Thomas Barwick Topline Summary and Update Karyopharm Therapeutics Inc. (NASDAQ:KPTI) is a long-struggling commercial-stage biotech working on developing the market for their nuclear exportin 1 inhibitor selinexor. While it is currently approved to treat multiple myeloma in later lines of therapy, KPTI is on track to potentially expand the label into endometrial cancer, with a phase 3 trial eagerly anticipated (though still a ways away). Now that we know the abstracts being presented at the American Society ...

Financial Data and Key Metrics Changes - Total revenue for Q4 2023 was $33.7 million, consistent with Q4 2022, while total revenue for the full year 2023 was $146 million, down from $157.1 million in 2022 [55][56] - Net product revenue from US commercial sales of XPOVIO for Q4 2023 was $25.1 million, compared to $31.1 million in Q4 2022, and for the full year 2023, it was $112 million, down from $120.4 million in 2022 [56][60] - The gross-to-net discount for XPOVIO in Q4 2023 was 23.5%, and for the full year 2023, it was 22%, with expectations for 2024 to be in the 25% to 30% range [68] Business Line Data and Key Metrics Changes - XPOVIO's new patient share in the community setting approached 70% in the second to fourth line, representing double-digit growth year-over-year [44] - The community setting now accounts for two-thirds of the business, with a 20% year-over-year increase in prescribing sites [51][52] - The company expects US XPOVIO net product revenue for 2024 to be in the range of $100 million to $120 million, reflecting a balance of growth conviction and competitive market recognition [60][71] Market Data and Key Metrics Changes - The competitive landscape in the multiple myeloma market has intensified, particularly with the introduction of bispecific therapies in the second half of 2023, impacting demand in the academic setting [12][44] - Despite competition, the company achieved total demand growth year-on-year in the community setting in 2023, which is a key growth driver for 2024 [84] Company Strategy and Development Direction - The company is focused on advancing its late-stage pipeline, particularly in myelofibrosis and endometrial cancer, with three pivotal Phase 3 trials expected to read out results in 2025 [5][17] - The strategy includes shifting the use of selinexor into earlier lines of therapy, where patients tend to stay on treatment longer, thus increasing duration of therapy [95] - The company aims to leverage its existing commercial infrastructure to support rapid launches of selinexor in new indications, with a potential peak annual revenue of approximately $2 billion in the US alone [13][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing Phase 3 studies and the potential for selinexor to address high unmet needs in cancer treatment [67][73] - The company anticipates a cash runway into late 2025, supported by expected revenues from XPOVIO and partnerships [66][71] - Management highlighted the importance of evolving the regulatory landscape and potential changes in study design to enhance the value proposition of selinexor [105] Other Important Information - The company reported a decrease in R&D expenses due to reduced personnel costs, while SG&A expenses also decreased, reflecting cost optimization efforts [64][69] - The existing cash and investments as of December 31, 2023, totaled $192.4 million, down from $279.7 million in 2022 [70] Q&A Session Summary Question: Can you quantify the community versus academic setting growth in 2023? - The company achieved total demand growth year-on-year in the community setting, with a 20% increase in prescriber base, which is a significant growth driver for 2024 [84][85] Question: What is the impact of BCMA therapies moving into 2024? - The introduction of bispecific therapies posed a significant competitive threat in the academic setting, but the community setting has not seen a major impact yet [78] Question: Can you comment on the enrollment experience of the Phase 3 SPD triplet study in multiple myeloma? - Enrollment is progressing well, with significant interest in the study both in the US and EU, and completion of enrollment is expected later this year [115] Question: What is the company's cash position and runway? - The company finished 2023 with $192 million in cash, with a projected cash runway into late 2025, considering expected revenues and expenditures [119]

Financial Performance & Guidance - Karyopharm reported XPOVIO Net Product Revenue of $112 million for FY 2023 and $25 million for Q4 2023[118] - The company anticipates U S XPOVIO Net Product Revenue between $100 million and $120 million in 2024[119] - Karyopharm expects its cash runway to be sufficient to fund planned operations into late 2025[122] - Total revenue was $33.7 million for 4Q 2023 and $146 million for FY 2023[138] Clinical Development Programs - Karyopharm is conducting a Phase 3 trial of selinexor + ruxolitinib in treatment-naïve myelofibrosis (MF)[18] - Preliminary analysis from the Phase 3 SIENDO trial showed encouraging overall survival in the TP53 wild-type exploratory subgroup[29] - The company is planning to report top-line results from the pivotal EC-042 Phase 3 trial in TP53 wildtype endometrial cancer in 1H 2025[141] - Karyopharm is also expecting to report top-line results from the Phase 3 trial of selinexor + ruxolitinib in treatment-naïve MF in 2H 2025[141] Market Opportunity - Karyopharm estimates a potential for ~$2 billion in annual peak U S revenues from selinexor across multiple myeloma, endometrial cancer, and myelofibrosis[16, 20] - Approximately 20,000 people in the U S live with myelofibrosis[25] - In the U S each year, approximately 16,000 patients are diagnosed with advanced and recurrent endometrial cancer[100]

Financial Performance - As of December 31, 2023, the company reported an accumulated deficit of $1.5 billion and net losses of $143.1 million for the year, compared to $165.3 million in 2022 and $124.1 million in 2021[574]. - Total revenue for 2023 was $146.0 million, which included $112.0 million from XPOVIO net product revenue and $34.0 million from license revenue[574]. - Net product revenue from U.S. commercial sales of XPOVIO decreased by 7% in 2023 compared to 2022, primarily due to the closure of myeloma foundations that support Medicare Part D patients[585]. - License and other revenue decreased by $2.6 million in 2023 compared to 2022, mainly due to a decline in milestone-related revenue and royalty revenue from Antengene, partially offset by increased revenue from Menarini[587]. - Interest income rose significantly by $8.58 million (364%) in 2023 compared to 2022, contributing to a total other expense net decrease of $9.5 million (42%)[595]. - Net cash used in operating activities decreased by $56.83 million (38%) in 2023 compared to 2022, primarily due to reduced expenses and milestone payments received[602]. - The company received $32.0 million in milestone and upfront payments in 2023, with additional potential payments tied to development goals and sales milestones[607]. Expenses and Cost Management - Total operating expenses decreased by $23.7 million (8%) in 2023 compared to 2022, with research and development expenses down by $9.9 million (7%) and selling, general and administrative expenses down by $13.5 million (9%)[589][593]. - Research and development expenses for 2023 were $138.75 million, a decrease from $148.66 million in 2022, primarily due to a reduction in personnel costs and stock-based compensation[591]. - Clinical trial costs increased by $9.2 million (16%) in 2023, driven by advancements in three pivotal Phase 3 trials[591][592]. - Selling, general and administrative expenses are expected to decrease slightly in 2024 due to cost optimization efforts[594]. - The company anticipates research and development expenses to increase slightly in 2024 as it continues to advance its pivotal Phase 3 trials[592]. Cash and Liquidity - As of December 31, 2023, the company had $191.4 million in cash, cash equivalents, and investments[574]. - As of December 31, 2023, the company had cash, cash equivalents, and investments totaling $191.4 million, which are expected to fund operations for at least twelve months[619]. - The company has provided a security deposit of $0.3 million for its operating lease, classified as long-term restricted cash[612]. - The company does not believe its cash and investments have significant risk of default or illiquidity, but acknowledges potential instability in financial institutions[620]. Clinical Development and Commercialization - The company plans to continue clinical trials and seek additional approvals for selinexor in multiple high unmet need cancer indications, including endometrial cancer and multiple myeloma[573]. - The commercialization of XPOVIO is supported by a comprehensive patient and healthcare provider support program, KaryForward™, and a dedicated network of specialty pharmacy providers[571]. - The company announced in January 2024 that further clinical development of the eltanexor program is on hold to focus resources on prioritized late-stage programs[573]. - XPOVIO has received regulatory approval in over 40 countries outside the U.S. and is commercially available in a growing number of countries[572]. - The company expects changes in Medicare Part D under the Inflation Reduction Act to reduce the need for patient assistance programs in 2024 compared to 2023[586]. - License and other revenue is expected to increase in 2024 compared to 2023 due to anticipated milestone achievements[588]. - The company expects to continue incurring costs related to commercialization expenses for its products, depending on the responsibilities of collaborators[615]. Market and Risk Factors - The company is exposed to market risks related to interest rates, with an immediate 100 basis point shift in rates not expected to materially affect the fair market value of its investment portfolio[619]. - The company does not currently hedge its foreign currency exchange rate risk, which could impact costs related to contracts with organizations in Canada, the UK, and Europe[621]. - The company is subject to fluctuations in foreign currency rates for clinical trial budgets frequently denominated in foreign currencies[621]. - The company has incurred significant losses since inception and may not achieve profitability for several years, necessitating reliance on additional financing[616].

Financial Data and Key Metrics Changes - Total revenue for Q3 2023 was $36 million, slightly down from $36.1 million in Q3 2022 [36] - Net product revenue from U.S. sales of XPOVIO was $30.2 million in Q3 2023, compared to $32 million in Q3 2022, impacted by higher patient assistance program utilization and increased gross to net discounts [37] - Cash and cash equivalents totaled $209.2 million as of September 30, 2023, down from $279.7 million at the end of 2022, with a cash runway expected through late 2025 [39][40] Business Line Data and Key Metrics Changes - XPOVIO delivered $30.2 million in net sales in Q3 2023, with total demand year-over-year declining 3% compared to Q3 2022, primarily due to increased competition in late lines [17][32] - The utilization of the patient assistance program (PAP) contributed to 9% of total demand in Q3 2023, up from 4% in Q3 2022, reflecting higher patient engagement [18] - The NCCN has updated guidelines to recommend switching classes of therapy, enhancing XPOVIO's positioning in the treatment landscape [20] Market Data and Key Metrics Changes - The company expects total revenues in 2023 to be between $145 million and $160 million, with XPOVIO net U.S. product revenue projected between $110 million and $125 million [40] - The new patient share mix for XPOVIO in the second to fourth line was over 60%, representing approximately 20% growth year-over-year [49] Company Strategy and Development Direction - The company is focused on advancing its mid and late-stage pipeline, with three pivotal Phase 3 trials expected to read out data through 2024 and 2025 [4][90] - There is a strong emphasis on cost management, with a 12% reduction in R&D and SG&A expenses year-over-year for the first nine months of 2023 [38] - The company aims to leverage its commercialization capabilities and relationships in the community to drive growth across multiple indications [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing clinical trials and the potential for selinexor to change treatment paradigms in multiple myeloma and endometrial cancer [42][90] - The company is optimistic about the upcoming data readouts and the impact of recent guideline updates on XPOVIO's market positioning [60][76] Other Important Information - The company has reduced its workforce by approximately 20% to strengthen its financial position for ongoing Phase 3 studies [36] - The collaboration with BMS to evaluate selinexor in combination with mezigdomide is expected to enhance treatment options for multiple myeloma patients [93] Q&A Session Summary Question: Contextualizing new IMF data and Phase 3 top line data expectations - Management highlighted the impressive efficacy of the combination of selinexor and ruxolitinib in JAK naive patients, with a focus on the durability of responses [46] Question: Update on eltanexor development plans - Management remains enthusiastic about eltanexor's data in hard-to-treat patient populations, with encouraging survival rates observed [47] Question: Enrollment progress and repo rates in early line patients - Enrollment is proceeding well, driven by enthusiasm around new data, with a noted increase in new patient starts in earlier lines [57] Question: Impact of NCCN guideline updates on XPOVIO - The elevation of XPOVIO to category one in NCCN guidelines is expected to strengthen its position in the community and drive steady growth [60] Question: Overall survival data from the SIENDO Phase 3 study - Initial overall survival data is anticipated to be presented later this year, with ongoing monitoring of patient populations [71] Question: Impact of foundation closures on PAP - The impact of PAP is expected to remain similar in Q4 as in Q3, with anticipated changes in Medicare Part D design expected to reduce reliance on PAP in 2024 [85]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Karyopharm Therapeutics Inc.'s unaudited condensed consolidated financial statements for Q3 and nine months ended September 30, 2023, are presented [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets from $358.2 million at the end of 2022 to $270.0 million as of September 30, 2023, primarily driven by a reduction in cash and cash equivalents Condensed Consolidated Balance Sheets (in thousands) | | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $43,655 | $135,188 | | Investments | $164,660 | $142,779 | | Total current assets | $263,222 | $350,162 | | **Total assets** | **$269,960** | **$358,172** | | **Liabilities and Stockholders' Deficit** | | | | Total current liabilities | $62,079 | $65,908 | | Convertible senior notes | $170,702 | $170,105 | | **Total liabilities** | **$370,356** | **$374,828** | | **Total stockholders' deficit** | **($100,396)** | **($16,656)** | | **Total liabilities and stockholders' deficit** | **$269,960** | **$358,172** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenue for Q3 2023 was $36.0 million, with a net loss of $34.5 million, while nine-month revenue decreased to $112.3 million with a narrowed net loss of $101.3 million Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | | For the Three Months Ended Sep 30, 2023 | For the Three Months Ended Sep 30, 2022 | For the Nine Months Ended Sep 30, 2023 | For the Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $30,207 | $32,009 | $86,955 | $89,319 | | License and other revenue | $5,802 | $4,136 | $25,331 | $34,175 | | **Total revenue** | **$36,009** | **$36,145** | **$112,286** | **$123,494** | | Research and development | $35,553 | $31,359 | $99,369 | $117,730 | | Selling, general and administrative | $30,805 | $34,645 | $101,193 | $110,752 | | **Total operating expenses** | **$67,269** | **$66,984** | **$204,018** | **$231,827** | | Loss from operations | ($31,260) | ($30,839) | ($91,732) | ($108,333) | | **Net loss** | **($34,506)** | **($36,324)** | **($101,262)** | **($126,785)** | | **Net loss per share—basic and diluted** | **($0.30)** | **($0.45)** | **($0.89)** | **($1.60)** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly decreased for the nine months ended September 30, 2023, while cash, cash equivalents, and restricted cash ended lower Condensed Consolidated Statements of Cash Flows (in thousands) | | For the Nine Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($74,138) | ($122,711) | | Net cash used in investing activities | ($18,903) | ($38,958) | | Net cash provided by financing activities | $860 | $37,895 | | **Net decrease in cash, cash equivalents and restricted cash** | **($92,304)** | **($124,388)** | | Cash, cash equivalents and restricted cash at end of period | $44,581 | $73,057 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail Karyopharm's business, key accounting policies, and breakdowns of revenues, inventory, financial instruments, investments, stock-based compensation, equity, and long-term obligations - The company's lead asset, XPOVIO® (selinexor), is approved for multiple myeloma and diffuse large B-cell lymphoma (DLBCL) in the U.S. and is commercialized by partners in approximately 40 countries outside the U.S.[22](index=22&type=chunk)[23](index=23&type=chunk) Product Revenue, Net (in thousands) | | For the Three Months Ended Sep 30, | For the Nine Months Ended Sep 30, | | :--- | :--- | :--- | | | 2023 | 2022 | 2023 | 2022 | | Gross product revenue | $37,981 | $39,178 | $111,387 | $108,947 | | Provisions for product revenue | ($7,774) | ($7,169) | ($24,432) | ($19,628) | | **Total product revenue, net** | **$30,207** | **$32,009** | **$86,955** | **$89,319** | License and Other Revenue (in thousands) | | For the Three Months Ended Sep 30, | For the Nine Months Ended Sep 30, | | :--- | :--- | :--- | | | 2023 | 2022 | 2023 | 2022 | | Menarini | $5,564 | $1,618 | $19,912 | $15,235 | | Antengene | $80 | $1,532 | $1,952 | $11,533 | | Other | $158 | $986 | $3,467 | $7,407 | | **Total license and other revenue** | **$5,802** | **$4,136** | **$25,331** | **$34,175** | - The company has **$172.5 million** in principal of 3.00% convertible senior notes due 2025. As of September 30, 2023, the conditions for conversion had not been met.[60](index=60&type=chunk)[62](index=62&type=chunk)[64](index=64&type=chunk) - A deferred royalty obligation exists with HealthCare Royalty Partners (HCR), where Karyopharm received **$135.0 million** in total investment and makes tiered percentage payments on net revenues of selinexor. Total payments are capped at **195%** of the investment amount.[67](index=67&type=chunk)[68](index=68&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20(MD%26A)) Management discusses the company's financial condition, results of operations, and liquidity, highlighting XPOVIO® commercialization and pipeline development [Results of Operations](index=19&type=section&id=Results%20of%20Operations) Q3 2023 total revenue was flat, with net product revenue impacted by patient assistance programs, while R&D expenses rose and SG&A expenses fell, leading to a narrowed net loss Comparison of Operations (in thousands) | | For the Three Months Ended Sep 30, 2023 | For the Three Months Ended Sep 30, 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $30,207 | $32,009 | ($1,802) | (6)% | | License and other revenue | $5,802 | $4,136 | $1,666 | 40% | | **Total revenue** | **$36,009** | **$36,145** | **($136)** | **(0)%** | | Research and development | $35,553 | $31,359 | $4,194 | 13% | | Selling, general and administrative | $30,805 | $34,645 | ($3,840) | (11)% | | **Net loss** | **($34,506)** | **($36,324)** | **$1,818** | **(5)%** | - Net product revenue in 2023 was adversely impacted by approximately **$1.2 million** in Q3 and **$5.4 million** year-to-date due to providing XPOVIO at no charge through its Patient Assistance Program (PAP) following the closure of several myeloma foundation support programs.[88](index=88&type=chunk) - The decrease in nine-month license and other revenue was primarily due to the recognition of **$7.8 million** of milestone-related revenue from Antengene in 2022 which did not recur in 2023.[90](index=90&type=chunk) - The increase in Q3 R&D expenses was driven by a **$7.1 million** rise in clinical trial costs for three pivotal Phase 3 studies, partially offset by lower personnel and stock-based compensation costs due to reduced headcount.[95](index=95&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2023, Karyopharm had $208.3 million in liquidity, expected to fund operations for at least twelve months, with decreased cash used in operating activities - As of September 30, 2023, the company's principal source of liquidity was **$208.3 million** of cash, cash equivalents and investments.[104](index=104&type=chunk) - Management believes that existing cash, cash equivalents and investments will be sufficient to fund current operating plans and capital expenditure requirements for at least **twelve months** from the report's issuance date.[104](index=104&type=chunk) Cash Flow Summary (in thousands) | | For the Nine Months Ended Sep 30, 2023 | For the Nine Months Ended Sep 30, 2022 | $ Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | ($74,138) | ($122,711) | $48,573 | | Net cash used in investing activities | ($18,903) | ($38,958) | $20,055 | | Net cash provided by financing activities | $860 | $37,895 | ($37,035) | - The company has a 2023 Open Market Sale Agreement with Jefferies to sell up to **$100.0 million** of common stock. No shares were sold under this agreement during the nine months ended September 30, 2023.[111](index=111&type=chunk)[112](index=112&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are U.S. interest rates and foreign currency exchange rates, with interest rate risk considered low due to short-term investments - The primary market risk is interest rate sensitivity on its **$208.3 million** portfolio of cash, cash equivalents, and investments. An immediate **100 basis point** shift in interest rates is not expected to have a material effect.[121](index=121&type=chunk) - The company is exposed to foreign currency exchange rate risk through contracts with CROs and CMOs in Canada and Europe. It does not currently hedge this risk.[123](index=123&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting - Based on an evaluation as of September 30, 2023, the President and CEO and the Executive VP and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level.[124](index=124&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls.[125](index=125&type=chunk) [PART II - OTHER INFORMATION](index=26&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) This section details material risks and uncertainties that could adversely affect the company's business, financial condition, and results of operations [Risks Related to Commercialization and Product Development](index=26&type=section&id=Risks%20Related%20to%20Commercialization%20and%20Product%20Development) The company's success depends on XPOVIO's commercial success, facing intense competition, and risks from long, expensive, and uncertain clinical development processes - The business is substantially dependent on the commercial success of XPOVIO. Failure to successfully commercialize it will materially harm the business.[130](index=130&type=chunk) - The company faces substantial competition from major pharmaceutical and biotech companies, with several new novel therapeutics recently entering the multiple myeloma market, such as TECVAYLI™, ELREXFIO™, and TALVEY™.[134](index=134&type=chunk) - Serious adverse side effects related to XPOVIO, such as fatigue, nausea, and cytopenias, could delay or prevent regulatory approval, limit commercial value, or lead to significant negative financial consequences.[144](index=144&type=chunk)[145](index=145&type=chunk) [Risks Related to Regulatory Matters](index=35&type=section&id=Risks%20Related%20to%20Regulatory%20Matters) The company faces risks from expensive, uncertain regulatory approvals, post-marketing requirements, healthcare reform, and stringent data privacy laws - The regulatory approval process is expensive, time-consuming, and uncertain, and the company may not receive approvals for commercialization in a timely manner, or at all.[172](index=172&type=chunk) - XPOVIO's approval for DLBCL is under the FDA's Accelerated Approval Program, which requires a post-marketing confirmatory trial. Failure to verify clinical benefit in this trial could lead the FDA to withdraw its approval for this indication.[188](index=188&type=chunk) - The Inflation Reduction Act (IRA) of 2022 has significant implications, including authorizing Medicare to negotiate drug prices (starting 2026) and imposing rebates for price increases that outpace inflation, which could adversely affect revenue.[223](index=223&type=chunk)[224](index=224&type=chunk) - The company is subject to stringent data privacy laws like GDPR in Europe and CCPA/CPRA in California, which regulate the processing of personal data. Non-compliance can lead to significant fines and reputational harm.[242](index=242&type=chunk)[246](index=246&type=chunk)[248](index=248&type=chunk) [Risks Related to Our Financial Position and Capital Requirements](index=52&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Capital%20Requirements) The company has a history of significant losses, requires additional funding, and its indebtedness contains covenants that could restrict operations - The company has incurred significant losses since inception, with an accumulated deficit of **$1.4 billion** as of September 30, 2023, and expects to continue incurring losses.[270](index=270&type=chunk) - Additional funding will be needed to achieve business objectives. If unable to raise capital when needed, the company may be forced to delay, reduce, or eliminate R&D programs or commercialization efforts.[275](index=275&type=chunk) - The Revenue Interest Agreement with HCR contains covenants that, if violated, could lead to accelerated payments or foreclosure on all present and future assets related to selinexor.[278](index=278&type=chunk) [Risks Related to Our Dependence on Third Parties](index=57&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) The company heavily relies on third parties for international collaborations, U.S. product distribution, clinical trials, and manufacturing, posing significant operational risks - The company depends on collaborations with third parties (e.g., Antengene, Menarini) for development, marketing, and commercialization of its products outside the U.S. Unsuccessful collaborations could force the company to alter its plans.[289](index=289&type=chunk)[290](index=290&type=chunk) - The company relies on a limited number of specialty pharmacies and distributors for U.S. sales of XPOVIO. Any failure by these parties to perform could adversely affect results.[295](index=295&type=chunk) - The company is completely dependent on third-party contract manufacturers, including a single source supplier for its active pharmaceutical ingredient. Any disruption could delay clinical development, marketing approval, or commercialization.[305](index=305&type=chunk)[308](index=308&type=chunk) [Risks Related to Our Intellectual Property](index=61&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) Success depends on obtaining and maintaining patent protection, facing litigation risks, and potential competition from generic versions of approved products - The company's success depends on its ability to obtain and maintain patent protection. The patent position of biotech companies is highly uncertain, and pending applications may not result in issued patents that provide meaningful protection.[310](index=310&type=chunk)[312](index=312&type=chunk) - The company may become involved in expensive and time-consuming lawsuits to protect its patents or defend against infringement claims by third parties, the outcomes of which are uncertain.[318](index=318&type=chunk)[319](index=319&type=chunk) - Upon regulatory approval of its products, competitors could enter the market with generic versions by filing ANDAs or 505(b)(2) applications, which may lead to a material decline in sales of the company's products.[324](index=324&type=chunk) [Risks Related to Our Operations and Employee Matters](index=65&type=section&id=Risks%20Related%20to%20Our%20Operations%20and%20Employee%20Matters) Future success relies on retaining key personnel and is vulnerable to increasing cyber incidents that could disrupt operations and lead to data loss - The company is highly dependent on its key management and scientific teams and faces significant competition in recruiting and retaining qualified personnel.[335](index=335&type=chunk)[336](index=336&type=chunk) - Internal computer systems are vulnerable to cyber incidents such as malware, ransomware, and phishing. A security breach could result in a material disruption of development programs, loss of trade secrets, and significant liability.[337](index=337&type=chunk)[339](index=339&type=chunk) [Risks Related to Our Common Stock](index=66&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) The common stock price may be volatile, facing delisting risks from Nasdaq non-compliance, and corporate provisions could deter potential acquisitions - Failure to comply with Nasdaq's continued listing requirements, such as the minimum **$1.00** bid price, could lead to delisting, which would negatively impact the stock's price and liquidity. The stock price has recently closed below **$1.00** per share.[341](index=341&type=chunk) - The stock price has been and may continue to be volatile, influenced by factors such as clinical trial results, competitor announcements, regulatory developments, and general market conditions.[345](index=345&type=chunk) - Provisions in the corporate charter and Delaware law, such as a classified board and inability of stockholders to act by written consent, could discourage or delay a potential acquisition.[342](index=342&type=chunk)[344](index=344&type=chunk) [Item 5. Other Information](index=71&type=section&id=Item%205.%20Other%20Information) This section discloses information regarding director and officer trading arrangements under Rule 10b5-1, with no adoptions or terminations in Q3 2023 - During the third quarter of 2023, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement.[365](index=365&type=chunk) [Item 6. Exhibits](index=72&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including a common stock purchase warrant, an amendment to the Revenue Interest Financing Agreement, and certifications - Lists exhibits filed with the report, including a Common Stock Purchase Warrant, the Second Amendment to the Revenue Interest Financing Agreement, and CEO/CFO certifications pursuant to the Sarbanes-Oxley Act.[367](index=367&type=chunk) [Signatures](index=73&type=section&id=Signatures) The report is duly signed and authorized by the company's Principal Executive Officer and Principal Financial and Accounting Officer on November 2, 2023 - The report was signed on November 2, 2023, by Richard Paulson, President and Chief Executive Officer, and Michael Mason, Executive Vice President, Chief Financial Officer and Treasurer.[372](index=372&type=chunk)

Second Quarter 2023 Financial Results & Business Update On Today's Call Elhan Webb, CFA, Senior Vice President, Investor Relations Richard Paulson, President and Chief Executive Officer • Commercial Highlights • Closing Remarks Richard Paulson, President and Chief Executive Officer This presentation contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those regarding Karyopharm's guidance on its 2023 total rev ...

Karyopharm Therapeutics Inc. (NASDAQ:KPTI) Q2 2023 Earnings Conference Call August 2, 2023 8:00 AM ET Company Participants Elhan Webb - Senior Vice President, Investor Relations Richard Paulson - President and Chief Executive Officer Reshma Rangwala - Chief Medical Officer Sohanya Cheng - Chief Commercial Officer Michael Mason - Chief Financial Officer Conference Call Participants Kevin Strang - Jefferies Colleen Kusy - Baird Nicole Gabreski - Piper Sandler Brian Abrams - RBC Capital Markets Operator Good m ...

PART I - FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited condensed consolidated financial statements of Karyopharm Therapeutics Inc. for the periods ended June 30, 2023, and December 31, 2022, including balance sheets, statements of operations, comprehensive loss, cash flows, and stockholders' deficit, along with accompanying notes detailing the company's business, accounting policies, and specific financial items [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Item | June 30, 2023 | December 31, 2022 | Change (2023 vs 2022) | % Change | | :-------------------------------- | :------------ | :---------------- | :-------------------- | :------- | | **Assets** | | | | | | Cash and cash equivalents | $80,894 | $135,188 | $(54,294) | -40.16% | | Investments | $155,871 | $142,779 | $13,092 | 9.17% | | Accounts receivable, net | $32,280 | $47,086 | $(14,806) | -31.45% | | Total current assets | $291,381 | $350,162 | $(58,781) | -16.79% | | Total assets | $297,830 | $358,172 | $(60,342) | -16.85% | | **Liabilities and Stockholders' Deficit** | | | | | | Total current liabilities | $58,928 | $65,908 | $(6,980) | -10.59% | | Convertible senior notes | $170,497 | $170,105 | $392 | 0.23% | | Deferred royalty obligation | $132,718 | $132,718 | $0 | 0.00% | | Total liabilities | $369,078 | $374,828 | $(5,750) | -1.53% | | Total stockholders' deficit | $(71,248) | $(16,656) | $(54,592) | 327.77% | | Total liabilities and stockholders' deficit | $297,830 | $358,172 | $(60,342) | -16.85% | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Change (YoY) | % Change (YoY) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change (YoY) | % Change (YoY) | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------- | :------------- | :----------------------------- | :----------------------------- | :----------- | :------------- | | Product revenue, net | $28,460 | $29,010 | $(550) | -1.89% | $56,748 | $57,310 | $(562) | -0.98% | | License and other revenue | $9,119 | $10,669 | $(1,550) | -14.53% | $19,529 | $30,039 | $(10,510) | -35.00% | | Total revenue | $37,579 | $39,679 | $(2,100) | -5.29% | $76,277 | $87,349 | $(11,072) | -12.68% | | Cost of sales | $1,194 | $939 | $255 | 27.16% | $2,545 | $2,365 | $180 | 7.61% | | Research and development | $31,477 | $44,309 | $(12,832) | -28.96% | $63,816 | $86,371 | $(22,555) | -26.11% | | Selling, general and administrative | $34,481 | $37,339 | $(2,858) | -7.65% | $70,388 | $76,107 | $(5,719) | -7.51% | | Total operating expenses | $67,152 | $82,587 | $(15,435) | -18.69% | $136,749 | $164,843 | $(28,094) | -17.04% | | Loss from operations | $(29,573) | $(42,908) | $13,335 | -31.08% | $(60,472) | $(77,494) | $17,022 | -21.97% | | Net loss | $(32,630) | $(49,062) | $16,432 | -33.49% | $(66,756) | $(90,461) | $23,705 | -26.20% | | Net loss per share—basic and diluted | $(0.29) | $(0.62) | $0.33 | -53.23% | $(0.59) | $(1.15) | $0.56 | -48.70% | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(32,630) | $(49,062) | $(66,756) | $(90,461) | | Unrealized loss on investments | $(297) | $(170) | $(264) | $(184) | | Foreign currency translation adjustment | $(67) | $(455) | $119 | $(545) | | Comprehensive loss | $(32,994) | $(49,687) | $(66,901) | $(91,190) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(44,608) | $(94,341) | | Net cash used in investing activities | $(11,218) | $(50,631) | | Net cash provided by financing activities | $860 | $32,096 | | Effect of exchange rate on cash, cash equivalents and restricted cash | $(71) | $(544) | | Net decrease in cash, cash equivalents and restricted cash | $(55,037) | $(113,420) | | Cash, cash equivalents and restricted cash at end of period | $81,848 | $84,025 | [Condensed Consolidated Statements of Stockholders' Deficit](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Deficit) - Total stockholders' deficit increased significantly from **$(16,656) thousand** at December 31, 2022, to **$(71,248) thousand** at June 30, 2023, primarily due to a net loss of **$(66,756) thousand** for the six months ended June 30, 2023, partially offset by stock-based compensation expense and proceeds from stock option exercises[10](index=10&type=chunk)[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - Karyopharm Therapeutics Inc. is a commercial-stage pharmaceutical company focused on discovering, developing, and commercializing first-in-class drugs targeting nuclear export for cancer treatment, with its lead asset, XPOVIO® (selinexor), approved in the U.S. for multiple myeloma and diffuse large B-cell lymphoma (DLBCL) and commercialized globally through partners[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - Net product revenue from U.S. sales of XPOVIO was consistent year-over-year for both the three and six months ended June 30, 2023, despite an adverse impact of approximately **$3.0 million** and **$4.2 million** for the respective periods due to providing XPOVIO at no charge through its Patient Assistance Program following the closure of certain myeloma foundations[26](index=26&type=chunk)[88](index=88&type=chunk) License and Other Revenue (in thousands) | Partner | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Menarini | $5,611 | $6,531 | $14,348 | $13,617 | | Antengene | $760 | $987 | $1,872 | $10,001 | | Other | $2,748 | $3,151 | $3,309 | $6,421 | | **Total** | **$9,119** | **$10,669** | **$19,529** | **$30,039** | - License and other revenue decreased by **$1.6 million** for the three months and **$10.5 million** for the six months ended June 30, 2023, primarily due to reduced development-related expense reimbursements from Menarini and a non-recurring **$7.8 million** milestone payment from Antengene in 2022[89](index=89&type=chunk)[90](index=90&type=chunk) - The company's financial assets measured at fair value, primarily cash equivalents and investments, totaled **$227.4 million** at June 30, 2023, with most classified as Level 2 inputs, while the embedded derivative liability from the Revenue Interest Agreement is classified as Level 3 (**$2.8 million**)[38](index=38&type=chunk) - As of June 30, 2023, the company held investments classified as available-for-sale with an aggregate fair value of **$155.9 million**, primarily in corporate debt securities, commercial paper, and U.S. government and agency securities, with unrealized losses totaling **$611 thousand** attributed to changes in interest rates[39](index=39&type=chunk)[41](index=41&type=chunk) - Potentially dilutive securities, including **11.2 million** outstanding stock options and **7.95 million** unvested restricted stock units, were excluded from diluted net loss per common share calculations due to their anti-dilutive effect during periods of net loss[44](index=44&type=chunk) Stock-based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of sales | $104 | $55 | $185 | $110 | | Research and development | $1,902 | $6,953 | $3,840 | $9,921 | | Selling, general and administrative | $4,054 | $8,085 | $7,424 | $12,398 | | **Total** | **$6,060** | **$15,093** | **$11,449** | **$22,429** | - Stock-based compensation expense decreased significantly, primarily due to severance-related expenses incurred in 2022 for former executives, while the company also increased authorized common shares to **400 million** and amended its 2022 Equity Incentive Plan and 2013 Employee Stock Purchase Plan[46](index=46&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - The company has **$172.5 million** in 3.00% Convertible Senior Notes due 2025, with a fair value of approximately **$115.4 million** at June 30, 2023, influenced by market interest rates and stock price volatility, incurring interest expense of **$1.485 million** for the three months and **$2.980 million** for the six months ended June 30, 2023[58](index=58&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) - The deferred royalty obligation from a Revenue Interest Agreement with HCR had a carrying value of **$132.7 million** at June 30, 2023, and was amended on August 1, 2023, to increase the payment cap from 185% to 195% of the investment amount, extend a minimum payment date, and issue warrants for **250,000 shares**[10](index=10&type=chunk)[65](index=65&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Karyopharm's financial condition and operational results, highlighting revenue trends, expense changes, liquidity, and capital resources, detailing the impact of commercialization efforts for XPOVIO, R&D prioritization, and financing activities, along with future funding requirements [Overview](index=18&type=section&id=OVERVIEW) - Karyopharm is a commercial-stage pharmaceutical company focused on novel cancer therapies, specifically Selective Inhibitor of Nuclear Export (SINE) compounds, with its lead asset, XPOVIO® (selinexor), approved in the U.S. for multiple myeloma and DLBCL and commercialized globally through partners[79](index=79&type=chunk)[82](index=82&type=chunk) - The company's primary focus is on marketing XPOVIO in its approved indications and developing product candidates for high unmet need cancer indications, including endometrial cancer, multiple myeloma, myelodysplastic neoplasms, and myelofibrosis[83](index=83&type=chunk) - As of June 30, 2023, Karyopharm had an accumulated deficit of **$1.4 billion** and reported net losses of **$66.8 million** and **$90.5 million** for the six months ended June 30, 2023 and 2022, respectively[84](index=84&type=chunk) [Critical Accounting Estimates](index=19&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) - There have been no changes to the critical accounting estimates identified in the company's Annual Report on Form 10-K for the year ended December 31, 2022[86](index=86&type=chunk) [Results of Operations](index=19&type=section&id=RESULTS%20OF%20OPERATIONS) Summary of Results of Operations (in thousands, except for percentages) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | $ Change | % Change | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | $ Change | % Change | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------- | :------------- | :----------------------------- | :----------------------------- | :----------- | :------------- | | Product revenue, net | $28,460 | $29,010 | $(550) | (2)% | $56,748 | $57,310 | $(562) | (1)% | | License and other revenue | $9,119 | $10,669 | $(1,550) | (15)% | $19,529 | $30,039 | $(10,510) | (35)% | | Total revenue | $37,579 | $39,679 | $(2,100) | (5)% | $76,277 | $87,349 | $(11,072) | (13)% | | Total operating expenses | $67,152 | $82,587 | $(15,435) | (19)% | $136,749 | $164,843 | $(28,094) | (17)% | | Loss from operations | $(29,573) | $(42,908) | $13,335 | (31)% | $(60,472) | $(77,494) | $17,022 | (22)% | | Net loss | $(32,630) | $(49,062) | $16,432 | (33)% | $(66,756) | $(90,461) | $23,705 | (26)% | - Net product revenue for the three and six months ended June 30, 2023, remained consistent compared to the prior year periods, despite a **$3.0 million** and **$4.2 million** adverse impact from providing XPOVIO at no charge through the Patient Assistance Program due to foundation closures[88](index=88&type=chunk) - License and other revenue decreased by **$1.6 million (15%)** for the three months and **$10.5 million (35%)** for the six months ended June 30, 2023, primarily due to reduced development-related expense reimbursements from Menarini and a non-recurring **$7.8 million** milestone from Antengene in 2022[89](index=89&type=chunk)[90](index=90&type=chunk) - Research and development expenses decreased by **$12.8 million (29%)** for the three months and **$22.6 million (26%)** for the six months ended June 30, 2023, driven by prioritization of core clinical programs, higher trial start-up costs in 2022, and reductions in personnel and stock-based compensation (including severance in 2022)[96](index=96&type=chunk)[97](index=97&type=chunk) - Selling, general and administrative expenses decreased by **$2.9 million (8%)** for the three months and **$5.7 million (8%)** for the six months ended June 30, 2023, mainly due to **$3.5 million** in severance-related stock-based compensation expenses incurred in 2022 for a former CEO[99](index=99&type=chunk) - Other expense, net, decreased by **$3.1 million (51%)** for the three months and **$6.6 million (52%)** for the six months ended June 30, 2023, primarily due to a significant increase in interest income (**$2.5 million** and **$5.3 million**, respectively) from higher average interest rates on investments[101](index=101&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - As of June 30, 2023, Karyopharm had **$236.8 million** in cash, cash equivalents, and investments, which are expected to fund current operating plans and capital expenditure requirements for at least twelve months[103](index=103&type=chunk) - Net cash used in operating activities decreased by **$49.7 million** for the six months ended June 30, 2023, compared to the prior year, primarily due to decreased expenses and the collection of **$22.4 million** in milestone payments from Antengene[104](index=104&type=chunk) - Net cash used in investing activities decreased by **$39.4 million**, driven by a **$36.8 million** increase in proceeds from investment sales/maturities and a **$2.5 million** decrease in investment purchases[105](index=105&type=chunk) - Net cash provided by financing activities decreased by **$31.2 million**, mainly due to **$29.3 million** in net cash proceeds from common stock sales under the 2018 Open Market Sale Agreement in 2022, with no such sales in the first half of 2023[106](index=106&type=chunk) - Future funding requirements include **$8.6 million** in operating lease costs through September 2025, **$185.4 million** for convertible senior notes over the next three years, and approximately **$196.0 million** in future royalty obligations to HCR[120](index=120&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines Karyopharm's exposure to market risks, primarily interest rate sensitivity due to its investment portfolio and foreign currency exchange rate fluctuations from international operations, noting the company does not currently hedge foreign currency risk and believes a 100 basis point shift in interest rates would not materially affect its investment portfolio - Karyopharm is exposed to market risk from changes in interest rates, with **$236.8 million** in cash, cash equivalents, and investments as of June 30, 2023, but a 100 basis point shift in interest rates is not expected to have a material effect on its fair market value due to the short-term duration and low-risk profile of its investment portfolio[121](index=121&type=chunk) - The company is also exposed to foreign currency exchange rate risk due to contracts with CROs, CMOs, and clinical trial sites in Canada and Europe, denominated in foreign currencies, and does not currently hedge this risk[123](index=123&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of Karyopharm's disclosure controls and procedures as of June 30, 2023, concluding they were effective at a reasonable assurance level, with no material changes in internal control over financial reporting identified during the quarter - As of June 30, 2023, Karyopharm's management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[124](index=124&type=chunk) - There were no changes in internal control over financial reporting during the fiscal quarter ended June 30, 2023, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[125](index=125&type=chunk) PART II - OTHER INFORMATION [Item 1A. Risk Factors](index=26&type=page&id=Item%201A.%20Risk%20Factors) This section details various risks that could materially and adversely affect Karyopharm's business, financial condition, and results of operations, spanning commercialization and product development, regulatory matters, financial position and capital requirements, dependence on third parties, intellectual property, operations and employee matters, and risks related to the company's common stock [Risks Related to Commercialization and Product Development](index=26&type=section&id=Risks%20Related%20to%20Commercialization%20and%20Product%20Development) - Karyopharm's business heavily relies on the commercial success of XPOVIO, requiring broad market acceptance, effective sales/marketing, favorable safety/efficacy profiles, and compliance with post-marketing requirements, with failure to achieve these factors potentially harming the business significantly[130](index=130&type=chunk)[131](index=131&type=chunk)[133](index=133&type=chunk) - The company faces substantial competition in the cancer field from major pharmaceutical and biotechnology companies with greater resources, and new therapeutics, including bispecific T-cell engagers and immunomodulators, are entering the multiple myeloma market, potentially impacting XPOVIO's product revenues[134](index=134&type=chunk) - Clinical development is lengthy, expensive, and uncertain, with delays or failures in trials due to design issues, negative results, slow enrollment, or non-compliance by third parties potentially preventing or delaying marketing approval and increasing costs[140](index=140&type=chunk)[141](index=141&type=chunk)[144](index=144&type=chunk) - Serious adverse events (AEs) related to XPOVIO or product candidates could delay or prevent regulatory approval, limit commercial value, or result in significant negative financial consequences, with common AEs for selinexor generally manageable but capable of leading to trial withdrawals or more restrictive labeling[145](index=145&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - The COVID-19 pandemic has caused and may continue to cause disruptions to revenue, clinical trial enrollment, site initiation, regulatory review timelines, and supply chains, adversely impacting business and financial results[153](index=153&type=chunk)[155](index=155&type=chunk) - Preliminary or interim clinical trial data may not be predictive of final results and are subject to change upon full analysis or differing regulatory interpretations, as seen with the SIENDO Study, potentially harming business and prospects[156](index=156&type=chunk)[158](index=158&type=chunk)[160](index=160&type=chunk) - Failure to identify or successfully develop additional product candidates, or incorrect prioritization of development programs, could lead to missed commercial opportunities and material harm to the business due due to limited resources[161](index=161&type=chunk) - Inability to maintain or expand sales, marketing, and distribution capabilities, especially for new indications or outside the U.S., could hinder commercialization success, as establishing these capabilities is expensive and risky[162](index=162&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - Commercial success depends on obtaining and maintaining adequate pricing and reimbursement from third-party payors, with cost containment efforts, delays in reimbursement, and high co-pay amounts potentially limiting demand and revenue for XPOVIO and future products[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) - Product liability lawsuits, whether merited or not, could result from the commercialization of XPOVIO or clinical testing of candidates, leading to substantial liabilities, decreased demand, reputational harm, and significant costs[170](index=170&type=chunk)[171](index=171&type=chunk) - International business operations are subject to risks including reduced intellectual property protection, parallel importing, unexpected regulatory changes, economic instability, and geopolitical conflicts, which could adversely affect the ability to conduct business in foreign markets[173](index=173&type=chunk) [Risks Related to Regulatory Matters](index=35&type=section&id=Risks%20Related%20to%20Regulatory%20Matters) - The regulatory approval process is expensive, time-consuming, and uncertain, with failure to obtain timely approvals for product candidates in the U.S. and internationally, or delays due to differing regulatory interpretations, additional study requirements, or manufacturing non-compliance, potentially harming revenue generation materially[174](index=174&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk)[183](index=183&type=chunk) - Seeking accelerated development pathways (e.g., Breakthrough Therapy, Fast Track, Priority Review, PRIME) does not guarantee expedited approval or approval at all, and new FDA provisions under FDORA require confirmatory trials to be underway before accelerated approval and allow expedited withdrawal if clinical benefits are not verified[184](index=184&type=chunk)[188](index=188&type=chunk)[190](index=190&type=chunk) - Post-marketing regulatory requirements, including confirmatory trials for accelerated approvals (like XPOVIO for DLBCL), must be met diligently, as failure to verify clinical benefits or comply with obligations could lead to withdrawal of approval and substantially lower revenues[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) - Approved products are subject to ongoing review and extensive regulation, including cGMP compliance, labeling, advertising, and post-marketing studies, with non-compliance or discovery of unknown problems potentially resulting in fines, restrictions, product recalls, or withdrawal of marketing approvals[194](index=194&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) - If regulatory authorities require clearance or approval of a companion diagnostic for a product candidate (e.g., selinexor in endometrial cancer), delays or failure to obtain such approval would prevent commercialization and materially impair revenue generation[199](index=199&type=chunk)[201](index=201&type=chunk) - Obtaining orphan drug exclusivity is not guaranteed, and even if granted, it may not prevent competition from different products or clinically superior same products, with changes in orphan drug regulations potentially impacting the business adversely[208](index=208&type=chunk)[209](index=209&type=chunk)[211](index=211&type=chunk) - Inadequate funding or disruptions at government agencies like the FDA and SEC, including government shutdowns or policy changes (e.g., post-COVID-19), could delay product review and approval, impacting business operations and access to capital[212](index=212&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk) - Current and future healthcare legislation (e.g., PPACA, IRA) may increase the difficulty and cost of obtaining marketing approval, restrict post-approval activities, and exert downward pressure on drug prices and reimbursement, adversely affecting revenue and financial condition[216](index=216&type=chunk)[221](index=221&type=chunk) - The prices of prescription pharmaceuticals are subject to considerable legislative and executive actions, including potential Medicare price negotiations (IRA), inflation-based rebates, and state-level pricing controls, with ongoing litigation against the IRA creating further uncertainty[222](index=222&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) - Relationships with healthcare providers and third-party payers are subject to anti-kickback, fraud and abuse, and other healthcare laws, with non-compliance potentially leading to criminal sanctions, civil penalties, exclusion from government programs, and reputational harm[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk) - Complex reporting and payment obligations under programs like the Medicaid Drug Rebate Program involve subjective decisions and interpretations, with non-compliance or inaccurate reporting potentially resulting in penalties, restatements, or investigations, adversely affecting financial results[236](index=236&type=chunk)[237](index=237&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) - Stringent and evolving data privacy and security laws (e.g., HIPAA, CCPA, GDPR) in the U.S. and internationally impose significant compliance costs and risks, with breaches or non-compliance potentially leading to fines, litigation, reputational damage, and operational disruptions[242](index=242&type=chunk)[246](index=246&type=chunk)[251](index=251&type=chunk) - Misconduct by employees, contractors, or collaborators, including non-compliance with regulatory standards or insider trading, could lead to significant liability, governmental investigations, and harm to the company's reputation[252](index=252&type=chunk)[253](index=253&type=chunk) - Failure to comply with environmental, health, and safety laws, particularly concerning hazardous materials, could result in fines, penalties, substantial costs, and impairment of research, development, or commercialization efforts[254](index=254&type=chunk)[256](index=256&type=chunk) - International operations are subject to laws like the FCPA and UK Bribery Act, with non-compliance with anti-corruption and export/import control laws potentially leading to substantial penalties, loss of privileges, and limitations on international market competition[257](index=257&type=chunk)[258](index=258&type=chunk)[260](index=260&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[268](index=268&type=chunk)[270](index=270&type=chunk) - The CREATES Act exposes the company to potential litigation and damages if competitors claim insufficient provision of approved products for generic testing, potentially enabling generic competition and impacting product revenue[264](index=264&type=chunk)[267](index=267&type=chunk) [Risks Related to Our Financial Position and Capital Requirements](index=52&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Capital%20Requirements) - Karyopharm has incurred significant operating losses since inception, with an accumulated deficit of **$1.4 billion** as of June 30, 2023, and expects to continue incurring losses, potentially never achieving or maintaining profitability if revenue from XPOVIO sales and license arrangements is insufficient[271](index=271&type=chunk)[272](index=272&type=chunk)[275](index=275&type=chunk) - The company will need additional funding to achieve its business objectives, including commercialization, R&D, and regulatory approvals, and an inability to raise capital on acceptable terms could force delays or elimination of programs, with current economic instability posing additional challenges[276](index=276&type=chunk)[277](index=277&type=chunk)[280](index=280&type=chunk) - The Revenue Interest Agreement with HCR contains covenants and events of default that, if violated, could accelerate payments up to **$249.8 million** or lead to foreclosure on pledged collateral, including all assets related to selinexor[281](index=281&type=chunk) - The company's indebtedness, including **$172.5 million** in convertible senior notes and **$135.0 million** from the Revenue Interest Agreement, could limit cash flow, increase vulnerability to adverse conditions, and impair the ability to satisfy obligations[282](index=282&type=chunk)[283](index=283&type=chunk) - The conditional conversion feature of the convertible notes, if triggered, could require cash settlement, adversely affecting liquidity, and accounting rules may also reclassify notes as current liabilities, reducing net working capital[285](index=285&type=chunk)[286](index=286&type=chunk) - Raising additional capital through equity or convertible debt will dilute existing stockholders, debt financing may impose restrictive covenants, and collaborations could require relinquishing valuable rights to product candidates[287](index=287&type=chunk)[288](index=288&type=chunk)[289](index=289&type=chunk) - Unstable market and economic conditions, including the COVID-19 pandemic, geopolitical conflicts, inflation, rising interest rates, and banking system instability, could adversely affect the company's ability to raise capital, financial performance, and stock price[290](index=290&type=chunk) [Risks Related to Our Dependence on Third Parties](index=56&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) - Karyopharm relies on collaborations with third parties (e.g., Antengene, Menarini) for development, marketing, and commercialization of XPOVIO and product candidates, and unsuccessful collaborations, or inability to maintain/establish new ones, could alter development plans and limit market potential[291](index=291&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) - Risks with collaborators include their discretion over resources, non-compliance, abandonment of programs, development of competing products, and potential disputes over intellectual property, all of which could harm the business[296](index=296&type=chunk)[298](index=298&type=chunk) - Reliance on third-party specialty pharmacies and distributors for XPOVIO distribution carries risks, including non-performance, termination of agreements, or failure to meet commercial demand, which could adversely affect results of operations[299](index=299&type=chunk)[300](index=300&type=chunk) - The company relies on third parties (CROs, clinical investigators) for clinical trials and preclinical studies, and their unsatisfactory performance, failure to meet deadlines, or non-compliance with regulatory requirements could delay approvals and commercialization[301](index=301&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk) - Reliance on third parties for investigator-sponsored clinical trials means limited control over design, conduct, and data, and inadequate data or breaches of obligations could delay or impair regulatory approval for product candidates[308](index=308&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk) - Complete dependence on third-party contract manufacturers for products and product candidates exposes the company to risks of non-compliance with cGMP, supply disruptions, quality issues, and potential misappropriation of proprietary information, which could adversely affect operations and profitability[311](index=311&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk) [Risks Related to Our Intellectual Property](index=60&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) - Inability to obtain and maintain broad patent protection for products and product candidates could allow competitors to commercialize similar drugs, adversely affecting Karyopharm's ability to commercialize its own, as the patent prosecution process is expensive, time-consuming, and uncertain[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk)[322](index=322&type=chunk) - Patent challenges (e.g., opposition, reexamination, litigation) could reduce the scope, invalidate, or render unenforceable Karyopharm's patent rights, allowing competitors to operate without payment or limiting the duration of protection[321](index=321&type=chunk)[323](index=323&type=chunk) - Lawsuits to protect or enforce patents are expensive, time-consuming, and may be unsuccessful, and third parties may also allege infringement of their IP rights, potentially requiring licenses, cessation of commercialization, or monetary damages[324](index=324&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk) - Claims that employees wrongfully used or disclosed trade secrets of former employers could lead to litigation, loss of IP rights, or distraction of management, and failure to protect trade secret confidentiality would harm competitive position[327](index=327&type=chunk)[338](index=338&type=chunk) - Non-compliance with procedural, documentary, and fee payment requirements by governmental patent agencies could lead to abandonment or lapse of patent rights, and failure to extend patent terms under Hatch-Waxman Amendments could shorten exclusivity and reduce revenue[329](index=329&type=chunk)[334](index=334&type=chunk)[337](index=337&type=chunk) - Regulatory approval of product candidates could lead to generic competition under Hatch-Waxman Amendments, potentially resulting in a material decline in sales if patents and regulatory exclusivities are not successfully defended[330](index=330&type=chunk)[331](index=331&type=chunk)[333](index=333&type=chunk) - Failure to secure trademark registrations or FDA approval of proposed drug names could hinder enforcement against third parties or require significant additional resources to identify suitable names[339](index=339&type=chunk)[340](index=340&type=chunk) [Risks Related to Our Operations and Employee Matters](index=64&type=section&id=Risks%20Related%20to%20Our%20Operations%20and%20Employee%20Matters) - Karyopharm's future success depends on retaining key management and scientific personnel and attracting qualified new talent, with the loss of key employees or inability to recruit/retain staff potentially impeding business objectives[342](index=342&type=chunk)[343](index=343&type=chunk) - Information technology system failures or security breaches (e.g., cyber incidents, data loss) could disrupt operations, compromise confidential information, lead to liability, damage reputation, and delay development/commercialization programs[344](index=344&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) [Risks Related to Our Common Stock](index=65&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) - Provisions in Karyopharm's corporate charter documents and Delaware law (e.g., classified board, advance notice requirements, authorized preferred stock) could make an acquisition more difficult and prevent stockholders from replacing current management[347](index=347&type=chunk)[348](index=348&type=chunk) - The price of Karyopharm's common stock has been and may continue to be volatile, influenced by factors such as commercialization success, competitive landscape, clinical trial results, regulatory developments, and general economic conditions, potentially leading to investment decline[349](index=349&type=chunk)[350](index=350&type=chunk)[353](index=353&type=chunk) - Securities class action litigation is a risk, especially given stock price volatility in the pharmaceutical sector, and such litigation could result in substantial costs, divert management's attention, and negatively impact reputation and financial condition[354](index=354&type=chunk)[355](index=355&type=chunk) - Management has broad discretion in using cash, cash equivalents, and investments, and ineffective use could lead to financial losses, stock price decline, and delays in product development[356](index=356&type=chunk) - Identification of a material weakness in internal control over financial reporting could adversely affect business, financial results, and reporting obligations, potentially leading to a decline in stock price and SEC sanctions[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk)[360](index=360&type=chunk) - Inaccurate estimates or assumptions in financial statements, projected guidance, or market opportunities could cause actual results to vary, leading to adjustments in public guidance and potential stock price decline[361](index=361&type=chunk)[362](index=362&type=chunk)[363](index=363&type=chunk) - The ability to use net operating loss (NOL) carryforwards and tax credit carryforwards may be limited by ownership changes (Sections 382 and 383 of the Code) and changes in tax laws (e.g., TCJA, IRA), potentially impacting future taxable income offset[364](index=364&type=chunk)[365](index=365&type=chunk)[366](index=366&type=chunk)[367](index=367&type=chunk) [Item 5. Other Information](index=70&type=section&id=Item%205.%20Other%20Information) This section discloses recent corporate events, including an amendment to the Revenue Interest Financing Agreement with HealthCare Royalty Partners, which increased the payment cap and extended a payment date, and the approval of an amended Annual Bonus Plan for employees, also detailing a Rule 10b5-1 trading arrangement adopted by a director - On August 1, 2023, Karyopharm amended its Revenue Interest Financing Agreement with HealthCare Royalty Partners, increasing the payment cap from **185% to 195%** of the investment amount, extending a minimum aggregate payment date to June 30, 2025, and issuing warrants for up to **250,000 shares** of common stock[369](index=369&type=chunk)[370](index=370&type=chunk) - The Board of Directors approved an amended and restated Annual Bonus Plan, designed to align employee and stockholder interests through cash-based annual performance bonus awards tied to corporate and individual goals, with the CEO's bonus **100%** based on corporate performance[372](index=372&type=chunk)[373](index=373&type=chunk) - On June 12, 2023, Barry Greene, a lead independent director, adopted a Rule 10b5-1 trading arrangement for the exercise and sale of up to **3,030 shares** of common stock underlying a vested stock option, effective until September 29, 2023[378](index=378&type=chunk) [Item 6. Exhibits](index=72&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, financing agreements, equity incentive plans, and certifications from executive officers, providing transparency into the company's foundational and operational agreements - Key exhibits include the Restated Certificate of Incorporation, Common Stock Purchase Warrant, Open Market Sale Agreement, amendments to the 2022 Equity Incentive Plan and 2013 Employee Stock Purchase Plan, the Second Amendment to Revenue Interest Financing Agreement, and the Annual Bonus Plan[381](index=381&type=chunk) [Signatures](index=73&type=section&id=Signatures) This section contains the official signatures of Karyopharm Therapeutics Inc.'s President and Chief Executive Officer, Richard Paulson, and Executive Vice President, Chief Financial Officer and Treasurer, Michael Mason, certifying the accuracy and completeness of the Form 10-Q report as of August 2, 2023 - The report is signed by Richard Paulson, President and Chief Executive Officer, and Michael Mason, Executive Vice President, Chief Financial Officer and Treasurer, on August 2, 2023[384](index=384&type=chunk)[385](index=385&type=chunk)

Karyopharm Therapeutics, Inc. (NASDAQ:KPTI) Q1 2023 Earnings Conference Call May 4, 2023 8:00 AM ET Company Participants Elhan Webb - SVP, IR Richard Paulson - President, CEO & Director Sohanya Cheng - EVP & Chief Commercial Officer Reshma Rangwala - Chief Medical Officer Michael Mason - EVP, CFO & Treasurer Conference Call Participants Peter Lawson - Barclays Kevin Strang - Jefferies Colleen Kusy - Robert W. Baird Nicole Gabreski - Piper Sandler Eric Joseph - JPMorgan Operator Good morning. My name is ...