What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-03-11 compared with 2023-03-01 · 150 added, 153 removed, 773 unchanged (28% of the section changed)

8 unchanged sentences

As of December 31, 2023, our investment portfolio includes cash, cash equivalents, and investments of $417.9 million that earn interest at market rates.

Our investments held during the year were comprised of highly rated instruments such as, money market funds, commercial paper and debt instruments of financial institutions, corporations, and obligations issued by the U.S.

government-sponsored agencies and U.S.

Our investments held during the year were comprised of highly rated instruments such as money market funds, certificates of deposit, agency securities, commercial obligations and U.S.

Treasury securities.

As of December 31, 2023, the majority of these instruments had a maturity of less than a year.

110 unchanged sentences

41,946 36,643 21,493

Acquired in-process research and development 7,339 — —

Total operating expenses

2 unchanged sentences

( 164,411 ) ( 115,154 ) ( 56,814 )

Other (expense) income, net:

Other income (expense), net:

Interest income

1 unchanged sentence

Non-cash interest expense for the sale of future royalties ( 18,083 ) ( 21,108 ) ( 1,450 )

Other income (expense), net

Total other (expense) income, net

Other (expense) income, net

Total other income (expense), net

788 ( 13,546 ) ( 982 )

Loss before income taxes ( 163,623 ) ( 128,700 ) ( 57,796 )

Provision for income taxes ( 24 ) — —

Benefit (Provision) for income taxes 4 ( 24 ) —

( 163,619 ) ( 128,724 ) ( 57,796 )

Other comprehensive loss:

Unrealized loss on available for sale securities

Unrealized gain (loss) on available for sale securities

4,449 ( 4,824 ) ( 418 )

15 unchanged sentences

Balance, January 1, 2021 27,356 $ 27 $ 660,665 $ ( 4 ) $ ( 263,957 ) $ 396,731

Issuance of common stock from exercises of options 101 — 497 — — 497

Issuance of common stock from exercises of options and employee stock purchase plan 291 1 2,563 — — 2,564

Stock-based compensation

10 unchanged sentences

Issuance of common stock from exercises of options and employee stock purchase plan 139 — 2,421 — — 2,421

Issuance of common stock upon vesting of restricted stock units 69 — — — — —

Repurchases and retirements of common stock ( 2,124 ) ( 2 ) ( 50,454 ) ( 50,456 )

Stock-based compensation

— — 33,205 — — 33,205

Comprehensive loss — — — ( 4,824 ) — ( 4,824 )

Comprehensive income — — — 4,449 — 4,449

Net loss — — — — ( 163,619 ) ( 163,619 )

17 unchanged sentences

18,083 21,108 1,450

(Gain) loss on disposal of property and equipment, net of gain on lease termination — ( 15 ) 26

Gain on disposal of property and equipment — — ( 15 )

Changes in operating assets and liabilities:

14 unchanged sentences

Purchases of property and equipment ( 807 ) ( 358 ) ( 1,366 )

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

144,754 ( 394,845 ) 38,835

2 unchanged sentences

Proceeds from the sale of future royalties — 35,000 250,000

Payments on notes payable — — ( 1,375 )

Repayment of liability for sale of future royalties ( 11,726 ) ( 2,474 ) —

Payments for repurchase of common stock ( 50,000 ) — —

Payments for issuance costs related to the sale of future royalties ( 43 ) ( 336 ) ( 255 )

Net cash provided (used in) by financing activities

Net cash (used in) provided by financing activities

( 59,297 ) 44,017 252,298

4 unchanged sentences

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Interest paid $ — $ — $ 4

Non-cash investing and financing activities:

2 unchanged sentences

$ 8 $ 154 $ 31

Receivable related to issuance of common stock, upon exercise of stock options $ 40 $ 11 $ —

Amounts accrued for issuance costs related to the sale of future royalties

$ — $ 80 $ 102

Amounts accrued for repurchase of common stock

$ 456 $ — $ —

Receivable related to issuance of common stock, upon exercise of stock options $ ( 51 ) $ 40 $ 11

See accompanying notes to consolidated financial statements.

5 unchanged sentences

We are a clinical-stage biotechnology company focused on delivering innovative immunology therapeutics.

We are developing immune cell modulating antibodies, including two wholly owned checkpoint agonists in clinical-stage development, for autoimmune and inflammatory disease:

rosnilimab, our PD-1 agonist, previously referred to as ANB030, in a planned Phase 2b trial for the treatment of moderate-to-severe rheumatoid arthritis (“RA”);

and ANB032, our BTLA agonist, in a planned Phase 2b trial for the treatment of moderate-to-severe atopic dermatitis (“AD”).

We also have other preclinical immune cell modulator candidates in our portfolio, including ANB033, an anti-CD122 antagonist antibody for the treatment of autoimmune and inflammatory diseases.

In addition, we have two cytokine antagonists that we are exploring options for out-licensing:

imsidolimab, our anti-IL-36R antibody, in a Phase 3 trial for the treatment of generalized pustular psoriasis (“GPP”), and etokimab, our anti-IL-33 antagonist that is Phase 2/3 ready.

We are developing immune cell modulating antibodies, including two wholly owned checkpoint agonists in clinical-stage development, for autoimmune and inflammatory diseases:

rosnilimab, our PD-1 agonist in a Phase 2b trial for the treatment of moderate-to-severe rheumatoid arthritis (“RA”) and a Phase 2 trial for the treatment of moderate-to-severe ulcerative colitis (“UC”);

and ANB032, our BTLA agonist, in a Phase 2b trial for the treatment of moderate-to-severe atopic dermatitis (“AD”).

We also have other preclinical immune cell modulator candidates for the treatment of autoimmune and inflammatory diseases in our portfolio, including ANB033, an anti-CD122 antagonist antibody, and ANB101, a BDCA2 modulator antibody.

In addition, we have developed two cytokine antagonists that we are exploring options for out-licensing:

imsidolimab, our anti-IL-36R antibody, in Phase 3 development for the treatment of generalized pustular psoriasis (“GPP”), and etokimab, our anti-IL-33 antagonist that is Phase 2/3 ready.

We have also discovered multiple therapeutic antibodies licensed to GlaxoSmithKline, Inc.

(“GSK”) in a financial collaboration for immune-oncology, including an anti-PD-1 antagonist antibody (JEMPERLI (dostarlimab-gxly)), an anti-TIM-3 antagonist antibody (cobolimab, GSK4069889) and an anti-LAG-3 antagonist antibody (GSK4074386).

(“GSK”) in a financial collaboration for immuno-oncology, including an anti-PD-1 antagonist antibody ( Jemperli (dostarlimab-gxly)) and an anti-TIM-3 antagonist antibody (cobolimab, GSK4069889).

We currently recognize revenue from milestones and royalties achieved under our immuno-oncology collaboration with GSK.

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If events or circumstances occur such that we do not obtain additional funding, we will most likely be required to reduce our plans and/or certain discretionary spending, which could have a material adverse effect on our ability to achieve our intended business objectives.

Our management believes our currently available resources will provide sufficient funds to enable us to meet our operating plans for at least the next twelve months from the issuance of our consolidated financial statements.

AnaptysBio management believes our currently available resources will provide sufficient funds to enable us to meet our operating plans for at least the next twelve months from the issuance of our consolidated financial statements.

The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

12 unchanged sentences

We base our estimates and assumptions on historical experience when available and on various factors that we believe to be reasonable under the circumstances.

Significant estimates relied upon in preparing these financial statements include estimates related to revenue recognition, accrued research and development expenses, stock-based compensation, and the liability related to the sale of future royalties.

We evaluate our estimates and assumptions on an ongoing basis.

12 unchanged sentences

If the decline in fair value is due to credit-related factors, a loss is recognized in net income, whereas if the decline in fair value is not due to credit-related factors, the loss is recorded in other comprehensive income (loss).

No credit impairment losses have been recorded during the years ended December 31, 2023, 2022, or 2021.

Concentration of Credit Risk

24 unchanged sentences

We account for fixed lease components separately from non-lease components.

We keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

We elected the practical expedient to not record leases with an initial term of 12 months or less on the balance sheet and recognize the associated lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

Liability Related to the Sale of Future Royalties

We treat the liability related to the sale of future royalties as debt, amortized under the effective interest rate method over the estimated life of the Jemperli Royalty Monetization Agreement and the Zejula Royalty Monetization Agreement.

The amortization of the liability related to the sale of future revenue is based on our current estimates of future

royalty payments.

The amortization of the liability related to the sale of future revenue is based on our current estimates of future royalty

Royalty and milestone revenue will be recognized as earned and the payments made will be recorded as a reduction of the liability when paid.

3 unchanged sentences

Non-Cash Interest Expense on the Liability Related to the Sale of Future Royalties

The total threshold of royalties paid, less the net proceeds received will be recorded as non-cash interest expense over the life of the liability.

The total threshold of royalties to be paid, less the net proceeds received will be recorded as non-cash interest expense over the life of the liability.

We impute interest on the unamortized portion of the liability using the effective interest method and record expense based on the timing of payments received over the term of the Jemperli Royalty Monetization Agreement and the Zejula Royalty Monetization Agreement.

27 unchanged sentences

For our collaboration agreements, this is generally over the period in which research and development services have been performed.

There were no new agreements with performance obligations entered into during the year ended December 31, 2023.

Transaction Price.

25 unchanged sentences

Upfront and milestone payments incurred under our in-licensing agreements are expensed as acquired in-process research and development in the period in which they are incurred, provided that the technology or method has no alternative future use.

Acquired In-process Research and Development

Acquired in-process research and development costs consist of upfront payments incurred in connection with the acquisition of licensing of products or technologies that do not meet the definition of a business under the Accounting Standards of Codification Topic 805, Business Combinations .

Stock-Based Compensation

12 unchanged sentences

Realization of deferred tax assets is dependent upon future taxable income.

A valuation allowance is recognized if it is more

likely than not that some portion or all of a deferred tax asset will not be realized based on the weight of available evidence, including expected future earnings.

A valuation allowance is recognized if it is more likely than not that some portion or all of a deferred tax asset will not be realized based on the weight of available evidence, including expected future earnings.

We recognize an uncertain tax position in our consolidated financial statements when we conclude that a tax position is more likely than not to be sustained upon examination based solely on technical merits.

23 unchanged sentences

4,800 3,977 3,631

Recent Accounting Pronouncements

Accounting Pronouncements

We have implemented all new accounting pronouncements that are in effect and may have an impact on our consolidated financial statements.

Unless otherwise discussed, we believe the impact of any recently issued pronouncements, not yet effective will not have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires enhanced disclosure of significant segment expenses on an annual and interim basis.

The guidance will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning December 15, 2024, with early adoption permitted.

Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements.

We are currently assessing the impact that this standard will have on our consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures Income Taxes , which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

This guidance will be effective for the annual periods beginning after December 15, 2024.

Early adoption is permitted.

Upon adoption, the guidance can be applied prospectively or retrospectively.

We are currently assessing the impact that this standard will have on our consolidated financial statements.

Balance Sheet Accounts and Supplemental Disclosures

14 unchanged sentences

Accrued professional fees 1,168 607

Accrued research and development expenses 15,351 7,953

Accrued research, development and manufacturing expenses

21,898 15,351

Accrued for repurchase of common stock

Other 244 296

3 unchanged sentences

GlaxoSmithKline Collaboration

In March 2014, we entered into a Collaboration and Exclusive License Agreement (the “GSK Agreement”) with TESARO, Inc.

In March 2014, we entered into a Collaboration and Exclusive License Agreement with GSK (the “GSK Agreement”) with TESARO, Inc.

(“Tesaro”), an oncology-focused biopharmaceutical company now a part of GlaxoSmithKline (Tesaro and GlaxoSmithKline are hereinafter referred to, collectively, as “GSK”).

Under the terms of the GSK Agreement, we agreed to perform certain discovery and early preclinical development of therapeutic antibodies with the goal of generating immunotherapy antibodies for subsequent preclinical, clinical, regulatory, and commercial development to be performed by GSK.

Under the terms of the GSK Agreement, GSK paid an upfront license fee of $ 17.0 million in March 2014 and agreed to provide funding to us for research and development services related to antibody discovery programs for three specific targets.

In November 2014, Amendment No.

1 to the GSK Agreement was agreed by both parties to add an additional antibody discovery program for an upfront license fee of $ 2.0 million.

Currently, under the GSK Agreement, GSK is developing JEMPERLI (dostarlimab), an anti-PD-1 antagonist antibody, as a monotherapy and in combination with additional therapies, for various solid tumor indications.

In addition, under the collaboration, GSK is developing dostarlimab in combination with two other development programs from the GSK Agreement:

cobolimab, an anti-TIM-3 antibody, and GSK40974386, an anti-LAG antibody, for various solid tumor indications.

For each development program, we are eligible to receive milestone payments of up to $ 18.0 million if certain preclinical and clinical trial events are achieved by GSK, up to an additional $ 90.0 million if certain U.S.

and European regulatory submissions and approvals in multiple indications are achieved, and up to an additional $ 165.0 million upon the achievement of specified levels of annual worldwide net sales.

Currently, under the GSK Agreement, GSK is developing Jemperli (dostarlimab), an anti-PD-1 antagonist antibody, as a monotherapy for various solid tumor indications.

In addition, GSK is developing dostarlimab in combination with additional therapies under the collaboration, including with another development program from the GSK Agreement:

cobolimab, an anti-TIM-3 antibody, in 2L NSCLC.

In October 2023, Amendment No.

5 to the GSK Agreement was agreed by both parties to terminate the anti-LAG-3 antagonist antibody development program under the GSK Agreement.

In accordance with the GSK Agreement and the amendment, we have regained full global rights to the anti-LAG-3 antagonist antibody development program.

For each remaining development program under the GSK Agreement, we are eligible to receive milestone payments if certain preclinical and clinical trial events are achieved by GSK, if certain U.S.

and European regulatory submissions and approvals in multiple indications are achieved, and upon the achievement of specified levels of annual worldwide net sales.

We will also be eligible to receive tiered 4 - 8 % royalties related to worldwide net sales of products developed under the collaboration.

On October 23, 2020, Amendment No.

3 to the GSK Agreement (the “Amendment”) was agreed to by both parties to permit GSK to conduct development and commercialization in combination with any third-party molecules of Zejula, an oral, once-daily poly (ADP-ribose) polymerase (PARP) inhibitor.

Under the Amendment, we were granted increased royalties upon sales of Jemperli , equal to 8 % of Net Sales (as defined in the GSK Agreement) below $ 1.0 billion and from 12 % up to 25 % of Net Sales above $ 1.0 billion.

Unless earlier terminated by either party upon specified circumstances, the GSK Agreement will terminate, with respect to each specific developed product, upon the later of the 12 th anniversary of the first commercial sale of the product or the expiration of the last to expire of any patent.

Prior to the adoption of ASC 606, Revenue from Contracts with Customers , we determined that the upfront license fees and research funding under the GSK Agreement, as amended, should be accounted for as a single unit of accounting and that the upfront license fees should be deferred and recognized as revenue over the same period that the research and development services are performed.

In February 2016, Amendment No.

2 to the GSK Agreement was agreed by both parties to define the effective dates of the development programs of the GSK Agreement.

We determined that the research and development services would be extended through December 31, 2016.

As a result, the period over which the unrecognized license fees and discovery milestones were recognized was extended through December 31, 2016 and have since been recognized in full.

We assessed these arrangements in accordance with ASC 606 and concluded that the contract counterparty, GSK, is a customer.

We identified the following material promises under the GSK Agreement:

(1) the licenses under certain patent rights relating to six discovery programs (four targets) and transfer of certain development and regulatory information, (2) research and development (“R&D”) services, and (3) joint steering committee meetings.

(1) the licenses under certain patent rights and transfer of certain development and regulatory information, (2) research and development (“R&D”) services, and (3) joint steering committee meetings.

We considered the research and discovery capabilities of GSK for these specific programs and the fact that the discovery and optimization of these antibodies is proprietary and could not, at the time of contract inception, be provided by other vendors, to conclude that the license does not have stand-alone functionality and is therefore not distinct.

1 unchanged sentence

Based on these assessments, we identified all services to be interrelated and therefore concluded that the promises should be combined into a single performance obligation at the inception of the arrangement.

On October 23, 2020, Amendment No.

Under the Amendment, we were granted increased royalties upon sales of JEMPERLI, equal to 8 % of Net Sales (as defined in the GSK Agreement) below $ 1.0 billion and from 12 % up to 25 % of Net Sales above $ 1.0 billion.

The Amendment also provided for a one-time, non-refundable cash payment of $ 60.0 million that we received and recognized as revenue in the fourth quarter of 2020.

The $ 1.1 billion in cash milestone payments due under the GSK Agreement remain unchanged.

Additionally, under the terms of the Amendment, GSK has agreed to certain diligence commitments with respect to the future development of JEMPERLI, and the parties have agreed to review such commitments under regular joint review committee meetings going forward.

We assessed this Amendment in accordance with ASC 606 and concluded the Amendment was a contract modification to the GSK Agreement.

Based on our assessment, we identified the terms of the Amendment to be interrelated to the GSK Agreement’s single performance obligation, noting completion and delivery of terms under the Amendment were satisfied by both parties with the execution of the Amendment.

As of December 31, 2022, the transaction price for the GSK Agreement and Amendment includes the upfront payment, research reimbursement revenue, one-time payment associated with the Amendment, and milestones and royalties earned to date, which are allocated in their entirety to the single performance obligation.

We earned and recognized $ 5.3 million in royalty revenue during the year ended December 31, 2022 related to GSK’s net sales of Zejula and JEMPERLI during the period based on estimates or actual GSK’s sales historical experience.

Of the royalty revenue recognized, $ 2.3 million is JEMPERLI non-cash revenue related to the JEMPERLI Royalty Monetization Agreement, $ 1.6 million is Zejula revenue prior to the Zejula Royalty Monetization Agreement and $ 1.4 million is Zejula non-cash revenue related to the Zejula Royalty Monetization Agreement, see Note 5.

We earned and recognized $ 3.2 million in royalty revenue during the year ended December 31, 2021 related to GSK’s net sales of Zejula and JEMPERLI during the period based on estimates or actual GSK’s sales historical experience.

Of the royalty revenue recognized, $ 0.2 million is JEMPERLI non-cash revenue related to the JEMPERLI Royalty Monetization Agreement and the remaining is Zejula and JEMPERLI revenue prior to the royalty monetization agreements.

As of December 31, 2023, the transaction price for the GSK Agreement and Amendments includes the upfront payment, research reimbursement revenue and milestones and royalties earned to date, which are allocated in their entirety to the single performance obligation.

We recognized $ 17.2 million in royalty revenue during the year ended December 31, 2023 related to GSK’s net sales of Jemperli and Zejula during the period, which we estimate based on either GSK’s prior sales experience or actuals.

Of the royalty revenue recognized during the year ended December 31, 2023, $ 13.8 million is Jemperli non-cash revenue related to the Jemperli Royalty Monetization Agreement, $ 3.4 million is Zejula non-cash revenue related to the Zejula Monetization Agreement, each of such agreements as described in Note 5.

We recognized $ 5.3 million in royalty revenue during the year ended December 31, 2022, related to GSK’s net sales of Jemperli and Zejula during the period based on GSK’s prior sales experience or actuals.

Of the royalty revenue recognized during the year ended December 31, 2022, $ 2.3 million is Jemperli non-cash revenue related to the Jemperli Royalty Monetization Agreement, $ 1.6 million is Zejula revenue prior to the Zejula Royalty Monetization Agreement and $ 1.4 million is Zejula non-cash revenue related to the Zejula Royalty Monetization Agreement.

GSK reports sales information to us on a one quarter lag and differences between actual and estimated royalty revenues will be adjusted in the following quarter.

There was no royalty revenue recognized during the year ended December 31, 2020.

All royalty revenue related to Zejula global net sales starting July 2022, will be paid directly to a wholly-owned subsidiary of DRI Healthcare Trust pursuant to the Zejula Royalty Monetization Agreement, see Note 5.

We earned and recognized one clinical milestone for $ 5.0 million during the year ended December 31, 2022.

No clinical milestones were recognized during the year ended December 31, 2023 and we recognized one clinical milestone for $ 5.0 million during the year ended December 31, 2022.

No other future clinical or regulatory milestones have been included in the transaction price, as all milestone amounts were subject to the revenue constraint.

As part of the constraint evaluation, we considered numerous factors including the fact that the receipt of milestones is outside of our control and contingent upon success in future clinical trials, an outcome that is difficult to predict, and GSK’s efforts.

Any consideration related to sales-based milestones, including royalties, will be recognized when the related sales occur as they were determined to relate predominantly to the intellectual property license granted to GSK and therefore have also been excluded from the transaction price.

transaction price.

We will re-evaluate the variable transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

Milestones under the GSK Agreement are as follows:

(JEMPERLI/Dostarlimab) Anti-TIM-3

(GSK4069889A/Cobolimab) Anti-LAG-3

(GSK40974386)

Milestone Event Amount Quarter Recognized Amount Quarter Recognized Amount Quarter Recognized

( Jemperli /Dostarlimab)

(GSK4069889A/Cobolimab)

Milestone Event Amount Quarter Recognized Amount Quarter Recognized

Initiated in vivo toxicology studies using good laboratory practices (GLPs)

$ 1.0 M Q2'15 $ 1.0 M Q4'15 $ 1.0 M Q3'16

IND clearance from the FDA $ 4.0 M Q1'16 $ 4.0 M Q2'16 $ 4.0 M Q2'17

Phase 2 clinical trial initiation $ 3.0 M Q2'17 $ 3.0 M Q4'17 $ 3.0 M Q4'19

Phase 3 clinical trial initiation - first indication $ 5.0 M Q3'18 $ 5.0 M Q4'22 $ 5.0 M —

Phase 3 clinical trial initiation - second indication $ 5.0 M Q2'19 $ 5.0 M — $ 5.0 M —

$ 1.0 M Q2'15 $ 1.0 M Q4'15

IND clearance from the FDA $ 4.0 M Q1'16 $ 4.0 M Q2'16

Phase 2 clinical trial initiation $ 3.0 M Q2'17 $ 3.0 M Q4'17

Phase 3 clinical trial initiation - first indication $ 5.0 M Q3'18 $ 5.0 M Q4'22

Phase 3 clinical trial initiation - second indication $ 5.0 M Q2'19 $ 5.0 M —

Filing of the first BLA (1) - first indication

$ 10.0 M Q1'20 $ 10.0 M — $ 10.0 M —

$ 10.0 M Q1'20 $ 10.0 M —

Filing of the first MAA (2) - first indication

$ 5.0 M Q1'20 $ 5.0 M — $ 5.0 M —

$ 5.0 M Q1'20 $ 5.0 M —

Filing of the first BLA - second indication

$ 10.0 M Q1'21 $ 10.0 M — $ 10.0 M —

First BLA approval - first indication $ 20.0 M Q2'21 $ 20.0 M — $ 20.0 M —

$ 10.0 M Q1'21 $ 10.0 M —

First BLA approval - first indication $ 20.0 M Q2'21 $ 20.0 M —

First MAA approval - first indication

$ 10.0 M Q2'21 $ 10.0 M — $ 10.0 M —

First BLA approval - second indication $ 20.0 M Q3'21 $ 20.0 M — $ 20.0 M —

$ 10.0 M Q2'21 $ 10.0 M —

First BLA approval - second indication $ 20.0 M Q3'21 $ 20.0 M —

Filing of the first MAA - second indication (3)

$ 5.0 M — $ 5.0 M — $ 5.0 M —

$ 5.0 M — $ 5.0 M —

First MAA approval - second indication (3)

$ 10.0 M — $ 10.0 M — $ 10.0 M —

$ 10.0 M — $ 10.0 M —

First commercial sales milestone (3)

$ 15.0 M — $ 15.0 M — $ 15.0 M —

$ 15.0 M — $ 15.0 M —

Second commercial sales milestone (3)

$ 25.0 M — $ 25.0 M — $ 25.0 M —

$ 25.0 M — $ 25.0 M —

Third commercial sales milestone (3)

$ 50.0 M — $ 50.0 M — $ 50.0 M —

Fourth commercial sales milestone $ 75.0 M — $ 75.0 M — $ 75.0 M —

Milestones recognized through December 31, 2022 $ 93.0 M — $ 13.0 M — $ 8.0 M —

Milestones that may be recognized in the future $ 180.0 M — $ 260.0 M — $ 265.0 M —

$ 50.0 M — $ 50.0 M —

Fourth commercial sales milestone $ 75.0 M — $ 75.0 M —

Milestones recognized through December 31, 2023 $ 93.0 M — $ 13.0 M —

Milestones that may be recognized in the future $ 180.0 M — $ 260.0 M —

(1) Biologics License Application (“BLA”)

1 unchanged sentence

(3) For Jemperli , the filing and approval of the first MAA for a second indication and first three commercial sales milestones are included as part of the royalty monetization agreement with Sagard, see Note 5.

Milestones achieved during the discovery period were recognized as revenue pro-rata through December 31, 2016.

Milestones achieved during fiscal 2017 were recognized as revenue in the period earned, while milestones after December 31, 2017 are recognized upon determination that a significant reversal of revenue would not be probable.

Cash is generally received within 30 days of milestone achievement.

We recognized $ 10.3 million in revenue under the GSK Agreement during the year ended December 31, 2022, of which $ 5.0 million was related to one milestone and $ 5.3 million was related to royalty revenue.

We recognized $ 17.2 million in revenue under the GSK Agreement during the year ended December 31, 2023, of which $ 17.2 million was related to royalty revenue and none was related to milestone revenue, as there were no milestones earned during the year.

We recognized $ 10.3 million in revenue during the year ended December 31, 2022, of which $ 5.3 million was related to royalty revenue and $ 5.0 million was related to one milestone.

We recognized $ 63.2 million in revenue during the year ended December 31, 2021, of which $ 60.0 million was related to four milestones and $ 3.2 million was related to royalty revenue.

We recognized $ 75.0 million in revenue during the year ended December 31, 2020, of which $ 60.0 million was related to terms under Amendment No.

3 to the GSK Agreement that were satisfied and $ 15.0 million in milestone revenue related to two milestones.

Antibody Generation Agreement with Bristol-Myers Squibb

In December 2011, we entered into a license and collaboration agreement (the “BMS Agreement”) with Celgene, now a part of Bristol-Myers Squibb (Celgene and Bristol-Myers Squibb are hereinafter referred to, collectively, as “BMS”), to develop therapeutic antibodies against multiple targets.

We granted BMS the option to obtain worldwide commercial rights to antibodies generated against each of the targets under the agreement, which option was triggered on a target-by-target basis by our delivery of antibodies meeting certain pre-specified parameters pertaining to each target under the agreement.

The BMS Agreement provided for an upfront payment of $ 6.0 million from BMS, which we received in 2011 and recognized through 2014, milestone payments of up to $ 53.0 million per target, low single-digit royalties on net sales of antibodies against each target, and reimbursement of specified research and development costs.

There was no revenue recognized under this agreement during the years ended December 31, 2022, 2021, and 2020.

Revenue was last recognized under this agreement in 2016.

On November 24, 2023, we entered into an exclusive license agreement (the “Centessa Agreement”) with Centessa Pharmaceuticals (UK) Limited (“Centessa”), pursuant to which we acquired the exclusive global development and commercialization rights to a blood dendritic cell antigen 2 (BDCA2) modulator antibody portfolio, including lead asset CBS004 (renamed ANB101), CBS008 (renamed ANB102) and the related family of backup antibodies, for the treatment of autoimmune and inflammatory diseases.

In connection with the Centessa Agreement, we paid Centessa an upfront cash payment of $ 4.0 million and an additional cash payment of $ 3.0 million as reimbursement to Centessa for manufacturing costs incurred.

There were $ 0.3 million in transaction costs incurred.

The total transaction amount of $ 7.3 million was expensed as in-process research and development in December 2023, and the $ 7.0 million in payments made as of December 31, 2023 were classified as an operating activity in

the statement of cash flows.

We accounted for the transaction as an asset acquisition as the set of acquired assets did not constitute a business.

Under the term of the agreement, Centessa may be entitled to receive potential future payments of up to $ 10.0 million upon the achievement of a certain event-based milestone and would be entitled to receive on a product-by-product and country-by-country basis, a royalty of low single digits on annual net sales of any product in the territory in each calendar year.

As of December 31, 2023, achievement of the milestone is not probable and, therefore, we have not recognized a liability for the associated $ 10.0 million contingent consideration.

Sale of Future Royalties

1 unchanged sentence

In October 2021, we signed a royalty monetization agreement (“ Jemperli Royalty Monetization Agreement”) with Sagard Healthcare Royalty Partners, LP (“Sagard”).

Under the terms of the JEMPERLI Royalty Monetization Agreement, we received $ 250.0 million in exchange for royalties and milestones payable to us under our GSK collaboration on annual global net sales of JEMPERLI below $ 1.0 billion starting in October 2021.

Under the terms of the Jemperli Royalty Monetization Agreement, we received $ 250.0 million in exchange for royalties and milestones payable to us under our GSK collaboration on annual global net sales of Jemperli below $ 1.0 billion starting in October 2021 (not including any combination products that contain both Jemperli and another Development Antibody).

The aggregate Jemperli royalties and milestones to be received by Sagard under the Jemperli Royalty Monetization Agreement is capped at certain fixed multiples of the upfront payment based on time.

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The aggregate future estimated payments, less the $ 249.6 million, net of proceeds, will be recognized as non-cash interest expense over the life of the agreement.

Royalty and milestone revenue will be recognized as earned on net sales of JEMPERLI, and we will record the royalty payments to Sagard as a reduction of the liability when paid.

Royalty and milestone revenue will be recognized as earned on net sales of Jemperli , and these payments to Sagard will be recorded as a reduction of the liability when paid.

As such payments are made to Sagard, the balance of the liability will be effectively repaid over the life of the Jemperli Royalty Monetization Agreement.

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Non-cash interest expense recognized 17,074

Liability related to sale of future royalties - ending balance $ 269,540

Liability related to sale of future royalties and milestones - ending balance $ 278,090

Zejula Royalty Monetization Agreement

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The proceeds received from DRI of $ 35.0 million were recorded as a liability, net of transaction costs of $ 0.2 million, which will be amortized over the estimated life of the arrangement using the effective interest rate method.

Royalty revenue will be recognized as earned on net sales of Zejula, and we will record the royalty payments to DRI as a reduction of the liability when paid.

The aggregate future estimated payments, less the $ 34.8 million, of net proceeds, will be recorded as non-cash interest expense over the life of the arrangement.

Royalty revenue will be recognized as earned on net sales of Zejula, and these royalty payments to DRI will be recorded as a reduction of the liability when paid.

The aggregate future estimated payments, less the $ 34.8 million, of net proceeds, will be recorded as non-cash interest expense over the life of the agreement.

As such payments are made to DRI, the balance of the liability will be effectively repaid over the life of the Zejula Royalty Monetization Agreement.

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At each reporting date, we will reassess our estimate of total future royalty payments to be received and if such payments are materially different than our original estimates, we will prospectively adjust the imputed interest rate and the related amortization of the royalty obligation.

We recognized Zejula non-cash royalty revenue of approximately $ 1.4 million and non-cash interest expense of approximately $ 0.7 million for the year ended December 31, 2022.

We recognized Zejula non-cash royalty revenue of approximately $ 3.4 million and $ 1.4 million during the years ended December 31, 2023 and 2022, respectively and non-cash interest expense of approximately $ 1.0 million and $ 0.7 million during the years ended December 31, 2023 and 2022, respectively.

The interest and amortization of issuance costs is reflected as non-cash interest expense for the sale of future royalties in the Consolidated Statements of Operations.

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(in thousands) December 31, 2023

Liability related to sale of future Zejula royalties and milestones - balance at 12/31/2021 $ —

Proceeds from sale of future royalties 35,000

Issuance costs related to the sale of future royalties ( 184 )

Liability related to sale of future Zejula royalties - balance at 12/31/2022

Amortization of issuance costs 28

Royalty and milestone payments to DRI ( 692 )

Royalty payments to DRI

Non-cash interest expense recognized 942

Liability related to sale of future royalties and milestones - ending balance $ 34,873

Liability related to sale of future royalties - ending balance

Fair Value Measurements and Available for Sale Investments

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Certificates of deposit (2)

2,856 — 2,856 —

Agency securities (2)

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Of the 500,000,000 shares of common stock authorized, 26,596,765 shares were issued and outstanding as of December 31, 2023.

Common stock reserved for future issuance upon the exercise, issuance or conversion of the respective equity instruments at December 31, 2022 are as follows:

Issued and Outstanding:

Stock options

Restricted stock units

Shares Reserved For:

2017 Equity Incentive Plan

2017 Employee Stock Purchase Plan

Stock Repurchase Program

In January 2023, our Board of Directors authorized a stock repurchase program (the “Repurchase Program”) to repurchase up to $ 50.0 million of our outstanding common stock, par value $ 0.001 per share.

The Repurchase Program was completed in May 2023.

The following table presents the repurchase activity from January 1, 2023 through May 5, 2023, the end date of the Repurchase Program:

Total number of shares purchased Average price paid per share Approximate dollar value of shares purchased

(in thousands)

First Quarter 2023 1,589,424 $ 24.19 $ 38,456

Second Quarter 2023 534,790 21.59 11,544

Total 2,124,214 $ 50,000

The repurchased common stock was subsequently retired after the repurchase and the par value of the shares was charged to common stock.

The excess of the repurchase price over the par value was applied against additional paid in capital.

Open Market Sales Agreement

In November 2022, we entered into the Cowen Sales Agreement with Cowen and Company, LLC, through which we may offer and sell shares of our common stock, having an aggregate offering of up to $ 150.0 million through Cowen and Company, LLC as our sales agent.

In November 2022, we entered into the Cowen Sales Agreement with Cowen, through which we may offer and sell shares of our common stock, having an aggregate offering of up to $ 150.0 million through Cowen as our sales agent.

As of December 31, 2023, we had sold no shares under this agreement.

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2017 Equity Incentive Plan

On January 12, 2017, our board of directors and stockholders approved and adopted the 2017 Equity Incentive Plan (the “2017 Plan”).

The 2017 Plan became effective upon the execution and delivery of the underwriting agreement for our initial public offering on January 26, 2017, and replaced our prior 2006 Equity Incentive Plan.

In January 2017, our Board of Directors and stockholders approved and adopted the 2017 Equity Incentive Plan (the “2017 Plan”).

Under the 2017 Plan, we may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then our employees, officers, directors or consultants.

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The 2017 Plan automatically increased by 1,140,527 shares as of January 1, 2023.

As of December 31, 2023, 2,272,850 shares were available for future issuance.

Employee Stock Purchase Plan

On January 12, 2017, our board of directors and stockholders approved and adopted the 2017 Employee Stock Purchase Plan or the ESPP.

The ESPP became effective upon the execution and delivery of the underwriting agreement for our initial public offering on January 26, 2017.

In January 2017, our Board of Directors and stockholders approved and adopted the 2017 Employee Stock Purchase Plan or the ESPP.

In addition, the number shares of stock available for issuance under the ESPP will be automatically increased each January 1, beginning on January 1, 2018, by 1 % of the aggregate number of outstanding shares of our common stock as of the immediately preceding December 31 or such lesser number as determined by our Board of Directors.

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As of December 31, 2023, 98,000 shares have been issued under the ESPP.

As of December 31, 2023, 1,734,840 shares were available for future issuance under the ESPP.

Stock Options

Stock options granted to employees and non-employees generally vest over a four-year period while stock options granted to directors vest over a one-year period.

Stock options granted to employees and non-employees generally vest over a four-year period while stock options granted to directors generally vest over a one-year period.

Each stock option award has a maximum term of 10 years from the date of grant, subject to earlier cancellation prior to vesting upon cessation of service to us.

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Time-based Restricted Stock Units

Each Restricted Stock Unit represents one equivalent share of our common stock to be issued after satisfying the applicable continued service-based vesting criteria over a specified period.

Each Restricted Stock Unit (“RSU”) represents one equivalent share of our common stock to be issued after satisfying the applicable continued service-based vesting criteria over a specified period.

The fair value of these RSUs is based on the closing price of our common stock on the date of the grant.

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Granted 568,574 $ 22.02

Released ( 68,900 ) $ 23.89

Forfeitures and cancellations ( 46,945 ) $ 21.87

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We record the expense for stock-based compensation awards subject to performance-based milestone vesting over the requisite service period when management determines that achievement of the milestone is probable.

Management evaluates when the achievement of a performance-

based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date.

The estimated fair values of stock option awards granted to employees were determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions:

Management evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date.

estimated fair values of stock option awards granted were determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions:

2023 2022 2021

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We determine the appropriate risk-free interest rate, expected term for employee stock-based awards, contractual term for non-employee stock-based awards, and volatility assumptions.

The weighted-average expected option term for employee and non-employee stock-based awards reflects the application of the simplified method, which defines the life as the average of the contractual term of the options and the weighted-average vesting period for all option tranches.

Expected volatility for 2022 and 2021 incorporates the historical volatility of our stock price, and volatility for 2020 incorporates our stock price as well as similar entities whose share prices are publicly available.

The weighted-average expected option term for employee and non-employee stock-based awards reflects the historical option term for 2023 and the simplified life method for 2022 and 2021, which defines the life as the average of the contractual term of the options and the weighted-average vesting period for all option tranches.

Expected volatility incorporates the historical volatility of our stock price.

The risk-free interest rate is based upon U.S.

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The fair value of the award will be recognized as part of compensation cost, occurring ratably over the stated 24-month requisite service period.

During the year ended December 31, 2022, we recognized $ 9.2 million of non-cash stock-based compensation cost related to the award.

During the year ended December 31, 2023, we recognized $ 11.7 million and $ 9.2 million during the year ended December 31, 2022 of non-cash stock-based compensation cost related to the award.

At December 31, 2023, there was $ 31.6 million of unrecognized compensation cost related to unvested stock option awards, which is expected to be recognized over a remaining weighted average vesting period of 2.67 years, $ 12.2 million of unrecognized cost related to unvested RSU awards, which is expected to be recognized over a period of 1.23 years, and $ 0.2 million of unrecognized compensation cost related to the ESPP, which is expected to be recognized over a remaining weighted-average vesting period of 0.37 years.

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federal tax regulations.

We elected to match 100 % of an employee’s contributions up to 6 % of the employees’ eligible salary with a maximum annual match limit of $ 11,000 in 2022, $ 8,000 in 2021, and 50 % of an employee’s contributions up to 6 % of the employees’ eligible salary with a maximum annual match limit of $ 6,000 in 2020.

We elected to match 100 % of an employee’s contributions up to 10 % of the employees’ eligible salary with a maximum limit of $ 22,500 in 2023, 100 % of an employee’s contribution up to 6 % of the employees’ salary with a maximum limit of $ 11,000 in 2022, and $ 8,000 in 2021.

For the years ended December 31, 2023, 2022, and 2021, we incurred approximately $ 1.6 million, $ 1.0 million, and $ 0.6 million, respectively of costs related to the 401(k) plan.

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The exercise of the lease option is at our sole discretion, which we currently do not anticipate exercising and as such was not recognized as part of the ROU asset and lease liability.

The monthly base rent will be $ 4.20 per rentable square foot and will be increased by 3 % annually.

The monthly base rent was initially $ 4.20 per rentable square foot and is increased by 3 % annually.

Under the Lease Agreement, we are also responsible for our pro rata share of real estate taxes, building insurance, maintenance, direct expenses, and utilities.

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Total $ 17,814

License Agreements

We have certain obligations under licensing agreements with third parties that are contingent upon achieving various development, regulatory and commercial milestones.

Pursuant to these license agreements, we are required to make milestone payments if certain development, regulatory and commercial sales milestones are achieved.

Also, pursuant to the terms of each of these license agreements, when and if commercial sales of a product commence, we will pay royalties to our licensors on net sales of the respective products.

Certain of the licensing agreements require guaranteed minimum annual payments.

Terms of the licensing agreements generally range from the remaining life of the patent up to 19 years and, in some cases, may be subject to earlier termination by either party upon specified circumstances.

Total expense incurred under all collaborative licensing agreements for upfront, milestone and royalty payments were $ 0.7 million, $ 0.2 million, and $ 0.2 million during the years ended December 31, 2022, 2021 and 2020, respectively.

Total cash paid under these agreements was $ 0.1 million, $ 0.2 million, and $ 0.3 million during the years ended December 31, 2022, 2021, and 2020, respectively.

Future minimum annual obligations under all such license agreements will be $ 0.2 million during 2023 and thereafter.

These obligations are payable through ten years from the first commercial sale, if any, or expiration of the last patent to expire, the dates of which are not determinable at this time.

Other Commitments and Contingencies

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Consolidated net loss before income taxes $ ( 163,623 ) $ ( 128,700 ) $ ( 57,796 )

For the year ended December 31, 2022, we recognized income tax expense of $ 24,000 , related to state income taxes.

For the years ended December 31, 2021 and 2020, we recognized no provision or benefit from income taxes.

For the years ended December 31, 2023 and 2022, we recognized an income tax benefit of $ 4,000 and income tax provision of $ 24,000 , respectively, related to state income taxes.

For the year ended December 31, 2021, we recognized no benefit or provision for income taxes.

Significant components of our deferred tax assets and liabilities are as follows:

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ROU asset ( 3,552 ) ( 3,859 )

Other, net ( 2,658 ) —

Fixed assets ( 122 ) ( 189 )

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Federal net operating losses generated in 2018 and after carryover indefinitely and may generally be used to offset up to 80% of future taxable income.

As of December 31, 2022, we had federal and California research tax credit carryforwards of approximately $ 6.1 million and $ 12.2 million, respectively.

The federal research tax credit carryforwards will begin to expire in 2041 and the California research tax credits carryforward indefinitely.

As of December 31, 2023, we had federal and state research tax credit carryforwards of approximately $ 12.1 million and $ 14.4 million, respectively.

The federal research tax credit carryforwards will begin to expire in 2041 and the state research tax credits carryforward indefinitely.

We also have foreign tax losses of $ 3.2 million, which will carry forward indefinitely, subject to a continuity of ownership test.

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Change in the valuation allowance 35,784 29,385 4,842

Income tax expense $ 24 $ — $ —

Income tax (benefit) expense $ ( 4 ) $ 24 $ —

We recognize a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.

Income tax positions must meet a more likely than not recognition at the effective date to be recognized.

At December 31, 2022 and 2021, we had no unrecognized tax benefits that, if recognized and realized, would affect the effective tax rate due to the valuation allowance against deferred tax assets.

As of December 31, 2023 and 2022, we had no unrecognized tax benefits that, if recognized and realized, would affect the effective tax rate due to the valuation allowance against deferred tax assets.

The following table summarizes the activity related to our unrecognized tax benefits:

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Balance at the beginning of the year $ 3,369 $ 2,473

Decrease related to prior year tax positions — ( 2,555 )

Increase related to prior year tax positions

Increase related to current year tax positions 1,494 896

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Due to our losses incurred, we are essentially subject to income tax examination by tax authorities from inception to date.

Subsequent Event

Stock Repurchase Plan

In January 2023, our Board of Directors authorized a Stock Repurchase Plan under which we may repurchase up to $ 50.0 million of the Company’s outstanding common stock.

To the extent we repurchase any of our stock, we will provide information regarding such repurchases on a quarterly basis in our Forms 10-Q and 10-K for the applicable completed quarter.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk