Karyopharm Therapeutics Inc

1. Nature of Business and Basis of Presentation

Nature of Business

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

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

Our lead asset, XPOVIO, received its initial U.S. approval from the U.S. Food and Drug Administration (the “FDA”) in July 2019 and is currently approved and marketed for the following indications: (i) in combination with bortezomib and dexamethasone for the treatment of adult patients with multiple myeloma who have received at least one prior therapy; (ii) in combination with dexamethasone for the treatment of adult patients with relapsed or refractory multiple myeloma who have received at least four prior therapies and whose disease is refractory to at least two proteasome inhibitors, at least two immunomodulatory agents, and an anti-CD38 monoclonal antibody; and (iii) for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (“DLBCL”), not otherwise specified, including DLBCL arising from follicular lymphoma, after at least two lines of systemic therapy. The commercialization of XPOVIO and NEXPOVIO (the brand name for selinexor in Europe and the United Kingdom) outside of the U.S. is managed by our partners in their respective territories. XPOVIO/NEXPOVIO has received regulatory approval in various indications in 45 countries outside the U.S. and is commercially available in a growing number of countries as our partners continue to secure reimbursement approvals.

Liquidity, Capital Resources and Going Concern

As of September 30, 2024, we had$133.5 million of cash, cash equivalents and investments and an accumulated deficit of $1.5 billion. We have incurred significant operating losses since our inception and we anticipate that we will continue to incur significant operating losses to maintain our research and development programs, including as we continue to develop and seek regulatory approval of selinexor for multiple cancer indications, and to support our continued operations. As a result, our continued operations are dependent on our ability to raise additional funding and marketing XPOVIO in its currently approved indications. Based on our current business plan and current capital resources, combined with the uncertainty regarding the availability of additional funding, we have concluded that there is substantial doubt regarding our ability to continue as a going concern within one year after the date these condensed consolidated financial statements are issued. We plan to address the conditions that raise substantial doubt regarding our ability to continue as a going concern by, among other things, obtaining additional funding through equity offerings, debt financings and refinancings, collaborations, strategic alliances and/or licensing arrangements. However, there is no assurance that such additional funding will be available on terms acceptable to us, or at all. We may also be required to reduce our current spending requirements where possible.

If we utilize our capital resources more quickly than anticipated or are unable to obtain additional funding, we may have to significantly curtail, delay, reduce or eliminate one or more of our research and development programs or any current or future commercialization efforts for one or more of our products or product candidates, which could materially adversely affect our business, financial condition, and results of operations. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our financial statements, and it is likely that investors will lose all or part of their investment. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms, if at all. The accompanying condensed consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets and liabilities that may be necessary if we were unable to continue as a going concern.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. When preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2024. For further information, refer to the financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission on February 29, 2024 (“Annual Report”).

Basis of Consolidation

The condensed consolidated financial statements as of September 30, 2024 include the accounts of Karyopharm Therapeutics Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

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

2. Product Revenue

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

As of September 30, 2024 and December 31, 2023, net product revenue of $24.5 million and $17.8 million, respectively, were included in accounts receivable. To date, we have hadno bad debt write-offs and we do not currently have credit issues with any customers. There wereno credit losses associated with accounts receivable as of September 30, 2024 and December 31, 2023.

3. Inventory

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

4. License Agreements

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

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

During the three months ended September 30, 2024, we recognized $6.0 million of milestone revenue, $2.0 million of revenue for the reimbursement of development-related expenses, and $0.5 million of royalty revenue from Menarini. We also recognized $0.3 million of royalty revenue from Antengene.

During the three months ended September 30, 2023, we recognized $5.4 million of revenue for the reimbursement of development-related expenses from Menarini.

During the nine months ended September 30, 2024, we recognized $15.0 million of revenue for the reimbursement of development-related expenses, $10.0 million of milestone revenue, $1.6 million of royalty revenue, and $0.6 million of other revenue from Menarini. We also recognized $1.2 million of royalty revenue from Antengene and $2.0 million of other milestone-related revenue.

During the nine months ended September 30, 2023, we recognized $15.0 million of revenue for the reimbursement of development-related expenses, $3.5 million of license-related revenue, $0.7 million of royalty revenue, and $0.7 million of other revenue from Menarini. We also recognized $1.5 million of royalty revenue and $0.5 million of other revenue from Antengene. In addition, we recognized $2.5 million of other milestone-related revenue and $0.5 million of other royalty revenue.

As of September 30, 2024, license and other revenue of $7.2 million was included in accounts receivable. At December 31, 2023, license and other revenue of $9.1 million and $1.0 million were included in accounts receivable and other current assets, respectively.

5. Fair Value Measurements

Financial instruments, including cash, cash equivalents, accounts receivable, net, other current assets, other assets, restricted cash, accounts payable, and accrued expenses, are presented at amounts that approximate fair value as of September 30, 2024 and December 31, 2023.

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

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

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

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

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

The following tables present information about our financial assets 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):

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 following liabilities are measured at fair value at the end of each reporting period, with changes in fair value recognized as a component of other income (expense), net on our condensed consolidated statements of operations. See Note 10, “Long-Term Obligations” to our condensed consolidated financial statements for further discussion of these liabilities:

(1)

The embedded derivative liability (the “HCRx Derivative”) associated with a Revenue Interest Financing Agreement (the “Revenue Interest Agreement”) we entered into with HealthCare Royalty Partners III, L.P. and HealthCare Royalty Partners IV, L.P. (“HCRx”) in September 2019 and as amended in June 2021, August 2023 and May 2024 (as amended, the “Amended Revenue Interest Agreement”) is included as a component of the deferred royalty obligation on our condensed consolidated balance sheets. The valuation method for the HCRx Derivative 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 HCRx Derivative was deemed to have a de-minimus value as of September 30, 2024 primarily due to a $56.2 million decrease in the deferred royalty obligation during thenine months ended September 30, 2024.

(2)

The embedded derivative liabilities (the “2029 Notes Derivatives”) associated with our 6.00% convertible senior notes due 2029 (the “2029 Notes”) is included as a component of the 2029 Notes on our condensed consolidated balance sheet. The valuation method for the 2029 Notes Derivatives incorporates certain unobservable Level 3 key inputs including: (i) the volatility of our common stock price and (ii) our estimated credit spread.

(3)

The warrants to purchase up to 45.8 million shares of our common stock issued in May 2024 (the “May 2024 Warrants”) are classified as a long-term liability on our condensed consolidated balance sheets. The valuation method for the May 2024 Warrants incorporates certain unobservable Level 3 key inputs including: (i) the volatility of our common stock price and (ii) an estimate of when the May 2024 Warrants will be exercised based on an option pricing model.

The following table sets forth a summary of the changes in the estimated fair value of these liabilities, which are all classified as Level 3 (in thousands):

6. Investments

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

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

Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when we believe the uncollectability of an investment is confirmed or when either of the criteria regarding intent or requirement to sell is met. We held 8 and 41 debt securities as of September 30, 2024 and December 31, 2023, respectively, that were in an unrealized loss position. The unrealized losses as of September 30, 2024 and December 31, 2023 were attributable to changes in interest rates, and we donot believe any unrealized losses represented credit losses.

We do not intend to sell the investments before recovery of their amortized cost bases, which may be at maturity. All of our investments mature within two years from September 30, 2024. The following tables summarize our investments in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by investment type and length of time in a continuous unrealized loss position (in thousands):

7. Net Loss Per Share

Basic net loss per common share is calculated using the two-class method by dividing the net loss allocated to common shares by the weighted-average number of common shares outstanding for the period. Diluted net loss per common share is calculated by adjusting net loss to remove the effects from potential dilutive common shares and dividing this adjusted amount by the weighted average number of common shares and potential dilutive common shares outstanding for the period. Potential dilutive common shares are not included if their effect is anti-dilutive.

As discussed further in Note 10, “Long-Term Obligations”, we have the option to settle the conversion obligation for our 3.00% convertible senior notes due 2025 (the “2025 Notes”) in cash, shares or any combination of the two. There was no impact of the 2025 Notes on the calculation of dilutive loss per common share during thethree months ended September 30, 2024 and the three and nine months ended September 30, 2023 because they were anti-dilutive in these periods.

As discussed further in Note 10, “Long-Term Obligations”, we have the option to settle the conversion obligation for our 2029 Notes in cash, shares or any combination of the two. There was no impact of the 2029 Notes on the calculation of dilutive loss per common share during the three and nine months ended September 30, 2024 because they were anti-dilutive in these periods.

As discussed further in Note 11, “Common Share Warrants”, warrants to purchase up to 55,563,775 shares of our common stock were outstanding as of September 30, 2024. These warrants are not included in the calculation of basic net loss per share because the warrant holders do not have an obligation to share in our losses. There was no impact of these warrants on the calculation of dilutive loss per common share during the three and nine months ended September 30, 2024 and 2023 because they were anti-dilutive in these periods.

The following is a reconciliation of the numerator and denominator used to calculate diluted net loss per common share for thenine months ended September 30, 2024 (in thousands except per share amounts):

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

8. Stock-based Compensation Expense

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

Our 2022 Equity Incentive Plan, as amended (the “2022 Plan”), provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and other stock-based awards. On May 29, 2024, our stockholders approved an amendment to the 2022 Plan to increase the number of shares of our common stock available for issuance under the 2022 Plan by 6,000,000 shares.

On May 29, 2024, our stockholders also approved an amendment to our Amended & Restated 2013 Employee Stock Purchase Plan (the “ESPP”) to increase the number of shares of our common stock available for issuance under the ESPP by 5,000,000 shares.

We agreed with our financial advisor to settle our fee for services provided in connection with the May 2024 refinancing transactions described in Note 10, “Long-Term Obligations” through the private placement of 6,872,027 shares of our common stock, resulting in $6.9 million being capitalized to our condensed consolidated balance sheet as a debt issuance cost and $0.8 million being expensed to selling, general and administrative expense as stock-based compensation expense on our condensed consolidated statements of operations during thenine months ended September 30, 2024.

9. Stockholders’ Equity

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

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

We or Jefferies may suspend or terminate the offering of Shares upon notice to the other party and subject to other conditions. We have agreed to pay Jefferies commissions for its services in acting as agent in the sale of the Shares in the amount of up to 3.00% of gross proceeds from the sale of the Shares pursuant to the 2023 Open Market Sale Agreement. We have also agreed to provide Jefferies with customary indemnification and contribution rights.

We didnot sellany Shares under the 2023 Open Market Sale Agreement during the three and nine months ended September 30, 2024 and 2023. As of September 30, 2024, $100.0 million of Shares was available for issuance and sale under the 2023 Open Market Sale Agreement.

10. Long-Term Obligations

2025 Notes

In October 2018, we issued $172.5 million aggregate principal amount of the 2025 Notes in a private offering to qualified institutional buyers in reliance on Rule 144A under the Securities Act. In connection with the issuance of the 2025 Notes, we incurred $5.6 million of debt issuance costs, which was being amortized to interest expense using the effective interest method over seven years. In May 2024, we exchanged $148.0 million aggregate principal amount of our 2025 Notes for (i) $111.0 million aggregate principal amount of our 2029 Notes and (ii) the May 2024 Warrants to purchase up to 45.8 million shares of our common stock. The 2029 Notes and the May 2024 Warrants are described in more detail below. $24.5 million in aggregate principal amount of the 2025 Notes remained outstanding following completion of the May 2024 exchange transactions (the “Remaining 2025 Notes”).

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

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

(1)

during any 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 Remaining 2025 Notes on each applicable trading day;

(2)

during the five-business day period immediately after anyfive consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of Remaining 2025 Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;

(3)

if we call the Remaining 2025 Notes for redemption, until the close of business on the business day immediately preceding the redemption date; or

(4)

upon the occurrence of specified corporate events as described within the indenture governing the 2025 Notes.

As of September 30, 2024, none of the above circumstances had occurred and as such, the Remaining 2025 Notes could not have been converted.

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

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

We determined the expected life of the 2025 Notes was equal to itsseven-year term and the effective interest rate was 3.53%. As of September 30, 2024, the “if-converted value” did not exceed the remaining principal amount of the 2025 Notes. The fair value of the 2025 Notes is influenced by market interest rates, our stock price and stock price volatility, and has been classified as Level 2 within the fair value hierarchy as it uses quoted prices in active markets. The estimated fair value of the 2025 Notes as of September 30, 2024 and December 31, 2023 was approximately$19.2 million and $87.9 million, respectively.

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

Future minimum payments on the 2025 Notes as of September 30, 2024 were as follows (in thousands):

Senior Secured Term Loan

On May 8, 2024, we entered into a credit and guaranty agreement (the “Credit Agreement”) with certain existing holders of the 2025 Notes and HCRx, which provides for a senior secured term loan facility of $100.0 million (the “Term Loan”). The Term Loan matures in May 2028 and bears interest at a variable rate equal to the applicable secured overnight financing rate plus 9.25%, subject to a floor of 3.00%. Principal payments under the Term Loan will begin in June 2026, and consist of quarterly cash payments in the amount of 6.25% of the aggregate principal amount of the Term Loan, with the remaining principal due when the Term Loan matures in May 2028.

We can prepay the Term Loan at any time. All repayments, including prepayments, are subject to a redemption fee of 3.00% of the principal paid. Prepayments made before May 8, 2027 are subject to a prepayment premium ranging from 3.00% to 5.00% of the principal prepaid. The prepayment premium for prepayments made before May 8, 2025 also includes the unpaid interest that would have accrued on the amount being prepaid through May 8, 2025. In addition, we are required to repay the Term Loan with proceeds from certain asset sales and condemnation events, subject, in some cases, to reinvestment rights.

All obligations under the Credit Agreement are secured on a first priority basis, subject to certain exceptions, by substantially all of our assets. The Credit Agreement contains customary covenants, including a requirement to maintain cash, cash equivalents and investments of at least $25.0 million at all times, and restrictions on indebtedness, liens, investments, fundamental changes, asset sales, licensing transactions, dividends, modifications to material agreements, payment of subordinated indebtedness, and other matters customarily restricted in such agreements. Specifically, we are prohibited from exclusively licensing, selling or otherwise disposing of U.S. rights to oncology indications of selinexor. As of September 30, 2024, we were in compliance with these covenants. If certain events of default occur, the Term Loan may be due and payable immediately. These events include the withdrawal of approval of certain indications of selinexor, payment defaults, covenant defaults, bankruptcy, cross-defaults to certain other agreements, change in control and lien priority.

The outstanding balance of the Term Loan consisted of the following (in thousands):

We determined the expected life of the Term Loan was equal to itsfour-year term and the effective interest rate is 17.86%. The carrying value of the Term Loan approximates its fair value due to the variable interest rate. In connection with the issuance of the Term Loan, we incurred $6.8 million of debt issuance costs, which are being amortized to interest expense using the effective interest method over four years.

We recognized $4.3 million of interest expense related to the Term Loan during thethree months ended September 30, 2024, which consisted of $3.7 million of contractual interest expense and $0.6 million of debt issuance cost amortization. We recognized $6.7 million of interest expense related to the Term Loan during thenine months ended September 30, 2024, which consisted of $5.8 million of contractual interest expense and $0.9 million of debt issuance cost amortization.

Future minimum payments on the Term Loan as of September 30, 2024 were as follows (in thousands):

2029 Notes

On May 13, 2024, pursuant to privately-negotiated agreements with certain holders of the 2025 Notes, we exchanged $148.0 million aggregate principal amount of 2025 Notes for (i) $111.0 million aggregate principal amount of the 2029 Notes and (ii)May 2024 Warrants to purchase up to 45.8 million shares of our common stock. This will create additional taxable income related to the cancellation of debt, however, we expect this taxable income will be fully offset by our net operating loss carryforwards.

On May 13, 2024, we also issued $5.0 million aggregate principal amount of the 2029 Notes to HCRx in exchange for a $5.0 million reduction in our deferred royalty obligation. The 2029 Notes are second-lien secured obligations of the Company and bear interest at a rate of 6.00% per year payable quarterly in arrears beginning on June 30, 2024. The 2029 Notes will mature on May 13, 2029, unless earlier converted, redeemed or repurchased in accordance with their terms.

The 2029 Notes will be convertible into shares of our common stock at an initial conversion rate of 444.4444 shares per $1,000 principal amount (the “Conversion Option”), which is equivalent to a conversion price of $2.25 per share of common stock and subject to adjustment upon the occurrence of certain events and customary anti-dilution adjustments. Upon conversion of the 2029 Notes, we will deliver shares of our common stock plus cash in lieu of any fractional shares to the holders of the 2029 Notes. Holders of the 2029 Notes may convert their 2029 Notes at any time prior to the close of business on May 13, 2029.

On or after May 13, 2026, we may redeem for cash all or a portion of the 2029 Notes 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 during any 30 consecutive trading day period (the “Redemption Option”). The redemption price will be equal to the principal amount of the 2029 Notes to be redeemed, plus any accrued and unpaid interest as of the redemption date. The redemption price will also include an amount equal to the aggregate value of all remaining interest payments on the 2029 Notes to be redeemed from the redemption date through maturity, which is payablein cash or, under certain circumstances and if we so elect, in shares of our common stock or a combination of cash and our common stock. Any shares of our common stock used to pay this amount will be valued based on their market price at the time of the redemption. In some cases, we will be required to make an offer to repurchase the 2029 Notes at a 101% premium with proceeds from certain asset sales, subject, in some cases, to reinvestment rights.

If certain corporate events occur prior to the maturity date, a holder that elects to convert their 2029 Notes may be entitled to receive a payment from us, in cash or, under certain circumstances and if we so elect, in shares of our common stock, or a combination of cash and our common stock, based on an increase in the conversion rate in connection with such corporate event. In addition, if we undergo certain fundamental changes, holders may require us to repurchase for cash all or any portion of their 2029 Notes at a price equal to the principal amount of the 2029 Notes to be repurchased, plus any accrued and unpaid interest as of the repurchase date.

No holder will be entitled to receive shares of our common stock in connection with the 2029 Notes if such receipt would cause the holder (together with its affiliates) to own more than 4.99% (subject to increase or decrease at the election of the holder, but in no event to exceed 19.99%) of the number of shares of the common stock outstanding immediately after giving effect to such event. In addition, a holder may elect to receive pre-funded warrants with respect to any shares of common stock that would otherwise be issuable in connection with the 2029 Notes but for the foregoing ownership limitations. These pre-funded warrants will have an exercise price of $0.0001 per share and will not expire. As of September 30, 2024, no pre-funded warrants have been issued.

All obligations under the 2029 Notes are secured on a second priority basis by the same collateral that secures the obligations under the Term Loan. The 2029 Notes contain covenants and events of default that are generally consistent with the Term Loan. As of September 30, 2024, we were in compliance with these covenants.

We accounted for the exchange of the 2025 Notes for the 2029 Notes and May 2024 Warrants as a debt extinguishment because the terms of the 2029 Notes are substantially different from the terms of the 2025 Notes. We recognized a $44.7 million gain on extinguishment of debt during thenine months ended September 30, 2024, the components of which are shown in the following table (in thousands):

As required by extinguishment accounting, the 2029 Notes received by the holders of the 2025 Notes were recorded at their initial fair value of $78.9 million as of May 8, 2024, which was estimated using a risk-neutral convertible bond model implemented using a binomial lattice which incorporates certain unobservable Level 3 key inputs including: (i) the volatility of our common stock price and (ii) our estimated credit spread. The $32.1 million difference between the initial fair value of $78.9 million and the principal amount of $111.0 million will be amortized to interest expense over the term of the 2029 Notes using the effective interest method over five years.

In connection with the issuance of the 2029 Notes, we incurred $4.8 million of debt issuance costs, which are being amortized to interest expense using the effective interest method over five years.

We have determined that the Conversion Option and Redemption Option are embedded derivatives that require bifurcation from the debt instrument and fair value recognition. These derivatives are referred to as the 2029 Notes Derivatives in Note 5, “Fair Value Measurements”to our condensed consolidated financial statements. The 2029 Notes Derivatives were bifurcated at their initial fair value of $28.9 million.

The following is a summary of the debt issuance costs and discounts being amortized to interest expense over the term of the 2029 Notes using the effective interest method, resulting in an effective interest rate of 26.94%(in thousands):

The outstanding balance of the 2029 Notes consisted of the following (in thousands):

We determined the expected life of the 2029 Notes was equal to its five-year term. As of September 30, 2024, the “if-converted value” did not exceed the remaining principal amount of the 2029 Notes. The fair value of the 2029 Notes is influenced by market interest rates, our stock price and stock price volatility, and has been classified as Level 3 within the fair value hierarchy as it uses unobservable inputs. The estimated fair value of the 2029 Notes as of September 30, 2024 was approximately$87.2 million.

We recognized $3.5 million of interest expense related to the 2029 Notes during thethree months ended September 30, 2024, which consisted of $1.8 million of amortization and $1.7 million of contractual interest expense. We recognized $5.5 million of interest expense related to the 2029 Notes during thenine months ended September 30, 2024, which consisted of $2.8 million of amortization and $2.7 million of contractual interest expense.

Future minimum payments on the 2029 Notes as of September 30, 2024 were as follows (in thousands):

Deferred Royalty Obligation

In September 2019, we entered into the Revenue Interest Agreement with HCRx, which was subsequently amended in June 2021, August 2023, and May 2024, under which we have received a total of $135.0 million, less certain transaction expenses. In exchange for this amount, HCRx receives payments from us at a percentage of net revenues of selinexor and any of our other future products, including worldwide net product sales and upfront payments, milestones, and royalties. Total payments to HCRx are capped at $263.3 million (the “Payment Cap”).

In May 2024, we entered into an amendment (the “HCRx Amendment”) to the Amended Revenue Interest Agreement with HCRx, pursuant to which we:

(1)

made a cash payment to HCRx in the amount of $49.5 million;

(2)

delivered to HCRx a Term Loan note with a principal amount of $15.0 million; and

(3)

delivered to HCRx 2029 Notes with a principal amount of $5.0 million.

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 expires on the earlier of (i) the date in which HCRx has received cash payments totaling $263.3 million or (ii) the legal maturity date of October 1, 2031. If HCRx has not received total payments equal to $263.3 million by September 2031, we will be required to pay an amount equal to $135.0 million plus a specific annual rate of return less payments previously paid to HCRx.

In the event of a change of control, an event of default, including, among others, our failure to pay any amounts due to HCRx, insolvency, our failure to pay indebtedness when due, the revocation of regulatory approval of XPOVIO in the U.S. or our breach of any covenant contained in the Amended Revenue Interest Agreement and our failure to cure the breach within the prescribed time frame, we are obligated to pay HCRx an amount equal to $263.3 million less payments previously paid to HCRx.

After giving effect to the above, as of May 2024, we had made aggregate payments under the Amended Revenue Interest Agreement totaling $135.0 million and the maximum remaining amount we owed to HCRx was $128.3 million. After May 2024, we are obligated to make quarterly payments in the amount of a fixed percentage of our net product revenues, upfront payments, milestones, and royalties earned in the applicable quarter, subject to the provisions in the Amended Revenue Interest Agreement described earlier in this footnote.

The HCRx Amendment also subordinates the indebtedness and liens under the Amended Revenue Interest Agreement to the indebtedness and liens under the Term Loan, and, subject to certain exceptions, makes the indebtedness and liens under the Amended

Revenue Interest Agreement pari passu with the indebtedness and liens under the 2029 Notes. In addition, the HCRx Amendment reduces the exercise price of 250,000 warrants to purchase shares of common stock issued to HCRx on August 1, 2023 from $2.25 per share to $1.10 per share.

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

We have also determined that the repayment of $263.3 million, less all payments made to date, upon a change of control is an embedded derivative that requires bifurcation from the debt instrument and fair value recognition as further described in Note 5, “Fair Value Measurements”.

As of September 30, 2024, we have made $140.9 million in payments to HCRx. The effective interest rate as of September 30, 2024 was approximately 16.08%. We have incurred debt issuance costs totaling $1.7 million which 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 as of September 30, 2024 and December 31, 2023 was $73.5 million and $129.7 million, respectively, which included the carrying amount of the debt, the fair value of the bifurcated embedded derivative liability, and unamortized debt issuance costs. The carrying value of the deferred royalty obligation approximated fair value as of September 30, 2024 and December 31, 2023 and was based on our estimates of future payments to HCRx over the life of the arrangement, which are considered Level 3 inputs.

11. Common Share Warrants

Equity Classified Common Share Warrants

On December 5, 2022, we issued to certain institutional investors, in a private placement offering of securities, warrants to purchase up to 9,537,563 shares of common stock at an exercise price of $6.36 per share. The warrants are exercisable through December 7, 2027. As of September 30, 2024, all of these warrants were outstanding.

On August 1, 2023, in connection with the Second Amendment to the Revenue Interest Agreement dated as of August 1, 2023, we issued warrants to HCRx to purchase up to 250,000 shares of common stock at an exercise price of $2.25 per share. In May 2024, the exercise price was reduced to $1.10 per share in connection with the HCRx Amendment. The warrants are exercisable through August 1, 2030. As of September 30, 2024, all of these warrants were outstanding.

Liability Classified Common Share Warrants

In connection with the exchange of 2025 Notes for the 2029 Notes described in further detail in Note 10, “Long-Term Obligations”, we issued the May 2024 Warrants to purchase up to 45,776,213 shares of our common stock at an exercise price of $1.10 per share, subject to customary antidilution adjustments. The May 2024 Warrants are exercisable through May 13, 2029. If the closing price of our common stock exceeds two times the then current exercise price of the warrants, which is currently equal to $2.20, for 20 trading days during any 30 consecutive trading day period, we can require the holder to exercise the May 2024 Warrants. As of September 30, 2024, the May 2024 Warrants to purchase 45,776,212 shares of our common stock were outstanding. Under the terms of the May 2024 Warrants, a holder cannot receive shares of our common stock if such receipt would cause the holder (together with its affiliates) to own more than 4.99% (subject to increase or decrease at the election of the holder, but in no event to exceed 19.99%) of our common stock outstanding on the date of receipt. In addition, a holder may elect to receive pre-funded warrants with respect to any common stock that would otherwise be issuable but for the foregoing ownership limitations. These pre-funded warrants will have an exercise price of $0.0001 per share and will not expire. As of September 30, 2024, no pre-funded warrants have been issued.

The May 2024 Warrants were classified as a long-term liability in our condensed consolidated balance sheet because they did not meet the criteria for equity classification and are measured at fair value at the end of each reporting period as further described in Note 5, “Fair Value Measurements.”