Karyopharm Therapeutics(KPTI) - 2023 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) 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 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 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 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 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 - 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][18] Notes to Condensed Consolidated Financial Statements - 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][22][23] - 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][88] 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][90] - 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] - 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][41] - 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] 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][49][50][51] - 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][62][63] - 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][65][72][74] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 - 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][82] - 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] - 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] Critical Accounting Estimates - 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] Results of Operations 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] - 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][90] - 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][97] - 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] - 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] Liquidity and Capital Resources - 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] - 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] - 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] - 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] - 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] - 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] Item 4. Controls and Procedures 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] - 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] PART II - OTHER INFORMATION Item 1A. Risk Factors 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 - 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][131][133] - 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] - 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][141][144] - 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][147][148][149] - 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][155] - 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][158][160] - 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] - 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][164][165] - 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][167][168][169] - 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][171] - 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] Risks Related to Regulatory Matters - 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][176][177][183] - 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][188][190] - 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][192][193] - 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][196][197] - 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][201] - 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][209][211] - 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][214][215] - 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][221] - 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][226][227][228][229] - 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][234][235] - 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][237][239][240] - 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][246][251] - 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][253] - 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][256] - 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][258][260][262][263][268][270] - 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][267] Risks Related to Our Financial Position and Capital Requirements - 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][272][275] - 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][277][280] - 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] - 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][283] - 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][286] - 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][288][289] - 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] Risks Related to Our Dependence on Third Parties - 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][294][295] - 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][298] - 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][300] - 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][304][305] - 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][309][310] - 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][312][313][314][315] Risks Related to Our Intellectual Property - 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][317][318][319][322] - 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][323] - 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][325][326] - 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][338] - 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][334][337] - 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][331][333] - 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][340] Risks Related to Our Operations and Employee Matters - 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][343] - 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][345][346] Risks Related to Our Common Stock - 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][348] - 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][350][353] - 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][355] - 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] - 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][358][359][360] - 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][362][363] - 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][365][366][367] Item 5. Other Information 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][370] - 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][373] - 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] Item 6. Exhibits 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] 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][385]