# RIGEL PHARMACEUTICALS INC (RIGL) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from RIGEL PHARMACEUTICALS INC's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1034842/000155837025002169/rigl-20241231x10k.htm
Accession: 0001558370-25-002169
Filing date: 2025-03-04
Report date: 2024-12-31
Extracted from a substantive MD&A body after the formal Item 7 span was a TOC or reference stub.
Confidence: high

Company profile: /company/RIGL/
All MD&A years: /company/RIGL/mda/
Previous year: /company/RIGL/mda/fy2023/ (FY 2023)
Next year: /company/RIGL/mda/fy2025/ (FY 2025)

Overview

We are a biotechnology company dedicated to developing and providing novel therapies that significantly improve the lives of patients with hematologic disorders and cancer. We focus on products that address signaling pathways that are critical to disease mechanisms.

TAVALISSE (fostamatinib disodium hexahydrate) is our first product approved by the FDA. TAVALISSE is the only approved oral SYK inhibitor for the treatment of adult patients with chronic ITP who have had an insufficient response to a previous treatment. The product is also commercially available in Europe and the UK (as TAVLESSE), and in Canada, Israel and Japan (as TAVALISSE) for the treatment of chronic ITP in adult patients.

REZLIDHIA (olutasidenib) is our second FDA-approved product. REZLIDHIA capsules are indicated for the treatment of adult patients with R/R AML with a susceptible IDH1 mutation as detected by an FDA-approved test. We in-licensed REZLIDHIA from Forma with exclusive, worldwide rights for its development, manufacturing and commercialization.

GAVRETO (pralsetinib) is our third FDA-approved product which we began commercializing in June 2024. GAVRETO is a once daily, small molecule, oral, kinase inhibitor of wild-type RET and oncogenic RET fusions. GAVRETO is approved by the FDA for the treatment of adult patients with metastatic RET fusion-positive NSCLC as detected by an FDA-approved test. GAVRETO is also approved under accelerated approval based on overall response rate and duration response rate, for the treatment of adult and pediatric patients 12 years of age and older with advanced or metastatic RET fusion-positive thyroid cancer who require systemic therapy and who are radioactive iodine-refractory (if radioactive iodine is appropriate). We acquired the rights to research, develop, manufacture and commercialize GAVRETO in the US from Blueprint pursuant to an Asset Purchase Agreement entered in February 2024.

We continue to advance the development of R289, our dual IRAK 1/4 inhibitor program, in an open-label, Phase 1b study to determine the tolerability and preliminary efficacy of the drug in patients with lower-risk MDS who are relapsed, refractory or resistant to prior therapies.

We have strategic development collaborations with MDACC to expand our evaluation of olutasidenib in AML and other hematologic cancers with IDH1 mutations, and with CONNECT to conduct a Phase 2 clinical trial to evaluate olutasidenib in combination with temozolomide in patients with HGG harboring an IDH1 mutation.

We have a RIPK1 inhibitor program in clinical development with our partner Lilly. We also have product candidates in clinical development with partners BerGenBio and Daiichi.

For discussions of recent business updates, please refer to “Part I, Item 1, Business – Business Updates” of this Annual Report on Form 10-K.

Critical Accounting Estimates

The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other

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sources. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are more fully described in “Note 1– Description of Business and Summary of Significant Accounting Policies” in the “Notes to Financial Statements” contained in “Part II, Item 8, Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. We believe our critical accounting estimates which require subjective and complex judgments include estimates around our product sales allowances and discounts as described below.

Our revenues from product sales are recognized at net sales price when our customers obtain control of our product, which occurs at a point in time, upon delivery. Under the revenue recognition guidance, we are required to estimate the transaction price, including variable consideration that is subject to a constraint, in our contracts with our customers. Variable considerations are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Revenue from product sales is recorded net of certain variable considerations which includes estimated government-mandated rebates and chargebacks, PBM rebates, distribution fees, estimated product returns and other deductions.

​

Provisions for sales discounts, returns and allowances are provided for in the period the related revenue is recorded. Our estimates are based on available customer and payor data received from the specialty pharmacies and distributors, as well as third-party market research data. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see “Note 1– Description of Business and Summary of Significant Accounting Policies”, in the “Notes to Financial Statements” contained in “Part II, Item 8, Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

Results of Operations

Revenues

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[[/GREPCENT_TABLE]]

The following table summarizes revenues from each of our customers who individually accounted for 10% or more of the total net product sales and revenues from collaborations:

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31,"],["\u200b","\u200b","2024","","2023"],["McKesson Corporation","\u200b","\u200b","45%","\u200b","\u200b","43%"],["Cencora Inc. (formerly ASD Healthcare)","\u200b","\u200b","20%","\u200b","\u200b","21%"],["Cardinal Health, Inc.","\u200b","\u200b","13%","\u200b","\u200b","25%"],["Kissei","\u200b","\u200b","11%","\u200b","\u200b","*"]]
[[/GREPCENT_TABLE]]

*Denotes less than 10%

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Revenue from product sales is related to our sale of our products in the US, net of chargebacks, discounts and fees, government and other rebates and returns. Typically, our first quarter net sales are impacted by the first quarter reimbursement issues such as the resetting of co-pays and the Medicare donut hole.

TAVALISSE net product sales in 2024 was $104.8 million, increased by 12% compared to $93.7 million in 2023. The increase was primarily due to increased quantities sold, as well as increased price per bottle, partially offset by higher revenue reserves driven by increased government and private payor rebates. REZLIDHIA net product sales in 2024 was $23.0 million, increased by 118% compared to $10.6 million in 2023. The increase was primarily due to increased quantities sold primarily driven by increased number of patients under therapy, partially offset by the higher revenue reserves primarily due to increased government rebates. Following the commercialization of GAVRETO in June 2024, we started recognizing revenue from shipments to our distributors. In 2024, we recognized $17.1 million of GAVRETO net product sales.

Following table summarizes our revenues by collaborative partners for the periods presented:

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

​

In 2024, contract revenues from collaborations consisted primarily of revenue from Kissei of $20.4 million, $10.0 million of which was the upfront fee we received from sublicensing olutasidenib, and the remainder was related to the delivery of drug supplies. In addition, we recognized revenue from Grifols of $9.1 million related to delivery of drug supplies and earned royalty, and $4.0 million from Dr. Reddy’s related to an upfront fee from sublicensing olutasidenib. In 2023, contract revenues from collaborations consisted primarily of revenue from Grifols of $8.8 million related to the delivery of drug supplies and earned royalty, and revenue from Kissei of $2.2 million related to the delivery of drug supplies. 

​

No government contract revenue was recognized in 2024. Government contracts revenue in 2023 comprised $1.0 million of government award granted to us by the US Department of Defense (DOD) to support our Phase 3 clinical trial to evaluate the safety and efficacy of fostamatinib in hospitalized COVID-19 patients, and $0.1 million award granted to us by Biomedical Advanced Research and Development (BARDA), part of the Office of the Assistant Secretary for the Preparedness and Response at the DHHS for our evaluation of fostamatinib in mitigating the impact of long-term respiratory distress.

​

We expect our future revenues to include product sales of our existing commercial products and product sales from new commercial products we may have in the future. Our net product sales may be impacted by the demand from our customers, changes to government and private payor rebate programs, chargeback and discount programs, co-payment assistance programs, and any other rebate and discount programs we may enter in the future. In addition, our future revenues may include payments from our existing and new collaboration partners and government grants. As of December 31, 2024, we have deferred revenue of $1.4 million associated with our collaboration agreement with Kissei, which amount will be recognized as revenue upon satisfaction of our remaining performance obligation.

​

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Cost of Product Sales

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

The cost of product sales includes the cost of inventories sold to our customers and to our collaborative partners. Certain inventories sold for the periods presented include inventory quantities acquired or produced prior to the FDA approval of the product, and do not reflect the full cost of the inventories sold, since such costs incurred prior to FDA approval were previously expensed and charged to research and development expense. In particular, we still utilize active pharmaceutical ingredients with zero cost for our TAVALISSE inventories, which we expect to make use of for the next 1 to 2 years. As such, we recognize lower cost of product sales in the periods where we sell inventory quantities acquired or produced prior to the FDA approval of the product. As we acquire or produce more FDA approved inventory quantities in the future, our inventory cost in the balance sheet and cost of product sales will reflect the full cost of acquiring or producing such products. Cost of product sales may also include reserves for potential excess, dated or obsolete inventories, estimated based upon assumptions about future demand and market conditions as well as product shelf lives. Cost of product sales also includes amortization of intangible assets acquired from in-licensing or acquisition of commercialized products, as well as sublicensing revenue fees and royalty expense.

The increase in cost of product sales in 2024 compared to 2023 was primarily due to increased royalty expense and sublicensing revenue fee of $6.8 million, and increased amortization of intangible assets of $1.0 million. In addition, cost of product sales also increased by $3.7 million due to increase in product sales and delivery of drug supplies pursuant to our supply agreements with our collaborative partners.

Research and Development Expense

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[[/GREPCENT_TABLE]]

The decrease in research and development expense in 2024 compared to 2023 was primarily due to decreased personnel related costs and stock-based compensation expense of $0.9 million, decreased consulting related expenses of $0.9 million, and decreased other various research and development expenses of $0.8 million. These decreases were partially offset by increased clinical trial related expenses of $1.5 million primarily driven by increased research development activities on our ongoing clinical development programs for olutasidenib, which was partly offset by decreased clinical expenses due to the timing of study progress activities on our ongoing IRAK 1/4 inhibitor program, and timing of trial completion activities on our Phase 3 trials of fostamatinib in patients with COVID-19 and wAIHA.

Our research and development expenditures include costs related to preclinical and clinical trials, scientific personnel, supplies, equipment, consultants, sponsored research, stock-based compensation, and allocated facility costs. We expect to continue to incur significant research and development expense as we continue our activities in our clinical studies including IRAK 1/4 inhibitor program; our collaborative partnerships with MDACC and CONNECT to evaluate olutasidenib in AML, other hematologic cancers and glioma; and any other clinical programs we may pursue in the future.

We do not track fully burdened research and development costs separately for each of our drug candidates. Our research team is focused on identifying and evaluating product candidates in our focused range of therapeutic indications that can be developed into small molecule therapeutics in our own proprietary programs or with potential collaborative partners. “Research” expenses relate primarily to personnel expenses, lab supplies, fees to third-party research consultants and compounds. Our development group leads the implementation of our clinical and regulatory strategies

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and prioritizes disease indications in which our compounds may be studied in clinical trials. “Development” expenses relate primarily to clinical trials, personnel expenses, costs related to our regulatory filings, lab supplies and fees to third-party research consultants. “Other” expenses primarily consist of allocated facilities costs and allocated stock-based compensation expense relating to personnel in research and development groups.

In addition to reviewing the three categories of research and development expense described in the preceding paragraph, we principally consider qualitative factors in making decisions regarding our research and development programs, which include enrollment in clinical trials and the results thereof, the clinical and commercial potential for our drug candidates and competitive dynamics. We also make our research and development decisions in the context of our overall business strategy, which includes the evaluation of potential collaborations for the development of our drug candidates.

Preclinical testing and clinical development are long, expensive and uncertain processes, and we cannot reliably predict the timing of such clinical trial activities. In general, biopharmaceutical development involves a series of steps, beginning with identification of a potential target and including, among others, proof of concept in animals and Phase 1, 2 and 3 clinical trials in humans. Significant delays in clinical testing could materially impact our product development costs and timing of completion of the clinical trials. We do not know whether planned clinical trials will begin on time, will need to be halted or revamped or will be completed on schedule, or at all. Clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory approval to commence a trial, delays from scale up, delays in reaching agreement on acceptable clinical trial agreement terms with prospective clinical sites, delays in obtaining institutional review board approval to conduct a clinical trial at a prospective clinical site or delays in recruiting subjects to participate in a clinical trial.

We currently do not have reliable estimates of total costs for a particular drug candidate to reach the market. Our potential products are subject to a lengthy and uncertain regulatory process that may involve unanticipated additional clinical trials and may not result in receipt of the necessary regulatory approvals. Failure to receive the necessary regulatory approvals would prevent us from commercializing the product candidates affected. In addition, clinical trials of our potential products may fail to demonstrate safety and efficacy, which could prevent or significantly delay regulatory approval.

The following table presents our total research and development expense by category (in thousands):

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["*","We started tracking research and development expense by category on January 1, 2007."]]
[[/GREPCENT_TABLE]]

“Other” expenses in 2024 and 2023 consisted of allocated facilities costs of $0.5 million and $1.0 million, respectively, and stock-based compensation expense of $1.5 million and $2.1 million, respectively.

Selling, General and Administrative Expense

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

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The increase in selling, general and administrative expense in 2024 compared to 2023 was primarily due to increased personnel-related costs and stock-based compensation expense of $7.4 million primarily driven by increased headcount, and increased commercial related expenses of $2.5 million primarily due to expansion of commercial activities. These increases were partially offset by decreased consulting and third party services of $0.9 million and decreased other various sales, general and administrative expenses of $1.7 million.

We expect to incur significant selling, general and administrative expenses, as we expect our commercial related expenses to increase as we continue to expand our commercial activities for our commercial products. We continue to deploy resources to enable our field-based employees to engage with healthcare providers. These engagements have enabled our field team to cover existing prescribers, as well as develop relationships with new prescribers to identify appropriate patients for our products.

Interest Income and Expense

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

Interest income is related to our interest-bearing cash and investment balances. The decrease in interest income in 2024 compared to 2023 was primarily driven by lower interest rates.

Interest expense comprised primarily of interest on the outstanding term loans with MidCap. The increase in interest expense in 2024 compared 2023 was primarily due to higher interest rate applicable to the term loans, as well as higher principal outstanding balance of the term loans as additional $20.0 million (Tranche 5) was funded in March 2023.

Provision for income tax

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

The provision for income tax for the year ended December 31, 2024 was related to foreign withholding tax and state taxes. We have not recorded federal income taxes due to the sufficient NOL carryforwards that were generated prior to the enactment of the Tax Act, as well as significant research and development credit carryforwards. We continue to record a full valuation allowance on our deferred tax assets considering our cumulative losses in prior years and forecasted losses in the future. For the year ended December 31, 2023, there was no foreign withholding tax, and we have not recorded state and federal income taxes due to our pre-tax book losses and a full valuation allowance was recorded against our deferred tax assets.

​

Liquidity and Capital Resources

Liquidity

As of December 31, 2024 and 2023, we had approximately $77.3 million and $56.9 million, respectively, in cash, cash equivalents and short-term investments. We continue to maintain investment portfolios primarily in money market funds, US treasury bills, government-sponsored enterprise securities, corporate bonds and commercial paper. Cash in excess of immediate requirements is invested with regard to liquidity and capital preservation. We view our investments portfolio as available-for-sale and are available for use in current operations. Wherever possible, we seek to minimize the potential effects of concentration and degrees of risk. We continue to monitor the impact of the changes in the conditions of the credit and financial markets to our investment portfolio and assess if future changes in our investment strategy are necessary.

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Following summarizes our cash flow activity for the periods presented:

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

Net cash provided by operating activities in 2024 was primarily due the proceeds from sales of our products, and cash received from our collaboration partners including the $10.0 million upfront payment from Kissei pursuant to the collaboration and license agreement, partially offset by the payments of operating expenses. Net cash used in operating activities in 2023 was primarily due to payments of operating expenses, partially offset by the proceeds from sales of our products, cash received from our collaboration partners including the $20.0 million regulatory milestone payment from Kissei received in January 2023, as well as cash received from government grants. 

Net cash provided by investing activities in 2024 comprised primarily of net maturities of short-term investments of $4.4 million, proceeds from sale of property and equipment of $0.1 million, partially offset by payments for acquisition of intangible assets and capital expenditures of $0.4 million. Net cash used in investing activities in 2023 comprised payment of milestone obligations to Forma recorded as intangible assets of $15.0 million, partially offset by net maturities of short-term investments of $10.4 million and proceeds from sale of property and equipment of $0.3 million.

Net cash used in financing activities in 2024 comprised payment of the closing purchase price to Blueprint of $10.0 million and cost share payments to a collaboration partner of $3.6 million, partially offset by the net proceeds from issuance of common stock upon exercise of stock options and participation in the Purchase Plan of $2.0 million. Net cash provided by financing activities in 2023 was primarily due to the net cash proceeds from term loan financing (Tranche 5) of $20.0 million and proceeds from exercise of stock options and participation in the Purchase Plan of $1.0 million, partially offset by our cost share payments to Lilly of $2.6 million.

​

We believe that our existing capital resources are sufficient to support our current and projected funding requirements, including the continued commercialization of our products, through at least the next 12 months from the date of issuance of this Annual Report on Form 10-K. We used estimates and assumptions that may differ from actual, and we could utilize our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with commercializing our products, the development of our product candidates and other research and development activities, we are unable to estimate with certainty our future product revenues, our revenues from our current and future collaborative partners, the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical trials and other research and development activities.

Capital Resources

We finance our operations primarily through sales of our products, and contract payments under our collaboration agreements, as well as through equity securities and debt financing.

Under our existing collaboration agreements that we entered in the ordinary course of business, we received or may be entitled to receive upfront cash payments, payments contingent upon specified events achieved by such partners and royalties on any net sales of products sold by such partners under the agreements. As of December 31, 2024, total future contingent payments to us under our existing agreements with our collaboration partners was approximately $1.5 billion, if all potential product candidates achieved all of the payment triggering events under all of our current agreements. This estimated future contingent amount does not include any estimated royalties that could be due to us if the partners successfully commercialize any of the licensed products. Future events that may trigger payments to us under the agreements are based solely on our partners’ future efforts and achievements of specified development, regulatory and/or commercial events. See further discussion in “Note 4 - Sponsored Research and License Agreements

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and Government Contracts” to our “Notes to Financial Statements” contained in “Part II, Item 8, Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

We have an Open Market Sale Agreement with Jefferies, as a sole agent, entered on August 4, 2020, and amended and restated on August 2, 2024. Pursuant to such Open Market Sale Agreement, we may sell from time to time, through Jefferies, shares of our common stock in sales deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act, subject to conditions specified in the Open Market Sale Agreement, including maintaining an effective registration statement covering the sale of shares under the Open Market Sale Agreement. We have an active Registration Statement filed with the SEC, which registered, among other securities, a base prospectus which covers the offering, issuance, and sale by us of up to $250.0 million in the aggregate of the securities identified from time to time in one or more offerings, which include the $100.0 million of shares of our common stock that may be offered, issued and sold under the Open Market Sale Agreement. As of December 31, 2024, we have not sold any shares of common stock under such Open Market Sale Agreement.

We have a Credit Agreement with MidCap that provides for $60.0 million term loan credit facility, which was fully funded as of December 31, 2024.

Our operations will require significant additional funding in the foreseeable future. Unless and until we can generate sufficient cash from our operating activities, we may choose to raise additional funds through public and/or private offerings of equity securities, debt financings, or from other sources. However, certain external factors such as global pandemics, the global tensions arising from the Russia-Ukraine war and Hamas-Israel war, political and economic legislations, and other factors may continue to rapidly evolve which could significantly disrupt the global financial markets. Our ability to raise additional funds may be adversely impacted by potential worsening of global economic conditions and volatility in the credit and financial markets in the US and worldwide. We could experience an inability to access additional funds, which could in the future negatively affect our capacity for certain corporate development transactions or our ability to make important, opportunistic investments. To the extent that we raise additional funds through the sale of equity, our shareholders’ ownership interest may experience substantial dilution. Our current credit facility with MidCap and any debt financing that we can obtain in the future may involve operating covenants that may restrict our business. To the extent that we raise additional funds through collaboration and licensing arrangements, we may be required to relinquish some of our rights to our technologies or product candidates or grant licenses on terms that are not favorable to us.

Our future funding requirements will depend upon many factors, including, but not limited to:

[[GREPCENT_TABLE]]
[["","\u25cf","the ongoing costs to commercialize our products, or any other future product candidates, if any such candidate receives regulatory approval for commercial sale;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","our ability to generate expected revenue from our commercialization efforts;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","the progress and success of our clinical trials and preclinical activities (including studies and manufacture of materials) of our product candidates conducted by us;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","our ability to secure and maintain our patent protection and regulatory rights;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","our ability to meet operating covenants under our current and future credit facilities, if any;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","our ability to enter into partnering opportunities across our pipeline within and outside the US;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","the costs and timing of regulatory filings and approvals by us and our collaborators;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","the progress of research and development programs carried out by us and our collaborative partners;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","any changes in the breadth of our research and development programs;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","the ability to achieve the events identified in our collaborative agreements that may trigger payments to us from our collaboration partners;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","our ability to acquire or license other technologies or compounds that we may seek to pursue;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","our ability to manage our growth;"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","\u25cf","competing technological and market developments;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","the costs and timing of obtaining, enforcing and defending our patent and other intellectual property rights, including regulatory rights such as regulatory data exclusivities; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","expenses associated with any unforeseen litigation, including any arbitration and securities class action lawsuits."]]
[[/GREPCENT_TABLE]]

Insufficient funds may require us to delay, scale back or eliminate some or all of our commercial efforts and/or research or development programs, to lose rights under existing licenses or to relinquish greater or all rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose or may adversely affect our ability to operate as a going concern.

Material Cash Requirements

We conduct our commercial activities and research and development programs internally and with third parties that include, among others, arrangements with vendors, consultants, CROs and universities. Our contract arrangements with these third parties are generally cancellable on reasonable notice, and our obligations under such arrangements are generally based on services performed. We have agreements with certain clinical research organizations to conduct our clinical trials including our strategic development collaborations with MDACC and CONNECT. The timing of payments for any amounts owed under the respective agreements depends on various factors including, but not limited to, patient enrollment and other progress of the clinical trials. We can terminate these agreements at any time, and if terminated, we would not be liable for the full amount of the respective agreements. Instead, we will be liable for services provided through the termination date plus certain cancellation charges, if any, as defined in each of the respective agreements. In addition, these agreements may, from time to time, be subjected to amendments as a result of any change orders executed by the parties. We expect to continue entering into contracts in the normal course of business with various third parties to support our commercial activities and research and development programs.

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In the ordinary course of business, we enter into agreements with contract manufacturers to manufacture our inventory products. Although the agreements generally provide a termination clause with or without cause, we may still be subjected to payment of cancellation fees. The level of cancellation fees is generally dependent on the timing of the written notice in relation to the commencement of work, with the maximum cancellation fees equal to the full price of the work order. In October 2024, we entered into an agreement with a third-party contract manufacturer to manufacture TAVALISSE that is expected to be delivered starting in 2026 through 2029. As of December 31, 2024, the contractual obligation not included in our financial statements related an agreement that may potentially be subjected to cancellation fees amounted to approximately $24.1 million, with approximately $6.8 million due in one year and $9.3 million due within two to three years. As of December 31, 2024, we have not incurred any cancellation fees under our agreements with contract manufacturers.

As discussed in detail in “Note 4 – Sponsored Research and License Agreements and Government Contracts” to our “Notes to Financial Statements” contained in “Part II, Item 8, Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, under the Lilly Agreement, although our co-funding obligation for development of ocadusertib (previously R552) in the US, Europe, and Japan ended on April 1, 2024, we have the right to opt-in to co-funding, upon us providing notice to Lilly within 30 days of certain events, as specified in the agreement. If we decide to exercise our opt-in right, we will be required to continue to share in the global development costs with Lilly, and if we later exercise our second opt-out right (no later than April 1, 2025), our share in global development costs will be up to a specified cap through December 31, 2025, as provided for in the Lilly Agreement.

Also, as discussed in detail in “Note 4 – Sponsored Research and License Agreements and Government Contracts” and “Note 5 – In-Licensing and Acquisition” of our “Notes to Financial Statements” contained in “Part II, Item 8, Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, pursuant to our license and transition services agreement with Forma, Forma is entitled to potential development and regulatory milestone payment and tiered royalty payments on net sales as well as certain portion of sublicensing revenue. Further, following our olutasidenib sublicensing agreements with Kissei and Dr. Reddy’s, Forma is entitled to the portion of the sublicensing revenue we receive from Kissei and Dr. Reddy’s under such respective agreements.

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Additionally, as discussed in detail in “Note 5 – In-Licensing and Acquisition” of our “Notes to Financial Statements” contained in “Part II, Item 8, Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, pursuant to an Asset Purchase Agreement with Blueprint, in addition to unpaid purchase price consideration, Blueprint is entitled to potential commercial and regulatory milestone payments, as well as tiered royalty payments.

We have a contractual commitment with respect to our credit facility with MidCap. Under the amended Credit Agreement, the term loans mature on September 1, 2027, and the interest-only period is through October 1, 2025. As of December 31, 2024, the outstanding principal amount of the loan was $60.0 million, of which $7.5 million principal payments are due within 12 months. As of December 31, 2024, future interest calculated using the base interest rate as per the amended Credit Agreement, and the final fee payments associated with the credit facility amounted to $14.3 million, with approximately $6.5 million payable within 12 months.

As of December 31, 2024, we have a contractual commitment related to our sublease agreement with Atara for approximately $0.3 million, payable through the expiration of the sublease agreement in May 2025. In February 2025, we entered into a lease agreement with 611 Gateway to lease the same office space currently subleased from Atara. Our contractual commitment related to the lease agreement with 611 Gateway was $1.4 million, of which $0.3 million is payable in the next 12 months from December 31, 2024.

We are also subject to claims related to the patent protection of certain of our technologies, as well as purported securities class action lawsuit, other litigations, and other contractual agreements. We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual matter. We do not have other material contractual commitments with respect to matters discussed above.

​