Long-Term Obligations

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Long-Term Obligations

10. Long-Term Obligations

3.00% Convertible Senior Notes due 2025

On October 16, 2018, we completed an offering of $150.0 million aggregate principal amount of our 3.00% convertible senior notes due 2025. In addition, on October 26, 2018, we issued an additional $22.5 million aggregate principal amount of the Notes pursuant to the full exercise of the option to purchase additional Notes granted to the initial purchasers in the offering. The Notes were sold in a private offering to qualified institutional buyers in reliance on Rule 144A under the Securities Act. In accordance with accounting guidance for debt with conversion and other options, we separately accounted for the liability component (“Liability Component”) and the embedded conversion option (“Equity Component”) of the Notes by allocating the proceeds between the Liability Component and the Equity Component, due to our ability to settle the Notes in cash, shares of our common stock or a combination of cash and shares of our common stock, at our option. In connection with the issuance of the Notes, we incurred approximately $5.6 million of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees, and allocated these costs between the Liability Component and the Equity Component based on the allocation of the proceeds. Of the total debt issuance costs, $2.2 million was allocated to the Equity Component and recorded as a reduction to additional paid-in capital and $3.4 million was allocated to the Liability Component and recorded as a reduction of the Notes. The portion allocated to the Liability Component is amortized to interest expense using the effective interest method over seven years.

In 2021, upon adoption of ASU 2020-06, we reclassified the Equity Component as of January 1, 2021 and combined it with the Liability Component of the Notes, increasing the carrying value of our convertible debt by approximately $50.6 million, with a corresponding decrease to additional paid-in capital of $65.6 million and accumulated deficit of $15.0 million. Our deferred tax liability related to the Notes also decreased by approximately $11.8 million, with a corresponding increase in the income tax valuation allowance.

The Notes are senior unsecured obligations and bear interest at a rate of 3.00% per year payable semiannually in arrears on April 15 and October 15 of each year, beginning on April 15, 2019. Upon conversion, the Notes will be converted into cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. As of October 15, 2022, the Notes are subject to redemption at our option in whole or in part, if the conditions described below are satisfied. Holders may require us to repurchase their Notes following a fundamental change (as defined within the indenture governing the Notes) at a cash repurchase price generally equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest. The Notes will mature on October 15, 2025, unless earlier converted, redeemed or repurchased in accordance with their terms. Subject to satisfaction of certain conditions and during the periods described below, the Notes may be converted at an initial conversion rate of 63.0731 shares of common stock per $1,000 principal amount of the Notes (equivalent to an initial conversion price of approximately $15.85 per share of common stock).

Holders of the Notes may convert all or any portion of their Notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding June 15, 2025 only under the following circumstances:

(1)during any calendar quarter commencing after the calendar quarter ending on December 31, 2018 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the Notes on each applicable trading day;

(2)during the five-business day period immediately after any five consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day;

(3)if we call the Notes for redemption, until the close of business on the business day immediately preceding the redemption date; or

(4)upon the occurrence of specified corporate events as described within the indenture governing the Notes.

As of December 31, 2023, none of the above circumstances had occurred and as such, the Notes could not have been converted.

As of October 15, 2022, we may redeem for cash all or part of the Notes at our option if the last reported sale price of our common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending within five trading days prior to the date on which we send any notice of redemption. The redemption price will be 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any. In addition, calling any convertible note for redemption will constitute a make-whole fundamental change with respect to that convertible note, in which case the conversion rate applicable to the conversion of that convertible note, if it is converted in connection with the redemption, will be increased in certain circumstances. We did not redeem any of the Notes as of December 31, 2023.

The outstanding balances of the Notes consisted of the following (in thousands):

	As of December 31,
	2023			2022
Principal	$	172,500		$	172,500
Less: debt issuance costs		(1,581	)		(2,395	)
Net carrying amount	$	170,919		$	170,105

We determined the expected life of the Notes was equal to its seven-year term and the effective interest rate was 3.53%. As of December 31, 2023, the “if-converted value” did not exceed the remaining principal amount of the Notes. The fair value of the Notes was determined based on data points other than quoted prices that are observable, either directly or indirectly, and has been classified as Level 2 within the fair value hierarchy. The fair value of the Notes, which differs from their carrying value, is influenced by market

interest rates, our stock price and stock price volatility. The estimated fair value of the Notes as of December 31, 2023 and 2022 was approximately $87.9 million and $133.1 million, respectively.

The following table sets forth total interest expense recognized related to the Notes (in thousands):

	For the Years Ended December 31,
	2023		2022		2021
Contractual interest expense	$	5,175	$	5,175	$	5,175
Amortization of debt issuance costs		814		812		780
Total	$	5,989	$	5,987	$	5,955

Future minimum payments on the Notes were as follows (in thousands):

Years ended December 31,	Future Minimum Payments
2024	$	5,175
2025		177,675
Total minimum payments		182,850
Less: interest expense and issuance costs		(11,931	)
Convertible senior notes	$	170,919

Deferred Royalty Obligation

In September 2019, we entered into a Revenue Interest Financing Agreement (“the Revenue Interest Agreement”) with HCR. In June 2021, we, and certain of our subsidiaries, entered into an amendment of the Revenue Interest Agreement (the “Amended Revenue Interest Agreement”) with, among others, HCR. We received $75.0 million, less certain transaction expenses, upon closing of the Revenue Interest Agreement (the “First Investment Amount”) and $60.0 million upon closing of the Amended Revenue Interest Agreement (the “Second Investment Amount” and, together with the First Investment Amount, the “Investment Amount”).

In exchange for the above payments, HCR receives payments from us at a tiered percentage (the “Applicable Tiered Percentage”) of net revenues of selinexor and any of our other future products, including worldwide net product sales and upfront payments, milestones, and royalties. The Applicable Tiered Percentage is subject to reduction in the future if a target based on cumulative U.S. net sales of selinexor is met. Prior to the Second Amendment (as defined below) in August 2023, total payments to HCR were capped at 185% of the Investment Amount (the "Payment Cap").

Under the terms of the Amended Revenue Interest Agreement, if HCR had not received 100% of the First Investment Amount and 65% of the Second Investment Amount by December 31, 2024 (the "First Minimum Aggregate Payment"), or 100% of both the First Investment Amount and the Second Investment Amount by September 30, 2026, we were required to make a cash payment sufficient to gross up the payments to such minimum amounts.

On August 1, 2023, we entered into a Second Amendment to the Amended Revenue Interest Agreement (the “Second Amendment”) with HCR. The Second Amendment (i) increased the Payment Cap from 185% to 195% of the Investment Amount; (ii) extended by six months the payment date of the First Minimum Aggregate Payment from December 31, 2024 to June 30, 2025; and (iii) issued warrants to HCR for the purchase of up to 250,000 shares of our common stock with a termination date of August 1, 2030 and an exercise price of $2.25 per share. Except as set forth in the Second Amendment, all other terms and conditions of the Amended Revenue Interest Agreement remain in full force and effect.

As the repayment of the funded amount is contingent upon worldwide net product sales and upfront payments, milestones, and royalties, the repayment term may be shortened or extended depending on actual worldwide net product sales and upfront payments, milestones, and royalties. The repayment period commenced on October 1, 2019 for the First Investment Amount and on July 1, 2021 for the Second Investment Amount, and expires on the earlier of (i) the date in which HCR has received cash payments totaling an aggregate of 195% of the Investment Amount or (ii) the legal maturity date of October 1, 2031. If HCR has not received payments equal to 195% of the Investment Amount by the twelve-year anniversary of the initial closing date, we will be required to pay an amount equal to the Investment Amount plus a specific annual rate of return less payments previously paid to HCR. In the event of a change of control, we are obligated to pay HCR an amount equal to 195% of the Investment Amount less payments previously paid to HCR. In addition, upon the occurrence of an event of default, including, among others, our failure to pay any amounts due to HCR, insolvency, our failure to pay indebtedness when due, the revocation of regulatory approval of XPOVIO in the U.S. or our breach of any covenant contained in the Amended Revenue Interest Agreement and our failure to cure the breach within the prescribed time

frame, we are obligated to pay HCR an amount equal to 195% of the Investment Amount less payments previously paid to HCR. In addition, upon an event of default, HCR may exercise all other rights and remedies available under the Amended Revenue Interest Agreement, including foreclosing on the collateral that was pledged to HCR, which consists of all of our present and future assets. As of December 31, 2023, we have made $61.7 million in payments to HCR.

We have concluded that the features of both the First Investment Amount and Second Investment Amount are similar to those of a debt instrument. Accordingly, we have accounted for the transaction as long-term debt and presented it as a deferred royalty obligation on our consolidated balance sheets. We have also determined that the repayment of 195% of the Investment Amount, less any payments made to date, upon a change of control is an embedded derivative that requires bifurcation from the debt instrument and fair value recognition, as further described in Note 6, “Fair Value Measurements” to our consolidated financial statements.

The effective interest rate as of December 31, 2023 was 15%. In connection with the First Investment Amount, we incurred debt issuance costs totaling $1.4 million. Debt issuance costs have been netted against the debt and are being amortized over the estimated term of the debt using the effective interest method, adjusted on a prospective basis for changes in the underlying assumptions and inputs.

The carrying value of the deferred royalty obligation at December 31, 2023 and December 31, 2022 was $129.7 million and $129.9 million, respectively, based on $135.0 million of proceeds, net of the fair value of the bifurcated embedded derivative liability upon execution of the Revenue Interest Agreement and the Amended Revenue Interest Agreement, and debt issuance costs incurred. The carrying value of the deferred royalty obligation approximated fair value at December 31, 2023 and 2022 and is based on our current estimates of future payments to HCR over the life of the arrangement, which are considered Level 3 inputs.