What changed in this filing

/stocks — the workspaceLOADING

Item 4. Controls and Procedures

2023-08-08 compared with 2023-05-09 · 172 added, 123 removed, 656 unchanged (31% of the section changed)

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or the following:

the extent to which COVID-19 or any future pandemic and related governmental regulations and restrictions may impact our business, including our research, clinical trials, which include ongoing site initiation and patient enrollment, manufacturing and financial condition;

our expectations regarding the potential benefits, activity, effectiveness and safety of our product candidates and therapeutics developed utilizing our Probody® platform technology;

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developments relating to our competitors, our industry, international conflict or uncertainties;

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.

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Operating lease liabilities - long term

Other long term liabilities

Total liabilities

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Three Months Ended

Six Months Ended

Operating expenses:

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Interest income

Other income, net

Other income (expense), net

Other comprehensive income (loss):

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Income (Loss)

Equity (Deficit)

Balance at December 31, 2022

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Balance at March 31, 2023

Exercise of stock options

Release of RSUs

Issuance of common stock under the ESPP

Stock-based compensation

Other comprehensive loss

Balance at June 30, 2023

Comprehensive

1 unchanged sentence

Income (Loss)

Equity (Deficit)

Balance at December 31, 2021

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Balance at March 31, 2022

Exercise of stock options

Issuance of common stock under the ESPP

Stock-based compensation

Other comprehensive loss

Balance at June 30, 2022

See accompanying notes to condensed financial statements.

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(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

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Deferred revenue

Net cash provided by (used) in operating activities

Net cash used in operating activities

Cash flows from investing activities:

Purchases of property and equipment

Purchase of short-term investments

Purchases of short term investments

Maturities of investments

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from exercise of stock options

Proceeds from employee stock purchase plan and exercise of stock options

Net cash provided by financing activities

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The accompanying interim condensed financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented.

The condensed results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

The condensed results of operations for the three months and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

The accompanying condensed financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC.

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The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheets that sum to the total of the amounts shown in the statements of cash flows:

March 31, 2023

June 30, 2023

December 31, 2022

March 31, 2022

June 30, 2022

December 31, 2021

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Three Months Ended

Six Months Ended

Options and ESPP to purchase common stock

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The following tables set forth the fair value of the Company’s investments subject to fair value measurements on a recurring basis and the level of inputs used in such measurements:

March 31, 2023

June 30, 2023

(in thousands)

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Treasury Securities

As of March 31, 2023, the remaining contractual terms of those investments are less than a year.

As of June 30, 2023, the remaining contractual terms of those investments are less than a year.

Accrued Liabilities

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Three Months Ended

Six Months Ended

(in thousands)

Bristol Myers Squibb

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AbbVie was to be responsible for later development and commercialization, with global late-stage development costs shared between the two companies.

As of December 31, 2022, the Company has received in aggregate $ 100.0 million in upfront and milestone payments under the CD71 Agreement.

In March 2023, the Company announced that it will evaluate the potential next steps for CX-2029 following the decision from AbbVie, to not advance CX-2029 into additional clinical studies.

As a result of AbbVie’s decision, the 2016 CD71 License and Collaboration Agreement has been terminated and the Company has an exclusive option to re-acquire

The Company has received in aggregate $ 100.0 million in upfront and milestone payments under the CD71 Agreement.

In March 2023, the Company announced that it would evaluate the potential next steps for CX-2029 following the decision from AbbVie, to not advance CX-2029 into additional clinical studies.

A s a result of AbbVie’s decision, the 2016 CD71 License and Collaboration Agreement has been terminated and the Company has an exclusive option to re-acquire full rights to

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

full rights to CX-2029.

The Company has completed the performance obligation under the CD71 Agreement as of March 31, 2023 and recognized the related remaining deferred revenue of $ 4.0 million in the first quarter of 2023.

In December 2022, the research on the two discovery targets under the Discovery Agreement has concluded with no plans to advance the discovery targets into clinical studies or to pursue new programs.

The Company completed the performance obligation for the second target earlier than the original research term that was projected to end in 2024 and recorded a cumulative change in estimate of $ 4.4 million in the fourth quarter of 2022.

In March 2023, AbbVie gave notice that the Discovery Agreement would be terminated in 60 days and all target rights will revert back to CytomX .

The Discovery Agreement has also been terminated and all target rights have reverted back to CytomX.

On September 29, 2017, the Company and Amgen, Inc.

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In October 2021, CytomX and Amgen executed an amendment to the Amgen Agreement primarily to (1) extend the target selection date for Amgen to select its additional targets for research and development, and (2) reduce the total number of milestone events and increase the total amount of milestone payments for EGFR Products.

In May 2023, CytomX and Amgen executed an amendment to the Amgen Agreement to extend the target selection period for Amgen to select its additional targets for research and development as further discussed below.

Under the terms of the Amgen Agreement, as amended, the Company and Amgen will co-develop a conditionally activated T-cell engaging bispecific therapeutic targeting epidermal growth factor receptor (the “EGFR Products”).

The Company is responsible for early-stage development of EGFR Products and Amgen will be responsible for late-stage development and commercialization of EGFR Products.

Following early-stage development, the Company will have the right to elect to participate financially in the global co-development of EGFR Products with Amgen, during which the Company would bear certain of the worldwide development costs for EGFR Products and Amgen would bear the rest of such costs (the “EGFR Co-Development Option”).

Following early-stage development, the Company will have the right to elect to participate financially in the global co-development of EGFR Products with Amgen, during which the Company would bear a certain percentage of the worldwide development costs for EGFR Products and Amgen would bear the rest of such costs (the “EGFR Co-Development Option”).

If the Company exercises its EGFR Co-Development Option, the Company will share in somewhat less than 50 % of the profit and losses from sales of such EGFR Products in the U.S., subject to certain caps, offsets, and deferrals.

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Except with respect to preclinical activities to be conducted by CytomX, Amgen will be responsible, at its expense, for the development, manufacture, and commercialization of all Amgen Products.

If Amgen exercises all of its options and advances all three of the Amgen Products, CytomX was initially eligible to receive up to $ 950.0 million in upfront, development, regulatory, and commercial milestones and tiered high single-digit to low-teen percentage royalties.

The Company concluded that, at the inception of the agreement, Amgen’s option to select the two additional targets is not a material right and does not represent a performance obligation of the agreement.

If Amgen exercises all of its options and advances all three of the Amgen Products, CytomX is eligible to receive up to $ 950.0 million in upfront, development, regulatory, and commercial milestones and tiered high single-digit to low-teen percentage royalties.

The Company concluded that, at the inception of the agreement and subsequent amendments, Amgen’s option to select the two additional targets is not a material right and does not represent a performance obligation of the agreement.

At the initiation of the collaboration, CytomX had the option to select, from programs specified in the Amgen Agreement, an existing preclinical stage T-cell engaging bispecific product from the Amgen preclinical pipeline.

In March 2018, CytomX selected the program.

In March 2018, CytomX selected the program and this program is currently in preclinical development.

CytomX is responsible, at its expense, for converting this program to a conditionally activated T-cell engaging bispecific product, and thereafter, will be responsible for development, manufacturing, and commercialization of the product (“CytomX Product”).

Amgen is eligible to receive up to $ 203.0 million in development, regulatory, and commercial milestone payments for the CytomX Product, and tiered mid-single digit to low double-digit percentage royalties.

As of March 31, 2023 and December 31, 2022, deferred revenue related to the EGFR Products performance obligation wa s $ 16.4 million and $ 18.0 million, respectively.

As of March 31, 2023 and December 31, 2022, deferred revenue related to the Amgen Other Products performance obligation w as $ 0.4 million and $ 0.6 million, respectively.

As of June 30, 2023 and December 31, 2022, deferred revenue related to the EGFR Products performance obligation was $ 14.9 million and $ 18.0 million, respectively.

As of June 30, 2023 and December 31, 2022, deferred revenue related to the Amgen Other Products performance obligation w as $ 0.2 million and $ 0.6 million, respectively.

CytomX Therapeutics, Inc.

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In January 2023, the Company announced that it achieved a clinical candidate milestone under the Astellas Agreement which triggered a $ 5.0 million milestone payment to the Company.

The $ 5.0 million milestone payment was fully recognized in the first quarter of 2023 as the Company had completed its performance obligation related to the collaboration target.

As of March 31, 2023 and December 31, 2022, deferred revenue relating to the Astellas Agreement wa s $ 41.8 m illion and $ 44.5 million, respectively.

The amount due from Astellas under the Astellas Agreement wa s $ 1.0 mill ion and $ 1.0 million as of March 31, 2023 and 2022, respectively.

The $ 5.0 million milestone payment was fully recognized in the first quarter of 2023 as the Company had completed its related performance obligation of the collaboration target which resulted in the clinical candidate nomination for further development.

As of June 30, 2023 and December 31, 2022, deferred revenue relating to the Astellas Agreement wa s $ 38.0 m illion and $ 44.5 million, respectively.

The amount due from Astellas under the Astellas Agreement wa s $ 1.3 mill ion and $ 1.0 million as of June 30, 2023 and December 31, 2022, respectively.

Bristol Myers Squibb Company

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Under the terms of Amendment 1, the Company continued to have obligations to Bristol Myers Squibb to discover and conduct preclinical development of Probody therapeutics against any targets they chose to select during the research period under the terms of Amendment 1.

Pursuant to Amendment 1, the financial consideration from Bristol Myers Squibb was comprised of an upfront payment of $ 200.0 million, estimated research and development service fees, and contingent payments for development, regulatory and sales milestones for the eight

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

The Company was also entitled to tiered mid-single to low double-digit percentage royalties from potential future sales.

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There were no substantive changes to each party's performance obligations.

As of December 31, 2022, the Company is eligible for up to approximately $ 2.1 billion in contingent payments for development, regulatory and sales milestones based on the ongoing collaboration projects, including the CTLA-4 program, with BMS.

As of June 30, 2023, the Company is eligible for up to approximately $ 2.1 billion in contingent payments for development, regulatory and sales milestones based on the ongoing collaboration projects, including the CTLA-4 program, with BMS.

The Company reevaluated the remaining potential milestone payments and determined that significant revenue reversal was probable as the achievement of such milestones was highly dependent on factors outside the Company’s control.

As a result, these payments continued to be fully constrained and were not included in the transaction price as of March 31, 2023.

As of March 31, 2023 and December 31, 2022, deferred revenue relating to the BMS Agreement wa s $ 161.5 mi llion and $ 169.2 million, respectively.

As a result, these payments continued to be fully constrained and were not included in the transaction price as of June 30, 2023.

As of June 30, 2023 and December 31, 2022, deferred revenue relating to the BMS Agreement wa s $ 147.6 millio n and $ 169.2 million, respectively.

ModernaTX, Inc.

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(“Moderna”) entered into a Collaboration and License Agreement (the “Moderna Agreement”) on December 30, 2022, the effective date, to collaborate on discovery and preclinical research and development activities to create investigational messenger RNA (mRNA) based conditionally activated therapies using the Company’s Probody therapeutic technology.

Moderna is solely responsible for the development (preclinical and clinical), manufacture, and commercialization of any products under the Moderna Agreement.

Moderna is solely responsible for the development (preclinical and clinical), manufacturing, and commercialization of any products under the Moderna Agreement.

Under the terms of the Moderna Agreement, the Company granted Moderna an exclusive, worldwide right to develop and commercialize Probody therapeutics for the collaboration programs.

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The Company is also eligible to receive tiered royalties from high-single digit to low-teen percentage rates of annual global net sales of any products that are commercialized under the Moderna Agreement.

The Moderna Agreement also provides Moderna with an option to participate in a future equity financing by CytomX at market price, subject to certain terms, conditions and regulatory requirements.

As of March 31, 2023 and December 31, 2022, deferred revenue relating to the Moderna Agreement was $ 34.3 million and $ 35.0 million, respectively.

The Moderna Agreement also provided Moderna with an option to participate in an equity financing by CytomX at market price, subject to certain terms, conditions and regulatory requirements.

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

As of June 30, 2023 and December 31, 2022, deferred revenue relating to the Moderna Agreement was $ 32.3 m illion and $ 35.0 million, respectively.

The amount due from Moderna under the Moderna Agreement wa s $ 0 and $ 35.0 million as of June 30, 2023 and December 31, 2022, respectively.

Regeneron Pharmaceuticals, Inc.

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Under the Collaboration and License Agreement, the Company granted Regeneron an exclusive, worldwide, royalty-bearing license under certain Company intellectual property to develop, manufacture, commercialize and otherwise exploit licensed products (“Licensed Products”) for all human and non-human diagnostic, prophylactic and therapeutic uses in oncology.

Regeneron is responsible for funding the cost of preclinical research and discovery activities of both parties for all Licensed Products and for funding the cost of development, manufacture and commercialization of all Licensed Products worldwide.

Regeneron is responsible for funding the cost of preclinical research and discovery activities of both parties for all Licensed Products and for funding the cost of development, manufacturing and commercialization of all Licensed Products worldwide.

Pursuant to the Regeneron Agreement, the consideration from Regeneron is comprised of an upfront fee of $ 30.0 million, contingent payments for development and regulatory milestones and commercial milestone payments of up to an aggregate of approximately $ 0.8 billion.

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In addition, the Company will receive research and development service fees based on a prescribed FTE rate.

As of March 31, 2023 and December 31, 2022, deferred revenue relating to the Regeneron Agreement was $ 29.5 million and $ 30.0 million, respectively.

As of June 30, 2023 and December 31, 2022, deferred revenue relating to the Regeneron Agreement was $ 28.2 million and $ 30.0 million, respectively.

The amount due from Regeneron under the Regeneron Agreement wa s $ 0.5 mill ion and $ 30.0 million as of June 30, 2023 and December 31, 2022, respectively.

Contract Liabilities

The following table presents changes in the Company’s total contract liabilities during the three months ended March 31, 2022 and 2023:

The following table presents changes in the Company’s total contract liabilities during the six months ended June 30, 2023 and 2022:

Revenue Recognized

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Deferred revenue

The Company expects that t he $ 283.9 m illion of deferred revenue related to the following contracts as of March 31, 2023 will be recognized as revenue based on actual FTE effort and program progress as set forth below.

The Company expects that the $ 261.2 million of deferred revenue related to the following contracts as of June 30, 2023 will be recognized as revenue based on actual FTE effort and estimated program progress as set forth below.

However, the timing of revenue recognition could differ from the estimates depending on facts and circumstances impacting the various contracts, including progress of research and development, resources assigned to the contracts by the Company or its collaboration partners or other factors outside of the Company’s control.

The $ 14.9 million of deferred revenue related to the Amgen EGFR Products is expected to be recognized until 2026 .

The $ 0.4 million of deferred revenue related to the Amgen Other Products is expected to be recognized until 2023 .

The $ 0.2 million of deferred revenue related to the Amgen Other Products is expected to be recognized within 2023 .

The $ 38.0 million of deferred revenue related to the Astellas Agreement, together with research and development service fees, is expected to be recognized until 2026 .

The $ 161.5 million of deferred revenue related to the BMS Agreement is expected to be recognized until 2025 .

The $ 34.3 million of deferred revenue related to the Moderna Agreement, together with research and development service fees, is expected to be recognized until 2028 .

The $ 29.5 million of deferred revenue related to the Regeneron Agreement, together with research and development service fees, is expected to be recognized until 2026 .

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

The $ 147.6 million of deferred revenue related to the BMS Agreement is expected to be recognized until 2025 .

The $ 32.3 million of defe rred revenue related to the Moderna Agreement, together with research and development service fees, is expected to be recognized until 2027 .

The $ 28.2 mi llion of deferred revenue related to the Regeneron Agreement, together with research and development service fees, is expected to be recognized until 2026 .

Stock-Based Compensation

Stock Options

Activities for the Company’s stock option plans for the three months ended March 31, 2023 were as follows:

Activities for the Company’s stock option plans for the six months ended June 30, 2023 were as follows:

Options Outstanding

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Option forfeited/expired

Balance at March 31, 2023

The Company recorded $ 1.9 million and $ 2.9 million of stock-based compensation expense related to the stock option plans for the three months end March 31, 2023 and 2022, respectively.

Balance at June 30, 2023

The Company recorde d $ 1.7 milli on and $ 2.8 million of stock-based compensation expense related to the stock options for the three months ended June 30, 2023 and 2022, respectively.

The Company record ed $ 3.6 millio n and $ 5.7 million of stock-based compensation expense related to the stock options for the six months ended June 30, 2023 and 2022, respectively.

Time-based RSUs ("TRSU")

Activities for the Company’s TRSUs for the three months ended March 31, 2023 were as follows:

Activities for the Company’s TRSUs for the six months ended June 30, 2023 were as follows:

Weighted Average Grant Date Fair Value Per Share

Balance at December 31, 2022

RSU's awarded

RSU's cancelled

Balance at March 31, 2023

The Company recorded $ 0.4 million and $ 0.3 million of stock-based compensation expense related to the TRSUs for the three months end March 31, 2023 and 2022, respectively.

TRSUs awarded

TRSUs cancelled

Balance at June 30, 2023

The Company recorded $ 0.5 million and $ 0.4 million of stock-based compensation expense related to the TRSUs for the three months ended June 30, 2023 and 2022, respectively.

The Company recorded $ 1.0 million and $ 0.7 million of stock-based compensation expense related to the TRSUs for the six months ended June 30, 2023 and 2022, respectively.

Performance-based RSUs ("PSUs")

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Vesting for 50% of the PSUs granted will occur within one year of the grant date upon achievement of certain specific milestones ("2021-Tranche 1") and the remaining 50% will vest within two years of the grant date upon achievement of additional company objectives ("2021-Tranche 2").

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

In July 2022, the Company determined that the performance condition for 2021-Tranche 1 was met and recorded $ 1.0 million of stock-based compensation expense for the year ended December 31, 2022.

As the achievement of the milestones for Tranche 2 was not considered probable, no compensation cost was recorded for 2021-Tranche 2 of these awards through March 31, 2023.

As the achievement of the milestones for Tranche 2 was not considered probable, no compensation cost was recorded for 2021-Tranche 2 of these awards through June 30, 2023.

In August 2022, the Company granted 250,000 PSUs to executive employees with an aggregated grant date fair value of approximately $ 0.4 million.

Vesting for 50% of the PSUs granted will occur upon attaining certain specific milestones by December 2023 (“2022-Tranche 1”), and the remaining 50% will vest upon attaining certain specific milestones by December 2024 (“2022-Tranche 2”).

As of December 31, 2022, and March 31, 2023, the Company determined that it is probable that the performance conditions for 2022-Tranche 1 will be satisfied and hence recorded $ 55,000 and $ 29,000 compensation cost, respectively, for those awards for the year ended December 31, 2022 and for the three months ended March 31, 2023.

As of December 31, 2022 and March 31, 2023, the Company determined that it is not probable that the performance conditions for 2022-Tranche 2 will be satisfied and hence recorded no compensation cost for those awards through March 31, 2023.

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

As of December 31, 2022, and June 30, 2023, the Company determined that it is probable that the performance conditions for 2022-Tranche 1 will be satisfied and hence recorded $ 55,000 , $ 33,000 and $ 62,000 c ompensation cost, respectively, for those awards for the year ended December 31, 2022 and for the three and six months ended June 30, 2023.

As of December 31, 2022 and June 30, 2023, the Company determined that it is not probable that the performance conditions for 2022-Tranche 2 will be satisfied and hence recorded no compensation cost for those awards through June 30, 2023.

In February 2023, the Company granted 710,000 PSUs to executive employees with an aggregated grant date fair value of approximately $ 1.8 million.

Vesting for 50% of the PSUs granted will occur upon attaining certain specific milestones by December 2024 (“2023-Tranche 1”), and the remaining 50% will vest upon attaining certain specific milestones by December 2025 (“2023-Tranche 2”).

The Company determined that it is not probable that the performance conditions will be satisfied for each of these tranches and hence no compensation cost was recorded for these awards through March 31, 2023.

Activities for the Company’s PSUs for the three months ended March 31, 2023 were as follows:

Activities for the Company’s PSUs for the six months ended June 30, 2023 were as follows:

Weighted Average Grant Date Fair Value Per Share

Balance at December 31, 2022

PSU's awarded

PSU's cancelled

Balance at March 31, 2023

PSUs cancelled

Balance at June 30, 2023

Stock-based Compensation

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Three Months Ended

Six Months Ended

(in thousands)

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The Company believes that the lawsuit is without merit and intends to vigorously defend itself.

The Company does not believe a loss is probable and has no t recorded any amount as a contingent liability for claims associated with this lawsuit as of March 31, 2023.

The Company maintains a full valuation allowance against its net deferred tax assets due to the Company’s history of losses as of March 31, 2023 and December 31, 2022 .

The Company does not believe a loss is probable and has no t recorded any amount as a contingent liability for claims associated with this lawsuit as of June 30, 2023 .

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

The Company maintains a full valuation allowance against its net deferred tax assets due to the Company’s history of losses as of June 30, 2023 and December 31, 2022 .

The Company files income taxes in the U.S.

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As of the date of this filing, the state of California has not proposed adjustments to the tax returns.

Due to the ongoing nature of the examination and discussions with the state of California, the Company is unable to estimate a date by which this matter will be resolved or reasonably estimate the potential impact should the tax position be revised.

D ue to the ongoing nature of the examination and discussions with the state of California, the Company is unable to estimate a date by which this matter will be resolved or reasonably estimate the potential impact should the tax position be revised.

Based on the Company's current expectations and understanding of the reasonably possible outcomes, the Company does not anticipate that the resolution of this matter would result in a material impact on its financial position or results of operations.

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

Restructuring

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The restructuring was substantially complete as of December 31, 2022.

The following is a summary of accrued restructuring costs as of March 31, 2023 (in thousands):

The following is a summary of accrued restructuring costs as of June 30, 2023 (in thousands):

Severance and Benefits Costs

1 unchanged sentence

Stock Based Compensation

Total restructuring cost recorded

Change in estimates

Non-cash charges

Balance at December 31, 2022

Change in estimates

Balance at March 31, 2023

Balance at June 30, 2023

The Company has a lease of office and laboratory space located in South San Francisco, California for the Company’s corporate headquarters (the “2016 Lease”).

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The sublease is classified as an operating lease whereby sublease income is recognized on a straight-line basis over the sublease term that expires on September 30, 2026.

For the three months ended March 31, 2023, sublease income was immaterial.

March 31, 2023

For the three and six months ended June 30, 2023, sublease income was $ 0.3 mil lion.

June 30, 2023

(in thousands)

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Total sublease income payments

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

Subsequent Event

In July 2023, the Company entered into an agreement with BVF Partners L.P.

(“BVF”) for a private placement that resulted in initial gross proceeds of approximately $ 30.0 million.

In the private placement, CytomX issued pre-funded warrants to BVF to purchase up to 14,423,077 shares of common stock, accompanying Tranche 1 warrants to purchase up to 5,769,231 shares of common stock and accompanying Tranche 2 warrants to purchase up to 5,769,231 shares of common stock, at a combined price of $ 2.08 per share.

Each pre-funded warrant has an exercise price of $ 0.00001 per share of common stock, are immediately exercisable and will be exercisable for 20 years .

The accompanying Tranche 1 warrants have an exercise price of $ 4.16 per share of common stock, are immediately exercisable and will expire in July 2025 .

The accompanying Tranche 2 warrants have an exercise price of $ 6.24 per share of common stock, are immediately exercisable and will expire in July 2026 .

CytomX Therapeutics, Inc.

Management’s Discuss ion and Analysis of Financial Condition and Results of Operations

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Having demonstrated favorable tolerability and encouraging anti-tumor activity in Phase 1 studies, CX-2029 entered into a four-cohort Phase 2 expansion study initially designed to enroll twenty-five efficacy evaluable patients per cohort in the following malignancies:

CytomX Therapeutics, Inc.

squamous non-small cell lung cancer (“sqNSCLC”), head and neck squamous cell carcinoma (“HNSCC”), esophageal and gastro-esophageal junction (“E/GEJ”) cancers, and diffuse large B-cell lymphoma (“DLBCL”).

The DLBCL cohort was later deprioritized due to strategic and

competitive reasons and did not enroll any patients.

The DLBCL cohort was later deprioritized due to strategic and competitive reasons and did not enroll any patients.

In January 2023, a data update for the Phase 2 expansion was disclosed which included data across all fully enrolled cohorts.

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The treatment discontinuation rate due to AEs was 3.3% as a result of anemia.

In March 2023, CytomX announced that it will evaluate the potential next steps for CX-2029 following the decision from its collaboration partner, AbbVie, Inc., to not advance CX-2029 into additional clinical studies.

In March 2023, CytomX announced that it would evaluate potential next steps for CX-2029 following the decision from its collaboration partner, AbbVie, Inc., to not advance CX-2029 into additional clinical studies.

As a result of AbbVie’s decision, the 2016 CD71 License and Collaboration Agreement has been terminated and CytomX has an exclusive option to re-acquire full rights to CX-2029.

Praluzatamab ravtansine is our conditionally activated ADC directed toward CD166 which has been evaluated in a three-arm study in patients with advanced human epidermal growth factor receptor 2 (“HER2”)-non-amplified breast cancer.

Arms A and B examined praluzatamab ravtansine monotherapy in patients with hormone receptor-positive/HER2-non-amplified breast cancer and triple-negative breast cancer (“TNBC”), respectively.

Arm C studied praluzatamab ravtansine in combination with pacmilimab (CX-072), our wholly-owned PD-L1 inhibitor, in patients with TNBC.

In July 2022, Phase 2 topline results were disclosed for Arms A and B.

Based on the reported results, the Company deprioritized further investment and announced it would seek a partnership to further develop praluzatamab ravtansine.

Our partner, Bristol Myers Squibb, is conducting a randomized Phase 2 study evaluating BMS-986249, a Probody version of ipilimumab, the anti-CTLA-4 antibody, in combination with nivolumab, the anti-PD-1 antibody, in patients with metastatic melanoma.

10 unchanged sentences

patient cohort phase had been initiated.

The Company anticipates initial CX-904 Phase 1 dose escalation data in the first half of 2024.

Our pipeline also includes CX-2051, a wholly-owned conditionally activated ADC paired with a next-generation camptothecin payload and directed toward the epithelial cellular adhesion molecule (EpCAM).

1 unchanged sentence

CX-2051 has demonstrated a wide predicted therapeutic index and strong preclinical activity and tolerability in multiple preclinical models, including colorectal cancer.

We plan to submit an IND for this program in the second half of 2023.

We plan to submit an IND for this program in the fourth quarter of 2023.

Arms A and B examined praluzatamab ravtansine monotherapy in patients with hormone receptor-positive/HER2-non-amplified breast cancer and triple-negative breast cancer (“TNBC”), respectively.

Arm C studied praluzatamab ravtansine in combination with pacmilimab (CX-072), our wholly-owned PD-L1 inhibitor, in patients with TNBC.

In July 2022, Phase 2 topline results were disclosed for Arms A and B.

Based on the reported results, the Company deprioritized further investment.

Another wholly-owned emerging product candidate is CX-801, an interferon ("IFN") alpha-2b Probody.

1 unchanged sentence

CX-801 is a dually masked, conditionally activated version of IFNa2b that has the potential to become a unique centerpiece of combination therapy for a wide range of tumor types.

An IND submission for CX-801 is planned in the second half of 2023.

An IND submission for CX-801 is planned in the fourth quarter of 2023.

We are also continuously engaged in drug discovery efforts towards the generation of new clinical candidates across multiple modalities for the treatment of cancer, including additional ADCs, Cytokines, TCBs, and most recently, mRNAs reflecting the versatility of our Probody platform.

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We are not profitable and have incurred losses in each year since our founding in 2008.

Our net loss was $3.3 million for the three months ended in March 31, 2023.

As of March 31, 2023 and December 31, 2022, we had an accumulated deficit of $726.2 million and $722.9 million, respectively.

Our net loss was $1.1 million and $4.4 million for the three and six months ended June 30, 2023.

As of June 30, 2023 and December 31, 2022, we had an accumulated deficit of $727.3 million and $722.9 million, respectively.

We expect to continue to incur significant losses for the foreseeable future.

CytomX Therapeutics, Inc.

Global health authorities, including the FDA, regulate many aspects of a product candidate’s life cycle, including research and development and preclinical and clinical testing.

We will need to commit significant time, resources, and funding to develop our wholly-owned and partnered product candidates in clinical trials.

the pace of enrollment of our clinical trials, which is a function of many factors, including the availability and proximity of patients with the relevant condition.

We are unable to provide the nature, timing, and estimated costs of the efforts necessary to complete the development of our product candidates because, among other reasons, of regulatory uncertainty, manufacturing limitations, and the pace of enrollment of our clinical trials, which is a function of many factors, including the availability and proximity of patients with the relevant condition.

We currently have no manufacturing capabilities and do not intend to establish any such capabilities in the near term.

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Impact of COVID-19

The COVID-19 pandemic continues to impact our ongoing operations, including clinical trials.

Any preventative or protective actions that we, our collaboration partners or others have taken, or may take, in respect of the virus may result in further disruption for our clinical trials, including clinical trials for CX-904, manufacturing, research, financial reporting capabilities and operations generally and could potentially impact our patients, partners, employees and third parties.

Any resulting financial impact cannot be reasonably estimated at this time but may materially affect the business and our financial condition and results of operations.

The extent to which the COVID-19 pandemic continues to impact our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions necessary to contain the virus or treat its impact, among others.

Currently, it is not possible to predict how long the pandemic will last or the extent or degree of its ongoing impact on economic activity, and our business.

We do not know the full extent of any impact or delay on our business or our operations, including clinical trial activity, however, we will continue to monitor the COVID-19 situation closely and operate in accordance with all relevant health and safety guidelines as they evolve in response to changing public health conditions.

The COVID-19 pandemic previously impacted our ongoing operations, including clinical trials, however, any resulting financial impact cannot be reasonably estimated.

The extent to which the COVID-19 pandemic may continue to impact our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions necessary to contain the virus or treat its impact, among others.

We will continue to monitor the COVID-19 situation closely and operate in accordance with all relevant health and safety guidelines as they evolve in response to changing public health conditions.

Critical Accounting Policies and Estimates

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Milestone payments, when considered probable of being reached and when a significant revenue reversal would not be probable of occurring, are also recorded net of the associated sublicense fees and included in the transaction price.

CytomX Therapeutics, Inc.

Research and Development Expenses

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Three Months Ended

Six Months Ended

(in thousands)

Bristol Myers Squibb

Total revenue

The increase in revenue of $14.5 million for the three months ended March 31, 2023 compared to the corresponding period of 2022 was primarily due to:

CytomX Therapeutics, Inc.

The increase in revenue of $11.9 million for the three months ended June 30, 2023 compared to the corresponding period of 2022 was primarily due to:

An increase in revenue under the BMS Agreement driven by higher percentage of completion of the existing and new targets selected in 2022;

An increase in revenue under the Astellas Agreement primarily driven by a $5.0 million clinical candidate milestone achieved in January 2023, partially offset by lower percentage of completion on targets in the current period;

An increase in revenue from recognition of the remaining deferred revenue of $4.0 million upon termination of the AbbVie CD71 Agreement.

An increase in revenue under the Regeneron Agreement and Moderna Agreement due to new preclinical studies that commenced during the current period;

A decrease in revenue under the AbbVie Agreement due to termination of the agreement in March 2023.

The increase in revenue of $26.3 million for the six months ended June 30, 2023 compared to the corresponding period of 2022 was primarily due to:

An increase in revenue under the BMS Agreement driven by higher percentage of completion of the existing and new targets selected in 2022;

An increase in revenue under the Astellas Agreement primarily driven by a $5.0 million clinical candidate milestone achieved in January 2023;

A decrease in revenue under the AbbVie Agreement due to termination of the agreement in March 2023, partially offset by an increase from the the remaining deferred revenue of $4.0 million was recognized in full in the first quarter of 2023;

An increase in revenue under the Regeneron Agreement and Moderna Agreement due to new preclinical studies that commenced during the current period.

Operating Costs and Expenses

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Three Months Ended

(in thousands)

Six Months Ended

External costs incurred by product candidate (target):

(in thousands)

Praluzatamab ravtansine, CX-2009 (CD166)

CX-2029 (CD71)

CX-904 (EGFRxCD3)

Pacmilimab, CX-072 (PD-L1)

Other wholly owned and partnered programs

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Total research and development expenses

The decrease in research and development expenses for the three months ended March 31, 2023 compared to the corresponding period of 2022 was primarily due to a decrease in personnel related expenses, as well as winding down of laboratory contract services and clinical study activities related to the CX-2009 and CX-2029 programs, partially offset by an increase in laboratory contract services related to IND enabling activities.

Research and development expenses decreased by $10.5 million and $19.9 million for the three months and six months ended June 30, 2023, respectively, compared to the corresponding periods of 2022.

This was primarily due to a decrease in personnel related expenses, as well as winding down of laboratory contract services and clinical study activities related to the CX-2009 and CX-2029 programs, partially offset by an increase in laboratory contract services related to IND enabling activities.

General and Administrative Expenses

Three Months Ended

Six Months Ended

(in thousands)

General and administrative expenses

General and administrative expenses decreased by $2.6 million for the three months ended March 31, 2023 compared to the corresponding period of 2022, primarily due to a decrease in personnel related expenses due to the workforce reduction in 2022 and patent related legal expenses.

CytomX Therapeutics, Inc.

General and administrative expenses decreased by $4.3 million and $6.9 million for the three months and six months ended June 30, 2023, respectively, compared to the corresponding periods of 2022 primarily due to a decrease in personnel related expenses as a result of the workforce reduction in 2022 and patent related legal expenses.

Interest Income and Other Income (Expense)

Three Months Ended

Six Months Ended

(in thousands)

Interest income

Other income, net

Total interest income and other income, net

Other income (expense), net

Total interest and other income

Interest Income

Interest income increased by $2.3 million for the three months ended March 31, 2023 compared to the corresponding period of 2022 was primarily driven by higher interest rates in 2023.

Interest income increased by $2.0 million and $4.3 million for the three months and six months ended June 30, 2023 compared to the corresponding periods of 2022 was primarily driven by higher interest rates in 2023.

Liquidity and Capital Expenditures

Sources of Liquidity

As of March 31, 2023, we had cash, cash equivalents and investments of $204.5 million and an accumulated deficit of $726.2 million, compared to cash, cash equivalents and investments of $193.7 million and an accumulated deficit of $722.9 million as of December 31, 2022.

As of June 30, 2023, we had cash, cash equivalents and investments of $180.9 million and an accumulated deficit of $727.3 million, compared to cash, cash equivalents and investments of $193.7 million and an accumulated deficit of $722.9 million as of December 31, 2022.

To date, we have financed our operations primarily through sales of our common stock in conjunction with the IPO, subsequent stock offerings and through our at-the-market offering, sales of our convertible preferred securities prior to our IPO and payments received under our collaboration agreements.

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Pursuant to the Moderna Agreement, we collected an upfront fee and prepaid research funding of $35.0 million in January 2023.

In July 2023, we completed a private placement that resulted in initial gross proceeds of approximately $30.0 million.

On July 13, 2022, we announced a restructuring plan to prioritize resources on our emerging pre-clinical and early clinical pipeline as well as our existing collaboration partnerships.

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We incurred aggregate restructuring charges of approximately $7.5 million, primarily related to one-time severance payments and other employee-related costs.

Based upon our current operating plan, we expect our existing capital resources will be sufficient to fund operations into mid-2025.

Based upon our current operating plan, we expect our existing capital resources will be sufficient to fund operations into the second half of 2025.

However, if the anticipated operating results and future financing are not achieved in future periods, our planned expenditures may need to be reduced in order to extend the time period over which the then-available resources would be able to fund the operations.

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or if they are successful, that the terms and conditions of such financing will be favorable to us.

CytomX Therapeutics, Inc.

Summary Statement of Cash Flows

The following table summarizes our cash flows for the periods indicated:

Three Months Ended

Six Months Ended

(in thousands)

Net cash provided by (used) in operating activities

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents

Cash Flows from Operating Activities

During the three months ended March 31, 2023, cash provided by operating activities was $9.4 million, which consisted of a net loss of $3.3 million, adjusted by non-cash charges of $2.4 million and a net increase of $10.3 million relating to the change of our net operating assets and liabilities.

During the six months ended June 30, 2023, cash used in operating activities was $15.8 million, which consisted of a net loss of $4.4 million, adjusted by non-cash charges of $4.6 million and a net decrease of $16.0 million relating to the change of our net operating assets and liabilities.

The non-cash charges primarily consisted of $4.8 million in stock-based compensation, $1.8 million in non-cash lease expense, $1.2 million in depreciation and amortization, partially offset by $3.2 million in accretion of discounts on investments.

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an increase of $34.1 million in cash flows from accounts receivable primarily related to the receipt of the $35.0 million upfront payment and prepaid research under the Moderna agreement entered into in December 2022.

a increase $0.8 million in cashflows from prepaid and other current assets primarily due to decrease in advance payments to our third party manufacturing vendors and timing of payments.

During the three months ended March 31, 2022, cash used in operating activities was $41.3 million, which consisted of a net loss of $32.0 million, a net decrease of $14.1 million relating to the change of our net operating assets and liabilities, adjusted by non-cash charges of $4.8 million.

an increase $2.4 million in cashflows from prepaid and other current assets primarily due to a decrease in advance payments to our third party manufacturing vendors and timing of payments.

During the six months ended June 30, 2022, cash used in operating activities was $75.6 million, which consisted of a net loss of $61.5 million, adjusted by non-cash charges of $10.7 million and a net decrease of $24.8 million relating to the change of our net operating assets and liabilities.

The non-cash charges primarily consisted of $7.9 million in stock-based compensation, $1.6 million in non-cash lease expense and $1.2 million in depreciation and amortization.

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a net decrease of $19.9 million in deferred revenue resulting from the continued recognition of deferred revenue from existing customers;

a decrease of $5.2 million in accounts payable, accrued and other long-term liabilities primarily due to timing of payments and an increase in research and clinical expenses;

a decrease of $0.9 million in cash flows from accounts receivable and prepaid and other current assets primarily due to increased advance payments to our third party manufacturing vendors and timing of payments.

a decrease of $5.3 million in accounts payable, accrued and other long-term liabilities primarily due to timing of payment;

an increase of $0.4 million in cash flows from accounts receivable and prepaid and other current assets primarily due to decreased advance payments to our third party manufacturing vendors and timing of payments.

Cash Flows from Investing Activities

During the three months ended March 31, 2023, cash used in investing activities was $146.6 million used to purchase short-term investments.

During the three months ended March 31, 2022, cash used in investing activities was $0.7 million of capital expenditures used to purchase property and equipment.

During the six months ended June 30, 2023, cash used in investing activities was $120.6 million, which consisted of $220.0 million used in the purchase of short-term investments and $0.6 million of capital expenditures used to purchase property and equipment, partially offset by $100.0 million in proceeds received upon the maturity of marketable securities.

During the six months ended June 30, 2022, cash used in investing activities was $1.1 million of capital expenditures used to purchase property and equipment.

CytomX Therapeutics, Inc.

Cash Flows from Financing Activities

During the three months ended March 31, 2023, there were no financing activities.

During the three months ended March 31, 2022, cash provided by financing activities consisted of $7,000 of proceeds from the exercise of stock options.

During the six months ended June 30, 2023, cash provided by financing activities consisted of $0.3 million of proceeds from the exercise of stock options and employee stock purchases under the employee stock purchase plan.

During the six months ended June 30, 2022, cash provided by financing activities consisted of $0.5 million of proceeds from the exercise of stock options and employee stock purchases under the employee stock purchase plan.

Contractual Obligations

During the three months ended March 31, 2023, there were no material changes in contractual obligations from the amounts disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

During the six months ended June 30, 2023, there were no material changes in contractual obligations from the amounts disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Quantitative and Qualitat ive Disclosure About Market Risk

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Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.

Our management, with the participation of our Principal Executive and Principal Financial Officers, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2023, the end of the period covered by this Quarterly Report on Form 10-Q.

Based on their evaluation and subject to the foregoing, the Principal Executive and Principal Financial Officers concluded that our disclosure controls and procedures were effective as of June 30, 2023.

Remediation of Material Weakness

In connection with preparing our financial statements for the year ending December 31, 2022 and evaluating new collaboration and license agreements initiated in the fourth quarter of 2022, we re-evaluated our previous application of ASC 606 for our collaboration and license agreements and identified an error.

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The Company identified a material weakness in internal control over financial reporting related to its application of ASC 606 for license and collaboration agreements.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2023, the end of the period covered by this Quarterly Report on Form 10-Q.

Based on their evaluation and subject to the foregoing, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 31, 2023.

Status of Remediation of Material Weakness

To remediate this material weakness, during the three months ended March 31, 2023, we have implemented and continue to improve the operation of our controls related to the application of ASC 606 to our collaboration and license agreements and the related controls to measure the progress in satisfying the performance obligations.

While we believe that these efforts will improve our internal control over financial reporting, the implementation of our remediation is ongoing and will require validation and testing of the design and operating effectiveness of our internal controls over a sustained period of financial reporting cycles.

The actions that we are taking are subject to ongoing senior management review, as well as audit committee oversight.

We will not be able to conclude whether the steps we are taking will fully remediate the material weaknesses in our internal control over financial reporting until we have completed our remediation efforts and subsequent evaluation of their effectiveness.

To remediate this material weakness, during the six months ended June 30, 2023, we have implemented and improved the operation of our controls related to the application of ASC 606 to our collaboration and license agreements and the related controls to measure the progress in satisfying the performance obligations.

Management has determined that the material weakness was remediated during the three months ended June 30, 2023, due to enhancements made to our related technical accounting analysis processes and internal controls during the period.

Changes in Internal Controls Over Financial Reporting

Except as discussed above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our fiscal quarter ended March 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CytomX Therapeutics, Inc.

Except as discussed above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our fiscal quarter ended June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CytomX Therapeutics, Inc.

PART II –

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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-Q

Item 4. Controls and Procedures