CytomX Therapeutics, Inc. 10-Q

Item 4 Controls and Procedures 30 PART II – OTHER INFORMATION Item 1. Legal Proceedings 31 Item 1A. Risk Factors 31 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 74 Item 3. Defaults Upon Senior Securities 74 Item 4. Mine Safety Disclosures 74 Item 5. Other Information 74 Item 6. Exhibits 75 Signatures 76 2 Forward-Looking Statements This Quarterly Report on Form 10-Q contains certain forward-looking statements that involve risks and uncertainties. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including those factors identified in “Risk Factors” or “Management’s Discussion and Analysis of Financial Condition and Results of Operations” or the following: • our expectations regarding the potential benefits, activity, effectiveness and safety of our product candidates and therapeutics developed utilizing our PROBODY® conditionally activated platform technology; • the initiation, timing, progress and results of our ongoing clinical trials, research and development programs, preclinical studies, and Investigational New Drug Application (“IND”), Clinical Trial Application, New Drug Application (“NDA”), Biologics License Application (“BLA”); and other regulatory submissions; • the timing of the completion of our ongoing clinical trials and the timing and availability of clinical data from such clinical trials; • our ability to identify and develop additional product candidates; • our dependence on collaborators for developing, obtaining regulatory approval for and commercializing product candidates in the collaboration; • our or a collaborator’s ability to obtain and maintain regulatory approval of any of our product candidates; • our receipt and timing of any milestone payments or royalties under any research collaboration and license agreements or arrangements; • our expectations and beliefs regarding the evolution of the market for cancer therapies and development of the immuno-oncology industry; • the rate and degree of market acceptance of any approved product candidates; • the commercialization of any approved product candidates; • our ability to establish and maintain collaborations and retain commercial rights for our product candidates in such collaborations; • the implementation of our business model and strategic plans for our business, technologies and product candidates; • our estimates of our expenses, ongoing losses, future revenue and capital requirements; • our ability to obtain additional funds for our operations; • our or any collaborator’s ability to obtain and maintain intellectual property protection for our technologies and product candidates and our ability to operate our business without infringing the intellectual property rights of others; • our reliance on third parties to conduct our preclinical studies or any future clinical trials; • our reliance on third-party supply and manufacturing partners to supply the materials and components for, and manufacture, our research and development, preclinical and clinical trial product supplies; • our ability to attract and retain qualified key management and technical personnel; • our ability to secure and maintain licenses of intellectual property to protect our technologies and product candidates; • our financial performance; 3 • developments relating to our competitors, our industry, international conflict or uncertainties; and • the extent to which 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; 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. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A. Risk Factors and discussed elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for certain drugs and therapeutic biologics, including data regarding the estimated size of those markets, their projected growth rates and the incidence of certain medical conditions. Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained these industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications, government data and similar sources. In some cases, we do not expressly refer to the sources from which these data are derived. Except where the context otherwise requires, in this Quarterly Report on Form 10-Q, “we,” “us,” “our” and the “Company” refer to CytomX Therapeutics, Inc. Trademarks This Quarterly Report on Form 10-Q includes trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included in this Quarterly Report on Form 10-Q are the property of their respective owners. 4 PART I – FINANCIAL INFORMATION Item 1. Condensed Financi al Statements (Unaudited) CYTOMX THERAPEUTICS, INC. CONDENSED BAL ANCE SHEETS (in thousands, except share and per share data) March 31, December 31, 2024 2023 (unaudited) (1) Assets Current assets: Cash and cash equivalents $ 36,185 $ 17,171 Short-term investments 114,099 157,338 Accounts receivable 13,177 3,432 Prepaid expenses and other current assets 3,786 4,995 Total current assets 167,247 182,936 Property and equipment, net 3,567 3,958 Intangible assets, net 693 729 Goodwill 949 949 Restricted cash 917 917 Operating lease right-of-use asset 11,234 12,220 Other assets 80 83 Total assets $ 184,687 $ 201,792 Liabilities and Stockholders' Deficit Current liabilities: Accounts payable $ 1,964 $ 1,458 Accrued liabilities 14,220 17,599 Operating lease liabilities - short term 4,724 4,589 Deferred revenue, current portion 123,628 132,267 Total current liabilities 144,536 155,913 Deferred revenue, net of current portion 59,743 80,048 Operating lease liabilities - long term 8,148 9,385 Other long term liabilities 3,940 3,893 Total liabilities 216,367 249,239 Commitments and contingencies (Note 9) Stockholders' deficit: Convertible preferred stock — — Common stock 1 1 Additional paid-in capital 677,986 675,905 Accumulated other comprehensive (loss) income ( 10 ) 95 Accumulated deficit ( 709,657 ) ( 723,448 ) Total stockholders' deficit ( 31,680 ) ( 47,447 ) Total liabilities and stockholders' deficit $ 184,687 $ 201,792 __________________ (1) The condensed balance sheet as of December 31, 2023 was derived from the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. See accompanying notes to condensed financial statements. 5 CYTOMX THERAPEUTICS, INC. CONDENSED STATEMENTS OF OPERA TIONS AND COMPREHENSIVE LOSS (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Revenues $ 41,463 $ 23,499 Operating expenses: Research and development 22,052 21,175 General and administrative 7,754 7,977 Total operating expenses 29,806 29,152 Income (Loss) from operations 11,657 ( 5,653 ) Interest income 2,194 2,327 Other (expense) income, net ( 11 ) 15 Income (Loss) before income taxes 13,840 ( 3,311 ) Provision for income taxes 49 — Net Income (loss) 13,791 ( 3,311 ) Other comprehensive income (loss): Unrealized (loss) gain on investments, net of tax ( 105 ) 16 Total comprehensive income (loss) $ 13,686 $ ( 3,295 ) Net income (loss) per share: Basic $ 0.17 $ ( 0.05 ) Diluted $ 0.17 $ ( 0.05 ) Shares used to compute net income (loss) per share Basic 82,029,466 66,248,992 Diluted 82,630,020 66,248,992 See accompanying notes to condensed financial statements. 6 CYTOMX THERAPEUTICS, INC. CONDENSED STATEMENTS OF STOC KHOLDERS’ DEFICIT (in thousands, except share data) (Unaudited) Accumulated Additional Other Total Common Stock Paid-in Comprehensive Accumulated Stockholders' Shares Amount Capital Income (Loss) Deficit Deficit Balance at December 31, 2023 67,310,838 $ 1 $ 675,905 $ 95 $ ( 723,448 ) $ ( 47,447 ) Exercise of stock options and release of RSUs 826,797 — 174 — — 174 Stock-based compensation — — 1,907 — — 1,907 Other comprehensive loss — — — ( 105 ) — ( 105 ) Net income — — — — 13,791 13,791 Balance at March 31, 2024 68,137,635 $ 1 $ 677,986 $ ( 10 ) $ ( 709,657 ) $ ( 31,680 ) Accumulated Additional Other Total Common Stock Paid-in Comprehensive Accumulated Stockholders' Shares Amount Capital Income (Loss) Deficit Deficit Balance at December 31, 2022 66,228,046 $ 1 $ 637,117 $ 10 $ ( 722,879 ) $ ( 85,751 ) Release of RSUs 110,892 - - - - - Stock-based compensation - - 2,409 - - 2,409 Other comprehensive income - - - 16 - 16 Net loss - - - - ( 3,311 ) ( 3,311 ) Balance at March 31, 2023 66,338,938 $ 1 $ 639,526 $ 26 $ ( 726,190 ) $ ( 86,637 ) See accompanying notes to condensed financial statements. 7 CYTOMX THERAPEUTICS, INC. CONDENSED STATEMEN TS OF CASH FLOWS (in thousands) (Unaudited) Three Months Ended March 31, 2024 2023 Cash flows from operating activities: Net income (loss) $ 13,791 $ ( 3,311 ) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Amortization of intangible assets 36 36 Depreciation and amortization 431 559 Accretion of discounts on short-term investments ( 1,866 ) ( 1,535 ) Stock-based compensation expense 1,907 2,409 Non-cash lease expense 986 901 Changes in operating assets and liabilities Accounts receivable ( 9,745 ) 34,896 Prepaid expenses and other assets 1,212 781 Accounts payable 581 ( 618 ) Accrued liabilities and other long-term liabilities ( 4,434 ) ( 7,360 ) Deferred revenue ( 28,944 ) ( 17,409 ) Net cash (used in) provided by operating activities ( 26,045 ) 9,349 Cash flows from investing activities: Purchases of property and equipment ( 115 ) ( 48 ) Purchases of short-term investments — ( 146,594 ) Maturities of short-term investments 45,000 — Net cash provided by (used in) investing activities 44,885 ( 146,642 ) Cash flows from financing activities: Proceeds from exercise of stock options 174 — Net cash provided by financing activities 174 — Net increase (decrease) in cash, cash equivalents and restricted cash 19,014 ( 137,293 ) Cash, cash equivalents and restricted cash, beginning of period 18,088 194,567 Cash, cash equivalents and restricted cash, end of period $ 37,102 $ 57,274 See accompanying notes to condensed financial statements. 8 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) 1. Descriptio n of the Business CytomX Therapeutics, Inc. (the “Company”) is a clinical-stage, oncology-focused biopharmaceutical company developing potent biologics designed to remain masked and inactive in healthy tissue and to be unmasked and preferentially activated in the tumor microenvironment. The Company aims to build a commercial enterprise to maximize its impact on the treatment of cancer. The Company is advancing potential first-in-class and best-in-class therapeutics created using its PROBODY® therapeutic technology platform that could meaningfully improve outcomes for cancer patients. Its proprietary and unique PROBODY technology platform is designed to enable “conditional activation” of antibody-based drugs in the tumor microenvironment across multiple therapeutic modalities. The Company is located in South San Francisco, California and was incorporated in the state of Delaware in September 2010. 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying interim condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Unaudited Interim Financial Information 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, 2024 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, 2023 filed with the SEC. Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments purchased with original maturities of three months or less at the date of purchase to be cash equivalents. Restricted cash represents a standby letter of credit issued pursuant to an office lease. Revenue Recognition The Company’s revenues are primarily derived through its license, research, development and commercialization agreements. The terms of these types of agreements may include (i) licenses for the Company’s technology or programs, (ii) research and development services, and (iii) services or obligations in connection with participation in research or steering committees. 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. The Company assesses whether the promises in its arrangements with customers are distinct performance obligations that should be accounted for separately. Judgment is required to determine whether the license to the Company’s intellectual property is distinct from the research and development services or participation on steering committees. The Company’s collaboration and license agreements may include contingent payments related to specified research, development and regulatory milestones. Such milestone payments are typically payable under the collaborations when the collaboration partner claims or selects a target, or initiates or advances a covered product candidate in preclinical or clinical development, upon submission for marketing 9 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) approval of a covered product with regulatory authorities, or upon receipt of actual marketing approvals of a covered product or for additional indications. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. At each reporting date, the Company re-evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price by using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price in such period of determination. The Company’s collaboration and license agreements may also include contingent payments related to sales-based milestones. Sales-based milestones are typically payable when annual sales of a covered product reach specified levels. Sales-based milestones are recognized at the later of when the associated performance obligation has been satisfied or when the sales occur. Unlike other contingency payments, such as regulatory milestones, sales-based milestones are not included in the transaction price based on estimates at the inception of the contract; instead, they are included when the sales or usage occur. Due to the early stage of the Company’s licensed technology, the license of such technology is typically combined with research and development services and steering committee participation as one performance obligation. Under the collaboration and license agreements, each collaboration target or program is generally considered to be a separate combined performance obligation. The transaction price in each arrangement is allocated to the identified performance obligations based on the relative standalone selling price (“SSP”) of each distinct performance obligation, which requires judgment. In instances where SSP is not directly observable, such as when a license or service is not sold separately, SSP is determined using information that may include market conditions and other observable inputs. Variable consideration is allocated to certain performance obligations if it is triggered by the Company’s efforts to satisfy or a specific outcome from satisfying these performance obligations. In the event that the Company receives non-cash consideration such as consideration in the form of a research license and research support services from the counterparty, the transaction price of a non-monetary exchange that has commercial substance is estimated based on the fair value of the non-cash consideration received, which may be determined through a valuation analysis. The Company recognizes revenue from upfront payments over the estimated period of performance under the agreement using an input method for the performance obligation. In applying the input method of revenue recognition, the Company uses actual full-time equivalent (FTE) hours incurred relative to estimated total FTE hours expected to be incurred for each combined performance obligation over the estimated research service period of each collaboration target. In certain cases, the Company’s performance creates an asset that does not have an alternative use to the customer and the Company has an enforceable right to payment at all times for performance completed to date. In these cases, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. Any consideration payable to the Company’s customers is treated as a reduction to the transaction price and revenue, unless the payment to the customer is in exchange for distinct good and services. Contract Balances Customer payments are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until the Company satisfies its performance obligations under these arrangements. Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional. Recently Issued Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which enhances transparency in income tax disclosures. ASU 2023-09 require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The 10 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) amendments are set to be effective for fiscal years beginning after December 15, 2024, and are required to be applied on a prospective basis. The Company is evaluating the impact on our financial statements. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption. 3. Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing the net income (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 March 31, 2024 2023 (in thousands, except share and per share data) Numerator: Net income (loss) $ 13,791 $ ( 3,311 ) Denominator: Basic Weighted-average common shares outstanding 67,606,389 66,248,992 Weighted-average pre-funded warrants 14,423,077 — Weighted-average common shares outstanding used to calculate basic net income (loss) per share 82,029,466 66,248,992 Diluted Weighted-average common shares outstanding used to calculate basic net income (loss) per share 82,029,466 66,248,992 Effect of potentially dilutive securities: Stock options, ESPP & RSUs 600,554 — Weighted-average common shares outstanding used to calculate diluted net income (loss) per share 82,630,020 66,248,992 Net income (loss) per share Basic $ 0.17 $ ( 0.05 ) Diluted $ 0.17 $ ( 0.05 ) The following weighted-average outstanding shares of potentially dilutive securities are excluded from the computation of diluted net income (loss) per share for the periods presented, because including them would have been anti-dilutive: Three Months Ended March 31, 2024 2023 Options and ESPP to purchase common stock 13,710,289 13,986,524 Common stock warrants 11,538,462 — RSUs 227,525 1,539,053 Total 25,476,276 15,525,577 11 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) 4. Fair Value Measurements and Investments In accordance with Accounting Standards Codification (“ASC”) 820-10, Fair Value Measurements and Disclosures, the Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows: • Level I: Inputs which include quoted prices in active markets for identical assets and liabilities. • Level II: Inputs other than Level I that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level III: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts of the Company’s financial instruments, including restricted cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities. The Company’s financial instruments consist of Level I assets which consist primarily of highly liquid money market funds, some of which are included in restricted cash and U.S. Treasury securities that are included in cash equivalents or short-term investments. 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, 2024 Valuation Hierarchy Amortized Cost Gross Unrealized Losses Aggregate Fair Value (in thousands) Assets Money market funds Level I $ 39,069 $ — $ 39,069 Restricted cash (money market funds) Level I 917 — 917 U.S. Treasury Securities Level II 114,109 ( 10 ) 114,099 Total $ 154,095 $ ( 10 ) $ 154,085 December 31, 2023 Valuation Hierarchy Amortized Cost Gross Unrealized Gains Aggregate Fair Value (in thousands) Assets Money market funds Level I $ 17,109 $ — $ 17,109 Restricted cash (money market funds) Level I 917 — $ 917 U.S. Treasury Securities Level II 157,243 95 $ 157,338 Total $ 175,269 $ 95 $ 175,364 As of March 31, 2024, the remaining contractual terms of those investments are less than a year. 12 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) 5. Accrued Liabilities Accrued liabilities consisted of the following: March 31, December 31, 2024 2023 (in thousands) Research and clinical expenses $ 7,701 $ 8,435 Payroll and related expenses 4,855 8,160 Legal and professional expenses 1,209 690 Other accrued expenses 455 314 Total $ 14,220 $ 17,599 6. Collaboration and License Agreements The following table summarizes the revenue by collaboration partner: Three Months Ended March 31, 2024 2023 (in thousands) AbbVie $ — $ 3,988 Amgen 1,279 1,776 Astellas 15,452 8,705 Bristol Myers Squibb 19,634 7,725 Regeneron 2,393 581 Moderna 2,705 724 Total revenue $ 41,463 $ 23,499 AbbVie Ireland Unlimited Company In April 2016, the Company and AbbVie entered into two agreements, a CD71 Co-Development and Licensing Agreement (the “CD71 Agreement”) and a Discovery Collaboration and Licensing Agreement (as amended and restated in June 2019, the “Discovery Agreement” 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”), 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. Under the CD71 Agreement, t he Company has received in aggregate $ 100.0 million in upfront and milestone payments. AbbVie had entered into a license agreement with Seattle Genetics, Inc. (“SGEN”) to license certain intellectual property rights pursuant to which the Company was required to pay SGEN sublicense fees for certain milestone achievements and an annual maintenance fee. These sublicense fees were treated as reductions to the transaction price and combined with the performance obligation to which they relate. 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. As a result of AbbVie’s decision, the 2016 CD71 License and Collaboration Agreement was terminated in May 2023 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, a CD71-targeting conditionally activated antibody drug conjugate. The Transition Agreement supersedes the CD71 Agreement that was terminated in May 2023, and grants certain intellectual property rights from AbbVie Global to enable the continued development of CX-2029 by the Company for all human and nonhuman diagnostic, prophylactic, and therapeutic uses. Pursuant to the Transition Agreement, AbbVie 13 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) Global is eligible to receive tiered sales royalties for CX-2029 ranging from the low-to-mid single digit percentages. 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 but continues to view CD71 as a target of strategic interest, including novel next-generation strategies. Amgen, Inc. On September 29, 2017, the Company and Amgen, Inc. (“Amgen”) entered into a Collaboration and License Agreement (the “Amgen Agreement”). Pursuant to the Amgen Agreement, the Company received an upfront payment of $ 40.0 million in October 2017. Concurrent with the Amgen Agreement, the Company and Amgen entered into a Share Purchase Agreement pursuant to which Amgen purchased 1,156,069 shares of the Company’s common stock at a price of $ 17.30 per share for total proceeds of $ 20.0 million. 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 each of May 2023 and March 2024, 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 engagers (“TCEs”) 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 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. If the Company chooses not to exercise its EGFR Co-Development Option, the Company will not bear any costs of later stage development. The Company is also eligible to receive up to $ 460.0 million in development, regulatory, and commercial milestone payments for EGFR Products, and royalties in the low-double-digit to mid-teen percentage of worldwide commercial sales, provided that if the Company exercises its EGFR Co-Development option, it shall receive a profit and loss split of sales in the United States and royalties in the low-double-digit to mid-teen percentage of commercial sales outside of the United States. In January 2022, the IND for the EGFR product (CX-904) was allowed to proceed by the U.S. Food and Drug Administration (“FDA”). Amgen also has the right to select a total of up to three targets, including the two additional targets discussed below. The Company and Amgen collaborate in the research and development of conditionally activated T-cell engaging bispecifics therapies directed against such targets. Amgen has selected one such target (the “Amgen Other Product”). If Amgen exercises its option within a specified period of time, it can select two such additional targets (the “Amgen Option Products” and, together with the Amgen Other Product, the “Amgen Products”). 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 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 TCE product from the Amgen preclinical pipeline. 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 TCE 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, 2024 and December 31, 2023, deferred revenue related to the EGFR Products performance obligation was $ 11.5 million and $ 12.8 million, respectively. Deferred revenue related to the Amgen Other Products performance obligation was immaterial as of March 31, 2024 and December 31, 2023. 14 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) Astellas Pharma Inc. The Company and Astellas Pharma, Inc. (“Astellas”) entered into a Collaboration and License Agreement (the “Astellas Agreement”) on March 23, 2020, the effective date, to collaborate on preclinical research activities to discover and develop certain antibody compounds for the treatment of cancer using the Company’s PROBODY therapeutic technology. Under the terms of the Astellas Agreement, the Company granted Astellas an exclusive, worldwide right to develop and commercialize PROBODY therapeutics for up to four collaboration targets including one initial target and three additional targets (“Additional Targets”). In addition, Astellas had the right to expand the number of Additional Targets from three up to five (the “Expansion Option”) before the third anniversary of the effective date. Furthermore, for a specified number of targets, at a pre-specified time prior to the initiation of the first pivotal study of a product against such target, the Company may elect to participate in certain development costs and share in the profits generated in the United States with respect to such product (“Cost Share Option”). 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 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. The Company is also entitled to tiered royalties from high-single digit to mid-teen percentage royalties from potential future sales. Astellas is responsible for all preclinical research costs incurred by either party as set forth in the preclinical research plan and the Company will receive research and development service fees based on a prescribed full-time employee ("FTE") rate. 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 related performance obligation of the collaboration target which resulted in the clinical candidate nomination for further development. In March 2024, the Company announced that it achieved the good laboratory practices ("GLPs") toxicology milestone for this candidate 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 2024 as the Company had completed its related performance obligation of the collaboration target. Also, in March 2024, the Company announced that it achieved a clinical candidate milestone for a second collaboration target under the Astellas Agreement which triggered an additional $ 5.0 million milestone payment to the Company. The $ 5.0 million milestone payment was fully recognized in the first quarter of 2024 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 March 31, 2024 and December 31, 2023, deferred revenue relating to the Astellas Agreement was $ 27.6 million and $ 31.0 million, respectively. The amount due from Astellas under the Astellas Agreement wa s $ 12.1 million as of March 31, 2024 which included the $ 10.0 million of milestone payments earned in March 2024, and $ 2.2 million as of December 31, 2023. Bristol Myers Squibb Company On May 23, 2014, the Company and Bristol Myers Squibb Company (“Bristol Myers Squibb”) entered into a Collaboration and License Agreement (the “BMS Agreement”) to discover and develop compounds for use in human therapeutics aimed at multiple immuno-oncology targets using the Company’s PROBODY therapeutic technology. The effective date of the BMS Agreement was July 7, 2014. Under the terms of the BMS Agreement, the Company granted Bristol Myers Squibb exclusive worldwide rights to develop and commercialize PROBODY therapeutics for up to four oncology targets. Bristol Myers Squibb had additional rights to substitute up to two collaboration targets within three years of the effective date of the BMS Agreement. These rights expired in May 2017. Each collaboration target had a two-year research term and the two additional targets had to be nominated by Bristol Myers Squibb within five years of the effective date of the BMS Agreement. The research term for each collaboration target could be extended in one year increments up to three times. Pursuant to the BMS Agreement, the financial consideration from Bristol Myers Squibb was comprised of an upfront payment of $ 50.0 million and estimated research and development service fees, and the Company was initially entitled to receive contingent payments of up to $ 25.0 million for additional targets and contingent payments for development, regulatory and sales milestones. In addition, the Company was entitled to royalty payments in the mid-single digits to low double-digit percentages from potential future sales. On March 17, 2017, the Company and Bristol Myers Squibb amended the BMS agreement and entered into Amendment Number 1 to Extend Collaboration and License Agreement (“Amendment 1”). Amendment 1 granted Bristol Myers Squibb exclusive worldwide rights to develop 15 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) and commercialize PROBODY therapeutics for up to eight additional targets. The effective date of Amendment 1 was April 25, 2017 (“Amendment Effective Date”). 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 targets. The Company was also entitled to tiered mid-single to low double-digit percentage royalties from potential future sales. Amendment 1 did not change the term of Bristol Myers Squibb’s royalty obligation under the BMS Agreement. Bristol Myers Squibb’s royalty obligation continues on a licensed-product by licensed-product basis until the later of (i) the expiration of the last claim of the licensed patents covering the licensed products in the country, (ii) the twelfth anniversary of the first commercial sale of a licensed product in a country, or (iii) the expiration of any applicable regulatory, pediatric, orphan drug or data exclusivity with respect to such product. The initial transaction price for the BMS Agreement and Amendment 1, collectively, was $ 304.7 million consisting of the upfront fees of $ 250.0 million, target selection fees for the third and fourth targets of $ 25.0 million, estimated research and development service fees of $ 17.7 million and milestone payments received up to January 1, 2018, of $ 12.0 million. The Company determined that the remaining potential milestone payments were probable of significant revenue reversal as their achievement was highly dependent on factors outside the Company’s control. Therefore, these payments were fully constrained and were not included in the transaction price upon the adoption of ASC 606 on January 1, 2018. The initial transaction price for the combined obligation for each collaboration target is recognized using an input measure. In February 2021, the Company and Bristol Myers Squibb amended the BMS agreement and entered into Amendment Number 2 to amend the Collaboration and License Agreement (“Amendment 2”), as previously amended by Amendment 1. Subsequent to Amendment 2, in addition to Bristol Myers Squibb’s ongoing development of the CTLA-4 program, Bristol Myers Squibb also had the exclusive worldwide rights to develop and commercialize PROBODY therapeutics for up to five oncology targets. Under the terms of Amendment 2, the period for target selection was extended and in 2022, all remaining targets were selected. The Company will continue to collaborate with Bristol Myers Squibb to discover and conduct preclinical development of PROBODY therapeutics against targets selected by Bristol Myers Squibb over the estimated research period, which is projected to end in April 2025. Pursuant to Amendment 2, the Company was eligible to receive contingent payments for development, regulatory and sales milestones. It is also entitled to tiered mid-single to low double-digit percentage of royalties from potential future sales. The Company accounted for Amendment 2 as a modification and reallocated the remaining unrecognized transaction price to the remaining performance obligations. In October 2022, the Company and Bristol Myers Squibb amended the BMS Agreement and entered into Amendment Number 3 (“Amendment 3”), as previously amended by Amendment 1 and Amendment 2, to clarify the rights and restrictions of certain new proprietary antibodies that the parties exchanged. There were no substantive changes to each party's performance obligations. In March 2024, following a Bristol Myers Squibb corporate portfolio prioritization process, Bristol Myers Squibb notified CytomX that it does not intend to continue the development of BMS-986288 beyond the current Phase 2 study and terminated its collaboration license on the CTLA-4 target under the collaboration. As of March 31, 2024, the Company is eligible to receive approximately $ 1.8 billion in contingent payments for development, regulatory and sales milestones for the ongoing collaboration programs. 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, 2024. As of March 31, 2024 and December 31, 2023, deferred revenue relating to the BMS Agreement was $ 100.3 million and $ 119.9 million, respectively. ModernaTX, Inc. The Company and ModernaTX, Inc. (“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), manufacturing, and commercialization of any products under the Moderna Agreement. 16 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) 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. In exchange, the Company received an upfront payment of $ 35.0 million in January 2023, including $ 5.0 million of prepaid research and development service fees. The Company will continue to receive research and development service fees according to the preclinical research work plans based on a prescribed FTE rate and is eligible to receive up to approximately $ 1.2 billion in future development, regulatory, and commercial milestone payments. 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 provided Moderna with an option to participate in an equity financing by CytomX at market price, subject to certain terms, conditions and regulatory requirements. As of March 31, 2024 and December 31, 2023, deferred revenue relating to the Moderna Agreement was $ 21.5 million and $ 24.2 million, respectively. Regeneron Pharmaceuticals, Inc. The Company and Regeneron Pharmaceuticals Inc. (“Regeneron”) entered into a Collaboration and License Agreement (the “Regeneron Agreement”) on November 16, 2022, to collaborate on creation of conditionally-activated investigational bispecific cancer therapies utilizing the Company’s PROBODY® therapeutic platform and Regeneron’s Veloci-Bi® bispecific antibody development platform. The Company and Regeneron will collaborate on preclinical research and discovery activities for initially agreed upon collaboration programs (“Collaboration Program”) with an option to expand additional Collaboration Programs (“Additional Collaboration Program Option”). 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, 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. If Regeneron exercises its Additional Collaboration Program Option, the Company would be eligible to receive additional upfront and milestone payments aggregating up to approximately $ 1.2 billion. The Company is also entitled to tiered royalties from high-single digit to low-teen percentage royalties from potential future sales. In addition, the Company will receive research and development service fees based on a prescribed FTE rate. As of March 31, 2024 and December 31, 2023, deferred revenue relating to the Regeneron Agreement was $ 22.5 million and $ 24.4 million, respectively. The amount due from Regeneron under the Regeneron Agreement was $ 1.0 million and $ 1.1 million as of March 31, 2024 and December 31, 2023, respectively. Contract Liabilities The following table presents changes in the Company’s total contract liabilities during the three months ended March 31, 2024 and 2023: Deferred Revenue (in thousands) December 31, 2023 $ 212,315 Additions 2,266 Revenue recognized ( 31,210 ) March 31, 2024 $ 183,371 December 31, 2022 $ 301,326 Additions 869 Revenue recognized ( 18,278 ) March 31, 2023 $ 283,917 The Company expects that the $ 183.4 million of deferred revenue related to the following contracts as of March 31, 2024 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 17 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) development, resources assigned to the contracts by the Company or its collaboration partners or other factors outside of the Company’s control. • The $ 11.5 million of deferred revenue related to the Amgen EGFR Products is expected to be recognized until 2026 . • The $ 27.6 million of deferred revenue related to the Astellas Agreement is expected to be recognized until 2026 . • The $ 100.3 million of deferred revenue related to the BMS Agreement is expected to be recognized through the second quarter of 2025 . • The $ 21.5 million of deferred revenue related to the Moderna Agreement, together with research and development service fees, is expected to be recognized until 2027 . • The $ 22.5 million of deferred revenue related to the Regeneron Agreement, together with research and development service fees, is expected to be recognized until 2026 . 7. License Agreement UCSB Agreement In August 2010, the Company entered into an exclusive, worldwide license agreement with University of California, Santa Barbara (“UCSB”), relating to the use of certain patents and technology relating to its core technology, including its therapeutic antibodies, and to certain patent rights the Company co-owns with UCSB covering PROBODY antibodies and other pro-proteins (the “UCSB Agreement”). Pursuant to the UCSB Agreement, the Company is obligated to (i) make royalty payments to UCSB on net sales of its products covered under the agreement, subject to annual minimum amounts, (ii) make milestone payments to UCSB upon the occurrence of certain events, (iii) make a milestone payment to UCSB upon occurrence of an IPO or change of control, and (iv) reimburse UCSB for prosecution and maintenance of the licensed patents. As part of the UCSB Agreement, the Company has annual minimum royalty obligations of $ 0.2 million under the terms of certain exclusive licensed patent rights. In April 2019, the Company entered into Amendment No.3 to the UCSB Agreement to adjust and clarify certain sublicense terms (“Amendment No.3”). Under the terms of Amendment No.3, the Company and UCSB agreed to modify the determination of sublicense revenues payable by the Company to UCSB on certain existing collaboration agreements and on collaboration agreements executed subsequent to Amendment No.3. In exchange, the Company agreed to make an upfront payment of $ 1.0 million as well as additional annual license maintenance fees of $ 0.8 million through 2031 . In March 2024, the Company incurred $ 0.6 million of sublicense fees triggered by achieving the GLP toxicology studies milestone for the first clinical candidate which was nominated by Astellas in 2023, as well as by achieving the clinical candidate nomination milestone for a second collaboration target under the Astellas Agreement. For the three months ended March 31, 2024 and 2023, the Company incurred sublicense expenses of $ 1.6 million and $ 1.1 million, respectively, under the provisions of the UCSB Agreement. ImmunoGen (acquired by AbbVie in 2024) In December 2019, the Company entered into a License Agreement (the “ImmunoGen 2019 License”) with ImmunoGen, Inc. to obtain an exclusive license with respect to epithelial cell adhesion molecule (“EPCAM”). Under the ImmunoGen 2019 License, ImmunoGen agreed to transfer its know-how, patents, intellectual property rights, and technology transfer materials and information related to its EpCAM program. The license gives the Company the sole ability to develop, manufacture, use and commercialize any licensed product that incorporates, is comprised of, or otherwise derived from PROBODY technology that targets EpCAM in any human therapeutic field on a worldwide basis. In April 2024, the Company incurred a $ 5.0 million milestone payable to ImmunoGen with respect to achieving the milestone of dosing the first patient for CX-2051 under the ImmunoGen 2019 License Agreement. 18 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) 8. Stock-Based Compensation Stock Options Activities for the Company’s stock option plans for the three months ended March 31, 2024 were as follows: Options Outstanding Number of Options Weighted- Average Exercise Price Per Share Balance at December 31, 2023 12,949,612 $ 7.16 Options granted 1,780,000 1.68 Options exercised ( 119,874 ) 1.57 Option forfeited/expired ( 303,341 ) 11.03 Balance at March 31, 2024 14,306,397 $ 6.44 The Company recorded $ 1.4 million and $ 1.9 million of stock-based compensation expense related to the stock option plans for the three months ended March 31, 2024 and 2023, respectively. Time-based RSUs ("TRSU") Activities for the Company’s TRSUs for the three months ended March 31, 2024 were as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Balance at December 31, 2023 1,400,529 $ 2.40 RSU's awarded 1,117,333 1.62 RSU's vested ( 706,923 ) 2.14 RSU's cancelled ( 28,139 ) 1.76 Balance at March 31, 2024 1,782,800 $ 2.02 The Company recorded $ 0.4 million and $ 0.4 million of stock-based compensation expense related to the TRSUs for the three months end March 31, 2024 and 2023, respectively. Performance-based RSUs ("PSUs") 2022 PSU 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 was set to occur upon attaining certain specific milestones by December 2023 (“2022-Tranche 1”), and the remaining 50% are set to vest upon attaining certain specific milestones by December 2024 (“2022-Tranche 2”). In December 2023, the Company determined that the performance conditions for 2022-Tranche 1 was satisfied and the award was vested in December 2023. As a result, the Company recorded $ 55,000 and the remaining $ 128,000 c ompensation cost for the 2022-Tranche 1 award for the year ended December 31, 2022 and 2023, respectively. As of March 31, 2024 and December 31, 2023, the Company determined that it is probable that the performance conditions for the 2022-Tranche 2 will be satisfied and recorded $ 19,000 and $ 106,000 compensation cost for the award for the three months ended March 31, 2024 and for the fiscal year 2023, respectively. 2023 PSU In February 2023, the Company granted 760,000 PSUs to executive employees with an aggregated grant date fair value of approximately $ 1.9 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, 2024. 19 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) 2024 PSU In January 2024, the Company granted 810,000 PSUs to executive employees with an aggregated grant date fair value of approximately $ 1.3 million. Vesting for 50% of the PSUs granted will occur upon attaining certain specific milestones by December 2025 (“2024-Tranche 1”), and the remaining 50% will vest upon attaining certain specific milestones by December 2026 (“2024-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, 2024. Activities for the Company’s PSUs for the three months ended March 31, 2024, were as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Balance at December 31, 2023 875,000 $ 2.41 PSU's awarded 810,000 1.66 Balance at March 31, 2024 1,685,000 $ 2.05 Stock-based Compensation Total stock-based compensation recorded was as follows: Three Months Ended March 31, 2024 2023 (in thousands) Research and development $ 707 $ 961 General and administrative 1,200 1,448 Total stock-based compensation expense $ 1,907 $ 2,409 9. Commitments and Contingencies Legal Proceedings On March 4, 2020 , Vytacera Bio, LLC filed a patent infringement lawsuit against the Company in the U.S. District Court for the District of Delaware. The lawsuit alleges that the Company's use, offers to sell, and/or sales of the PROBODY® technology platform for basic research applications constitutes infringement. The complaint seeks unspecified monetary damages. In September 2022, the Company filed a motion to dismiss the case and the Court granted the parties’ 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. In January 2024, the case was transferred to a new Judge and the case will remain stayed pending a ruling by the trial judge on the Magistrate’s 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 March 31, 2024. 10. Income Taxes The Company maintains a full valuation allowance against its net deferred tax assets due to the Company’s history of losses through December 31, 2023 . The Company files income taxes in the U.S. federal jurisdiction, the state of California and various other U.S. states. The state of California contested the Company’s tax position on revenue apportionment for upfront and milestone payments resulting from the Company’s collaboration and licensing agreements for the years 2017 and 2018. In September 2023, the Company received Notice of Proposed Assessment (“NOPA”) from the Franchise Tax Board. The Company recorded an uncertain tax position of $ 3.9 million in long term liabilities for the proposed tax assessment, penalties and interest through March 31, 2024 . Of the unrecognized tax benefits as of March 31, 2024, approximately $ 3.9 million would affect the Company’s effective tax rate if recognized. In addition, utilization of carryforward attributes and indirect federal tax effects of the assessment would result in a reduction in deferred tax assets of $ 5.1 million. The Company 20 CytomX Therapeutics, Inc. Notes to Condensed Financial Statements (Unaudited) filed a protest to contest the proposed assessment in November 2023. Due to the ongoing n ature 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. 11. Subsequent Event In February 2020, the Company entered into the Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC (“Jefferies”), to sell its common stock, at par value $ 0.00001 per share, with aggregate gross sales proceeds of up to $ 75,000,000 , from time to time upon the Company’s request, through an at the market offering under which Jefferies will act as sales agent. Pursuant to the Sales Agreement, Jefferies as the sales agent will receive a commission of 3.0 % of the gross sales price for shares of common stock sold under the Sales Agreement. In April 2024, under the Sales Agreement, the Company sold 2,270,608 shares at an average price of $ 2.20 per share and received net proceeds of approximately $ 4.8 million after deducting the 3.0 % sales commission and related issuance cost. In June 2023, the Company entered into an agreement with BVF Partners L.P. (“BVF”) for a private placement and received an aggregate net proceeds of approximately $ 29.7 million in July 2023, 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. On May 1, 2024, BVF exercised its right to purchase 7.5 million shares of common stock at an exercise price of $ 0.00001 per share. 21 CytomX Therapeutics, Inc. Item 2. Management’s Discuss ion and Analysis of Financial Condition and Results of Operations You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended December 31, 2023, included in our Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission (“SEC”) on March 11, 2024. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report titled “Risk Factors.” Except as may be required by law, we assume no obligation to update these forward-looking statements or the reasons that results could differ from these forward-looking statements. Overview We are a clinical-stage, oncology-focused biopharmaceutical company focused on developing novel, conditionally activated, masked biologics designed to be preferentially unmasked and activated in the tumor microenvironment. We aim to build a commercial enterprise to maximize our impact on the treatment of cancer. By pioneering a novel class of localized biologic drug candidates, powered by our PROBODY® therapeutic technology platform, we lead the field of masked, conditionally activated oncology therapeutics and have established biologics localization as a strategic area of research and development. Our vision is to transform lives with safer, more effective therapies with the goal to address major unmet needs in oncology. Our proprietary, versatile, multi-modality PROBODY technology platform is designed to enable conditional activation of potent biologic therapeutic candidates within the tumor microenvironment, while minimizing drug activity in healthy tissues and circulation. Our platform is built on a strong foundation of tumor biology expertise, including deep knowledge of tumor-associated enzymes known as proteases. Proteases are tightly controlled in normal tissues but often dysregulated and active in tumor microenvironments where they play important roles in cancer cell migration, invasion and metastasis. Leveraging our deep scientific knowledge, we conceived of and constructed our PROBODY therapeutic platform which allows us to genetically engineer biologic therapeutic candidates to contain protease-cleavable masks. Our masking strategy is designed to reduce binding of biologic therapeutics to their targets until the mask is removed by proteases in the tumor microenvironment, providing more selective targeting of the tumor. We are employing our leading, masking platform technology to address some of the biggest challenges in oncology biologics research and development. These include the validation of potential new targets for antibody-drug conjugates (“ADCs”), opening therapeutic window for novel T-cell engagers (“TCEs”) targeting solid tumors, and increasing the therapeutic index for immune modulators such as cytokines. We are also exploring the potential for our PROBODY platform in preclinical research in areas outside of oncology, including in our collaboration with Moderna. We have utilized our PROBODY therapeutic platform and masking technology to build a promising, broad pipeline of potential first-in-class and best-in-class clinical-stage molecules. These are CX-904, a conditionally activated, PROBODY® TCE, targeting the epidermal growth factor receptor (“EGFR”) on tumor cells and the CD3 receptor on T cells; CX-2051, an investigational, conditionally activated ADC targeting epithelial cell adhesion molecule (“EpCAM”); and CX-801, an investigational, masked version of interferon alpha-2b (“IFNα2b”). Our current clinical-stage molecules address targets or mechanisms that have been previously validated as having anti-cancer activity but have been limited in their utilization due to systemic toxicities. We have incorporated our significant, multi-modality masking expertise and clinical learnings to optimize predicted therapeutic index and the clinical potential of these promising agents through tumor localized conditional activation. Reinforcing our leadership in the field of conditional activation, in 2022 we advanced our first TCE into the clinic. CX-904, partnered with Amgen, is a conditionally activated TCE against EGFR and CD3. In preclinical studies, CytomX’s PROBODY EGFRxCD3 TCE demonstrated anti-tumor activity and better tolerability when compared to TCEs without PROBODY masking. In May 2022, the first patient was dosed in a Phase 1 study evaluating CX-904 as a treatment for patients with advanced solid tumors. Patient enrollment in the Phase 1 dose escalation portion of the study continues to progress. We reported in January 2023 that the initial single patient cohort phase of the study was complete and that the “3+3” patient cohort phase had been initiated. On May 8, 2024, we reported a Phase 1a data update based on an April 16, 2024 data cutoff. As of the data cutoff, the CX-904-101 study had enrolled 35 patients with advanced metastatic solid tumor types that are generally known to express EGFR, including pancreatic, colorectal (CRC), non-small cell lung cancer (NSCLC), head and neck squamous cell carcinoma (HNSCC), gastric, and esophageal cancers. Patients enrolled in the study were heavily pre-treated and had a median of 4 prior lines of therapy. 19 patients were enrolled into initial non-step dosing cohorts with target doses ranging from 0.007 mg to 6 mg, and 16 patients were subsequently enrolled into step-dosing cohorts with target doses ranging from 5 mg to 10 mg and with tocilizumab prophylaxis. Enrollment into a cohort with a target dose of 15 mg is ongoing. 22 CytomX Therapeutics, Inc. As of the cutoff date, CX-904 demonstrated a favorable safety profile that supports administration and monitoring of enrolled patients in an outpatient setting. 1 There were no observed cases of cytokine release syndrome (CRS) of any grade in step-dosing cohorts as of the cutoff date. In non-step dosing cohorts, only Grade 1 CRS was observed in patients treated at the highest dose of 6 mg. Overall, the most common treatment-related adverse events (TRAEs) were rash, arthralgia, arthritis, pruritis, and vomiting, the majority of which were low grade, being observed in 14 (40%), 13 (37%), 5 (14%), 5 (14%) and 5 (14%) of patients, respectively. Grade 3 adverse events were tenosynovitis (n=1), arthralgia (n=2), arthritis (n=1), rash (n=1). As of the April 16, 2024 data cutoff, 8 patients had measurable tumor reduction per RECIST 1.1, including 2 of 6 efficacy-evaluable patients (33%) with pancreatic cancer with confirmed partial responses. All 6 efficacy-evaluable patients with pancreatic cancer achieved disease control (objective response or stable disease). For the two patients with a confirmed partial response, one patient (6 mg target dose) achieved an 83% tumor reduction. A second patient (5 mg target dose) with a confirmed response achieved a 51% tumor reduction and remained on study treatment as of the data cutoff. In addition, a third pancreatic cancer patient maintained stable disease with no evidence of tumor growth through 3.5 months of study treatment, remaining on treatment as of the data cutoff. Preliminary pharmacokinetic and pharmacodynamic data were consistent with the PROBODY TCE mechanism of action, including maintained masking in circulation, and CD8+ T-cell margination and tumor infiltration. CX-904 Phase 1a dose escalation and optimization continues, with future enrollment focused on determining a recommended Phase 2 dose, or doses. We expect to provide an additional Phase 1a dose escalation update by the end of 2024. These additional data will inform discussions with CytomX partner, Amgen, towards initiation of Phase 1b expansion cohorts in specific EGFR positive tumor types. Our pipeline also includes CX-2051, a wholly-owned conditionally activated, PROBODY ADC paired with a next-generation camptothecin payload and directed toward the epithelial cellular adhesion molecule (EpCAM). CX-2051 is licensed from ImmunoGen. CX-2051 has been tailored to optimize the therapeutic index for the systemic treatment of EpCAM-expressing epithelial cancers where previous industry efforts targeting EpCAM have not been successful due to dose-limiting toxicities. CX-2051 has demonstrated a wide predicted therapeutic index and strong preclinical activity and tolerability in multiple preclinical models, including colorectal cancer. The IND for CX-2051 was cleared by the FDA in January 2024 and Phase 1 clinical initiation in EpCAM expressing solid tumors, including CRC commenced in April 2024. The Phase 1 dose escalation will follow a Bayesian Optimal Interval (BOIN) design and is intended to demonstrate clinical proof of concept to potentially move into dose expansion studies in 2025. Another wholly-owned product candidate is CX-801, an interferon ("IFN") alpha-2b PROBODY. IFNα2b provides a potentially superior approach to activating anti-tumor immune responses than other cytokines. CX-801 is a dually masked, conditionally activated version of IFNα2b that has the potential to become a cornerstone of combination therapy for a wide range of tumor types. The IND for CX-801 was cleared by the FDA in January 2024 and initiation of Phase 1 dose escalation in solid tumors including melanoma, renal, and head and neck squamous cell carcinoma is expected in the first half of 2024. In Phase 1 dose escalation, we will use a BOIN design to evaluate safety and signs of clinical activity for CX-801 and progress into combinations, where CX-801 has the potential to be cornerstone of therapy, including in combination with checkpoint inhibitors. On May 7, 2024 CytomX announced a clinical collaboration with Merck to evaluate CX-801 in combination with KEYTRUDA® in the Phase 1 study. CX-2029 was previously developed in a global co-development collaboration with AbbVie. This program is intended to open a therapeutic window for successful targeting of CD71, also known as the transferrin receptor 1 (“TfR1”). CD71 is a cell surface protein essential for iron uptake in dividing cells and is highly expressed in a number of solid and hematologic cancers. However, given its central role in iron metabolism, CD71 is present on most healthy cells and is thought to be an undruggable target with conventional ADCs. CX-2029 is conjugated with the tubulin inhibitor, monomethyl auristatin E (“MMAE”), as the payload. In March 2023, following the completion of the Phase 2 Study in squamous non-small cell lung cancer (“sqNSCLC”), head and neck squamous cell carcinoma (“HNSCC”), esophageal and gastro-esophageal junction (“E/GEJ”) cancers, AbbVie notified CytomX that it would not advance CX-2029 into additional clinical studies and terminated the 2016 CD71 License and Collaboration Agreement. CytomX re-acquired full rights to CX-2029 but does not currently have plans to make further significant investments in the solid tumor program in the near-term but continues to view CD71 as a target of strategic interest, including novel next-generation strategies. _______________________________ 1 In-patient monitoring is not required following treatment at cleared dose levels 23 CytomX Therapeutics, Inc. 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, TCEs, and mRNAs reflecting the versatility of our PROBODY platform. We currently have more than 15 active drug discovery and/or development programs. 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. As of March 31, 2024 and December 31, 2023, we had an accumulated deficit of $709.7 million and $723.4 million, respectively. 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. 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. As such, we are dependent on third parties to supply our product candidates according to our specifications, in sufficient quantities, on time, in compliance with appropriate regulatory standards and at competitive prices. Critical Accounting Policies and Estimates The preparation of our Condensed Financial Statements requires us to make estimates and judgments that affect the reported amounts in the financial statements and related disclosures. On an ongoing basis, management evaluates its significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates. 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, 2023. Components of Results of Operations Revenue Our revenue to date has been primarily derived from non-refundable license payments, milestone payments and reimbursements for research and development expenses under our research, collaboration, and license agreements. We recognize revenue from upfront payments over the term of our estimated period of performance under the agreement using an input method for the entire performance obligation. In applying the input method of revenue recognition, we use actual full-time equivalent (FTE) hours incurred relative to estimated total FTE hours expected to be incurred for each combined performance obligation over the estimated research service period of each collaboration target. In addition to receiving upfront payments, we are entitled to variable payments related to research and development services provided and may be entitled to milestone and other contingent payments upon achieving predefined objectives. Revenue from variable payments related to research and development or milestones and other contingent payments, when it is probable that there will not be a significant revenue reversal, are also recognized over the performance period based on a similar method. For the foreseeable future, we do not expect to generate any revenue from the sale of products unless and until such time as our product candidates have advanced through clinical development and obtained regulatory approval. We expect that any revenue we generate in the foreseeable future will fluctuate from year to year as a result of the timing and amount of milestones and other payments from our collaboration agreements with Amgen, Astellas, Bristol Myers Squibb, Regeneron, Moderna and any other collaboration partners, and as a result of the fluctuations in the research and development expenses we incur in the performance of assigned activities under these agreements. AbbVie, one of our previous collaboration partners, entered into a license agreement with Seagen Inc. (“SGEN”) to license certain intellectual property rights. As part of the collaboration agreement with AbbVie, we received a sublicense to these intellectual property rights and therefore paid SGEN sublicense fees. These sublicense fees were treated as reductions to the transaction price and combined with the performance obligation to which they relate. 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. 24 CytomX Therapeutics, Inc. Research and Development Expenses Our research and development expenses consist primarily of costs incurred to conduct research, such as the discovery and development of our product candidates, clinical development, including activities with third parties, such as contract research organizations (“CRO”) and contract development and manufacturing organizations (“CMO”), and the manufacture of drug products used in clinical trials, as well as the development of product candidates pursuant to our research, collaboration and license agreements. Research and development expenses include personnel costs, including stock-based compensation expense, contractor services, laboratory materials and supplies, depreciation and maintenance of research equipment, and an allocation of related facilities costs. We expense research and development costs as incurred. We expect our research and development expenses could vary substantially in the future as we prioritize our pipeline opportunities, advance our product candidates through clinical trials, initiate additional clinical trials, and pursue regulatory approval of our product candidates. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors including: the safety and efficacy of our product candidates, early clinical data, investment in our clinical program, the ability of collaborators to successfully develop our licensed product candidates, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of our product candidates. General and Administrative Expenses General and administrative expenses include personnel costs, expenses for outside professional services and other allocated expenses. Personnel costs consist of salaries, bonuses, benefits and stock-based compensation. Outside professional services consist of accounting and audit services, legal and other consulting fees. Allocated expenses primarily consist of rent expense related to our office and information technology related costs. Income Taxes 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 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 Interest income primarily consists of interest income from our cash equivalents and investments, and accretion of discounts or amortization of premiums on our investments. Other Income (Expense), Net Other income (expense), net consists primarily of gains and losses resulting from changes to currency exchange rates. Results of Operations Revenue 25 CytomX Therapeutics, Inc. The following table summarizes our revenue by collaboration partner during the respective periods: Three Months Ended March 31, 2024 2023 Change (in thousands) AbbVie $ — $ 3,988 $ (3,988 ) Amgen 1,279 1,776 (497 ) Astellas 15,452 8,705 6,747 Bristol Myers Squibb 19,634 7,725 11,909 Regeneron 2,393 581 1,812 Moderna 2,705 724 1,981 Total revenue $ 41,463 $ 23,499 $ 17,964 The increase in revenue of $18.0 million for the three months ended March 31, 2024 compared to the corresponding period of 2023 was primarily due to: • An increase in revenue under the BMS Agreement driven by higher percentage of completion of the existing targets; • An increase in revenue under the Astellas Agreement primarily driven by two milestone payments of $5.0 million each, triggered in March 2024. One was related to the nomination of a second clinical candidate while the other was related to the milestone achievement of GLP toxicology study of the first clinical candidate. Astellas revenue in the first quarter of 2023 included the $5.0 million milestone for the 1st clinical candidate nomination achieved in the collaboration; • An increase in revenue under the Regeneron Agreement and Moderna Agreement driven by higher percentage of completion of research collaboration programs that commenced in 2023. • A decrease in revenue under the AbbVie Agreement due to termination of the agreement in March 2023. Operating Costs and Expenses Research and Development Expenses The following table summarizes our research and development expenses by program incurred during the respective periods presented: Three Months Ended March 31, 2024 2023 Change (in thousands) External costs incurred by product candidate (target): CX-904 (EGFRxCD3) $ 1,212 $ 437 $ 775 CX-2051 (EpCAM) 3,081 2,343 738 CX-801 (IFNα2b) 999 3,964 (2,965 ) CX-2029 (CD71) 48 707 (659 ) Other programs 3,137 1,319 1,818 General research and development expenses 4,013 3,365 648 Total external costs 12,490 12,135 355 Internal costs 9,562 9,040 522 Total research and development expenses $ 22,052 $ 21,175 $ 877 Research and development expenses increased by $0.9 million for the three months ended March 31, 2024, compared to the corresponding period of 2023. This was primarily due to increased laboratory contract services and manufacturing activities related to CX-904, CX-2051 26 CytomX Therapeutics, Inc. and other wholly owned and partnered programs, as well as consulting, personnel and license related expenses, offset by decreased manufacturing activities for CX-801 program and winding down of clinical study activities related to the CX-2009 and CX-2029 programs. General and Administrative Expenses Three Months Ended March 31, 2024 2023 Change (in thousands) General and administrative $ 7,754 $ 7,977 $ (223 ) General and administrative expenses decreased by $0.2 million for the three months ended March 31, 2024, compared to the corresponding period of 2023, primarily due to lower rent as a result of partial sublease of the Company’s headquarters. Interest Income and Other Income (Expense), Net Three Months Ended March 31, 2024 2023 Change (in thousands) Interest income $ 2,194 $ 2,327 $ (133 ) Other income (expense), net (11 ) 15 (26 ) Total interest income and other expense $ 2,183 $ 2,342 $ (159 ) Total interest income was $2.2 million for the three months ended March 31, 2024, compared to $2.3 million in the corresponding period of 2023. Income Taxes Three Months Ended March 31, 2024 2023 Change (in thousands) Provision for income taxes $ 49 $ — $ 49 The $0.1 million tax provision represented the interest accrued for the three months ended March 31,2024 related to the proposed assessment received from the state of California for the years 2017 and 2018. Liquidity and Capital Resources Sources of Liquidity As of March 31, 2024, we had cash, cash equivalents and short-term investments of $150.3 million and an accumulated deficit of $709.7 million, compared to cash, cash equivalents and short-term investments of $174.5 million and an accumulated deficit of $723.4 million as of December 31, 2023. 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 July 2023, we completed a private placement and issued pre-funded warrants to purchase an aggregate of 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. We received gross proceeds of approximately $30.0 million. In March 2024, we achieved a clinical candidate milestone for a second collaboration target as well as the GLP toxicology studies milestone for the first collaboration target nominated in January 2023 under the Astellas Agreement. We collected the two milestones payment totaled $10.0 million in April 2024. In April 2024, we sold 2,270,608 shares at an average price of $2.20 per share under our at-the-market offering and received net proceeds of approximately $4.8 million after deducting the 3.0% sales commission and related issuance cost. Based upon our current operating plan, we expect our existing capital resources will be sufficient to fund operations to the end 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. The amounts and timing of our actual expenditures depend on numerous factors, including the progress of our preclinical and clinical development efforts, the results of any clinical trials and other studies, our operating costs and expenditures and other factors described under the caption “Risk 27 CytomX Therapeutics, Inc. Factors” in this Quarterly Report on Form 10-Q. The cost and timing of developing our product candidates is highly uncertain and subject to substantial risks and changes. As such, we may alter our expenditures as a result of contingencies such as the failure of one or all of our product candidates currently in clinical development, the acceleration of one or all of our product candidates in clinical development, the initiating of clinical trials for additional product candidates, the identification of more promising product candidates in our research efforts or unexpected operating costs and expenditures. We will need to raise additional funds in the future. There can be no assurance, however, that such efforts will be successful; or if they are successful, that the terms and conditions of such financing will be favorable to us. Summary Statement of Cash Flows The following table summarizes our cash flows for the periods indicated: Three Months Ended March 31, 2024 2023 (in thousands) Net cash (used in) provided by operating activities $ (26,045 ) $ 9,349 Net cash provided by (used in) investing activities 44,885 (146,642 ) Net cash provided by financing activities 174 - Net increase (decrease) in cash, cash equivalents and restricted cash $ 19,014 $ (137,293 ) Cash Flows from Operating Activities During the three months ended March 31, 2024, cash used in operating activities was $26.0 million, which consisted of a net income of $13.8 million and non-cash charges of $1.5 million, adjusted by a net decrease of $41.3 million relating to the change of our net operating assets and liabilities. The non-cash charges primarily consisted of $1.9 million in stock-based compensation, $1.0 million in non-cash lease expense, $0.5 million in depreciation and amortization, partially offset by $1.9 million in accretion of discounts on investments. The change in our net operating assets and liabilities was primarily due to: • a net decrease of $28.9 million in deferred revenue resulting from the continued recognition of deferred revenue from existing customers; • a decrease of $3.9 million in accounts payable, accrued and other long-term liabilities primarily due to timing of payments; • a decrease of $9.7 million in cashflows from accounts receivable primarily related to the $10.0 million milestones receivable in the current quarter for the second clinical candidate nomination and the initiation of GLP toxicology study for the first nominated clinical candidate under the Astellas Agreement; offset by • an increase $1.2 million in cashflows from prepaid and other current assets primarily due to decrease in advance payments due to timing of payment. 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. The non-cash charges primarily consisted of $2.4 million in stock-based compensation, $0.9 million in non-cash lease expense, $0.6 million in depreciation and amortization, partially offset by $1.5 million in accretion of discounts on investments. The change in our net operating assets and liabilities was primarily due to: 28 CytomX Therapeutics, Inc. • a net decrease of $17.4 million in deferred revenue resulting from the continued recognition of deferred revenue from existing and new customers; • a decrease of $8.0 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; offset by • an increase of $34.9 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. Cash Flows from Investing Activities During the three months ended March 31, 2024, cash provided by investing activities was $44.9 million consisted of $45.0 million of proceeds from the maturities of short-term investments partially offset by $0.1 million of capital expenditures used to purchase property and equipment. During the three months ended March 31, 2023, cash used in investing activities was $146.6 million used to purchase short-term investments. Cash Flows from Financing Activities During the three months ended March 31, 2024, cash provided by financing activities was $0.2 million consisted of proceeds from the exercise of stock options. During the three months ended March 31, 2023, there were no financing activities. Contractual Obligations During the three months ended March 31, 2024, 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, 2023. 29 CytomX Therapeutics, Inc. Item 3. Quantitative and Qualitat ive Disclosure About Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. Item 4. Controls and Proc edures Evaluation of Disclosure Controls and Procedures The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”) refers to controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its Principal Executive and Principal Financial Officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. 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 March 31, 2024, 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 at the reasonable assurance level as of March 31, 2024. Changes in Internal Controls 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 March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 30 CytomX Therapeutics, Inc. PART II – OTHER INFORMATION