Karyopharm Therapeutics(KPTI) - 2022 Q4 - Annual Report

PART I Business Karyopharm Therapeutics is a commercial-stage pharmaceutical company focused on pioneering novel cancer therapies by developing and commercializing first-in-class drugs targeting nuclear export Overview Karyopharm is a commercial-stage pharmaceutical company focused on developing and commercializing first-in-class XPO1 inhibitor drugs like XPOVIO for cancer treatment - Karyopharm is a commercial-stage pharmaceutical company focused on discovering, developing, and commercializing first-in-class drugs that inhibit the nuclear export protein XPO1 for treating cancer and other diseases[15] - The company's lead asset, XPOVIO® (selinexor), is the first oral XPO1 inhibitor to receive FDA approval and is marketed in the U.S. for multiple myeloma and diffuse large B-cell lymphoma (DLBCL)[15][19] - XPOVIO/NEXPOVIO has received regulatory approval in various indications in approximately 40 countries outside the U.S., with commercialization managed by partners[17] Our Strategy The company's strategy focuses on maximizing XPOVIO's commercial value, advancing a prioritized clinical pipeline, maintaining strong leadership, and ensuring a well-capitalized business - The company's strategy is built on four key pillars[20] - Maximize XPOVIO's Commercial Value: Expand use in earlier-line multiple myeloma and globally through partners[23] - Focus on Prioritized Clinical Pipeline: Concentrate on four priority programs: multiple myeloma, endometrial cancer, myelofibrosis (MF), and myelodysplastic neoplasms (MDS)[23] - Provide Strong Leadership: Maintain a strong leadership team to achieve scientific, clinical, and commercial goals[23] - Maintain a Well-capitalized Business: Ensure sufficient capital to advance clinical development opportunities[23] Our Programs to Treat Cancer The company's core technology involves Selective Inhibitor of Nuclear Export (SINE) compounds, such as selinexor and eltanexor, which block the XPO1 protein, forcing tumor suppressor proteins to accumulate in the cell nucleus, counteracting oncogenic pathways - The company's SINE compounds, selinexor and eltanexor, are designed to inhibit the XPO1 protein, forcing the nuclear accumulation of tumor suppressor proteins and thereby counteracting cancer cell growth[26][27] Key Clinical Trial Pipeline | Drug | Regimen | Indication | Study Name | Stage | | :--- | :--- | :--- | :--- | :--- | | Selinexor | w/dexamethasone | Multiple myeloma (penta-refractory) | STORM | Commercial | | | w/bortezomib + dexamethasone | Multiple myeloma (2L+) | BOSTON | Commercial | | | monotherapy | DLBCL (R/R) | SADAL | Commercial | | | w/R-GDP | DLBCL (R/R) | XPORT-DLBCL-030 | Late Stage | | | monotherapy | Endometrial cancer (maintenance; TP53 wild-type) | XPORT-EC-042 | Late Stage | | | w/pomalidomide + dexamethasone | Multiple myeloma (2L+) | XPORT-MM-031 | Late Stage | | | monotherapy | Myelofibrosis (previously treated) | XPORT-MF-035 | Mid Stage | | | w/ruxolitinib | Myelofibrosis (treatment naïve) | XPORT-MF-034 | Mid Stage | | Eltanexor | monotherapy | Myelodysplastic neoplasms (refractory) | KCP-8602-801 | Mid Stage | Collaboration, License and Other Strategic Agreements Karyopharm maintains commercial rights in the U.S. and Japan while leveraging strategic partnerships for global reach, including agreements with Menarini, Antengene, FORUS, and Promedico - Menarini: Granted exclusive commercialization rights for selinexor in Europe, Latin America, and other territories. Karyopharm received a $75.0 million upfront payment in December 2021 and is eligible for up to $202.5 million in milestones plus tiered royalties[80][81] - Antengene: Granted exclusive rights to develop and commercialize selinexor, eltanexor, and other compounds in China and other Asia-Pacific territories. Karyopharm has received upfront payments and recognized milestone revenue of $7.8 million in 2022, $29.3 million in 2021, and $9.8 million in 2020[82][83] - FORUS Therapeutics: Exclusive distribution agreement for XPOVIO in Canada. Karyopharm received a $5.0 million upfront payment in 2020 and is eligible for milestones and double-digit royalties[84] - Promedico Ltd.: Exclusive distribution agreement for XPOVIO in Israel and surrounding territories, with eligibility for milestone payments and double-digit royalties[85] Intellectual Property The company's intellectual property strategy relies on a combination of patents, trade secrets, and know-how, with selinexor and eltanexor patent portfolios extending to at least 2032 and 2034, respectively - As of February 10, 2023, the company owned 32 U.S. patents, with 12 pending U.S. applications, 112 granted foreign patents, and 92 pending foreign applications[89] - The selinexor patent portfolio covers composition of matter, methods of use, and manufacturing, with patents expected to expire no earlier than 2032, not including potential extensions[91] - The eltanexor patent portfolio covers composition of matter and methods of making and using the compound, with patents expected to expire no earlier than 2034, not including potential extensions[91] - The company relies on unpatented trade secrets and know-how, protected by confidentiality and invention assignment agreements with employees, collaborators, and consultants[96][97] Competition Karyopharm faces intense competition from major pharmaceutical and biotechnology companies with greater financial and operational resources across its therapeutic areas, including multiple myeloma, endometrial cancer, myelofibrosis, and DLBCL - The company faces competition from major pharmaceutical and biotech companies with significantly greater financial resources and expertise in R&D, manufacturing, and marketing[101] - Multiple Myeloma: XPOVIO competes with IMiDs (e.g., lenalidomide), PIs (e.g., bortezomib), monoclonal antibodies (e.g., daratumumab), CAR-T therapies, and newly approved bispecific T-Cell engagers like TECVAYLI™[107] - Endometrial Cancer: Competes with chemotherapy, targeted drugs, and investigational therapies including checkpoint inhibitors and PARP inhibitors. There are currently no approved maintenance therapies[108] - Myelofibrosis: The standard of care is JAK inhibitors (e.g., ruxolitinib). Late-stage competition includes other JAKi and non-JAKi therapies[110][111] - DLBCL: Competes with multi-agent chemotherapy, CAR-T therapies, antibody-drug conjugates (e.g., polatuzumab vedotin-piiq), and a CD19-directed antibody (tafasitamab-cxix)[113][114] Sales and Marketing In the U.S., Karyopharm commercializes XPOVIO with its own focused team of approximately 70 field-based employees and a patient support program, KaryForward®, while relying on partners for ex-U.S. commercialization - The company commercializes XPOVIO in the U.S. with a field-based team of approximately 70 employees targeting healthcare professionals in academic and community settings[117] - The KaryForward® patient support program provides assistance with insurance coverage, co-pay support for eligible commercial patients, and a Patient Assistance Program for uninsured or underinsured patients[119] - The company intends to commercialize its products alone in the U.S. and rely on partners for development and commercialization in territories outside of the U.S[117] Manufacturing Karyopharm outsources all manufacturing to third-party contract manufacturers, relying on a single source for its active pharmaceutical ingredient and drug product, while maintaining over two years of inventory to mitigate supply risks - The company outsources all manufacturing and relies on third-party contract manufacturers for clinical and commercial supplies[120] - Karyopharm currently relies on a single source supplier for its active pharmaceutical ingredient (API) and drug product manufacturing[121] - To minimize supply disruption risk, the company maintains inventory levels sufficient to exceed its two-year forecasts for XPOVIO[122] Government Regulation The company's operations are subject to extensive regulation by the FDA and foreign authorities, covering all stages from R&D to post-market surveillance, including the U.S. drug approval process, healthcare reform, and data privacy laws - The company is subject to extensive regulation by the FDA in the U.S. and comparable authorities in foreign jurisdictions, covering all stages from research and development to post-market surveillance[124] - The U.S. drug approval process involves preclinical studies, submitting an Investigational New Drug (IND) application, and conducting human clinical trials (Phase 1, 2, 3) before submitting a New Drug Application (NDA)[126][143] - The Inflation Reduction Act of 2022 (IRA) will impact the company through provisions allowing Medicare to negotiate drug prices (beginning in 2026), imposing rebates for price increases that outpace inflation, and capping Medicare out-of-pocket drug costs[221][222] - The company is subject to stringent data privacy laws, including HIPAA in the U.S., the GDPR in Europe, and the CCPA/CPRA in California, which govern the use and protection of personal and health information[225][226][255] Human Capital As of February 10, 2023, Karyopharm had 385 employees and focuses on attracting, retaining, and developing its workforce through competitive compensation, comprehensive benefits, career development programs, and diversity and inclusion initiatives - As of February 10, 2023, the company had 385 employees, with none represented by a labor union[266] - The company offers competitive total rewards, including equity grants to all new employees, an Employee Stock Purchase Plan, and a 4% match for its 401(k) plan[261] - Karyopharm supports employee growth through a formal mentorship program, tuition assistance, and leadership training, and promotes diversity through various internal programs and external partnerships[263][265] Information about our Executive Officers This section provides a list of Karyopharm's executive officers as of February 10, 2023, detailing their names, ages, and positions within the company Executive Officers as of February 10, 2023 | Name | Age | Position | | :--- | :--- | :--- | | Richard Paulson, M.B.A | 55 | President and Chief Executive Officer | | Sohanya Cheng, M.B.A. | 40 | Executive Vice President, Chief Commercial Officer | | Michael Mano, J.D. | 46 | Senior Vice President, General Counsel and Secretary | | Michael Mason, C.P.A., M.B.A. | 48 | Executive Vice President, Chief Financial Officer and Treasurer | | Stephen Mitchener, Pharm.D. | 44 | Senior Vice President, Chief Business Officer | | Stuart Poulton | 50 | Executive Vice President, Chief Development Officer | | Reshma Rangwala, M.D., Ph.D | 45 | Executive Vice President, Chief Medical Officer | Risk Factors The company faces significant risks, primarily related to its substantial dependence on the commercial success of XPOVIO, intense competition, potential clinical trial failures, regulatory challenges, financial losses, third-party reliance, and intellectual property protection issues - Commercialization Risks: The business is substantially dependent on the commercial success of XPOVIO. Failure to achieve widespread market acceptance, substantial competition from existing and new therapies, and potential for serious adverse side effects could materially harm the business[283][287][297] - Clinical and Regulatory Risks: Clinical development is lengthy, expensive, and uncertain. Trials may fail to demonstrate safety and efficacy, and regulatory approval processes are unpredictable. Post-approval requirements, such as confirmatory trials for accelerated approvals, must be met to maintain marketing authorization[292][325][336] - Financial Risks: The company has a history of significant losses ($1.3 billion accumulated deficit as of Dec 31, 2022) and may never achieve profitability. It will need additional funding, and failure to raise capital could force a reduction in R&D or commercialization efforts. Existing debt and royalty agreements contain restrictive covenants[416][420][425] - Third-Party Dependence: Karyopharm relies completely on third parties for manufacturing, on partners for ex-U.S. commercialization, and on CROs for clinical trials. Any failure by these third parties to perform could disrupt operations and delay development[434][442][450] - Intellectual Property Risks: The inability to obtain and maintain sufficient patent protection for products could allow competitors to develop similar drugs. The company may also become involved in expensive and time-consuming lawsuits to protect or defend its IP rights[456][463] Unresolved Staff Comments Not applicable Properties The company's headquarters are located in Newton, Massachusetts, where it leases 98,502 square feet of office and laboratory space, with additional smaller office spaces leased in Munich, Germany, and Tel Aviv-Yafo, Israel - Headquarters are in Newton, Massachusetts, with 98,502 sq. ft. of leased office and lab space[507] - Additional leased office spaces are located in Munich, Germany (3,681 sq. ft.) and Tel Aviv-Yafo, Israel (4,736 sq. ft.)[507] Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 11 of the Consolidated Financial Statements - The company refers to Note 11 "Commitments and Contingencies" for information on legal proceedings[508] Mine Safety Disclosures Not applicable PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the Nasdaq Global Select Market under the symbol "KPTI", with 18 holders of record as of February 10, 2023, and no cash dividends paid or anticipated - The company's common stock trades on the Nasdaq Global Select Market under the symbol "KPTI"[512] - As of February 10, 2023, there were 18 holders of record of the common stock[512] - The company has never paid cash dividends and does not anticipate paying any in the foreseeable future[513] Reserved This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations For the year ended December 31, 2022, Karyopharm reported total revenue of $157.1 million, a net loss of $165.3 million, and $278.0 million in cash, cash equivalents, and investments, expected to fund operations for at least the next twelve months Financial Highlights (2022 vs. 2021) | Metric | 2022 ($M) | 2021 ($M) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $157.1 | $209.8 | (25%) | | Net Product Revenue | $120.4 | $98.4 | +22% | | License & Other Revenue | $36.6 | $111.4 | (67%) | | Net Loss | ($165.3) | ($124.1) | +33% | | R&D Expenses | $148.7 | $160.8 | (8%) | | SG&A Expenses | $145.4 | $143.8 | +1% | - The 22% increase in net product revenue in 2022 was driven by a growing number of patients treated in earlier lines of therapy and an improved net price for XPOVIO[539] - The decrease in license and other revenue was primarily due to the recognition of a one-time $75.0 million upfront payment from Menarini in 2021[540] - As of December 31, 2022, the company had $278.0 million in cash, cash equivalents, and investments, deemed sufficient to fund operations for at least the next 12 months[527][553] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk stems from interest rate sensitivity on its $278.0 million investment portfolio and foreign currency exchange rate fluctuations from international contracts, with no current hedging strategies in place - Primary market risk exposure is interest rate sensitivity on its $278.0 million portfolio of cash, cash equivalents, and investments as of December 31, 2022[569] - The company is also exposed to foreign currency exchange rate risk from contracts with CROs and CMOs in Canada and Europe, but does not currently use hedging instruments[571] Financial Statements and Supplementary Data This section contains the company's audited consolidated financial statements for 2022, 2021, and 2020, along with the report of the independent registered public accounting firm, Ernst & Young LLP - This item includes the audited consolidated financial statements and the report of the independent registered public accounting firm[572] Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, a conclusion affirmed by an unqualified opinion from Ernst & Young LLP - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[574] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO 2013 framework[576] - The independent registered public accounting firm issued an unqualified opinion on the company's internal control over financial reporting as of December 31, 2022[582][583] Other Information None Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable PART III Directors, Executive Officers and Corporate Governance Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the definitive proxy statement for the 2023 annual meeting of stockholders[593][594] Executive Compensation Information required by this item regarding executive compensation is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the definitive proxy statement for the 2023 annual meeting of stockholders[593][596] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information required by this item regarding security ownership is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the definitive proxy statement for the 2023 annual meeting of stockholders[593][597] Certain Relationships and Related Transactions, and Director Independence Information required by this item regarding related transactions and director independence is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the definitive proxy statement for the 2023 annual meeting of stockholders[593][598] Principal Accountant Fees and Services Information required by this item regarding principal accountant fees and services is incorporated by reference from the company's 2023 Proxy Statement - Information for this item is incorporated by reference from the definitive proxy statement for the 2023 annual meeting of stockholders[593][599] PART IV Exhibits and Financial Statement Schedules This section lists the financial statements filed as part of the report and the exhibits required by Item 601 of Regulation S-K, which are listed in the Exhibit Index - This item lists the financial statements and exhibits filed with the Form 10-K[602][605] Form 10-K Summary None