What changed in this filing

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Item 4. Controls and Procedures

2023-11-07 compared with 2023-08-08 · 240 added, 148 removed, 680 unchanged (36% of the section changed)

81 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current assets:

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Operating lease right-of-use asset

Liabilities and Stockholders' Equity (Deficit)

Liabilities and Stockholders' Deficit

Current liabilities:

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Commitments and contingencies (Note 9)

Stockholders' equity (deficit):

Stockholders' deficit:

Convertible preferred stock

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Accumulated deficit

Total stockholders' deficit

Total liabilities and stockholders' equity (deficit)

Total liabilities and stockholders' deficit

__________________

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating expenses:

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Total operating expenses

Loss from operations

Income (loss) from operations

Interest income

Other income (expense), net

Other (expense) income, net

Income (loss) before income taxes

Provision for income taxes

Net income (loss)

Other comprehensive income (loss):

Unrealized gain (loss) on short term investments, net of tax

Comprehensive loss

Net loss per share:

Basic and diluted net loss per share

Shares used in computing basic and diluted net loss per share

Unrealized (loss) gain on short term investments, net of tax

Comprehensive income (loss)

Net income (loss) per share:

Shares used to compute net income (loss) per share

See accompanying notes to condensed financial statements.

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Stock-based compensation

Other comprehensive loss

Other comprehensive income

Balance at June 30, 2023

Release of RSUs

Issuance pre-funded warrants and warrants, net of issuance cost

Stock-based compensation

Other comprehensive loss

Balance at September 30, 2023

Comprehensive

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Balance at June 30, 2022

Exercise of stock options

Stock-based compensation

Other comprehensive income

Balance at September 30, 2022

See accompanying notes to condensed financial statements.

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(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net loss to net cash used in operating activities:

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Purchases of short term investments

Maturities of investments

Maturities of short term investments

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of pre-funded warrants and warrants, net of issuance cost

Proceeds from employee stock purchase plan and exercise of stock options

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CytomX Therapeutics, Inc.

(the “Company”) is a clinical-stage, oncology-focused biopharmaceutical company dedicated to destroying cancer differently.

(the “Company”) is a clinical-stage, oncology-focused biopharmaceutical company developing potent biologics designed to be preferentially localized to tumors.

The Company aims to build a commercial enterprise to maximize its impact on the treatment of cancer.

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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 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 condensed results of operations for the three months and nine months ended September 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:

June 30, 2023

September 30, 2023

December 31, 2022

June 30, 2022

September 30, 2022

December 31, 2021

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Payments to the Company under these arrangements typically include one or more of the following:

nonrefundable upfront and license fees, research funding, milestone and other contingent payments to the Company for the achievement of defined collaboration objectives and certain preclinical, clinical, regulatory and sales-based events, as well as royalties on sales of any commercialized products.

nonrefundable upfront and license fees, research funding, milestone and other

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

contingent payments to the Company for the achievement of defined collaboration objectives and certain preclinical, clinical, regulatory and sales-based events, as well as royalties on sales of any commercialized products.

The Company assesses whether the promises in its arrangements with customers are distinct performance obligations that should be accounted for separately.

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Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional.

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

The Company determines if an arrangement is or contains a lease at inception.

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ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease.

Operating lease

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

The Company uses an implicit rate when readily available, or its incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments.

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The Company recognizes sublease income on a straight-line basis over the sublease term and records sublease income on a net basis against rent expense.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period.

Diluted net loss per share is calculated using the weighted-average number of common shares outstanding, plus potential dilutive common stock during the period.

Net Income (Loss) Per Share

Basic net income (loss) per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period.

Diluted net income (loss) per share is calculated using the weighted-average number of common shares outstanding, plus potential dilutive common stock during the period.

Diluted net loss per share is the same as basic net loss per share since the effect of the potentially dilutive securities is anti-dilutive.

The pre-funded warrants are included in both the basic and diluted EPS calculation.

The following table presents the calculation of basic and diluted net income (loss) per share:

Three Months Ended

Nine Months Ended

September 30,

(in thousands, except share and per share data)

Net income (loss)

Weighted-average common shares outstanding

Weighted-average prefunded warrants

Weighted-average common shares outstanding used to calculate basic net income (loss) per share

Effect of potentially dilutive securities:

Stock option, ESPP & RSU

Weighted-average common shares outstanding used to calculate diluted net income (loss) per share

Net income (loss) per share

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

The following weighted-average outstanding shares of potentially dilutive securities are excluded from the computation of diluted net loss per share for the periods presented, because including them would have been anti-dilutive:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Options and ESPP to purchase common stock

Common stock warrants

Fair Value Measurements and Investments

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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:

June 30, 2023

September 30, 2023

(in thousands)

2 unchanged sentences

Treasury Securities

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

December 31, 2022

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Treasury Securities

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

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

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

Accrued Liabilities

Accrued liabilities consisted of the following:

September 30,

(in thousands)

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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and together with the CD71 Agreement the “AbbVie Agreements”).

Under the terms of the CD71 Agreement, the Company and AbbVie were co-developing a conditionally activated antibody-drug conjugate (“ADC”) against CD71, with the Company being responsible for preclinical and early clinical development.

Under the terms of the CD71 Agreement, the Company and AbbVie were co-developing a conditionally activated antibody-drug conjugate (“ADC”), CX-2029, against CD71, with the Company being responsible for preclinical and early clinical development.

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

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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

A s a result of AbbVie’s decision, the 2016 CD71 License and Collaboration Agreement has been terminated and the Company re-acquired 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 concluded with no plans to advance the discovery targets into clinical studies or to pursue new programs.

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

In August 2023, the Company entered into a Transition Agreement (the “Transition Agreement”) with AbbVie Global Enterprises Ltd.

("AbbVie Global", an affiliate entity of AbbVie), pursuant to which the Company regained exclusive worldwide rights to develop CX-2029.

The Transition Agreement supersedes the recently terminated CD71 Agreement and grants certain intellectual property rights from AbbVie Global to enable the continued development of CX-2029 by Company for all human and nonhuman diagnostic, prophylactic, and therapeutic uses.

Pursuant to the Transition Agreement, AbbVie Global is eligible to receive tiered sales royalties for CX-2029 ranging from the

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

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

low-to-mid single digit percentages.

The Company will also pay Seattle Genetics, Inc.

(“Seagen”) potential future development, regulatory, and commercial milestones, and tiered sales royalties ranging from the mid-to-high single digits percentages related to certain CX-2029 linker payload technology licensed from Seagen.

In the fourth quarter of 2023, the Company decided to not to make any further substantial investments in the CX-2029 program in the near-term.

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

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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 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.

As of September 30, 2023 and December 31, 2022, deferred revenue related to the EGFR Products performance obligation was $ 13.4 million and $ 18.0 million, respectively.

As of September 30, 2023 and December 31, 2022, deferred revenue related to the Amgen Other Products performance obligation w as $ 0.1 million and $ 0.6 million, respectively.

CytomX Therapeutics, Inc.

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The Cost Share Option, if exercised, will also provide the option for the Company to co-commercialize such product in the United States.

The Company does not consider the Cost Share Option as a performance obligation at the inception of the agreement as the participation is at the Company’s discretion.

The Company does not consider the Cost Share Option as a performance obligation at the inception of the agreement as participation is at the Company’s discretion.

Pursuant to the Astellas Agreement, the consideration from Astellas is comprised of an upfront fee of $ 80.0 million and contingent payments for development, regulatory and sales milestones of up to an aggregate of approximately $ 1.6 billion.

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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.

As of September 30, 2023 and December 31, 2022, deferred revenue relating to the Astellas Agreement wa s $ 34.7 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 September 30, 2023 and December 31, 2022, respectively.

Bristol Myers Squibb Company

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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 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.

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

As of September 30, 2023 and December 31, 2022, deferred revenue relating to the BMS Agreement wa s $ 133.5 millio n and $ 169.2 million, respectively.

ModernaTX, Inc.

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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.

As of September 30, 2023 and December 31, 2022, deferred revenue relating to the Moderna Agreement was $ 29.1 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 September 30, 2023 and December 31, 2022, respectively.

Regeneron Pharmaceuticals, Inc.

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

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.

As of September 30, 2023 and December 31, 2022, deferred revenue relating to the Regeneron Agreement was $ 25.9 million and $ 30.0 million, respectively.

The amount due from Regeneron under the Regeneron Agreement wa s $ 1.1 mill ion and $ 0 million as of September 30, 2023 and December 31, 2022, respectively.

Contract Liabilities

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

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

Revenue Recognized

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Deferred revenue

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.

The Company expects that the $ 236.7 million of deferred revenue related to the following contracts as of September 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 $ 13.4 million of deferred revenue related to the Amgen EGFR Products is expected to be recognized until 2026 .

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

The $ 0.1 million of deferred revenue related to the Amgen Other Products is expected to be recognized until 2024 .

The $ 34.7 million of deferred revenue related to the Astellas Agreement, together with research and development service fees, is expected to be recognized until 2026 .

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The $ 25.9 mi llion of deferred revenue related to the Regeneron Agreement, together with research and development service fees, is expected to be recognized until 2026 .

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

(“BVF”) for a private placement that resulted in an aggregate net proceeds of approximately $ 29.7 million, after deducting issuance costs of approximately $ 0.3 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.

The following table summarizes the Company's outstanding warrants as of September 30, 2023:

Pre-funded Warrants

Tranche 1 Warrants

Tranche 2 Warrants

Exercise Price

Warrants Outstanding

The pre-funded warrants will expire in July 2043 , while Tranche 1 and Tranche 2 warrants will expire in July 2025 and July 2026 , respectively.

Stock-Based Compensation

Stock Options

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

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

Options Outstanding

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Option forfeited/expired

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.

Balance at September 30, 2023

The Company recorde d $ 0.5 milli on and $ 2.3 million of stock-based compensation expense related to the stock options for the three months ended September 30, 2023 and 2022, respectively.

The Company record ed $ 4.1 millio n and $ 8.0 million of stock-based compensation expense related to the stock options for the nine months ended September 30, 2023 and 2022, respectively.

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

Time-based RSUs ("TRSU")

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

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

Weighted Average Grant Date Fair Value Per Share

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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.

Balance at September 30, 2023

The Company recorded $ 0.5 million and $ 0.1 million of stock-based compensation expense related to the TRSUs for the three months ended September 30, 2023 and 2022, respectively.

The Company recorded $ 1.5 million and $ 0.8 million of stock-based compensation expense related to the TRSUs for the nine months ended September 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 June 30, 2023.

In September 2023, the performance condition for 2021-Tranche 2 was modified and the award was vested in in September 2023.

As a result, the Company recorded $ 0.1 million of stock-based compensation expense for 2021-Tranche 2 for the three and nine months ended September 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 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.

As of December 31, 2022, and September 30, 2023, the Company determined that it is probable that the performance conditions for 2022-Tranche 1 will be satisfied and recorded $ 55,000 , $ 33,000 and $ 95,000 c ompensation cost, respectively, for those awards for the year ended December 31, 2022 and for the three and nine months ended September 30, 2023.

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

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

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

Weighted Average Grant Date Fair Value Per Share

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PSUs cancelled

Balance at June 30, 2023

Balance at September 30, 2023

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

Stock-based Compensation

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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stipulation to stay all pending case deadlines until that motion is finally resolved.

On October 30, 2023, Magistrate Judge Burke issued a Report & Recommendation that recommended granting Company’s motion to dismiss all counts of the complaint.

The case will remain stayed pending Judge Williams’

ruling on the Report & Recommendation.

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 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 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 September 30, 2023 .

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

The Company files income taxes in the U.S.

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The examination contests the Company’s tax position on revenue apportionment for upfront and milestone payments resulting from the Company’s collaboration and licensing agreements.

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

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.

In September 2023, the Company received Notice of Proposed Assessment (“NOPA”) from the Franchise Tax Board of approximately $ 2.8 million of taxes and penalties which the Company recorded as tax provision for the three and nine months ended September 30, 2023 related to state taxes and unrecognized tax benefit.

The provision is recorded in other long term liabilities.

Of the unrecognized tax benefits as of September 30, 2023, approximately $ 2.8 million would affect the Company’s effective tax rate if recognized.

Penalties of $ 0.4 million have been accrued in the nine months ended September 30, 2023.

In addition, the Company would utilize additional carryforward attributes resulting in a reduction in deferred tax assets of $ 5.7 million, net of federal tax benefit, with an offsetting reduction in valuation allowance.

The Company plans to contest the proposed assessment.

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.

Restructuring

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Restructuring costs of $ 2.4 million and $ 5.1 million were recorded in general and administrative expense and research and development expense, respectively, in the third and fourth quarters of 2022.

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

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

The restructuring was complete as of September 30, 2023.

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

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

Severance and Benefits Costs

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Change in estimates

Balance at June 30, 2023

Balance at September 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 and six months ended June 30, 2023, sublease income was $ 0.3 mil lion.

June 30, 2023

For the three and nine months ended September 30, 2023, sublease income was $ 0.3 mil lion and $ 0.6 million, respectively.

September 30, 2023

(in thousands)

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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.

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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Additionally, we have recently initiated a research collaboration with our Probody platform beyond cancer into other therapeutic areas.

We have utilized our multi-modality Probody platform to build a promising, broad pipeline of potential first-in-class and best-in-class therapeutics that includes molecules in clinical testing including:

CX-2029, a Probody ADC targeting CD71;

CX-904, a conditionally activated TCB, targeting the epidermal growth factor receptor (“EGFR”) on tumor cells and the CD3 receptor on T cells and BMS-986288, a Probody version of a non-fucosylated anti-CTLA-4 antibody.

We also have a broad pre-clinical pipeline across our collaborations and internally, including two wholly-owned next-generation molecules in investigational new drug application (“IND”) enabling studies.

We also have a broad pre-clinical pipeline across our collaborations and internally, including two wholly-owned next-generation molecules for which the Company expects to file investigational new drug applications (“IND”) by the end of 2023.

For our next generation molecules, we have selected the previously validated anti-cancer targets, the epithelial cell adhesion molecule (EpCAM) and interferon alpha-2b (IFNa2b), that have been limited in their potential due to systemic toxicities.

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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.

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

In the fourth quarter of 2023, the Company decided to not to make any further substantial investments in the CX-2029 program in the near-term.

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.

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patient cohort phase had been initiated.

In the fourth quarter of 2023, the Company decided to initiate backfilling of certain dose escalation cohorts.

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

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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 fourth quarter of 2023.

We plan to submit an IND for this program by the end of 2023.

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

IFNa2b provides a potentially superior approach to activating anti-tumor immune responses than other cytokines.

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 by the end of 2023.

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.

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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.

IFNa2b provides a potentially superior approach to activating anti-tumor immune responses than other cytokines.

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 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 do not have any products approved for sale, and we continue to incur significant research and development and general administrative expenses related to our operations.

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

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.

As of September 30, 2023 and December 31, 2022, we had an accumulated deficit of $724.3 million and $722.9 million, respectively.

CytomX Therapeutics, Inc.

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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.

The extent to which the COVID-19 or any other 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 such pandemic and the actions necessary to contain the disease 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.

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Estimates are assessed each period and updated to reflect current information.

There are no material changes to our critical accounting policies and estimates as presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.

A summary of our critical accounting policies and estimates is presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.

Except as noted below, there have been no material changes to our critical accounting policies and estimates for the nine months ended September 30, 2023.

Research and Development Expenses

We record accrued liabilities for estimated costs of research, preclinical and clinical studies and contract manufacturing activities, which are a significant component of research and development expenses.

A substantial portion of our ongoing research and development activities is conducted by third-party service providers, including CROs.

Our contracts with CROs generally include pass-through costs, such as regulatory expenses, investigator fees, travel costs and other miscellaneous costs.

The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payments that do not match the periods over which materials or services are provided to us under such contracts.

We accrue the costs incurred under agreements with these third parties based on actual work completed in accordance with the respective agreements.

In the event we make advance payments, they are recorded as prepaid expenses and recognized as the services are performed.

We determine the estimated costs through discussions with internal personnel and external service providers as to the progress of stage of completion of the services and the agreed-upon fees to be paid for such services.

We make significant judgments and estimates in determining the accrual balance in each reporting period.

As actual costs become known, we adjust our accruals.

Although we do not expect our estimates to be materially different than the actual amounts incurred, such estimates for the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in us reporting amounts that are too high or too low in any one period.

Our accrual is dependent, in part, upon the receipt of timely and accurate reporting from CROs and other third-party vendors.

Variations in the assumptions used to estimate accruals including, but not limited to, the number of patients enrolled, the rate of patient enrollment and the actual services performed, may vary from our estimates, resulting in adjustments to clinical trial expenses in future periods.

For example, during the three and nine months ended September 30, 2023, we recorded a $0.7 million credit upon final reconciliation of the CX-072 clinical trial and a $0.6 million credit in closing out certain activities of the CX-2009 clinical trial.

Changes in these estimates that result in material changes to our accruals could materially affect our financial condition and results of operations.

CytomX Therapeutics, Inc.

Components of Results of Operations

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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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Allocated expenses primarily consist of rent expense related to our office and information technology related costs.

Income taxes are recorded in accordance with ASC 740, Accounting for Income Taxes, or ASC 740, which provides for deferred taxes using an asset and liability approach.

We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our financial statements or tax returns.

We determine our deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when

CytomX Therapeutics, Inc.

the differences are expected to reverse.

Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

We also account for uncertain tax positions in accordance with the provisions of ASC 740.

When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the benefit will more likely than not be realized.

The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

Interest Income

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Other income (expense), net consists primarily of gains and losses resulting from changes to currency exchange rates.

CytomX Therapeutics, Inc.

Results of Operations

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Total revenue

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:

The increase in revenue of $15.2 million for the three months ended September 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 Regeneron Agreement and Moderna Agreement due to new preclinical studies that commenced during the current period;

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

An increase in revenue under the Amgen Agreement primarily driven by higher percentage of completion of the CX-904 development in the current period due to an increase in projected hours-to-completion in prior year same period;

A decrease in revenue under the Astellas Agreement due to a higher level activity in the 2022 period leading up to the achievement of a clinical candidate milestone in January 2023.

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:

The increase in revenue of $41.6 million for the nine months ended September 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;

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

An increase in revenue under the Amgen Agreement driven by higher percentage of completion the CX-904 development in the current period due to an increase in projected hours-to-completion in prior year same period;

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

CytomX Therapeutics, Inc.

Operating Costs and Expenses

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

External costs incurred by product candidate (target):

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Total research and development expenses

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.

Research and development expenses decreased by $14.0 million and $33.8 million for the three months and nine months ended September 30, 2023, respectively, compared to the corresponding periods of 2022.

This was primarily due to a decrease in personnel related expenses as a result of the workforce reduction in 2022, 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.

During the three and nine months ended September 30, 2023, we recorded a $0.7 million credit upon final reconciliation of the CX-072 clinical trial and a $0.6 million credit in closing out certain activities of the CX-2009 clinical trial.

General and Administrative Expenses

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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General and administrative 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.

General and administrative expenses decreased by $3.7 million and $10.6 million for the three months and nine months ended September 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, reduced external vendor services, and lower building rent as a result of a partial sublease of the Company’s headquarters.

Interest Income and Other Income (Expense)

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Total interest and other income

CytomX Therapeutics, Inc.

Interest Income

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.

Interest income increased by $2.0 million and $6.0 million for the three months and nine months ended September 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 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.

As of September 30, 2023, we had cash, cash equivalents and investments of $194.1 million and an accumulated deficit of $724.3 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, payments received under our collaboration agreements and proceeds from private placements of our common stock, warrants and pre-funded warrants.

In November 2022, we entered into a Collaboration and License Agreement with Regeneron Pharmaceuticals, Inc.

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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:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Net increase (decrease) in cash and cash equivalents

CytomX Therapeutics, Inc.

Cash Flows from Operating Activities

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.

During the nine months ended September 30, 2023, cash used in operating activities was $34.1 million, which consisted of a net loss of $1.4 million and a net decrease of $38.0 million relating to the change of our net operating assets and liabilities, offset by non-cash charges of $5.3 million.

The non-cash charges primarily consisted of $6.0 million in stock-based compensation, $2.8 million in non-cash lease expense, $1.7 million in depreciation and amortization, partially offset by $5.2 million in accretion of discounts on investments.

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a net decrease of $64.7 million in deferred revenue resulting from the continued recognition of deferred revenue from existing and new customers;

a decrease of $12.3 million in accounts payable, accrued and other long-term liabilities primarily due to decrease of payroll-related expenses and restructuring related expenses as well as timing of other payments;

a decrease of $9.6 million in accounts payable, accrued and other long-term liabilities primarily due to decrease of payroll-related expenses, restructuring related expenses, and laboratory contract services;

an increase of $33.6 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.

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.

an increase of $2.7 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 nine months ended September 30, 2022, cash used in operating activities was $109.4 million, which consisted of a net loss of $90.5 million and a net decrease of $33.7 million relating to the change of our net operating assets and liabilities, offset by non-cash charges of $14.9 million.

The non-cash charges primarily consisted of $10.6 million in stock-based compensation, $2.5 million in non-cash lease expense and $1.8 million in depreciation and amortization.

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a decrease of $3.5 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.

a decrease of $1.0 million in cash flows from increase in accounts receivable caused by increase in service revenue.

Cash Flows from Investing Activities

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.

During the nine months ended September 30, 2023, cash used in investing activities was $163.5 million, which consisted of $313.0 million used in the purchase of short-term investments and $0.5 million of capital expenditures used to purchase property and equipment, partially offset by $150.0 million in proceeds received upon the maturity of marketable securities.

During the nine months ended September 30, 2022, cash used in investing activities was $1.6 million of capital expenditures used to purchase property and equipment.

Cash Flows from Financing Activities

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.

During the nine months ended September 30, 2023, cash provided by financing activities consisted of $29.7 million of net proceeds from issuance of pre-funded warrants and warrants and $0.4 million of proceeds from the exercise of stock options and employee stock purchases under the employee stock purchase plan.

During the nine months ended September 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 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.

During the nine months ended September 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.

CytomX Therapeutics, Inc.

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.

Upon reassessment, we have determined that certain revenue should be recognized over time using an input method as an appropriate measure of progress, rather than ratably over the estimated research period.

The Company’s internal control to perform a technical accounting analysis for collaboration and license agreements failed to operate as designed.

As a result, we concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2022.

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

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.

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 September 30, 2023, the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Controls 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.

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 September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CytomX Therapeutics, Inc.

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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