Karyopharm Therapeutics Inc

1. Organization and Operations

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. 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 targeting multiple high unmet cancer indications, including our lead clinical programs in myelofibrosis and our other late-stage clinical programs in endometrial cancer and multiple myeloma. 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®(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 over 45 countries outside the U.S. and is commercially available in a growing number of countries as our partners continue to secure reimbursement approvals.

We have historically financed our operations primarily through a combination of proceeds from (i) product revenue sales, (ii) public and private placements of equity securities, (iii) the issuance of convertible debt, (iv) a term loan, (v) our deferred royalty obligation, (vi) at the market offerings and (vii) business development activities. As of December 31, 2024, we had an accumulated deficit of $1.6 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 and considering our debt obligations, including a requirement to maintain cash, cash equivalents and investments of at least $25.0 million at all times, we have concluded that there is substantial doubt regarding our ability to continue as a going concern within one year after the date these 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, investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms, if at all. The accompanying 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.

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. (“KSC”), our wholly-owned Massachusetts corporation incorporated in December 2013 and dissolved in October 2024, (iii) Karyopharm Europe GmbH, our wholly-owned German limited liability company, incorporated in September 2014, and (iv) Karyopharm Israel Ltd., our wholly-owned Israeli subsidiary formed in June 2018. All intercompany balances and transactions have been eliminated in consolidation.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-09, Improvements to Income Tax Disclosures, which requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. The standard is effective for fiscal years beginning after December 15, 2024. We are currently evaluating the disclosure requirements related to this new standard.

Segment Information

Operating segments are defined as components of an enterprise whose operating results are regularly reviewed by the Chief Operating Decision Maker ("CODM") to allocate resources and assess performance. We view our operations and manage our business as a single operating segment, which is the business of discovering, developing and commercializing drugs to treat cancer. All our revenue and all our long-lived assets are attributable to the United States and to our single operating segment.

Our CODM is our Chief Executive Officer who uses net loss as reported on the consolidated statements of operations to monitor budget versus actual results and to ensure we have sufficient capital resources to develop and seek regulatory approval of our product candidates. The following table presents the significant revenue and expense categories in our single operating segment:

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, embedded derivative liabilities, liability-classified common stock warrants, 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.

The following table summarizes customers that represent 10% or greater of our consolidated total revenue:

The following table summarizes customers with amounts due that represent 10% or greater of our consolidated accounts receivable, net balance:

Fair Value Measurements

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 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 and if the present value of cash flows expected to be collected is less than the amortized cost basis, an allowance 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 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.

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 31 to 68 days. We analyze accounts for collectability and periodically evaluate the creditworthiness of our customers. We determined an allowance for credit losses wasnot material as of December 31, 2024 and 2023 as we have hadno bad debt write-offs to date and we do not currently have credit issues with any customers.

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.

Deferred Royalty Obligation

We treat the debt obligation to HealthCare Royalty Partners III, L.P. and HealthCare Royalty Partners IV, L.P. (“HCRx”), as discussed further in Note 10, “Long-Term Obligations”, asa 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.

Embedded Derivatives

Embedded derivatives that require bifurcation are separated from the host debt instrument and are measured at fair value at the end of each reporting period. See Note 6, “Fair Value Measurements”, for additional detail on the valuation methodology. Changes in fair value are recognized as a component of other income (expense), net on our consolidated statements of operations. Embedded derivatives are reported in the same line as the host debt instrument on the consolidated balance sheets.

Common Stock Warrants

We classify our common stock warrants in stockholder’s equity if they allow for settlement only in shares of our common stock, are indexed to our common stock, and meet the criteria for equity classification. Common stock warrants that do not meet the criteria for equity classification are classified as liabilities and are measured at fair value at the end of each reporting period. See Note 6, “Fair Value Measurements”, for additional detail on the valuation methodology.

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 XPOVIO 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, 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.

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 six to 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 and historical returns data. 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. We 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.

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 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 agreements are detailed in Note 5, “License 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.

Research and Development Expenses

Research and development costs are charged to expense as incurred and include, but are not limited to:

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employee-related expenses, including salaries, benefits, travel and stock-based compensation expense;

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expenses incurred under agreements with CROs, CMOs and consultants that help conduct clinical trials and preclinical studies;

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the cost of acquiring, developing and manufacturing clinical trial materials, including comparator products;

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

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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 (“RSUs”), performance-based restricted stock units (“PSUs”) 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 RSUs is the quoted closing market price per share of our common stock on the Nasdaq Global Select Market on the grant date. Forfeitures are recognized as they occur.

PSUs are awards which will vest if certain performance goals are achieved over a certain performance period. Certain portions of certain PSU awards vest based on continuous service to the Company throughout the performance period even if the performance goal is not achieved. Stock-based compensation expense for PSUs is determined using the grant date fair value, which is the quoted closing market price per share of our common stock on the Nasdaq Global Select Market on the grant date. The grant date fair value of PSUs with a market condition also includes a discount that represents the likelihood that the related performance goals will not be achieved. Stock-based compensation expense for PSUs with a market condition is recognized on a straight-line basis over the service period. Market conditions include goals related to the performance of our common stock. Stock-based compensation expense for PSUs without a market condition is not recognized until the achievement of the performance goal is deemed probable (the “Probable Date”). At the Probable Date, we record a cumulative catch-up expense for the portion of the grant date fair value attributable to the period from the grant date to the Probable Date. The remaining expense is recognized over the remaining service period on a straight-line basis.

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, 2024, 2023 and 2022.

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 KSC 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.

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% unsecured 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 the years ended December 31, 2023 and 2022 because they were anti-dilutive in these periods. The table below describes the impact of the 2025 Notes on the calculation of dilutive loss per common share during the year ended December 31, 2024.

As discussed further in Note 10, “Long-Term Obligations”, we have the option to settle the conversion obligation for our 6.00% secured convertible senior notes due 2029 (the “2029 Notes”) in cash, shares or any combination of the two. The 2029 Notes were issued in May 2024 and did not impact the calculation of dilutive loss per common share during the year ended December 31, 2024 because they were anti-dilutive in this period.

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 December 31, 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 years ended December 31, 2024, 2023 and 2022 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 the year ended December 31, 2024 (in thousands except per share amounts):

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

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):

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 and other liabilities.

As of December 31, 2024 and 2023, net product revenue of $27.8 million and $17.8 million, respectively, was included in accounts receivable, net.

4. 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.

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, or 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.

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 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.

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

5. License Agreements

The following license agreements affected the consolidated financial statements during the years ended December 31, 2024, 2023 and 2022:

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 completion of the manufacturing technology transfer plan, we will grant to Antengene non-exclusive rights to manufacture the Antengene Licensed Compounds solely for their development and commercialization 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 necessary to obtain such approvals. Antengene is also responsible for the commercialization of the Antengene Licensed Compounds in the Antengene Territory at its own cost and expense. Until Antengene manufactures its own drug supply, we will furnish clinical and commercial supplies to Antengene pursuant to supply agreements between us and Antengene, 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 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 identified the following performance obligations in the Amended Antengene Agreement: exclusive licenses, initial data transfers, and a stand-ready obligation to provide initial clinical supply for each of the Antengene Licensed Compounds. We also identified as performance obligations the following customer options for each of the Antengene Licensed Compounds that were offered at a significant and incremental discount and represent material rights: (i) the material right for additional data transfers; (ii) the material right for additional clinical supply and related substance supply; (iii) the material right for manufacturing technology transfers and licenses; and (iv) the material right for the option 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. All of the performance obligations that received an allocation of the initial transaction price of $11.7 million were 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 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, are 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 “Original 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 March 2023, the Original Menarini Agreement was amended (the “Amended Menarini Agreement”) to expand the Menarini Territory to include all countries in the continent of Africa and Saudi Arabia, United Arab Emirates, Kuwait, Oman, Qatar, Bahrain, Lebanon, Jordan, Iraq, and Yemen (together with the Menarini Territory, the “Expanded Menarini Territory”). In addition, we granted to Menarini a non-exclusive license to package and label the Product in or outside of the Expanded Menarini Territory for all human oncology indications solely to enable Menarini to commercialize the Product within the Expanded Menarini Territory.

Under the terms of the Amended 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 Expanded 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 Expanded 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 Expanded 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 Expanded 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 under the Original Menarini Agreement and $3.5 million in April 2023 upon execution of the Amended Menarini Agreement. In addition, we are entitled to receive additional 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 Expanded Menarini Territory. The payments owed by Menarini to us are subject to reduction in specified circumstances. Menarini will reimburse us for 25% of all expenses we incur for the 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 andwill be recognized as earned.

The Amended 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 Amended Menarini Agreement may be terminated earlier by either party for (i) an uncured material breach of the Amended 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 Amended Menarini Agreement as a whole or (B) in its entirety if the breach affects the Amended Menarini Agreement as a whole, or (ii) in the event of the insolvency or bankruptcy of the other party. We may also terminate the Amended Menarini Agreement for certain patent challenges by Menarini.

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 the Product, as well as the initial transfer of know-how and information to Menarini. The Amended Menarini Agreement provides that we will supply to Menarini, and Menarini will purchase from us, all required quantities of Product for the Expanded 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, are recognized when the related sales occur, as they were determined to relate predominantly to the intellectual property licenses granted to Menarini.

Summary of License and Other Revenue

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

During the year ended December 31, 2024, we recognized (i) $15.0 million of revenue for the reimbursement of development-related expenses, $10.0 million of milestone revenue, $2.2 million of royalty revenue, and $0.8 million of other reimbursement revenue from Menarini; (ii) $1.7 million of royalty revenue from Antengene; and (iii) $2.0 million of milestone-related revenue, $0.4 million of royalty revenue, and $0.3 million of other reimbursement revenue from our other partners.

During the year ended December 31, 2023, we recognized (i) $15.0 million of revenue for the reimbursement of development related expenses, $4.0 million of milestone-related revenue, $3.5 million of license-related revenue, $1.1 million of royalty revenue, and $0.8 million of other reimbursement revenue from Menarini; (ii) $1.5 million of royalty revenue, and $1.2 million of other reimbursement revenue from Antengene; and (iii) $3.4 million of license-related revenue, $2.5 million of milestone-related revenue, $0.5 million of royalty revenue, and $0.5 million of other reimbursement revenue from our other partners.

During the year ended December 31, 2022, we recognized (i) $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; (ii) $7.8 million of milestone-related revenue, $3.8 million of royalty revenue, and $1.8 million of other reimbursement revenue from Antengene; and (iii) $5.2 million of royalty revenue and $2.3 million of milestone-related revenue from our other partners.

License and other revenue of $2.9 million and $9.1 million were included in accounts receivable, net as of December 31, 2024 and 2023, respectively. No license and other revenue was included in other current assets as of December 31, 2024. License and other revenue of $1.0 million was included in other current assets as of December 31, 2023.

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 as of December 31, 2024 and 2023.

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 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 consolidated statements of operations. See Note 10, “Long-Term Obligations”, to our consolidated financial statements for further discussion of the following Level 3 liabilities:

(1)

The embedded derivative liability (the “HCRx Derivative”) associated with a Revenue Interest Financing Agreement (the “Revenue Interest Agreement”) we entered into with 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 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 December 31, 2024 primarily due to a $56.2 million decrease in the deferred royalty obligation during the year ended December 31, 2024.

(2)

The embedded derivative liabilities (the “2029 Notes Derivatives”) associated with the 2029 Notes are included as a component of the 2029 Notes on our consolidated balance sheets. 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 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 the liabilities described above, which are all classified as Level 3 (in thousands):

See Note 10, “Long-Term Obligations”, to our consolidated financial statements for further discussion on the fair value of our debt instruments.

7. Investments

The following tables summarize our investments in debt securities, classified as available-for-sale (in thousands):

As of December 31, 2024 and 2023, we held 5 and 41 debt securities, respectively, that were in an unrealized loss position. The unrealized losses as of December 31, 2024 and 2023 were attributable to changes in interest rates and donot 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, 2024. 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):

8. Stockholders’ Equity

Authorized Common Shares

On May 24, 2023, our stockholders approved an amendment to our Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of our common stock from 200,000,000 shares to 400,000,000 shares.

On January 30, 2025, our stockholders approved an amendment to our Restated Certificate of Incorporation, as amended, to increase the number of authorized shares of our capital stock from 405,000,000 to 805,000,000 and the number of authorized shares of our common stock from 400,000,000 shares to 800,000,000 shares. In addition, on January 30, 2025, our stockholders approved an amendment to our Restated Certificate of Incorporation, as amended, to effect a reverse stock split of our issued shares of common stock at a ratio within the range of not less than 1-for-5 and not greater than 1-for-15, and a proportionate reduction in the number of authorized shares of common stock, with the exact ratio within such range and the implementation and timing of such reverse stock split to be determined at the sole discretion of our Board of Directors, without further approval or authorization of our stockholders.

Private Placement Offering

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 31,791,908 shares of common stock. We received aggregate net proceeds of approximately $154.7 million.

Open Market Sale Agreement

On February 17, 2023, we entered into an Open Market Sale Agreement (the “2023 Open Market Sale Agreement”) with Jefferies LLC, as agent (“Jefferies”). Under the 2023 Open Market Sale Agreement, we may issue and sell shares of our common stock having an aggregate offering price of up to $100.0 million (the “Shares”) from time to time through Jefferies (the “2023 Open Market Offering”). Upon entry into the 2023 Open Market Sale Agreement, we terminated our previous Open Market Sale Agreement with Jefferies, as agent, which we had entered into in August 2018 (the “2018 Open Market Sale Agreement”), pursuant to which we could issue and sell shares of our common stock having an aggregate offering price of up to $175.0 million (the “Open Market Shares”).

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

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

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 $35.1 million. We did not sell any Open Market Shares under the 2018 Open Market Sale Agreement nor any Shares under the 2023 Open Market Sale Agreement during the years ended December 31, 2024 and 2023. As of December 30, 2024, $100.0 million of Shares was available for issuance and sale under the 2023 Open Market Sale Agreement.

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. 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. On May 24, 2023 and 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 5,000,000 and 6,000,000 shares, respectively. As of December 31, 2024, there were 8,070,510 shares available for future grants under the 2022 Plan.

Under the terms of the 2022 Plan and the 2013 Plan, we granted stock options, RSUs, and PSUs 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 and RSUs vest over a period of one to four years. PSUs will vest if certain performance goals are achieved over a certain performance period. Certain portions of certain PSU awards vest based on continuous service to the Company throughout the performance period even if the performance goal is not achieved.

During 2024, 2023, and 2022, 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 2022, 2023, and 2024, the Board increased the number of shares reserved for issuance under the 2022 Inducement Plan by 850,000, 1,200,000, and 1,000,000, respectively. 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, 2024, there were 1,523,535 shares available for future grants under the 2022 Inducement Plan.

As of December 31, 2024, we had 28,745,131 shares reserved for issuance, which includes shares available for future grants and outstanding stock options, RSUs and PSUs under the 2013 Plan, 2022 Plan, and Inducement Awards (including the Inducement Awards granted under the 2022 Inducement Plan).

Stock-based Compensation Expense

Total stock-based compensation expense recognized was as follows (in thousands):

The total stock-based compensation expense recognized by award type was as follows (in thousands):

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 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 consolidated statements of operations during the year ended December 31, 2024.

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 for the year ended December 31, 2022.

Stock Options

The following table summarizes stock option activity related to the 2013 Plan, 2022 Plan, and Inducement Awards (including the stock option Inducement Awards granted under the 2022 Inducement Plan):

There wereno stock options exercised for the year ended December 31, 2024. The total intrinsic value of stock options exercised for the years ended December 31, 2023 and 2022 was less than $0.1 million and $0.3 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:

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, 2024, 2023 and 2022 was $0.64, $1.54 and $5.83 per share, respectively.

As of December 31, 2024, there was $2.6 million of unrecognized compensation expense related to unvested stock option awards, which is expected to be recognized over a weighted-average period of 1.1 years.

Restricted Stock Units and Performance-Based Restricted Stock Units

The following is a summary of RSU and PSU activity for the 2013 Plan, 2022 Plan, and Inducement Awards (including RSU Inducement Awards granted under the 2022 Inducement Plan):

The total fair value of RSUs and PSUs that vested during the years ended December 31, 2024, 2023 and 2022 was $2.8 million, $2.9 million, and $8.3 million, respectively. As of December 31, 2024, there was $19.0 million of unrecognized compensation expense related to unvested RSUs and PSUs, which is expected to be recognized over a weighted-average period of 1.8 years.

Employee Stock Purchase Plan

We have an ESPP that permits eligible employees to enroll insix-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 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 annual increase in the number of shares of common stock authorized for issuance pursuant to the ESPP 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 (the “Evergreen Provision”). On May 24, 2023, our stockholders approved an amendment and restatement of our ESPP (the “Amended & Restated ESPP”), which (i) eliminated the Evergreen Provision and (ii) increased the number of shares of common stock authorized for issuance under the ESPP by 1,500,000 shares. On May 29, 2024, our stockholders approved an amendment to the Amended & Restated ESPP to increase the number of shares of our common stock available for issuance under the Amended & Restated ESPP by 5,000,000 shares. As of December 31, 2024,4,655,260 shares of our common stock remained available for issuance under the Amended & Restated ESPP.

During the years ended December 31, 2024, 2023 and 2022, $1.5 million, $1.1 million and $2.3 million, respectively, was withheld from employees, on an after-tax basis, in order to purchase 1,977,558,638,182 and 508,391 shares of our common stock, respectively. As of December 31, 2024, there was $0.2 million of total unrecognized stock-based compensation expense related to the Amended & Restated ESPP. The expense is expected to be recognized over a period offour months.

The fair value of the option component of the shares purchased under the Amended & Restated ESPP was estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

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”) and as of December 31, 2024.

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 amount of 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 December 31, 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 December 31, 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 December 31, 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 December 31, 2024 and 2023 was$19.1 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 Remaining 2025 Notes 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 December 31, 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 approximately 17%. The principal 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 $10.8 million of interest expense related to the Term Loan during the year ended December 31, 2024, which consisted of$9.4 million of contractual interest expense and$1.4 million of debt issuance cost amortization.

Future minimum payments on the Term Loan as of December 31, 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.

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 payable 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. 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 December 31, 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 December 31, 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 the year ended December 31, 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 five-year term of the 2029 Notes using the effective interest method over five years.

In connection with the issuance of the 2029 Notes, we incurred $5.0 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 6, “Fair Value Measurements”, to our 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 approximately 27% (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 December 31, 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 December 31, 2024 was approximately$81.7 million.

We recognized $9.0 million of interest expense related to the 2029 Notes during the year ended December 31, 2024, which cons isted of $4.6 million of amortization and $4.4 million of contractual interest expense.

Future minimum payments on the 2029 Notes as of December 31, 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 October 1, 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 timeframe, 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.

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 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 6, “Fair Value Measurements”.

As of December 31, 2024, we have made $143.4 million in payments to HCRx. The effective interest rate as of December 31, 2024 was approximately 16%. 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 December 31, 2024 and 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 December 31, 2024 and 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 December 31, 2024, all of these warrants were outstanding.

On 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 December 31, 2024, all of these warrants were outstanding.

Liability-Classified Common Share Warrants

In connection with the exchange of the 2025 Notes for the 2029 Notes described in further detail in Note 10, “Long-Term Obligations”, we issued the May 2024 Warrants to certain 2025 Note holders 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 December 31, 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 December 31, 2024, no pre-funded warrants have been issued.

The May 2024 Warrants were classified as a long-term liability in our 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 6, “Fair Value Measurements.”

12. Commitments and Contingencies

Operating 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. We have elected not to separate lease components and non-lease components for leases of office or other space.

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.

We are party to an operating lease where we currently lease a total of 98,502 square feet of office and research space in Newton, Massachusetts. In November 2024, we amended this lease (as amended, the “Newton, MA Lease”) which reduced the leased premises to 52,224 square feet of solely office space as of October 1, 2025 and extended the term of the Newton MA Lease for an additional five years, from October 1, 2025 to September 30, 2030. 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 $0.3 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 expense for each of the years ended December 31, 2024, 2023 and 2022 was $2.8 million. Variable lease costs pertain to reimbursement of certain landlord expenses and were immaterial for each of the years ended December 31, 2024, 2023 and 2022.

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, 2024, 2023 and 2022.

We review the carrying values of our lease assets for possible impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. We have not recorded an impairment in any period since inception.

Lease Commitments

As of December 31, 2024, 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):

As of December 31, 2024, the remaining lease term on the Newton, MA Lease was 5.8 years and the discount rate used to calculate the operating lease liability was 14.5%.

Litigation

From time to time we may face legal claims or actions in the normal course of business. There areno outstanding legal claims or material actions as of December 31, 2024.

13. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

14. 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. Property and equipment, net consisted of the following (in thousands):

15. 401(k) Plan

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 $2.5 million, $3.7 million, and $3.1 million to the 401(k) Plan for the years ended December 31, 2024, 2023 and 2022, respectively.

16. Income Taxes

We recorded an income tax provision of $0.1 million, $0.3 million, and $0.4 million for the years ended December 31, 2024, 2023 and 2022, respectively. Our current income tax provision consists of state income tax due from our KSC entity through its dissolution in October 2024, as well as foreign income taxes due from our German and Israel subsidiaries, both of which operate on a cost-plus profit margin. We didnot have a deferred income tax provision for the years ended December 31, 2024, 2023 and 2022.

The components of loss before income taxes were as follows (in thousands):

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):

The Tax Cuts and Jobs Act of 2017 (“TCJA”) requires taxpayers to capitalize and amortize research and development expenditures, resulting in capitalized research and development costs of $120.7 million and $135.9 million as of December 31, 2024 and 2023, respectively. We will amortize these costs for tax purposes over five years for research and development performed in the U.S. and over 15 years for research and development performed outside the U.S.

On May 13, 2024, we exchanged $148.0 million aggregate principal amount of the 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, as described in further detail in Note 10, “Long-Term Obligations”. This created $93.2 million of taxable income related to the cancellation of debt, which was fully offset by our net operating loss carryforwards.

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 willnot be realized. Accordingly, we have provided a full valuation allowance for deferred tax assets as of December 31, 2024 and 2023. The valuation allowance increased by approximately$34.8 million during the year ended December 31, 2024 primarily due to increased capitalization of research and development expenditures as required by changes to the tax laws from the TCJA as described above.

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:

As of December 31, 2024, 2023 and 2022, we had U.S. federal net operating loss carryforwards of approximately$728.1 million,$768.5 million and $737.4 million, respectively, which may be able to offset future income tax liabilities. Of the$728.1 million carryforward as of December 31, 2024,$476.4 million of the carryforward has an indefinite life and$251.7 million will expire at various dates through 2037. As of December 31, 2024, 2023 and 2022, we had U.S. state net operating loss carryforwards of approximately$645.2 million,$655.7 million and $616.4 million, respectively, which may be available to offset future state income tax liabilities and expire at various dates through 2044. As of December 31, 2024, 2023 and 2022, we didnot have any foreign net operating loss carryforwards to offset future foreign income tax liabilities.

As of December 31, 2024, 2023 and 2022, we had federal research and development and orphan drug tax credit carryforwards of approximately$107.3 million,$99.3 million and $90.9 million, respectively, available to reduce future tax liabilities, which expire at various dates through 2044. As of December 31, 2024, 2023 and 2022, we had state research and development tax credit carryforwards of approximately$13.1 million,$11.9 million and $12.0 million, respectively, available to reduce future tax liabilities, which expire at various dates through 2039. We completed a study of research and development tax credits through December 31, 2022 and adjusted our deferred tax asset for the results of that study. For the years ended December 31, 2024 and 2023, 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.

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 athree-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.

We will recognize interest and penalties related to uncertain tax positions in the income tax provision. As of December 31, 2024, 2023 and 2022, we hadno 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, 2021 through December 31, 2024. 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.

EXHIBIT INDEX

† 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.