PUMA BIOTECHNOLOGY INC

Note1—Business and Basis of Presentation

Puma Biotechnology, Inc., (the “Company”) is a biopharmaceutical company based in Los Angeles, California that develops and commercializes innovative products to enhance cancer care and improve treatment outcomes for patients. The Company is currently commercializing NERLYNX®, an oral version of neratinib (“NERLYNX”), for the treatment ofHER2-positive breast cancer. Additionally, the Company in-licensed, and is responsible for global development and commercialization of, alisertib. Alisertib is a selective, small molecule inhibitor of aurora kinase A that is designed to disrupt mitosis leading to apoptosis of rapidly proliferating tumor cells dependent on aurora kinase. The Company believes alisertib has potential application in the treatment of a range of different cancer types, including hormone receptor positive breast cancer, triple-negative breast cancer and small cell lung cancer.

The Company hasone subsidiary, Puma Biotechnology, B.V., a Netherlands company. This subsidiary was established for the purpose of legal representation in the European Union. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated.

The accompanying consolidated financial statements of the Company and its subsidiary has been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”).

The Company has incurred significant operating losses since its inception. While the Company recently reported net income, we cannot assure that we will continue to do so and will need to continue to generate significant revenue to sustain operations and successfully commercialize neratinib. In2017, the Company received U.S. Food and Drug Administration (“FDA”) approval for itsfirst product, NERLYNX® (neratinib)(“NERLYNX”), formerly known asPB272 (neratinib, oral), for the extended adjuvant treatment of adult patients with early stageHER2-overexpressed/amplified breast cancer following adjuvant trastuzumab-based therapy. Following FDA approval in* July 2017,*NERLYNX became available by prescription in the United States, and the Company commenced commercialization.

In* February 2020,NERLYNX was also approved by the FDA in combination with capecitabine for the treatment of adult patients with advanced or metastaticHER2*-positive breast cancer who have receivedtwo or more prior anti-HER2-based regimens in the metastatic setting.

In2018, the European Commission (“EC”) granted marketing authorization for NERLYNX in the European Union (“EU”) for the extended adjuvant treatment of adult patients with early stage hormone receptor positiveHER2-overexpressed/amplified breast cancer and who are less thanone year from the completion of prior adjuvant trastuzumab-based therapy.

The Company is required to make substantial payments to Pfizer upon the achievement of certain milestones and has contractual obligations for clinical trial contracts.

The Company has entered into other exclusive sub-license agreements with various parties to pursue regulatory approval, if necessary, and commercialize NERLYNX, if approved, in many regions outside the United States, including Europe (excluding Russia and Ukraine), Australia, Canada, China, Southeast Asia, Israel, South Korea, and various countries and territories in Central and South America. The Company plans to continue to pursue commercialization of NERLYNX in other countries outside the United States, if approved.

In* September 2022,the Company entered an exclusive license agreement with a subsidiary of Takeda Pharmaceutical Company Limited (“Takeda”) to license the worldwide research and development and commercial rights to alisertib, a selective, small-molecule, orally administered inhibitor of aurora kinase A. Alisertib is an adenosine triphosphate–competitive and reversible inhibitor of aurora kinase A and results in disruption of mitosis leading to apoptosis of rapidly proliferating tumor cells that are dependent on aurora kinase A. Alisertib has been tested in clinical trials in patients with metastatic cancers including breast cancer, small cell lung cancer, head and neck cancer, ovarian cancer, peripheral T cell lymphoma and acute myeloid leukemia. Under the terms of the exclusive license agreement, the Company assumed sole responsibility for the global development and commercialization of alisertib. The Company paid Takeda an upfront license fee of $7.0 million in October 2022and is eligible to receive potential future milestone payments of up to $287.3 million upon the Company’s achievement of certain regulatory and commercial milestones over the course of the exclusive license agreement, as well as tiered royalty payments for any net sales of alisertib. The Company recorded in-process research and development expense of $7.0 million during the year ended December 31, 2022,in connection with the up-front payment related to the asset acquisition. As of December 31, 2023*,no milestones had been accrued as the underlying contingencies werenot probable or estimable.

The Company has reported net income of appro ximately$21.6 million and cash provided by operations of approximately $27.0 million for the year ended* December 31, 2023*. The Company’s commercialization, research and development or marketing efforts* mayrequire funding in addition to the cash and cash equivalents and marketable securities totaling approximately $95.9 million at December 31, 2023*. The Company believes that its existing cash and cash equivalents and marketable securities as of* December 31, 2023* and proceeds that will become available to the Company through product sales and sub-license payments are sufficient to satisfy its operating cash needs, including amounts due under the Company's Note Purchase Agreement with Athyrium, for at leastone year after the filing of the Annual Report on Form10-K in which these financial statements are included. The Company continues to remain dependent on its ability to obtain sufficient funding to sustain operations and continue to successfully commercialize neratinib in the United States. While the Company has been successful in raising capital in the past, there can beno assurance that it will be able to do so in the future. The Company’s ability to obtain funding* maybe adversely impacted by uncertain market and economic conditions, the Company’s success in commercializing neratinib, unfavorable decisions of regulatory authorities or adverse clinical trial results. The outcome of these matters cannot be predicted at this time. Additionally, the terms of the Company’s Note Purchase Agreement place restrictions on the Company’s ability to operate the business and on the Company’s financial flexibility, and the Company may*be unable to achieve the revenue necessary to satisfy the minimum revenue and cash balance covenants as specified in the agreement.

Since its inception through* December 31, 2023*, the Company’s financing has primarily been proceeds from product, royalty, and license revenue, public offerings of its common stock, private equity placements, and various debt instruments.

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Note2—Significant Accounting Policies

The significant accounting policies followed in the preparation of these consolidated financial statements are as follows:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications hadno effect on the reported results of operations. An adjustment to the presentation of operating lease assets and liabilities, net has been made to the Consolidated Statements of Cash Flows for the year ended* December 31, 2022.*

Segment Reporting

Management has determined that the Company operates inone business segment, which is the development and commercialization of innovative products to enhance cancer care.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the balance sheet, and reported amounts of revenues and expenses for the period presented. Accordingly, actual results could differ from those estimates.

Significant estimates include estimates for variable consideration for which reserves were established. These estimates are included in the calculation of net revenues and include trade discounts and allowances, product returns, provider chargebacks and discounts, government rebates, payor rebates, and other incentives, such as voluntary patient assistance, and other allowances that are offered within contracts between the Company and its customers, payors, and other indirect customers relating to the Company’s sale of its products. Other significant estimates also include those related to legal and other expense accruals.

Net Income (Loss) per Share of Common Stock

Basic net income (loss) per share of common stock is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the periods presented, as required by ASC260, Earnings per Share. For purposes of calculating diluted loss per share of common stock, the denominator includes both the weighted average number of shares of common stock outstanding and the number of dilutive common stock equivalents, such as stock options, restricted stock units (“RSUs”) and warrants. A common stock equivalent isnot included in the denominator when calculating diluted earnings per common share if the effect of such common stock equivalent would be anti-dilutive. The following potentially dilutive outstanding common stock equivalents were excluded from diluted net income (loss) per share because of their anti-dilutive effect:

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Revenue Recognition

Under ASC Topic606, Revenue from Contracts with Customers (“ASC606”) the Company recognizes revenue when its customer obtains control of the promised goods or services, in an amount that reflects the consideration that the entity expects to be entitled in exchange for those goods or services. The Company hadno contracts with customers until the FDA approved NERLYNX on* July 17, 2017.*Subsequent to receiving FDA approval, the Company entered into a limited number of arrangements with specialty pharmacies and specialty distributors in the United States to distribute NERLYNX. These arrangements are the Company’s initial contracts with customers. The Company has determined that these sales channels with customers are similar.

Product Revenue, Net

The Company sells NERLYNX to a limited number of specialty pharmacies and specialty distributors in the United States. These customers subsequently resell the Company’s products to patients and certain medical centers or hospitals. In addition to distribution agreements with these customers, the Company enters into arrangements with healthcare providers and payors that provide for government mandated and/or privately negotiated rebates, chargebacks and discounts with respect to the purchase of the Company’s products.

The Company recognizes revenue on product sales when the specialty pharmacy or specialty distributor, as applicable, obtains control of the Company's product, which occurs at a point in time (upon delivery). Product revenue is recorded net of applicable reserves for variable consideration, including discounts and allowances. The Company’s payment terms range between10 and68 days.

Product revenue also consists of product sales under sub-license agreements to our sub-licensees, who then sell into their respective international territories.

Shipping and handling costs for product shipments occur prior to the customer obtaining control of the goods and are recorded in cost of sales.

If taxes relating to product sales should be collected from customers and remitted to governmental authorities, they will be excluded from revenue. The Company expenses incremental costs of obtaining a contract when incurred if the expected amortization period of the asset that the Company would have recognized isone year or less. However,no such costs were incurred during the year ended* December 31, 2023*.

For the year ended* December 31, 2023*, four customers individually comprised approximately 31.4%,17.2%,15.2% and 11.9% respectively, of the Company’s total product revenue. For the year ended* December 31, 2022*, two major customers accounted for approximately 35% and 20%, respectively, of the Company’s total product revenue. For the year ended* December 31, 2021*, two major customers accounted for approximately 31% and 22%, respectively, of the Company’s total product revenue.

Reserves for Variable Consideration

Revenue from product sales is recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, product returns, provider chargebacks and discounts, government rebates, payor rebates, and other incentives, such as voluntary patient assistance, and other allowances that are offered within contracts between the Company and its customers, payors, and other indirect customers relating to the Company’s sale of its products. These reserves, as detailed below, are based on the related sales, and are classified as reductions of accounts receivable, net when the right of offset exists in accordance with ASU2013-1,* Balance Sheet (Topic210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities*, or as a current liability. These estimates take into consideration a range of possible outcomes that are probability-weighted in accordance with the expected value method in ASC606 for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts.

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The amount of variable consideration that is included in the transaction price* maybe constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract willnot* occur in a future period. The Company’s analysis also contemplated application of the constraint in accordance with the guidance, under which it determined a significant reversal of revenue wouldnot occur in a future period for the estimates detailed below as of* December 31, 2023* and, therefore, the transaction price wasnot reduced further during the year ended* December 31, 2023*. Actual amounts of consideration ultimately received* may*differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

Trade Discounts and Allowances

The Company generally provides customers with discounts, which include incentive fees that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. The reserve for discounts is established in the same period that the related revenue is recognized, together with reductions to accounts receivables, net on the consolidated balance sheets. In addition, the Company compensates its customers for sales order management, data, and distribution services. The Company has determined such services received to date arenot distinct from the Company’s sale of products to its customers and, therefore, these payments have been recorded as a reduction of revenue within the statement of operations.

Product Returns

Consistent with industry practice, the Company offers the specialty pharmacies and specialty distributors that are its customers limited product return rights for damaged and expiring product, provided it is within a specified period around the product expiration date as set forth in the applicable individual distribution agreement. The Company estimates the amount of its product sales that* may*be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized, as well as a reduction to accounts receivables, net on the consolidated balance sheets. The Company currently estimates product returns using its own sales information, including its visibility into the inventory remaining in the distribution channel. The Company has an insignificant number of returns to date and believes that returns of its products will continue to be minimal.

Provider Chargebacks and Discounts

Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to its customers who directly purchase the product from the Company. Customers charge the Company for the difference between what they pay for the product and the ultimate selling price to the qualified healthcare providers. The reserve for chargebacks is established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and a reduction to accounts receivable, net on the consolidated balance sheets. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider by customers, and the Company generally issues credits for such amounts within a few weeks of the customer’s notification to the Company of the resale. Chargebacks consist of credits the Company expects to issue for units that remain in the distribution channel at each reporting period end that the Company expects will be sold to qualified healthcare providers and chargebacks that customers have claimed, but for which the Company hasnot yet issued a payment.

Government Rebates

The Company is subject to discount obligations under state Medicaid programs and Medicare. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability, which is included in accrued expenses on the consolidated balance sheets. The Company’s liability for these rebates consists of invoices received for claims from prior quarters that havenot been paid or for which an invoice hasnot yet been received, estimates of claims for the current quarter, and estimates of future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel at the end of each reporting period.

Payor Rebates

The Company contracts with certain private payor organizations, primarily insurance companies and pharmacy benefit managers, for the payment of rebates with respect to utilization of its products. The Company estimates these rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue, net and the establishment of a current liability, which is included in accrued expenses on the consolidated balance sheets.

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Other Incentives

Other incentives the Company offers include voluntary patient assistance programs, such as the co-pay assistance program, which are intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payors. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue, but remains in the distribution channel at the end of each reporting period. The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability, which is included as a component of accrued expenses on the consolidated balance sheets.

License Revenue

The Company also recognizes license revenue under certain of the Company’s sub-license agreements that are within the scope of ASC606. The terms of these agreements* maycontain multiple performance obligations, which mayinclude licenses and research and development activities. The Company evaluates these agreements under ASC606* to determine the distinct performance obligations. Non-refundable, upfront fees that arenot contingent on any future performance and requireno consequential continuing involvement by the Company, are recognized as revenue when the license term commences and the licensed data, technology or product is delivered. The Company defers recognition of non-refundable upfront license fees if the performance obligations arenot satisfied. The Company’s payment terms range between the execution date of the sub-license agreement and45 days.

Prior to recognizing revenue, the Company makes estimates of the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized willnot occur and when the uncertainty associated with the variable consideration is subsequently resolved.

If there are multiple distinct performance obligations, the Company allocates the transaction price to each distinct performance obligation based on its relative standalone selling price. The standalone selling price is generally determined based on the prices charged to customers or using expected cost-plus margin. Revenue is recognized by measuring the progress toward complete satisfaction of the performance obligations using an input measure.

Since2018, the Company has entered into sub-license agreements with certain sub-licensees in territories outside of the United States. These sub-licensing agreements grant certain intellectual property rights and set forth various respective obligations with respect to actions such as development, pursuit and maintenance of regulatory approvals, commercialization and supply of NERLYNX in the sub-licensees’ respective territories.

License fees under the sub-license agreements includeone-time upfront payments when each sub-license agreement was executed and potential additionalone-time milestone payments due to the Company upon successful completion of certain performance obligations, such as achieving regulatory approvals or sales target thresholds, and potential double-digit royalties on sales of the licensed product, calculated as a percentage of net sales of the licensed product throughout each sub-licensee’s respective territory. As of* December 31, 2023*, the total potential milestone payments that would be due to the Company upon achievement of all respective performance obligations under the sub-license agreements is approximately $579.8 million. At this time, the Company cannot estimate if or when these milestone-related performance obligations might be achieved.

Royalty Revenue

For sub-license agreements that are within the scope of ASC606, the Company recognizes revenue when the related sales occur in accordance with the sales-based royalty exception under ASC606-10-55-65. Royalty revenue consists of consideration earned related to international sales of NERLYNX made by the Company’s sub-licensees in their respective territories. The Company recognizes royalty revenue when the performance obligations have been satisfied. The Company’s payment terms range between10 and45 days.

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Legal Contingencies and Expense

For legal contingencies, the Company accrues a liability for an estimated loss if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated. Legal fees and expenses are expensed as incurred based on invoices or estimates provided by legal counsel. The Company periodically evaluates available information, both internal and external, relative to such contingencies and adjusts the accrual as necessary. The Company determines whether a contingency should be disclosed by assessing whether a material loss is deemed reasonably possible. In determining whether a loss should be accrued, the Company evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss (see Note13-Commitments and Contingencies).

Royalty Expenses

Royalties incurred in connection with the Company’s license agreement with Pfizer, as disclosed in Note13-Commitments and Contingencies, are expensed to cost of sales as revenue from product sales is recognized.

Research and Development Expenses

Research and development (“R&D”) expenses are charged to operations as incurred. The major components of research and development costs include clinical manufacturing costs, clinical trial expenses, consulting and otherthird-party costs, salaries and employee benefits, stock-based compensation expense, supplies and materials, and allocations of various overhead costs. Clinical trial expenses include, but arenot limited to, investigator fees, site costs, comparator drug costs, and clinical research organization (“CRO”) costs. In the normal course of business, the Company contracts withthird parties to perform various clinical trial activities in the ongoing development of potential products. The financial terms of these agreements are subject to negotiation and variations from contract to contract and* may*result in uneven payment flows. Payments under the contracts depend on factors such as the achievement of certain events, the successful enrollment of patients and the completion of portions of the clinical trial or similar conditions. The Company’s accruals for clinical trials are based on estimates of the services received and efforts expended pursuant to contracts with numerous clinical trial sites, cooperative groups and CROs. As actual costs become known, the Company adjusts its accruals in that period.

In instances where the Company enters into agreements withthird parties for clinical trials and other consulting activities, upfront amounts are recorded to prepaid expenses and other in the accompanying consolidated balance sheets and expensed as services are performed or as the underlying goods are delivered. If the Company doesnot expect the services to be rendered or goods to be delivered, any remaining capitalized amounts for non-refundable upfront payments are charged to expense immediately. Amounts due under such arrangements* maybe either fixed fee or fee for service, and may*include upfront payments, monthly payments and payments upon the completion of milestones or receipt of deliverables.

Costs related to the acquisition of technology rights and patents for which development work is still in process are charged to operations as incurred and considered a component of research and development costs.

Acquired In-Process Research and Development Expense

The Company has acquired, and* maycontinue to acquire, the rights to develop new drug candidates. Payments to acquire a new drug candidate are immediately expensed as acquired in-process research and development provided that the drug candidate hasnot* achieved regulatory approval for marketing and, absent obtaining such approval, hasno alternative future use.

Stock-Based Compensation

Stock option awards

ASC Topic718, Compensation-Stock Compensation (“ASC718”) requires the fair value of all share-based payments to employees and non-employees, including grants of stock options, to be recognized in the statement of operations over the requisite service period. Under ASC718, employee and non-employee option grants are generally valued at the grant date and those valuations donot change once they have been established. The fair value of each option award is estimated on the grant date using the Black-Scholes Option Pricing Method. As allowed by ASC718, the Company’s estimate of expected volatility is based on its average volatilities using its expected life, or approximately the pastsix years of publicly traded history. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant valuation. Option forfeitures are estimated when the option is granted to reduce the option expense to be recognized over the life of the award. The estimated forfeiture rate considers historical employee turnover rates stratified into employee pools, actual forfeiture experience and other factors. The option expense is adjusted upon the actual forfeiture of a stock option grant and the Company periodically revises the estimated forfeiture rate in subsequent periods if actual forfeitures differ from those estimates. Due to its limited history of stock option exercises, the Company uses the simplified method to determine the expected life of the option grants. Compensation expense related to modified stock options is measured based on the fair value for the awards as of the modification date. Any incremental compensation expense arising from the excess of the fair value of the awards on the modification date compared to the fair value of the awards immediately before the modification date is recognized at the modification date or ratably over the requisite service period, as appropriate.

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Restricted stock units

RSUs are valued on the grant date and the fair value of the RSUs is equal to the market price of the Company’s common stock on the grant date. RSU expense is recognized over the requisite service period in the statement of operations. When the requisite service period begins prior to the grant date (because the service inception date occurs prior to the grant date), the Company is required to begin recognizing compensation cost before there is a measurement date (i.e., the grant date). The service inception date is the beginning of the requisite service period. If the service inception date precedes the grant date, accrual of compensation cost for periods before the grant date shall be based on the fair value of the award at the reporting date. In the period in which the grant date occurs, cumulative compensation cost shall be adjusted to reflect the cumulative effect of measuring compensation cost based on fair value at the grant date rather than the fair value previously used at the service inception date (or any subsequent reporting date). RSU forfeitures are estimated when the RSU is granted to reduce the RSU expense to be recognized over the life of the award. The estimated forfeiture rate considers historical employee turnover rates stratified into employee pools, actual forfeiture experience and other factors. The RSU expense is “trued-up” upon the actual forfeiture of a RSU grant and the Company periodically revises the estimated forfeiture rate in subsequent periods if actual forfeitures differ from those estimates. Compensation expense related to modified restricted stock units is measured based on the fair value for the awards as of the modification date. Any incremental compensation expense arising from the excess of the fair value of the awards on the modification date compared to the fair value of the awards immediately before the modification date is recognized at the modification date or ratably over the requisite service period, as appropriate.

Warrants

Warrants (see Note10-Stockholders’ Equity (Deficit) for further details) granted to employees and non-employees are normally valued at the fair value of the instrument on the grant date and are recognized in the statement of operations over the requisite service period. When the requisite service period precedes the grant date and a market condition exists in the warrant, the Company values the warrant using the Monte Carlo Simulation Method. When the terms of the warrant become fixed, the Company values the warrant using the Black-Scholes Option Pricing Method. As allowed by ASC718, the Company’s estimate of expected volatility is based on its average volatilities using its pastnine years of publicly traded history. The risk-free rate for periods within the contractual life of the warrant is based on the U.S. Treasury yield curve in effect at the time of grant valuation. In determining the value of the warrant until the terms are fixed, the Company factors in the probability of the market condition occurring and several possible scenarios. When the requisite service period precedes the grant date and is deemed to be complete, the Company records the fair value of the warrant at the time of issuance as an equity stock-based compensation transaction. The grant date is determined when all pertinent information, such as exercise price and quantity are known.

Income Taxes

The Company follows ASC Topic740, Income Taxes(“ASC740”) which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the consolidated financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely thannot that the asset willnot be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The standard addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under ASC740, the Company* mayrecognize the tax benefit from an uncertain tax position only if it is more likely thannot* that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than50% likelihood of being realized upon ultimate settlement. ASC740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of* December 31, 2023*, the Company’s uncertain tax positions includes a reserve for its R&D credits.

Financial Instruments

The carrying value of financial instruments, such as cash equivalents, accounts receivable and accounts payable, approximate their fair value because of their short-term nature. The carrying value of long-term debt approximates its fair value as the principal amounts outstanding are subject to variable interest rates that are based on market rates that are regularly reset.

Cash and Cash Equivalents

The Company classifies all highly liquid instruments with an original maturity ofthree months or less as cash equivalents.

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Restricted Cash

Restricted cash represents cash held at financial institutions that is pledged as collateral for stand-by letters of credit for lease and legal verdict commitments. The lease related letters of credit will lapse at the end of the respective lease terms through2026. At* December 31, 2023and2022*, the Company had restricted cash in the amount of $2.1 million and $2.6 million, resp ectively.

Investment Securities

The Company classifies all investment securities (short-term and long-term) as available-for-sale, as the sale of such securities* maybe required prior to maturity to implement management’s strategies. These securities are carried at fair value, with the unrealized gains and losses, reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity (deficit) until realized. Realized gains and losses from the sale of available-for-sale securities, if any, are determined on a specific identification basis. In accordance with ASU2016*-13, Financial Instruments–* Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments*, credit losses on available-for-sale securities are reported using an expected loss model and recorded to an allowance.No material credit losses on available-for-sale securities were recognized in the years ending* December 31, 2023*, Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield using the straight-line method. Interest income is recognized when earned.

Assets Measured at Fair Value on a Recurring Basis

ASC Topic820, Fair Value Measurement (“ASC820”) provides a single definition of fair value and a common framework for measuring fair value as well as disclosure requirements for fair value measurements used in financial statements. Under ASC820, fair value is determined based upon the exit price that would be received by a company to sell an asset or paid by a company to transfer a liability in an orderly transaction between market participants, exclusive of any transaction costs. Fair value measurements are determined by either the principal market or the most advantageous market. The principal market is the market with the greatest level of activity and volume for the asset or liability. Absent a principal market to measure fair value, the Company uses the most advantageous market, which is the market from which the Company would receive the highest selling price for the asset or pay the lowest price to settle the liability, after considering transaction costs. However, when using the most advantageous market, transaction costs are only considered to determine which market is the most advantageous and these costs are then excluded when applying a fair value measurement. ASC820 creates athree-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below, with Level1 having the highest priority and Level3 having the lowest.

Following are the major categories of assets measured at fair value on a recurring basis as of* December 31, 2023and2022*, using quoted prices in active markets for identical assets (Level1), significant other observable inputs (Level2), and significant unobservable inputs (Level3) (in thousands):

The Company’s investments in commercial paper, corporate bonds and U.S. government securities are exposed to price fluctuations. The fair value measurements for commercial paper, corporate bonds and U.S. government securities are based upon the quoted prices of similar items in active markets multiplied by the number of securities owned.

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The following tables summarize the Company’s short-term investments (in thousands):

Concentration of Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, principally consist of cash and cash equivalents, marketable securities, and accounts receivable, net. The Company’s cash and cash equivalents and restricted cash in excess of the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation insured limits at* December 31, 2023*, were approximately $84.4 million. The Company doesnot believe it is exposed to any significant credit risk due to the quality nature of the financial instruments in which the money is held. Pursuant to the Company’s internal investment policy, investments must be rated A-1/P-1 or better by Standard and Poor’s Rating Service and Moody’s Investors Service at the time of purchase.

The Company sells its products in the United States primarily through specialty pharmacies and specialty distributors. Therefore, wholesale distributors and large pharmacy chains account for a large portion of its accounts receivables, net and product revenues, net. The creditworthiness of its customers is continuously monitored, and the Company has internal policies regarding customer credit limits. The Company estimates an allowance for credit loss primarily based on the credit worthiness of its customers, historical payment patterns, aging of receivable balances and general economic conditions. The Company recorded $0.9 million credit loss expense in the year ended* December 31, 2023,andno such expense in the year ended December 31, 2022.The Company recorded a recovery of credit loss expense of $1.0 million in year ended December 31, 2021.*

As of* December**31,* 2023 and2022, accounts receivable from individual customers with balances due in excess of10% of total accounts receivable totaled $32.3 million and $28.9 million, respectively.

The Company’s success depends on its ability to successfully commercialize NERLYNX. The Company currently has a single product with limited commercial sales experience, which makes it difficult to evaluate its current business, predict its future prospects and forecast financial performance and growth. The Company has invested a significant portion of its efforts and financial resources in the development and commercialization of the lead product, NERLYNX, and expects NERLYNX to constitute the vast majority of product revenue for the foreseeable future.

The Company relies exclusively onthird parties to formulate and manufacture NERLYNX and its drug candidates. The commercialization of NERLYNX and any other drug candidates, if approved, could be stopped, delayed or made less profitable if thosethird parties fail to provide sufficient quantities of product or fail to do so at acceptable quality levels or prices. The Company hasno experience in drug formulation or manufacturing and doesnot intend to establish its own manufacturing facilities. The Company lacks the resources and expertise to formulate or manufacture NERLYNX and other drug candidates. While the drug candidates were developed by Pfizer, both the drug substance and drug product are manufactured bythird-party contractors. The Company is using the samethird-party contractors to manufacture, supply, store and distribute drug supplies for clinical trials and the commercialization of NERLYNX. If the Company is unable to continue its relationships withone or more of thesethird-party contractors, it could experience delays in the development or commercialization efforts as it locates and qualifies new manufacturers. The Company intends to rely onone or morethird-party contractors to manufacture the commercial supply of drugs.

Inventory

The Company values its inventories at the lower of cost and estimated net realizable value. The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing overhead, on afirst-in,first-out basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and it writes down any excess and obsolete inventories to their estimated realizable value in the period in which the impairment isfirst identified. Such impairment charges, should they occur, are recorded within the cost of sales in the consolidated statements of operations. The determination of whether inventory costs will be realizable requires estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory* may*be required, which would be recorded as a cost of sales in the consolidated statements of operations.

F-17

The Company capitalizes inventory costs associated with the Company’s products after regulatory approval, if any, when, based on management’s judgment, future commercialization is considered probable, and the future economic benefit is expected to be realized. Inventory that can be used in either the production of clinical or commercial product is recorded as research and development expense when selected for use in a clinical trial. Starter kits, provided to patients prior to insurance approval, are expensed by the Company to selling, general and administrative expense as incurred.

The Company’s inventory balances are as follows:

Other Current Assets

Other current assets consisted of the following at* December 31 (*in thousands):

Other current assets primarily contain receivables other than trade receivables. For the year ended* December 31, 2023,the Company recorded a $0.7 million receivable for reimbursement from a vendor for damaged inventory. For the year ended December 31, 2022,the Company recorded a $1.9 million receivable related to the Coronavirus Aid Relief Economic Security Act (the “CARES Act”), which was received in thefirst* quarter of2022. Other amounts consist primarily of capitalized sublease commission and a sublease tenant improvement allowance, net of amortization.

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the useful lives of the assets, which is generally three years for computer hardware and software, three years for phone equipment, andseven years for furniture and fixtures. Leasehold improvements are amortized using the straight-line method over the lesser of the useful life or the lease term. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is credited or charged to operations. Repairs and maintenance costs are expensed as incurred.

The Company reviews its long-lived assets used in operations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset* may**not* be recoverable, as required by ASC Topic360, Property, Plant, and Equipment (“ASC360”). The Company performs a recoverability test by comparing the sum of the estimated undiscounted cash flows over the life of the asset to its carrying value on the consolidated balance sheet. If the undiscounted cash flows used in the recoverability test are less than the carrying value, the Company would then determine the fair value of the long-lived asset and recognize an impairment loss for the amount in excess of the carrying value.No impairments were recorded during the years ended* December 31, 2023and2022.*

Leases

ASC Topic842,** Leases, as adopted in thefirst quarter of2019, requires lessees to recognize most leases on the balance sheet with a corresponding right-of-use asset (“ROU asset”). ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term. ROU assets are evaluated for impairment using the long-lived assets impairment guidance, as required by ASC360. A significant indication of impairment of an ROU asset would include a change in the extent or manner in which the asset is being used. The Company must make assumptions that underlie the most significant and subjective estimates in determining whether any impairment exists. Those estimates, and the underlying assumptions, include estimates of future cash flow utilizing market lease rates and determination of fair value. If an ROU asset related to an operating lease is impaired, the carrying value of the ROU asset post-impairment should be amortized on a straight-line basis through the earlier of the end of the useful life of the ROU asset or the end of the lease term. Post impairment, a lessee must calculate the amortization of the ROU asset and interest expense on the lease liability separately, although the sum of thetwo continues to be presented as a single lease cost. If a lease is planned to be abandoned withno intention of subleasing, the ROU asset should be assessed for impairment.

Leases are classified as financing or operating, which will drive the expense recognition pattern. The Company elects to exclude short-term leases if and when the Company has them. For additional information, see Note6-Leases.

The Company leases office space and copy machines, all of which are operating leases. Most leases include the option to renew, and the exercise of the renewal options is at the Company’s sole discretion. Options to extend or terminate a lease are considered in the lease term to the extent that the option is reasonably certain of exercise. The leases donot include options to purchase the leased property. The depreciable life of assets and leasehold improvements is limited by the expected lease term. Covenants imposed by the leases include letters of credit required to be obtained by the lessee.

The incremental borrowing rate (“IBR”) represents the rate of interest the Company would expect to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. When determinable, the Company uses the rate implicit in the lease to determine the present value of lease payments. As the Company’s leases donot provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s average IBR for existing leases as of* December 31, 2023* was 10.9%.

The Company decided to cease the use of a portion of its leased office space in2023. In connection with the decreased need for the right to use the ROU asset, the Company entered into a sublease for the underlying asset, in which the sublease income is less than the original lease payments, indicating impairment. In performing the recoverability test on the effective date, the undiscounted future estimated cash flows and carrying value were identified for the subleased portion of the leased building, as an individual asset group, defined under ASC360. A reduction to the carrying value of the ROU asset of approximately $0.6 million was recorded, representing the fair value amount in excess of the carrying value, with a corresponding impairment charge recorded as selling, general and administration expense, in the consolidated statements of operations for the year ended* December 31, 2023.*

F-18

License Fees and Intangible Assets

The Company expenses amounts paid to acquire licenses associated with products under development when the ultimate recoverability of the amounts paid is uncertain and the technology hasno alternative future use when acquired. Acquisitions of technology licenses are charged to expense or capitalized based upon the asset achieving technological feasibility in accordance with management’s assessment regarding the ultimate recoverability of the amounts paid and the potential for alternative future use. The Company has determined that technological feasibility for its drug candidates is reached when the requisite regulatory approvals are obtained to make the product available for sale. The Company capitalizes technology licenses upon reaching technological feasibility.

The Company maintains definite-lived intangible assets related to the license agreement with Pfizer. These assets are amortized over their remaining useful lives, which are estimated based on the shorter of the remaining patent life or the estimated useful life of the underlying product. Intangible assets are amortized using the economic consumption method if anticipated future revenues can be reasonably estimated. The straight-line method is used when future revenues cannot be reasonably estimated. Amortization costs are recorded as part of cost of sales.

In* September 2022,the Company entered into an exclusive license agreement with Takeda to license the worldwide research and development and commercial rights to alisertib, a selective, small-molecule, orally administered inhibitor of aurora kinase A. The up-front payment of $7.0 million was expensed as acquired in-process research and development as thedrug candidate hasnot* achieved regulatory approval for marketing and hasno alternative future use.

The Company assesses its intangible assets for impairment if indicators are present or changes in circumstance suggest that impairment* mayexist. Events that could result in an impairment, or trigger an interim impairment assessment, include the receipt of additional clinical or non-clinical data regardingone* of the Company’s drug candidates or a potentially competitive drug candidate, changes in the clinical development program for a drug candidate, or new information regarding potential sales of the drug. If impairment indicators are present or changes in circumstance suggest that impairment* mayexist, the Company performs a recoverability test by comparing the sum of the estimated undiscounted cash flows of each asset group to its carrying value on the consolidated balance sheet. If the undiscounted cash flows used in the recoverability test are less than the carrying value, the Company would determine the fair value of the intangible asset and recognize an impairment loss if the carrying value of the intangible asset exceeds its fair value. In connection with the FDA approval of NERLYNX in July 2017,the Company triggered aone*-time milestone payment pursuant to its license agreement with Pfizer. In* June 2020,the Company entered into a letter agreement with Pfizer relating to the method of payment associated with a milestone payment under the Company’s license agreement with Pfizer (see Note13*-Commitments and Contingencies). The Company capitalized the milestone payments as an intangible asset and is amortizing the asset to cost of sales on a straight-line basis over the estimated useful life of the licensed patent through2030. In addition, the Company reached a commercial milestone by achieving aggregate worldwide net sales of $250 million in calendar year2022, resulting in a payable to Pfizer of $12.5 million as of* December 31, 2022*. The Company capitalized this milestone as an intangible asset and accrued in-licensed rights on the accompanying consolidated balance sheets and payment was made in thefirst quarter of2023. The Company recorded amortization expense related to its intangible assets of $9.7 million, $8.0 million, and $8.0 million for the years ended* December 31, 2023,2022 and2021, respectively. As of December 31, 2023*, estimated future amortization expense related to the Company’s intangible asset was approximately $9.7 million for each year from2023 through2029, and $2.4 million for2030.

F-19

Recently Issued Accounting Standards

In* October 2023,the FASB issued ASU2023*-06, Disclosure Improvements – Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The ASU modifies the disclosure or presentation requirements of a variety of Topics in the Codification to align with the SEC’s regulations. The ASU also makes those requirements applicable to entities that werenot previously subject to the SEC’s requirements. The ASU is effective for the Companytwo years after the effective date to remove the related disclosure from Regulation S-X or S-K. As of the date these financial statements have been made available for issuance, the SEC hasnot yet removed any related disclosure. The Company doesnot expect the adoption of ASU2023-06 to have a material effect on its consolidated financial statements.

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures. The ASU requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. ASU2023-09 is effective for the Company’s annual reporting periods beginning after* December 15, 2025.Adoption is either with a prospective method or a fully retrospective method of transition. Early adoption is permitted. The Company is currently evaluating the effect that adoption of ASU2023*-09 will have on its consolidated financial statements.

Update (ASU)2023-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures, which requires enhanced disclosures about segment expenses on an annual and interim basis. The impact of the adoption of this ASU isnot expected to have a material effect on our consolidated financial statements.

In* November 2021,the FASB issued ASUNo.* 2021-10, Government Assistance (Topic832*), which enhances disclosure of transactions with governments that are accounted for by applying a grant or contribution model. ASU2021*-10 requires entities to provide information about the nature of the transactions, the related accounting policies used to account for the transactions, the effect of the transactions on an entity's finan cial statements, and significant terms and conditions associated with the transactions. ASU2021-10 must be adopted for fiscal years beginning after* December 15, 2021.Early adoption is permitted. We adopted this guidance during2022,* and recognized approximately $3.8 million in payroll tax credits under the CARES Act.

Note3—Accounts Receivable

Accounts receivable, net consisted of the following (in thousands):

Trade accounts receivable consist entirely of amounts owed from the Company’s customers related to product sales. Royalty revenue receivable represents amounts owed related to royalty revenue recognized based on the Company’s sub-licensees’ sales in their respective territories in the years ended* December 31, 2023and2022*.

For all accounts receivable, the Company recognized credit losses based on lifetime expected losses. In determining estimated credit losses, the Company evaluated its historical loss rates, current economic conditions and reasonable and supportable forecasts of future economic conditions. The Company recorded $0.9 million credit loss expense in the year ended* December 31, 2023,andno such expense in the year ended December 31, 2022.The Company recorded a recovery of credit loss expense of $1.0 million in year ended December 31, 2021.*

F-20

Note4—Prepaid Expenses and Other

Prepaid expenses and other consisted of the following at* December**31* (in thousands):

Other current prepaid amounts consist primarily of deposits, signing bonuses, licenses, subscriptions and software. Other long-term prepaid amounts consist primarily of prefunding of reimbursement claims.

Note5—Property and Equipment

Property and equipment consisted of the following at* December**31* (in thousands):

For the years ended* December 31, 2023*,2022 and2021, the Company incurred depreciation expense of $0.4 million, $0.6 million, and $0.7 million, respectively.

F-21

Note6—Leases

In* December 2011,the Company entered into a non-cancelable operating lease for office space in Los Angeles, California, which lease was subsequently amended in November 2012,** December 2013,** March 2014,** July 2015,and December 2017.The initial term of the lease was forseven* years and commenced on* December**10,* 2011. As amended, the Company rents approximately 65,656 square feet. The term of the lease runs until* March 2026,*and rent amounts payable by the Company increase approximately 3% per year. Concurrent with the execution of the lease, the Company provided the landlord an automatically renewable stand-by letter of credit in the amount of $1.0 million. The stand-by letter of credit is collateralized by a high-yield savings account, which is classified as restricted cash, long-term on the accompanying consolidated balance sheets.

In* June 2012,the Company entered into a long-term lease agreement for office space in South San Francisco, California, which was subsequently amended in May 2014and July 2015.As amended, the Company rents approximately 29,470 square feet. The term of this lease runs until March 2026,*with the option to extend for an additional five-year term, and rents payable by the Company increase approximately 3% per year. The Company provided the landlord an automatically renewable stand-by letter of credit in the amount of $1.1 million. The stand-by letter of credit is collateralized by a high-yield savings account, which is classified as restricted cash, long-term on the accompanying consolidated balance sheets.

The Company also leases copier equipment for use in the office spaces. Components of copier lease expense include both fixed and variable lease expenses.

Total rent expense for years ended* December 31, 2023*, 2022 and2021 was approximately $4.9 million, $4.9 million and $5.1 million, respectively. For purposes of determining straight-line rent expense, the lease term is calculated from the date the Companyfirst takes possession of the facility, including any periods of free rent and any renewal option periods that the Company is reasonably certain of exercising. The Company’s office and equipment leases generally have contractually specified minimum rent and annual rent increases are included in the measurement of the ROU asset and related lease liability. Additionally, under these lease arrangements, the Company* maybe required to pay directly, or reimburse the lessors, for real estate taxes, insurance, utilities, maintenance and other operating costs. Such amounts are generally variable and thereforenot* included in the measurement of the ROU asset and related lease liability but are instead recognized as variable lease expense in selling, general and administrative costs in the consolidated statements of operations when they are incurred.

The future minimum lease payments under ASC842 as of* December 31, 2023* were as follows (in thousands):

In* February 2019,the Company entered into a long-term sublease agreement for 12,429 square feet of the office space in Los Angeles, California. Also, in August** 2023,* the Company entered into a long-term sublease agreement for an additional 13,916 square feet of the office space in Los Angeles, California, which commenced in* November** 2023.* As a result of the long-term sublease entered during2023, the Company recorded an impairment expense on the right-of-use asset of approximately $0.6 million. For both subleases, the term of the leases run until* March 2026and the rent amounts payable to the Company increase approximately 3% per year. The Company recorded sublease income of $0.5 million for each of the years ended December 31, 2023*, 2022 and2021, in other income (expenses) in the consolidated statements of operations.

The future minimum lease payments to be received as of* December 31, 2023* were as follows (in thousands):

F-22

Supplemental cash flow information related to leases for the year ended* December 31, 2023*:

Note7—Intangible Assets

Intangible assets consisted of the following at* December**31* (in thousands):

Estimated future intangible amortization expense as of* December 31, 2023* is as follows (in thousands):

Note8—Accrued Expenses

Accrued expenses consisted of the following at* December**31* (in thousands):

F-23

Included in accrued liabilities is approximately $7.7 million ($8.0 million net of imputed interest) as of* December 31, 2023,and $15.4 million ($16.0 million net of imputed interest) as of December 31, 2022,that is related toEshelman v. Puma Biotechnology, Inc., et al*.* On November 10, 2022,the Company announced the parties entered into a settlement agreement. Pursuant to the settlement agreement, Dr. Eshelman filed a Stipulation of Voluntary Dismissal with Prejudice on November 7, 2022,and the Company agreed to pay Dr. Eshelman $16.0 million. The settlement amount will be paid intwo separate payments, thefirst* payment of $8.0 million was paid in* January 2023,and thesecond* payment of $8.0 million will be paid on or before* November 1, 2024.*

Accrued variable consideration represents estimates of adjustments to product revenue, net for which reserves are established. Accrued royalties represent royalties incurred in connection with the Company’s license agreement with Pfizer. Accrued CRO services, accrued other clinical development expenses, and accrued legal fees represent the Company’s estimates of such costs and are recognized as incurred. Accrued compensation includes commissions, vacation and restructuring costs.

Other accrued expenses consist primarily of grants, software and taxes.

Restructuring Costs

On* October 26, 2023,the Company implemented a reduction in our workforce of approximately 5% across the Company. The Company incurred approximately $0.4 million in related costs, including severance payments and insurance premiums, of which approximately $0.1 million is included in accrued compensation as of December 31, 2023.The Company believes that all payments related to this plan will be made by March 31, 2024**.*

Note9—Debt

Long-term debt consisted of the following at* December 31, 2023* (in thousands):

Athyrium Note Purchase Agreement

The Company issued senior notes for an aggregate principal amount of $100.0 million pursuant to a note purchase agreement dated* July 23, 2021,by the Company, and its subsidiaries, and Athyrium Opportunities IV Co-Invest1 LP (“Athyrium”), as Administrative Agent, and certain other investor parties (the “Note Purchase Agreement”), with an initial maturity date of July 23, 2026** (*the “Athyrium Notes”). The Athyrium Notes were issued for face amount of $100.0 million net of an original issue discount of $1.5 million. The Athyrium Notes also require a 2.0% exit payment to be made on each payment of principal. The borrowings under the Athyrium Notes, together with cash on hand, were used to repay the Company’s outstanding indebtedness, including the applicable exit and prepayment fees owed to lenders under its Oxford Credit Facility. The Company can borrow up to an additional $25.0 million under the Note Purchase Agreement for certain purposes specified in the Note Purchase Agreement. The Athyrium Notes are secured by substantially all of the Company’s assets. The Company incurred $1.9 million of deferred financing costs with the borrowing.

Interest on the Athyrium Notes is calculated in part based on the Secured Overnight Financing Rate (“SOFR”), which replaced the “London Interbank Offering Rate” as the floating benchmark for interest rate calculations applicable to the Athyrium Notes pursuant to the terms of the Third Amendment to Note Purchase Agreement dated as of* September 16, 2022 (the “Third Amendment”). The modification of the Note Purchase Agreement pursuant to the Third Amendment didnot* meet the requirements of a debt extinguishment under ASC470-50 -Debt Modifications and Exchanges andno gain or loss was recognized. The Company performed a quantitative analysis and determined that the terms of the new debt and original debt instrument arenot substantially different. Accordingly, the Third Amendment is accounted for as a debt modification.

Following the effectiveness of the Third Amendment, the Athyrium Notes bear interest at an annual rate equal to the sum of (a)eight percent (8.00%) plus (b) the lesser of (i) the sum of (x)three-month term SOFR for an interest period ofthree months plus (y)0.26161% (26.161 basis points) and (ii)three andone-half ofone percent (3.50%) per annum. Interest is payable quarterly on the last business day of* March,** June,** Septemberand Decembereach year. Beginning June 30, 2024,principal payments are required to be made quarterly at 11.11% of the original face amount with the remaining balance paid at maturity. Each principal payment will also include a 2.0% exit payment. As of December 31, 2023,*the effective interest rate for the loan was 12.99%.

At the Company’s option, the Company* mayprepay the outstanding principal balance of the notes in whole or in part, subject to a prepayment fee of 2.0% of the amount prepaid if the prepayment occurs on or prior to thesecond* anniversary of the issuance date of such notes, plus the present value of remaining interest that would have accrued through and including thesecond anniversary date, and 2.0% of the amount prepaid if the prepayment occurs after thesecond anniversary but on or prior to thethird anniversary of the issuance date of such notes.

The Athyrium Notes include affirmative and negative covenants applicable to the Company. The affirmative covenants include, among others, covenants requiring the Company to maintain its legal existence and governmental approvals, deliver certain financial reports, maintain insurance coverage, and satisfy certain requirements regarding deposit accounts. The negative covenants include, among others, restrictions on the Company’s transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, selling assets and suffering a change in control, in each case subject to certain exceptions. The Company is also required to maintain minimum cash balances and achieve certain minimum product revenue targets, measured as of the last day of each fiscal quarter on a trailing year-to-date basis. As of* December 31, 2023,*the Company was in compliance with such covenants.

F-24

As of* December 31, 2023*, the principal balance outstanding under the Athyrium Notes was $100.0 million, representing all of the Company’s debt.

The future minimum principal and exit payments under the Athyrium Notes as of* December 31, 2023*, were as follows (in thousands):

Debt Issuance Costs and Discounts

Debt issuance costs and discounts consist of the following (in thousands):

Debt issuance costs and discounts are financing costs related to the Company’s outstanding debt. Amortization of debt issuance costs is expensed using the effective interest method and is included in interest expense in the consolidated statements of operations. For the years ended* December 31, 2023,*2022 and2021, the Company recorded approximately $1.3 million, $1.2 million and $2.6 million, respectively, of interest expense related to the amortization of debt issuance costs, discounts and exit fees in the consolidated statements of operations.

Note10—Stockholders’ Equity (Deficit)

Common Stock

The Company didnot issue any shares of common stock upon exercise of stock options for the years ended* December 31, 2023,2022 and2021. The Company issued 1,301,127,1,017,744 and 1,089,120 shares of common stock upon vesting of RSUs during the years ended December 31, 2023,*2022 and2021, respectively.

Alan H. Auerbach, the Company’s President, Chief Executive Officer and Chairman of the Board purchased 2,360,295 shares of the Company's common stock for aggregate gross proceeds of approximately $7.5 million before deducting any offering expenses undertwo separate purchase agreements in the year ended* December 31, 2022.Thefirst* purchase took place on* March 8, 2022for 1,792,114 shares for a purchase price $2.79 per share and thesecond* purchase took place on* December 9, 2022*for 568,181 shares for a purchase price $4.40. Each purchase price was equal to the closing price of the Company’s common stock on NASDAQ on the date of each purchase.

Authorized Shares

The Company has 100,000,000 shares of stock authorized for issuance, all of which are common stock, par value $0.0001 per share.

Warrants

In* October 2011,*the Company issued an anti-dilutive warrant to Mr. Auerbach. The warrant was issued to provide Mr. Auerbach with the right to maintain ownership of at least 20% of the Company’s common stock in the event that the Company raised capital through the sale of its securities in the future.

In connection with the closing of a public offering in* October 2012,the exercise price and number of shares underlying the warrant issued to Mr. Auerbach were established and, accordingly, the final value of the warrant became fixed. Pursuant to the terms of the warrant, Mr. Auerbach was able to exercise the warrant to acquire 2,116,250 shares of the Company’s common stock at $16 per share until October**4,* 2021. On* April 1, 2021,the Company's Board of Directors approved an amendment to the terms of the warrant by extending the term until October 4, 2026.The amendment was approved by the Company's stockholders on June 15, 2021.*

As a result of this amendment, the Company recorded additional stock-based compensation in the amount of $13.6 million which was included in selling, general and administrative expense for the year ended* December 31, 2021.The fair value of the additional stock-based compensation was estimated using the Black-Scholes Option Pricing Method (see Note2*-Significant Accounting Policies) with the following assumptions as of* June 15, 2021,*the date of the modification.

Stock Options and Restricted Stock Units

The Company’s2011 Incentive Award Plan (“2011 Plan”) was adopted by the Company’s Board of Directors on* September**15,* 2011. Pursuant to the2011 Plan, the Company* maygrant incentive stock options and nonqualified stock options, as well as other forms of equity-based compensation. Incentive stock options maybe granted only to employees, while consultants, employees, officers and directors are eligible for the grant of nonqualified options under the2011* Plan. The maximum term of stock options granted under the2011 Plan is10 years and the awards generally vest over athree-year period. The exercise price of incentive stock options granted under the2011 Plan must be at least equal to the fair value of such shares on the date of grant. On* April 1, 2021,the Board of Directors adopted an amendment to the2011* Plan to increase the number of shares of the Company's common stock reserved for issuance thereunder by 2,000,000 shares. The amendment was approved by the Company's stockholders on* June 15, 2021.As of December 31, 2023*, a total of 14,545,860 shares of the Company’s common stock have been reserved for issuance under the2011 Plan.

F-25

As of* December 31, 2023*,5,222,006 shares of the Company’s common stock are issuable upon the exercise of outstanding awards granted under the2011 Plan and 2,104,460 shares of the Company’s common stock are available for future issuance under the2011 Plan. The Company awarded only “plain vanilla options” as determined by the SEC Staff Accounting Bulletin107, orShare Based Payment. The fair value of options granted to employees and non-employees was estimated using the Black-Scholes Option Pricing Method (see Note2-Significant Accounting Policies) with the following weighted-average assumptions used during the years ended* December**31:*

The Company’s2017 Employment Inducement Incentive Award Plan (“2017 Plan”) was adopted by the Company’s Board of Directors on* April**27,* 2017. Pursuant to the2017 Plan, the Company* maygrant stock options and restricted stock units, as well as other forms of equity-based compensation to employees, as an inducement to join the Company. The maximum term of stock options granted under the2017* Plan is 10 years and the awards generally vest over athree-year period. The exercise price of stock options granted under the2017 Plan must be at least equal to the fair market value of such shares on the date of grant. On* July 15, 2021,the Board of Directors adopted an amendment to the2017* Plan to increase the number of shares of the Company's common stock reserved for issuance thereunder by 1,000,000 shares. As of* December 31, 2023*, a total of 3,000,000 shares of the Company’s common stock have been reserved for issuance under the2017 Plan. As of* December 31, 2023*,821,647 shares of the Company’s common stock are issuable upon the exercise of outstanding stock options and vesting of RSUs granted under the2017 Plan, and 1,141,854 shares of the Company’s common stock are available for future issuance under the2017 Plan.

Stock-based compensation expense was as follows for the years ended* December**31* (in thousands):

F-26

Activity with respect to options granted under the2011 Plan and2017 Plan is summarized as follows:

At* December 31, 2023*, total estimated unrecognized compensation cost related to non-vested stock options granted prior to that date was approximately $1.3 million, which is expected to be recognized over a weighted-average period of 1.0 years. At* December 31, 2023*, the total estimated unrecognized compensation cost related to non-vested RSUs was approximately $3.9 million, which is expected to be recognized over a weighted-average period of 1.1 years. The weighted-average grant date fair value of options granted during the years ended* December 31, 2023,2022 and2021, was $3.17, $1.72 and $7.90 per share, respectively. The weighted average grant date fair value of RSUs awarded during the year ended December 31, 2023,*2022 and2021 was $3.96, $2.49 and $11.44, respectively.

Stock Option Rollforward

F-27

Restricted Stock Unit Rollforward

Note11—401(k) Savings Plan

During2012, the Company adopted a401(k) savings plan for the benefit of its employees. The Company is required to make matching contributions to the401(k) plan equal to 100% of thefirst 3% of wages deferred by each participating employee and 50% on the next2% of wages deferred by each participating employee. The Company incurred expenses for employer matching contributions of approximately $1.6 million, $1.5 million, and $1.5 million for the years ended* December 31, 2023,*2022 and2021, respectively.

Note12—Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic740, Income Taxes. Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. Income tax expense was as follows for the years ended* December**31* (in thousands):

F-28

The provision for income taxes in the accompanying consolidated statements of operations differs from the amount calculated by applying the statutory income tax rate to income (loss) from continuing operations before income taxes. Approximately $4.2 million of tax expense for the year ended* December 31, 2023* is due to stock-based compensation expense shortfall and the expiration of vested stock options. Approximately $1.8 million of the tax benefit for the year ended* December 31, 2023* is due to R&D tax credits, net of an approximately $0.5 million reserve related to unrecognized tax benefits for the method of allocation of expenses used in the R&D tax credits calculation. The primary components of such differences are as follows as of* December 31 (*in thousands):

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes give rise to the Company’s deferred income taxes. The components of the Company’s net deferred tax assets are as follows as of* December 31 (*in thousands):

As the ultimate realization of the potential benefits of the Company’s deferred tax assets is considered unlikely by management, the Company has offset the deferred tax assets attributable to those potential benefits through valuation allowances. Accordingly, the Company didnot recognize any benefit from income taxes in the accompanying consolidated statements of operations to offset its pre-tax losses. The valuation allowance decreased by approximately $6.2 million and approximately $5.1 million for theyears ended* December 31, 2023* and2022, respectively. At* December 31, 2023*, the Company had federal and state net operating loss carryforwards, respectively, of approximately $874.2 million and approximately $839.1 million, which will begin to expire in2033. At* December 31, 2023*, the Company also has federal research and development credit carryforwards of approx imately $39.7 million. Ifnot utilized, the carryforwards will begin to expire in2033. The Company has state research and development credit carryforwards of approximately $25.1 million which donot expire. Pursuant to the Internal Revenue Code, Sections382 and383, use of the Company’s net operating loss and credit carryforwards could be limited if a cumulative change in ownership of more than50% occurs within athree-year period. The Company performed an initial assessment of the potential limitation on net operating loss and credit carryforwards, and concluded that there will beno limitation for the tax year2023.

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The following is a tabular reconciliation of the total amounts of unrecognized tax benefits at* December 31 (*in thousands):

During the year ended* December 31, 2023,*the Company completed an R&D credit study. As a result of the study, the Company computed the credit under safe harbor rules, which when applied consistently, results in a more conservative approach of calculating the amount of the R&D credit. The Company concluded that a release of uncertain tax benefits for the portion of the R&D credit attributable to safe harbor was appropriate, and released a portion of previously recorded uncertain tax positions reserve.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by the federal and state jurisdictions where applicable. There are currentlyno pending income tax examinations. The Company’s tax years for2010 and forward are subject to examination by the federal and California tax authorities due to the carryforward of unutilized net operating losses and research and development credits.

Note13—Commitments and Contingencies

License Agreements

Pfizer License Agreement

In* August 2011,the Company entered into an agreement pursuant to which Pfizer agreed to grant it a worldwide license for the development, manufacture and commercialization ofPB272* (neratinib, oral),PB272 (neratinib, intravenous) andPB357, and certain related compounds. The license is exclusive with respect to certain patent rights owned by or licensed to Pfizer. Under the agreement, the Company is obligated to commence a new clinical trial for a product containingone of these compounds within a specified period of time and to use commercially reasonable efforts to complete clinical trials and to achieve certain milestones as provided in a development plan. From the closing date of the agreement through* December**31,* 2011, Pfizer continued to conduct the existing clinical trials on behalf of the Company at the licensor’s sole expense. At the Company’s request, Pfizer agreed to continue to perform certain services in support of the existing clinical trials at the Company’s expense. These services will continue through the completion of the transitioned clinical trials. The license agreement “capped” the out of pocket expense the Company would be responsible to complete the then existing clinical trials. All agreed upon costs incurred by the Company above the “cost cap” would be reimbursed by Pfizer. The Company exceeded the “cost cap” during thefourth quarter of2012. In accordance with the license agreement, the Company billed Pfizer for agreed upon costs above the “cost cap” until* December 31, 2013.*

On* July18,* 2014, the Company entered into an amendment to the license agreement with Pfizer. The amendment amends the agreement to (i) reduce the royalty rate payable by the Company to Pfizer on sales of licensed products; (ii) release Pfizer from its obligation to pay for certain out-of-pocket costs incurred or accrued on or after* January1,* 2014 to complete certain ongoing clinical studies; and (iii) provide that Pfizer and the Company will continue to cooperate to effect the transfer to the Company of certain records, regulatory filings, materials and inventory controlled by Pfizer as promptly as reasonably practicable.

As consideration for the license, the Company is required to make substantial payments upon the achievement of certain milestones totaling approximately $187.5 million if all such milestones are achieved, of which $102.5 million have been achieved as of* December 31, 2023*. In connection with the FDA approval of NERLYNX in* Julyof2017,* the Company triggered aone-time milestone payment pursuant to the agreement. In* June 2020,the Company entered into a letter agreement (the “Letter Agreement”), with Pfizer relating to the method of payment associated with aone*-time milestone payment under the license agreement with Pfizer. The Letter Agreement permitted the Company to make the milestone payment in installments with the remaining amount payable to Pfizer (including interest). The milestone payment accrued interest at 6.25% per annum. The milestone payment including accrued interest of $1.8 million was paid in full in* September 2021.In addition, the company reached a commercial milestone by achieving aggregate worldwide net sales of $250 million in calendar year2022,* resulting in a payable to Pfizer of $12.5 million as of* December 31, 2022.The commercial milestone payable is included in accrued in-licensed rights on the accompanying consolidated balance sheets and was paid in February**2023.*

The Company* maytrigger additional milestone payments in the future. Should the Company commercialize any more of the compounds licensed from Pfizer or any products containing any of these compounds, the Company will be obligated to pay to Pfizer annual royalties at a fixed rate in the low to mid-teens of net sales of all such products, subject to certain reductions and offsets in some circumstances. The Company’s royalty obligation continues, on a product-by-product and country-by-country basis, until the later of (i) the last to expire licensed patent covering the applicable licensed product in such country, or (ii) the earlier of generic competition for such licensed product reaching a certain level in such country or expiration of a certain time period afterfirst* commercial sale of such licensed product in such country. In the event that the Company sublicenses the rights granted to the Company under the license agreement with Pfizer to athird party, the same milestone and royalty payments are required. The Company can terminate the license agreement at will, or for safety concerns, in each case upon specified advance notice.

Takeda License Agreement

In* September 2022,the Company entered into an exclusive license agreement with Takeda to license the worldwide research and development and commercial rights to alisertib, a selective, small-molecule, orally administered inhibitor of aurora kinase A. Under the terms of the exclusive license agreement, the Company assumed sole responsibility for the global development and commercialization of alisertib. The Company paid Takeda an upfront license fee of $7 million in October 2022and is eligible to receive potential future milestone payments of up to $287.3 million upon the Company’s achievement of certain regulatory and commercial milestones over the course of the exclusive license agreement, as well as tiered royalty payments for any net sales of alisertib. The Company recorded in-process research and development expense of $7.0 million in connection with the up-front payment related to the asset acquisition. As of December 31, 2023*,no milestones had been accrued as the underlying contingencies werenot probable or estimable.

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Clinical Trial Contracts

The Company engages with CROs and contract manufacturing organizations (“CMOs”) in addition to engaging in contracts for the management of its ongoing clinical trials and pre-commercialization efforts. The Company* maycancel these agreements with a 30 to 45 day written notice to the outside vendor. The Company would be obligated to pay for services rendered up to that point, which amounts to total contractual obligations of approximately $66.0 million within the nexttwelve* months. The contracts also contain variable costs that are hard to predict as they are based on such things as patients enrolled and clinical trial sites, which can vary, and therefore, arenot included in the total obligations amount. Included in the total contractual obligations amount above are payments to be made when milestones are reached. Asof* December 31, 2023*, Company obligations for potential milestone payments totaled approximately $15.5 million. This amount will be paid by the Company if all milestones are reached and would reduce the overall contractual obligation ifone or more milestone is never reached.

The Company and certain of its executive officers were named as defendants in the lawsuits detailed below. The Company records a liability in the consolidated financial statements for loss contingencies when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, andno amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is reasonably possible butnot known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded.

Included in accrued liabilities is approximately $7.7 million ($8.0 million net of imputed interest) as of* December 31, 2023* that is related toEshelman v. Puma Biotechnology, Inc., et al. The Company announced on* November 10, 2022**,* that the parties entered into a settlement agreement. Pursuant to the settlement agreement, Dr. Eshelman filed a Stipulation of Voluntary Dismissal with Prejudice on* November 7, 2022**,* and the Company agreed to pay Dr. Eshelman $16.0 million. The settlement amount will be paid intwo separate payments, thefirst payment of $8.0 million was paid in* January 2023,and the final payment of $8.0 million will be paid on or before November 1, 2024.*

Legal Malpractice Suit

On* September 17, 2020,the Company filed a lawsuit against Hedrick Gardner Kincheloe & Garofalo, L.L.P. and David L. Levy, the attorneys who previously represented the Company inEshelman v. Puma Biotechnology, Inc., et al*. in the Superior Court of Mecklenburg County, North Carolina. The Company is alleging legal malpractice based on the defendants’ negligent handling of the defense of the Company inEshelman v. Puma Biotechnology, Inc., et al. The Company is seeking recovery of the entire amount awarded inEshelman v. Puma Biotechnology, Inc., et al. and all legal fees and expenses incurred in appealing from the judgment and retrying the damages phase of the trial. On* November 23, 2020,the defendant filed an answer to the complaint denying the allegations of negligence. On August 19, 2022,the Company filed a voluntary dismissal of the legal malpractice action, without prejudice, to allow theEshelman v. Puma Biotechnology, Inc., et al*. to conclude before proceedings. On* June 2, 2023the Company re-filed the lawsuit against Hedrick Gardner Kincheloe & Garofalo, L.L.P. and David L. Levy, the attorneys who previously represented the Company inEshelman v. Puma Biotechnology, Inc., et al.* in the Superior Court of Mecklenburg County, North Carolina. On* August 22, 2023,the defendants filed motions to dismiss the case. These motions were presented at a hearing on February 20, 2024,*but there has yet to be a ruling.

F-31

Mfolozi Dlamini, individually and on behalf of all others similarly situated v. Puma Biotechnology, Inc.

On* May 26, 2023,Mfolozi Dlamini filed a Class Action Complaint against the Company in the United States District Court for the Central District of California, alleging injuries as a result of unauthorized disclosure of certain individuals’ personally identifiable information in connection with a data security incident discovered by the Company in June 2022.On September 21, 2023,*the plaintiff and the Company agreed to dismiss the action with prejudice.

Patent-Related Proceedings

AstraZeneca Litigation

On* September 22, 2021,the Company filed suit against AstraZeneca Pharmaceuticals, LP, AstraZeneca AB, and AstraZeneca PLC for infringement of United States Patent Nos.10,603,314 (“the’314* patent”) and10,596,162 (“the*’162* patent”) (Puma Biotechnology, Inc. et al. v. AstraZeneca Pharmaceuticals LP et al.,1:21CV01338 (D. Del.* Sep. 22, 2021)).The Company’s complaint alleges that AstraZeneca’s commercial manufacture, use, offer for sale, sale, distribution, and/or importation of Tagrisso® (osimertinib) products for the treatment of gefitinib and/or erlotinib-resistant non-small cell lung cancer infringes the’314* and*’162* patents. The Company is an exclusive licensee of the*’314* and*’162* patents under the Pfizer Agreement. Wyeth is a co-plaintiff. Plaintiffs seek a judgment that AstraZeneca’s product infringes the asserted patents and an award of monetary damages in an amount to be proven at trial. AstraZeneca AB and AstraZeneca Pharmaceuticals LP filed an answer and counterclaims on* November 5, 2021,including claims challenging the asserted patents asnot* infringed and/or invalid, and accusing plaintiffs of unclean hands and patent misuse. The parties stipulated to dismiss AstraZeneca PLC as a defendant and Pfizer as a Counterclaim Defendant on* December 10, 2021,which the Court so ordered on December 13, 2021.The Company filed its answer to AstraZeneca’s counterclaims on December 17, 2021,denying those claims. The case was reassigned to visiting Judge Matthew Kennelly of the Northern District of Illinois. A Markman Hearing was conducted on March 17, 2023,and the Court issued its claim construction decision on March 29, 2023.Fact discovery closed on May 19, 2023,and expert discovery closed on November 17, 2023.The parties recently exchanged motions for summary judgment on certain issues and alsoDaubertchallenges to certain expert opinions. A jury trial is scheduled to begin on May 13, 2024.*

Acebright China Litigation

On* January 18, 2022,Shanghai Acebright Pharmaceuticals Group Co., Ltd. (“Acebright”) filed an ANDA with the National Medical Products Administration in China (“NMPA”) seeking approval to market a generic version of the Company’s NERLYNX® (neratinib) tablet,40mg in China. Acebright seeks approval prior to the expiration ofthree* patents listed on the China Patent Information Registration Platform for Marketed Drugs (“Chinese Orange Book”), namely, Chinese Patent Nos.ZL201410082103.7, ZL201080060546.6, andZL200880118789.3 (the*“'789* patent”, and collectively, the “NERLYNX® Patents”), alleging in a Type4.2 patent declaration that its generic version of NERLYNX doesnot fall within the scope of the claims of NERLYNX® Patents listed in the Chinese Orange Book. The patent declaration of Acebright was published in the Chinese Orange Book on* January 19, 2022.On March 2, 2022,the Company filed petitions with the China National Intellectual Property Administration (“CNIPA”) and requested administrative determination that Acebright’s generic neratinib tablet falls within the scope of the claims of NERLYNX® Patents listed in the Chinese Orange Book. The Company’s request for administrative determination was accepted by CNIPA on March 18, 2022.The Company has notified NMPA of the acceptance of the request for administrative determination for NMPA to institute a stay of Acebright’s ANDA fornine* months. On* July 11, 2022,CNIPA decided that claims5* and6 of PatentNo. ZL200880118789.3 arenot eligible for registration in the Chinese Orange Book on the ground that thesetwo pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms,” which arenot eligible for listing in the Chinese Orange Book. On* September 9, 2022,CNIPA decided that the generic drug in Acebright’s ANDA doesnot* fall within the protection scope of claims1, 3, 5 and6 of PatentNo. ZL201410082103.7 and claims1-4, 7 and9-13 of PatentNo. ZL201080060546.6. Thethree CNIPA administrative decisions on NERLYNX® Patents have lifted the stay of Acebright’s ANDA by NMPA. The Company has appealed each CNIPA administrative decision in* January 2023at the Beijing Intellectual Property Court (“BJIPC”). Thethree* appeals were accepted by BJIPC on* February 20, 2023.The Company also filedthree* civil complaints based on thethree NERLYNX® Patents against Acebright with the BJIPC in* July 2022and requested court determination that Acebright’s generic neratinib tablet falls within the scope of the claims of NERLYNX® Patents. On May 6, 2023,the Company withdrewtwo* civil lawsuits andtwo appeals in relation to Chinese Patent Nos.ZL201410082103.7 andZL201080060546.6 at the BJIPC. On* May 24, 2023,the BJIPC accepted the Company’s withdrawal request. On July 24, 2023,the Company withdrew the remainingone* civil lawsuit andone appeal in relation to Chinese PatentNo. ZL200880118789.3 at the BJIPC. On* August 15, 2023,the BJIPC accepted the Company’s withdrawal request. On September 12, 2023,the NMPA approved Acebright’s ANDA to market a generic version of the Company’s NERLYNX® in China with the approval number of GuoYaoZhunZiH20234141.*

On* December 28, 2023,the Company filed a civil lawsuit against Acebright for infringement of the'789* patent under Article11 of the Chinese Patent Law before Jiangsu Nanjing Intermediate People’s Court. The Company’s complaint alleges that Acebright’s offer for sale of a generic version of the Company’s NERLYNX® product infringes the*'789* patent. The Company seeks a judgment that Acebright’s product infringes the*'789* patent and Acebright’s act of offer for sale shall be enjoined. On* January 2, 2024,*Jiangsu Nanjing Intermediate People’s Court accepted the civil complaint.

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Aosaikang China Litigation

On* November 17, 2022,Jiangsu Aosaikang Pharmaceutical Co. Ltd. (“Aosaikang”) filed an ANDA with NMPA in China seeking approval to market a generic version of the Company’s NERLYNX®. The ANDA applicationNo.* isCYHS2202006. Aosaikang made Type4.2 declarations against thefour Orange Book PatentsZL201410082103.7, ZL201080060546.6, ZL200880118789.3 andZL201710057547.9, alleging that its generic version of NERLYNX doesnot fall within the scope of the claims of the Orange Book patents. Aosaikang also alleged that PatentsZL200880118789.3 andZL201710057547.9 arenot eligible for Chinese Orange Book listing.

On* December 28, 2022,the Company submittedfour* Article76 petitions against the Aosaikang ANDA with the CNIPA and requested administrative determination that Aosaikang’s generic neratinib tablet falls within the scope of the claims of thefour Orange Book patents. On* January 6, 2023,the CNIPA accepted the Company’s request for administrative determination in relation to Patent Nos.ZL201410082103.7 andZL201080060546.6.* Also on* January 6, 2023,the CNIPA declined to accept the Company’s request for administrative determination in relation to Patent Nos.ZL200880118789.3 andZL201710057547.9,* alleging that the listed claims arenot eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms,” which arenot eligible for listing in the Chinese Orange Book. On* January 28, 2023,the Company requested the NMPA to institute anine*-month stay against Aosaikang ANDA starting from the CNIPA’s acceptance of the Company’s request for administrative determination. On* June 2, 2023,CNIPA decided that the generic drug in Aosaikang’s ANDA doesnot* fall within the protection scope of claims1, 3, 5 and6 of PatentNo. ZL201410082103.7 and claims1-4, 7 and9-13 of PatentNo. ZL201080060546.6. Thetwo CNIPA administrative decisions on NERLYNX® Patents have lifted the stay of Aosaikang’s ANDA by NMPA. The Company has the right to appeal each CNIPA administrative decision withinsix months of receiving the decision. The Company also has the right to enforce thefour Orange Book patents in civil litigation before the Chinese court.

Convalife China Litigation

Convalife Pharmaceuticals (Shanghai) Co., Ltd (“Convalife”) filed an ANDA with NMPA in China seeking approval to market a generic version of the Company’s NERLYNX®. The ANDA applicationNo. isCYHS2202095. On* December 23, 2022,Convalife made Type4.2* declarations against thefour Orange Book PatentsZL201410082103.7, ZL201080060546.6, ZL200880118789.3 andZL201710057547.9, alleging that its generic version of NERLYNX doesnot fall within the scope of the claims of the Orange Book patents. Convalife also alleged that PatentsZL200880118789.3 andZL201710057547.9 arenot eligible for Chinese Orange Book listing.

On* February 1, 2023,the Company submittedfour* Article76 petitions against the Convalife ANDA with the CNIPA and requested administrative determination that Convalife’s generic neratinib tablet falls within the scope of the claims of thefour Orange Book patents. On* February 3, 2023,the CNIPA accepted the Company’s request for administrative determination in relation to Patent Nos.ZL201410082103.7 andZL201080060546.6.* Also on* February 3, 2023,the CNIPA declined to accept the Company’s request for administrative determination in relation to Patent Nos.ZL200880118789.3 andZL201710057547.9,* alleging that the listed claims arenot eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms,” which arenot eligible for listing in the Chinese Orange Book. On* February 24, 2023,the Company requested the NMPA to institute anine*-month stay against Convalife ANDA starting from the CNIPA’s acceptance of the Company’s request for administrative determination. On* June 2, 2023,CNIPA decided that the generic drug in Convalife’s ANDA doesnot* fall within the protection scope of claims1, 3, 5 and6 of PatentNo. ZL201410082103.7 and claims1-4, 7 and9-13 of PatentNo. ZL201080060546.6. Thetwo CNIPA administrative decisions on NERLYNX® Patents have lifted the stay of Convalife’s ANDA by NMPA. The Company has the right to appeal each CNIPA administrative decision withinsix months of receiving the decision. The Company also has the right to enforce thefour Orange Book patents in civil litigation before the Chinese court.

Kelun China Litigation

Hunan Kelun Pharmaceutical Co., Ltd. (“Kelun”) filed an ANDA with NMPA in China seeking approval to market a generic version of the Company’s NERLYNX®. The ANDA applicationNo. isCYHS2300221. On* January 28, 2023,Kelun made Type4.2* declarations against thefour Orange Book PatentsZL201410082103.7, ZL201080060546.6, ZL200880118789.3 andZL201710057547.9, alleging that its generic version of NERLYNX doesnot fall within the scope of the claims of the Orange Book patents. Kelun also alleged that PatentsZL200880118789.3 andZL201710057547.9 arenot eligible for Chinese Orange Book listing.

On* March 13, 2023,the Company submittedfour* Article76 petitions against the Kelun ANDA with the CNIPA and requested administrative determination that Kelun’s generic neratinib tablet falls within the scope of the claims of thefour Orange Book patents. On* March 21, 2023,the CNIPA declined to accept the Company’s request for administrative determination in relation to Patent Nos.ZL200880118789.3 andZL201710057547.9,* alleging that the listed claims arenot eligible for registration in the Chinese Orange Book on the ground that these pharmaceutical method-of-use claims fall in the scope of “patents of crystalline forms,” which arenot eligible for listing in the Chinese Orange Book. On* March 24, 2023,the CNIPA accepted the Company’s request for administrative determination in relation to Patent Nos.ZL201410082103.7 andZL201080060546.6.* On* April 17, 2023,the Company requested the NMPA to institute anine*-month stay against Kelun’s ANDA starting from the CNIPA’s acceptance of the Company’s request for administrative determination. On* September 14, 2023,the Company withdrew thetwo* requests for administrative determination in relation to Chinese Patent Nos.ZL201410082103.7 andZL201080060546.6 at the CNIPA. On* September 25, 2023,*the CNIPA accepted the Company’s withdrawal request.