million;
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•
•
Future long-term debt obligations related to the Notes of $188.0 million over the next three years; and
Future royalty obligations to HCR under our Revenue Interest Financing Agreement of approximately $204.2 million.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk related to changes in interest rates. We had cash, cash equivalents and investments of $278.0
million as of December 31, 2022. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the
general level of U.S. interest rates. Due to the short-term duration of our investment portfolio and the low risk profile of our
investments, an immediate 100 basis point shift in interest rates would not have a material effect on the fair market value of our
investment portfolio.
We do not believe our cash, cash equivalents and investments have significant risk of default or illiquidity. While we believe our
cash, cash equivalents and investments do not contain excessive risk, we cannot provide absolute assurance that in the future our
investments will not be subject to adverse changes in securities at one or more financial institutions that are in excess of federally
insured limits. Given the potential instability of financial institutions, we cannot provide assurance that we will not experience losses
on these deposits and investments.
We are also exposed to market risk related to changes in foreign currency exchange rates. We contract with contract research
organizations and contract manufacturing organizations that are located in Canada and Europe, which are denominated in foreign
currencies. We also contract with a number of clinical trial sites outside of the U.S., and our budgets for those studies are frequently
denominated in foreign currencies. We are subject to fluctuations in foreign currency rates in connection with these agreements. We
do not currently hedge our foreign currency exchange rate risk.
Item 8. Financial Statements and Supplementary Data
Our consolidated financial statements, together with the report of our independent registered public accounting firm, appears on
pages 106 through 113 of this Annual Report on Form 10-K.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the
reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the rules and forms prescribed by the Securities and Exchange Commission and is accumulated and communicated to
management, including the principal executive officer (our President and Chief Executive Officer) and principal financial officer (our
Executive Vice President, Chief Financial Officer and Treasurer), to allow timely decisions regarding required disclosure.
Our management, under the supervision and with the participation of our President and Chief Executive Officer and Executive
Vice President, Chief Financial Officer and Treasurer, has 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 Annual Report on Form
10-K. Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving their objectives. Our disclosure controls and procedures have been designed to provide
reasonable assurance of achieving their objectives. Based on such evaluation, our President and Chief Executive Officer and
Executive Vice President, Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures were effective
at the reasonable assurance level as of December 31, 2022.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term
is defined in Rules13a-15(f) and15d-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or
procedures may deteriorate. Our internal control over financial reporting is a process designed under the supervision of our principal
executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of our financial statements for external reporting purposes in accordance with U.S. generally accepted accounting
principles.
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Under the supervision and with the participation of management, including our principal executive officer and principal
financial officer we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013
framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on our evaluation under that framework, management concluded that our internal control over financial reporting
was effective as of December 31, 2022.
Our independent registered public accounting firm that audited the financial statements included in this Annual Report on Form
10-K has issued an attestation report on our internal control over financial reporting, which is included below.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by
Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2022 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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To the Shareholders and the Board of Directors of Karyopharm Therapeutics Inc.
Report of Independent Registered Public Accounting Firm
Opinion on Internal Control Over Financial Reporting
We have audited Karyopharm Therapeutics Inc.’s internal control over financial reporting as of December 31, 2022, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework), (the COSO criteria). In our opinion, Karyopharm Therapeutics Inc. (the Company) maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the 2022 consolidated financial statements of the Company and our report dated February 17, 2023 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting 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 the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 17, 2023
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Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Certain information required by Part III is omitted from this Annual Report on Form 10-K and is incorporated by reference from
our definitive proxy statement relating to our 2023 annual meeting of stockholders, pursuant to Regulation 14A of the Exchange Act,
which we refer to as our 2023 Proxy Statement. We expect to file our 2023 Proxy Statement with the SEC within 120 days of
December 31, 2022.
Item 10. Directors, Executive Officers and Corporate Governance
Information regarding our directors, including the audit committee and audit committee financial experts, and compliance with
Section 16(a) of the Exchange Act, if applicable, will be included in our 2023 Proxy Statement and is incorporated herein by
reference. Information regarding our executive officers is set forth in “Business - Information about Our Executive Officers” in Part I,
Item 1 of this Annual Report on Form 10-K.
We have adopted a Code of Business Conduct and Ethics for all of our directors, officers and employees as required by Nasdaq
governance rules and as defined by applicable SEC rules. Stockholders may locate a copy of our Code of Business Conduct and Ethics
on our website at www.karyopharm.com or request a copy without charge from:
Karyopharm Therapeutics Inc.
Attention: Investor Relations
85 Wells Avenue, 2nd Floor
Newton, MA 02459
We will post to our website any amendments to the Code of Business Conduct and Ethics and any waivers that are required to
be disclosed by the rules of either the SEC or Nasdaq.
Item 11. Executive Compensation
The information required by this Item 11 of Form 10-K regarding executive compensation will be included in our 2023 Proxy
Statement and, other than the information required by Item 402(v) of Regulation S-K, is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item 12 of Form 10-K regarding security ownership of certain beneficial owners and
management and securities authorized for issuance under equity compensation plans will be included in our 2023 Proxy Statement and
is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 of Form 10-K regarding certain relationships and related transactions and director
independence will be included in our 2023 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information required by this Item 14 of Form 10-K regarding principal accountant fees and services will be included in our
2023 Proxy Statement and is incorporated herein by reference.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1) Financial Statements
The financial statements listed below are filed as a part of this Annual Report on Form 10-K.
Report of Independent Registered Public Accounting Firm (PCAOB ID 42).............................................................................
Consolidated Balance Sheets as of December 31, 2022 and 2021...............................................................................................
Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020..............................................
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2022, 2021 and 2020 .............................
Consolidated Statements of Stockholders’ (Deficit) Equity for the years ended December 31, 2022, 2021 and 2020 ..............
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 ............................................
Notes to Consolidated Financial Statements................................................................................................................................
Page
number
107
109
110
111
112
113
114
(a)(2) Financial Statement Schedules
All financial schedules have been omitted because the required information is either presented in the consolidated financial
statements or the notes thereto or is not applicable or required.
(a)(3) Exhibits
The exhibits required by Item 601 of Regulation S-K and Item 15(b) of this Annual Report on Form 10-K are listed in the
Exhibit Index immediately preceding the signature page of this Annual Report on Form 10-K and are incorporated herein.
Item 16. Form 10-K Summary
None.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and
the Board of Directors of Karyopharm Therapeutics Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Karyopharm Therapeutics Inc. (the Company) as of
December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, stockholders’ (deficit) 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”). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework), and our report dated February 17, 2023 expressed an unqualified opinion thereon.
Adoption of ASU No. 2020-06
As discussed in Note 10 to the consolidated financial statements, the Company changed its method of accounting for convertible
senior notes in 2021 due to the adoption of Accounting Standards Update No. 2020-06, Debt—Debt with Conversion and Other
Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or
fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication
of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
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Description of the
Matter
Accrued Research and Development Costs
The Company’s accrued research and development costs totaled $15.6 million at December 31, 2022. As
discussed in Note 2 to the consolidated financial statements, the Company’s accrued research and development
costs are recognized based on various inputs, including an evaluation of the progress to complete specific tasks
using data such as clinical site activations, patient enrollment, and other information provided to the Company
by its service providers based on their actual costs incurred. Payments for these activities are based on the terms
of individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the
consolidated balance sheet as accrued expenses.
Auditing the Company’s accrued research and development costs is especially challenging due to the significant
volume of information received from service providers that conduct research and development activities on the
Company’s behalf. While the Company’s estimates of accrued research and development costs are primarily
based on information received related to each study or ongoing work order from its service providers, the
Company may need to make an estimate for additional costs incurred. Finally, due to the duration of certain of
the Company’s ongoing research and development activities and the timing of invoicing received from third
parties, the actual amounts incurred are not typically known by the report date.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of the controls over
the Company’s process for recording accrued research and development costs. These procedures included
controls over management’s review of inputs used, as well as the completeness and accuracy of the underlying
data, in calculating the accrual.
To test accrued research and development costs, our audit procedures included, among others, testing the
accuracy and completeness of the underlying data used to calculate accrued research and development costs, as
well as evaluating the assumptions and estimates used by management. To assess the nature and extent of
services incurred, we corroborated the progress of clinical trials with the Company’s research and development
personnel that oversee the clinical trials and obtained information from service providers regarding costs
incurred to date. We also tested subsequent invoices received and inspected the Company’s contracts with
service providers and any pending change orders to assess the effect on the accrual.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2014.
Boston, Massachusetts
February 17, 2023
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Karyopharm Therapeutics Inc.
Consolidated Balance Sheets
(in thousands, except per share amounts)
Assets
Current assets:
Cash and cash equivalents
Investments
Accounts receivable, net
Inventory
Prepaid expenses and other current assets
Restricted cash
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Other assets
Restricted cash
Total assets
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable
Accrued expenses
Operating lease liabilities
Other current liabilities
Total current liabilities
Convertible senior notes
Deferred royalty obligation
Operating lease liabilities, net of current portion
Total liabilities
Stockholders’ deficit:
Preferred stock, $0.0001 par value; 5,000 shares authorized; none issued and
outstanding
Common stock, $0.0001 par value; 200,000 shares authorized; 113,213 and 75,746
shares issued and outstanding at December 31, 2022 and December 31, 2021,
respectively
Additional paid-in capital
Accumulated other comprehensive (loss) income
Accumulated deficit
Total stockholders’ deficit
Total liabilities and stockholders’ deficit
December 31,
2022
December 31,
2021
$
$
$
$
$
$
$
135,188
142,779
47,086
4,224
19,821
1,064
350,162
1,139
6,238
—
633
358,172
2,773
58,415
2,872
1,848
65,908
170,105
132,718
6,097
374,828
190,459
38,156
22,497
4,106
14,039
6,349
275,606
1,642
7,915
19,505
637
305,305
1,603
69,121
2,316
678
73,718
169,293
132,998
8,969
384,978
—
—
12
1,327,909
(638)
(1,343,939)
(16,656)
358,172
$
8
1,098,776
191
(1,178,648)
(79,673)
305,305
The accompanying notes are an integral part of these consolidated financial statements.
109
Karyopharm Therapeutics Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Table of Contents
Revenues:
Product revenue, net
License and other revenue
Total revenue
Operating expenses:
Cost of sales
Research and development
Selling, general and administrative
Total operating expenses
Loss from operations
Other income (expense):
Interest income
Interest expense
Other (expense) income, net
Total other expense, net
Loss before income taxes
Income tax provision
Net loss
Net loss per share—basic and diluted
Weighted-average number of common shares outstanding used to
compute net loss per share—basic and diluted
$
$
$
For the Years Ended December 31,
2021
2020
2022
$
120,445
36,629
157,074
$
98,436
111,383
209,819
5,213
148,662
145,401
299,276
(142,202)
2,359
(24,996)
(83)
(22,720)
(164,922)
(369)
(165,291) $
(2.02) $
3,402
160,842
143,846
308,090
(98,271)
582
(26,046)
(85)
(25,549)
(123,820)
(268)
(124,088) $
(1.65) $
76,210
31,875
108,085
2,705
150,813
126,417
279,935
(171,850)
2,820
(27,140)
206
(24,114)
(195,964)
(309)
(196,273)
(2.72)
81,871
75,218
72,044
The accompanying notes are an integral part of these consolidated financial statements.
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Karyopharm Therapeutics Inc.
Consolidated Statements of Comprehensive Loss
(in thousands)
Net loss
Other comprehensive (loss) income
Unrealized (loss) gain on investments
Foreign currency translation adjustment
Comprehensive loss
For the Years Ended December 31,
2021
(124,088) $
2022
(165,291) $
2020
(196,273)
(341)
(488)
(166,120) $
(286)
(41)
(124,415) $
288
267
(195,718)
$
$
The accompanying notes are an integral part of these consolidated financial statements.
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Karyopharm Therapeutics Inc.
Consolidated Statements of Stockholders’ (Deficit) Equity
(in thousands)
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
(Loss)
Income
Accumulated
Deficit
Total
Stockholders’
(Deficit) Equity
Common Shares
Shares
Amount
Balance at December 31, 2019
Vesting of restricted stock
Exercise of stock options and shares issued under the employee
stock purchase plan
Stock-based compensation expense
Issuance of common stock, net of issuance costs
Unrealized gain on investments
Foreign currency cumulative translation adjustment
Net loss
Balance at December 31, 2020
Vesting of restricted stock
Exercise of stock options and shares issued under the employee
stock purchase plan
Stock-based compensation expense
Issuance of common stock for asset purchase
Issuance of common stock, net of issuance costs
Cumulative effect adjustment for adoption of new accounting
guidance
Unrealized loss on investments
Foreign currency cumulative translation adjustment
Net loss
Balance at December 31, 2021
Vesting of restricted stock
Exercise of stock options and shares issued under the employee
stock purchase plan
Stock-based compensation expense
Issuance of common stock, net of issuance costs
Unrealized loss on investments
Foreign currency cumulative translation adjustment
Net loss
Balance at December 31, 2022
65,370
204
1,161
—
7,188
—
—
—
73,923
480
555
—
150
638
—
—
—
—
75,746
957
726
—
35,784
—
—
—
113,213
$
$
7
—
—
—
—
—
—
—
7
—
—
—
—
1
—
—
—
—
8
—
—
—
4
—
—
—
12
$
923,142
—
$
$
(37)
—
(873,338)
—
$
10,307
24,407
161,776
—
—
—
1,119,632
—
3,745
29,783
1,355
9,902
(65,641)
—
—
—
1,098,776
—
3,977
35,399
189,757
—
—
—
1,327,909
$
$
—
—
—
288
267
—
518
—
—
—
—
—
—
(286)
(41)
—
191
—
—
—
—
(341)
(488)
—
(638)
$
—
—
—
—
—
(196,273)
(1,069,611)
—
—
—
—
—
15,051
—
—
(124,088)
(1,178,648)
—
—
—
—
—
—
(165,291)
(1,343,939)
$
49,774
—
10,307
24,407
161,776
288
267
(196,273)
50,546
—
3,745
29,783
1,355
9,903
(50,590)
(286)
(41)
(124,088)
(79,673)
—
3,977
35,399
189,761
(341)
(488)
(165,291)
(16,656)
The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents
Karyopharm Therapeutics Inc.
Consolidated Statements of Cash Flows
(in thousands)
Operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating
activities:
Stock-based compensation expense
Amortization of debt discount and issuance costs
Depreciation and amortization
Net amortization of premiums and discounts on investments
Acquired in-process research and development
Other
Changes in operating assets and liabilities:
Accounts receivable, net
Inventory
Prepaid expenses and other assets
Operating lease right-of-use assets
Accounts payable
Accrued expenses and other liabilities
Deferred revenue
Operating lease liabilities
Net cash used in operating activities
Investing activities
Purchases of property and equipment
Proceeds from sales and maturities of investments
Purchases of investments
Acquired in-process research and development
Net cash (used in) provided by investing activities
Financing activities
Proceeds from issuance of common stock, net of issuance costs
Proceeds from the exercise of stock options and shares issued under the
employee stock purchase plan
Proceeds from Amended Revenue Interest Agreement
Net cash provided by financing activities
Effect of exchange rate on cash, cash equivalents and restricted cash
Net (decrease) increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Reconciliation of cash, cash equivalents and restricted cash reported
within the consolidated balance sheets
Cash and cash equivalents
Short-term restricted cash
Long-term restricted cash
Total cash, cash equivalents and restricted cash
Supplemental disclosures:
Cash paid for interest on convertible debt
Cash paid for amounts included in the measurement of operating lease
liabilities
Cash paid for interest on deferred royalty obligation
$
$
$
$
$
$
For the Years Ended December 31,
2021
2020
2022
$
(165,291)
$
(124,088)
$
(196,273)
35,399
812
621
(825)
—
(281)
(5,084)
(118)
(5,782)
1,677
1,170
(9,536)
—
(2,316)
(149,554)
(118)
121,878
(226,016)
—
(104,256)
189,761
3,977
—
193,738
(488)
(60,560)
197,445
136,885
135,188
1,064
633
136,885
5,175
3,447
29,273
$
$
$
$
$
$
29,783
780
789
1,560
7,355
(106)
(9,616)
(1,462)
(24,759)
1,449
(2,847)
16,260
(297)
(1,917)
(107,116)
(212)
192,780
(45,228)
(5,500)
141,840
24,407
8,071
972
1,419
—
(186)
(5,019)
(2,627)
(1,996)
1,254
3,465
12,161
(4,236)
(1,646)
(160,234)
(145)
221,037
(274,577)
—
(53,685)
9,903
161,776
3,745
60,000
73,648
(48)
108,324
89,121
197,445
190,459
6,349
637
197,445
5,175
3,277
10,361
$
$
$
$
$
$
10,307
—
172,083
268
(41,568)
130,689
89,121
85,918
2,481
722
89,121
5,175
3,200
6,014
The accompanying notes are an integral part of these consolidated financial statements.
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1. Organization and Operations
Karyopharm Therapeutics Inc.
Notes to Consolidated Financial Statements
We are 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. 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 the regulatory approval of selinexor as an oral agent in multiple
myeloma, endometrial cancer and myelofibrosis; eltanexor as an oral agent in myelodysplastic neoplasms; and in additional cancer
indications with significant unmet medical need. We were incorporated in Delaware on December 22, 2008 and have a principal place
of business in Newton, Massachusetts.
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 approximately 40 countries outside the U.S., including the European Union, United Kingdom, Singapore, Mainland
China, South Korea, Australia, Canada, Taiwan and Israel and is commercially available in a growing number of countries.
To date, we have financed our operations through a combination of product revenue sales and through private placements of our
common and preferred stock, proceeds from our initial public offering and follow-on offerings of common stock, proceeds from the
issuance of convertible debt, proceeds pursuant to a revenue interest financing agreement and subsequent amendment (deferred
royalty obligation), proceeds from our “at the market offering” program and cash generated from our business development activities.
As of December 31, 2022, we had an accumulated deficit of $1.3 billion. We expect that our cash, cash equivalents and investments at
December 31, 2022 will be sufficient to fund our current operating plans and capital expenditure requirements for at least twelve
months from the date of issuance of these financial statements.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) and include the accounts of (i) Karyopharm Therapeutics Inc., (ii)
Karyopharm Securities Corp. (“KPSC”), our wholly-owned Massachusetts corporation incorporated in December 2013, (iii)
Karyopharm Europe GmbH, our wholly-owned German limited liability company, incorporated in September 2014, (iv) Karyopharm
Therapeutics (Bermuda) Ltd., a limited liability company, registered in Bermuda in March 2015 and dissolved in January 2022, and
(v) Karyopharm Israel Ltd., our wholly-owned Israeli subsidiary formed in June 2018. Certain prior period amounts in the
consolidated financial statements have been reclassified to conform to the current period presentation. All intercompany balances and
transactions have been eliminated in consolidation.
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for
evaluation by the chief operating decision maker in deciding how to allocate resources and in assessing performance. We view our
operations and manage our business in one operating segment, which is the business of discovering, developing and commercializing
drugs to treat cancer and certain other diseases. All of our revenue to date is attributable to the U.S.
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Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
On an ongoing basis, we evaluate our estimates, including estimates related to our net product revenue, license and other
revenue, clinical trial accruals, stock-based compensation expense, interest expense on our deferred royalty obligation, our embedded
derivative liability, valuation allowances, and other reported amounts of expenses during the reported period. We base our estimates
on historical experience and other market-specific or relevant assumptions that we believe to be reasonable under the circumstances.
Although we regularly assess these estimates, actual results could differ from those estimates. Changes in estimates are recorded in the
period in which they become known.
Concentrations of Credit Risk and Off-Balance Sheet Risk
Financial instruments which potentially subject us to credit risk consist primarily of cash, cash equivalents and investments. We
hold these investments in highly rated financial institutions, and, by policy, limit the amounts of credit exposure to any one financial
institution. These amounts at times may exceed federally insured limits. We have not experienced any credit losses in such accounts
and do not believe we are exposed to any significant credit risk on these funds. We have no off-balance sheet concentrations of credit
risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.
The following table summarizes customers that represent 10% or greater of our consolidated total revenue:
Customer A
Customer B
Customer C
Menarini
Antengene
2022
For the Years Ended December 31,
2021
2020
32%
24%
13%
10%
9%
22%
14%
8%
36%
15%
The following table summarizes customers with amounts due that represent 10% or greater of our consolidated accounts
receivable, net balance:
Antengene
Customer A
Customer B
Fair Value Measurements
As of December 31,
2022
2021
47%
21%
21%
32%
15%
15%
0%
22%
0%
36%
43%
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
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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 inputs: Quoted prices in active markets for identical assets or liabilities
Level 2 inputs: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly
Level 3 inputs: Unobservable inputs that reflect our own assumptions about the assumptions market participants would use in
pricing the asset or liability.
Cash and Cash Equivalents
Cash and cash equivalents consist primarily of demand deposit accounts and deposits in short-term money market funds. Cash
equivalents are stated at cost, which approximates fair value. We consider all highly liquid investments with maturities of three
months or less from the date of purchase to be cash equivalents. We do not hold any money market funds with significant liquidity
restrictions that would be required to be excluded from cash equivalents.
Investments
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 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.
Accounts Receivable
Amounts are recorded as accounts receivable when our right to consideration is unconditional other than the passage of time.
Accounts receivable consists of amounts due from customers, net of customer allowances for cash discounts and chargebacks. Our
contracts with customers have standard payment terms that generally require payment within 30 to 65 days. We analyze accounts for
collectability and periodically evaluate the creditworthiness of our customers. We determined an allowance for credit losses was not
material as of both December 31, 2022 and 2021 as we have had no bad debt write-offs to date and we do not currently have credit
issues with any customers.
Inventory
Prior to regulatory approval, we expense costs relating to the production of inventory as research and development expenses in
the period incurred. We capitalize the costs incurred to manufacture our products after regulatory approval when, based on our
judgment, future commercialization is considered probable and the future economic benefit is expected to be realized. We value our
inventories at the lower of cost or estimated net realizable value. We determine the cost of our inventories, which includes amounts
related to materials and manufacturing overhead, on a first-in, first-out basis. Raw materials and work in process includes all inventory
costs prior to packaging and labelling, including raw materials, active pharmaceutical ingredient, and drug product. Finished goods
include packaged and labelled products.
Raw materials and work in process that may be used for either research and development or commercial sale are classified as
inventory until the material is consumed or otherwise allocated for research and development. If the material is intended to be used for
research and development, it is expensed as research and development once that determination is made.
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We assess the recoverability of our inventory each reporting period and write-down any inventory that has become obsolete, that
has a cost basis in excess of its estimated realizable value, and that is not expected to be sold or otherwise consumed before expiry.
Inventory write-downs are recorded as cost of sales in the period the impairment is identified.
Property and Equipment, Net
Property and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization
expense is recorded using the straight-line method over the estimated useful lives of the respective assets, generally three to five years.
Leasehold improvements are amortized over the shorter of the lease term or the estimated useful economic lives of the related assets.
Expenditures for maintenance and repairs are charged to expense while the costs of significant improvements are capitalized. Upon
retirement or sale, the costs of the assets disposed of and the related accumulated depreciation or amortization is removed from the
consolidated balance sheets and any related gains or losses are reflected on the consolidated statements of operations.
Leases
We determine if an arrangement contains a lease at contract inception based on the facts and circumstances in the arrangement.
Lease classification, recognition, and measurement are then determined at the lease commencement date. For arrangements that
contain a lease we (i) identify lease and non-lease components, (ii) determine the consideration in the contract, (iii) determine whether
the lease is an operating or financing lease; and (iv) recognize lease right-of-use assets and liabilities. Lease liabilities and their
corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term.
The interest rate implicit in lease contracts is typically not readily determinable and as such, we use our incremental borrowing
rate based on the information available at the lease commencement date, which represents an internally developed rate that would be
incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic
environment. In determining the incremental borrowing rate, we consider (i) our estimated public credit rating, (ii) our observable debt
yields, as well as other bonds in the market issued by other companies with similar credit ratings as us, and (iii) adjustments necessary
for collateral, lease term, and inflation or foreign currency.
Most leases include options to renew and/or terminate the lease, which can impact the lease term. The exercise of these options
is at our discretion and we do not include any of these options within the expected lease term as we are not reasonably certain we will
exercise these options. Leases that have a lease term of 12 months or less at commencement date are excluded from this treatment and
are recognized on a straight-line basis over the term of the lease.
Fixed, or in substance fixed, lease payments on our operating lease are recognized over the expected term of the lease on a
straight-line basis. Variable lease expenses that are not considered fixed, or in substance fixed, are recognized as incurred. Fixed and
variable lease expense on our operating lease is recognized within operating expenses on our consolidated statements of operations.
Long-Lived Assets
We review the carrying values of our long-lived assets for possible impairment whenever events or changes in circumstances
indicate that the carrying amounts of the assets may not be recoverable. Any long-lived assets held for disposal are reported at the
lower of their carrying amounts or fair values less costs to sell. We have not recorded an impairment in any period since inception.
Accrued Research and Development Costs
We estimate our accrued research and development costs by reviewing quotes and contracts, identifying services that have been
performed on our behalf, and estimating the associated cost incurred for services performed when we have not yet been invoiced or
otherwise notified of the actual cost. Most of our service providers invoice us monthly in arrears for services performed or when
contractual milestones are met. We make estimates of our accrued research and development costs at each balance sheet date in our
financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates
with the service providers and make adjustments if necessary. The significant estimates in our accrued research and development costs
include fees to be paid to contract research organizations (“CROs”), and contract manufacturing organizations (“CMOs”) in
connection with research and development activities as well as fees to be paid to investigative sites in connection with clinical studies,
for which we have not yet been invoiced.
We base our expenses related to CROs and CMOs on our estimates of the services performed and efforts expended pursuant to
quotes and contracts with CROs and CMOs that conduct research and development activities on our behalf. The payment terms of
these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be
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instances in which payments made to our service providers will exceed the level of services performed and result in a prepayment. In
accruing service fees, we estimate the time period over which the services will be performed and the level of effort to be expended in
each period. If the actual timing of the performance of services or the level of effort varies from our estimates, we adjust the accrual or
prepayment accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, if our
estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result
in us reporting amounts that are too high or too low in any particular period. To date, our estimates have not been materially different
than amounts actually incurred.
Deferred Royalty Obligation
We treat the debt obligation to HealthCare Royalty Partners III, L.P. and HealthCare Royalty Partners IV, L.P. (“HCR”), as
discussed further in Note 10, “Long-Term Obligations”, as a deferred royalty obligation, amortized using the effective interest rate
method over the estimated life of the revenue streams. We recognize interest expense thereon using the effective rate, which is based
on our current estimates of future revenues over the life of the arrangement. We periodically assess our expected revenues using
internal projections, impute interest on the carrying value of the deferred royalty obligation, and record interest expense using the
imputed effective interest rate. To the extent our estimates of future revenues are greater or less than previous estimates or the
estimated timing of such payments is materially different than previous estimates, we will account for any such changes by adjusting
the effective interest rate on a prospective basis, which will adjust future interest expense with a corresponding impact to the
classification of our deferred royalty obligation. The assumptions used in determining the expected repayment term of the deferred
royalty obligation and amortization period of the issuance costs requires that we make estimates that could impact the short-term and
long-term classification of such costs, as well as the period over which such costs will be amortized.
Common Stock Warrants
We classify our common stock warrants in stockholder's equity if they only allow for settlement in shares of our common stock,
are indexed to our common stock, and meet the criteria for equity classification. See Note 8, “Stockholders’ Equity” for further detail.
Revenue Recognition
To determine revenue recognition, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify
the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance
obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. At contract inception, we
assess whether the goods or services promised within a contract with a customer are distinct and, therefore, represent a separate
performance obligation. Goods or services that are determined not to be distinct are combined with other promised goods and services
until a distinct bundle is identified. We then determine the transaction price, which is the total amount of consideration we expect to
receive from a customer in exchange for the promised goods or services and includes an estimate of any variable consideration in the
contract. We then allocate the transaction price to each performance obligation and recognize the associated revenue when (or as) our
customer obtains control of the goods or services within the performance obligation.
Incremental costs of obtaining a contract with a customer are capitalized and amortized consistent with the pattern of
transferring the goods or services to which the cost relates when the expected amortization period of the asset is greater than one year.
Incremental costs are expensed as incurred if the expected amortization period of the asset that we would have recognized is one year
or less.
Product Revenue Recognition
We ship XPOVIO in the U.S. to specialty pharmacies and specialty distributors, collectively referred to as our customers, under
a limited number of distribution arrangements with such third parties. Our specialty pharmacy customers resell XPOVIO directly to
patients, while our specialty distributor customers resell XPOVIO to healthcare entities, who then resell to patients. We also enter into
certain arrangements with group purchasing organizations and/or other payors that provide for government mandated and/or privately
negotiated rebates, chargebacks, and discounts with respect to the purchase of our products.
Each unit of XPOVIO that is ordered by our customers represents a distinct performance obligation that is completed when
control of the product is transferred to the customer. Accordingly, we recognize product revenue when the customer obtains control of
our product, which occurs at a point in time, generally upon delivery pursuant to our agreements with our customers. If taxes are
collected from customers relating to product sales and remitted to governmental authorities, they are excluded from revenue.
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Revenue from product sales is recorded at the net sales price, which includes estimates of variable consideration for which
reserves are reported. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are
generally classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount
is payable to a party other than a customer). Certain amounts are known at the time of sale based on contractual terms and are
recorded pursuant to the most likely amount method, which is the single most likely amount in a range of possible considerations.
Other amounts are estimated pursuant to the expected value method, which is the sum of probability-weighted amounts in a range of
possible consideration amounts. Relevant factors used in the expected value method include: current contractual and statutory
requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. These
reserves reflect our best estimates of the variable consideration based on the terms of the respective underlying contracts.
The following are the components of variable consideration related to product revenue:
Cash discounts and distributor fees: We provide customary discounts on XPOVIO sales to our customers for prompt payment,
the terms of which are explicitly stated in our contracts with such customers. We also pay fees to our customers for sales order
management, data, and distribution services, the terms of which are also explicitly stated in our contracts with such customers. Such
fees are not for a distinct good or service and, accordingly, are recorded as a reduction of revenue, as well as a reduction to accounts
receivable (cash discounts) or as a component of accrued expenses (distributor fees).
Product returns: Consistent with industry practice, we offer our customers and other indirect purchasers a limited right of return
for purchased units of XPOVIO for damage, defect, recall, and/or product expiry (beginning three months prior to the product’s
expiration date and ending twelve months after the product’s expiration date). We estimate the amount of product sales that will be
returned using quantitative and qualitative considerations, such as visibility into the inventory remaining in the distribution channel.
Reserves for estimated returns are recorded as a reduction of revenue in the period that the related revenue is recognized, as well as a
component of accrued expenses.
Based on the distribution model for XPOVIO, contractual inventory limits with our customers, the price of XPOVIO, and
limited contractual return rights, we currently believe there will be minimal XPOVIO returns. However, we will update our estimated
return liability each reporting period based on actual shipments of XPOVIO subject to contractual return rights, changes in
expectations about the amount of estimated and/or actual returns, and other qualitative considerations.
Chargebacks: Chargebacks for fees and discounts represent the estimated obligations resulting from our contractual
commitments to provide products to qualified healthcare entities at prices lower than the list prices charged to our customers who
purchase XPOVIO directly from us. Our customers charge us for the discount provided to the healthcare entities. Chargebacks are
generally determined at the time of resale to the qualified healthcare provider by our customers. Accordingly, reserves for chargebacks
consist of credits that we expect to issue for units that remain in the distribution channel inventory at the end of the reporting period
that we expect will be sold to qualified healthcare entities, as well as chargebacks that customers have claimed, but for which we have
not yet issued a credit. We record reserves for chargebacks based on contractual terms in the same period that the related revenue is
recognized, resulting in a reduction of product revenue and accounts receivable. We generally issue credits to the customer for such
amounts within a few weeks after the customer notifies us of the resale to a discount-eligible healthcare entity.
Government rebates: We are subject to discount obligations under state Medicaid programs, Medicare, the Department of
Veterans Affairs, the Department of Defense, and others. 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 as a component
of accrued expenses. For Medicare, we estimate the number of patients in the prescription drug coverage gap for whom we will owe
an additional liability under Medicare Part D. Our liability for these rebates consists of invoices received for claims from prior and
current 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 distribution
channel inventories at the end of the reporting period.
Other incentives: Other incentives offered by us include co-payment assistance, which we provide as financial assistance to
patients with commercial insurance that requires prescription drug co-payments by the patient. We calculate the accrual for co-
payment assistance based on estimates of claims and the average co-payment assistance amounts per claim that we expect to receive
associated with sales of XPOVIO that have been recognized as revenue but remain in distribution channel inventories at the end of the
reporting period. Such estimates are based on industry experience with similar products, as well as actual amounts from our product
sales to date. Any adjustments to such estimated liabilities on units in the distribution channel at period end, as well as actual amounts
incurred on units sold through the distribution channel during the period, are recorded in the same period that 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.
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Product revenue reserves and allowances: As noted above, cash discounts and chargebacks are recorded as reductions of
accounts receivable and product returns, distributor fees, government rebates, and other incentives are recorded as a component of
accrued expenses. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future
vary from our estimates, we will adjust these estimates, which would affect product revenue, net and earnings in the period in which
such variances become known.
License and Asset Purchase Agreements
We generate revenue from license or similar agreements with pharmaceutical companies for the development and
commercialization of certain of our products and product candidates. Such agreements may include the transfer of intellectual property
rights in the form of licenses, transfer of technological know-how, delivery of drug substances, research and development services,
and participation on certain committees with the counterparty. Payments made by the customer may include non-refundable upfront
fees, payments upon the exercise of options, payments based upon the achievement of defined milestones, and royalties on sales of
products and product candidates if they are approved and commercialized. Our license and asset purchase agreements are detailed in
Note 5, “License and Asset Purchase Agreements”.
At contract inception, we evaluate all goods or services in the agreement to determine if they are distinct. If they are not distinct,
they are combined with other promised goods or services to create a bundle of promised goods or services that are distinct. Distinct
goods or services and distinct bundles of goods or services are considered performance obligations. Optional future services where
any additional consideration paid to us reflects their standalone selling prices do not provide the customer with a material right and,
therefore, are not considered performance obligations. Optional future services that are priced in a manner which provides the
customer with a significant or incremental discount are considered performance obligations because they provide the customer with a
material right.
We utilize judgment to estimate the transaction price at contract inception. We evaluate contingent milestones to determine if
they should be included in the transaction price using the most likely amount method. Milestone payments that are not within our
control, such as regulatory approvals, are not considered likely of being achieved until those approvals are received and are excluded
from the transaction price using the most likely amount method. The transaction price is then allocated to each performance obligation
on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations are satisfied. At
the end of each reporting period, we re-evaluate our estimate of the transaction price, including the probability of achieving milestone
payments that may not be subject to a material reversal, and adjust the transaction price if necessary. Any such adjustments are
recorded on a cumulative catch-up basis, which would affect license and other revenue in the period of adjustment.
We then determine whether the performance obligations are satisfied over time or at a point in time and, if over time, the
appropriate method of measuring progress for purposes of recognizing revenue. We evaluate the measure of progress, as applicable,
for each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or
services to the customer under the terms of a contract, a contract liability is recorded within deferred revenue. Contract liabilities
within deferred revenue are recognized as revenue after control of the goods or services is transferred to the customer and all revenue
recognition criteria have been met.
For arrangements that include a license of intellectual property and sales-based royalties, including sales-based milestone
payments, we recognize revenue when the related sales occur because the license of intellectual property is deemed to be the
predominant item to which the royalties relate.
We account for asset purchase agreements under the accounting standards for business combinations and research and
development, as applicable. In-process research and development acquired in an asset acquisition is expensed immediately unless
there is an alternative future use. Subsequent payments made for the achievement of milestones are evaluated to determine whether
they have an alternative future use or should be expensed.
Cost of Sales
Cost of sales includes the cost of producing and distributing inventories related to sales of XPOVIO in the U.S. and sales of
selinexor to our partners who commercialize our products outside of the U.S. Cost of sales is recognized in the period the related sales
occur and includes compensation expense for employees involved with production and distribution, freight, and indirect overhead
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costs, as well as third-party royalties payable on net product revenue. Cost of sales may also include excess or obsolete inventory
adjustment charges, abnormal costs, unabsorbed manufacturing and overhead costs, and manufacturing variances.
Research and Development Expenses
Research and development costs are charged to expense as incurred and include, but are not limited to:
•
•
•
•
•
employee-related expenses, including salaries, benefits, travel and stock-based compensation expense;
expenses incurred under agreements with CROs, CMOs and consultants that help conduct clinical trials and preclinical
studies;
the cost of acquiring, developing and manufacturing clinical trial materials, including comparator products;
facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of
facilities, insurance and other supplies; and
costs associated with preclinical activities and regulatory operations.
Costs for certain research and development activities, such as clinical trials, are recognized based on various inputs, including an
evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, and other
information provided to us by our vendors based on their actual costs incurred. Payments for these activities are based on the terms of
the individual arrangements, which may differ from the pattern of costs incurred, and are accordingly reflected in our financial
statements as prepaid or accrued research and development costs.
Selling, General and Administrative Expenses
Selling, general and administrative costs are charged to expense as incurred and consist primarily of salaries, benefits, travel,
and other related costs, including stock-based compensation, for personnel in executive, finance, commercial and administrative
functions. Other significant costs include facility costs not otherwise included in research and development expenses, legal fees
relating to patent and corporate matters and fees for accounting and consulting services.
Accounting for Stock-Based Compensation
We grant stock-based awards to employees and non-employees, including stock options, restricted stock units, and shares issued
under our employee stock purchase plan (“ESPP”). We account for all stock-based awards at their fair value as of the grant date and
recognize compensation expense on the consolidated statements of operations on a straight-line basis over the vesting period of the
award. We use the Black-Scholes option pricing model to determine the fair value of stock options as of the grant date. The fair value
of restricted stock units is the quoted closing market price per share on the grant date. Forfeitures are recognized as they occur.
Foreign Currency Transactions
The functional currency of our subsidiaries in Germany and Israel are the Euro and Shekel, respectively. Foreign currency
transaction gains and losses are recorded on the consolidated statements of operations and were immaterial for the years ended
December 31, 2022, 2021 and 2020.
Income Taxes
We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined
based on the difference between the financial reporting and the tax reporting basis of assets and liabilities and are measured using the
enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. We provide a valuation
allowance against deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets
will be realized. We have evaluated available evidence and concluded that we may not realize the benefit of our deferred tax assets;
therefore, a valuation allowance has been established for the full amount of the net deferred tax assets. We recognize interest and/or
penalties related to income tax matters in income tax expense. Our state tax provision pertains to income generated by our KPSC
entity. Our foreign tax provision pertains to foreign income taxes due by our German and Israel subsidiaries, both of which operate on
a cost-plus profit margin basis.
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Net Loss Per Share
Basic and diluted net loss per common share is calculated by dividing net loss by the weighted-average number of common
shares outstanding for the periods. Diluted net loss per share is computed by dividing the diluted net loss by the weighted average
number of common shares, 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 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 share due to their anti-
dilutive effect (in thousands):
Outstanding stock options
Unvested restricted stock units
2022
13,026
3,403
As of December 31,
2021
12,178
2,301
2020
11,276
1,674
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 “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 share during the years ended December 31, 2022, 2021 and 2020.
As discussed further in Note 8, “Stockholders’ Equity”, on December 5, 2022, we issued warrants to purchase up to 9,537,563
shares of common stock. The warrants were excluded from the calculation of basic and diluted net loss per share during the year
ended December 31, 2022 as the warrant holders do not have an obligation to share in our losses.
Comprehensive Loss
Comprehensive loss consists of net loss and certain changes in stockholders' deficit that are excluded from net loss, which
currently consists of unrealized gains and losses on investments and foreign currency translation adjustments.
3. Product Revenue
To date, our only source of product revenue has been from the U.S. sales of XPOVIO. The following table summarizes activity
in each of the product revenue allowance and reserve categories (in thousands):
Beginning balance at January 1, 2020
Provision related to sales in the current year
Credits or payments made
Ending balance at December 31, 2020
Provision (reversal) related to sales in the current year
Credits or payments made
Ending balance at December 31, 2021
Provision related to sales in the current year
Credits or payments made
Ending balance at December 31, 2022
Discounts and
Chargebacks
Fees, Rebates,
and Other
Incentives
Returns
Total
$
$
1,002
9,754
(8,677)
2,079
13,546
(13,714)
1,911
17,920
(16,966)
2,865
$
$
1,819
4,263
(3,889)
2,193
7,849
(7,736)
2,306
9,979
(8,551)
3,734
$
$
234
435
—
669
(235)
(90)
344
219
(21)
542
$
$
3,055
14,452
(12,566)
4,941
21,160
(21,540)
4,561
28,118
(25,538)
7,141
Discounts and chargebacks are recorded as reductions of accounts receivable, and returns, fees, rebates, and other incentives are
recorded as a component of accrued expenses.
As of December 31, 2022 and 2021, net product revenue of $23.6 million and $20.0 million, respectively, was included in
accounts receivable, net.
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4. Inventory
The following table presents our inventory (in thousands), all of which was related to XPOVIO:
Raw materials
Work in process
Finished goods
Total inventory
As of December 31,
2022
2021
$
$
1,370
1,878
976
4,224
$
$
1,797
1,895
414
4,106
XPOVIO was initially approved by the FDA in July 2019 at which time we began to capitalize costs to manufacture XPOVIO.
Prior to FDA approval of XPOVIO, all costs related to the manufacturing of XPOVIO and related material were charged to research
and development expense in the period incurred.
5. License and Asset Purchase Agreements
The following license and asset purchase agreements affected the consolidated financial statements during the years ended
December 31, 2022, 2021 and 2020:
Antengene License Agreement
In May 2020, we entered into an amendment to our May 2018 license agreement (the “Original Antengene Agreement” and, as
amended, the “Amended Antengene Agreement”) with Antengene Therapeutics Limited, a corporation organized and existing under
the laws of Hong Kong (“Antengene”) and a subsidiary of Antengene Corporation Co. Ltd., a corporation organized and existing
under the laws of the People’s Republic of China, pursuant to which we expanded the territory licensed to Antengene in the Original
Antengene Agreement for the exclusive development and commercialization rights of selinexor, eltanexor and KPT-9274, each for the
diagnosis, treatment and/or prevention of all human oncology indications, as well as verdinexor for the diagnosis, treatment and/or
prevention of certain human non-oncology indications (“Antengene Licensed Compounds”).
Under the terms of the Amended Antengene Agreement, Antengene has the exclusive development and commercialization
rights for the Antengene Licensed Compounds in mainland China, Taiwan, Hong Kong, Macau, South Korea, Brunei, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, Australia and New Zealand (the “Antengene
Territory”). Under the terms of the Original Antengene Agreement, we received an upfront cash payment of $11.7 million in 2018 and
in June 2020 we received a one-time upfront cash payment of $11.7 million in connection with the Amended Antengene Agreement.
We are also entitled to future milestone payments from Antengene if certain development, regulatory and commercialization goals are
achieved. Finally, we are also eligible to receive tiered double-digit royalties based on future net sales of selinexor and eltanexor, and
tiered single- to double-digit royalties based on future net sales of verdinexor and KPT-9274 in the Antengene Territory. In addition,
upon Antengene’s election and the parties’ full execution of a manufacturing technology transfer plan and satisfaction of other
specified conditions for each Licensed Compound (the “Antengene Manufacturing Election”), we will grant to Antengene non-
exclusive rights to manufacture the requested Antengene Licensed Compounds and products containing such compounds in or outside
of the Antengene Territory solely for development and commercialization in the fields in the Antengene Territory.
As part of the Amended Antengene Agreement, Antengene also has the right to participate in global clinical studies of the
Antengene Licensed Compounds and will bear the cost and expense for patients enrolled in such global clinical studies in the
Antengene Territory. Antengene is responsible for seeking regulatory and marketing approvals for the Antengene Licensed
Compounds in the Antengene Territory, as well as any development of the products specifically necessary to obtain such approvals.
Antengene is also responsible for the commercialization of the Antengene Licensed Compounds in the Oncology Field and Non-
Oncology Field, as applicable, in the Antengene Territory at its own cost and expense. Until such time as Antengene elects to
manufacture its own drug substance, we will furnish clinical supplies of drug substance to Antengene for use in Antengene’s
development efforts pursuant to a clinical supply agreement between us and Antengene, and Antengene's commercial supplies of drug
product pursuant to a commercial supply agreement between us and Antengene, in each case the costs of which will be borne by
Antengene.
The Amended Antengene Agreement will continue in effect on a product-by-product, country-by-country basis until the later of
the tenth anniversary of the first commercial sale of the applicable product in such country or the expiration of specified patent
protection and regulatory exclusivity periods for the applicable product in such country. However, the Amended Antengene
Agreement may be terminated earlier by (i) either party for breach of the Amended Antengene Agreement by the other party or in the
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event of the insolvency or bankruptcy of the other party, (ii) Antengene on a product-by-product basis for certain safety reasons or on
a product-by-product, country-by-country basis for any reason with 180 days prior notice or (iii) us in the event Antengene challenges
or assists with a challenge to certain of our patent rights.
We assessed the Amended Antengene Agreement and concluded that the amendment was a contract modification. We further
concluded that the performance obligations under the Amended Antengene Agreement were the same performance obligations
identified in the Original Antengene Agreement, including the following material promises under the contract: (i) exclusive licenses
for each Antengene Licensed Compound; (ii) initial data transfers for each Antengene Licensed Compound, which consisted of
regulatory data compiled by us for the Antengene Licensed Compounds as of May 2018 (the “Antengene Effective Date”); and (iii)
obligations to stand-ready to provide an initial clinical supply for each Antengene Licensed Compound.
We also identified immaterial promises under the contract relating to information exchanges and participation on operating
committees and other working groups. Separately, we also identified certain customer options that would create an obligation for us if
exercised by Antengene, including (i) additional data transfers for each Antengene Licensed Compound, which would consist of the
transfer of additional regulatory data compiled by us for each Antengene Licensed Compound after the Antengene Effective Date; (ii)
obligations to provide additional clinical supply and related substance supply for each Antengene Licensed Compound upon request
by Antengene; (iii) manufacturing technology transfers and licenses for each Antengene Licensed Compound under the Antengene
Manufacturing Election, as detailed above; and (iv) options for a backup compound, which represents Antengene’s option to select a
replacement compound in the event it elects to discontinue the development of the Antengene Licensed Compounds (the “Antengene
Transfer Options”). The Antengene Transfer Options individually represent material rights, as they were offered at a significant and
incremental discount. Therefore, they were further assessed as performance obligations under the Amended Antengene Agreement.
Finally, we also identified certain other customer options that create a manufacturing obligation for us, including for commercial
supply. These options do not represent a material right, as they are not offered at a significant and incremental discount.
In further evaluating the promises detailed above, we determined that the exclusive licenses, initial data transfers, and stand-
ready obligation to provide initial clinical supply for each Antengene Licensed Compound were not distinct from one another, and
must be combined as four separate performance obligations (the “Antengene Combined License Obligation for selinexor,”
“Antengene Combined License Obligation for eltanexor,” “Antengene Combined License Obligation for KPT-9274” and “Antengene
Combined License Obligation for verdinexor”). This is because, for each Antengene Licensed Compound, Antengene requires the
initial data transfer and initial clinical supply to derive benefit from the exclusive licenses, since we did not grant manufacturing
licenses to any of the Antengene Licensed Compounds at contract inception. We also determined that each of the Antengene Transfer
Options represents a distinct performance obligation. Based on these determinations, we identified eight performance obligations at
the inception of the Antengene License Agreement, including (i) the Antengene Combined License Obligation for selinexor; (ii) the
Antengene Combined License Obligation for eltanexor; (iii) the Antengene Combined License Obligation for KPT-9274; (iv) the
Antengene Combined License Obligation for verdinexor; and the four components of the Antengene Transfer Options, including (v)
the material right for additional data transfer; (vi) the material right for additional clinical supply and related substance supply; (vii)
the material right for manufacturing technology transfer and license; and (viii) the material right for the option for a backup
compound.
We further determined that the up-front payment of $11.7 million, received upon execution of the Original Antengene
Agreement, constituted the entirety of the consideration included in the transaction price at contract inception, which was allocated to
the performance obligations based on their relative standalone selling prices. We determined that substantially all of the total
standalone selling price in the arrangement was derived from the four Antengene Combined License Obligations for selinexor,
eltanexor, KPT-9274 and verdinexor. In connection therewith, we also estimated the standalone selling price for each of the material
rights within the Antengene Transfer Options, and determined that such amounts were insignificant, and, therefore, immaterial for
purposes of allocation. Accordingly, we allocated the $11.7 million transaction price among the Antengene Combined License
Obligations as follows: $9.4 million for selinexor, $1.1 million for eltanexor, $1.0 million for KPT-9274, and $0.2 million for
verdinexor. We believe that a change in the assumptions used to determine our best estimate of the standalone selling prices for any of
the identified performance obligations would not have a significant effect on the allocation of the underlying transaction price to the
performance obligations.
Under the Original Antengene Agreement, we had already fulfilled all of our promises under the combined performance
obligations for selinexor and KPT-9274 as of the effective date of the Amended Antengene Agreement. We recognized $1.0 million
under the Original Antengene Agreement during the first quarter of 2020 and had recognized $9.4 million under the Original
Antengene Agreement in 2019. Accordingly, the licenses to the incremental territories for selinexor and KPT-9274 were considered
distinct from the promised goods and services already provided. By contrast, we had not yet fulfilled all of our promises under the
combined performance obligations for eltanexor and verdinexor under the Original Antengene Agreement as of the effective date of
the Amended Antengene Agreement. Accordingly, the licenses to the incremental territories for eltanexor and verdinexor are not
distinct from promised goods and services already provided.
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Based on the conclusions noted above, we updated the transaction price, which included the $1.3 million unrecognized deferred
revenue from the $11.7 million upfront payment we received from Antengene under the terms of the Original Antengene Agreement,
and the $11.7 million upfront payment we received from Antengene under the terms of the Amended Antengene Agreement, and
allocated the total, or $13.0 million, to the remaining performance obligations based on their estimated standalone selling prices as of
the effective date of the Amended Antengene Agreement. Since we had already fulfilled all of our promises under the combined
performance obligations for selinexor and KPT-9274 as of the effective date of the Amended Antengene Agreement, we recognized a
cumulative adjustment to license revenue of $12.7 million during the year ended December 31, 2020. We recognized $0.3 million in
revenue when initial clinical supply of eltanexor was delivered to Antengene during the year ended December 31, 2021. For the
remaining promises to be fulfilled under the combined performance obligation for verdinexor, none of the transaction price was
allocated thereto, as it was assessed as immaterial in comparison to the other combined performance obligations under the Amended
Antengene Agreement.
All development and regulatory milestones, which represent variable consideration, will be evaluated each reporting period and
included in the transaction price if the milestone is considered likely of achievement and if it is probable that a significant revenue
reversal will not occur in future periods. Milestones included in the transaction price will be fully recognized in revenue in the same
reporting period because all performance obligations that received an allocation of the transaction price were fully satisfied as
December 31, 2021.
Any consideration related to sales-based milestones, as well as royalties on net sales upon commercialization of XPOVIO by
Antengene, will be recognized when the related sales occur, as they were determined to relate predominantly to the intellectual
property licenses granted to Antengene.
Menarini License Agreement
In December 2021, we entered into a license agreement (the “Menarini Agreement”) with Berlin-Chemie AG, an affiliate of the
Menarini Group (“Menarini”), pursuant to which we granted Menarini a non-exclusive license to develop, and an exclusive license to
commercialize, products containing selinexor (the “Product”), for all human oncology indications in the European Economic Area,
United Kingdom, Switzerland, Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan,
Uzbekistan, Ukraine, Turkey, Mexico, all Central America countries and all South America countries (collectively, the “Menarini
Territory”). In addition, we granted to Menarini a non-exclusive license to package and label the Product in or outside of the Menarini
Territory for all human oncology indications solely to enable Menarini to commercialize the Product within the Menarini Territory.
Under the terms of the Menarini Agreement, we will use commercially reasonable efforts to develop the Product, transfer any
marketing approval or authorization with respect to the Product in the Menarini Territory to Menarini and to complete any post-
marketing approval or authorization studies required by a regulatory authority as a condition of maintaining the approval in any
country in the Menarini Territory. Menarini is obligated to use commercially reasonable efforts to apply for and obtain marketing
approval or authorization of the Product, and to obtain price or reimbursement approval for the Product after approval of the relevant
marketing approval or authorization, in each country of the Menarini Territory in each indication for which we have conducted a
registrational clinical trial. Menarini is also obligated to use commercially reasonable efforts at its sole cost and expense to launch and
commercialize the Product in each country of the Menarini Territory in each indication for which we have conducted a registrational
clinical trial.
We received an upfront cash payment of $75.0 million in December 2021 and are entitled to receive up to $202.5 million in
milestone payments from Menarini if certain development and sales performance milestones are achieved. We are further eligible to
receive tiered royalties ranging from the mid-teens to mid-twenties based on future net sales of the Product in the Menarini Territory.
The payments owed by Menarini to us are subject to reduction in specified circumstances. Menarini will reimburse us for 25% of all
documented expenses we incur for the global development of the Product during 2022 through 2025, provided that such
reimbursements shall not exceed $15.0 million per calendar year. These amounts represent variable consideration and will be
recognized as earned.
The Menarini Agreement will continue in effect on a country-by-country basis until the last to occur among: (i) the fifteenth
anniversary of the first commercial sale of the Product in the applicable country, (ii) the expiration of the last-to-expire of the licensed
patent rights in the applicable country or (iii) the expiration of any regulatory exclusivity protection covering the Product in such
country. However, the Menarini Agreement may be terminated earlier by either party for (i) an uncured material breach of the
Menarini Agreement by the other party (A) on a country-by-country basis with respect to the country to which the breach does not
affect the Menarini Agreement as a whole or (B) in its entirety if the breach affects the Menarini Agreement as a whole, or (ii) in the
event of the insolvency or bankruptcy of the other party. We may also terminate the Menarini Agreement for certain patent challenges
by Menarini.
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We assessed this arrangement and concluded that the contract counterparty, Menarini, is a customer. We identified the following
material promises in the arrangement: the granting of a non-exclusive license to develop, and an exclusive license to commercialize,
product and label the Product, as well as the initial transfer of know-how and information to Menarini. We also identified immaterial
promises under the contract relating to information exchanges and participation on operating committees and other working groups
that were not deemed performance obligations. As for the supply of the Product, the Menarini Agreement provides that we will supply
to Menarini, and Menarini will purchase from us, all required quantities of Product for the Menarini Territory in accordance with a
supply agreement separately entered into by and between us and Menarini in 2022 (the “Supply Agreement”). We determined that the
promise of the Supply Agreement was not a performance obligation at the outset of the arrangement as the rate charged for the
Product was not at a significant and incremental discount and therefore did not represent a material right. We then determined that the
granting of the license and the initial transfer of know-how were not distinct from one another and must be combined as a performance
obligation (the “Combined Performance Obligation”). Based on these determinations, we identified one distinct performance
obligation at the inception of the contract: the Combined Performance Obligation. We further determined that the up-front payment of
$75.0 million constituted the entirety of the consideration included in the transaction price at contract inception, which was allocated
to the Combined Performance Obligation. The Combined Performance Obligation was fully satisfied as of December 31, 2021.
All development and regulatory milestones, which represent variable consideration, will be evaluated each reporting period and
included in the transaction price if the milestone is considered likely of achievement and if it is probable that a significant revenue
reversal will not occur in future periods. Milestones included in the transaction price will be fully recognized in revenue in the same
reporting period because the Combined Performance Obligation was fully satisfied as of December 31, 2021.
Any consideration related to sales-based milestones, as well as royalties on net sales upon commercialization by Menarini, will
be recognized when the related sales occur, as they were determined to relate predominantly to the intellectual property licenses
granted to Menarini.
FORUS Therapeutics Inc. Distribution Agreement
In December 2020, we entered into an exclusive distribution agreement (the “FORUS Agreement”) for the commercialization of
XPOVIO in Canada with FORUS Therapeutics Inc. (“FORUS”). Under the terms of the FORUS Agreement, we granted exclusive
rights to FORUS as our sole and exclusive distributor of selinexor within Canada. Pursuant to the terms of the FORUS Agreement, we
received an upfront payment of $5.0 million in the fourth quarter of 2020. We are also eligible to receive additional payments if
certain prespecified regulatory and commercial milestones are achieved by FORUS, as well as double-digit royalties on future net
sales of XPOVIO in Canada. We have retained the exclusive production rights and will supply finished products to FORUS for
commercial use in Canada.
We assessed the FORUS Agreement and concluded that the contract counterparty, FORUS, is a customer. We identified the
following material promises under the contract: (i) transfer of exclusive rights to distribute XPOVIO in Canada; and (ii) initial data
transfer, which consisted of development and regulatory data compiled by us.
We also identified immaterial promises under the contract relating to ongoing regulatory cooperation from us in order to support
FORUS in the regulatory approval process. Separately, we also identified a customer option, which is our obligation to provide
commercial supply to FORUS throughout the term of the FORUS Agreement. This option does not represent a material right, as it is
not offered at a significant and incremental discount.
In further evaluating the promises detailed above, we determined that the exclusive license and initial data transfer were not
distinct from one another, and must be combined as a single, distinct performance obligation. We further determined that the up-front
payment of $5.0 million, received upon execution of the FORUS Agreement, constituted the entirety of the consideration included in
the transaction price at contract inception, which we allocated to the performance obligation. During 2020, we recognized $5.0 million
in revenue under the FORUS Agreement, as the performance obligation was satisfied when the initial data transfer was delivered
during the fourth quarter of 2020.
The regulatory milestones, which represent variable consideration, are evaluated each reporting period and are included in the
transaction price if the milestone is considered likely of achievement and if it is probable that a significant revenue reversal will not
occur in future periods. Once included in the transaction price, the milestone will be fully recognized in revenue in the same reporting
period because the performance obligation that received an allocation of the transaction price was fully satisfied as of December 31,
2020.
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Any consideration related to commercial milestones, as well as royalties on net sales upon commercialization of XPOVIO by
FORUS, will be recognized when the related sales occur, as they were determined to relate predominantly to the intellectual property
licenses granted to FORUS.
Neumedicines Asset Purchase Agreement
In November 2020, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Neumedicines Inc.
(“Neumedicines”). Pursuant to the Asset Purchase Agreement, we agreed to acquire certain clinical-stage assets from Neumedicines,
including a proprietary recombinant human interleukin 12 (“Il-12”). The acquisition closed in July 2021 (the “Closing”), having a total
value of approximately $7.4 million. We paid $0.5 million in cash during the year ended December 31, 2020, and at the time of
closing, paid $5.5 million in cash and issued 150,000 shares of our common stock to Neumedicines. Further, we will owe
Neumedicines up to $65.0 million in royalty payments on net product sales of the acquired IL-12 asset (“KPT-1200”) and an
additional 75,000 shares of our common stock as well as other contingent and variable cash payments upon the satisfaction of certain
development and regulatory milestones. The $7.4 million of consideration was recorded as research and development expense for the
year ended December 31, 2021. The $5.5 million cash portion of the consideration paid at the time of closing was recorded as an
investing activity on the consolidated statement of cash flows for the year ended December 31, 2021. Contemporaneously with the
Closing, we entered into a license agreement with Libo Pharma Corp. (“Libo”) under which we granted to Libo an exclusive license to
manufacture, develop and commercialize IL-12 products in certain countries in Asia, Africa and Oceania.
Summary of License and Other Revenue
The following table presents information about our license and other revenue (in thousands):
Antengene
Menarini
Other
Total license and other revenue
2022
For the Years Ended December 31,
2021
2020
$
$
13,353
15,672
7,604
36,629
$
$
30,429
75,000
5,954
111,383
$
$
23,749
—
8,126
31,875
During the year ended December 31, 2022, we recognized (i) $7.8 million of milestone-related revenue, $3.8 million of royalty
revenue, and $1.8 million of other reimbursement revenue from Antengene; (ii) $15.0 million of revenue for the reimbursement of
development related expenses, $0.3 million of royalty revenue, and $0.4 million of other reimbursement revenue from Menarini; (iii)
$5.2 million of royalty revenue and $1.5 million of milestone revenue under the FORUS Agreement; and (iv) $0.8 million of
milestone-related revenue from our other partners.
During the year ended December 31, 2021, we recognized $29.3 million of milestone-related revenue, $0.8 million of royalty
revenue, and $0.3 million of other revenue from Antengene. We also recognized $75.0 million of revenue related to the upfront payment
we received from Menarini and $6.0 million of other revenue.
During the year ended December 31, 2020, we recognized $13.7 million of revenue related to upfront payments, $9.8 million of
milestone-related revenue, and $0.2 million of other revenue from Antengene. We also recognized $5.0 million in revenue under the
FORUS Agreement and $3.1 million of other revenue.
License and other revenue of $22.5 million and $2.5 million were included in accounts receivable, net at December 31, 2022
and 2021, respectively. License and other revenue of $7.8 million and $1.4 million were included in other current assets at
December 31, 2022 and 2021, respectively. There was no license and other revenue in other long-term assets at December 31, 2022.
License and other revenue of $19.5 million were included in other long-term assets at December 31, 2021.
6. 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 December 31, 2022 and 2021.
Items classified as Level 2 consist of corporate debt securities, commercial paper, and U.S. government and agency securities.
We estimate the fair values 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
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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 we entered into with
HCR in September 2019 and amended in June 2021 (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
consolidated balance sheet. 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 (expense) income, net on the 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
Financial assets
Cash equivalents:
Money market funds
Commercial paper
Investments:
Corporate debt securities
Commercial paper
U.S. government and agency securities
Financial liability
Embedded derivative liability
Description
Financial assets
Cash equivalents:
Money market funds
U.S. government and agency securities
Commercial paper
Investments:
Corporate debt securities
Commercial paper
U.S. government and agency securities
Financial liability
Embedded derivative liability
Quoted
Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
As of
December 31, 2022
115,498
—
—
—
—
115,498
$
$
— $
7,629
78,143
43,914
20,722
150,408
$
—
—
—
—
—
—
— $
— $
2,800
Quoted
Prices
in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
32,947
12,000
—
—
—
—
44,947
$
$
— $
—
11,998
24,269
12,995
892
50,154
$
—
—
—
—
—
—
—
— $
— $
3,080
$
$
$
$
$
$
$
$
$
$
$
$
115,498
7,629
78,143
43,914
20,722
265,906
2,800
As of December
31, 2021
32,947
12,000
11,998
24,269
12,995
892
95,101
3,080
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The following table sets forth a summary of the changes in the estimated fair value of our embedded derivative liability (in
thousands):
Balance as of December 31, 2020
Change in fair value
Addition of value as a result of Amended Revenue Interest Agreement
Balance as of December 31, 2021
Change in fair value
Balance as of December 31, 2022
Embedded
Derivative
Liability
1,800
(90)
1,370
3,080
(280)
2,800
$
$
7. Investments
The following table summarizes our investments in debt securities, classified as available-for-sale (in thousands):
Corporate debt securities
Commercial paper
U.S. government and agency securities
Total
Corporate debt securities
Commercial paper
U.S. government and agency securities
Total
Amortized
Cost
78,411
43,944
20,768
143,123
Amortized
Cost
24,272
12,998
891
38,161
$
$
$
$
$
$
$
$
As of December 31, 2022
Total
Unrealized
Gains
Total
Unrealized
Loss
3
1
—
4
$
$
(271) $
(31)
(46)
(348) $
Aggregate
Fair Value
78,143
43,914
20,722
142,779
As of December 31, 2021
Total
Unrealized
Gains
Total
Unrealized
Loss
3
—
1
4
$
$
Aggregate
Fair Value
24,269
12,995
892
38,156
(6) $
(3)
—
(9) $
At December 31, 2022 and 2021, we held 60 and 10 debt securities, respectively, that were in an unrealized loss position. The
unrealized losses at December 31, 2022 and 2021 were attributable to changes in interest rates and do not represent credit losses. We
do not intend to sell the investments before recovery of their amortized cost bases, which may be at maturity. All our investments
mature within two years from December 31, 2022. The following tables summarize our debt securities in an unrealized loss position
for which an allowance for credit losses has not been recorded, aggregated by major security type and length of time in a continuous
unrealized loss position (in thousands):
Corporate debt securities
Commercial paper
U.S. government and agency securities
Total
Aggregate
Related
Fair Value
$
$
72,820
35,589
20,722
129,131
$
$
Less than 12 Months
Unrealized
Losses
As of December 31, 2022
12 Months or Longer
Aggregate
Related
Fair Value
Unrealized
Losses
Total
Aggregate
Related
Fair Value
Unrealized
Losses
(271) $
(31)
(46)
(348) $
— $
—
—
— $
— $
—
—
— $
72,820
35,589
20,722
129,131
$
$
(271)
(31)
(46)
(348)
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Corporate debt securities
Commercial paper
Total
8. Stockholders’ Equity
Private Placement Offering
Less than 12 Months
Unrealized
Losses
Aggregate
Related
Fair Value
$
$
16,655
9,995
26,650
$
$
As of December 31, 2021
12 Months or Longer
Aggregate
Related
Fair Value
Unrealized
Losses
Total
Aggregate
Related
Fair Value
Unrealized
Losses
(6) $
(3)
(9) $
— $
—
— $
— $
—
— $
16,655
9,995
26,650
$
$
(6)
(3)
(9)
On December 5, 2022, we entered into a securities purchase agreement with certain institutional investors pursuant to which we
issued and sold, in a private placement offering of securities, an aggregate of (i) 31,791,908 shares of common stock and (ii)
accompanying warrants to purchase up to 9,537,563 shares of common stock at an exercise price of $6.36 per share. We received
aggregate net proceeds of approximately $154.7 million. The warrants are exercisable at any time between December 7, 2022 and
December 7, 2027.
Underwritten Offering
On March 6, 2020, we completed a follow-on offering under our shelf registration statement on Form S-3 pursuant to which we
issued an aggregate of 7,187,500 shares of common stock, which included the full exercise of the underwriters’ option to purchase
additional shares, at a public offering price of $24.00 per share. We received aggregate net proceeds of approximately $161.8 million
from the offering after deducting the underwriting discounts and commissions and other offering expenses.
Open Market Sale Agreement
On August 17, 2018, we entered into an Open Market Sale Agreement (the “2018 Open Market Sale Agreement”) with Jefferies
LLC, as agent (“Jefferies”), pursuant to which we may issue and sell shares of our common stock having an aggregate offering price
of up to $75.0 million from time to time through Jefferies (the “Open Market Offering”). On May 5, 2020, we entered into
Amendment No. 1 to the 2018 Open Market Sale Agreement, pursuant to which we increased the maximum aggregate offering price
of shares of our common stock that we may issue and sell from time to time through Jefferies, by $100.0 million, from $75.0 million
to up to $175.0 million (the “Open Market Shares”).
During the years ended December 31, 2022 and 2021, we sold an aggregate of 3,991,652 and 638,341 Open Market Shares,
respectively, under the 2018 Open Market Sale Agreement, for net proceeds of approximately $35.1 million and $9.9 million,
respectively. During the year ended December 31, 2020, we did not sell any shares under the 2018 Open Market Sale Agreement. As
of December 31, 2022, $64.0 million of Open Market Shares remained available for issuance under the 2018 Open Market Sale
Agreement.
On February 17, 2023, we entered into an Open Market Sale Agreement (the “2023 Open Market Sale Agreement”) with
Jefferies, as agent. 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. 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.
Upon entry into the 2023 Open Market Sale Agreement, the 2018 Open Market Sale Agreement was terminated.
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9. Stock-based Compensation
On May 19, 2022, our stockholders approved the 2022 Equity Incentive Plan (the “2022 Plan”), succeeding our 2013 Stock
Incentive Plan (the “2013 Plan”), which has expired and under which no further grants may be made. Under the terms of the 2022
Plan, 2013 Plan and the 2010 Stock Incentive Plan, which was replaced by the 2013 Plan, we granted stock options and restricted
stock units (“RSUs”) to our employees, officers, directors, consultants and advisors. Stock options have a ten-year term and an
exercise price equal to the fair market value of a share of our common stock on the grant date. Stock options vest over four years with
25% vesting on the one-year anniversary of the grant date and the remainder vesting in equal monthly installments thereafter. The
RSUs generally vest in four equal annual installments beginning on the first anniversary of the grant date.
The 2022 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock
awards, RSU awards and other stock-based awards. The number of shares of common stock reserved for issuance under the 2022 Plan
is equal to the sum of: (i) 4,100,000 shares; and (ii) such additional number of shares (up to 14,231,243) as is equal to the sum of (x)
the number of shares of common stock under the 2013 Plan that remained available for grant under the 2013 Plan immediately prior to
May 19, 2022 and (y) the number of shares of common stock subject to awards granted under the 2013 Plan that are outstanding as of
such date which awards expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by us at their original
issuance price pursuant to a contractual repurchase right. As of December 31, 2022, there were 5,632,984 shares available for future
grants under the 2022 Plan.
During 2022, 2021, and 2020, we also granted stock options and RSUs through inducement grants outside of our stockholder
approved equity compensation plans as permitted under the Nasdaq Stock Market listing rules to certain employees to induce them to
accept employment with us (collectively, “Inducement Awards”). In February 2022, our Board approved the 2022 Inducement Stock
Incentive Plan (the “2022 Inducement Plan”) under which 850,000 shares of common stock were initially reserved for issuance for
inducement awards to be granted to newly hired full-time employees. In May 2022, the Board amended the 2022 Inducement Plan to
increase the total number of shares reserved for issuance under the 2022 Inducement Plan to 1,700,000. We assessed the terms of these
Inducement Awards and determined there was no possibility that we would have to settle these awards in cash and therefore, equity
accounting was applied. As of December 31, 2022, there were 491,300 shares available for future grants under the 2022 Inducement
Plan.
As of December 31, 2022, we had 22,553,468 shares reserved for issuance, which includes shares available for future grants and
outstanding stock options and RSUs under the 2010 Plan, 2013 Plan, 2022 Plan, and Inducement Awards (including the Inducement
Awards granted under the 2022 Inducement Plan).
During the year ended December 31, 2022, we accelerated the vesting and extended the exercise date of certain stock-based
awards granted to our former Chief Executive Officer and former Chief Scientific Officer in connection with their departure from the
Company in May 2022. These modifications resulted in the recognition of incremental stock-based compensation expense of $7.4
million.
Stock-based Compensation Expense
In connection with all stock-based payment awards, total stock-based compensation expense recognized was as follows (in
thousands):
Cost of sales
Research and development
Selling, general and administrative
Total
2022
For the Years Ended December 31,
2021
2020
226
14,351
20,822
35,399
$
$
154
11,842
17,787
29,783
$
$
126
10,215
14,066
24,407
$
$
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The total stock-based compensation expense recognized by award type was as follows (in thousands):
Options
RSUs
ESPP
Total
Stock Options
2022
For the Years Ended December 31,
2021
2020
$
$
21,513
12,587
1,299
35,399
$
$
19,288
9,348
1,147
29,783
$
$
16,976
6,017
1,414
24,407
The following table summarizes stock option activity related to the 2010 Plan, 2013 Plan, 2022 Plan, and Inducement Awards
(including the stock option Inducement Awards granted under the 2022 Inducement Plan):
Options outstanding at December 31, 2021
Granted
Exercised
Forfeited
Options outstanding at December 31, 2022
Options exercisable at December 31, 2022
Weighted-
Average
Exercise
Price
12.69
8.52
7.66
14.97
11.46
12.44
Options
$
12,177,700
3,074,445
$
(218,906) $
(2,006,880) $
$
13,026,359
$
8,484,449
Weighted-
Average
Remaining
Contractual
Term (years)
Aggregate
Intrinsic
Value
(in
thousands)
6.6
$
2,289
5.3
3.7
$
$
6
6
The total intrinsic value of stock options exercised for the years ended December 31, 2022, 2021 and 2020 was $0.3 million,
$1.0 million and $9.4 million respectively.
The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The
following table summarizes the assumptions used in calculating the fair value of the stock option awards:
Volatility
Expected term (in years)
Risk-free interest rate
Dividend
2022
79%-81%
5.5-6.1
1.69%-4.23%
—%
For the Years Ended December 31,
2021
76%-78%
5.9-6.1
0.62%-1.35%
—%
2020
78%-82%
6.0
0.30%-1.52%
—%
We use the simplified method to calculate the expected term as our historical exercise data does not provide a reasonable basis
upon which to estimate the expected term. The expected term is applied to the stock option grant group as a whole, as we do not
expect substantially different exercise or post-vesting termination behavior among our employee population. Our expected stock price
volatility assumption is based on the historical volatility of our publicly traded stock. The risk-free interest rate is based on a treasury
instrument whose term is consistent with the expected term of the stock options. We account for forfeitures as they occur.
Using the Black-Scholes option-pricing model, the weighted-average grant date fair values of options granted during the years
ended December 31, 2022, 2021 and 2020 was $5.83, $7.57 and $12.17 per share, respectively.
At December 31, 2022, there was $25.6 million of unrecognized compensation related to unvested stock option awards, which
are expected to be recognized over a weighted-average period of 2.6 years.
Restricted Stock Units
A RSU represents the right to receive one share of our common stock upon vesting of the RSU. The fair value of each RSU is
based on the closing price of our common stock on the date of grant. We grant RSUs with service conditions that vest in two or four
equal annual installments provided that the employee remains employed with us on the vesting date.
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The following is a summary of RSU activity for the 2010 Plan, 2013 Plan, 2022 Plan, and Inducement Awards (including the
RSU Inducement Awards granted under the 2022 Inducement Plan):
Unvested at December 31, 2021
Granted
Forfeited
Vested
Unvested at December 31, 2022
Number of
Shares
Underlying
RSUs
Weighted
-Average
Grant Date
Fair Value
2,300,649
2,782,806
(722,902)
(957,728)
3,402,825
$
$
$
$
$
13.92
9.05
12.36
13.62
10.35
As of December 31, 2022, there was $26.2 million of unrecognized compensation costs related to unvested RSUs, which are
expected to be recognized over a weighted-average period of 2.7 years.
Employee Stock Purchase Plan
We have an ESPP that permits eligible employees to enroll in six-month offering periods. Participants may purchase shares of
our common stock, through payroll deductions, at a price equal to 85% of the fair market value of the common stock on the first or
last day of the applicable six-month offering period, whichever is lower. Purchase dates under the ESPP occur on or about May 1 and
November 1 each year. In 2013, our stockholders approved an increase in the number of shares of common stock authorized for
issuance pursuant to the ESPP to 242,424 shares of common stock, plus an annual increase to be added on the first day of each fiscal
year, commencing on January 1, 2015 and ending on December 31, 2023, equal to the lesser of 484,848 shares of our common stock,
1% of the number of outstanding shares on such date, or an amount determined by the Board. As of December 31, 2022, 286,152
shares of our common stock remained available for issuance under the ESPP.
During the years ended December 31, 2022, 2021 and 2020, $2.3 million, $2.0 million and $2.9 million, respectively, was
withheld from employees, on an after-tax basis, in order to purchase 508,391, 330,257 and 249,228 shares of our common stock,
respectively. As of December 31, 2022, there was $0.4 million of total unrecognized stock-based compensation expense related to the
ESPP. The expense is expected to be recognized over a period of four months.
The fair value of the option component of the shares purchased under the ESPP was estimated using the Black-Scholes option-
pricing model with the following weighted-average assumptions:
Volatility
Expected term (in years)
Risk-free interest rate
Dividend
10. Long-Term Obligations
3.00% Convertible Senior Notes due 2025
2022
68%-131%
0.5
0.06%-4.58%
—%
For the Years Ended December 31,
2021
58%-68%
0.5
0.03%-0.06%
—%
2020
58%-110%
0.5
0.11%-0.12%
—%
On October 16, 2018, we completed an offering of $150.0 million aggregate principal amount of our 3.00% convertible senior
notes due 2025. In addition, on October 26, 2018, we issued an additional $22.5 million aggregate principal amount of the Notes
pursuant to the full exercise of the option to purchase additional Notes granted to the initial purchasers in the offering. The Notes were
sold in a private offering to qualified institutional buyers in reliance on Rule 144A under the Securities Act. In accordance with
accounting guidance for debt with conversion and other options, we separately accounted for the liability component (“Liability
Component”) and the embedded conversion option (“Equity Component”) of the Notes by allocating the proceeds between the
Liability Component and the Equity Component, due to our ability to settle the Notes in cash, shares of our common stock or a
combination of cash and shares of our common stock, at our option. In connection with the issuance of the Notes, we incurred
approximately $5.6 million of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees, and
allocated these costs between the Liability Component and the Equity Component based on the allocation of the proceeds. Of the total
debt issuance costs, $2.2 million was allocated to the Equity Component and recorded as a reduction to additional paid-in capital and
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$3.4 million was allocated to the Liability Component and recorded as a reduction of the Notes. The portion allocated to the Liability
Component is amortized to interest expense using the effective interest method over seven years.
In 2021, upon adoption of ASU 2020-06, we reclassified the Equity Component as of January 1, 2021 and combined it with the
Liability Component of the Notes, increasing the carrying value of our convertible debt by approximately $50.6 million, with a
corresponding decrease to additional paid-in capital of $65.6 million and accumulated deficit of $15.0 million. Our deferred tax
liability related to the Notes also decreased by approximately $11.8 million, with a corresponding increase in the income tax valuation
allowance.
The 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 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. The Notes will be subject to redemption at
our option, on or after October 15, 2022, in whole or in part, if the conditions described below are satisfied. The 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 Notes may be converted at an initial conversion rate of 63.0731 shares of
common stock per $1 principal amount of the Notes (equivalent to an initial conversion price of approximately $15.85 per share of
common stock).
Holders of the Notes may convert all or any portion of their Notes, in multiples of $1 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:
(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 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 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 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 Notes.
As of December 31, 2022, none of the above circumstances had occurred and as such, the Notes could not have been converted.
As of October 15, 2022, we may redeem for cash all or part of the 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 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 Notes as of December 31,
2022.
The outstanding balances of the Notes consisted of the following (in thousands):
Principal
Less: debt issuance costs
Net carrying amount
As of December 31,
2022
2021
$
$
172,500
(2,395)
170,105
$
$
172,500
(3,207)
169,293
We determined the expected life of the Notes was equal to its seven-year term and the effective interest rate was 3.53%. As of
December 31, 2022, the “if-converted value” did not exceed the remaining principal amount of the Notes. The fair value of the Notes
was determined based on data points other than quoted prices that are observable, either directly or indirectly, and has been classified
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as Level 2 within the fair value hierarchy. The fair value of the 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 Notes as of December 31, 2022 and 2021 was
approximately $133.1 million and $139.2 million, respectively.
The following table sets forth total interest expense recognized related to the Notes (in thousands):
Contractual interest expense
Amortization of debt discount
Amortization of debt issuance costs
Total
2022
For the Years Ended December 31,
2021
2020
$
$
5,175
—
812
5,987
$
$
5,175
—
780
5,955
$
$
5,175
7,685
386
13,246
Future minimum payments on the Notes were as follows (in thousands):
Years ended December 31,
2023
2024
2025
Total minimum payments
Less: interest expense and issuance costs
Convertible senior notes
Deferred Royalty Obligation
Future Minimum
Payments
5,175
5,175
177,675
188,025
(17,920)
170,105
$
$
$
In September 2019, we entered into a Revenue Interest Financing Agreement (“the Revenue Interest Agreement”) with HCR. In
June 2021, we, and certain of our subsidiaries, entered into an amendment of the Revenue Interest Agreement (the “Amended
Revenue Interest Agreement”) with, among others, HCR. We received $75.0 million, less certain transaction expenses, upon closing
of the Revenue Interest Agreement (the “First Investment Amount”) and $60.0 million upon closing of the Amended Revenue Interest
Agreement (the “Second Investment Amount” and, together with the First Investment Amount, the “Investment Amount”).
In exchange for the above payments, HCR 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 HCR are capped at 185% of the Investment Amount.
If HCR has not received 100% of the First Investment Amount and 65% of the Second Investment amount by December 31,
2024, 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 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 HCR has received cash payments totaling an
aggregate of 185% of the Investment Amount or (ii) the legal maturity date of October 1, 2031. If HCR has not received payments
equal to 185% of the Investment Amount by the twelve-year anniversary of the initial closing date, we will be required to pay an
amount equal to the Investment Amount plus a specific annual rate of return less payments previously paid to HCR. In the event of a
change of control, we are obligated to pay HCR an amount equal to 185% of the Investment Amount less payments previously paid to
HCR. In addition, upon the occurrence of an event of default, including, among others, our failure to pay any amounts due to HCR,
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 HCR an amount equal to 185% of the Investment Amount less payments previously paid to HCR. In
addition, upon an event of default, HCR may exercise all other rights and remedies available under the Amended Revenue Interest
Agreement, including foreclosing on the collateral that was pledged to HCR, which consists of all of our present and future assets. As
of December 31, 2022, we have made $45.6 million in payments to HCR.
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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 consolidated balance sheets. We have also
determined that the repayment of 185% of the Investment Amount, 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 6,
“Fair Value Measurements” to our consolidated financial statements.
The effective interest rate as of December 31, 2022 was 15%. In connection with the First Investment Amount, we incurred debt
issuance costs totaling $1.4 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 December 31, 2022 and December 31, 2021 was $129.9 million
based on $135.0 million of proceeds, net of the fair value of the bifurcated embedded derivative liability upon execution of the
Revenue Interest Agreement and the Amended Revenue Interest Agreement, and debt issuance costs incurred. The carrying value of
the deferred royalty obligation approximated fair value at December 31, 2022 and 2021 and is based on our current estimates of future
payments to HCR over the life of the arrangement, which are considered Level 3 inputs.
11. Commitments and Contingencies
Operating Leases
We are party to an operating lease of 98,502 square feet of office and research space in Newton, Massachusetts with a term
through September 30, 2025 (the “Newton, MA Lease”). The lease contains a renewal option for an additional five years which was
not included in the lease term as its exercise is not reasonably certain. Pursuant to the Newton, MA Lease, we have provided a security
deposit in the form of a cash-collateralized letter of credit in the amount of $0.6 million which is classified within long-term restricted
cash on the consolidated balance sheets.
The Newton, MA Lease provides for increases in future minimum annual rental payments, as defined in the lease agreement.
The operating lease costs for each of the years ended December 31, 2022, 2021 and 2020 were $2.8 million. Variable lease costs
pertain to reimbursement of certain landlord expenses and were immaterial for each of the years ended December 31, 2022, 2021 and
2020.
In addition, we are party to certain short-term leases having a term of twelve months or less at the commencement date. We
recognize short-term lease expense on a straight-line basis and do not record a related right-of use asset or lease liability for such
leases. These costs were immaterial for the years ended December 31, 2022, 2021 and 2020.
Lease Commitments
As of December 31, 2022, future minimum lease payments under non-cancellable operating lease agreements for which we have
recognized operating lease right-of-use assets and liabilities are as follows (in thousands):
Years ending December 31,
2023
2024
2025
Total minimum lease payments
Less: present value adjustment
Operating lease liabilities
Future
Minimum
Payments
3,718
3,817
2,918
10,453
(1,484)
8,969
$
$
$
As of December 31, 2022, the remaining lease term on the Newton, MA Lease was 2.8 years and the discount rate used to
calculate the operating lease liability was 11%.
Litigation
From time to time we may face legal claims or actions in the normal course of business. There are no outstanding legal claims or
actions as of December 31, 2022.
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12. Accrued Expenses
Accrued expenses consisted of the following (in thousands):
Compensation and employee-related costs
Research and development costs
Interest
Product rebates, discounts, reserves, and royalties
Other
Total accrued expenses
13. Related Party Transactions
As of December 31,
2022
2021
19,625
15,600
11,673
5,110
6,407
58,415
$
$
19,687
15,894
21,978
3,938
7,624
69,121
$
$
We paid consulting expenses of $0.2 million, $0.2 million and $0.3 million for the years ended December 31, 2022, 2021 and
2020, respectively, for consulting services with certain related parties, including a family member of management and a board
member. Amounts due to related parties included in accounts payable and accrued expenses at both December 31, 2022 and 2021
were insignificant.
14. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
Laboratory equipment
Furniture and fixtures
Office and computer equipment
Leasehold improvements
Total property and equipment
Less accumulated depreciation and amortization
Total property and equipment, net
15. 401(k) Plan
Estimated Useful Life
(In Years)
4
5
3
Lesser of useful life
or lease term
As of December 31,
2022
2021
870
654
809
5,451
7,784
(6,645)
1,139
$
$
822
654
772
5,451
7,699
(6,057)
1,642
$
$
We have a 401(k) retirement and profit-sharing plan (the “401(k) Plan”) covering all qualified employees. The 401(k) Plan
allows each participant to contribute a portion of their base wages up to an amount not to exceed an annual statutory maximum.
Effective January 1, 2011, we adopted a Safe Harbor Plan that provides a Company match up to 4% of components of employee
compensation. We contributed a match of $3.1 million, $2.9 million, and $2.9 million to the 401(k) Plan for the years ended
December 31, 2022, 2021 and 2020, respectively.
16. Income Taxes
We recorded an income tax provision of $0.4 million, $0.3 million, and $0.3 million, respectively, for the years ended
December 31, 2022, 2021 and 2020. Our income tax provision pertains to income generated by our KPSC entity, as well as foreign
income taxes due by our German and Israel subsidiaries, both of which operate on a cost-plus profit margin. Our current income tax
provision was almost entirely foreign tax expense for the years ended December 31, 2022 and 2021. The components of our current
income tax provision consisted of $0.1 million in state tax expense and $0.2 million in foreign income tax expense for the year ended
December 31, 2020. We did not have a deferred income tax provision for the years ended December 31, 2022, 2021 and 2020.
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The components of income (loss) before income taxes were as follows (in thousands):
Foreign
U.S.
Total
For the Years Ended December 31,
2021
2020
2022
$
$
$
892
(165,814)
(164,922) $
(30,052) $
(93,768)
(123,820) $
(37,088)
(158,876)
(195,964)
Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and
income tax purposes. The significant components of our deferred tax assets are comprised of the following (in thousands):
Deferred tax assets:
U.S. and state net operating loss carryforwards
Research and development credits
Fixed assets and intangible assets
Stock-based compensation
Accruals and other temporary differences
Interest Expense - Sec 163(j)
Lease liability
Applicable High Yield Discount Obligation Interest
Capitalized research and development
Deferred royalty embedded derivative
Deferred royalty obligation
Unicap - Sec 263A
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Convertible debt amortization
Right-of-use asset
Deferred royalty obligation
Total deferred tax liabilities
Net deferred tax assets
As of December 31,
2022
2021
$
$
189,629
100,436
27,312
13,818
6,613
9,236
2,193
—
27,748
679
1,805
1,214
(379,166)
1,517
(5)
(1,512)
—
(1,517)
$
— $
187,762
88,091
28,268
12,555
5,964
3,704
2,676
2,069
388
720
—
903
(330,902)
2,198
(6)
(1,849)
(343)
(2,198)
—
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 us during 2022 and
resulted in capitalized R&D costs of $131.4 million as of December 31, 2022. We will amortize these costs for tax purposes over 5
years for R&D performed in the U.S. and over 15 years for R&D performed outside the U.S.
We have evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets. Based on our
history of operating losses, we have concluded that it is more likely than not that the benefit of our deferred tax assets will not be
realized. Accordingly, we have provided a full valuation allowance for deferred tax assets as of December 31, 2022, 2021 and 2020.
The valuation allowance increased by approximately $48.3 million during the year ended December 31, 2022 primarily due to
increased capitalization of R&D expenditures in 2022 as required by changes to the tax laws from the TCJA as described above.
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A reconciliation of income tax expense computed at the statutory federal income tax rate to income taxes as reflected in the
financial statements is as follows:
Federal income tax expense at statutory
rate
State income tax, net of federal benefit
Permanent differences
Research and development credit
Foreign rate differential
Change in valuation allowance
Migrated intellectual property
Stock-based compensation and 162m
adjustment
Provision to return adjustments
Other
Effective income tax rate
2022
For the Years Ended December 31,
2021
2020
21.0%
4.0%
(3.3)%
6.3%
—%
(29.3)%
—%
(2.0)%
—%
3.1%
(0.2)%
21.0%
0.8%
(2.7)%
11.3%
(5.2)%
(35.4)%
13.9%
(4.3)%
(0.5)%
0.9%
(0.2)%
21.0%
1.6%
(1.0)%
6.5%
(4.1)%
(25.7)%
2.1%
(0.6)%
0.3%
(0.3)%
(0.2)%
As of December 31, 2022, 2021 and 2020, we had U.S. federal net operating loss carryforwards of approximately $737.4
million, $735.2 million and $698.8 million, respectively, which may be able to offset future income tax liabilities. Of the $737.4
million carryforward as of December 31, 2022, $444.5 million of the carryforward has an indefinite life and $292.9 million will expire
at various dates through 2037. As of December 31, 2022, 2021 and 2020, we had U.S. state net operating loss carryforwards of
approximately $616.4 million, $590.3 million and $575.2 million, respectively, which may be available to offset future state income
tax liabilities and expire at various dates through 2042. As of December 31, 2022, 2021 and 2020, we did not have any foreign net
operating loss carryforwards to offset future foreign income tax liabilities.
As of December 31, 2022, 2021 and 2020, we had federal research and development and orphan drug tax credit carryforwards
of approximately $90.9 million, $80.6 million and $69.8 million, respectively, available to reduce future tax liabilities, which expire at
various dates through 2042. As of December 31, 2022, 2021 and 2020, we had state research and development tax credit
carryforwards of approximately $12.0 million, $9.4 million and $6.8 million, respectively, available to reduce future tax liabilities,
which expire at various dates through 2037. We completed a study of R&D tax credits through December 31, 2020 and adjusted our
deferred tax asset for the results of that study. For the years ending December 31, 2022 and 2021, we generated research credits but
have not conducted a study to document the qualified activities. This study may result in an adjustment to our research and
development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented
as an uncertain tax position. A full valuation allowance has been provided against our research and development credits and, if an
adjustment is required, this adjustment would be offset by an adjustment to the deferred tax asset established for the research and
development credit carryforwards and the valuation allowance.
Prior to executing the Menarini Agreement in December 2021, the rights to, among other things, develop, manufacture and
commercialize selinexor in the Menarini Territory were transferred from our former Bermuda subsidiary, Karyopharm Therapeutics
(Bermuda) Ltd., to Karyopharm Therapeutics Inc. For tax purposes, the transfer is treated as a return of capital and the fair market
value of the rights are recorded as an intangible asset that is amortized over a fifteen-year period. The fair market value of the rights
was determined to be equal to the $75.0 million upfront payment we received from Menarini and was recorded as a $17.2 million
deferred tax asset, fully offset by a valuation allowance.
Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and
possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may
become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders
over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as
well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable
income or tax liabilities. The amount of the annual limitation is determined based on the value of us immediately prior to the
ownership change. Subsequent ownership changes may further affect the limitation in future years. Previously, we have completed
several financings since our inception, which have resulted in changes in control as defined by Sections 382 and 383 of the Internal
Revenue Code. We reduced our deferred tax assets for tax attributes we believe will expire unused. In the future, we may complete
financings that could result in a change in control, which will reduce our deferred tax assets for tax attributes we believe will expire
unused due to the change in control limitations.
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We will recognize interest and penalties related to uncertain tax positions in the income tax provision. As of December 31,
2022, 2021 and 2020, we had no accrued interest or penalties related to uncertain tax positions and no such amounts have been
recognized.
We or one of our subsidiaries file income tax returns in the U.S. and various state and foreign jurisdictions. Our federal, state
and foreign income tax returns are generally subject to tax examinations for the tax years ended December 31, 2019 through
December 31, 2022. To the extent we have tax attribute carryforwards, the tax years in which the attribute was generated may still be
adjusted upon examination by the Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period.
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Exhibit
Number
3.1
3.2
4.1
4.2
4.3
4.4
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
EXHIBIT INDEX
Description of Exhibit
Restated Certificate of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 3.1 to the
Registrant’s Quarterly Report on Form 10-Q (File No. 001-36167) filed with the Commission on August 7, 2019)
Third Amended and Restated By-Laws of the Registrant (incorporated by reference to Exhibit 3.1 to the
Registrant’s Current Report on Form 8-K (File No. 001-36167) filed with the Commission on December 2, 2022)
Specimen Stock Certificate evidencing the shares of common stock (incorporated by reference to Exhibit 4.1 to
the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-191584) filed with the
Commission on October 28, 2013)
Indenture (including form of Note) with respect to the Registrant’s 3.00% convertible senior notes due 2025,
dated as of October 16, 2018, between the Registrant and Wilmington Trust, National Association, as trustee
(incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36167)
filed with the Commission on October 16, 2018)
Description of Securities Registered under Section 12 of the Exchange Act (incorporated by reference to Exhibit
4.3 to the Registrant's Annual Report on Form 10-K (File No. 001-36167) filed with the Commission on February
24, 2021)
Form of Warrant to Purchase Common Stock to be issued pursuant to the Securities Purchase Agreement
(incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36167)
filed with the Commission on December 5, 2022)
2010 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on
Form S-1 (File No. 333-191584) filed with the Commission on October 4, 2013)
Forms of Non-Qualified Stock Option Agreement under 2010 Stock Incentive Plan (incorporated by reference to
Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-191584) filed with the
Commission on October 4, 2013)
2013 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Amendment No. 1 to
Registration Statement on Form S-1 (File No. 333-191584) filed with the Commission on October 28, 2013)
Form of Incentive Stock Option Agreement under 2013 Stock Incentive Plan (incorporated by reference to Exhibit
10.4 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-191584) filed
with the Commission on October 28, 2013)
Form of Nonstatutory Stock Option Agreement under 2013 Stock Incentive Plan (incorporated by reference to
Exhibit 10.5 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-191584)
filed with the Commission on October 28, 2013)
Form of Restricted Stock Unit Agreement under the 2013 Stock Incentive Plan (incorporated by reference to
Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36167) filed with the Commission
on November 9, 2015)
Form of Incentive Stock Option Agreement under 2013 Stock Incentive Plan adopted August 25, 2020
(incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-
36167) filed with the Commission on November 2, 2020)
Form of Nonstatutory Stock Option Agreement under 2013 Stock Incentive Plan adopted August 25, 2020
(incorporated by reference to Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q (File No.001-
36167) filed with the Commission on November 2, 2020)
Form of Restricted Stock Unit Agreement under 2013 Stock Incentive Plan adopted August 25, 2020
(incorporated by reference to Exhibit 10.11 to the Registrant’s Quarterly Report on Form 10-Q (File No.001-
36167) filed with the Commission on November 2, 2020)
Form of Restricted Stock Unit Agreement under 2013 Stock Incentive Plan adopted January 24, 2022
(incorporated by reference to Exhibit 10.11 to the Registrant's Annual Report on Form 10-K (File No. 001-36167)
filed with the Commission on March 1, 2022)
2022 Equity Incentive Plan (incorporated by reference to Appendix A to the Registrant's definitive proxy
statement on Schedule 14A (File No. 001-36167) filed with the Commission on April 8, 2022)
Form of Stock Option Agreement under the 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.2
to the Registrant's Quarterly Report on Form 10-Q (File No. 001-36167) filed with the Commission on August 4,
2022)
141
Table of Contents
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
10.29*
10.30*
10.31*
10.32*
10.33*
10.34*
Form of Restricted Stock Unit Agreement under the 2022 Equity Incentive Plan (incorporated by reference to
Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q (File No. 001-36167) filed with the Commission
on August 4, 2022)
Form of Restricted Stock Unit Agreement (Time Vested) under the 2022 Equity Incentive Plan adopted February
9, 2023
Form of Restricted Stock Unit Agreement (Performance Vested) under the 2022 Equity Incentive Plan adopted
February 9, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File
No. 001-36167), filed with the Commission on February 15, 2023
Form of Nonstatutory Stock Option Agreement for Inducement Grants (incorporated by reference to Exhibit 10.3
to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36167) filed with the Commission on May 10,
2018)
Form of Nonstatutory Stock Option Agreement for Inducement Grants adopted August 25, 2020 (incorporated by
reference to Exhibit 10.12 to the Registrant’s Quarterly Report on Form 10-Q (File No.001-36167) filed with the
Commission on November 2, 2020)
2022 Inducement Stock Incentive Plan (incorporated by reference to Exhibit 10.17 to the Registrant's Annual
Report on Form 10-K (File No. 001-36167) filed with the Commission on March 1, 2022)
Amendment No. 1 to the 2022 Inducement Stock Incentive Plan (incorporated by reference to Exhibit 99.3 to
Registrant's Registration Statement on Form S-8 (File No. 333-265386) filed with the Commission on June 3,
2022)
Amendment No. 2 to the 2022 Inducement Stock Incentive Plan
Form of Stock Option Agreement under 2022 Inducement Stock Incentive Plan (incorporated by reference to
Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K (File No. 001-36167) filed with the Commission
on March 1, 2022)
Form of Restricted Stock Unit Agreement under 2022 Inducement Stock Incentive Plan (incorporated by
reference to Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K (File No. 001-36167) filed with the
Commission on March 1, 2022)
Form of Restricted Stock Unit Agreement (Time Vested) under the 2022 Inducement Stock Incentive Plan
adopted February 9, 2023
2020 Israeli Equity Incentive Sub Plan to the 2013 Stock Incentive Plan (incorporated by reference to Exhibit
10.13 to the Registrant’s Quarterly Report on Form 10-Q (File No.001-36167) filed with the Commission on
November 2, 2020)
2022 Israeli Equity Incentive Sub Plan to the 2022 Equity Incentive Plan
2013 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Amendment
No. 1 to Registration Statement on Form S-1 (File No. 333-191584) filed with the Commission on October 28,
2013)
Karyopharm Therapeutics Inc. Annual Bonus Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K (File No. 001-36167) filed with the Commission on August 6, 2019)
Form of Indemnification Agreement between the Registrant and each of its Directors (incorporated by reference to
Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1 (File No. 333-191584) filed with the
Commission on October 4, 2013)
Non-Employee Director Compensation Policy
Offer Letter, dated as of April 28, 2021, between the Registrant and Richard Paulson (incorporated by reference to
Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-36167) filed with the Commission on
May 3, 2021)
Offer Letter, dated February 3, 2019, between the Registrant and Michael Mason (incorporated by reference to
Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36167) filed with the Commission on
February 25, 2019)
Letter Agreement, dated as of August 31, 2020, between the Registrant and Michael Mason (incorporated by
reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K (File No. 001-36167) filed with the
Commission on August 31, 2020)
Nonstatutory Stock Option Agreement, dated February 25, 2019, between the Registrant and Michael Mason
(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36167)
filed with the Commission on February 25, 2019)
Amended and Restated Letter Agreement, dated as of April 28, 2021, between the Registrant and Michael
Kauffman, M.D., Ph.D. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K
(File No. 001-36167) filed with the Commission on May 3, 2021)
142
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10.35*
10.36*
10.37*
10.38*
10.39*
10.40*
10.41*
10.42*
10.43
10.44
10.45
10.46
10.47
10.48
10.49
10.50
10.51†
10.52**
Transition Agreement, dated March 28, 2022, between the Registrant and Michael G. Kauffman (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36167) filed with the
Commission on March 29, 2022)
Amended and Restated Letter Agreement, dated as of April 28, 2021, between the Registrant and Sharon
Shacham, Ph.D., M.B.A. (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-
K (File No. 001-36167) filed with the Commission on May 3, 2021)
Transition Agreement, dated March 28, 2022, between the Registrant and Sharon Shacham (incorporated by
reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36167) filed with the
Commission on March 29, 2022)
Severance Agreement, dated February 18, 2022, between the Registrant and Jatin Shah (incorporated by reference
to Exhibit 10.3 to the Registrant’s Current Report on Form 10-Q (File No. 001-36167) filed with the Commission
on May 5, 2022)
Consulting Agreement, dated March 1, 2022, between the Registrant and Jatin Shah (incorporated by reference to
Exhibit 10.4 to the Registrant’s Current Report on Form 10-Q (File No. 001-36167) filed with the Commission on
May 5, 2022)
Amendment #1 to Consulting Agreement, dated March 21, 2022, between the Registrant and Jatin Shah
(incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 10-Q (File No. 001-36167)
filed with the Commission on May 5, 2022)
Severance Agreement, dated August 2, 2022, between the Registrant and Ran Frenkel (incorporated by reference
to Exhibit 10.8 to the Registrant's Quarterly Report on Form 10-Q (File No. 001-36167) filed with the
Commission on August 4, 2022)
Consulting Agreement, dated August 2, 2022, between the Registrant and Ran Frenkel (incorporated by reference
to Exhibit 10.9 to the Registrant's Quarterly Report on Form 10-Q (File No. 001-36167) filed with the
Commission on August 4, 2022)
Office Lease Agreement between NS Wells Acquisition LLC and the Registrant, dated March 27, 2014
(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36167)
filed with the Commission on April 1, 2014)
First Amendment to Lease, dated December 31, 2014, by and between the Registrant and NS Wells Acquisition
LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-
36167) filed with the Commission on January 5, 2015)
Second Amendment to Lease, dated October 22, 2015, by and between the Registrant and NS Wells Acquisition
LLC (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-
36167) filed with the Commission on November 9, 2015)
Third Amendment to Lease, dated February 28, 2018, by and between the Registrant and AG-JCM Wells Avenue
Property Owner, LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-
Q (File No. 001-36167) filed with the Commission on May 10, 2018)
Fourth Amendment to Lease, dated June 6, 2018, by and between the Registrant and AG-JCM Wells Avenue
Property Owner, LLC (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-
Q (File No. 001-36167) filed with the Commission on August 7, 2018)
Fifth Amendment to Lease, dated as of August 13, 2020, by and between the Registrant and AG-JCM Wells
Avenue Property Owner, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on
Form 10-Q (File No. 001-36167) filed with the Commission on November 2, 2020)
Open Market Sale Agreement, dated August 17, 2018, by and between the Registrant and Jefferies LLC
(incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36167)
filed with the Commission on August 17, 2018)
Amendment No. 1 to the Open Market Sale Agreement, by and between the Registrant and Jefferies LLC, dated
May 5, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No.
001-36167) filed with the Commission on May 5, 2020)
License Agreement, dated May 23, 2018, by and between the Registrant and Antengene Therapeutics Limited
(incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-
36167) filed with the Commission on August 7, 2018)
Amendment to License Agreement, dated May 1, 2020, by and between Antengene Therapeutics Limited and the
Registrant (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No.
001-36167) filed with the Commission on August 8, 2020)
143
Table of Contents
10.53
10.54**
10.55**
10.56**
10.57
10.58
21.1
23.1
31.1
31.2
32.1
Parent Company Guarantee, dated May 23, 2018, by and between the Registrant and Antengene Therapeutics
Limited (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (File No.
001-36167) filed with the Commission on August 7, 2018)
License Agreement, dated as of December 17, 2021, between the Registrant and Berlin-Chemie AG (Menarini
Group) (incorporated by reference to Exhibit 10.41 to the Registrant's Annual Report on Form 10-K (file No. 001-
36167) filed with the Commission on March 1, 2022)
Revenue Interest Financing Agreement, dated September 14, 2019, between the Registrant and HealthCare
Royalty Partners III, L.P. and HealthCare Royalty Partners IV, L.P. (incorporated by reference to Exhibit 10.2 to
the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36167) filed with the Commission on November 4,
2019)
Omnibus Amendment to Transaction Documents, dated as of June 23, 2021, by and among the Registrant,
Karyopharm Europe GmbH, Karyopharm Therapeutics (Bermuda) Ltd., HealthCare Royalty Partners III, L.P.,
HealthCare Royalty Partners IV, L.P., HCRP Overflow Fund, L.P., HCR Stafford Fund, L.P., HCR Canary Fund,
L.P., HCR Potomac Fund, L.P., HCR Molag Fund, L.P., HealthCare Royalty Management, LLC and HCR
Collateral Management, LLC (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report
on Form 8-K (File No. 001-36167) filed with the Commission on June 24, 2021)
Securities Purchase Agreement, dated December 5, 2022 by and among the Registrant and the other parties
thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-
36167) filed with the Commission on December 5, 2022)
Registration Rights Agreement, dated December 5, 2022 by and among the Registrant and the other parties thereto
(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36167)
filed with the Commission on December 5, 2022)
Subsidiaries of the Registrant
Consent of Ernst & Young LLP (Independent registered public accounting firm for the Registrant)
Certification of Chief Executive Officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act
of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Executive Vice President, Chief Financial Officer and Treasurer pursuant to Rules 13a-14(a) or
15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act
of 2002, by Richard Paulson, President and Chief Executive Officer of the Registrant, and Michael Mason,
Executive Vice President, Chief Financial Officer and Treasurer of the Registrant
101.INS
101.SCH
101.CAL
101.LAB
101.PRE
101.DEF
104
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Inline XBRL Calculation Linkbase Document
Inline XBRL Labels Linkbase Document
Inline XBRL Presentation Linkbase Document
Inline XBRL Definition Linkbase Document
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information
contained in Exhibits 101)
†
*
**
Confidential treatment has been granted as to portions of the exhibit.
Indicates a management contract or compensatory plan or arrangement.
Certain portions of this exhibit (indicated by “***” or “**”) have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-
K.
144
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 17, 2023
KARYOPHARM THERAPEUTICS INC.
By:
/s/ Richard Paulson
Richard Paulson
President and Chief Executive Officer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
President and Chief Executive Officer and Director
February 17, 2023
/s/ Richard Paulson
Richard Paulson
/s/ Michael Mason
Michael Mason
/s/ Garen G. Bohlin
Garen G. Bohlin
/s/ Barry E. Greene
Barry E. Greene
/s/ Peter Honig
Peter Honig, M.D., M.P.H.
/s/ Mansoor Raza Mirza
Mansoor Raza Mirza, M.D.
/s/ Christy J. Oliger
Christy J. Oliger
/s/ Deepika R. Pakianathan
Deepika R. Pakianathan, Ph.D.
/s/ Chen Schor
Chen Schor
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
February 17, 2023
(Principal Executive Officer)
Executive Vice President, Chief Financial Officer and
Treasurer
(Principal Financial and Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
145