Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017
2022
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-35006
sppicompanylogoa20.jpgsppi-20220930_g1.jpg
SPECTRUM PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)

Delaware93-0979187
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
Pilot House - Lewis Wharf, 2 Atlantic Ave6th FloorBostonMA02110
11500 South Eastern Avenue, Suite 240
Henderson, Nevada
89052
(Address of principal executive offices)(Zip Code)
(702) 835-6300
(Registrant’s telephone number, including area code)
: (617) 586-3900

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par valueSPPIThe NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  ý☒    No  ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨☐Accelerated filerý☐
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
☒		Smaller reporting company¨☒
Emerging Growth Companygrowth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨☐    No  ý☒
As of October 31, 2017, 100,662,238November 7, 2022, 203,205,510shares of the registrant’s common stock were outstanding.




SPECTRUM PHARMACEUTICALS, INC.
Table of Contents
QUARTERLY REPORT ON FORMSpectrum Pharmaceuticals, Inc.
Quarterly Report on Form 10-Q
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBERFor the Three and Nine Months Ended September 30, 20172022
TABLE OF CONTENTS
ItemPage
PART I. FINANCIAL INFORMATION
Item 1.
Condensed Consolidated Financial Statements (unaudited):
3
4
5
6
68
79
Item 2.
3627
Item 3.
4633
Item 4.
4633
PART II. OTHER INFORMATION
Item 1.
4734
Item 1A.
4734
Item 6.
4736
4837
Items 2 through 5 of Part II have been omitted because they are not applicable with respect to the current reporting period.


SPECTRUM PHARMACEUTICALS, INC. ®, FUSILEV®, FOLOTYN®, ZEVALIN®, MARQIBO®, BELEODAQ®, EVOMELA® and QAPZOLA® are® is a registered trademarkstrademark of Spectrum Pharmaceuticals, Inc. and its affiliates. ROLONTIS™,REDEFINING CANCER CARE™, ROLVEDON™ and the Spectrum Pharmaceuticals'Pharmaceuticals’ logos are trademarks owned by Spectrum Pharmaceuticals, Inc. Any other trademarks are the property of their respective owners.





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Part I: Financial Information
PART I: FINANCIAL INFORMATION

ITEMItem 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFinancial Statements

SPECTRUM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and par value amounts)
(Unaudited)

September 30,
2017
December 31,
2016		September 30,
2022		December 31,
2021
ASSETS


ASSETS
Current assets:


Current assets:
Cash and cash equivalents$247,468

$158,222
Cash and cash equivalents$56,255 $88,539 
Marketable securities248

247
Marketable securities43,997 12,108 
Accounts receivable, net of allowance for doubtful accounts of $88 and $88, respectively37,767

39,782
Other receivables5,876

5,754
Other receivables586 1,028 
Inventories8,983

8,715
Inventories9,373 — 
Prepaid expenses and other assets2,957

3,930
Prepaid expenses and other current assetsPrepaid expenses and other current assets2,769 2,277 
Total current assets303,299

216,650
Total current assets112,980 103,952 
Property and equipment, net of accumulated depreciation615

449
Intangible assets, net of accumulated amortization and impairment charges144,036

164,234
Goodwill18,131

17,886
Property and equipment, netProperty and equipment, net422 455 
Facility and equipment under leaseFacility and equipment under lease1,869 2,505 
Other assets35,736

29,549
Other assets3,658 4,636 
Total assets$501,817

$428,768
Total assets$118,929 $111,548 
LIABILITIES AND STOCKHOLDERS’ EQUITY


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:


Current liabilities:
Accounts payable and other accrued liabilities$49,635

$52,483
Accounts payable and other accrued liabilities$42,011 $41,258 
Accrued payroll and benefits7,636

8,981
Accrued payroll and benefits7,613 11,971 
Deferred revenue2,783

3,188
FOLOTYN development liability153

861
Total current liabilities60,207

65,513
Total current liabilities49,624 53,229 
FOLOTYN development liability, less current portion12,273

12,269
Deferred revenue, less current portion324

323
Acquisition-related contingent obligations4,551

1,315
Deferred tax liabilities6,829

6,675
Loan payable, long-termLoan payable, long-term28,488 — 
Other long-term liabilities11,127

9,604
Other long-term liabilities4,965 10,766 
Convertible senior notes101,770

97,043
Total liabilities197,081

192,742
Total liabilities83,077 63,995 
Commitments and contingencies


Commitments and contingencies (Note 7)
Commitments and contingencies (Note 7)
Stockholders’ equity:


Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding—

—
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding— — 
Series B junior participating preferred stock, $0.001 par value; 1,500,000 shares authorized; no shares issued and outstanding—

—
Series E convertible voting preferred stock, $0.001 par value and $10,000 stated value; 2,000 shares authorized; no shares issued and outstanding.—

—
Common stock, $0.001 par value; 175,000,000 shares authorized; 94,061,740 and 80,466,735 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively94

80
Common stock, $0.001 par value; 300,000,000 shares authorized; 203,339,656 and 164,502,013 issued and outstanding at September 30, 2022 and December 31, 2021, respectively
Common stock, $0.001 par value; 300,000,000 shares authorized; 203,339,656 and 164,502,013 issued and outstanding at September 30, 2022 and December 31, 2021, respectively
203 165 
Additional paid-in capital765,754

640,166
Additional paid-in capital1,148,996 1,094,353 
Accumulated other comprehensive income (loss)3,673

(1,579)
Accumulated other comprehensive lossAccumulated other comprehensive loss(3,009)(3,042)
Accumulated deficit(464,785)
(402,641)Accumulated deficit(1,110,338)(1,043,923)
Total stockholders’ equity304,736

236,026
Total stockholders’ equity35,852 47,553 
Total liabilities and stockholders’ equity$501,817

$428,768
Total liabilities and stockholders’ equity$118,929 $111,548 
See accompanying notes to these unaudited condensed consolidated financial statements.

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SPECTRUM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2017
2016
2017
2016
Revenues:






Product sales, net$31,234

$30,272

$88,235

$96,401
License fees and service revenue5,161

3,121

11,562

14,807
Total revenues$36,395

$33,393

$99,797

$111,208
Operating costs and expenses:






Cost of sales (excludes amortization and impairment charges of intangible assets)12,179

7,503

31,618

18,715
Cost of service revenue—

2,221

4,221

5,716
Selling, general and administrative18,880

19,465

54,595

69,047
Research and development13,878

13,293

43,670

43,037
Amortization and impairment charges of intangible assets6,928

6,907

20,718

19,052
Total operating costs and expenses51,865

49,389

154,822

155,567
Loss from operations(15,470)
(15,996)
(55,025)
(44,359)
Other (expense) income:






Interest expense, net(2,014)
(2,373)
(6,196)
(7,087)
Change in fair value of contingent consideration related to acquisitions(2,942)
78

(3,236)
(1,249)
Other income, net251

372

901

990
Total other expenses(4,705)
(1,923)
(8,531)
(7,346)
Loss before income taxes(20,175)
(17,919)
(63,556)
(51,705)
Benefit for income taxes1,466

464

1,412

635
Net loss$(18,709)
$(17,455)
$(62,144)
$(51,070)
Net loss per share:






Basic and diluted$(0.22)
$(0.22)
$(0.78)
$(0.73)
Weighted average shares outstanding:






Basic and diluted83,463,153

79,303,380

80,177,370

70,437,885
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2022202120222021
Operating costs and expenses:
Selling, general and administrative$8,263 $12,243 $27,518 $41,515 
Research and development13,335 20,850 33,535 69,335 
Total operating costs and expenses21,598 33,093 61,053 110,850 
Loss from continuing operations before other income (expense) and income taxes(21,598)(33,093)(61,053)(110,850)
Other income (expense):
Interest income, net128 11 256 121 
Other income (expense), net(443)9 (5,534)(7,948)
Total other income (expense)(315)20 (5,278)(7,827)
Loss from continuing operations before income taxes(21,913)(33,073)(66,331)(118,677)
Provision for income taxes from continuing operations(16)— (45)(9)
Loss from continuing operations(21,929)(33,073)(66,376)(118,686)
Income (loss) from discontinued operations, net of income taxes4 (11)(39)(227)
Net loss$(21,925)$(33,084)$(66,415)$(118,913)
Basic and diluted loss per share:
Loss from continuing operations$(0.12)$(0.21)$(0.37)$(0.77)
Income (loss) from discontinued operations$0.00 $(0.00)$(0.00)$(0.00)
Net loss per share, basic and diluted$(0.12)$(0.21)$(0.37)$(0.78)
Weighted average shares outstanding, basic and diluted188,358,072 159,261,818 177,818,168 153,341,854 
See accompanying notes to these unaudited condensed consolidated financial statements.



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SPECTRUM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net loss$(18,709) $(17,455) $(62,144) $(51,070)
Other comprehensive income:       
Unrealized gain on available-for-sale securities, net of income tax expense of $2,068, $342, and $2,068, $872 for the three and nine months ended September 30, 2017 and 2016, respectively.5,047
 465
 3,903
 2,975
Foreign currency translation adjustments405
 96
 1,349
 254
Other comprehensive income5,452
 561
 5,252
 3,229
Total comprehensive loss$(13,257) $(16,894) $(56,892) $(47,841)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2022202120222021
Net loss$(21,925)$(33,084)$(66,415)$(118,913)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities, net of tax32 (1)(14)(1,130)
Foreign currency translation adjustments(86)(153)47 (522)
Other comprehensive income (loss)(54)(154)33 (1,652)
Total comprehensive loss$(21,979)$(33,238)$(66,382)$(120,565)
See accompanying notes to these unaudited condensed consolidated financial statements.



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SPECTRUM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
Common StockAdditional Paid-In CapitalAccumulated
Other Comprehensive Loss 		Accumulated DeficitTotal
Stockholders' Equity
SharesAmount
Balance as of December 31, 2021164,502,013 $165 $1,094,353 $(3,042)$(1,043,923)$47,553 
Net loss— — — — (15,442)(15,442)
Other comprehensive income, net— — — 134 — 134 
Recognition of stock-based compensation expense— — 3,011 — — 3,011 
Restricted stock award grants, net of forfeitures1,675,472 2 (2)— — — 
Issuance of common shares to Hanmi Pharmaceutical Co., Ltd.12,500,000 12 19,988 — — 20,000 
Issuance of common stock upon vesting of performance units150,000 — — — — — 
Balance as of March 31, 2022178,827,485 $179 $1,117,350 $(2,908)$(1,059,365)$55,256 
Net loss— — — — (29,048)(29,048)
Other comprehensive loss, net— — — (47)— (47)
Recognition of stock-based compensation expense— — 2,077 — — 2,077 
Issuance of common shares pursuant to at-the-market offering, net of offering costs5,619,827 6 4,941 — — 4,947 
Issuance of common stock for employee stock purchase plan388,541 — 257 — — 257 
Restricted stock award grants, net of forfeitures34,420 — — — — — 
Balance as of June 30, 2022184,870,273 $185 $1,124,625 $(2,955)$(1,088,413)$33,442 
Net loss— — — — (21,925)(21,925)
Other comprehensive income, net— — — (54)— (54)
Recognition of stock-based compensation expense— — 2,547 — — 2,547 
Issuance of common shares pursuant to at-the-market offering, net18,894,118 19 21,594 — — 21,613 
Restricted stock award grants, net of forfeitures(424,735)(1)— — — (1)
Issuance of warrants upon debt financing— — 230 — — 230 
Balance as of September 30, 2022203,339,656 $203 $1,148,996 $(3,009)$(1,110,338)$35,852 

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Common StockAdditional Paid-In CapitalAccumulated
Other Comprehensive Loss 		Accumulated DeficitTotal
Stockholders' Equity
SharesAmount
Balance as of December 31, 2020146,083,110 $146 $1,021,221 $(1,829)$(885,295)$134,243 
Net loss— — — — (35,697)(35,697)
Other comprehensive loss, net— — — (1,678)— (1,678)
Recognition of stock-based compensation expense— — 4,212 — — 4,212 
Issuance of common shares under an at-the-market sales agreement5,678,893 6 21,351 — — 21,357 
Restricted stock award grants, net of forfeitures1,966,333 2 — — — 2 
Balance as of March 31, 2021153,728,336 $154 $1,046,784 $(3,507)$(920,992)$122,439 
Net loss— — — — (50,132)(50,132)
Other comprehensive income, net— — — 180 — 180 
Recognition of stock-based compensation expense— — 4,360 — — 4,360 
Issuance of common stock for employee stock purchase plan163,463 — 474 — — 474 
Issuance of common stock upon exercise of stock options1,250 — 2 — — 2 
Restricted stock award grants, net of forfeitures39,127 — — — — — 
Issuance of common stock upon vesting of restricted stock units1,386 — — — — — 
Issuance of common shares under an at-the-market sales agreement10,172,498 10 31,255 — — 31,265 
Balance as of June 30, 2021164,106,060 $164 $1,082,875 $(3,327)$(971,124)$108,588 
Net loss— — — — (33,084)(33,084)
Other comprehensive loss, net— — — (154)— (154)
Recognition of stock-based compensation expense— — 4,114 — — 4,114 
Restricted stock award grants, net of forfeitures(148,160)— — — — — 
Balance as of September 30, 2021163,957,900 $164 $1,086,989 $(3,481)$(1,004,208)$79,464 

See accompanying notes to these unaudited condensed consolidated financial statements.
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SPECTRUM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Nine Months Ended
September 30,
 20222021
Cash Flows From Operating Activities:
Loss from continuing operations$(66,376)$(118,686)
Loss from discontinued operations, net of income taxes(39)(227)
Net loss(66,415)(118,913)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization200 212 
Amortization of debt discount17 — 
Stock-based compensation7,635 12,686 
Non-cash lease expense539 1,151 
Other non-cash items88 281 
Loss on disposal of manufacturing equipment— 3,057 
Loss on disposal of assets2 — 
Realized loss (gain) on sale of equity holdings1,094 (4,580)
Unrealized loss on equity holdings3,352 12,816 
Changes in operating assets and liabilities:
Accounts receivable, net— 66 
Other receivables431 (1,391)
Inventories(9,373)— 
Prepaid expenses and other current assets(617)1,620 
Other assets976 (89)
Accounts payable and other accrued liabilities389 4,376 
Accrued payroll and benefits(4,360)(1,085)
Other long-term liabilities(5,609)654 
Net cash used in operating activities(71,651)(89,139)
Cash Flows From Investing Activities:
Proceeds from maturities of investments2,799 109,771 
Proceeds from sale of equity holdings2,028 4,406 
Purchases of investments(41,023)(16,568)
Purchases of property and equipment, net(45)(140)
Net cash (used in) provided by investing activities(36,241)97,469 
Cash Flows From Financing Activities:
Issuance of common shares to Hanmi Pharmaceutical Co., Ltd.20,000 — 
Proceeds from the issuance of debt, net of debt issuance costs28,852 — 
Proceeds from sale of common stock under an at-the-market sales agreement, net26,560 52,622 
Proceeds from sale of stock under our employee stock purchase plan257 474 
Proceeds from employees for exercises of stock options— 4 
Net cash provided by financing activities75,669 53,100 
Effect of exchange rates on cash and cash equivalents(61)(4)
Net (decrease) increase in cash and cash equivalents(32,284)61,426 
Cash and cash equivalents—beginning of period88,539 46,009 
Cash and cash equivalents—end of period$56,255 $107,435 
Supplemental disclosure of cash flow information:
Cash paid for facility and equipment under operating leases$1,492 $1,626 
Cash paid for income taxes$— $12 
Supplemental disclosures of non-cash financing activity:
Issuance of warrants in connection with debt financing$230 $— 
Debt issuance costs in accrued liabilities$152 $— 
 Nine Months Ended
September 30,
 2017
2016
Cash Flows From Operating Activities:   
Net loss$(62,144) $(51,070)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization20,965
 19,493
Stock-based compensation9,654
 9,754
Accretion of debt discount, recorded to interest expense on 2018 Convertible Notes (Note 14)
4,236
 4,246
Amortization of deferred financing costs, recorded to interest expense on 2018 Convertible Notes (Note 14)
491
 521
Bad debt recovery—
 (15)
Unrealized foreign currency exchange gain(18) (155)
Change in cash surrender value of corporate owned life insurance(266) —
Research and development expense recognized for the value of common stock issued in connection with QAPZOLA (Note 16(b)(x)) and ROLONTIS (Note 16(b)(xiii)) milestone achievements
—
 2,419
Deferred tax liabilities154
 (40)
Income tax recognition on unrealized gain for available-for-sale securities(2,068) —
Change in fair value of contingent consideration related to the Talon and EVOMELA acquisitions (Note 9)
3,236
 1,249
Changes in operating assets and liabilities:   
Accounts receivable, net2,143
 (12,040)
Other receivables(88) 5,571
Inventories554
 (6,768)
Prepaid expenses972
 804
Other assets183
 (2,095)
Accounts payable and other accrued obligations(2,954) (6,595)
Accrued payroll and benefits(1,343) (451)
FOLOTYN development liability (Note 15)
(704) (526)
Acquisition related contingent obligations—
 (1,300)
Deferred revenue(483) (1,417)
Other long-term liabilities1,523
 1,321
Net cash used in operating activities(25,957)
(37,094)
Cash Flows From Investing Activities:   
Payment for corporate-owned life insurance premiums(601) —
Redemption of mutual funds(1) (1)
Purchases of property and equipment(412) (61)
Net cash used in investing activities(1,014) (62)
Cash Flows From Financing Activities:   
Proceeds from exercise of stock options3,051
 190
Proceeds from sale of stock under employee stock purchase plan406
 383
Purchase and retirement of restricted stock to satisfy employees' tax liability at vesting(1,476) (829)
Payment of contingent consideration related to EVOMELA acquisition (Note 9(b))
—
 (4,700)
Proceeds from common shares sold under an at-market-issuance sales agreement (Note 18)
113,966
 73,869
Dividends paid upon conversion of Series E Convertible Voting Preferred Stock (Note 18)
—
 (6)
Net cash provided by financing activities115,947
 68,907
Effect of exchange rates on cash and equivalents270
 113
Net increase in cash and cash equivalents89,246
 31,864
Cash and cash equivalents—beginning of period158,222
 139,741
Cash and cash equivalents—end of period$247,468
 $171,605
Supplemental disclosure of cash flow information:   
Cash paid for income taxes$10
 $11
Cash paid for interest$1,513
 $1,650



See accompanying notes to these unaudited condensed consolidated financial statements.

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Spectrum Pharmaceuticals, Inc.
Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit,interest rate, and number of years)
(Unaudited)

Note 1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION, AND OPERATING SEGMENTDescription of Business, Basis of Presentation, And Operating Segment
(a) Description of Business
Spectrum Pharmaceuticals, Inc. (“Spectrum”,Spectrum,” the “Company”, “we”, “our”,“Company,” “we,” “our,” or “us”) is a biotechnologybiopharmaceutical company with a primary strategy comprised of acquiring, developing, and commercializing a broadnovel and diverse pipeline of late-stagetargeted oncology therapies. Our in-house organization includes clinical development, regulatory, quality, data management, and commercial products. commercialization.
We have an in-house clinical development organizationone commercial asset and one drug in late-stage development:
•ROLVEDONTM (formerly known as eflapegrastim), a novel long-acting granulocyte colony-stimulating factor (“G-CSF”) for the treatment of chemotherapy-induced neutropenia. On April 11, 2022, we announced that we had received notice that the Biologics License Application (“BLA”) had been accepted and received a Prescription Drug User Fee Act (“PDUFA”) date of September 9, 2022. On September 9, 2022, we received the U.S. Food and Drug Administration’s (“FDA”) marketing approval; and

•Poziotinib, a novel irreversible tyrosine kinase inhibitor under investigation for non-small cell lung cancer (“NSCLC”) tumors with regulatory and data management capabilities, and a commercial infrastructure and field sales forcevarious mutations. On December 6, 2021, we announced we submitted our New Drug Application (“NDA”) for our marketed products. Currently, we have six approved oncology/hematology products (FUSILEV, FOLOTYN, ZEVALIN, MARQIBO, BELEODAQ, and EVOMELA) that target different types of cancer including: non-Hodgkin's lymphoma ("NHL"), advanced metastatic colorectal cancer, acute lymphoblastic leukemia, and multiple myeloma ("MM").
We also have three drugs in mid-to-late stage development (in Phase 2 or Phase 3 clinical trials):
ROLONTIS (formerly referredpoziotinib to as SPI-2012 or LAPS-G-CSF)the FDA for chemotherapy-induced neutropenia.
QAPZOLA (formerly referred to as APAZIQUONE) for immediate intravesical instillation in post-transurethral resection of bladder tumorsuse in patients with non-muscle invasive bladder cancer ("NMIBC"previously treated locally advanced or metastatic NSCLC with HER2 exon 20 insertion mutations. The NDA submission is based on the positive results of Cohort 2 from the ZENITH20 clinical trial, which assessed the safety and efficacy of poziotinib. The product has received Fast Track designation and there is currently no treatment specifically approved by the FDA for this indication. On February 11, 2022, we announced that we had received notice that the NDA had been accepted and received a PDUFA action date of November 24, 2022. On September 22, 2022, we met with the FDA’s Oncologic Drugs Advisory Committee (“ODAC”). ODAC voted 9-4 that the current benefits of poziotinib did not outweigh its risks.
POZIOTINIB, a novel pan-HER inhibitor used in
Our business strategy is the treatmentdevelopment of patientslate-stage assets through commercialization and the sourcing of additional assets that are synergistic with a variety of solid tumors, including breastour existing portfolio (through purchase acquisitions, in-licensing transactions, or co-development and lung cancer.marketing arrangements).
(b) Basis of Presentation
Interim Financial Statements
The interim financial data for the three and nine months ended September 30, 20172022 and 2016, respectively,2021 is unaudited and is not necessarily indicative of our operating results for a full year. In the opinion of our management,We believe the interim data includes normal and recurring adjustments necessary for a fair presentation of our financial results for the three and nine months ended September 30, 20172022 and 2016.2021. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to U.S.the Securities and Exchange Commission (“SEC”) rules and regulations relating to interim financial statements. The December 31, 2016 balances reported herein are derived from the audited Consolidated Financial Statements included in our Annual Report on Form 10-KCertain prior period amounts have been reclassified for the year ended December 31, 2016, filedconsistency with the SEC on March 14, 2017 (our "2016 Form 10-K").current year presentation. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and Notes thereto included within our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (filed with the SEC on March 17, 2022).
Discontinued Operations - Sale of our Commercial Product Portfolio
In March 2019, we completed the sale of our Commercial Product Portfolio (as defined below in Note 8) to Acrotech Biopharma LLC (“Acrotech”) (the “Commercial Product Portfolio Transaction”). In accordance with applicable GAAP (ASC 205-20, Presentation of Financial Statements), the revenue-deriving activities and allocable expenses of our 2016 Form 10-K.sold commercial operations, connected to the Commercial Product Portfolio, are separately classified as “discontinued” for all periods presented
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, interest rate, and number of years)
(Unaudited)

within the accompanying Condensed Consolidated Statements of Operations. See Note 8 for further information on the Commercial Product Portfolio Transaction.
Principles of Consolidation
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and with the rules and regulations of the SEC. These financial statements include the financial position, results of operations, and cash flows of Spectrum and its subsidiaries, all of which are wholly-owned (except for Spectrum Pharma Canada ("SPC"), as discussed below).wholly-owned. All inter-company accounts and transactions among these legal entities have been eliminated in consolidation.
Variable Interest Entity
We own fifty-percent of SPC, a legal entity organized in Quebec, Canada in January 2008. Some of our clinical studies are conducted through this “variable interest entity” (as defined under applicable GAAP). We fund Substantially all of SPC’s operatingthe accumulated other comprehensive loss is comprised of foreign currency translation adjustments at September 30, 2022.
Liquidity and Capital Resources
The Company expects to incur future net losses as it continues to fund the advancement and commercialization of its product candidates. Based upon our current projections, including our intention to continue to place a disciplined focus on streamlining our business operations, we believe that our $100.3 million in aggregate cash, cash equivalents and marketable securities as of September 30, 2022, will be sufficient to fund our current and planned operations for at least the next twelve months. However, should our costs and sinceexpenses prove to be greater than we assume all riskscurrently anticipate, or should we change our current business plan in a manner that increases or accelerates our anticipated costs and rewardsexpenses, we may require additional liquidity earlier than expected. To the extent it becomes necessary to raise additional cash in the future, we will seek to raise it through the public or private sale of debt or equity securities, out-licensing arrangements, funding from joint-venture or strategic partners, debt financing or short-term loans, or through a combination of the foregoing. However, we do not currently have any binding commitments for this entity,additional financing. Accordingly, we meetcannot provide any assurance that we will be able to obtain additional liquidity on terms favorable to us or our current stockholders, or at all. Our liquidity and our ability to fund our capital requirements going forward are dependent, in part, on market and economic factors that are beyond our control. The Company may never achieve profitability or generate positive cash flows, and unless and until it does, the GAAP criteriaCompany will continue to need to raise additional capital.
On September 21, 2022, we entered into a Loan and Security Agreement (“Loan Agreement”), by and among the Company, Allos Therapeutics, Inc., Talon Therapeutics, Inc., and Spectrum Pharmaceuticals International Holdings, LLC, as being its “primary beneficiary.” Accordingly, SPC’sborrowers (together with the Company, the “Borrowers”), SLR Investment Corp. (“SLR”), as administrative agent (the “Agent”), and the lenders party thereto (the “Lenders”) that provides for a five-year senior secured term loan facility in an aggregate principal amount of up to $65.0 million available to us in four tranches (collectively, the “Term Loans”). As of September 30, 2022, we have drawn a total of $30.0 million of the Term Loans pursuant to the Loan Agreement, with a remaining undrawn principal balance sheetsof $35.0 million, which is available through December 31, 2023 and statementsis subject to the achievement of operations are included in our Condensed Consolidated Financial Statements as if it were a wholly-owned subsidiarycertain milestone events. Refer to Note 5 for all periods presented.

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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


additional information.
(c) Operating Segment
We operate in one reportable operating segment that is focused exclusively on developing and commercializingmarketing oncology and hematology drug products. For the three and nine months ended September 30, 20172022 and 2016, respectively,2021, all of our revenueoperating costs and related expenses were solely attributable to these activities. Substantially allactivities (and as applicable, classified as “discontinued” within the accompanying Condensed Consolidated Statements of our assets (excluding our cash and securities held in certain foreign bank accounts and by our Ex-U.S. entities, and our ZEVALIN distribution rights for the Ex-U.S. territory) are held in the U.S.Operations).
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATESSummary of Significant Accounting Policies And Use of Estimates
The preparation of financial statements in conformity with GAAP requires our management to make informed estimates and assumptions that affect theour reported amounts of assets, liabilities, revenues, and expenses. However, actual valuesThese amounts may materially differ since estimates are inherently uncertain.from the amounts ultimately realized and reported due to the inherent uncertainty of any estimate or assumption. On an on-going basis, our management evaluates (as applicable) its most critical estimates and assumptions, including those related toto: (i) gross-to-net revenue adjustments; (ii) the timing of revenue recognition; (iii) the collectability of customer accounts; (iv) whether the cost of our inventories can be recovered; (v) the fair value of our reported goodwill and intangible assets; (vi) the realization of our tax assets and estimates of our tax liabilities; (vii) the likelihood of payment and value of contingent liabilities; (viii)(ii) the fair value of our investments; (ix)(iii) the valuation of our stock options and the periodic expense recognition of stock-based compensation; and (x)(iv) the potential outcome of our ongoing or threatened litigation.litigation; and (v) the future undiscounted cash flows and revenues, as well as assesses our ability to fund our operations for at least the next twelve months from the date of issuance of these financial statements.
TheOur accounting policies and estimates and assumptions that most significantly impact the presented amounts within these Condensed Consolidated Financial Statements are further described below:
(i) Revenue Recognition
(a) Product Sales: We sell our products to wholesalers/distributors (i.e., our customers), except for our U.S. sales of ZEVALIN in which case the end-user (i.e., clinic or hospital) is our customer. Our wholesalers /distributors in turn sell our products directly to clinics, hospitals,Cash and private oncology-based practices. Revenue from product sales is recognized when title and risk of loss have transferred to our customer, and the following additional criteria are met:
(1)appropriate evidence of a binding arrangement exists with our customer;
(2)price is substantially fixed or determinable;
(3)collection from our customer is reasonably assured;
(4)our customer’s obligation to pay us is not contingent on resale of the product;
(5)we do not have significant continued performance obligations to our customer; and
(6)we have a reasonable basis to estimate returns.
Our gross revenue is reduced by our gross-to-net (“GTN”) estimates each period, resulting in our reported “product sales, net” in the accompanying Condensed Consolidated Statements of Operations. We defer revenue recognition in full if these estimates are not reasonably determinable at the time of sale. These estimates are based upon information received from external sources (such as written or oral information obtained from our customers with respect to their period-end inventory levels and their sales to end-users during the period), in combination with management’s informed judgments. Due to the inherent uncertainty of estimates, the actual amount we incur may be materially different than our GTN estimates, and require prospective revenue adjustments in periods after the initial sale was recorded.
Our GTN estimates are comprised of the following categories:
Product Returns Allowances: Our FUSILEV, MARQIBO, and BELEODAQ customers are permitted to return purchased product beginning at its expiration date and within six months thereafter. Our EVOMELA customers are permitted to return purchased product beginning at six months prior to its expiration date, and within 12 months thereafter (as well as for overstock inventory, as determined by end-users). Returned product is generally destroyed and not resold. Returns outside of the above-referenced criteria or for expiry of ZEVALIN and FOLOTYN are not contractually, or customarily, allowed. We estimate expected product returns for our allowance based on our historical return rates.

Cash Equivalents
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(all tabular amounts presented in thousands, except share, per share, per unit,interest rate, and number of years)
(Unaudited)



Government Chargebacks: Our products are subject to pricing limits under certain federal government programs (e.g., Medicare and 340B Drug Pricing Program). Qualifying entities (i.e., end-users) purchase products from our customers at their qualifying discounted price. The chargeback amount we incur represents the difference between our contractual sales price to our customer, and the end-user’s applicable discounted purchase price under the government program. There may be significant lag time between our reported net product sales and our receipt of the corresponding government chargeback claims from our customers.
Prompt Pay Discounts: Discounts for prompt payment are estimated at the time of sale, based on our eligible customers’ prompt payment history and the contractual discount percentage.
Commercial Rebates: Commercial rebates are based on (i) our estimates of end-user purchases through a group purchasing organization ("GPO"), (ii) the corresponding contractual rebate percentage tier we expect each GPO to achieve, and (iii) our estimates of the impact of any prospective rebate program changes made by us.
Medicaid Rebates: Our products are subject to state government-managed Medicaid programs, whereby rebates are issued to participating state governments. These rebates arise when a patient treated with our product is covered under Medicaid, resulting in a discounted price for our product under the applicable Medicaid program. Our Medicaid rebate accrual calculations require us to project the magnitude of our sales, by state, that will be subject to these rebates. There is a significant time lag in us receiving rebate notices from each state (generally several months or longer after our sale is recognized). Our estimates are based on our historical claim levels by state, as supplemented by management’s judgment.
Distribution, Data, and GPO Administrative Fees: Distribution, data, and GPO administrative fees are paid to authorized wholesalers/distributors of our products (except for U.S. sales of ZEVALIN) for various commercial services including: contract administration, inventory management, delivery of end-user sales data, and product returns processing. These fees are based on a contractually-determined percentage of our applicable sales.
(b) License Fees: Our out-license arrangements with licensees for their limited rights to market our product(s) may include one or more of the following forms of consideration: (a) upfront license fees, (b) royalties from our licensees’ sales, (c) milestone receipts from our licensees’ sales, and (d) milestone receipts upon regulatory achievements by us or our licensees. We recognize revenue from these categories based on the contractual terms that establish the legal rights and obligations between us and our licensees. We complete the following steps in determining the dollar amount and timing of revenue recognition from our license fees:
(i)We first assess the number of “units of accounting” for the elements in our out-license arrangements in accordance with multiple element arrangement guidance. We consider if elements (deliverables) have standalone value, and if standalone value does not exist for a deliverable, it is combined (as applicable) with other deliverables until the "bundle" has standalone value (as a single unit of accounting).

(ii)Next, we allocate arrangement consideration among the separate units of accounting (using the "relative selling price method").

(iii)Finally, we evaluate the timing of revenue recognition, which is impacted by the nature of the consideration to which we are entitled, as follows:

(a)
Upfront license fees: We consider whether upfront license fees are earned (i.e., realized) at the time of contract execution (i.e., when the license rights transfer to the customer) or over the actual (or implied) contractual term of the out-license. We give specific consideration to whether we have any on-going contractual service obligations to the licensee, including any requirements for us to provide on-going support services, and/or for us to supply drug products for the licensee’s future sales. As a result, we may either recognize all upfront license fees as revenue in the period of contract execution, or recognize these fees over the actual (or implied) contractual term of the out-license.

(b)
Royalties: We recognize revenue in the period that our licensees report product sales to us in their territory for which we are contractually entitled to a percentage-based royalty receipt (i.e., representing the period when earned and realizable).


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(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
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(c)
Sales milestones: We recognize revenue in the period that our licensees report achievement of annual or aggregate product sales levels in their territories for which we are contractually entitled to a specified lump-sum receipt (i.e., representing the period when earned and realizable).

(d)
Regulatory milestones: Under the terms of the respective out-license, regulatory achievements may either be our responsibility, or that of our licensee.

When our licensee is responsible for the achievement of the regulatory milestone (and we have no on-going obligations), we recognize this revenue in the period that our product achieves specified regulatory approvals for which we are contractually entitled to a fixed receipt (i.e., representing the period when earned and realizable).

When we are responsible for the achievement of the regulatory milestone, we recognize this revenue in the period that our product achieves specified regulatory approvals for which we are contractually entitled to a fixed receipt. Regulatory approvals by governmental agencies are inherently uncertain, and require our substantial cost and effort in completing our submission for potential approval. Therefore, these regulatory milestones are “substantive” and these fixed receipts remain at-risk (i.e. unearned and unrealizable) until the period of achievement. We believe the amounts we are entitled to receive upon our achievement relates solely to our past performance and is commensurate with either (i) our performance in achieving the milestone, or (ii) the resulting enhancement in value of the drug compound.
(c) Service Revenue: We receive fees under certain arrangements for (a) sales and marketing services, (b) supply chain services, (c) research and development services, and (d) clinical trial management services. Payment for these services may be triggered by (i) an established fixed-fee schedule, (ii) the completion of product delivery in our capacity as a procurement agent, (iii) the successful completion of a phase of development, (iv) favorable results from a clinical trial, and/or (v) regulatory approval events.
We consider whether revenue associated with these service arrangements is “realizable and earned” each reporting period, based on our completed services or deliverables during the reporting period, and the contractual terms of the arrangement (which typically includes fee schedules). For any/all milestone achievements in the reporting period that contractually result in fixed payments due to us, we apply the “milestone method” of revenue recognition. Accordingly, this revenue recognition occurs as each “substantive” milestone (as discussed below) is achieved by us, since (1) all contingencies associated with each milestone is resolved upon its achievement, (2) the milestone achievement relates solely to our past performance, and (3) no remaining milestone performance obligations exist in relation to our receipt of payment.
In recognizing revenue under the milestone method, we first assess the number of “units of accounting” in the arrangement. We consider if the separate “deliverable” has standalone value to our licensee, and if standalone value does not exist for a deliverable, it is combined with other deliverables until the "bundle" has standalone value. The allocation of arrangement consideration and the recognition of revenue is determined for those combined deliverables as a single unit of accounting. This includes allocation of consideration associated with milestones achieved by our licensees.
Next, we measure and allocate arrangement consideration among the separate units of accounting. This fixed or determinable consideration is allocated to the units of accounting using the "relative selling price method". Variable fees subsequently earned (other than substantive milestone payments) are allocated to the units of accounting on the same basis.
We determine whether the milestone is substantive by considering (i) the extent of our effort to achieve the milestone and/or the enhancement of the value of the delivered item(s) as a result of milestone achievement, (ii) whether the milestone achievement relates solely to our past performance, and (iii) if the milestone payment is reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within the arrangement.
For service contracts without milestones, we recognize revenue when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) services have been rendered, (iii) fees are fixed or determinable, and (iv) collectability is reasonably assured.

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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


(d) New Revenue Recognition Standard: ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), is effective for us beginning January 1, 2018. This new accounting standard requires that we recognize revenue in a manner that reasonably reflects the delivery of our goods or services to customers in return for expected consideration. To achieve this core principle, ASU 2014-09 provides the following steps in evaluating revenue arrangements: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

We are substantially complete with our evaluation of this new revenue standard, including (i) the impact on the value and timing of our revenue recognition for product sales, out-license arrangements, and service arrangements, (ii) the financial reporting transition requirements for adoption, and (iii) expanded footnote disclosures in our financial statements. We believe the adoption of ASU 2014-09 will not result in a material change of revenue recognition for our current product sales and out-license arrangements. We presently have no active service arrangements, though this new accounting standard would not have materially affected our historical revenue accounting practices for those types of arrangements. We will apply the "modified retrospective”transition method to implement ASU 2014-09 on January 1, 2018 (i.e., recognition of the cumulative effect of initially applying this standard to the opening balance of retained earnings), and as applicable, will include expanded revenue footnote disclosure requirements, beginning with our Form 10-Q for the period ended March 31, 2018.
(ii) Cash and Cash Equivalents
Our cash and cash equivalents consist of bank deposits and highly liquid investments with maturities of three months or less from the purchase date.
(iii)(ii) Marketable Securities
Our marketableMarketable securities consist of our holdings in equity securities (including mutual funds), bank CDs, government-related debt securities, and corporate debt securities. For equity securities and mutual funds, and bank certificates of deposit ("Bank CDs"). Since we classify these securities as “available-for-sale” under applicable GAAP, any realized or unrealized gains or losses from their change(losses) are recognized in value is reflected in “unrealized gain on available-for-sale securities” on“other income (expense), net” within the accompanying Condensed Consolidated Statements of Comprehensive Loss. RealizedOperations. Debt securities and bank CDs are classified as “available-for-sale” investments and (1) realized gains and losses on available-for-sale securities(losses) are includedrecognized in “other income (expense), net” onwithin the accompanying Condensed Consolidated Statements of Operations.Operations and (2) unrealized gains (losses) are recognized as a component of “accumulated other comprehensive loss” within the Condensed Consolidated Statements of Stockholders’ Equity.
(iv) Accounts Receivable, Net of Allowance for Doubtful Accounts(iii) Inventory
Our accounts receivables are derived from our product sales and license fees (receivables related to our service revenue is recorded in "other receivables"), and do not bear interest. The allowance for doubtful accounts is management’s best estimate of the amount of probable credit losses in our existing accounts receivable. Account balances are charged off against the allowance after appropriate collection efforts are exhausted.
(v) Inventories
We value our inventory at the lower of (i) the actual cost of its purchase or manufacture, or (ii) its current marketnet realizable value. Inventory cost is determined on thea first-in, first-out method.basis. We regularly review our inventory quantities in process of manufacture and on hand. Whenwhen appropriate we record a provision for obsolete and excess inventory to derive its new cost basis, which takes into account our sales forecast by product and corresponding expiry datesdates. We have not recognized a provision for obsolete and excess inventory through September 30, 2022.
We received FDA approval for ROLVEDON on September 9, 2022, and on that date began capitalizing inventory purchases of eachsaleable product lot.from certain suppliers. Prior to FDA approval, all saleable product purchased from such suppliers were included as a component of research and development expense, as we were unable to assert that the inventory had future economic benefit until we had received FDA approval.
Direct and indirect manufacturing costs related to the production of inventory prior to U.S. Food and Drug Administration ("FDA") approval are expensed through “research and development” on the accompanying Condensed Consolidated Statements of Operations, rather than being capitalized to inventory cost.
(vi)(iv) Property and Equipment, Net of Accumulated Depreciation
Our property and equipment, net, is stated at historical cost, and is depreciated on a straight-line basis over an estimated useful life that corresponds with its designated asset category. We evaluate the recoverability of “long-lived assets”long-lived assets (which includes property and equipment) whenever events or changes in circumstances in our business indicate that the asset’s carrying amount may not be recoverable through on-going operations.

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Notesthe carrying amount to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


(vii) Goodwill and Intangible Assets, Net of Accumulated Amortization and Impairment Charges
Our goodwill representsthe net undiscounted cash flows expected to be generated by the asset group. An impairment loss would be recorded for the excess of our business acquisition costnet carrying value over the estimated fair value of the net assets acquired in the corresponding transaction. Goodwill has an indefinite accounting lifeasset impaired. The fair value is estimated based on expected discounted future cash flows or other methods such as orderly liquidation value based on assumptions of asset class and is therefore not amortized. Instead, goodwill is evaluated for impairment on an annual basis (as of each October 1st), unless we identify impairment indicators that would require earlier testing.observed market data.
We evaluate the recoverability of indefinite-lived intangible assets at least annually, or whenever events or changes in our business indicate that an intangible asset’s (whether indefinite or definite-lived) carrying amount may not be recoverable. Such circumstances could include, but are not limited to the following:
(a)a significant decrease in the market value of an asset;
(b)a significant adverse change in the extent or manner in which an asset is used; or
(c)an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset.
Intangible assets with finite useful lives are amortized over their estimated useful lives on a straight-line basis. We review these assets for potential impairment if/when facts or circumstances suggest that the carrying value of these assets may not be recoverable.
(viii)(v) Stock-Based Compensation
Stock-based compensation expense for equity awards granted to our employees and members of our boardBoard of directorsDirectors is recognized on a straight-line basis over each award'saward’s vesting period. Recognized compensation expense is net of an estimated forfeiture rate, representing the percentage of awards that are expected to be forfeited (by termination of employment or service) prior to vesting.vesting, and is ultimately adjusted for actual forfeitures. We use the Black-Scholes option pricing model to determine the fair value of stock options and stock appreciation rights (as of the date of grant) which carrythat have service conditions for vesting. We use the Monte Carlo valuation model to value equity awards (as of the date of grant) which carrythat have combined market conditions and service conditions for vesting.
The calculation of the fair value of stock options and the recognition of stock-based compensation expense and the initial calculation of stock option fair value requires uncertaincertain assumptions, including (a) the pre-vesting forfeiture ratesrate of the awards,award, (b) the expected term of ourthat the stock options,option will remain outstanding, (c) our stock price volatility over itsthe expected term (and that of our designated peer group with respect to certain market-based awards), (d) zero dividend yield, and (d)(e) the "risk-free"prevailing risk-free interest rate overfor the period matching the expected term.
WeWith regard to (a)-(e) above: we estimate forfeiture rates based on our employees’ overall forfeiture history, which we believe will be representative of future results. We estimate the expected term of stock options granted based on our employees’ historical exercise patterns, which we believe will be representative of their future behavior. We estimate the volatility of our common stock on the date of grant based on the historical volatility of our common stock for a look-back period that corresponds with the expected term. We estimate the risk-free interest rate based upon the U.S. Department of the Treasury yields in effect at award grant, for a period equaling the expected term of the stock option.
(ix) Foreign Currency Translation
We translate the assetsoption and liabilities of our foreign subsidiaries that are stated in their functional currencies (i.e., local operating currencies), to U.S. dollars at the rates of exchange in effect at the reported balance sheet date. Revenues and expenses are translated using the monthly average exchange rates during the reported period. Unrealized gains and losses from the translation of our subsidiaries’ financial statements (that are initially denominated in the corresponding functional currency) are included aswe estimate a separate component of “accumulated other comprehensive income (loss)” in the Condensed Consolidated Balance Sheets.
We record foreign currency transactions, when initially denominated in a currency other than the respective functional currency of our subsidiary, at the prevailing exchange rate on the date of the transaction. Resulting unrealized foreign exchange gains and losses from transactions with third parties are included in “accumulated other comprehensive income (loss)” in the Condensed Consolidated Balance Sheets.

zero dividend yield.
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit,interest rate, and number of years)
(Unaudited)



Beginning April 1, 2015, all unrealized foreign exchange gains and losses associated with our intercompany loans are included in "accumulated other comprehensive income (loss)" in the Condensed Consolidated Balance Sheets, as these loans with our foreign subsidiaries are not expected to be settled in the "foreseeable future."
(x)(vi) Basic and Diluted Net Loss per Share
We calculate basic and diluted net loss per share using the weighted average number of common shares outstanding during the periods presented. In periods of a net loss, basic and diluted loss per share is the same. For the diluted earnings per share calculation, we adjust the weighted average number of common shares outstanding to include only dilutive stock options, warrants, and other common stock equivalents outstanding during the period.period to the extent that they are dilutive.
(xi)There were 24.2 million shares and 12.7 million shares of outstanding securities (including stock options, restricted stock units, unvested restricted stock awards, stock appreciation rights, and performance awards) as of September 30, 2022 and 2021, respectively, that were excluded from the calculation of diluted net loss per share because their inclusion would have been anti-dilutive.
(vii) Income Taxes
Deferred tax assets and liabilities are recorded based on the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the financial statements, as well as operating losses and tax credit carry forwards using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain.
We have recordedapply an estimated annual effective tax rate (“ETR”) approach for calculating a tax provision for interim periods. Our ETR differs from the U.S. federal statutory tax rate primarily as a result of nondeductible expenses and the impact of a valuation allowance to reduceon our deferred tax assets, which we record because we believe that, based upon a weighting of positive and negative factors, it is more likely than not that these deferred tax assets will not be realized. If/when we were to determine that our deferred tax assets are realizable, an adjustment to the corresponding valuation allowance would increase our net income in the period that such determination was made.
In the event that we are assessed interest and/or penalties from taxing authorities that have not been previously accrued, such amounts would be included in “benefit“provision for income taxes”taxes from continuing operations” within the accompanying Condensed Consolidated Statements of Operations infor the period in which we received the notice was received.notice.
(xii)(viii) Research and Development CostsExpenses
Our research and development costs are expensed as incurred. Research and development costs consist primarily of salaries, benefits, and other staff-related costs including associated stock-based compensation, laboratory supplies, clinical trial and related clinical manufacturing costs, costs related to manufacturing preparations, fees paid to other entities that conduct certain research and development activities on our behalf and payments made pursuant to license agreements. Clinical trial and other development costs incurred orby third parties are expensed as certainthe contracted work is performed. We accrue for costs incurred as the services are being provided by monitoring the status of activities and the invoices received from our external service providers. We adjust our accruals as actual costs become known. Where contingent milestone payments becomeare due to third parties under research and development or license agreements, the milestone payment obligations are expensed in the earliest period that we determine the respective milestone achievement is probable or has occurred.
(ix) Debt Issuance Costs
Debt issuance costs incurred in connection with the Term Loans are classified on the consolidated balance sheet as a direct deduction from the carrying amount of the related debt liability. These expenses are deferred and amortized as part of interest expense in the consolidated statement of operations using the effective interest rate method over the term of the debt agreement. Refer to Note 5 for additional information on the Term Loans.
(x) Recently Issued Accounting Standards
There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”), which are generally triggered bywe do not believe had or will have a material impact on our consolidated financial statements, unless otherwise described below.
In June 2022, the FASB issued Accounting Standards Update No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This standard clarifies that a contractual clinical or regulatory events.restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. This
(xiii)
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, interest rate, and number of years)
(Unaudited)

standard becomes effective for us on January 1, 2024, and is not expected to have a material impact on our condensed consolidated financial statements and related disclosures.
Note 3. Fair Value Measurements
We determine measurement-date fair value based on the proceeds that would be received through the sale of the asset, or that we would pay to settle or transfer the liability, in an orderly transaction between market participants. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include the following:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are publicly accessible at the measurement date.
Level 2: Observable prices that are based on inputs not quoted on active markets, but that are corroborated by market data. These inputs may include quoted prices for similar assets or liabilities or quoted market prices in markets that are not active to the general public.
Level 3: Unobservable inputs are used when little or no market data is available.
The table below summarizes certain asset and liability fair values that are included within our accompanying Condensed Consolidated Balance Sheets, and their designations among the three fair value measurement categories:
 September 30, 2022
Fair Value Measurements
 Level 1Level 2Level 3Total
Assets:
Money market funds$40,913 $— $— $40,913 
Equity securities258 — — 258 
Government-related debt securities45,158 — — 45,158 
Mutual funds3,551 8 — 3,559 
Key employee life insurance, cash surrender value(1)
— 3,504 — 3,504 
$89,880 $3,512 $— $93,392 
Liabilities:
Deferred executive compensation liability(2)
$— $7,434 $— $7,434 
$— $7,434 $— $7,434 
3. BALANCE SHEET ACCOUNT DETAIL(1) Included within other assets on our Condensed Consolidated Balance Sheets, and the amount is based on the stated cash surrender value of life insurance policies of named current and former employees at each period-end.
(2) Included $3.8 million within accounts payable and other accrued liabilities and $3.6 million within other long-term liabilities on our Condensed Consolidated Balance Sheets.
December 31, 2021
Fair Value Measurements
Level 1Level 2Level 3Total
Assets:
Equity securities$5,718 $— $— $5,718 
Money market funds66,322 — — 66,322 
Mutual funds6,390 9 — 6,399 
Key employee life insurance, cash surrender value(1)
— 4,507 — 4,507 
$78,430 $4,516 $— $82,946 
Liabilities:
Deferred executive compensation liability(2)
$— $11,243 $— $11,243 
$— $11,243 $— $11,243 
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, interest rate, and number of years)
(Unaudited)

(1) Included within other assets on our Condensed Consolidated Balance Sheets, and the amount is based on the stated cash surrender value of life insurance policies of named current and former employees at each period-end.
(2) Included $2.0 million within accounts payable and other accrued liabilities and $9.2 million within other long-term liabilities on our Condensed Consolidated Balance Sheets.

We did not have any transfers between “Level 1” and “Level 2” measurement categories for any periods presented.
Our carrying amounts of financial instruments such as cash equivalents, accounts receivable, prepaid expenses, accounts payable, and other accrued liabilities approximate their fair values due to their short-term nature of settlement.
Note 4. Balance Sheet Account Detail
The composition of selected financial statement captions that comprise the accompanying Condensed Consolidated Balance Sheets are summarized below:
(a) Cash and Cash Equivalents and Marketable Securities


We maintain cash balances with select major financial institutions. The Federal Deposit Insurance Corporation (“FDIC”) and other third parties insure a fraction of these deposits. Accordingly, these cash deposits are not insured against the possibility of a substantial or complete loss of principal and are inherently subject to the credit risk of the corresponding financial institution.
Our investment policy requires that purchased investments may only be in highly-rated and liquid financial instruments and limits our holdings of any single issuer (excluding any debt or equity securities that may be received from our strategic partners in connection with an out-license arrangement).
The carrying amount of our equity securities and money market funds approximates their fair value (utilizing “Level 1” or “Level 2” inputs) because of our ability to immediately convert these instruments into cash with minimal expected change in value. There were no material unrealized losses on our investment securities at September 30, 2022 or December 31, 2021.
The following is a summary of our presented composition of “cash and cash equivalents” and “marketable securities”:
Historical or Amortized CostFair
Value		Cash and Cash
Equivalents		Marketable
 Securities
September 30, 2022
Money market funds$40,913 $40,913 $40,913 $— 
Equity securities(1)
— 258 — 258 
Government-related debt securities45,172 45,158 4,970 40,188 
Mutual funds2,146 3,551 — 3,551 
Bank deposits10,372 10,372 10,372 — 
Total cash and cash equivalents and marketable securities$98,603 $100,252 $56,255 $43,997 
December 31, 2021
Equity securities$3,512 $5,718 $— $5,718 
Money market funds66,322 66,322 66,322 — 
Bank deposits22,217 22,217 22,217 — 
Mutual funds5,218 6,390 — 6,390 
Total cash and cash equivalents and marketable securities$97,269 $100,647 $88,539 $12,108 
(1)Our aggregate equity holdings consist of 0.4 million common shares of Unicycive Therapeutics, Inc., a NASDAQ-listed biopharmaceutical company, with a fair market value of $0.3 million as of September 30, 2022. We completed the sale of 0.4 million shares of common stock and recognized a $0.4 million gain within “other expense, net” within the accompanying Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022. Additionally, we completed the sale of our remaining 0.9 million shares of CASI Pharmaceuticals, Inc., a NASDAQ-listed biopharmaceutical company, common stock and recognized a $1.9 million loss within “other expense, net” within the accompanying Condensed
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit,interest rate, and number of years)
(Unaudited)



As of September 30, 2017 and December 31, 2016, our holdings included in “cash and cash equivalents” and “marketable securities” were at major financial institutions.
Our investment policy requires that investments in marketable securities be in only highly-rated instruments, which are primarily U.S. treasury bills or U.S. treasury-backed securities, and limited investments in securities of any single issuer. We maintain cash balances in excess of federally insured limits with reputable financial institutions. To a limited degree, the Federal Deposit Insurance Corporation ("FDIC") and other third parties insure these investments. However, these investments are not insured against the possibility of a complete loss of earnings or principal and are inherently subject to the credit risk related to the continued credit worthiness of the underlying issuer and general credit market risks. We manage such risks in our portfolio by investing in highly liquid, highly rated instruments, and limit investing in long-term maturity instruments.
The carrying amount of our equity securities, money market funds, Bank CDs, and mutual funds approximates their fair value (utilizing Level 1 or Level 2 inputs – see Note 2(xiii)) because of our ability to immediately convert these instruments into cash with minimal expected change in value.
The following is a summary of our presented “cash and cash equivalents” and “marketable securities”:
           Marketable Securities
 Cost Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Estimated
Fair
Value		 Cash and Cash
Equivalents		 Current Long
Term
September 30, 2017             
Bank deposits$21,574
 $—
 $—
 $21,574
 $21,574
 $—
 $—
Money market funds225,894
 —
 —
 225,894
 225,894
 —
 —
Bank certificates of deposits248
 —
 —
 248
 —
 248
 —
Total cash and cash equivalents and marketable securities$247,716
 $—
 $—
 $247,716
 $247,468
 $248
 $—
December 31, 2016             
Bank deposits$23,915
 $—
 $—
 $23,915
 $23,915
 $—
 $—
Money market funds128,563
 —
 —
 128,563
 128,563
 —
 —
Bank certificates of deposits5,991
 —
 —
 5,991
 5,744
 247
 —
Total cash and cash equivalents and marketable securities$158,469
 $—
 $—
 $158,469
 $158,222
 $247
 $—
As of September 30, 2017, none of these securities had been in a continuous unrealized loss position longer than one year.
(b) Property and Equipment, Net of Accumulated Depreciation
“Property and equipment, net of accumulated depreciation” consist of the following:
 September 30, 2017 December 31, 2016
Computer hardware and software$2,933
 $2,550
Laboratory equipment622
 622
Office furniture218
 211
Leasehold improvements2,938
 2,912
Property and equipment, at cost6,711
 6,295
(Less): Accumulated depreciation(6,096) (5,846)
Property and equipment, net of accumulated depreciation$615
 $449
Depreciation expense (included within “total operating costs and expenses” in the accompanying Condensed Consolidated Statements of Operations)Operations for the nine months ended September 30, 20172022. We no longer hold any shares of CASI Pharmaceuticals, Inc.
(b) Inventories
Upon approval of ROLVEDON on September 9, 2022, we began capitalizing our purchases of saleable inventory of ROLVEDON from suppliers. Inventories consist of the following:
September 30, 2022December 31, 2021
Raw materials$9,000 $— 
Work-in-process373 — 
Finished goods— — 
Inventories$9,373 $— 
(c)  Accounts Payable and 2016, was $0.2Other Accrued Liabilities
“Accounts payable and other accrued liabilities” consists of the following:
September 30, 2022December 31, 2021
Trade accounts payable and other$35,005 $33,408 
Lease liability - current portion752 1,282 
Commercial Product Portfolio accruals (Note 8)6,254 6,568 
Accounts payable and other accrued liabilities$42,011 $41,258 
Amounts presented within “accounts payable and other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets for our categories of gross-to-net (“GTN”) estimates related to the Commercial Product Portfolio accruals were as follows:
Commercial/Medicaid Rebates and Government ChargebacksDistribution, Data, Inventory and
GPO Administrative Fees		Product Return AllowancesTotal
Balance as of December 31, 2020$2,601 $942 $4,299 $7,842 
(Less): Payments and credits against GTN accruals(1,159)— (115)(1,274)
Balance as of December 31, 20211,442 942 4,184 6,568 
(Less): Payments and credits against GTN accruals(50)— (264)(314)
Balance as of September 30, 2022$1,392 $942 $3,920 $6,254 
Note 5. Loan Payable

On September 21, 2022, we entered into the Loan Agreement that provides for a five-year senior secured term loan facility in an aggregate principal amount of up to $65.0 million, and $0.4available to us in four tranches. Upon entering into the Loan Agreement in September 2022, we borrowed $30.0 million respectively.in term loans (the “Term A Loan”). Under the terms of the Loan Agreement, we may borrow up to an additional $35.0 million in term loans subject to us achieving the following milestones:
a.Through December 20, 2022, $10.0 million (the “Term B Loan”) if we provide satisfactory evidence that the FDA has approved the New Lease Accounting StandardDrug Application (“NDA”) for poziotinib for non-small cell lung cancer in previously treated patients with HER2 exon 20 insertion mutations with a label materially consistent with our filing of such NDA;

b.Through May 15, 2023, $15.0 million (the “Term C Loan”) if we provide satisfactory evidence that we have achieved a minimum of $15.7 million in Net Product Revenue (as defined in the Loan Agreement) calculated on a trailing six (6) month basis for any measuring period ending on or prior to March 31, 2023; and
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit,interest rate, and number of years)
(Unaudited)



c.Through November 15, 2023, $10.0 million (the “Term D Loan”) if we provide satisfactory evidence that we have achieved a minimum of $40.0 million in Net Product Revenue calculated on a trailing six (6) month basis for any measuring period ending on or prior to September 30, 2023.
In February 2016,The Loan Agreement contains customary events of default and representations, warranties and affirmative and negative covenants, including financial covenants requiring the FASB issued ASU 2016-02, which creates Topic 842, Leases Company to (i) maintain certain levels of cash in accounts subject to a control agreement in favor of the Agent of at least $25.0 million at all times commencing from September 21, 2022 and ending on the later of (A) July 31, 2023 and (B) the date Company either (1) receives, on or after September 13, 2022, at least $40.0 million in net cash proceeds from equity raises and/or business development or collaboration agreements or (2) (x) receives, on or after September 13, 2022, at least $30.0 million in net cash proceeds from equity raises and/or business development or collaboration agreements and (y) achieves at least $25.8 million in trailing 6-month net revenue from the sale of any products (on or prior to the period ending July 31, 2023) and (ii) maintain, commencing March 31, 2023, on a monthly basis until the end of 2023, and on a quarterly basis thereafter, either (A) net revenue from the sale of any products of at least $100 million on a trailing 12-month basis, or (B) net revenue from the sale of any products of an amount set forth in the Loan Agreement, on a trailing 6-month basis.
The Term Loans will be guaranteed by certain of our subsidiaries (the “Guarantors”). Our obligations under the FASB Accounting Standards Codification, and which will supersede Topic 840, Leases. ASU 2016-02 is effective for us beginning January 1, 2019, and mandatesLoan Agreement are secured by a "modified retrospective" transition method. This new standard requires leasepledge of substantially all of our assets and lease liabilitieswill be secured by a pledge of substantially all of the assets of the Guarantors.
The Term Loans bear interest at a floating rate per annum equal to the 1-Month CME Term SOFR (subject to a 2.3% floor) plus 5.7%. Interest-only payments are due beginning on November 1, 2022 through September 30, 2025, and the interest-only period may be extended to September 30, 2026 (“Principal Extension”) provided the Company and its subsidiaries have achieved a minimum of $40.0 million in net product revenue on a trailing six-month basis for any measuring period ending on or prior to September 30, 2023. We are also required to make monthly principal payments beginning on October 1, 2025 in an amount equal to 1/24th of the aggregate amount of the Term Loans outstanding if the Principal Extension is not executed, or, beginning on October 1, 2026, 1/12th of the aggregate amount of the Term Loans outstanding if the Principal Extension is executed. On the Maturity Date, we are required to pay in full all outstanding Term Loans and other amounts owed under the Loan Agreement.
At the time of borrowing any tranche of the Term Loans, we are required to pay an upfront fee of 1.0% of the aggregate principal amount borrowed at that time. We may prepay all of the Term Loans, and are required to make mandatory prepayments of the Term Loans upon the occurrence of a bankruptcy or insolvency event (including the acceleration of claims by operation of law). All mandatory and voluntary prepayments of the Term Loans are subject to prepayment premiums equal to (i) 3% of the principal prepaid if prepayment occurs on or before September 21, 2023, (ii) 2% of the principal prepaid if prepayment occurs after September 21, 2023 but on or before September 21, 2024, or (iii) 1% of the principal prepaid if prepayment occurs after September 21, 2024.
We will pay facility fees and success fees upon borrowing the future tranches as follows:
a.Facility fee of $0.1 million and success fee of 0.75% of the principal of the Term B Loans,
b.Facility fee of $0.2 million and success fee of 0.75% of the principal of the Term C Loans, and
c.Facility fee of $0.1 million and success fee of 0.75% of the principal of the Term D Loans.
In addition, we are required to pay an exit fee in an amount equal to 4.75% of all principal repaid, whether as a mandatory prepayment, voluntary prepayment, or a scheduled repayment. In connection with the Loan Agreement, we granted warrants (“Warrants”) to the Lenders to purchase up to 454,454 shares of our common stock at an exercise price of $0.66 per share, which had a fair market value at time of issuance of $0.2 million. The number of shares and exercise price are subject to anti-dilution adjustments for operating leases)splits, dividends, capital reorganizations, reclassifications and similar transactions. Upon borrowing the future tranches, we will issue warrants to be presentedthe Lenders to purchase an aggregate number of shares of common stock equal to 1.0% of the Term Loan amount funded divided by the applicable Exercise Price (as defined below). The Exercise Price is defined as the lesser of (a) the 10-day trailing average of the Company’s closing common stock price ending on the balance sheet at their "gross amount"trading day immediately prior to the funding date of the applicable Term Loan and requires additional disclosures regarding lease arrangements. We(b) the Company’s closing common stock price on the trading day immediately prior to the funding date of the applicable Term Loan. The Warrants are currently assessingimmediately exercisable, and the impact this guidanceexercise period will have onexpire 10 years from the date of issuance. During our consolidated financial statements, thoughevaluation of equity classification for the Warrants, we currentlyconsidered the conditions as prescribed within ASC 815-40, Derivatives and Hedging, Contracts in an Entity’s own Equity. The Warrants do not expect it to be significant. We presently do not have any capital lease arrangements, but have several operating lease agreements. These lease agreements primarily relate to our principal executive office in Henderson, Nevada and our administrative and research and development facility in Irvine, California.

(c) Inventories
“Inventories” consist offall under the following:liability criteria within ASC 480, Distinguishing
16
 September 30, 2017 December 31, 2016
Raw materials$1,683
 $2,991
Work-in-process7,457
 7,838
Finished goods3,439
 2,305
(Less:) Non-current portion of inventories included within "other assets" *(3,596) (4,419)
Inventories$8,983
 $8,715


* The "non-current" portion of inventories is presented within "other assets" in the accompanying Condensed Consolidated Balance Sheets at September 30, 2017 and December 31, 2016, respectively. This value of $3.6 million at September 30, 2017 represents product that we expect to sell beyond September 30, 2018.
(d) Prepaid Expenses and Other Assets
“Prepaid expenses and other assets” consist of the following:
 September 30, 2017 December 31, 2016
Prepaid insurance$185
 $721
Inventory other712
 1,458
Other miscellaneous prepaid operating expenses2,060
 1,751
Prepaid expenses and other assets$2,957
 $3,930
(e) Other Receivables
“Other receivables” consist of the following:
 September 30, 2017 December 31, 2016
FOLOTYN milestone for first sale in Japan (Note 16(b)(vii))
2,000
 —
CASI note - short term*1,515
 —
Other miscellaneous receivables**1,033
 239
Employee receivables***857
 —
Reimbursements due from development partners for incurred research and development expenses418
 1,796
Insurance receivable53
 500
Receivable for contracted sales and marketing services (Note 13)
—
 1,831
Income tax receivable—
 1,388
Other receivables$5,876
 $5,754
* This full balance was prospectively reclassified beginning March 31, 2017 to "other receivables" (presented within current assets on the accompanying Condensed Consolidated Balance Sheets) from "other assets" (presented within non-current assets) due to this note's maturity date - see Note 10.
** As of September 30, 2017, this balance is inclusive of $0.6 million of Medicaid rebate credits to be applied against future invoices for each respective state program.

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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit,interest rate, and number of years)
(Unaudited)



Liabilities from Equity as they are not puttable and do not represent an instrument that has a redeemable underlying security. The Warrants do meet the definition of a derivative instrument under ASC 815, but are eligible for the scope exception as they are indexed to our common stock and would be classified in permanent equity if freestanding.
*** ThisThe Loan Agreement contains customary events of default that entitle SLR to accelerate the repayment of the Term Loans, and to exercise remedies against the Borrowers and the collateral securing the Term Loans. Upon the occurrence and for the duration of an event of default, an additional default interest rate of 4.0% will apply to all obligations owed under the Loan Agreement.
In September 2022, we borrowed $30.0 million upon the signing of the Loan Agreement and incurred debt issuance costs of $3.0 million, including the exit fee of $1.4 million, that are classified as contra-liabilities on our condensed consolidated balance represents amounts due to us for exercisessheets and are being recognized as interest expense over the term of stock options by employees. These exercises were executed bythe loan using the effective interest method. During the three and nine months ended September 30, 2017, but2022, we recognized interest expense related to the cash receipts did not post to our bank account until October 2017.Term Loans of approximately $0.1 million, approximately $17 thousand of which was noncash.
(f) Intangible Assets and GoodwillThe following table summarizes the composition of Term Loans payable as reflected on the condensed consolidated balance sheet as of September 30, 2022 (in thousands):
“Intangible assets, net of accumulated amortization and impairment charges” consist of the following:
   September 30, 2017
 Historical
Cost		 Accumulated
Amortization		 Foreign
Currency
Translation		 Impairment Net Amount Full
Amortization
Period
(months)		 Remaining
Amortization
Period
(months)
MARQIBO IPR&D (NHL and other novel indications)$17,600
 $—
 $—
 $—
 $17,600
 n/a n/a
EVOMELA distribution rights (1)7,700
 (888) —
 —
 6,812
 156 138
BELEODAQ distribution rights25,000
 (6,094) —
 —
 18,906
 160 121
MARQIBO distribution rights26,900
 (16,102) —
 —
 10,798
 81 30
FOLOTYN distribution rights (2)118,400
 (50,843) —
 —
 67,557
 152 62
ZEVALIN distribution rights – U.S.41,900
 (36,688) —
 —
 5,212
 123 18
ZEVALIN distribution rights – Ex-U.S.23,490
 (16,579) (2,763) —
 4,148
 96 30
FUSILEV distribution rights (3)16,778
 (9,618) —
 (7,160) —
 56 0
FOLOTYN out-license (4)27,900
 (13,874) —
 (1,023) 13,003
 110 58
Total intangible assets$305,668
 $(150,686) $(2,763) $(8,183) $144,036
    
(1)The FDA approval of EVOMELA in March 2016 triggered a $6 million payment due to CyDex Pharmaceuticals, Inc. (a wholly-owned subsidiary of Ligand Pharmaceuticals Incorporated ("Ligand")). This event also resulted in a reclassification of our $7.7 million "EVOMELA IPR&D" to "EVOMELA distribution rights" due to our ability to begin its commercialization with this FDA approval. Amortization commenced on April 1, 2016, in accordance with our capitalization policy for intangible assets.September 30, 2022

Gross proceeds$30,000 
(2)Accrued exit fee
Beginning June 2016, we adjusted the amortization period of our FOLOTYN distribution rights to November 2022 from March 2025, representing the period through which we expect to have patent protection from generic competition (see Note 16(g)).

1,425 
(3)Unamortized debt discountOn February 20, 2015, the U.S. District Court for the District of Nevada found the patent covering FUSILEV to be invalid, which was upheld on appeal. On April 24, 2015, Sandoz Inc. began to commercialize a generic version of FUSILEV. This represented a “triggering event” under applicable GAAP in evaluating the value of our FUSILEV distribution rights as of March 31, 2015, resulting in a $7.2 million impairment charge (non-cash) in the first quarter of 2015. We accelerated amortization expense recognition in 2015 for the then remaining net book value of FUSILEV distribution rights.

(2,937)
(4)Carrying valueOn May 29, 2013, we amended our FOLOTYN collaboration agreement with Mundipharma International Corporation Limited ("Mundipharma"). As a result of the amendment, Europe and Turkey were excluded from Mundipharma’s commercialization territory, and their royalty rates and milestone payments to us were modified. This constituted a change under which we originally valued the FOLOTYN out-license as part of business combination accounting, resulting in an impairment charge (non-cash) of $1.0 million in the second quarter of 2013.$28,488 



The aggregate maturities of Loan Payable as of September 30, 2022 are as follows (in thousands):
September 30, 2022
2022$— 
2023— 
2024— 
20253,750 
2026 and thereafter26,250 
$30,000 
Note 6. Stock-Based Compensation
In June 2018, we adopted the 2018 Long-Term Incentive Plan (the “2018 Plan”) which provides for the issuance of restricted stock awards and units, incentive and nonqualified stock options, performance unit awards, stock appreciation rights, and other stock-based awards to employees, consultants and members of our Board of Directors. On June 21, 2022, our shareholders approved an additional 18.0 million shares to be reserved for issuance under the 2018 Plan.
Stock-based award grants to employees generally vest one-third on the first anniversary of the date of grant, and in equal annual installments thereafter over the remaining two-year vesting period. The 2018 Plan limits the term of each stock option to no more than 10 years from the date of grant. Historically, in the event of a change in control, all award types, with the exception of performance unit awards made to Named Executive Officers (“NEOs”) and staff, would automatically vest in full effective as of immediately prior to the consummation of the change in control. Moving forward, in the event of a change in control, all future award grants made to staff will vest at the full discretion of the Compensation Committee. All future award grants made to NEOs shall be governed by the terms of each individual Executive Employment Agreement, which typically provide that, with the exception of performance unit awards, all award types vest in full immediately prior to the consummation of a change in control.
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit,interest rate, and number of years)
(Unaudited)



We report our stock-based compensation expense (inclusive of our incentive stock plan and employee stock purchase plan) in the accompanying Condensed Consolidated Statements of Operations within “total operating costs and expenses” for the three and nine months ended September 30, 2022 and 2021, as follows:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2022202120222021
Selling, general and administrative$1,477 $2,927 $4,589 $8,730 
Research and development1,070 1,187 3,046 3,956 
Total stock-based compensation$2,547 $4,114 $7,635 $12,686 
   December 31, 2016

Historical
Cost		 Accumulated
Amortization		 Foreign
Currency
Translation		 Impairment Net Amount
MARQIBO IPR&D (NHL and other novel indications)$17,600
 $—
 $—
 $—
 $17,600
EVOMELA distribution rights7,700
 (444) —
 —
 7,256
BELEODAQ distribution rights25,000
 (4,688) —
 —
 20,312
MARQIBO distribution rights26,900
 (12,863) —
 —
 14,037
FOLOTYN distribution rights118,400
 (41,036) —
 —
 77,364
ZEVALIN distribution rights – U.S.41,900
 (34,083) —
 —
 7,817
ZEVALIN distribution rights – Ex-U.S.23,490
 (13,649) (5,038) —
 4,803
FUSILEV distribution rights16,778
 (9,618) —
 (7,160) —
FOLOTYN out-license27,900
 (11,832) —
 (1,023) 15,045
Total intangible assets$305,668
 $(128,213) $(5,038) $(8,183) $164,234
Restricted Stock Awards and Units

Intangible asset amortization and impairment expense recognized duringThe following table summarizes activity related to restricted stock awards (“RSAs”) for the nine months ended September 30, 2017 and 2016 was $20.72022:
Number of
Restricted Stock
Awards		Weighted Average
Fair Value per
Share at Grant
Date
Unvested at December 31, 20214,436,007 $3.33 
Granted2,160,240 1.20 
Vested(1,804,526)3.77 
Forfeited(875,513)2.61 
Unvested at September 30, 20223,916,208 $2.11 

The Company recorded stock-based compensation expense of $1.3 million and $19.1$4.2 million respectively.

Estimated intangible asset amortizationfor the three and nine months ended September 30, 2022, respectively, related to RSAs. As of September 30, 2022, there was approximately $5.7 million of unrecognized compensation expense related to the unvested portions of RSAs, which is expected to be recognized over a weighted-average period of approximately 1.7 years. The expense for time-based vesting awards is recognized over the remainder of 2017 and the five succeeding fiscal years and thereafter is as follows:

Years Ending December 31, 
Remainder of 2017$6,930
201827,719
201925,114
202019,761
202118,266
202215,882
2023 and thereafter12,764
 $126,436
“Goodwill” is comprisedvesting period of the following:award.
The following table summarizes activity related to restricted stock units (“RSUs”) for the nine months ended September 30, 2022:
Number of
Restricted Stock
Units		Weighted Average
Fair Value per
Share at Grant
Date
Outstanding at December 31, 2021184,512 $23.53 
Granted1,677,552 0.71 
Vested— — 
Forfeited(4,512)— 
Outstanding at September 30, 20221,857,552��$0.71 
The Company recorded stock-based compensation expense of $0.1 million and $0.2 million for the three and nine months ended September 30, 2022, respectively, related to RSUs. As of September 30, 2022, there was approximately $1.2 million of unrecognized compensation expense related to the unvested portions of RSUs, which is expected to be recognized over a weighted-average period of approximately 2.3 years.
Stock Options
The following table summarizes stock option activity for the nine months ended September 30, 2022:
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 September 30, 2017 December 31, 2016
Acquisition of Talon (MARQIBO rights)$10,526
 $10,526
Acquisition of ZEVALIN Ex-U.S. distribution rights2,525
 2,525
Acquisition of Allos (FOLOTYN rights)5,346
 5,346
Foreign currency exchange translation effects(266) (511)
Goodwill$18,131
 $17,886


17

Table of Contents
Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit,interest rate, and number of years)
(Unaudited)



Number of
Shares		Weighted-
Average
Exercise
Price/Share		Weighted-
Average
Remaining
Contractual
Term (Years)		Aggregate
Intrinsic
Value
Outstanding at December 31, 20219,505,461 $6.42 5.86
Granted6,885,316 0.68 
Exercised— — $— 
Forfeited(181,914)3.34 
Expired(1,239,985)7.28 
Outstanding at September 30, 202214,968,878 $3.74 7.59$— 
Vested and Expected to Vest at September 30, 20227,760,304 $1.08 9.26$— 
Exercisable at September 30, 20226,045,584 $7.68 5.12$— 
(g) Other Assets
“Other assets” are comprisedThe Company recorded stock-based compensation expense of the following:
 September 30, 2017 December 31, 2016
Equity securities (see Note 10)*
$17,751
 $11,533
Promissory note receivable - long term (see Note 10)**
—
 1,510
Research & development supplies and other267
 224
Executive officer life insurance – cash surrender value14,122
 11,863
Inventories - non-current portion3,596
 4,419
Other assets$35,736
 $29,549

* These equity securities in CASI were excluded from “marketable securities” (see Note 3(a)) due to our intent to hold them for at least one year beyond September 30, 2017. The unrealized gain on these "available-for-sale" equity securities are recognized as an increase to "other assets"$0.8 million and "accumulated deficit" (as a component of "other comprehensive income") within the accompanying Condensed Consolidated Balance Sheets and totaled $3.9$2.1 million net of income tax, for the three and nine months ended September 30, 2017. Effective January 1, 2018,2022, respectively, related to stock options. As of September 30, 2022, there was approximately $5.1 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.1 years.
The Company used the Black-Scholes option pricing model for determining the estimated fair value of stock-based compensation related to stock options. The table below summarizes the assumptions used:

Nine Months Ended September 30,
20222021
Expected life (in years)5.575.50
Risk-free interest rate1.70% - 3.30%0.56% - 1.01%
Expected volatility83.6% - 90.5%80.0% - 81.3%
Expected dividend yield—%—%
Weighted-average grant-date fair value per stock option$0.48$2.42
Note 7. Financial Commitments and Contingencies and Key License Agreements
(a) Facility and Equipment Leases
Overview
In the ordinary course of our business, we enter into leases with unaffiliated parties for the use of (i) office and research facilities and (ii) office equipment. Our current leases have remaining terms ranging from two to four years and none include any residual value guarantees, restrictive covenants, term extensions, or early-termination options.
We lease our principal executive office in Boston, Massachusetts under a non-cancelable operating lease expiring December 31, 2024. We also leased our research and development facility, in addition to other administrative office leases, in Irvine, California under a non-cancelable operating lease which expired on July 31, 2022. In June 2022, we entered into a new office facility lease in Irvine, California under a non-cancelable operating lease expiring July 31, 2025. We also leased an office facility in Henderson, Nevada under a non-cancelable operating lease which expired on October 31, 2022. We recognize lease expense on a straight-line basis over the new requirementsexpected term of ASU 2016-01, Recognitionthese operating leases, as reported within “selling, general and Measurement of Financial Assets and Liabilities, we will recognize our unrealized holding gains and lossesadministrative” expense on our "available-for-sale" equity securities within "other (expense) income" on the Consolidated Statement of Operations (rather than through "other comprehensive income" on the Consolidated Statements of Comprehensive Loss).
** This note was reclassified to "other receivables" from "other assets" beginning March 31, 2017 due to its March 2018 maturity date.
(h) Accounts Payable and Other Accrued Liabilities
“Accounts payable and other accrued liabilities” are comprised of the following:
 September 30, 2017 December 31, 2016
Trade accounts payable and other accrued liabilities$25,464
 $30,488
Accrued rebates8,120
 8,350
Accrued product royalty4,610
 4,723
Allowance for returns3,458
 2,309
Accrued data and distribution fees4,344
 4,222
Accrued GPO administrative fees449
 384
Accrued inventory management fee1,347
 540
Allowance for chargebacks1,843
 1,467
Accounts payable and other accrued liabilities$49,635
 $52,483
Amounts presented within “accounts payable and other accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets for GTN estimates (see Note 2(i)) wereStatements of Operations.
Our facility leases have minimum annual rents, payable monthly, and some carry fixed annual rent increases. Under some of these arrangements, real estate taxes, insurance, certain operating expenses, and common area maintenance are reimbursable to the lessor. These amounts are expensed as follows:incurred, as they are variable in nature and therefore excluded from the
19

Rebates and
Chargebacks		 Data and
Distribution,
GPO Fees, and
Inventory
Management
Fees		 Returns
Balance as of December 31, 2015$20,167
 $3,386
 $1,394
Add: provisions98,317
 14,979
 2,123
(Less): credits or actual allowances(108,667) (13,219) (1,208)
Balance as of December 31, 20169,817
 5,146
 2,309
Add: provisions85,602
 15,495
 2,164
(Less): credits or actual allowances(85,456) (14,501) (1,015)
Balance as of September 30, 2017$9,963
 $6,140
 $3,458


18

Table of Contents
Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit,interest rate, and number of years)
(Unaudited)




(i) Deferred Revenue
Deferred revenue (currentmeasurement of our reported lease asset and non-current) is comprised of the following:

September 30, 2017 December 31, 2016
ZEVALIN out-license deferred revenue in Asia/other territories (see Note 11)
$—
 $1,255
EVOMELA deferred revenue*2,731
 1,887
ZEVALIN out-license in India territory (see Note 16(b)(iii))
376
 369
Deferred revenue$3,107
 $3,511
* We commercialized EVOMELA beginning in April 2016, and have deferred revenue recognition (see Note 2(i)(a)) for any product shipped to our distributors, but not ordered and received by end-users asliability discussed below. As of September 30, 20172022 and December 31, 2016. This deferral is a result2021, we had no sublease arrangements with us as lessor, and no finance leases, as defined in ASU 2016-02, Leases (“Topic 842”).
The reported asset and liability, respectively, represents (i) the economic benefit of our present inability to estimate future customer returnsuse of leased facilities and rebate levels for this recently launched product.
(j) Other Long-Term Liabilities
"Other long-term liabilities" are comprisedequipment and (ii) the present-value of our contractual minimum lease payments, applying our estimated incremental borrowing rate as of the following:
 September 30, 2017 December 31, 2016
Accrued executive deferred compensation$10,250
 $8,352
Deferred rent (non-current portion)83
 167
Clinical study holdbacks, non-current56
 47
Other tax liabilities738
 738
Royalty liability—
 300
Other long-term liabilities$11,127
 $9,604
4. GROSS-TO-NET PRODUCT SALES
lease commencement date (since an implicit interest rate is not readily determinable in any of our leases). The below table presents a GTN product sales reconciliation forrecorded asset and liability associated with each lease is amortized over the accompanying Condensed Consolidated Statements of Operations:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Gross product sales$66,517
 $61,513
 $192,443
 $175,963
Commercial rebates and government chargebacks(28,075) (26,167) (85,400) (67,389)
Data and distribution fees, GPO fees, and inventory management fees(5,864) (4,234) (15,503) (10,235)
Prompt pay discounts(455) (300) (1,143) (380)
Product returns allowance(889) (540) (2,162) (1,558)
Product sales, net$31,234
 $30,272
 $88,235
 $96,401

5. COMPOSITION OF TOTAL REVENUE
The below table presents our net product sales by geography forrespective lease term using the effective interest rate method. During the three and nine months ended September 30, 20172022, we recognized $0.4 million of additional right-of-use assets in exchange for lease liabilities.
We elected to not separate “lease components” from “non-lease components” in our measurement of minimum payments for our facility leases and 2016:office equipment leases. Additionally, we elected to not recognize a lease asset and liability for a term of 12 months or less.




19




 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
United States$29,184
 93.4% $29,576
 97.7% $82,049
 93.0% $93,392
 96.9%
Europe2,050
 6.6% 696
 2.3% 6,186
 7.0% 3,009
 3.1%
Product sales, net$31,234
 100.0% $30,272
 100.0% $88,235
 100.0% $96,401
 100.0%

Financial Reporting Captions
The below table presentssummarizes the lease asset and liability accounts presented on our net product sales by drug for the three and nine months endedaccompanying Condensed Consolidated Balance Sheets:
Operating LeasesCondensed Consolidated Balance Sheet CaptionSeptember 30, 2022December 31, 2021
Operating lease right-of-use assets - non-currentFacility and equipment under lease$1,869 $2,505 
Operating lease liabilities - currentAccounts payable and other accrued liabilities752 1,282 
Operating lease liabilities - non-currentOther long-term liabilities1,249 1,452 
Total operating lease liabilities$2,001 $2,734 
As of September 30, 20172022 and 2016:December 31, 2021, our “facility and equipment under lease” consisted of office and research facilities of $1.5 million and $2.1 million, respectively, and office equipment of $0.4 million and $0.4 million, respectively.
Components of Lease Expense
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
FUSILEV$1,792
 5.7% $4,893
 16.2% $6,426
 7.3% $30,568
 31.7%
FOLOTYN11,576
 37.1% 11,315
 37.4% 32,031
 36.3% 35,577
 36.9%
ZEVALIN2,737
 8.8% 2,627
 8.7% 7,881
 8.9% 8,224
 8.5%
MARQIBO1,227
 3.9% 1,925
 6.4% 5,369
 6.1% 4,921
 5.1%
BELEODAQ3,399
 10.9% 3,635
 12.0% 9,666
 11.0% 10,326
 10.7%
EVOMELA10,503
 33.6% 5,877
 19.4% 26,862
 30.4% 6,785
 7.0%
Product sales, net$31,234
 100.0% $30,272
 100.0% $88,235
 100.0% $96,401
 100.0%
The below table presents our license fees and service revenues by source forWe recognize lease expense on a straight-line basis over the three and nine months ended September 30, 2017 and 2016:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Sales and marketing contracted services (Note 13)
$—
 —% $2,406
 77.1% $4,747
 41.1% $6,737
 45.5%
Out-license of ZEVALIN, FOLOTYN, BELEODAQ, MARQIBO: upfront cash receipt and subsequent royalties for the Canada territory (Note 16(b)(xv))
—
 —% —
 —% 3
 —% 6,000
 40.5%
Out-license of ZEVALIN: recognition of upfront cash receipt and subsequent royalties for Asia and certain other territories, excluding China (Note 11)
—
 —% 474
 15.2% 1,245
 10.8% 1,308
 8.8%
Out-license of FOLOTYN in all countries except the U.S., Canada, Europe, and Turkey: royalties (Note 15)
5,148
 99.7% 229
 7.3% 5,530
 47.8% 705
 4.8%
Out-license of ZEVALIN: amortization of upfront cash receipt related to India territory (Note 16(b)(iii)) and other
13
 0.3% 12
 0.4% 37
 0.3% 57
 0.4%
License fees and service revenues$5,161
 100.0% $3,121
 100.0% $11,562
 100.0% $14,807
 100.0%

6. STOCK-BASED COMPENSATION
We report our stock-based compensation expense (inclusiveterm of our incentive stock plan, employee stock purchase plan,operating leases, as reported within “selling, general and 401(k) contribution matching program) inadministrative” expense on the accompanying Condensed Consolidated Statements of Operations, based on the department to which the recipient belongs. Stock-based compensationOperations. The components of our aggregate lease expense included within “total operating costsis summarized below:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Operating lease cost$266 $381 $1,109 $1,274 
Variable lease cost38 79 236 280 
Short-term lease cost5 13 50 46 
     Total lease cost$309 $473 $1,395 $1,600 
Weighted Average Remaining Lease Term and expenses” for the three and nine months ended September 30, 2017 and 2016, was as follows:Applied Discount Rate

Weighted Average Remaining Lease TermWeighted Average Discount Rate
Operating leases as of September 30, 20222.7 years3.0%
Operating leases as of December 31, 20212.7 years3.8%
Future Contractual Lease Payments
20



 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Cost of sales$68
 $30
 $150
 $84
Research and development592
 470
 1,438
 1,461
Selling, general and administrative2,750
 2,650
 8,066
 8,209
Total stock-based compensation$3,410
 $3,150
 $9,654
 $9,754
7. NET LOSS PER SHARE
Net loss per share was computed by dividing net loss by the weighted average number of common shares outstanding for the three and nine months ended September 30, 2017 and 2016:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
Net loss$(18,709) $(17,455) $(62,144) $(51,070)
Weighted average shares – basic and diluted83,463,153
 79,303,380
 80,177,370
 70,437,885
Net loss per share – basic and diluted$(0.22) $(0.22) $(0.78) $(0.73)
The below outstanding securities were excluded from the above calculation of net loss per share because their impact under the "treasury stock method" and "if-converted method" would have been anti-dilutive due to our net loss per share in the three and nine months ended September 30, 2017 and 2016, as summarized below:
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
2018 Convertible Notes10,454,799
 11,401,284
 10,454,799
 11,401,284
Common stock options3,144,969
 1,603,028
 1,504,155
 1,498,034
Restricted stock awards2,025,661
 2,609,533
 2,025,661
 2,609,533
Common stock warrants111,441
 —
 32,833
 1,674
Preferred stock*—
 —
 —
 —
Total15,736,870
 15,613,845
 14,017,448
 15,510,525
* In June 2016, our then 20 outstanding shares of Series E convertible voting preferred stock were converted (at the election of the preferred stockholders) into an aggregate of 40,000 common shares; a $6 thousand dividend in arrears was paid upon this conversion.  

8. FAIR VALUE MEASUREMENTS
The table below summarizes certain asset and liability fair values that are included within our accompanying Condensed Consolidated Balance Sheets, and their designations among three fair value measurement categories (see Note

Table of Contents
Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit,interest rate, and number of years)
(Unaudited)



2(xiii)):
 September 30, 2017
Fair Value Measurements		 
 Level 1 Level 2 Level 3 Total 
Assets:
 
 
 
 
Bank certificates of deposits$—
 $248
 $—
 $248
 
Money market funds—
 225,894
 —
 225,894
 
Equity securities (Note 10)
17,751
 —
 —
 17,751
 
Mutual funds—
 58
 —
 58
 
Deferred compensation investments (life insurance cash surrender value)—
 14,122
 —
 14,122
*

$17,751
 $240,322
 $—
 $258,073
 
Liabilities:
 
 
 
 
Deferred executive compensation liability (Note 16(f))
$—
 $10,250
 $—
 $10,250
*
FOLOTYN development liability (Note 15)
—
 —
 12,426
 12,426
 
Talon CVR - MARQIBO (Note 9(a))
—
 —
 4,489
 4,489
 
Corixa Liability - ZEVALIN (Note 16(b)(i))
—
 —
 62
 62
 
 $—
 $10,250
 $16,977
 $27,227
 
 December 31, 2016
Fair Value Measurements		 
 Level 1 Level 2 Level 3 Total 
Assets:
 
 
 
 
Bank certificates of deposits$—
 $5,991
 $—
 $5,991
 
Money market funds—
 128,563
 —
 128,563
 
Equity securities (Note 10)
11,533
 —
 —
 11,533
 
Mutual funds—
 56
 —
 56
 
Deferred compensation investments (life insurance cash surrender value)—
 11,863
 —
 11,863
*

$11,533
 $146,473
 $—
 $158,006
 
Liabilities:
 
 
 
 
Deferred executive compensation liability (Note 16(f))
$—
 $8,352
 $—
 $8,352
*
FOLOTYN development liability (Note 15)
—
 —
 13,130
 13,130
 
Talon CVR - MARQIBO (Note 9(a))
—
 —
 1,253
 1,253
 
Corixa Liability - ZEVALIN (Note 16(b)(i))
—
 —
 62
 62
 

$—
 $8,352
 $14,445
 $22,797
 
* The reportedbelow table summarizes our (i) minimum lease payments over the next five years, (ii) lease arrangement implied interest, and (iii) present value of "deferred compensation investments" is based on the cash surrender value of the life insurance policies, while the value of the "deferred executive compensation liability" is based on the market value of the underlying investment holdings.future lease payments:

We did not have any transfers between "Level 1" and "Level 2" (see Note 2(xiii)) for all periods presented.
The table below summarizes the 2016 and 2017 activity of our liabilities that are valued with unobservable inputs (i.e, "Level 3"):

22

Table of Contents
Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


 Fair Value Measurements of
Unobservable Inputs (Level 3)
Balance at December 31, 2015$21,352
Settlement of Ligand Contingent Consideration liability - EVOMELA (see Note 9(b))
(6,000)
FOLOTYN development liability (see Note 15)
(1,556)
Ligand Contingent Consideration fair value adjustment prior to settlement - EVOMELA (see Note 9(b))
773
Talon CVR fair value adjustment - MARQIBO (see Note 9(a))
(124)
Balance at December 31, 201614,445
FOLOTYN development liability (see Note 15)
(704)
Talon CVR fair value adjustment - MARQIBO (see Note 9(a))
3,236
Balance at September 30, 2017*$16,977
* This amount is comprised of the current and non-current portions of “FOLOTYN development liability” and the non-current portion of “acquisition-related contingent obligations” on our accompanying Condensed Consolidated Balance Sheets.
Our carrying amounts of financial instruments such as cash equivalents, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, excluding acquisition-related contingent obligations, approximate their related fair values due to their short-term nature.

9. BUSINESS COMBINATIONS AND CONTINGENT CONSIDERATION
(a) Acquisition of Talon Therapeutics, Inc.
Overview of Talon Acquisition
On July 17, 2013, we purchased all of the outstanding shares of common stock of Talon Therapeutics, Inc. (“Talon”). Through the acquisition of Talon, we gained worldwide rights to MARQIBO. We accounted for this transaction as a business combination, which required that assets acquired and liabilities assumed be recognized on the balance sheet at their fair values as of the transaction date. The Talon purchase consideration was comprised of (i) an aggregate upfront cash amount of $11.3 million, (ii) issuance of 3.0 million shares of our common stock, then equivalent to $26.3 million (based on a closing price of $8.77 per share on July 17, 2013), and (iii) the issuance of contingent value rights (“Talon CVR”) initially valued at $6.5 million.
The Talon CVR was valued using a valuation model that probability-weights expected outcomes (ranging from 50% to 100%) and discounts those amounts to their present value, using an appropriate discount rate (these represent unobservable inputs and are therefore classified as Level 3 inputs – see Note 2 (xiii)). The Talon CVR has a maximum payout of $195 million if all sales and regulatory approval milestones are achieved, as summarized below:
$5 million upon the achievement of net sales of MARQIBO in excess of $30 million in any calendar year
$10 million upon the achievement of net sales of MARQIBO in excess of $60 million in any calendar year
$25 million upon the achievement of net sales of MARQIBO in excess of $100 million in any calendar year
$50 million upon the achievement of net sales of MARQIBO in excess of $200 million in any calendar year
$100 million upon the achievement of net sales of MARQIBO in excess of $400 million in any calendar year
$5 million upon receipt of marketing authorization from the FDA regarding Menadione Topical Lotion

Talon CVR Fair Value as of September 30, 2017 and December 31, 2016
The Talon CVR fair value will continue to be evaluated on a quarterly basis. Current and future changes in its fair value results from the likelihood and timing of milestone achievement and/or the corresponding discount rate applied thereon. Adjustments to Talon CVR fair value are recognized within “change in fair value of contingent consideration related to acquisitions” in the accompanying Condensed Consolidated Statements of Operations.

23

Table of Contents
Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


 Fair Value
of Talon
CVR
December 31, 2016$1,253
Fair value adjustment for the nine months ended September 30, 20173,236
September 30, 2017$4,489
(b) Acquisition of Rights to EVOMELA and Related Contingent Consideration
Overview of Acquisition of Rights to EVOMELA
In March 2013, we completed the acquisition of exclusive global development and commercialization rights to Captisol-enabled®, propylene glycol-free MELPHALAN (which we market as “EVOMELA”) for use as a conditioning treatment prior to autologous stem cell transplant for patients with MM. We acquired these rights from CyDex, a wholly-owned subsidiary of Ligand, for an initial license fee of $3 million, and assumed responsibility for EVOMELA's then-ongoing clinical and regulatory development program. We accounted for this transaction as a business combination, which required that assets acquired and liabilities assumed be recognized on the balance sheet at their fair values as of the transaction date.
We are required to pay Ligand additional amounts up to an aggregate $60 million upon the achievement of annual net sales thresholds (exclusive of the $6 million milestone payment triggered in March 2016, as discussed below), however, we do not expect to achieve these sales thresholds based on our estimated market size for this product and our projected market share at the time of the acquisition and to date. We also must pay Ligand royalties of 20% on our net sales of EVOMELA in all territories.
Our EVOMELA royalty obligation and sales-based milestones are jointly treated as part of an "executory contract" (as defined under GAAP) that is connected with an at-market supply agreement for Captisol that was executed concurrently with this acquisition (requiring the continuing involvement of CyDex). As a result, our royalty and sales-based milestone arrangements are treated as separate transactions, distinct from the consideration paid for the EVOMELA rights. Our royalty expenses are reported through “cost of sales” in our Condensed Consolidated Statements of Operations in the same period of our recognized revenue for the product sale.
Consideration Transferred
The acquisition-date fair value of the consideration transferred consisted of the following:
  
Cash consideration$3,000
Ligand Contingent Consideration4,700
Total purchase consideration$7,700
Fair Value Estimate of Asset Acquired and Liability Assumed
The total purchase consideration is allocated to the acquisition of the net tangible and intangible assets based on their estimated fair values as of the transaction date. The allocation of the total purchase price to the net assets acquired is as follows:
EVOMELA distribution rights$7,700
We estimated the fair value of the in-process research and development using the income approach. The income approach uses valuation techniques to convert future net cash flows to a single present value (discounted) amount. We applied our net cash flow projections for EVOMELA over 10 years and a discount rate of 25%, taking into account our estimates of future incremental earnings that may be achieved upon regulatory approval and commercialization of the product(s). The fair value of the Ligand Contingent Consideration liability was determined using the probability of success and the discounted cash flow method of the income approach (representing unobservable "Level 3" inputs - see Note 2(xiii) for regulatory and sales-based milestones due to Ligand upon achievement.
In March 2016, the FDA approved EVOMELA, triggering a $6 million milestone payment to Ligand that was paid in April 2016. "EVOMELA IPR&D" of $7.7 million was reclassified in April 2016 to "EVOMELA distribution rights" that is

24

Table of Contents
Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


reported within "Intangible assets, net of accumulated amortization and impairment charges" (see Note 3(f)). Amortization related to this intangible asset commenced on April 1, 2016.
Ligand Contingent Consideration Fair Value as of December 31, 2016
The fair value of the Ligand Contingent Consideration immediately prior to its payment was the full $6 million payment due upon EVOMELA's FDA approval. Accordingly, in the first quarter of 2016, we recorded a $0.8 million adjustment to the “change in fair value of contingent consideration related to acquisitions” in the accompanying Condensed Consolidated Statements of Operations. We have no further contingent consideration obligations as part of this transaction.
 Fair Value of
Ligand
Contingent
Consideration
December 31, 2015$5,227
Fair value adjustment for the three months ended March 31, 2016773
Payment to Ligand in April 2016 for FDA approval milestone achievement(6,000)
December 31, 2016$—
(c) Allos Acquisition
We acquired Allos Therapeutics, Inc. (“Allos”) on September 5, 2012 for cash consideration of $205.2 million and assumed FOLOTYN distribution rights (see Note 15). We accounted for this transaction as a business combination, which required that assets acquired and liabilities assumed be recognized on the balance sheet at their fair values as of the transaction date. We have no ongoing contingent consideration obligations from this transaction.
10. OUT-LICENSE OF MARQIBO, ZEVALIN, AND EVOMELA IN CHINA TERRITORY
Overview of CASI Out-License
On September 17, 2014, we executed three product out-license agreements with a perpetual term (collectively, the “CASI Out-License”) with CASI Pharmaceuticals, Inc. (“CASI”), a publicly-traded biopharmaceutical company (NASDAQ: CASI) with a primary focus on the China market. Under the CASI Out-License, we granted CASI the exclusive rights to distribute two of our commercialized oncology drugs, ZEVALIN and MARQIBO, and our Phase 3 drug candidate, EVOMELA (“CASI Out-Licensed Products”) in greater China (which includes Taiwan, Hong Kong and Macau). In return, we received CASI equity for the rights related to ZEVALIN and EVOMELA and a secured promissory note for the rights related to MARQIBO. Additionally, under certain conditions which generally expire on September 17, 2019, we have a right to receive additional CASI common stock in order to maintain our post-investment ownership percentage if CASI issues additional securities. In 2016, we acquired an additional 4.6 million common shares of CASI at par value, resulting in our total holding of 10.0 million common shares as of September 30, 2017.
CASI will be responsible for the development and commercialization of these three drugs, including the submission of import drug registration applications to regulatory authorities and conducting any confirmatory clinical studies in greater China. We will provide CASI with future commercial supply of the CASI Out-Licensed Products under typical market terms.
Proceeds Received in the Third Quarter of 2014
The proceeds we received, and its fair value on the CASI Out-License execution date, consisted of the following:
CASI common stock (5.4 million shares)$8,649
(a)
CASI secured promissory note due March 17, 2018, net of fair value discount ($1.5 million face value and 0.5% annual coupon)1,310
(b)
Total consideration received, net of fair value discount$9,959
(c)


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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


(a)
Value determined based on the September 17, 2014 closing price of 5.4 million shares of CASI common stock on the NASDAQ Capital Market of $1.60 per share. Our current intention is to hold these securities on a long-term basis. Accordingly, we have presented its value of $17.8 million as of September 30, 2017 within "other assets" (rather than "marketable securities") on our accompanying Condensed Consolidated Balance Sheets. The change in fair value of these securities is reported within "other assets" and "accumulated deficit" (as a component of "other comprehensive income (loss)") within the accompanying Condensed Consolidated Balance Sheets (see Note 3(g)).

(b)Value estimated using the terms of the $1.5 million promissory note, the application of a synthetic debt rating based on CASI’s publicly-available financial information, and the prevailing interest yields on similar public debt securities as of September 17, 2014. This full balance was prospectively reclassified beginning March 31, 2017 to "other receivables" (presented within current assets on the accompanying Condensed Consolidated Balance Sheets) from "other assets" (presented within non-current assets) due to this note's maturity date of March 17, 2018 (i.e., within 12 months of March 31, 2017).
(c)Presented within “license fees and service revenue” in the Consolidated Statements of Operations for the year ended December 31, 2015 (see below).
In addition, CASI will be responsible for paying any royalties or milestones that we are obligated to pay to our third-party licensors resulting from the achievement of certain milestones and/or sales of CASI Out-Licensed Products, but only to the extent of the greater China portion of such royalties or milestones.

License Fee Revenue Recognized in the Second Quarter of 2015

The $9.7 million value of the upfront proceeds (undiscounted, and net of certain foreign exchange adjustments) from CASI were recognized in 2015 within “license fees and service revenue” on our Consolidated Statements of Operations. The timing of this revenue recognition corresponds with the execution of supply agreements with CASI for ZEVALIN, MARQIBO, and EVOMELA. These agreements allow CASI to procure CASI Out-Licensed Products directly from approved third parties, and in such case, do not require our future involvement for their commercial supply.
11. OUT-LICENSE OF ZEVALIN IN CERTAIN EX-U.S. TERRITORIES

On November 16, 2015, we entered into an out-license agreement with Mundipharma for their commercialization of ZEVALIN in Asia (excluding India and Greater China), Australia, New Zealand, Africa, the Middle East, and Latin America (including the Caribbean islands). In return, we received $18 million (comprised of $15 million received in December 2015 and $3 million received in January 2016). Of these proceeds, $15 million was recognized within "license fees and service revenue" in the fourth quarter of 2015. Of the $3 million received in January 2016, $0.5 million was recognized for the three months ended September 30, 2016, and $1.2 million and $1.3 million was recognized in the same caption for the nine months ended September 30, 2017 and 2016, respectively (this $3 million was recognized in full by June 30, 2017).

Mundipharma is required to reimburse us for our payment of royalties due to Bayer Pharma AG ("Bayer") from their ZEVALIN sales (see Note 16(b)(ii)). We are also eligible to receive an additional $2 million upon Mundipharma's achievement of a specified sales milestone, that if/when achieved, will also be reported within "license fees and service revenue".
12. OUT-LICENSE OF ZEVALIN, FOLOTYN, BELEODAQ, AND MARQIBO IN CANADA TERRITORY
On January 8, 2016, we entered into a strategic partnership with Servier Canada, Inc. ("Servier") for the out-licenses of ZEVALIN, FOLOTYN, BELEODAQ, and MARQIBO. We received $6 million in upfront payments in the first quarter of 2016 which was recognized within "license fees and service revenue" in the accompanying Condensed Consolidated Statements of Operations for the nine months ended September 30, 2016. We will also receive development milestone payments if/when achieved, and a high single-digit royalty on their sales of these products.

13. CO-PROMOTION ARRANGEMENT WITH EAGLE PHARMACEUTICALS
On November 4, 2015, we executed an agreement with Eagle Pharmaceuticals, Inc. ("Eagle") whereby designated members of our sales force concurrently marketed up to six of Eagle's products along with our products in return for fixed

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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


monthly payments (aggregating $12.8 million), as well as variable sales-based milestones, over an 18 month contract term of January 1, 2016 through June 30, 2017 (the "Eagle Agreement"). As of July 1, 2017, our sales force is no longer marketing Eagle products, as the Eagle Agreement expired under its terms.
The fixed receipts from Eagle for our sales activities, as well as reimbursements of third-party marketing services, are recognized within "license fees and service revenue" on our accompanying Condensed Consolidated Statements of Operations. This amount was $0, $2.4 million, $4.7 million, and $6.7 million for the three and nine months ended September 30, 2017 and 2016, respectively. No sales-based milestones were achieved in the current or prior periods.
An allocation of our sales personnel costs that were dedicated to Eagle are reported within "cost of service revenue" on our accompanying Condensed Consolidated Statements of Operations, as are the reimbursable costs for third-party marketing services. These were an aggregate $0, $2.2 million, $4.2 million, and $5.7 million for the three and nine months ended September 30, 2017 and 2016, respectively.

14. CONVERTIBLE SENIOR NOTES

Overview
On December 17, 2013, we entered into an agreement for the sale of $120 million aggregate principal amount of 2.75% Convertible Senior Notes (equaling 120,000 notes, denominated in $1,000 principal units) due December 2018 (the “2018 Convertible Notes”). The 2018 Convertible Notes are convertible into shares of our common stock at a conversion rate of 95 shares per $1,000 principal units, then equating to 11.4 million common shares if fully converted. The in-the-money conversion price is equivalent to $10.53 per common share. The conversion rate and conversion price is subject to adjustment under certain limited circumstances. The 2018 Convertible Notes bear interest at a rate of 2.75% per year, payable semiannually in arrears on June 15 and December 15 of each year. The 2018 Convertible Notes will mature and become payable on December 15, 2018, subject to earlier conversion into common stock at the holders’ option.
The sale of the 2018 Convertible Notes closed on December 23, 2013 and our net proceeds were $115.4 million, after deducting banker and professional fees of $4.6 million. We used a portion of these net proceeds to simultaneously enter into “bought call” and “sold warrant” transactions with Royal Bank of Canada (collectively, the “Note Hedge”). We recorded the Note Hedge on a net cost basis of $13.1 million, as a reduction to “additional paid-in capital” in our accompanying Condensed Consolidated Balance Sheets. Under applicable GAAP, the Note Hedge has not been (and is not expected to be) marked-to-market through earnings or comprehensive income.
Open Market Purchases of 2018 Convertible Notes and Conversion Hedge Unwind in December 2016
In December 2016, we completed two open market purchases of our 2018 Convertible Notes, aggregating 9,963 note units (equivalent to $10 million principal value) for $9.0 million. We recognized an aggregate loss of $25,000 on the retirement of these 2018 Convertible Notes (based on its carrying value under GAAP), which is included in "other income (expense), net" on the Consolidated Statements of Operations for the year ended December 31, 2016. Accordingly, as of September 30, 2017, $110 million in principal of our 2018 Convertible Notes remained outstanding.
With these two open market purchases in December 2016, we concurrently unwound a portion of our previously sold warrants and previously purchased call options (that were part of our "conversion hedge" - see below) for aggregate net proceeds of $21,000. We recorded a corresponding net increase to "additional paid-in capital" in the Condensed Consolidated Balance Sheets as of December 31, 2016.
Conversion Hedge
We entered into the Note Hedge in December 2013 to reduce the potential dilution to our stockholders and/or offset any cash payments that we are required to make in excess of the principal amount, upon conversion of the 2018 Convertible Notes (in the event that the market price of our common stock is greater than the conversion price). The strike price of the “bought call” is equal to the conversion price and conversion rate of the 2018 Convertible Notes (then matching the 11.4 million common shares the 2018 Convertible Notes may be converted into); the strike price of our “sold warrant” is $14.03 per share of our common stock, and is also for 11.4 million common shares (reduced by the partial unwinding of these instruments, as discussed above).

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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


Conversion Events
On and after June 15, 2018, and until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their 2018 Convertible Notes. Prior to June 15, 2018, holders may convert all or a portion of their 2018 Convertible Notes only under any of the following circumstances: (1) during any fiscal quarter (and only during such fiscal quarter), if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding fiscal quarter, the last reported sale price of our common stock on such trading day is greater than or equal to 130% of the Notes' conversion price on such trading day; (2) during the five consecutive business day period immediately following any five consecutive trading day period in which, for each trading day of that measurement period, the trading price per $1,000 principal amount of 2018 Convertible Notes for such trading day was less than 98% of the product of (i) the last reported sale price of our common stock on such trading day and (ii) the applicable conversion rate on such trading day; (3) upon the occurrence of certain corporate transactions; and (4) at any time prior to our stockholders’ approval to settle the 2018 Convertible Notes in our common shares and/or cash.
As of September 30, 2017, the 2018 Convertible Notes are not eligible to be converted into our common stock as none of the above elements (1) through (4) were met. Our stockholders’ approval of "flexible settlement" occurred at our Annual Meeting of Stockholders on June 29, 2015. As a result, we may (at our election) settle any future conversions of the 2018 Convertible Notes by paying or delivering cash, shares of our common stock, or a combination of cash and shares of our common stock. However, if the holders of the Convertible Notes do not elect any conversion into our common stock, our December 2018 obligation to repay the then-outstanding amount in cash, plus any accrued and unpaid interest, is unchanged.
Carrying Value and Fair Value
The carrying value of the 2018 Convertible Notes as of September 30, 2017 and December 31, 2016, is summarized as follows:
 September 30, 2017 December 31, 2016
Principal amount$110,037
 $110,037
(Less): Unamortized debt discount (amortized through December 2018)(7,410) (11,646)
(Less): Debt issuance costs(857) (1,348)
Carrying value$101,770
 $97,043

As of September 30, 2017 and December 31, 2016, the estimated aggregate fair value of the 2018 Notes is $156.4 million and $101.8 million, respectively. These estimated fair values represent a Level 2 measurement (see Note 2(xiii)), based upon the 2018 Convertible Notes' quoted bid price at each date in a thinly-traded market.
Components of Interest Expense on 2018 Convertible Notes
The following table sets forth the components of interest expense recognized in the accompanying Condensed Consolidated Statements of Operations for the 2018 Convertible Notes for the nine months ended September 30, 2017 and 2016: 

Nine Months Ended
September 30,

2017 2016
Contractual coupon interest expense$2,270
 $2,475
Amortization of debt issuance costs491
 521
Accretion of debt discount4,236
 4,246
Total$6,997
 $7,242
Effective interest rate8.65% 8.66%


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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


15. FOLOTYN LICENSE AGREEMENT AND DEVELOPMENT LIABILITY
As a result of our acquisition of Allos on September 5, 2012 (see Note 9(c)), we assumed a strategic collaboration agreement with Mundipharma (the “Mundipharma Collaboration Agreement”), as well as certain FOLOTYN clinical development obligations (the "FOLOTYN Development Liability").
Mundipharma Collaboration Agreement Summary
Under the Mundipharma Collaboration Agreement, we retained full commercialization rights for FOLOTYN in the U.S. and Canada, with Mundipharma having exclusive rights to commercialize FOLOTYN in all other countries in the world (the “Mundipharma Territories”). On May 29, 2013, the Mundipharma Collaboration Agreement was amended and restated (the “Amended Mundipharma Collaboration Agreement”), in order to modify: (i) the scope of the licensed territory, (ii) milestone payments, (iii) royalty rates, and (iv) drug development obligations. In connection with the Amended Mundipharma Collaboration Agreement, we received a one-time $7 million payment from Mundipharma for our future research and development activities related to FOLOTYN.
As a result of the Amended Mundipharma Collaboration Agreement, (a) Europe and Turkey were excluded from Mundipharma’s commercialization territory, (b) we are entitled to regulatory and sales-dependent milestone receipts of up to $16 million and $107 million, respectively (see Note 16(b)(vii) for July 2017 achievement), (c) we will receive tiered double-digit royalties based on net sales of FOLOTYN within Mundipharma’s licensed territories, and (d) we and Mundipharma will each bear our own FOLOTYN development costs. Effective as of May 1, 2015, we modified the Amended Mundipharma Collaboration Agreement to revise the conditions for our exercise of the option to gain commercialization rights in Switzerland from Mundipharma, as well as royalties payable to us (in the tiered double-digits) on Mundipharma's net sales in Switzerland.
FOLOTYN Development Liability
The fair value of the FOLOTYN Development Liability within our accompanying Condensed Consolidated Balance Sheets was estimated using the discounted income approach model. The unobservable inputs (i.e., "Level 3" inputs - see Note 2(xiii)) in this valuation model that have the most significant effect on these liabilities include: (i) estimates of research and development personnel costs needed to perform the research and development services contractually required, (ii) estimates of expected cash outflows to third parties for these clinical services and supplies during the expected period of performance through 2031, and (iii) an appropriate discount rate for these expenditures. These inputs are reviewed by management on a quarterly basis for continued applicability.
We adjust this liability during each quarterly period, with corresponding adjustments for incurred costs recorded as credits to “research and development” expense in our accompanying Condensed Consolidated Statements of Operations. 

FOLOTYN
Development
Liability,
Current
 FOLOTYN
Development
Liability,
Long Term
 FOLOTYN
Development
Liability, Total
Balance at December 31, 2016$861
 $12,269
 $13,130
Transfer from long-term to current in 2017(4) 4
 —
(Less): Expenses incurred in 2017(704) —
 (704)
Balance at September 30, 2017$153
 $12,273
 $12,426
16. FINANCIAL COMMITMENTS & CONTINGENCIES AND LICENSE AGREEMENTS

(a) Facility Leases
We lease our principal executive office in Henderson, Nevada under a non-cancelable operating lease expiring April 30, 2019. We also lease our research and development facility in Irvine, California under a non-cancelable operating lease expiring May 31, 2019, in addition to several other administrative office leases. Each lease agreement contains scheduled rent increases which are accounted for on a straight-line basis.

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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


Operating Leases - future paymentsSeptember 30, 2022
2022 (remaining)$198 
2023804 
2024821 
2025188 
2026 and thereafter73 
Total future lease payments, undiscounted$2,084 
(Less): Implied interest(83)
Present value of operating lease payments$2,001 
(b) In/Out Licensing Agreements and Co-Development Arrangements
Overview
The in-license agreements for our commercialized and development-stage drug products provide us with territory-specific rights to their manufacture and distribution (including further sub-licensing/out-licensing rights). We are generally responsible for all related clinical development costs, patent filings and maintenance costs, marketing costs, and liability insurance costs. We also may enter into out-license agreements for territory-specific rights to these drug products which include one or more of: upfront license fees, royalties from our licensees’ sales, and/or milestone payments from our licensees’ sales or regulatory achievements. For certain drug products, we may enter into cost-sharing arrangements with licensees and licensors.
We are also obligated to make specified milestone payments to our licensors upon the achievement of certain regulatory and sales milestones, and to pay royalties based on our net sales of all in-licensed products. We also enter into out-licenseDepending on the milestone achievement type and whether the product has been approved, we will either (a) capitalize the value to “intangible assets” in the Condensed Consolidated Balance Sheets or (b) recognize the payment value within “research and development” or “cost of sales” on the Condensed Consolidated Statements of Operations. The liability relating to the payment due to the licensor will be recognized in the earliest period that we determine the respective milestone achievement is probable or has occurred.
The most significant remaining agreements for territory-specific rights to our drug products which include one or more of: upfront license fees, royalties from our licensees’ sales, and/or milestone payments from our licensees’ sales or regulatory achievements. For certain development-stage drug products, we may enter into cost-sharing arrangementsassociated with our licensees and licensors.
Our most significant of these agreements, andoperations, along with the key financial terms and our corresponding accounting and reporting conventions for each, are summarized below:as follows:
(i) ZEVALIN U.S.: In-Licensing and Development in the U.S.
In December 2008, we acquired rights to commercialize and develop ZEVALIN in the U.S. as the result of a transaction with Cell Therapeutics, Inc. (“CTI”) through our wholly-owned subsidiary, RIT Oncology LLC (“RIT”). In accordance with the terms of assumed contracts, we are required to meet specified payment obligations, including a milestone payment to Corixa Corporation of $5 million based on our ZEVALIN sales in the U.S. (the “Corixa Liability”). This milestone has not yet been met, and $0.1 million for this potential milestone achievement is included within “acquisition-related contingent obligations” in our accompanying Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, respectively. Our U.S. net sales-based ZEVALIN royalties are in the low to mid-single digits to Genentech, Inc. and in the mid-teens to Biogen Inc.
(ii) ZEVALIN Ex-U.S.: In-License and Asset Purchase Agreement with Bayer Pharma
In April 2012, through our wholly-owned subsidiary, Spectrum Pharmaceuticals Cayman, L.P., we completed a €19 million acquisition of licensing rights to market ZEVALIN outside of the U.S. from Bayer. ZEVALIN is currently approved in approximately 40 countries outside the U.S. for the treatment of B-cell NHL, including countries in Europe, Latin America, and Asia.
We amended the agreement in February 2016, which adjusted our tiered royalty to Bayer from the single-digits to 20%. The term of the agreement, as amended, continues until the expiration of the last-to-expire ZEVALIN patent in the relevant country, or 15 years from the date of first commercial sale of ZEVALIN in such country, whichever is longer.
(iii) ZEVALIN Ex-U.S.: Out-License Agreement with Dr. Reddy’s
We executed an exclusive License Agreement with Dr. Reddy’s Laboratories Ltd. (“Dr. Reddy’s”) in June 2014 for ZEVALIN distribution rights within India. The agreement term is 15 years from the receipt of pending approval of ZEVALIN from the Drug Controller General of India. In December 2014, upon our execution of a drug supply agreement, an upfront and non-refundable payment of $0.5 million was triggered and was paid to us in February 2015. The recognition of the applicable portion of this upfront receipt is reported on a straight-line basis, within “license fees and service revenue” on the Condensed Consolidated Statements of Operations over a 10-year term through December 2024. Additionally, sales and regulatory milestone payments, each aggregating $1.5 million (for a total of $3 million), are due to us when such milestones are achieved by Dr. Reddy’s, as well as an ongoing 20% royalty on their net sales of ZEVALIN in India.
(iv) ZEVALIN Ex-U.S.: Out-License Agreement with Mundipharma
In November 2015, we entered into an out-license agreement with Mundipharma for their commercialization of ZEVALIN in Asia (excluding India and Greater China), Australia, New Zealand, Africa, the Middle East, and Latin America (including the Caribbean islands). In return, we received $18 million (comprised of $15 million received in December 2015 and $3 million received in January 2016). Of these proceeds, $15 million was recognized within "license fees and service revenue" in the fourth quarter of 2015. Of the $3 million received in January 2016, $0.5 million was recognized for the three months ended September 30, 2016, and $1.2 million and $1.3 million was recognized in the same caption for the nine months ended September 30, 2017 and 2016, respectively (this $3 million was recognized in full by June 30, 2017).
Mundipharma is required to reimburse us for our payment of royalties due to Bayer from their net sales of ZEVALIN (see Note 16(b)(ii)). We are also eligible to receive an additional $2 million upon Mundipharma's achievement of a specified sales milestone that, if/when achieved, will also be reported within "license fees and service revenue".

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(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


(v) FUSILEV: In-License Agreement with Merck & Cie AG
In May 2006, we amended and restated a license agreement with Merck & Cie AG (“Merck”), which we assumed in connection with our March 2006 acquisition of the assets of Targent, Inc. This provided us with an exclusive license to use regulatory filings related to FUSILEV, and a non-exclusive license under certain patents and know-how, to develop, manufacture, and sell FUSILEV in the field of oncology in North America.
The contractual royalty percentage on our FUSILEV net sales due to Merck is set at the mid-single digits; however, in September 2017, we paid Merck $2.6 million in full settlement of all royalty obligations under the agreement. We are no longer contractually obligated to pay Merck any royalties on our future net sales of FUSILEV, though we remain obligated to a $0.2 million payment upon FDA approval of our oral form of FUSILEV. This regulatory milestone has not yet been met, and no amounts have been accrued in our accompanying Condensed Consolidated Balance Sheets for its potential achievement.
(vi) FOLOTYN: In-License Agreement with Sloan-Kettering Institute, SRI International and Southern Research Institute
In December 2002, Allos entered into an in-license agreement for the drug now marketed as FOLOTYN with Sloan-Kettering Institute for Cancer Research, SRI International, and Southern Research Institute. We assumed this agreement when we acquired Allos in September 2012. The agreement provides for our exclusive worldwide rights to a portfolio of patents and patent applications related to FOLOTYN, though we are required to fund certain development programs of the drug. In addition, we pay graduated royalties to our licensors based on our worldwide annual net sales of FOLOTYN (including that of our sub-licensees). These royalties are 8% of annual worldwide net sales up to $150 million; 9% of annual worldwide net sales of $150 million through $300 million; and 11% of annual worldwide net sales in excess of $300 million. In addition, milestones are due following receipt of regulatory approval milestone payments in certain territories.
(vii) FOLOTYN: Out-License Agreement with Mundipharma
As a result of our acquisition of Allos (see Note 9(c)), we assumed “the Mundipharma Collaboration Agreement” as well as certain FOLOTYN clinical development obligations. Under the Mundipharma Collaboration Agreement, as amended (see Note 15), we retained full commercialization rights for FOLOTYN in the U.S. and Canada, with Mundipharma having exclusive rights to commercialize FOLOTYN in all other countries in the world, except in Europe and Turkey. We are contractually entitled to receive regulatory and sales milestone payments from Mundipharma upon its achievement of such milestones, which aggregate $16 million and $107 million, respectively, as well as tiered double-digit royalties on Mundipharma's net sales.
In July 2017, FOLOTYN was approved in Japan for the treatment of adult patients with relapsed or refractory PTCL. Consequently, we received a $3 million from Mundipharma in August 2017 for this milestone achievement. This amount was recognized within "license fees and service revenue" on our Condensed Consolidated Statements of Operations for the three and nine months ending September 30, 2017.
In August 2017, FOLOTYN was commercially launched in Japan. This triggered a contractual milestone of $2.0 million from Mundipharma. This amount was recorded within "other receivables" on our Condensed Consolidated Balance Sheets and within "license fees and service revenue" on our Condensed Consolidated Statements of Operations for the three and nine months ending September 30, 2017.
(viii) EVOMELA: In-License Agreement with CyDex Pharmaceuticals, Inc.
In March 2013, we completed the acquisition of exclusive global development and commercialization rights to
EVOMELA from CyDex, a wholly-owned subsidiary of Ligand (see Note 9(b)), and assumed responsibility for its then-ongoing clinical and regulatory development program. We filed a New Drug Application ("NDA") with the FDA in December 2015 for EVOMELA's use as a conditioning treatment prior to autologous stem cell transplant for patients with MM, and in March 2016, the FDA communicated its approval. Consequently, we made a $6 million contractual milestone payment to Ligand in April 2016. This amount was capitalized as "EVOMELA distribution rights" and is presented within "intangible assets, net of accumulated amortization and impairment charges" (see Note 3(f)) within our accompanying Condensed Consolidated Balance Sheets as of September 30, 2017.
We are required to pay Ligand additional amounts of up to $60 million (exclusive of the $6 million paid in April 2016), upon our achievement of specified net sales thresholds. We are also responsible to pay Ligand royalties of 20% on our net sales of EVOMELA in all territories.

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(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


(ix) MARQIBO: Acquisition of Talon Therapeutics, Inc. and Related Contingent Consideration Agreement
In July 2013, we completed the acquisition of Talon, through which we obtained exclusive global development and commercialization rights to MARQIBO (see Note 9(a)). As part of this acquisition, the former Talon stockholders have contingent financial rights that we have valued and presented on our accompanying Condensed Consolidated Balance Sheets as a $4.5 million and $1.3 million liability within “acquisition-related contingent obligations” as of September 30, 2017 and December 31, 2016, respectively. The maximum payout value of these contingent financial rights to the former Talon stockholders is $195 million, assuming all sales and regulatory approval milestones are achieved by us. In addition, we are contractually obligated to pay royalties in the single digits on our net sales of MARQIBO and a portion of sublicensing revenue may be due upon our receipt of such revenue for MARQIBO.
(x) QAPZOLA: License Agreements with Allergan, Inc. and NDDO Research Foundation
In October 2008, we entered into an exclusive development and commercialization collaboration agreement with Allergan, Inc. ("Allergan") for QAPZOLA. Allergan paid us an up-front non-refundable fee of $41.5 million at execution (which we have recognized in full within “license fees and service revenue” by December 31, 2013).
Concurrently we also entered into a letter agreement with NDDO Research Foundation (“NDDO”), pursuant to which we agreed to pay NDDO the following in relation to QAPZOLA milestones: (a) upon FDA acceptance of our NDA, the issuance of 25,000 of our common shares (which occurred in March 2016 and the $0.1 million value of these shares was included in "research and development" expense for the year ended December 31, 2016), and (b) upon FDA approval, a one-time payment of $0.3 million (which has not yet been met, and no amounts have been accrued in our accompanying Condensed Consolidated Balance Sheets for its potential achievement).
In January 2013, we entered into a second amendment to the License, Development, Supply and Distribution Agreement with Allergan. This amendment relieved Allergan of its development and commercialization obligations and resulted in our acquisition of its rights in the U.S., Europe, and other territories, in exchange for our agreement to pay a tiered single-digit royalty on our sales of certain products containing QAPZOLA.
(xi) QAPZOLA: Collaboration Agreement with Nippon Kayaku Co. LTD.
In November 2009, we entered into a collaboration agreement with Nippon Kayaku Co., LTD. (“Nippon Kayaku”) for the development and commercialization of QAPZOLA in Asia, except North and South Korea (the “Nippon Kayaku Territory”). In addition, Nippon Kayaku received exclusive rights to QAPZOLA for the treatment of NMIBC in Asia (other than North and South Korea), including Japan and China. Nippon Kayaku will conduct QAPZOLA clinical trials in the Nippon Kayaku Territory pursuant to a development plan. Further, Nippon Kayaku will be responsible for all expenses relating to the development and commercialization of QAPZOLA in the Nippon Kayaku Territory.
Under the terms of this agreement, Nippon Kayaku paid us an upfront fee of $15 million (which we recognized within “license fees and service revenue” in full by December 31, 2013). Under the terms of the agreement, we are entitled to receive $10 million and $126 million from Nippon Kayaku upon the achievement of certain regulatory and commercialization milestones, respectively (some of which are our responsibility to achieve). Nippon Kayaku is also obligated to pay us royalties on its net sales of QAPZOLA in the mid-teen digits.
(xii) BELEODAQ: In-License and Collaboration Agreement with Onxeo
In February 2010, we entered into an in-license and collaboration agreement with TopoTarget A/S (now Onxeo DK) (“Onxeo”) for the development and commercialization of BELEODAQ, as amended in October 2013. We paid Onxeo an upfront fee of $30 million (and agreed to additional payments described below) for rights in North America and India, with an option for China. We are contractually obligated to pay royalties in the mid-teen digits on our net sales of BELEODAQ.
All development and studies of BELEODAQ are conducted under a joint development plan (of which we fund 70% and Onxeo funds 30%). We have the final decision-making authority for all developmental activities in North America and India (and China upon our exercise of the option). Onxeo has final decision-making authority for all developmental activities in all other jurisdictions. In February 2014, upon FDA acceptance of our NDA, we were contractually obligated to issue Onxeo one million shares of our common stock and to make a $10 million payment. The aggregate value of this milestone at achievement was $17.8 million, and was recognized within “research and development” expense in the first quarter of 2014.
In July 2014, we received approval from the FDA for BELEODAQ’s use for injection and treatment of relapsed or refractory peripheral T-cell lymphoma ("PTCL"). As a result, we made a second milestone payment to Onxeo of $25 million in

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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


November 2014. This amount was capitalized as "BELEODAQ distribution rights" and is presented within "intangible assets, net of accumulated amortization and impairment charges" (see Note 3(f)). We are also contractually obligated to pay Onxeo upon our achievements of other regulatory events and sales thresholds, up to $88 million and $190 million, respectively. These milestone amounts are not included within “total liabilities” in our accompanying Condensed Consolidated Balance Sheets.
(xiii) ROLONTIS:ROLVEDON: Co-Development and Commercialization Agreement with Hanmi Pharmaceutical Co. Ltd
In October 2014, we exercised our option under a License Option and Research Collaboration Agreement dated January 2012 (as amended) with Hanmi Pharmaceutical Co. Ltd. ("Hanmi", Ltd (“Hanmi”) for ROLONTIS (formerly known as “LAPS-G-CSF" or "SPI-2012”),ROLVEDON, a drug based on Hanmi’s proprietary LAPSCOVERY™ technology for the treatment of chemotherapy induced neutropenia. Under the terms of this agreement, as amended, we have primary financial responsibility for the ROLONTISROLVEDON development plan and hold its worldwide rights (except for Korea, China, and Japan). We
Effective January 1, 2022, we executed an amendment to this license agreement, whereby we are contractually obligated to pay Hanmi royalties in the mid-teen digitsa flat mid-single digit royalty on our aggregate annual net sales of ROLONTIS.

In January 2016,ROLVEDON. Additionally, Hanmi has agreed to release the first patient was dosed with ROLONTISCompany from a prior purchase obligation for ROLVEDON drug substance which resulted in a clinical trial.reduction in accrued liabilities of $11.2 million with a corresponding reduction in research and development expense. In addition, beginning in year three after the commercial launch, we are responsible for a supplemental mid-single digit royalty on aggregate annual net sales. This triggered our contractual milestone paymentsupplemental royalty will terminate once the aggregate payments made to Hanmi and in April 2016, we (i) issued Hanmi 318,750 sharesmeet the milestone limit of our common stock, then valued at $2.3$10.0 million, and (ii) remitted a $0.4 million payment tobased on the Internal Revenue Service on Hanmi's behalf for related tax obligations. This aggregate $2.7 million value was recognized within "researchsupplemental royalty. For the three and development" expense in our accompanying Condensed Consolidated Statements of Operations for the nine months ended September 30, 2016. We are responsible for further contractual payments upon our achievement2022, we have a $9 million obligation to Hanmi related to the purchase of regulatory and sales milestones, up to $13 million and $225 million, respectively. These amounts are not included within "total liabilities" in our accompanying Condensed Consolidated Balance Sheets.inventory.
(xiv) POZIOTINIB:(ii) Poziotinib: In-License Agreement with Hanmi and Exclusive Patent and Technology License Agreement with MD Anderson
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, interest rate, and number of years)
(Unaudited)

In February 2015, we executed an in-licensea co-development and commercialization agreement with Hanmi for POZIOTINIB,poziotinib, a pan-HER inhibitor in Phase 2 clinical trials, (which has also shown single agent activity in the treatment of various cancer types during Phase I1 studies, including breast, gastric, colorectal, and lung cancers), and made an upfront payment to Hanmi for these distribution rights. This payment was recognized within "research and development" expense in the Consolidated Statements of Operations for the year ended December 31, 2015. We are also contractually obliged to pay Hanmi royalties in the low to mid-teen digits on our net sales of POZIOTINIB.
Under the terms of this agreement, we received the exclusive global rights to commercialize POZIOTINIB, excludingpoziotinib, except for Korea and China. Hanmi and its development partners are fully responsible for the completion of on-going Phase 2 trials in Korea. We are financially responsible for all other clinical studies. We are contractually obligated
Effective January 1, 2022, we executed an amendment to makethis in-license agreement, whereby the payments to Hanmi upon our achievement of certainvarious regulatory milestones now aggregate to $18.0 million, which includes eliminating the first approval milestone payment in return for a supplemental mid-single digit royalty on aggregate annual net sales beginning in year three after the commercial launch. This supplemental royalty will terminate once the aggregate payments made to Hanmi meet the milestone limit of $15.0 million, based on the supplemental royalty. There were no contractual obligations to Hanmi under the previous agreement for the three or nine months ended September 30, 2022.
In April 2018, we executed an exclusive patent and technology agreement for the use of poziotinib in treating patients with EGFR and HER2 exon 20 mutations in cancer and HER2 exon 19 mutations in cancer with The University of Texas M.D. Anderson Cancer Center (“MD Anderson”). MD Anderson discovered poziotinib’s use in treating these patient-types. We made an upfront payment to MD Anderson of $0.5 million upon the execution of this agreement.
We are contractually obligated to pay nominal fixed annual license maintenance fees to MD Anderson and pay additional fees upon our achievement of various regulatory and sales milestones. These regulatory milestones aggregating $33aggregate to $6.0 million and $325 million, respectively. These amountsthe sales milestones aggregate to $24.0 million. We are also contractually obligated to pay MD Anderson royalties in the low single-digits on our net sales of poziotinib.
(iii) In-License Agreement with ImmunGene for FIT Drug Delivery Platform

In April 2019, we executed an asset transfer, license, and sublicense agreement with ImmunGene, Inc. (“ImmunGene”) for an exclusive license for the intellectual property related to (a) Anti-CD20-IFNα, an antibody-interferon fusion molecule directed against CD20 that is in Phase 1 development for treating relapsed or refractory non-Hodgkin’s lymphoma, including diffuse large B-cell lymphoma patients, representing a considerable unmet medical need, and (b) an antibody-interferon fusion molecule directed against GRP94, a target for which currently there are no existing approved therapies that have the potential for treating both solid and hematologic malignancies. Both molecules are based on the Focused Interferon Therapeutics (“FIT”) drug delivery platform.
In November 2021, we provided notice to terminate the asset transfer, license, and sublicense agreement with ImmunGene, Inc. Pursuant to the agreement, we will transfer the rights, title or interest with respect to the transferred product back to ImmunGene. There were no contractual obligations to ImmunGene for the three or nine months ended September 30, 2022.
As of September 30, 2022 we are no longer prosecuting or maintaining any ImmunGene intellectual property and we are not included within “total liabilities” in our accompanying Condensed Consolidated Balance Sheets.contractually obligated to pay nominal fixed annual license maintenance fees to any ImmunGene-related licensor.
(xv) ZEVALIN, FOLOTYN, BELEODAQ, and MARQIBO: Out-License
(iv) In-License Agreement with ServierTherapyx

In December 2020, we executed an asset transfer and license agreement with Therapyx, Inc. (“Therapyx”) for an exclusive worldwide license for the intellectual property related to any pharmaceutical or biological product for use in Canadahuman oncology containing, whether as its sole active or in combination with other active ingredients, an encapsulated IL-12, in any injectable dosage form or formulation.
In January 2016, we out-licensed ZEVALIN, FOLOTYN, BELEODAQ, and MARQIBOWe made an upfront payment of $0.8 million to Servier (see Note 12). We received an aggregate $6 million of upfront proceeds in the first quarter of 2016,Therapyx upon contract execution, which was recognizedrecorded to “research and development” expense within "license fees and service revenue" in our accompanying Condensed Consolidated Statements of Operations for the nine monthsyear ended September 30, 2016.December 31, 2020. We will make an additional payment of $2.2 million upon our acceptance of certain transferred materials from Therapyx. We will make further payments to Therapyx upon our achievement of various (i) regulatory milestones aggregating up to $30 million for the first approved IL-12 product, plus an additional $2.5 million milestone payment for each new indication approved for each product in the U.S., Europe, or Japan; and (ii) sales milestones aggregating up to $167.5 million based on worldwide annual net sales. We are also entitledcontractually obligated to milestone receipts (aggregating $2.0 million) upon Servier's achievement of specific regulatory approvals, and a high single-digit royaltypay royalties in the mid-single digits on itsour net sales of these products.all IL-12 products, potentially reduced by royalties due to third parties, the loss of IP protection within one or more countries, or the introduction of a competing product within one or more countries.
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, interest rate, and number of years)
(Unaudited)

Depending on the nature of the milestone achievement type we will either (a) capitalize the payment value to “intangible assets” in the Consolidated Balance Sheets or (b) recognize the payment value within “research and development” or “cost of sales” within the Consolidated Statements of Operations. The corresponding liability for the payment due to this licensor will be recognized in the Consolidated Balance Sheets within “accounts payable and other accrued liabilities” in the earliest period that we determine the respective milestone achievement is probable or has occurred.
(c) Service Agreements for Research and Development Activities
In connectionWe have entered into various contracts with numerous third-party service providers for the execution of our research and development of our drug products, we have entered into contracts with numerous third party service providers, such as radio-pharmacies, distributors,initiatives. These vendors include raw material suppliers, clinical trial centers,sites, clinical research organizations, and data monitoring centers, and with drug formulation, development and testing laboratories.among others. The financial terms of these agreements are varied and generally obligate us to pay in stages, depending on the achievement of certain events specified in the agreements - such as contract execution, reservationprogress of service or production capacity, actual performancecompletion, delivery of service, ordrug supply, and the successful accrualdosing of patients in clinical studies.
We recognize these “research and development” expenses and corresponding “accounts payable and other accrued liabilities” in the accompanying financial statements based on estimates of our vendors’ progress of performed services, patient enrollments and dosing, of patients.
At each period end, we accrue for all services received, with such accruals based on factors such as estimates of work performed, patient enrollment, completion of patientclinical studies, and other events. Should we decide to discontinue and/or slow-down the work on any project, the associated costs for those projects would typically be limited to the extent of the work completed.

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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, per unit, and number of years)
(Unaudited)


Generally,completed, as we are generally able to terminate these contracts due to the discontinuance of the related project(s) and thus avoid paying for the services that have not yet been rendered.with adequate notice.
(d) Supply and Service Agreements Associated with Product Production
We have entered into certainvarious product supply agreements and/or have issued vendor purchase orders which requirethat obligate us to make minimumagreed-upon raw material purchases from vendors forcertain vendors. We also have certain drug production service agreements with select contract manufacturers that obligate us to service fees during the manufacture of our products. These commitments do not exceed our planned commercial requirements, and the contracted prices do not exceed their fair market value.contractual period.
(e) Employment AgreementAgreements
We haveentered into revised employment agreements with certain of our named executive officers (chief executive officer, chief legal officer, and chief medical officer) in April/June 2018 and June 2019, which supersede any prior change in control severance agreements with such individuals. Also, we entered into an employment agreement with our current chief financial officer in April 2022. These agreements provide for the payment of certain benefits to each executive upon their separation of employment under specified circumstances. These arrangements are designed to encourage each to act in the best interests of our stockholders at all times during the course of a change in control event or other significant transaction.
We previously entered into an employment agreement with our former Chief Executive Officer, Joseph Turgeon, under which cash compensation and benefits would become payable in the event of termination by us for any reason other than cause, his resignation for good reason, or upon a change in control of our Company.
Effective December 31, 2021, Mr. Turgeon’s employment with the Company was terminated without cause in accordance with his employment agreement. We have accrued $2.6 million and $3.1 million for all contractual amounts due and unpaid to Mr. Turgeon as of September 30, 2022 and December 31, 2021, respectively, within "accrued payroll and benefits" on the accompanying Consolidated Balance Sheets.
(f) Deferred Compensation Plan
The Spectrum Pharmaceuticals, Inc. Deferred Compensation Plan (the “DC Plan”) is administeredgoverned by theour Compensation Committee of our Board of Directors and is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended.
The DC Plan is maintained to provide special deferred compensation benefits for a select group of our employees (the “DC Participants”). Under the DC Plan, we provide the DC Participants with the opportunity to make annual elections to defer up to a specified amount or percentageportion of their eligible cash compensation which is then placed into their DC Plan accounts. We match a fixed percentage of these deferrals, and we have the option tomay make additional discretionary contributions. At September 30, 20172022 and December 31, 2016,2021, the aggregate value of this DC Plan deferrals by employees and our discretionary contributions totaled $10.3liability was $7.4 million and $8.4$11.2 million, respectively, and areis included within “accounts payable and other accrued liabilities” and “other long-term liabilities” in the accompanying Condensed Consolidated Balance Sheets.
(g) Litigation
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, interest rate, and number of years)
(Unaudited)

We are involved from time-to-time with various legal matters arising in the ordinary course of business. These claims and legal proceedings are of a nature we believe are normal and incidental to a pharmaceutical business, and may include product liability, intellectual property, employment matters, and other general claims. We may also be subject to derivative lawsuits from time to time.
We make provisions for liabilities when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Such provisions are assessed at least quarterly and adjusted to reflect the impact of any settlement negotiations, judicial and administrative rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. Although the ultimate resolution of these various matters cannot be determined at this time, we do not believe that such matters, individually or in the aggregate, will have a material adverse effect on our consolidated results of operations, cash flows, or financial condition.
ANDABioverativ Patent Litigation
In 2016, the Company concluded regulatory and Abbreviated New Drug Application ("ANDA"On May 28, 2021, Bioverativ Therapeutics Inc. (“Bioverativ”) litigation with respect to its products FUSILEV and FOLOTYN. All costs pertaining to these matters (incurred and accrued) have been recognized within "selling, general and administrative" expenses on the accompanying Condensed Consolidated Statements of Operations for all periods presented.
Stockholder Litigation
In re Spectrum Pharmaceuticals, Inc. Securities Litigation (Consol. Case Nos. 2:16-cv-07074 & 2:16-cv-02279).  The Company and certain of its officers are named as defendants in this putative federal securities class action pendingfiled a complaint against us in the U.S. District Court for the District of Nevada.Delaware, which alleges that our proposed manufacture, use and sale of eflapegrastim (now known as ROLVEDON) would, if approved, infringe claims of three patents owned by Bioverativ (the “Subject Patents”). Bioverativ sought an unspecified amount of damages and injunctive relief.
Pursuant to our agreements with Hanmi, we hold worldwide rights (except for Korea, China, and Japan) to develop and commercialize eflapegrastim. The operativeagreements with Hanmi contain typical license terms including, without limitation, indemnification rights in favor of the Company with respect to any claims of infringement from a third party with respect to our use of a licensed technology, product or compound pursuant to such agreements.
Related to the Bioverativ litigation, on December 20, 2021, we were named as respondents in an International Trade Commission (“ITC”) action filed with the ITC. The complaint alleged importation into the United States, the sale for importation, and the sale within the United States after importation of certain monomer-dimer hybrid immunoconjugates in violation of section 337 of the Tariff Act of 1930 (19 U.S.C. 1337).
On February 18, 2022, Spectrum, Hanmi and Bioverativ entered into a license and settlement agreement which included a stipulation to dismiss the Bioverativ litigation and withdraw the ITC complaint. On February 18, 2022, the ITC action against us was withdrawn, and on March 2, 2022, the Bioverativ case was dismissed by the U.S. District Court.
Luo v. Spectrum Pharmaceuticals, Inc., et al. On August 31, 2021, a shareholder lawsuit was filed against us in the U.S. District Court for the District of Nevada, which alleges violationsthat we and certain of Sectionsour executive officers made false or misleading statements and failed to disclose material facts about our business and the prospects of approval for our BLA to the FDA for eflapegrastim in violation of Section 10(b) (and Rule 10b-5 promulgated thereunder) and 20(a) of the Securities Exchange Act of 1934, arising from statements regarding our businessas amended. On November 1, 2021, four individuals and the submissionone entity filed competing motions to be appointed lead plaintiff and for approval of an NDA for QAPZOLA to the U.S. Food & Drug Administration.counsel in this putative securities class action. The plaintiffs seek damages, interest, costs, attorneys’ fees, and other unspecified equitable relief.On March 2, 2022, the Court entered an order partially granting and partially denying without prejudice a stipulated order eliminating defendants’ obligation to answer the initial pleading pending an amended complaint and addressing related briefing scheduling for an anticipated motion to dismiss. On July 28, 2022, the Court appointed a lead plaintiff and counsel for the class. On September 26, 2022, an amended complaint was filed alleging misleading statements with respect to ROLONTIS manufacturing operations and controls and added allegations that defendants misled investors about the efficacy of and market need for Poziotinib between the Class Period of March 7, 2018 and August 5, 2021. We believe that these claims are without merit and intend to vigorously defend against these claims. Furthermore, the value of a potential settlement cannot be reasonably estimated given its highly uncertain nature as of September 30, 2017.

17. INCOME TAXES
We apply an estimated annual effective tax rate (“ETR”) approach for calculating a tax provision for interim periods, as required under GAAP. We recorded a benefit for income taxes of $1.4 million and $0.6 million for the nine months ended September 30, 2017 and 2016, respectively. Our ETR differs fromCsaba v. Turgeon, et. al, (filed December 15, 2021 in the U.S. federal statutory taxDistrict Court District of Nevada); Shumacher v. Turgeon, et. al, (filed March 15, 2022 in the U.S. District Court District of Nevada); Johnson v. Turgeon, et. al, (filed March 29, 2022 in the U.S. District Court District of Nevada); Raul v. Turgeon, et. al, (filed April 28, 2022 in the U.S. District of Delaware); and Albayrak v. Turgeon, et al, (filed June 9, 2022 in the U.S. District Court District of Nevada). These putative stockholder derivative actions were filed against us(as a nominal defendant), certain of our executive officers, and certain of our past and present members of the board of directors. The stockholder derivative complaints allege that certain of our executive officers are liable to Spectrum, pursuant to Section 10(b) and 21(d) of the Securities Exchange Act of 1934, as amended, for contribution and indemnification, if they are deemed (in the Luo class action), to have made false or misleading statements and failed to disclose material facts about our business and the prospects of approval for our BLA to the FDA for eflapegrastim. The complaints generally but not uniformly further allege that certain of our executive officers and certain of our past and present directors breached their fiduciary duties, and certain of our present directors negligently violated Section 14(a) of the Exchange Act, by allegedly causing such false or misleading statements to be issued and/or failing to disclose material facts about our
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, interest rate, and number of 35% primarilyyears)
(Unaudited)

business and the prospects of approval for our BLA to the FDA for eflapegrastim. The allegations state that as a result of nondeductible expenses, state income taxes, foreign income taxes,the violations, certain of our executive officers and past and present board members committed acts of gross mismanagement, abuse of control, or were unjustly enriched. The plaintiffs generally seek corporate reforms, damages, interest, costs, attorneys’ fees, and other unspecified equitable relief.
The parties are in the impactprocess of a valuation allowance on our deferred tax assets.
Our provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognizedseeking court approval for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and credit carryforwards.
Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized. A valuation allowance is established when it is more likely than not the future realization of all or someconsolidation of the deferred tax assets will not be achieved. The evaluationNevada derivative actions and staying all derivative actions until there is an adverse decision on a motion to dismiss in the Nevada securities class action. We believe that these claims are without merit and intend to vigorously defend against these claims.
Note 8. Discontinued Operations
Overview
In March 2019, we completed the sale of our seven then-commercialized drugs (the “Commercial Product Portfolio”) to Acrotech in the Commercial Product Portfolio Transaction. Upon closing we received $158.8 million in an upfront cash payment. We are also entitled to receive up to an aggregate of $140 million upon Acrotech’s future achievement of certain regulatory milestones (totaling $40 million) and sales-based milestones (totaling $100 million) relating to the Commercial Product Portfolio.
Substantially all of the need for a valuation allowance is performed on a jurisdiction by jurisdiction basis,contractual rights and includes a review of all available positive and negative evidence.
We recognizeobligations associated with the impact of a tax position in our financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based onCommercial Product Portfolio were transferred to Acrotech at the technical meritsclosing of the position. Any interestCommercial Product Portfolio Transaction. However, under the terms of this transaction we retained our trade “accounts receivable, net” and penalties related to uncertain tax positions will be reflected in income tax expense.
The intra period tax allocation rules require that we allocate the provision for income taxes between continuing operationsGTN liabilities included within “accounts payable and other categoriesaccrued liabilities” associated with our product sales made on and prior to February 28, 2019. Accordingly, these Condensed Consolidated Financial Statements reflect the corresponding revenue-deriving activities and allocable expenses of earnings, suchthis commercial business within “discontinued operations.”
Condensed Consolidated Statements of Operations
The following table presents the various elements of “loss from discontinued operations, net of income taxes” as other comprehensive income. In periods where we have a year-to-date pretax loss from continuing operations and year-to-date pre-tax incomereported in other categories of earnings, such as other comprehensive income, ASC 740-20-45-7 requires that we allocate the income tax provision to other categories of earnings, and then record a related tax benefit in continuing operations.

For the three and nine months ended September 30, 2017, we recognized a net loss from investments and currency transactions within "other comprehensive income" while sustaining losses from continuing operations. As a result of the required allocation under ASC 740-20-45-7, we recorded income tax expense of $2.0 million and $2.0 million in "other comprehensive income" on the accompanying Condensed Consolidated Statements of Comprehensive Loss, and a benefit for income taxes of $1.5 million and $1.4 million within "benefit for income taxes" on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017.Operations:
For the three and nine months ended September 30, 2016, we recognized a net income from investments and currency transactions within other comprehensive income while sustaining losses from continuing operations. As a result of the required allocation under ASC 740-20-45-7, we recorded tax expense of $0.3 million and $0.9 million in "other comprehensive income" on the accompanying Condensed Consolidated Statements of Comprehensive Loss, and a tax benefit of $0.5 million and $0.6 million within "benefit for income taxes" on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016.
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Revenues:
        Product sales, net$— $— $39 $— 
             Total revenues— — 39 — 
Operating costs and expenses:
Cost of sales (excluding amortization of intangible assets)3 6 47 133 
Selling, general and administrative— — — — 
Research and development(7)5 31 94 
Total operating costs and expenses(4)11 78 227 
Income (loss) from discontinued operations before income taxes4 (11)(39)(227)
Provision for income taxes from discontinued operations— — — — 
Income (loss) from discontinued operations, net of income taxes$4 $(11)$(39)$(227)

On January 1, 2017, we adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, on a modified prospective basis. Under ASU 2016-09, differences between the tax deduction for share based awards and the related compensation expenses recognized under ASC 718 are now accounted for as a component of the provision for income taxes. In addition, ASU 2016-09 eliminated the requirement that excess tax benefits from share based compensation reduce taxes payable prior to being recognized in the financial statements. As of December 31, 2016, we had cumulative excess benefits related to share based compensation of $2.7 million which had not been reflected as a deferred tax asset. As a result of the adoption of ASU 2016-09, the excess benefits were reclassified to our net operating loss carryover resulting in an increase in our deferred tax assets and valuation allowance of $2.7 million as of January 1, 2017. There was no impact to retained earnings as a result of the adoption of ASU 2016-09 on January 1, 2017. In addition, there was no impact on the three and nine months ended September 30, 2017 from the adoption of ASU 2016-09 due to the Company having a full valuation allowance.

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18. STOCKHOLDERS' EQUITYNote 9. Stockholders’ Equity
Sale of Common Stock - December 2015 and August 2017Under ATM AgreementsAgreement
In December 2015,On April 5, 2019, we entered into a collective at-market-issuanceat-the-market-issuance (“ATM”) sales agreement with FBR Capital MarketsCantor Fitzgerald & Co., MLV & Co. LLC, and H.C. Wainwright & Co., LLC.LLC and B. Riley FBR, Inc. (the “December 2015“April 2019 ATM Agreement”). The December 2015 ATM Agreement allowed us, pursuant to raise gross proceeds of up to $100 million from the salewhich we may offer and sell shares of our common stock through these brokersby any method deemed to be an “at the market” offering (the “ATM Offering”). From April 5, 2019 to March 2, 2020, the ATM Offering was conducted pursuant to a sales agreement prospectus filed with our automatic shelf registration statement on Form S-3ASR, filed with the SEC on April 5, 2019, which registered an aggregate
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Notes to Condensed Consolidated Financial Statements
(all tabular amounts presented in thousands, except share, per share, interest rate, and number of years)
(Unaudited)

offering price of $150 million under the April 2019 ATM Agreement. From May 8, 2020 to June 30, 2020, the ATM Offering was conducted pursuant to a sales agreement prospectus (the “Initial Sales Agreement Prospectus”)filed with our shelf registration statement on Form S-3, (declaredfiled with the SEC on March 20, 2020, as amended by Pre-Effective Amendment No. 1 thereto, and declared effective by the SEC on February 3, 2016; File No. 333-208760)May 8, 2020 (the "Registration Statement"“Registration Statement”), which registered an aggregate offering price of up to $75 million under the April 2019 ATM Agreement. On July 29, 2020, we terminated the Initial Sales Agreement Prospectus, but left the April 2019 ATM Agreement in full force and effect. On November 6, 2020, we filed a new sales agreement prospectus to the Registration Statement, which registered an aggregate offering price of up to $60 million under the April 2019 ATM Agreement.
On July 13, 2021, we filed a shelf registration statement with the SEC on Form S-3, which was declared effective by the SEC on July 21, 2021 (the “Registration Statement”). AsThe Registration Statement registered an aggregate offering price of July 31, 2017, we fully utilized thisup to $300 million of securities that may be issued and sold by us from time to time, including up to an aggregate offering price of $150 million of common stock (which amount is included in the $300 million aggregate offering price set forth in the base prospectus) that may be issued and sold pursuant to the April 2019 ATM Facility.Agreement.

In August 2017, weDuring January 2022, the Company entered into a collective at-market-issuance sales agreementSecurities Purchase Agreement with FBR Capital Markets & Co., MLV & Co. LLC, and H.C. Wainwright & Co., LLC. (the "August 2017 ATM Agreement"). The August 2017 ATM Agreement allows usHanmi, pursuant to raise gross proceeds of up to $150 million from the salewhich Hanmi purchased 12,500,000 shares of our common stock through these brokers under the Registration Statement.shares at a purchase price of $1.60 per share, for an aggregate purchase price equal to $20 million.


We sold and issued common shares of our common stock under both the December 2015 and August 2017 ATM Agreements, as summarized in the following table:
Description of Financing Transaction No. of Common Shares Issued  Proceeds Received (Net of Broker Commissions and Fees )
Common shares issued pursuant to the December 2015 ATM Agreement between April 1, 2016 and September 30, 2016 (no shares issued in remainder of 2016) 10,890,915
 $73,869
Common shares issued pursuant to the December 2015 ATM Agreement between July 1, 2017 and July 31, 2017 3,243,882
 $23,745
Common shares issued pursuant to the August 2017 ATM Agreement between August 1, 2017 and September 30, 2017 9,314,250
 $90,221
Conversion of Series E Convertible Voting Preferred Stock
In June 2016, our then outstanding 20 shares of Series E convertible voting preferred stock were converted (at the election of the preferred stockholders) into an aggregate of 40,000 common shares; a $6 thousand dividend in arrears was paid upon this conversion.
19. SUBSEQUENT EVENTS
Open Market Purchases of 2018 Convertible Notes and Conversion Hedge Unwind in October 2017
On October 12, 2017, we completed an open market purchase of our 2018 Convertible Notes, aggregating 69,472 note units (equivalent to $69.5 million principal value) for $27.3 million in cash and 5.4 million newly-issued shares of our common stock. We will determine and recognize the gain (loss) on the retirement of these 2018 Convertible Notes within "other income (expense), net" on the Consolidated Statements of Operations for the year ended December 31, 2017. After this purchase, $40.6 million in principal of our 2018 Convertible Notes remains outstanding; this amount, as well as cash and common share entries, will be reflected in our Consolidated Balance Sheets as of December 31, 2017.
Concurrent with this open market purchase, we also unwound a portion of our previously sold warrants and previously purchased call options that were part of our "conversion hedge" (see Note 14) for aggregate net proceeds of $5.8 million. We will record these net cash proceeds and corresponding net increase to "additional paid-in capital" in the Consolidated Balance Sheets as of December 31, 2017.

Sale of Common Stock UnderApril 2019 ATM Agreement in October 2017as follows:

Period in Which IssuedNo. of Common Shares Issued Proceeds Received
(Net of Broker Commissions and Fees )
Year ended December 31, 202115,851,391 $52,621 
Quarter ended June 30, 20225,619,827 $4,947 
Quarter ended September 30, 202218,894,118 $21,613 
In October 2017, we sold and issued 1.0 million shares
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Table of our common stock for net proceeds of $14.3 million under the August 2017 ATM Agreement (see Note 18). These shares and proceeds are not included in our "common stock" and "cash and cash equivalents" on our Condensed Consolidated Balance Sheets at September 30, 2017, though they will be reflected as of December 31, 2017.Contents

ITEMItem 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSManagement’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended or the Securities Act,(the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended or the Exchange Act,(the “Exchange Act”), in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, statements regarding our future product development and commercialization activities and costs, the revenue potential (licensing, royalty and sales) of our products and product candidates, the impact of the ongoing resurgences in coronavirus (“COVID-19”) infections or new strains of the virus on our business, the success, safety and efficacy of our drug products, revenues and revenue assumptions, clinical studies, including designs and implementation, development and commercialization timelines, product acquisitions, accounting principles, litigation expenses, liquidity and capital resources and trends, and other statements containing forward-looking words, such as, “believes,” “may,” “could,” “would,” “will,” “expects,” “intends,” “estimates,” “anticipates,” “plans,” “seeks,” “continues,” or the negative thereof or variation thereon or similar terminology (although not all forward-looking statements contain these words). Such forward-looking statements are based on the reasonable beliefs of our management as well as assumptions made by and information currently available to our management. ReadersAll forward-looking statements included in this Form 10-Q speak only as of the date of this Form 10-Q and readers should not put undue reliance on these forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified; therefore, our actual results may differ materially from those described in any forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in our periodic reports filed with the U.S. Securities and Exchange Commission or the SEC,(the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on March 14, 2017 (our "2016 Form 10-K")2021, as well as those discussed elsewhere in this Quarterly Report on Form 10-Q, and the following factors:factors, among others: 
•our ability to successfully develop, obtain regulatory approval forof, and market our products;
our ability to continue to grow sales revenue•the approval, or timing of approval, of our marketed products;products or new indications for our products by the U.S. Food and Drug Administration (the “FDA”) and other international regulatory agencies;
risks associated with doing•the overall impact of COVID-19 on our business, internationally;including, without limitation, delays caused by COVID-19 related travel restrictions;
our ability to generate•actions by the FDA and maintain sufficient cash resources to fund our business;other regulatory agencies, including international agencies;
our ability to enter into strategic alliances with partners for manufacturing, development and commercialization;
efforts of our development partners;
the ability of our manufacturing partners to meet our timelines;
the ability to timely deliver product supplies to our customers;
our ability to identify new product candidates and to successfully integrate those product candidates into our operations;
•the timing and/or results of pending or future clinical trials, and our reliance on contract research organizations;
reports•our ability to maintain sufficient cash resources to fund our business operations;
•our history of adverse eventsnet losses;
•our ability to enter into strategic alliances with partners for manufacturing, development and commercialization;
•our competitors’ progress with their drug development programs, which could adversely impact the perceived or safety concerns involving eachactual value of our products;in-development drugs;
•our dependence on the production capabilities of contract manufacturing organizations (“CMOs”) and other third-parties for active pharmaceutical ingredients (“APIs”), drug products, related supplies and logistical services;
•the ability of our manufacturing partners to satisfy regulatory requirements and to meet our product demands and timelines;
•our ability to identify and acquire new product candidates and to successfully integrate those product candidates into our operations;
•our ability to protect our intellectual property rights;
competition in the marketplace for our drugs;
delay in approval of our products or new indications for our products by the FDA;
•the impact of legislative or regulatory reform on the pricing for pharmaceutical products;
actions by the FDA and other regulatory agencies, including international agencies;
securing positive reimbursement for our products;
•the impact of any product liability, or other litigation to which we are, or may become a party;
the impact of legislative or regulatory reform of the healthcare industry and the impact of recently enacted healthcare reform legislation;
the availability and price of acceptable raw materials and components from third-party suppliers, and their ability to meet our demands;

•our ability, and that of our suppliers, development partners, and manufacturing partners, to comply with laws, regulations and standards and the application and interpretation of those laws, regulations and standards, that govern or affect the pharmaceutical and biotechnology industries, the non-compliance with which may delay or prevent the development, manufacturing, regulatory approvalsindustries; and sale
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Table of our products;Contents
defending against claims relating to improper handling, storage or disposal of hazardous chemical, radioactive or biological materials which could be time consuming and expensive;
•our ability to maintain the services of our key executives and technical and sales and marketing personnel;
the difficulty in predicting the timing or outcome of product development efforts and regulatory approvals; and
demand and market acceptance for our approved products.other personnel.
All subsequent written and oral forward-looking statements attributable to us or by persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. We expressly disclaim any intent or obligation to update information contained in any forward-looking statement after the date thereof to conform such information to actual results or to changes in our opinions or expectations.
Impact of COVID-19 Pandemic
On March 11, 2020, COVID-19 was declared a pandemic by the World Health Organization. Concerns related to the spread of COVID-19 have created global business disruptions as well as disruptions in our operations. The ongoing COVID-19 pandemic has adversely impacted economic activity and conditions worldwide, including workforces, liquidity, capital markets, consumer behavior, supply chains, and macroeconomic conditions. Despite progress in vaccination efforts, global economic activity remains uncertain and cannot be predicted with confidence.
The extent to which the COVID-19 pandemic may continue to impact our results of operations, including the long-term nature of the impacts, depends on numerous evolving factors, which are highly uncertain and difficult to predict, including the adoption rate of the COVID-19 vaccines, the emergence and spread of variants, the scope and the timing to further contain the virus or treat its impact, and to what extent normal economic and operating conditions can resume, among others. For more information related to the impact of COVID-19 on our business, refer to the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 17, 2022.
Company Overview
Spectrum Pharmaceuticals, Inc. (“Spectrum”, the “Company”, “we”, “our”, or “us”) is a biotechnologybiopharmaceutical company, with a primary strategy comprised of acquiring, developing, and commercializing novel and targeted oncology therapies. Our in-house development organization includes clinical development, regulatory, quality, data management and commercialization.
We have one commercial asset and one drug in late-stage development:
•ROLVEDON, a broadnovel long-acting granulocyte colony-stimulating factor (“G-CSF”) for the treatment of chemotherapy-induced neutropenia. On April 11, 2022, the Company announced that it had received notice that the Biologics License Application (“BLA”) had been accepted and diverse pipelinereceived a Prescription Drug User Fee Act (“PDUFA”) date of September 9, 2022. On September 9, 2022, the Company received FDA marketing approval for ROLVEDON; and
•Poziotinib, a novel irreversible tyrosine kinase inhibitor under investigation for non-small cell lung cancer (“NSCLC”) tumors with various mutations. On December 6, 2021, the Company announced it submitted its New Drug Application (“NDA”) for poziotinib to the FDA for use in patients with previously treated locally advanced or metastatic NSCLC with HER2 exon 20 insertion mutations. The NDA submission is based on the positive results of Cohort 2 from the ZENITH20 clinical trial, which assessed the safety and efficacy of poziotinib. The product has received Fast Track designation and there is currently no treatment specifically approved by the FDA for this indication. On February 11, 2022, the Company announced that it had received notice that the NDA had been accepted and received a PDUFA action date of November 24, 2022. On September 22, 2022, the Company met with the FDA’s Oncologic Drugs Advisory Committee (“ODAC”). ODAC voted 9-4 that the current benefits of poziotinib did not outweigh its risks.
Our business strategy is the development of our late-stage clinicalassets through commercialization and the sourcing of additional assets that are synergistic with our existing portfolio (through purchase acquisitions, in-licensing transactions, or co-development and marketing arrangements).
Recent Highlights of Our Business, Product Development Initiatives, and Regulatory Approvals
Our product and commercial products. We have an in-house clinical development organization with regulatory and data management capabilities, andproduct pipeline is summarized below:
ROLVEDON, a commercial infrastructure and field sales force for our marketed products. Currently, we have six approved oncology/hematology products (FUSILEV, FOLOTYN, ZEVALIN, MARQIBO, BELEODAQ, and EVOMELA) that target different types of cancer including: non-Hodgkin's lymphoma, advanced metastatic colorectal cancer, acute lymphoblastic leukemia, and multiple myeloma.novel long-acting G-CSF:
We also have three drugs in mid-to-late stage development (in Phase 2 orsubmitted our BLA for ROLVEDON to the FDA on October 24, 2019 that is supported by data from two similarly designed Phase 3 clinical trials):trials, ADVANCE and RECOVER, which evaluated the safety and efficacy of ROLVEDON in 643 early-stage breast cancer patients for the treatment of neutropenia due to myelosuppressive chemotherapy. Both studies met the
ROLONTIS (formerly referred
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pre-specified endpoint of non-inferiority in duration of severe neutropenia and met all of the secondary endpoints. In addition, the safety profile was similar to pegfilgrastim. On August 6, 2021, we announced the receipt of a Complete Response Letter (“CRL”) based on manufacturing deficiencies identified at both the drug substance and drug product manufacturers. The Company believes these manufacturing deficiencies have been remediated and on March 11, 2022, we resubmitted the BLA for ROLVEDON. On April 11, 2022, the Company announced that it had received notice that the BLA had been accepted and received a PDUFA date of September 9, 2022. On September 9, 2022, the Company received FDA marketing approval for ROLVEDON injection to decrease the incidence of infection, as SPI-2012 or LAPS-G-CSF)manifested by febrile neutropenia, in adult patients with non-myeloid malignancies receiving myelosuppressive anti-cancer drugs associated with clinically significant incidence of febrile neutropenia. ROLVEDON is currently being marketed for chemotherapy-induced neutropenia.sale in the United States.
QAPZOLA (formerly referredA company sponsored clinical trial has been initiated to evaluate the administration of ROLVEDON on the same day as APAZIQUONE) for immediate intravesical instillation in post-transurethral resectionchemotherapy. This Phase 1 clinical trial is a randomized, open label, actively controlled study to evaluate the same-day dosing of bladder tumorsROLVEDON on duration of neutropenia when administered at varying intervals following docetaxel and cyclophosphamide (TC) chemotherapy in patients with non-muscle invasive bladder cancer,early-stage breast cancer. On March 4, 2021, at the virtual 38th Annual Miami Breast Cancer Conference®, the Company presented positive early data showing rapid absolute neutrophil count (ANC) recovery in the first three patients dosed in the 30-minute arm of the same-day dosing. This arm met the prespecified interim safety evaluation criteria and therefore supported the expansion of this arm to 15 patients. The study design included an interim safety evaluation that was conducted once the first three patients in each arm (30 minutes, 3 hours, or NMIBC.5 hours) completed Cycle 1. Based on this review, the 30-minute arm expanded to a total of 15 patients, while the 3- and 5-hour dosing arms have been discontinued. In the 30-minute dosing arm, ANC recovery was more rapid compared to the 3- and 5-hour arms. The overall safety profile for the 30-minute arm was similar to what has been seen previously in large randomized studies with G-CSF given 24 hours after chemotherapy.
POZIOTINIB,Poziotinib, a Pan ErbB inhibitor targeting HER2 exon20 mutations:
Poziotinib is a novel, pan-HER inhibitor usedthat irreversibly blocks signaling through the Epidermal Growth Factor Receptor (“EGFR”) family of tyrosine-kinase receptors, including HER1 (erbB1; EGFR), HER2 (erbB2), HER4 (erbB4), and HER receptor mutations. This, in turn, leads to the inhibition of the proliferation of tumor cells that over-express these receptors. Mutations of over-expression/amplification of EGFR family receptors have been associated with a number of different cancers, including NSCLC, breast cancer, and gastric cancer. In February 2015, we entered into a co-development and commercialization agreement with Hanmi Pharmaceutical Co., Ltd. (“Hanmi”) for poziotinib worldwide rights, except in Korea and China.
Our clinical development program for poziotinib is focused on previously treated NSCLC, first-line treatment of NSCLC and treatment of other solid tumors with HER2 mutations. NSCLC tumors with HER2 exon 20 insertion mutations are rare and have generally not been responsive to other tyrosine kinase inhibitors. Patients with these mutations have a poor prognosis, and available treatment options are limited. Poziotinib, due to its unique chemical structure and characteristics, is believed to inhibit cell growth of tumors with HER2 exon-20 insertion mutations.
In October 2017, we announced the start of our pivotal ZENITH20 Phase 2 global clinical trial with active sites in the U.S., Canada and Europe. The ZENITH20 trial consisted of seven cohorts of NSCLC patients. Cohorts 1, 2, 3 and 4 have completed enrollment while Cohort 5 is continuing to enroll patients. We have closed Cohorts 6 and 7 for enrollment. Cohorts 1 (EGFR) and 2 (HER2) include previously treated NSCLC patients with exon 20 mutations. Cohort 3 (EGFR) and 4 (HER2) include first-line NSCLC patients with exon 20 mutations. Cohorts 1- 4 are each independently powered for a pre-specified statistical hypothesis and the primary endpoint is overall response rate (“ORR”). Cohort 5 includes previously treated NSCLC patients with HER2 exon 20 insertion mutations and is evaluating different dosing regimens. Cohort 6 included NSCLC patients with classical EGFR mutations who progressed while on treatment with first-line osimertinib and developed an additional EGFR mutation. Cohort 7 included NSCLC patients with a variety of less common mutations in EGFR or HER2 exons 18-21 or the extracellular or transmembrane domains.
On December 26, 2019, we announced that the pre-specified primary endpoint was not met in Cohort 1 of the ZENITH20 trial evaluating poziotinib in previously treated NSCLC patients with EGFR exon 20 insertion mutations. Cohort 1 enrolled a total of 115 patients who received 16 mg/day of poziotinib. The intent-to-treat analysis showed that 17 patients had a response (by RECIST) and 62 patients had stable disease for a 68.7% disease control rate (“DCR”). The confirmed ORR was 14.8% (95% CI 8.9%-22.6%). The median duration of response was 7.4 months and the progression free survival was 4.2 months. The safety profile was in-line with other second-generation EGFR tyrosine kinase inhibitors.
On July 27, 2020, we announced that we met the pre-specified primary endpoint for Cohort 2 in the ZENITH20 trial evaluating previously treated NSCLC patients with HER2 exon 20 insertion mutations. Cohort 2 enrolled a total of 90 patients who received an oral, once daily dose of 16 mg of poziotinib. All the patients had failed at least one line of prior systemic therapy with 60 patients (67%) having failed two or more prior therapies, including chemotherapy and immunotherapy. All
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responses were read independently and confirmed by a central imaging laboratory using RECIST criteria. The intent-to-treat analysis demonstrated a confirmed ORR of 27.8% (95% CI of 18.9%-38.2%). Based on the pre-specified statistical hypothesis for the primary endpoint, the observed lower bound of 18.9% exceeded the pre-specified lower bound of 17% in this heavily pre-treated population. The safety profile was in-line with the type of adverse events seen with other second-generation EGFR tyrosine kinase inhibitors. These results were presented at the European Society for Medical Oncology (“ESMO”) Virtual Congress 2020 Science Weekend held in September 2020.
In December 2020, we reported that its pre-specified primary endpoint in Cohort 3 evaluating poziotinib in first-line NSCLC patients with EGFR exon 20 insertion mutations was not met. Cohort 3 of the ZENITH20 clinical trial enrolled a total of 79 patients who received an oral once daily dose of 16 mg of poziotinib. The median time of follow up of all patients was 9.2 months with 12 ongoing patients still on treatment. The intent-to-treat analysis showed that 22 patients had a partial response (by RECIST) and 68 patients had stable disease for an 86.1% DCR. 91% of patients experienced tumor reduction with a median reduction of 25.5%. The confirmed ORR was 27.8% (95% CI 18.4-39.1%). Based on the pre-specified statistical hypothesis for the primary endpoint, the observed lower bound of 18.4% did not meet the pre-specified lower bound of >20%. The median duration of response was 6.5 months and the median progression free survival was 7.2 months. The safety profile was similar with the type of adverse events observed with other second-generation EGFR tyrosine kinase inhibitors. Grade 3 treatment related rash was 33% and diarrhea was 23%. 94% of patients had drug interruptions with 6 patients (8%) permanently discontinuing due to adverse events.
In March 2021, we announced that the FDA granted Fast Track designation for poziotinib based on data from Cohort 2 of ZENITH20, which evaluated previously treated patients with NSCLC with HER2 exon 20 insertion mutations. On December 6, 2021, the Company announced the submission of its NDA for poziotinib to the FDA for use in patients with previously treated locally advanced or metastatic NSCLC with HER2 exon 20 insertion mutations. The NDA submission is based on the positive results of Cohort 2 from the ZENITH20 clinical trial, which assessed the safety and efficacy of poziotinib. On February 11, 2022, the Company announced that the file had been accepted and an action date of November 24, 2022 had been set.
In March 2022, the Company presented the results of Cohort 4 at the European Society for Medical Oncology Targeted Anticancer Therapies (“ESMO TAT”) meeting. Cohort 4 of the ZENITH20 clinical trial enrolled a total of 70 patients, 48 of whom received an oral once daily dose of 16 mg of poziotinib and 22 of who received an oral twice daily dose of 8 mg of poziotinib. The intent-to-treat analysis demonstrated a confirmed ORR of 41% (95% CI of 30%-54%). Based on the pre-specified statistical hypothesis for the primary endpoint, the observed lower bound of 30% exceeded the pre-specified lower bound of 20%. The median duration of response was 5.7 months and median progression free survival was 5.6 months. The most common treatment related Grade ≥ 3 adverse events were rash (30%), stomatitis (19%), diarrhea (14%), and paronychia (7%). In addition, the incidence of Grade ≥ 3 pneumonitis was low at 3%. The safety profile was consistent with the TKI class.
On September 22, 2022, the Company met with ODAC to review poziotinib for the treatment of patients with a variety of solid tumors, including breast andpreviously treated locally advanced or metastatic non-small cell lung cancer.
See Item 1. Business of our 2016 Form 10-K, for a discussion of:
Company Overview
Cancer Background and Market Size
Product Portfolio
Manufacturing
Sales and Marketing
Customers
Competition
Research and Development
Recent Highlights in Our Business and Product Development
During the nine months ended September 30, 2017, and through the filing date of this quarterly report, we accomplished various critical business objectives, which included:
ROLONTIS, a novel long-acting G-CSF: A pivotal Phase 3 study (ADVANCE Study, or SPI-GCF-301) was initiated in the first quarter of 2016 to evaluate ROLONTIS as a treatment for chemotherapy-induced neutropenia. Based on the

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amended Special Protocol Assessment (SPA) received from the FDA, the size of the ADVANCE study was reduced to 400 evaluable patients. The ADVANCE study has completed enrollment and we expect to report top line data in the first quarter of 2018. To strengthen our forthcoming Biologics License Application (BLA) package for FDA review, we have initiated a second pivotal Phase 3 study (RECOVER Study, or SPI-GCF-302), which is expected to enroll approximately 218 patients, and include sites in the U.S., Europe, Canada, South Korea and India. A pharmacokinetics (PK) study that was originally a sub-study of the SPI-GCF-301 study is also enrolling in the U.S. We expect to file our BLA with the FDA for ROLONTIS in the fourth quarter of 2018.
QAPZOLA, a potent tumor-activated drug being investigated for NMIBC: In February 2017, we received a SPA from the FDA for our redesigned Phase 3 study of QAPZOLA. This Phase 3 study has been specifically designed to build on learnings from our previous studies, as well as recommendations from the FDA. The phase 3 study is currently enrolling 425 evaluable patients, using a dose of 8 mg of QAPZOLA, and will evaluate time-to-recurrence as the primary endpoint. We began enrolling patients in the third quarter of 2017.

POZIOTINIB, a novel pan-HER inhibitor:
◦In March 2016, we initiated a Phase 2 breast cancer trial for POZIOTINIB. The Phase 2 study is an open-label study that will enroll approximately 75 patients with HER-2 positive metastatic breast cancer, who have failed at least two HER-2 directed therapies. The dose and schedule of oral POZIOTINIB is based on clinical experience from the studies in South Korea, and will include the use of prophylactic therapies to help minimize the known side-effects of pan-HER directed therapies.

◦Tumors with exon 20 insertion mutations have generally not been responsive to several other EGFR inhibitors. However, POZIOTINIB, due to its unique structure and characteristics, is believed to inhibit cell growth of EGFR or HER2 exon 20 insertions. In collaboration with The University of Texas MD Anderson Cancer Center, an investigator-sponsored Phase 2 trial is currently enrolling in non-small cell lung cancer patients with EGFR or HER2 exon 20 insertion mutations. The study yielded interim results demonstrating evidence of significant antitumor activity in NSCLC patients with EGFR exon 20 insertion mutations, with interim data showing an Objective Response Rate of 73%.

Based on feedback from the FDA, The Company has initiated an additional multi-center study in patients with EGFR orcancer harboring HER2 exon 20 insertion mutations. We began enrolling patientsThe committee voted 9-4 that the current benefits of poziotinib did not outweigh its risks.ODAC is an independent panel of experts that reviews and evaluates data concerning the efficacy and safety of marketed and investigational products for use in October 2017.the treatment of cancer. ODAC makes appropriate recommendations to the FDA, but these recommendations are not binding and the final decision regarding product approval will be made solely by the FDA.

◦In addition to the these studies, other Phase 2 studies for POZIOTINIB in breast, lung, head-and-neck, and gastric cancer indications are being conducted in South Korea by Hanmi Pharmaceuticals and the Korean National OncoVenture.
CHARACTERISTICS OF OUR REVENUE AND EXPENSESComponents of Operating Results
See Item 7. CharacteristicsManagement’s Discussion and Analysis of Our RevenueFinancial Condition and ExpensesResults of Operations — Components of Operating Results of our 2016Annual Report on Form 10-K for the year ended December 31, 2021, for a discussion of the nature of our revenue and operating expense line items within our accompanying Condensed Consolidated Statements of Operations.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
See Item 7. Critical Accounting Policies and Estimates
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates of our 2016Annual Report on Form 10-K for the year ended December 31, 2021, for a discussion of significant estimates and assumptions made by our management as part of the preparation of our accompanying Condensed Consolidated Financial Statements. These critical accounting policies and estimates arise in conjunction with the following accounts:accounts in the preparation of this Form 10-Q:
Revenue recognition•Stock-based compensation; and
Inventories – lower•Research and development costs.
Results of cost or market
Fair value of acquired assets and assumed liabilities
Goodwill and intangible assets – impairment evaluations
Income taxes
Stock-based compensation
Litigation accruals (as required)


Operations
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RESULTS OF OPERATIONS
Operations Overview –Comparison of the Three and nine months endedNine Months Ended September 30, 20172022 and 2016
2021
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
 2017 2016 2017 2016
 ($ in thousands) ($ in thousands)
Total revenues$36,395
 100.0 % $33,393
 100.0 % $99,797
 100.0 % $111,208
 100.0 %
Operating costs and expenses:               
Cost of sales (excludes amortization and impairment charges of intangible assets)12,179
 33.5 % 7,503
 22.5 % 31,618
 31.7 % 18,715
 16.8 %
Cost of service revenue—
 — % 2,221
 6.7 % 4,221
 4.2 % 5,716
 5.1 %
Selling, general and administrative18,880
 51.9 % 19,465
 58.3 % 54,595
 54.7 % 69,047
 62.1 %
Research and development13,878
 38.1 % 13,293
 39.8 % 43,670
 43.8 % 43,037
 38.7 %
Amortization and impairment charges of intangible assets6,928
 19.0 % 6,907
 20.7 % 20,718
 20.8 % 19,052
 17.1 %
Total operating costs and expenses51,865
 142.5 % 49,389
 147.9 % 154,822
 155.1 % 155,567
 139.9 %
Loss from operations(15,470) (42.5)% (15,996) (47.9)% (55,025) (55.1)% (44,359) (39.9)%
Interest expense, net(2,014) (5.5)% (2,373) (7.1)% (6,196) (6.2)% (7,087) (6.4)%
Change in fair value of contingent consideration related to acquisitions(2,942) (8.1)% 78
 0.2 % (3,236) (3.2)% (1,249) (1.1)%
Other income, net251
 0.7 % 372
 1.1 % 901
 0.9 % 990
 0.9 %
Loss before income taxes(20,175) (55.4)% (17,919) (53.7)% (63,556) (63.7)% (51,705) (46.5)%
Benefit for income taxes1,466
 4.0 % 464
 1.4 % 1,412
 1.4 % 635
 0.6 %
Net loss$(18,709) (51.4)% $(17,455) (52.3)% $(62,144) (62.3)% $(51,070) (45.9)%
 Three Months Ended
September 30,		ChangeNine Months Ended
September 30,		Change
 20222021$%20222021$%
(in thousands)(in thousands)($ in thousands)(in thousands)
Operating costs and expenses:
Selling, general and administrative$8,263 $12,243 $(3,980)(32.5)%$27,518 $41,515 $(13,997)(33.7)%
Research and development13,335 20,850 (7,515)(36.0)%33,535 69,335 (35,800)(51.6)%
Total operating costs and expenses21,598 33,093 (11,495)(34.7)%61,053 110,850 (49,797)(44.9)%
Loss from continuing operations before other income (expense) and income taxes(21,598)(33,093)11,495 (34.7)%(61,053)(110,850)49,797 (44.9)%
Interest income, net128 11 117 1063.6 %256 121 135 111.6 %
Other income (expense), net(443)9 (452)(5022.2)%(5,534)(7,948)2,414 (30.4)%
Total other income (expense)(315)20 (335)(1675.0)%(5,278)(7,827)2,549 (32.6)%
Loss from continuing operations before income taxes(21,913)(33,073)11,160 (33.7)%(66,331)(118,677)52,346 (44.1)%
Provision for income taxes from continuing operations(16)— (16)— %(45)(9)(36)400 %
Loss from continuing operations$(21,929)$(33,073)$11,144 (33.7)%$(66,376)$(118,686)$52,310 (44.1)%
Income (loss) from discontinued operations, net of income taxes4 (11)15 (136.4)%(39)(227)188 (82.8)%
Net loss$(21,925)$(33,084)$11,159 (33.7)%$(66,415)$(118,913)$52,498 (44.1)%
THREE MONTHS ENDED SEPTEMBER 30, 2017 VERSUS 2016Quarterly Discussion
Total Revenues 
 Three months ended September 30,    
 2017 2016 $ Change % Change
 ($ in millions)    
Product sales, net:       
FUSILEV$1.8
 $4.9
 $(3.1) (63.3)%
FOLOTYN11.6
 11.3
 0.3
 2.7 %
ZEVALIN2.7
 2.6
 0.1
 3.8 %
MARQIBO1.2
 1.9
 (0.7) (36.8)%
BELEODAQ3.4
 3.6
 (0.2) (5.6)%
EVOMELA10.5
 5.9
 4.6
 78.0 %
 $31.2
 $30.2
*$1.0
 3.3 %
License fees and service revenue5.2
 3.1
 2.1
 67.7 %
Total revenues$36.4
 $33.3
*$3.1
 9.3 %
* Does not agree to the face of the accompanying Condensed Consolidated Statements of Operations for the three months ended September 30, 2016, by an immaterial amount due to rounding.
Product sales, net. To derive net product sales, gross product revenues in each period are reduced by management's latest estimated provisions for (i) product returns, (ii) government chargebacks, (iii) prompt pay discounts, (iv) commercial rebates, (v) Medicaid rebates, and (vi) distribution, data, and group purchasing organization, or GPO, administrative fees. Management considers various factors in the determination of these provisions, which are described in more detail within "Critical Accounting Policies and Estimates" of our 2016 Form 10-K.

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FUSILEV revenue decrease is attributable to a continued significant decline in our net average sales price and unit sales due to the competitive launch of generic levo-leucovorin product in April 2015 - see Note 3(f). We expect to report further quarterly net sales declines of FUSILEV due to ongoing pricing pressure from generic competition.
FOLOTYN revenue increase is due to an increase in the net average sales price per unit in the current period, partially offset by a decline in units sold.
ZEVALIN revenue remained flat in the current period as our net average sales price per unit decreased, though was offset by an increase in units sold.
MARQIBO revenue decreased due to a decline in units sold in the current period, partially offset by an increase in our net average sales price per unit.
BELEODAQ revenue decreased as a result of a slight decrease in units sold during the current period, while our average net sales price per unit remained flat.
EVOMELA revenue increased in the current period as a result of an increase in units sold, partially offset by a decrease in our average net sales price per unit. The commercial launch of this product commenced in April 2016.
License fees and service revenue. Our current period license fees and service revenue increased due to the recognition of a $3.0 million contractual milestone for FOLOTYN approval in Japan, and a $2.0 million contractual milestone for the first commercial sale of FOLOTYN in Japan (see Note 16(b)(vii)). These amounts were partially offset by prior year revenue attributable to our sales and marketing services (see Note 13) and upfront fees for our out-license of ZEVALIN, both of which did not reoccur in the current year period. Refer to Note 5 for a table of our license fees and service revenue by source for the three months ended September 30, 2017 and 2016.
Operating Expenses
 Three months ended September 30,    
 2017 2016 $ Change % Change
 ($ in millions)    
Operating costs and expenses:       
Cost of sales (excludes amortization of intangible assets)$12.2
 $7.5
 $4.7
 62.7 %
Cost of service revenue—
 2.2
 (2.2) (100.0)%
Selling, general and administrative18.9
 19.5
 (0.6) (3.1)%
Research and development13.9
 13.3
 0.6
 4.5 %
Amortization and impairment charges of intangible assets6.9
 6.9
 —
 — %
Total operating costs and expenses$51.9
 $49.4
 $2.5
 5.1 %
Cost of Sales. Cost of sales in the current period increased in greater proportion than our net revenue increase, resulting in a gross margin decrease. This is primarily due to (i) changes to our product sales mix and (ii) one-time royalty expense for FOLOTYN regulatory and commercial milestone achievements (see Note 16(b)(vii)), partially offset by our FUSILEV royalty settlement also recognized in the current period (see Note 16(b)(v)) .
Cost of Service Revenue. Cost of service revenue exclusively relates to our allocated commercial and marketing expenses (from "selling, general, and administrative" expenses) for our promotion and sale of Eagle products by our employees. During the current three month period, we did not recognize any amounts in "cost of service revenue" as our sales force ceased marketing Eagle products as of July 1, 2017 (see Note 13).
Selling, General and Administrative. Selling, general and administrative expenses decreased by $0.6$4.0 million in the current period. This decrease primarily duerelates to (i) a $1.7 million decrease in personnel expenses primarily related to the non-recurrencereduction in workforce during the strategic restructuring that began in January 2022, (ii) a decrease in stock-based compensation expense of certain patent litigation costs incurred$1.5 million, and (iii) a decrease of $0.8 million in the prior year period, as well as our ongoing operating expense reduction initiatives.other general expenses.


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Research and Development. Research and development expenses increaseddecreased by $0.6$7.5 million in the current period, primarily due to various costs associated with our ROLONTIS Phase 3 clinical trialsdecreased program activities of $2.7 million for ROLVEDON, $0.9 million for poziotinib, and our POZIOTINIB clinical initiatives and activities.
Amortization and Impairment Charges of Intangible Assets. Amortization expense remained consistent with the prior year period as we continue to straight-line expense the distribution rights$0.9 million related to our commercialized products (see Note 3(f)).early-stage compounds. Personnel expenses decreased by $3.0 million related to the reduction in workforce during the strategic restructuring that began in January 2022.
Total Other Expenses
 Three months ended September 30,    
 2017 2016 $ Change % Change
 ($ in millions)    
Total other expenses$(4.7) $(1.9) $(2.8) (147.4)%
Income (Expense). Total other expensesexpense increased by $2.8$0.3 million primarily due to a decrease of $2.9 million of realized gains recorded during the current period for the sale of our equity holdings, partially offset by a $2.6 million increase in the fair value of contingent consideration related to our MARQIBO product (see Note 9(a)) that is recognized through "other (expense) income" for its quarterly re-measurement. In the current quarter, we increased our revenue projections for in-development indications of MARQIBO, and this led to an increase in the contingent consideration liability and corresponding expense.
Benefit for Income Taxes
 Three months ended September 30,    
 2017 2016 $ Change % Change
 ($ in millions)    
Benefit for income taxes$1.5
 $0.5
 $1.0
 200.0%
Our current period benefit for income taxes of $1.5 million is primarily due to intraperiod tax allocation and presentation under GAAP. In the current period, we have unrealized gains from the change inmarket value of our available-for-sale securities that are reported within "other comprehensive income" of $5.0 million, while we also report a pretax "loss from continuing operations" of $20.2 million. Our prior period benefit for income taxes of $0.5 million is primarily dueequity holdings compared to the same instance of reported unrealized gains from the change in value of our available-for-sale securities, while we also reported a pretax operating loss in the sameprior year period.
NINE MONTHS ENDED SEPTEMBER 30, 2017 VERSUS 2016Year to Date Discussion
Total Revenues
 Nine months ended September 30,    
 2017 2016 $ Change % Change
 ($ in millions) 
 
Product sales, net:       
FUSILEV$6.4
 $30.6
 $(24.2) (79.1)%
FOLOTYN32.0
 35.6
 $(3.6) (10.1)%
ZEVALIN7.9
 8.2
 $(0.3) (3.7)%
MARQIBO5.4
 4.9
 $0.5
 10.2 %
BELEODAQ9.7
 10.3
 $(0.6) (5.8)%
EVOMELA26.9
 6.8
 $20.1
 >100.0 %

$88.3
*$96.4
 $(8.1) (8.4)%
License fees and service revenue11.6
 14.8
 (3.2) (21.6)%
Total revenues$99.9
*$111.2
 $(11.3) (10.2)%
* Does not agree to the face of the accompanying Condensed Consolidated Statements of Operations for the nine months ended September 30, 2017 and 2016, by an immaterial amount due to rounding.

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Product sales, net. To derive net product sales, gross product revenues in each period are reduced by management's latest estimated provisions for (i) product returns, (ii) government chargebacks, (iii) prompt pay discounts, (iv) commercial rebates, (v) Medicaid rebates, and (vi) distribution, data, and GPO administrative fees. Management considers various factors in the determination of these provisions, which are described in more detail within "Critical Accounting Policies and Estimates" of our 2016 Form 10-K.

FUSILEV revenue decrease is attributable to a continued significant decline in our net average sales price and unit sales due to the competitive launch of generic levo-leucovorin product in April 2015 - see Note 3(f). We expect to report further quarterly net sales declines of FUSILEV due to ongoing pricing pressure from generic competition.
FOLOTYN revenue decreased due to a decline in units sold in the current period, partially offset by an increase in our net average sales price per unit.
ZEVALIN revenue decreased due to a decline in our net average sales price per unit in the current period, partially offset by an increase in units sold.
MARQIBO revenue increased due to both an increase in the units sold during the period, and our average net sales price per unit.
BELEODAQ revenue decreased due to both a decline in the units sold during the period, and our average net sales price per unit.
EVOMELA revenue significantly increased in the current period as a result of an increase in units sold, partially offset by a decrease in our average net sales price per unit. The commercial launch of this product commenced in April 2016.
License fees and service revenue. Our license fees and service revenue in the current period decreased primarily due to the following: (i) an upfront receipt of $6 million for the out-license of ZEVALIN, FOLOTYN, BELEODAQ and MARQIBO (see Note 12) which did not reoccur in the current period, and (ii) a $2 million decrease in fees from our co-promotion with Eagle (seeNote 13) as our sales force is no longer marketing Eagle products as of July 1, 2017, partially offset by the current period recognition of a $3.0 million contractual milestone for FOLOTYN approval in Japan, and a $2.0 million contractual milestone for the first commercial sale of FOLOTYN in Japan (see Note 16(b)(vii)).
Operating Expenses
 Nine months ended September 30,    
 2017 2016 $ Change % Change
 ($ in millions)    
Operating costs and expenses:       
Cost of sales (excludes amortization and impairment charges of intangible assets)$31.6
 $18.7
 $12.9
 69.0 %
Cost of service revenue4.2
 5.7
 (1.5) (26.3)%
Selling, general and administrative54.6
 69.0
 (14.4) (20.9)%
Research and development43.7
 43.0
 0.7
 1.6 %
Amortization and impairment charges of intangible assets20.7
 19.1
 1.6
 8.4 %
Total operating costs and expenses$154.8
 $155.5
*$(0.7) (0.5)%
* Does not agree to the face of the accompanying Condensed Consolidated Statements of Operations for the nine months ended September 30, 2016, by an immaterial amount due to rounding.
Cost of Sales. Despite our decreased revenue in the current nine month period, cost of sales increased, resulting in a gross margin decrease. This decrease in gross margins is primarily due to (i) changes to our product sales mix and (ii) one-time royalty expense for FOLOTYN regulatory and commercial milestone achievements (see Note 16(b)(vii)), partially offset by our FUSILEV royalty settlement also recognized in the current period (see Note 16(b)(v)) .
Cost of Service Revenue. Cost of service revenue exclusively relates to our allocated commercial and marketing expenses (from "selling, general, and administrative" expenses) for our promotion and sale of Eagle products by our sales force. During

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the current three month period, we did not recognize any amounts in "cost of service revenue" as our sales force ceased marketing Eagle products as of July 1, 2017 (see Note 13).
Selling, General and Administrative. Selling, general and administrative expenses decreased by $14.4 million, largely driven by non-recurring legal expenses and prior-year settlements related to shareholder litigation and FOLOTYN patent matters, in addition to our ongoing operating expense reduction initiatives.

Research and Development. Research and development expenses increased by $0.7 million, primarily due to various costs associated with our ROLONTIS Phase 3 clinical trials and our POZIOTINIB clinical initiatives and activities. Although our clinical trial costs increased, it was muted by decreased development expenses for EVOMELA (with its commercial launch in April 2016), and non-recurring expense associated with a ROLONTIS clinical milestone in 2016.
Amortization and Impairment Charges of Intangible Assets. Amortization expense increased by $1.6$14.0 million in the current year dueperiod. This decrease primarily relates to an adjustment(i) a $3.5 million decrease in personnel expenses, primarily related to the reduction in workforce during the strategic restructuring that began in January 2022, (ii) a decrease in stock-based compensation expense of $4.1 million, (iii) a decrease in deferred compensation expense of $3.1 million given decreases in the amortization period of our FOLOTYN distribution rightsoverall market compared to November 2022 from March 2025, representing the period through which we expect to have patent protection from generic competition (see Note 3(f)). Amortization expense otherwise remained consistent with the prior year period, as we continue(iv) a decrease of $1.4 million in professional services, (v) a decrease in marketing spend of $1.0 million, and (vi) a decrease of $0.7 million in other general expenses.
Research and Development. Research and development expenses decreased by $35.8 million in the current period, primarily due to straight-line expense the distribution rightsreversal of an $11.2 million ROLVEDON drug substance accrual during the period. A concession was provided by Hanmi for drug substance which had been accrued during 2021 and is no longer payable. Expenses also decreased in the current period due to decreased program activities of $12.4 million for ROLVEDON, $4.9 million for poziotinib, and $2.1 million related to our commercialized products.early-stage compounds. Personnel expenses decreased by $5.2 million related to the reduction in workforce during the strategic restructuring that began in January 2022.
Total Other Expenses
 Nine months ended September 30,    
 2017 2016 $ Change % Change
 ($ in millions)    
Total other expenses$(8.5) $(7.3) $(1.2) (16.4)%
Income (Expense). Total other expenses increasedexpense decreased by $1.2$2.5 million primarily due to a $2.0$9.5 million increasereduction of unrealized losses in our equity holdings compared to the fair value of contingent consideration related to our MARQIBO product (see Note 9(a)) that is recognized through "other (expense) income" for its quarterly re-measurement. In the current quarter, we increased our revenue projections for in-development indications of MARQIBO, and this led to an increase in the contingent consideration liability and corresponding expense.prior year period. This increasedecrease was partially offset by a $0.9 million decrease in interest expense on our 2018 Convertible Notes due to our December 2016 repurchases of $10 million principal of these notes (see Note 14).
Benefit for Income Taxes
 Nine months ended September 30,    
 2017 2016 $ Change % Change
 ($ in millions)    
Benefit for income taxes$1.4
 $0.6
 $0.8
 (133.3)%
Our current period benefit for income taxes of $1.4 million is primarily due to intraperiod tax allocation and presentation under GAAP. In the current period, we have unrealized gains from the change in value of our available-for-sale securities that are reported within "other comprehensive income" of $3.9 million, while we also report a pretax "loss from continuing operations" of $63.6 million. Our prior period benefit for income taxes of $0.6 million is primarily due to the same instance of reported unrealized gains from the change in value of our available-for-sale securities, while we also reported a pretax operating loss in the same period.

$5.7
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LIQUIDITY AND CAPITAL RESOURCES
 September 30, 2017 December 31, 2016 September 30, 2016
 (in thousands, except financial metrics data)
Cash, cash equivalents and marketable securities$247,716
 $158,469
 $171,852
Accounts receivable, net$37,767
 $39,782
 $42,466
Total current assets$303,299
 $216,650
 $231,414
Total current liabilities$60,207
 $65,513
 $62,332
Working capital surplus (a)$243,092
 $151,137
 $169,082
Current ratio (b)5.0
 3.3
 3.7
(a)
Total current assets at period end minus total current liabilities at period end.
(b)
Total current assets at period end divided by total current liabilities at period end.
Net Cash Used In Operating Activities
Net cash usedmillion increase in operating activities was $26.0 million for the nine months ended September 30, 2017, as compared to $37.1 million in the prior year period. For the nine months ended September 30, 2017 and 2016, our cash collections from customers totaled $119.1 million and $118.3 million, respectively, representing 121.8% and 106.4% of reported net revenue for the same years. For the nine months ended September 30, 2017 and 2016, cash payments to our employees, vendors, and end-users for products, services, chargebacks, and rebates totaled $149.7 million and $161.0 million, respectively.
Net Cash Used In Investing Activities
Net cash used in investing activities was $1.0 million for the nine months ended September 30, 2017, as compared to $0.1 million in the prior year period. Our cash used in investing activitiesrealized losses recorded during the first nine months of 2017 primarily relates to a $0.6 million payment for corporate-owned life insurance premiums, and $0.4 million of computer hardware and software purchases.
Net Cash Provided By Financing Activities
Net cash provided by financing activities was $115.9 million for the nine months ended September 30, 2017, as compared to $68.9 million in the prior year period. Our cash provided by financing activities during the first nine months of 2017 primarily relates to: (i) $114.0 million of proceeds received from the sale of common shares under an at-market-issuance sales agreement, (ii) $3.1 million of proceeds from the issuance of common stock as a result of the exercise of employee stock options, and (iii) $0.4 million of proceeds from employee stock purchases under our employee stock purchase plan. These amounts were partially offset by our $1.5 million purchase and retirement of restricted stock (at our employees’ election), in order to meet their respective federal and state tax obligations at the time of stock vesting.
Convertible Senior Notes Due 2018
On December 17, 2013, we entered into an agreementcurrent period for the sale of $120our equity holdings in addition to a $1.3 million aggregate principal amount of 2.75% Convertible Senior Notes due December 2018, or the 2018 Convertible Notes. The 2018 Convertible Notes are convertible into shares ofloss on our common stock at a conversion rate of 95 shares per $1,000 principal amount of the 2018 Convertible Notes, totaling 10.5 million common shares if fully converted at September 30, 2017 (as reduced by $10 million of our 2018 Convertible Note repurchases in December 2016). The in-the-money conversion price is equivalent to $10.53 per common share. The conversion ratedeferred compensation plan assets.
Liquidity and conversion price are subject to adjustment under certain limited circumstances. We may settle conversions of the 2018 Convertible Notes by paying or delivering, as the case may be, cash, shares of our common stock, or a combination of cash and shares, at our election.Capital Resources
The 2018 Convertible Notes bear interest at a rateCompany expects to incur future net losses as it continues to fund the advancement and commercialization of 2.75% per year, payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2014. The 2018 Convertible Notes will mature and become payable on December 15, 2018, subject to earlier conversion into common stock at the holders’ optionits product candidates. Based upon the occurrence of certain circumstances.
The sale of the 2018 Convertible Notes closed on December 23, 2013 and our net proceeds were $115.4 million, after deducting banker and professional fees of $4.6 million. We used a portion of these proceeds to simultaneously enter into “bought call” and “sold warrant” transactions with Royal Bank of Canada, collectively referred to as the Note Hedge. We

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recorded the Note Hedge on a net cost basis of $13.1 million, as a reduction to “additional paid-in capital” incurrent projections, including our accompanying Condensed Consolidated Balance Sheets. Under applicable GAAP, the Note Hedge transaction has not been (and is not expected to be) marked-to-market through earnings or comprehensive income.
In December 2016, we completed two open market purchases of our 2018 Convertible Notes, aggregating 9,963 note units (equivalent to $10.0 million principal value) for $9.0 million. We recognized an aggregate loss of $25,000 on the retirement of these 2018 Convertible Notes (based on their carrying value under GAAP), which was included in "other income (expense), net" on the Consolidated Statements of Operations for the year ended December 31, 2016. Accordingly, as of September 30, 2017, $110 million in principal of our 2018 Convertible Notes was outstanding.
We concurrently unwound a portion of our previously sold warrants and previously purchased call options that were part of our "conversion hedge" (see Note 14) for aggregate net proceeds of $21,000, with a corresponding net increase to "additional paid-in capital" in the Condensed Consolidated Balance Sheets as of December 31, 2016.
On October 12, 2017, we completed another open market purchase of our 2018 Convertible Notes, aggregating 69,472 note units (equivalent to $69.5 million principal value) for $27.3 million in cash and 5.4 million newly-issued shares. After this purchase, $40.6 million in principal of our 2018 Convertible Notes remains outstanding; this amount, as well as cash and common share entries, will be reflected in our Consolidated Balance Sheets as of December 31, 2017. Concurrent with this open market purchase, we also unwound a portion of our previously sold warrants and previously purchased call options that were part of our "conversion hedge" for aggregate net proceeds of $5.8 million. We will record these net cash proceeds and the corresponding net increase to "additional paid-in capital" in the Consolidated Balance Sheets as of December 31, 2017.
Sale of Common Stock Under ATM Agreements
In December 2015 and August 2017, we entered into collective at-market-issuance sales agreements with FBR Capital Markets & Co., MLV & Co. LLC, and H.C. Wainwright & Co., LLC. These agreements allow us to raise aggregate gross proceeds through these brokers of up to $250 million from the sale of our common stock on the public market under our shelf registration statement on Form S-3 (declared effective by the SEC on February 3, 2016; File No. 333-208760).
Through September 2017, we have raised aggregate net proceeds of $187.8 million through these at-market sales, of which $114.0 million was raised during the three months ended September 30, 2017. We expect to use these proceedsintention to continue to develop our product pipeline and to provide additional capital structure flexibility.
In October 2017, we sold and issued 1.0 million shares of our common stock for net proceeds of $14.3 million through additional at-market sales. These shares and proceeds are not included in our "common stock" and "cash and cash equivalents"place a disciplined focus on our Condensed Consolidated Balance Sheets at September 30, 2017, though they will be reflected as of December 31, 2017.
Future Capital Requirements
We believe that the future growth ofstreamlining our business will depend on our ability to successfully develop and acquire drugs for the treatment of cancer, and to successfully bring them to market.
The timing and amount of our future capital requirements will depend on many factors, including:
the need for additional capital to fund future development programs;
the need for additional capital to fund strategic acquisitions;
the need for additional capital to fund licensing arrangements;
our requirement for additional information technology infrastructure and systems; and
adverse outcomes from potential litigation and the cost to defend such litigation.
Weoperations, we believe that our $248$100.3 million in aggregate cash, andcash equivalents and marketable securities as of September 30, 20172022, will allow usbe sufficient to fund our current and planned operations for at least the next twelve months. However, should our costs and expenses prove to be greater than we currently anticipate, or should we change our current business plan in a manner that increases or accelerates our anticipated costs and expenses, we may require additional liquidity earlier than expected. To the extent it becomes necessary to raise additional cash in the future, we will seek additional capitalto raise it through the public or private sale of debt or equity securities, (see Note 18), if necessary, especially in conjunction with opportunistic acquisitionsout-licensing arrangements, funding from joint-venture or licensing arrangements. We maystrategic partners, debt financing or short-term loans, or through a combination of the foregoing. However, we do not currently have any binding commitments for additional financing. Accordingly, we cannot provide any assurance that we will be unableable to obtain such additional capital when needed, orliquidity on terms favorable to us or our current stockholders, or at all. Our liquidity and convertibleour ability to fund our capital requirements going forward are dependent, in part, on market and economic factors that are beyond our control. The Company may never achieve profitability or generate positive cash flows, and unless and until it does, the Company will continue to need to raise additional capital.
On September 21, 2022, we entered into a Loan and Security Agreement (“Loan Agreement”), by and among the Company, Allos Therapeutics, Inc., Talon Therapeutics, Inc., and Spectrum Pharmaceuticals International Holdings, LLC, as borrowers, SLR Investment Corp. as administrative agent and the lenders party thereto that provides for a five-year senior note holders.secured term loan facility in an aggregate principal amount of up to $65.0 million available to us in four tranches (collectively, the “Term Loans”). As of September 30, 2022, we have drawn a total of $30.0 million of the Term Loans pursuant to the Loan Agreement, with a remaining undrawn principal balance of $35.0 million, which is available through December 31, 2023 and is subject to the achievement of certain milestone events. Refer to Note 5 of our accompanying Condensed Consolidated Financial Statements for additional information.

Cash Flows
Contractual ObligationsThe following table summarizes our sources and uses of cash for each of the periods presented:

Nine Months Ended
September 30,
(in thousands)20222021
Net cash used in operating activities$(71,651)$(89,139)
Net cash (used in) provided by investing activities(36,241)97,469 
Net cash provided by financing activities75,669 53,100 
Effect of exchange rate on cash and cash equivalents(61)(4)
Net (decrease) increase in cash and cash equivalents$(32,284)$61,426 
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During the three and nine months ended September 30, 2017, there2022, we used $71.7 million of cash in operating activities, resulting from our net loss of $66.4 million and the change in operating assets and liabilities of $18.2 million, offset by non-cash charges of $12.9 million. Our non-cash charges were no materialcomprised of stock-based compensation expense of $7.6 million, unrealized loss on equity holdings of $3.4 million, realized loss on the sale of equity holdings of $1.1 million, non-cash lease expense of $0.5 million, depreciation and amortization of $0.2 million, and other non-cash items of $0.1 million. The change in our operating assets and liabilities was primarily related to a decrease in our accounts payable and accrued liabilities and our purchase of inventory.
During the nine months ended September 30, 2021, we used $89.1 million of cash in operating activities, resulting from our net loss of $118.9 million, offset by changes in operating assets and liabilities of $4.2 million and non-cash charges of $25.6 million. Our non-cash charges were comprised of stock-based compensation expense of $12.7 million, unrealized loss on equity holdings of $12.8 million, loss on disposal of manufacturing equipment of $3.1 million, non-cash lease expense of $1.2 million, depreciation and amortization of $0.2 million, and other non-cash items of $0.3 million offset by realized gains on the sale of
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equity holdings of $4.6 million. The change in our operating assets and liabilities was primarily related to an increase in our contractual obligations describedaccounts payable and accrued liabilities.
Investing Activities
During the nine months ended September 30, 2022, net cash used in investing activities was $36.2 million and consisted primarily of purchases of investments of $41 million, which was offset by proceeds from maturities and investments of $2.8 million and from the sale of equity holdings of $2 million.
During the nine months ended September 30, 2021, net cash provided by investing activities was $97.5 million and consisted primarily of proceeds from maturities of investments of $109.8 million and $4.4 million from the sale of equity holdings offset by $16.6 million of purchases of investments.
Financing Activities
During the nine months ended September 30, 2022, net cash provided by financing activities was $75.7 million consisting of proceeds from the issuance of debt, net of debt issuance costs of $28.9 million, $26.6 million from the sale of common stock under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS contained in Part II, Item 7an at-the-market sales agreement, net, $20 million from the issuance of common shares to Hanmi and $0.3 million from the sale of stock under our 2016 Form 10-K, other thanemployee stock purchase plan.
During the fulfillmentnine months ended September 30, 2021, net cash provided by financing activities was $53.1 million primarily consisting $52.6 million of existing obligations inproceeds from the ordinary coursesale of business.

common stock under an at-the-market sales agreement, net, and $0.5 million from the sale of stock under our employee stock purchase plan.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements (except for operating leases) that provide financing, liquidity, market or credit risk support, or involve derivatives. In addition, we have no arrangements that may expose us to liability that are not expressly reflected in the accompanying Condensed Consolidated Financial Statements and/or notes thereto.
As of September 30, 2017, we did not have any relationships with unconsolidated entities or financial partnerships, often referred to as “structured finance” or “special purpose entities,” established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such,during the periods presented, nor do we are not subject tocurrently have any, material financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.as defined under SEC rules.
ITEMItem 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKQuantitative and Qualitative Disclosures about Market Risk
In the normal course of business, our operations are exposed to risks associated with fluctuations in interest rates, credit ratings and foreign currency exchange rates.Not applicable.
The primary objective of our investment activities is to preserve principal, while at the same time maximizing yields without significantly increasing risk. We do not utilize hedging contracts or similar instruments. Because of our ability to generally redeem these investments at par at short notice and without penalty, changes in interest rates would have an immaterial effect on the fair value of these investments. If a 10% change in interest rates were to have occurred on September 30, 2017, any decline in the fair value of our investments would not be material in the context of our accompanying Condensed Consolidated Financial Statements. In addition, we are exposed to certain market risks associated with credit ratings of corporations whose corporate bonds we may purchase from time to time. If these companies were to experience a significant detrimental change in their credit ratings, the fair market value of such corporate bonds may significantly decrease. If these companies were to default on these corporate bonds, we may lose part or all of our principal. We believe that we effectively manage this market risk by diversifying our investments, and investing in highly rated securities.
We are exposed to foreign currency exchange rate fluctuations relating to payments we make to vendors, suppliers and license partners in Euros (and other currencies to a lesser extent). We mitigate such risk by maintaining a limited portion of our cash in Euros.
ITEMItem 4.    CONTROLS AND PROCEDURESControls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2017.2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’sSEC’s rules and forms. These include controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
Based on the evaluation of our disclosure controls and procedures as of September 30, 2017,2022, our chief executive officer and chief financial officer concluded that, as of that date, our disclosure controls and procedures were effective.

Changes in Internal ControlControls Over Financial Reporting
There has been no change in our internal controlcontrols over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the third fiscal quarter of 20172022 that has materially affected, or is reasonably likely to materially affect, our internal controlcontrols over financial reporting.

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our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.
Limitations ofon Ensuring the Effectiveness of Internal Controls
A
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An internal control system, no matter how well conceived and operated, cancannot provide onlymore than reasonable not absolute, assurance that theits objectives of the internal control system are met. Because ofcompletely met due to inherent limitations in any control systems,limitations. Accordingly, no evaluation of controls can provide absolute assurance that all internal control issues if any, within a company have been detected. We areAs part of our ongoing activities, we continuously seekingseek to improve the efficiency and effectiveness of our business operations and of ouraccompanying internal controls.
 
PARTPart II. OTHER INFORMATIONOther Information


ITEMItem 1.    LEGAL PROCEEDINGS

Legal Proceedings
We are involved from time-to-time with various legal matters arising in the ordinary course of business. These claims and legal proceedings are of a nature we believe are normal and incidental to a pharmaceutical business, and may include product liability, intellectual property, employment matters, and other general claims. We aremay also be subject to derivative lawsuits from time-to-time.

time to time.
We make provisions for liabilities when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Such provisions are assessed at least quarterly and adjusted to reflect the impact of any settlement negotiations, judicial and administrative rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. Although the ultimate resolution of these various matters cannot be determined at this time, we do not believe that such matters, individually or in the aggregate, will have a material adverse effect on our consolidated results of operations, cash flows, or financial condition.

Certain of the legal proceedings in which we are involved are discussed in Note 166(g), “Commitments“Financial Commitments and Contingencies and Key License Agreements,” to our accompanying Condensed Consolidated Financial Statements, and are hereby incorporated by reference.
ITEMItem 1A. RISK FACTORSRisk Factors
As of the date of this filing, except as discussed below, there have been no material changes to the RISK FACTORSrisk factors included in our 2016Annual Report on Form 10-K.10-K for the year ended December 31, 2021, as filed with the SEC on March 17, 2022.

We are highly dependent upon Hanmi, as the sole supplier for ROLVEDON drug substance.
In February 2018, we entered into a non-exclusive supply agreement with Hanmi which was amended and restated in December 2019 and further amended and restated in January 2022, through which Hanmi manufactures and supplies drug substance for ROLVEDON.
ITEM 6.    EXHIBITS
Hanmi manufactures the ROLVEDON drug substance at its facility in Korea. As Hanmi is our only approved ROLVEDON drug substance manufacturer and the production of all of our ROLVEDON drug substance is at a single location, we are exposed to the risk that Hanmi’s facility may be harmed or rendered inoperable by natural or man-made disasters or pandemics, which could render it difficult or impossible for Hanmi to perform its manufacturing activities for some time. At this time there are no plans to establish a redundant manufacturing facility to reduce this risk. If there is a supply deficiency, Hanmi will notify us of the deficiency and, in such circumstances, we are required under the supply agreement to work with Hanmi to cure its supply failure. Furthermore, if Hanmi fails to comply with applicable regulatory requirements and maintain the FDA clearances related to the manufacturing of the drug substance, we may be unable to maintain commercial supply of ROLVEDON on a timely basis, or at all.
   Incorporated by Reference
Exhibit
Number
DescriptionFormFile No.ExhibitFiling DateFiled Herewith
1.1At Market Issuance Sales Agreement, dated August 4, 2017, between Spectrum Pharmaceuticals, Inc., H.C. Wainwright & Co. LLC, FBR Capital Markets & Co., and MLV & Co. LLC.8-K001-350061.18/4/17 
31.1
Certification of Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) promulgated under the Securities Exchange Act of 1934.
    X
31.2
Certification of Principal Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) promulgated under the Securities Exchange Act of 1934.
    X
32.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(b)/15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
    X
32.2
Certification of Principal Financial Officer pursuant to Rule 13a-14(b)/15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
    X
101.INSXBRL Instance Document.    X
101.SCHXBRL Taxonomy Extension Schema Document.    X
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.    X
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.    X
101.LABXBRL Taxonomy Extension Label Linkbase Document.    X
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.    X
If Hanmi is unable to supply the drug substance to manufacture ROLVEDON reliably and at the levels we anticipate or that are required by the market, we may be unable to approve a substitute drug substance manufacturer on a timely basis, if at all. Our ability to sell ROLVEDON commercially depends, in part, on our ability to obtain such drug substance in accordance with regulatory requirements and in sufficient quantities for commercial supply. As such, we are highly dependent upon Hanmi’s continued ability to supply drug substance at the levels we require. If Hanmi is unable to supply ROLVEDON drug substance at the levels we require, this could have a material adverse effect on our business, financial condition and results of operations and adversely affect our ability to satisfy demand for ROLVEDON, which could have adversely affect our product sales and operating results materially.

We have not been in compliance with the requirements of the NASDAQ Stock Market for continued listing and if NASDAQ does not concur that we have adequately remedied our non-compliance, our common stock may be delisted from trading on NASDAQ, which could have a material adverse effect on us and our shareholders.
The Company received notice pursuant to a letter dated November 1, 2022 from The NASDAQ Stock Market (“Nasdaq”) that, because the closing bid price for the Company's common stock has fallen below $1.00 per share for 30 consecutive
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business days, the Company no longer complies with the minimum bid price requirement for continued listing on the Nasdaq Global Market.
Nasdaq's notice has no immediate effect on the listing of the Company's common stock on the Nasdaq Global Market. Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has been provided an initial compliance period of 180 calendar days, or until May 1, 2023, to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of the Company's common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days prior to May 1, 2023.
If the Company does not regain compliance by May 1, 2023, the Company may be eligible for an additional grace period if it applies to transfer the listing of its common stock to the Nasdaq Capital Market. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the minimum bid price requirement, and provide written notice of its intention to cure the minimum bid price deficiency during the second compliance period by effecting a reverse stock split if necessary. If the Nasdaq staff determines that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible for such additional compliance period, Nasdaq will provide notice that the Company's common stock will be subject to delisting. The Company would have the right to appeal a determination to delist its common stock, and the common stock would remain listed on the Nasdaq Global Market until the completion of the appeal process.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
On September 21, 2022, in connection with our entry into the Loan Agreement, we granted Warrants to the Lenders to purchase up to 454,454 shares of our common stock at an exercise price of $0.66 per share, which had a fair market value at the time of issuance of $0.2 million. The number of shares and exercise price are subject to anti-dilution adjustments for splits, dividends, capital reorganizations, reclassifications and similar transactions. The Warrants are immediately exercisable, and the exercise period will expire 10 years from the date of issuance.
The Warrants were issued in a private placement pursuant to the exemption from the registration requirements of the Securities Act available under Section 4(a)(2) promulgated pursuant to the Securities Act. Each Lender represented that it is an accredited investor, and that it was acquiring the securities for its own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act.
The additional information regarding the Loan Agreement and the Warrants in Note 5, “Loan Payable” is hereby incorporated by reference.

Item 3.    Defaults Upon Senior Securities
None.

Item 4.    Mine Safety Disclosure
Not applicable.

Item 5.     Other Information
None.
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Item 6.    Exhibits

Incorporated by Reference
Exhibit
Number		DescriptionFormForm No.ExhibitFiling DateFiled Herewith
2.18-K001-3500610.11/17/2019
3.18-K001-350063.16/18/18
3.28-K001-350063.13/29/2018
10.1X
10.2X
10.3X
31.1X
31.2X
32.1X
32.2X
101.INSInline XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.X
101.SCHInline XBRL Taxonomy Extension Schema Document.X
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.X
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.X
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.X
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.X
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 filed herewith).

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SPECTRUM PHARMACEUTICALS, INC.
Date:November 10, 2022SPECTRUM PHARMACEUTICALS, INC.By:/s/ Nora E. Brennan
Nora E. Brennan
Date:November 3, 2017By:/s/ Kurt A. Gustafson
Kurt A. Gustafson
Executive Vice President and Chief Financial Officer
(Authorized Signatory and Principal Financial and Accounting Officer)



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