What changed in this filing

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Item 1. Financial Statements

2020-11-12 compared with 2020-08-12 · 232 added, 119 removed, 491 unchanged (42% of the section changed)

4 unchanged sentences

( Unaudited )

September 30,

Current assets

12 unchanged sentences

Accrued liabilities

Contract liability

Lease liabilities

1 unchanged sentence

Total current liabilities

Long-term contract liability

Long-term lease liabilities

3 unchanged sentences

Stockholders’ equity

Preferred stock, $0.0001 par value, 10,000,000 shares authorized as of June 30,

2020 and December 31, 2019;

no shares issued and outstanding as of

June 30, 2020 and December 31, 2019

Preferred stock, $0.0001 par value, 10,000,000 shares authorized as of

September 30, 2020 and December 31, 2019;

no shares issued and

outstanding as of September 30, 2020 and December 31, 2019

Common stock, $0.0001 par value, 300,000,000 shares authorized as of

June 30, 2020 and December 31, 2019;

27,184,824 and 20,339,461 shares

issued and outstanding as of June 30, 2020 and December 31, 2019

September 30, 2020 and December 31, 2019;

29,066,161 and 20,339,461

shares issued and outstanding as of September 30, 2020 and

December 31, 2019

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Collaboration revenue

Total revenue

Operating expenses

3 unchanged sentences

Loss from operations

Interest income and other income (expense), net

Change in unrealized (losses) gains on marketable

Interest income and other income (expense),

Change in unrealized (losses) gains on

marketable securities

Comprehensive loss

Net loss per common share, basic and diluted

Weighted average number of common shares outstanding

used in computing net loss per share, basic and diluted

Weighted average number of common shares

outstanding used in computing net loss per

share, basic and diluted

The accompanying notes are an integral part of these condensed financial statements.

IDEAYA Biosciences, Inc.

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Condensed Statements of Stockholders’ Equity

( in thousands, except share amounts )

( Unaudited )

Redeemable Convertible

Stockholders'

Preferred Stock

Comprehensive

Stockholders'

Income (Loss)

Balances as of March 31, 2020

Issuance of common stock upon follow-on public offering, net of

issuance costs

Balances as of June 30, 2020

Issuance of common stock upon follow-on public offering, net of issuance costs

Issuance of common stock in private placement, net of issuance costs

Issuance of common stock upon exercise of stock options

Employee stock purchase plan (ESPP) purchase

Repurchase of early exercised shares

1 unchanged sentence

Stock-based compensation

Other comprehensive income

Other comprehensive loss

Balances as of September 30, 2020

Balances as of June 30, 2019

Balances as of March 31, 2019

Conversion of redeemable convertible preferred stock into common

Issuance of common stock upon initial public offering, net of

issuance costs

Issuance of common stock upon exercise of stock options

Early exercised common stock options

Repurchase of early exercised shares

2 unchanged sentences

Other comprehensive income

Balances as of June 30, 2019

Balances as of September 30, 2019

The accompanying notes are an integral part of these condensed financial statements.

IDEAYA Biosciences, Inc.

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) — (Continued)

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

( in thousands, except share amounts )

8 unchanged sentences

issuance costs

Issuance of common stock in private placement, net of issuance costs

Issuance of common stock upon exercise of stock options

4 unchanged sentences

Other comprehensive loss

Balances as of June 30, 2020

Balances as of September 30, 2020

Balances as of December 31, 2018

8 unchanged sentences

Other comprehensive income

Balances as of June 30, 2019

Balances as of September 30, 2019

The accompanying notes are an integral part of these condensed financial statements.

3 unchanged sentences

( Unaudited )

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

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

Adjustments to reconcile net loss to net cash provided by (used in) operating activities

Depreciation and amortization

8 unchanged sentences

Accrued and other liabilities

Contract liabilities

Lease liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities

3 unchanged sentences

Sales of marketable securities

Net cash provided by investing activities

Net cash used in investing activities

Cash flows from financing activities

Proceeds from issuance of common stock upon public offering, net of issuance costs

Proceeds from issuance of common stock in private placement, net of issuance costs

Proceeds from exercise of common stock options, net of repurchases

13 unchanged sentences

Supplemental non-cash investing and financing activities:

Unpaid deferred offering costs

Vesting of early exercised options and restricted stock

Purchases of property and equipment in accounts payable and accrued liabilities

Unpaid offering costs

Conversion of redeemable convertible preferred stock into common stock

9 unchanged sentences

On June 22, 2020, the Company completed an underwritten public offering and sold and issued 6,666,667 shares of common stock at a price to the public of $15.00 per share for gross proceeds of $100.0 million.

The aggregate net proceeds to the Company were $93.6 million after deducting underwriting discounts and commissions and other offering costs.

On July 22, 2020, the Company sold and issued an additional 500,000 shares of common stock upon the exercise of the overallotment option by the underwriters for gross proceeds of $7.5 million.

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $116.9 million as of June 30, 2020.

The Company has historically financed its operations primarily through the sale of convertible notes, redeemable convertible preferred stock and common stock.

To date, none of the Company’s product candidates have been approved for sale, and the Company has not generated any revenue since inception.

The aggregate net proceeds to the Company were $100.7 million after deducting underwriting discounts and commissions and other offering costs.

Private Placement

The Company entered into a stock purchase agreement with Glaxo Group Limited, or GGL on June 17, 2020, pursuant to which, on August 3, 2020, the Company sold 1,333,333 shares at a price of $15.00 per shares to GGL for net proceeds of $20.0 million in a private placement.

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $121.9 million as of September 30, 2020.

The Company has historically financed its operations primarily through the sale of convertible notes, redeemable convertible preferred stock and common stock, and payments received from its collaboration arrangement.

To date, none of the Company’s product candidates have been approved for sale, and the Company has not generated any revenue from commercial products since inception.

Management expects operating losses to continue and increase for the foreseeable future, as the Company progresses into clinical development activities for its lead product candidates.

2 unchanged sentences

Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on the Company’s ability to achieve its intended business objectives.

As of June 30, 2020, the Company had cash, cash equivalents and marketable securities of $172.0 million.

As of September 30, 2020, the Company had cash, cash equivalents and marketable securities of $288.8 million.

Management believes that the Company’s current cash, cash equivalents and marketable securities will be sufficient to fund its planned operations for at least 12 months from the date of the issuance of these financial statements.

3 unchanged sentences

Certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the information required by GAAP for complete financial statements.

The accompanying balance sheet as of June 30, 2020, the statements of operations and comprehensive loss, of redeemable convertible preferred stock and stockholders’ equity (deficit) for the three and six months ended June 30, 2020 and June 30, 2019, and the statements of cash flows for the six months ended June 30, 2020 and June 30, 2019 are unaudited.

In the opinion of management, the unaudited data reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2020, the results of its operations and comprehensive loss for the three and six months ended June 30, 2020 and June 30, 2019 and its cash flows for the six months ended June 30, 2020 and June 30, 2019.

The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2020 and June 30, 2019 are also unaudited.

The results for the three and six months ended June 30, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim periods or any future year or period.

The accompanying balance sheet as of September 30, 2020, the statements of operations and comprehensive loss for the three and nine months ended September 30, 2020 and September 30, 2019, the statements of stockholders’ equity for the three months ended September 30, 2020 and September 30, 2019, the statements of redeemable convertible preferred stock and stockholders’ equity (deficit) for the nine months ended September 30, 2020 and September 30, 2019 and the

statements of cash flows for the nine months ended September 30 , 2020 and September 30 , 2019 are unaudited.

In the opinion of management, the unaudited data reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30 , 2020 , the results of its operations and comprehensive loss for the three a nd nine months ended September 30, 2020 and September 30, 2019 and its cash flows for the nine months ended September 30 , 2020 and September 30 , 2019 .

The financial data and other information disclosed in these notes related to the three and nine months ended September 30 , 2020 and September 30 , 2019 are also unaudited.

The results for the three and nine months ended September 30 , 2020 are not necessarily indicative of results to be expected for the year ending December 31, 20 20 , any other interim period s or any future year or period .

The accompanying interim unaudited condensed financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2019, which are included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 24, 2020 (the “Form 10-K”).

6 unchanged sentences

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period.

Such estimates include useful lives of property and equipment, determination of the discount rate for operating leases, accruals for research and development activities, stock-based compensation, and income taxes.

Such estimates include useful lives of property and equipment, determination of the discount rate for operating leases, accruals for research and development activities, revenue recognition, stock-based compensation, and income taxes.

Actual results could differ from those estimates.

20 unchanged sentences

Beginning in late 2019, the outbreak of a novel strain of virus named SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), or coronavirus, which causes coronavirus disease 2019, or COVID-19, has evolved into a global pandemic.

The extent of the impact of the coronavirus outbreak on the Company’s business will depend on certain developments, including the duration and spread of the outbreak and the extent and severity of the impact on the Company’s clinical trial activities, research activities and suppliers, all of which are uncertain and cannot be predicted.

The extent of the impact of t he coronavirus outbreak on the Company’s business will depend on certain developments, including the duration and spread of the outbreak and the extent and severity of the impact on the Company’s clinical trial activities , research activities and suppliers , all of which are uncertain and cannot be predicted.

At this point, the extent to which the coronavirus outbreak may materially impact the Company’s financial condition, liquidity or results of operations is uncertain.

The Company has expended and will continue to expend substantial funds to complete the research, development and clinical testing of product candidates.

The Company also will be required to expend additional funds to establish commercial-scale manufacturing arrangements a nd to provide for the marketing and distribution of products that receive regulatory approval.

The Company also will be required to expend additional funds to establish commercial-scale manufacturing arrangements and to provide for the marketing and distribution of products that receive regulatory approval.

The Company may require additional funds to commercialize its products.

The Company is unable to entirely fund these efforts with its current financial resources.

If adequate funds are unavailable on a timely basis from operations or additional sources of financing, the Company may have to delay, reduce the scope of or eliminate one or more of its research or development programs which would materially and adverse ly affect its business, financial condition and operations.

If adequate funds are unavailable on a timely basis from operations or additional sources of financing, the Company may have to delay, reduce the scope of or eliminate one or more of its research or development programs which would materially and adversely affect its business, financial condition and operations.

Concentration of Credit Risk

25 unchanged sentences

If a license to the Company’s intellectual property is determined to be distinct from the other promised goods or services identified in an arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license at the point in time when the license is transferred to the customer and the customer is able to use and benefit from the license.

For licenses that are bundled with other promises, the Company applie s judgment to assess the nature of the combined performance obligation t o 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 toward satisfying the performance obligation for purposes of recognizing revenue from non-r efundable, upfront fees.

For licenses that are bundled with other goods or services , the Company applie s judgment to assess the nature of the combined performance obl igation 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 toward satisfying the performance obligation for purposes of recognizing revenue f rom non-refundable, upfront fees.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of progress and related revenue recognition.

Customer options for additional goods or services:

If a contract contains customer options that allow the customer to acquire additional goods or services, including a license to the Company’s intellectual property, the goods and services underlying the customer options are evaluated to determine whether they are deemed to represent a material right.

In determining whether the customer option has a material right, the Company assesses whether there is an option to acquire additional goods or services at a discount.

If the customer option is determined not to represent a material right, the option is not considered to be a performance obligation.

If the customer option is determined to represent a material right, the material right is recognized as a separate performance obligation.

The Company allocates the transaction price to material rights based on the relative standalone selling price, which is determined based on the identified discount and the probability that the customer will exercise the option.

Amounts allocated to a material right are not recognized as revenue until the option is exercised.

Milestone payments:

6 unchanged sentences

however, it is not necessary for the Company to use the same approach for all contracts.

The Company expects to use the most likely amount method for development and regulatory milestone payments.

If it is probable that a significant revenue reversal would not occur when the uncertainty associated with the milestone is resolved, the associated milestone value is included in the transaction price.

9 unchanged sentences

The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

Contractual cost sharing payments received from a customer or collaboration partner are accounted for as variable consideration.

The Company includes an expected value in the transaction price.

Contractual cost sharing payments made to a customer or collaboration partner are accounted for as a reduction to the transaction price if such payments are not related to distinct goods or services received from the customer or collaboration partner.

Contracts may be amended to account for changes in contract specifications and requirements.

Contract modifications exist when the amendment either creates new, or changes existing, enforceable rights and obligations.

When contract modifications create new performance obligations and the increase in consideration approximates the standalone selling price for goods and services related to such new performance obligations as adjusted for specific facts and circumstances of the contract, the modification is ac counted for as a separate contract.

If a contract modification is not accounted for as a separate contract, the Company accounts for the promised goods or services not yet transferred at the date of the contract modification (the remaining promised goods o r services) prospectively, as if it were a termination of the existing contract and the creation of a new contract, if the remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification.

T he Company accounts for a contract modification as if it were a part of the existing contract if the remaining goods or services are not distinct and, therefore, form part of a single performance obligation that is partially satisfied at the date of the co ntract modification.

In such case the effect that the contract modification has on the transaction price, and on the entity’s measure of progress toward complete satisfaction of the performance obligation, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) at the date of the contract modification (the adjustment to revenue is made on a cumulative catch-up basis).

Contract modifications exist when the amendment either creates ne w, or changes existing, enforceable rights and obligations.

When contract modifications create new performance obligations and the increase in consideration approximates the standalone selling price for goods and services related to such new performance ob ligations as adjusted for specific facts and circumstances of the contract, the modification is accounted for as a separate contract.

If a contract modification is not accounted for as a separate contract, the Company accounts for the promised goods or ser vices not yet transferred at the date of the contract modification (the remaining promised goods or services) prospectively, as if it were a termination of the existing contract and the creation of a new contract, if the remaining goods or services are dis tinct from the goods or services transferred on or before the date of the contract modification.

The Company accounts for a contract modification as if it were a part of the existing contract if the remaining goods or services are not distinct and, therefo re, form part of a single performance obligation that is partially satisfied at the date of the contract modification.

In such case the effect that the contract modification has on the transaction price, and on the entity’s measure of progress toward compl ete satisfaction of the performance obligation, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) at the date of the contract modification (the adjustment to revenue is made on a cumulative catch-up basis).

Upfront payment contract liabilities resulting from the Company’s license and collaboration agreements do not represent a financing component as the payment is not financing the transfer of goods and services, and the technology underlying the licenses granted reflects research and development expenses already incurred by the Company.

23 unchanged sentences

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.

ASU 2018-15 requires that certain implementation costs incurred in a cloud computing arrangement be deferred and recognized over the term of the arrangement.

ASU 2018-15 requires that certain implementation costs incurred in a cloud comput ing arrangement be deferred and recognized over the term of the arrangement.

For public business entities, this ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

37 unchanged sentences

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

As of June 30, 2020, financial assets measured and recognized at fair value are as follows (in thousands):

June 30, 2020

As of September 30, 2020, financial assets measured and recognized at fair value are as follows (in thousands):

September 30, 2020

government securities

Corporate bonds

Commercial paper

Marketable securities

11 unchanged sentences

Included in cash and cash equivalents on the balance sheet

As of June 30 , 2020, all marketable securities had a remaining maturity of one year or less , except for corporate bonds with a fair value of $1.5 million that had maturities of one to two years .

As of December 31, 2019, all marketable securities had a remaining maturity of one year or less, except for corporate bonds with a fair value of $1.5 mi llion that had maturities of one to two years.

There were no financial liabilities measured and recognized at fair value as of June 30 , 20 20 and December 31, 201 9 .

As of September 30 , 2020, all marketable securities had a remaining maturity of one year or less , except for corporate bonds with a fair value of $1 0.2 million that had maturities of one to two years .

As of December 31, 2019, all marketable securities had a remaining maturity of one year or less, except for corporate bonds with a fair value o f $1.5 million that had maturities of one to two years.

There were no financial liabilities measured and recognized at fair value as of September 30 , 20 20 and December 31, 201 9 .

Balance Sheet Components

1 unchanged sentence

Property and equipment, net consisted of the following (in thousands):

September 30,

Laboratory equipment

6 unchanged sentences

Property and equipment, net

Depreciation and amortization expense was $0.4 million and $0.3 million for the three months ended June 30, 2020 and June 30, 2019, respectively, and $0.7 million and $0.6 million for the six months ended June 30, 2020 and June 30, 2019, respectively.

Depreciation and amortization expense was $0.3 million and $0.3 million for the three months ended September 30, 2020 and September 30, 2019, respectively, and $1.0 million and $0.9 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

Accrued salaries and benefits

September 30,

Accrued research and development expenses

Accrued salaries and benefits

Legal and professional fees

Accrued liabilities

Operating Leases

The Company leases its laboratory and office facilities in South San Francisco, California under a non-cancelable operating lease with expiration date in July 2024 (“Original Lease”).

On September 30, 2019, the Company and the landlord of the laboratory and office facilities in South San Francisco entered into a second amendment (“Second Amendment”) to lease additional office spaces at the same location.

The Company accounts for the Second Amendment as a separate contract and recognized a related right-of-use (“ROU”) asset and lease liability of $1.2 million on the lease commencement date in August 2020.

The maturities of operating lease liabilities as of September 30, 2020 are as follows (in thousands):

As of September 30, 2020

Operating Leases

Remaining fiscal 2020

Total lease payments

Present value of lease liabilities

Amounts recognized on the balance sheet

Current lease liabilities

Long-term lease liabilities

Total lease liabilities

Operating lease cost was $0.4 million and $0.4 million for the three months ended September 30, 2020 and September 30, 2019, respectively, and $1.1 million and $1.2 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

As of September 30, 2020, the ROU assets of $5.5 million are included in non-current assets on the balance sheet, and lease liabilities of $7.1 million are included in current liabilities and non-current liabilities on the balance sheet.

As of September 30, 2020, the remaining term for the operating lease in South San Francisco, California is 3.8 years, and the discount rate used to measure the lease liability for such operating lease upon recognition is 7.0% for the Original Lease and 6.0% for the Second Amendment.

During the nine months ended September 30, 2020, cash paid for amounts included in operating lease liabilities of $1.2 million is included in cash flows from operating activities on the statement of cash flows.

Commitments and Contingencies

2 unchanged sentences

The Company accrues for these matters when it is probable that future expenditures will be made and these expenditures can be reasonably estimated.

As of June 30, 2020, the Company does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

As of September 30, 2020, the Company does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Indemnification

The Company enters into standard indemnification arrangements in the ordinary course of business with vendors and other parties.

The Company enters into standard indemnification arrangements in the ordinary course of business with vendors, clinical trial sites and other parties.

Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party.

3 unchanged sentences

As a result, the Company believes the fair value of these agreements is not material.

The Company did not record a federal or state income tax provision or benefit for the six months ended June 30, 2020 and June 30, 2019 as it has incurred net losses since inception.

The Company did not record a federal or state income tax provision or benefit for the nine months ended September 30, 2020 and September 30, 2019 as it has incurred net losses since inception.

In addition, the net deferred tax assets generated from net operating losses are fully offset by a valuation allowance as the Company believes it is not more likely than not that the benefit will be realized.

3 unchanged sentences

The CARES Act also provides other non-tax benefits to assist those impacted by the pandemic.

The Company evaluated the impact of the CARES Act and determined that there is no material impact to the income tax provision for the quarter ended June 30, 2020.

The Company evaluated the impact of the CARES Act and determined that there is no material impact to the income tax provision for the quarter ended September 30, 2020 .

On June 29, 2020, California Assembly Bill 85 (AB 85) was signed into law, which suspends the use of net operating losses and limits the use of research tax credits for 2020, 2021 and 2022, respectively.

The Company evaluated the impact of AB 85 and determined that the new legislation did not materially impact the Company’s income tax provision for the quarter ended June 30, 2020.

As of June 30, 2020 and December 31, 2019, the Company’s certificate of incorporation authorized the Company to issue 300,000,000 shares of common stock at a par value of $0.0001 per share.

The Company evaluated the impact of AB 85 and determined that the new legislation did not materially impact the Company’s income tax provision for the quarter ended September 30, 2020.

As of September 30, 2020 and December 31, 2019, the Company’s certificate of incorporation authorized the Company to issue 300,000,000 shares of common stock at a par value of $0.0001 per share.

Each share of common stock is entitled to one vote.

The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors.

As of June 30, 2020 and December 31, 2019, no dividends have been declared to date.

As of September 30, 2020 and December 31, 2019, no dividends have been declared to date.

The Company had reserved common stock for future issuance as follows:

September 30,

Exercise of outstanding options under the 2015 and 2019 Plans

23 unchanged sentences

A total of 195,000 shares of common stock were initially reserved for issuance under the ESPP, subject to an annual increase on January 1 of each year, beginning on January 1, 2020.

For the six months ended June 30, 2020, the Company recorded less than $0.1 million of compensation expense related to participation in the ESPP.

For the nine months ended September 30, 2020, the Company recorded less than $0.1 million of compensation expense related to participation in the ESPP.

Stock-Based Compensation Expense

Total stock-based compensation expense recorded related to awards granted to employees and non-employees was as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

10 unchanged sentences

Options canceled

Balance, June 30, 2020

Exercisable as of June 30, 2020

Balance, September 30, 2020

Exercisable as of September 30, 2020

Vested and expected to vest as of

June 30, 2020

The weighted-average grant-date fair value of options granted during the six months ended June 30, 2020 and June 30, 2019 was $5.38 and $7.50 per share, respectively.

The aggregate intrinsic value of options exercised for the six months ended June 30, 2020 and June 30, 2019 was $1.0 million and $0.5 million, respectively.

September 30, 2020

The weighted-average grant-date fair value of options granted during the nine months ended September 30 , 2020 and September 30 , 2019 was $ 6.00 and $ 7.20 per share, respectively.

The aggregate intrinsic value of options exercised for the nine months ended September 30 , 2020 and September 30 , 2019 was $ 1.4 millio n and $ 0.7 million, respectively.

Intrinsic values are calculated as the difference between the exercise price of the underlying options and the fair value of the common stock on the date of exercise.

As of June 30, 2020 and December 31, 2019, total unrecognized stock-based compensation expense for stock options was $8.3 million and $5.9 million, respectively, which is expected to be recognized over a weighted-average period of 2.73 years and 2.81 years, respectively.

As of September 30, 2020 and December 31, 2019, total unrecognized stock-based compensation expense for stock options was $9.0 million and $5.9 million, respectively, which is expected to be recognized over a weighted-average period of 2.67 years and 2.81 years, respectively.

Early Exercise of Stock Options

2 unchanged sentences

The proceeds are initially recorded in other liabilities from the early exercise of stock options and are reclassified to additional paid-in capital as the Company’s repurchase right lapses.

During the six months ended June 30, 2020 and June 30, 2019, the Company repurchased 5,169 and 11,882 shares of common stock, respectively.

As of June 30, 2020 and December 31, 2019, shares that were subject to repurchase were 44,861 and 84,964, respectively.

The aggregate exercise price of early exercised shares as of June 30, 2020 and December 31, 2019 was less than $0.1 million and $0.1 million, respectively, which were recorded in other current liabilities and other non-current liabilities.

During the nine months ended September 30, 2020 and September 30, 2019, the Company repurchased 10,518 and 14,244 shares of common stock, respectively.

As of September 30, 2020 and December 31, 2019, shares that were subject to repurchase were 26,463 and 84,964, respectively.

The aggregate exercise price of early exercised shares as of September 30, 2020 and December 31, 2019 was less than $0.1 million and $0.1 million, respectively, which were recorded in other current liabilities and other non-current liabilities.

Black-Scholes Assumptions

The fair values of options were calculated using the assumptions set forth below:

June 30, 2020

June 30, 2019

Six Months Ended

June 30, 2020

Six Months Ended

June 30, 2019

September 30, 2020

September 30, 2019

Nine Months Ended

September 30, 2020

Nine Months Ended

September 30, 2019

Expected term

1 unchanged sentence

5.5 - 6.1 years

5.4 - 6.1 years

Expected volatility

2 unchanged sentences

84.9% - 95.1%

77.2% - 82.2%

Risk-free interest rate

19 unchanged sentences

Unvested, December 31, 2019

Unvested, June 30, 2020

As of June 30, 2020 and December 31, 2019, 14,625 shares of restricted stock were outstanding with an aggregate purchase price of less than $0.1 million, which is recorded in other non-current liabilities on the balance sheets.

Unvested, September 30, 2020

As of September 30, 2020 and December 31, 2019, 14,625 shares of restricted stock were outstanding with an aggregate purchase price of less than $0.1 million, which is recorded in other non-current liabilities on the balance sheets.

The restricted stock vests upon the achievement of pre-defined research milestones.

2 unchanged sentences

As the restricted stock was purchased by an employee at a price equal to its fair value at the time of issuance, there was no stock-based compensation expense related to these awards.

The total fair value of restricted stock vested during the six months ended June 30, 2020 and June 30, 2019 was zero and less than $0.1 million, respectively.

The total fair value of restricted stock vested during the nine months ended September 30, 2020 and September 30, 2019 was zero and less than $0.1 million in each period.

Significant Agreements

1 unchanged sentence

In June 2020, the Company entered into a Collaboration, Option and License Agreement, or the GSK Collaboration Agreement, with an affiliate of GlaxoSmithKline, GLAXOSMITHKLINE INTELLECTUAL PROPERTY (NO.

4), Limited, or GSK, pursuant to which the Company and GSK have entered into a collaboration and collaboration for its synthetic lethality programs targeting methionine adenosyltransferase 2a, or MAT2A, DNA Polymerase Theta, or Pol Theta or POLQ, and Werner Helicase, or WRN.

The GSK Collaboration Agreement is expected to become effective on the date that the parties receive Hart-Scott-Rodino Antitrust Improvements Act clearance, or HSR Clearance, therefor, or the Effective Date.

As of June 30, 2020, the GSK Collaboration Agreement is a wholly unperformed contract for the purpose of application of ASC 606;

as such, the GSK Collaboration Agreement does not result in any impact on the Company’s financial position as of June 30, 2020 and the results of its operations and cash flows for the three and six months ended June 30, 2020.

Pursuant to the GSK Collaboration Agreement, GSK has agreed to pay the Company $100.0 million (the “Upfront Payment”) within ten business days of the Effective Date of the GSK Collaboration Agreement.

On July 27, 2020, the Company and GSK received HSR Clearance, and the GSK Collaboration Agreement became effective.

4), Limited, or GSK, pursuant to which the Company and GSK have entered into a collaboration for its synthetic lethality programs targeting methionine adenosyltransferase 2a, or MAT2A, DNA Polymerase Theta, or Pol Theta or POLQ, and Werner Helicase, or WRN.

On July 27, 2020 (“Effective Date”), the Company and GSK received Hart-Scott-Rodino Antitrust Improvements Act clearance, or HSR Clearance, and the GSK Collaboration Agreement became effective.

Pursuant to the GSK Collaboration Agreement, GSK agreed to pay the Company $100.0 million (the “Upfront Payment”) within ten business days of the Effective Date of the GSK Collaboration Agreement.

On July 31, 2020, the Company received the Upfront Payment.

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GSK will be solely responsible for costs of the conduct of the MAT2A Combination Trial, except for supply of the MAT2A product therefor, to be provided by the Company at its own cost.

Subject to GSK’s exercise of the Option, GSK will lead later stage global clinical development for the MAT2A program, with IDEAYA responsible for 20% and GSK responsible for 80% of further development costs.

The cost-sharing percentages will be adjusted based on the actual ratio of U.S.

Subject to GSK’s exerc ise of the Option, GSK will lead later stage global clinical development for the MAT2A program, with IDEAYA responsible for 20% and GSK responsible for 80% of further development costs.

The cost-sharing percentages will be adjusted based on the actual rati o of U.S.

to global profits for MAT2A products, as measured three and six years after global commercial launch thereof.

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net profits and tiered royalties on global non-U.S.

net sales (as defined) of MAT2A products by GSK, its affiliates and their sublicensees ranging from high single digit to sub-teen double digit percentages, subject to certain customary reductions.

net sales of MAT2A products by GSK, its affiliates and their sublicensees ranging from high single digit to sub-teen double digit percentages, subject to certain customary reductions.

The Company will have a right to opt-out of the 50% U.S.

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Each party has the right to sublicense its rights under the GSK Collaboration Agreement subject to certain conditions.

The GSK Collaboration Agreement will continue in effect on a product-by-product and country-by-country basis until the expiration of the obligation to make payments under the GSK Collaboration Agreement with respect to such product in each country, unless earlier terminated by either party pursuant t o its terms.

Either the Company or GSK may terminate the GSK Collaboration Agreement for the other party’s insolvency or certain uncured breaches.

The Company may terminate the GSK Collaboration Agreement if GSK or any of its sublicensees or affiliates cha llenge certain patents of the Company.

GSK may terminate the GSK Collaboration Agreement in its entirety or on a target-by-target basis upon certain notice to the Company .

The Company may terminate the GSK Collaboration Agreement if GSK or any of its sublicensees or affiliates challenge certain patents of the Company.

GSK may terminate the GSK Collaboration Agreement in its entirety or on a target-by-target basis upon 90-day notice to the Company.

Pfizer Clinical Trial Collaboration and Supply Agreement

In March 2020, the Company entered into a clinical trial collaboration and supply agreement with Pfizer Inc., or the Supply Agreement, pursuant to which Pfizer will supply the Company with their MEK inhibitor, binimetinib, to evaluate the combination in patients with tumors harboring activating GNAQ or GNA11 hotspot mutations.

Under the Supply Agreement, the Company will sponsor a Phase 1/2 clinical trial for its product candidate, IDE196, and Pfizer will supply the Company with binimetinib for use in the clinical trial at no cost to the Company.

In March 2020, the Company entered into a clinical trial collaboration and supply agreement with Pfizer Inc., or the Supply Agreement, which was subsequently amended in September 2020.

Pursuant to the Supply Agreement, Pfizer supplies the Company with their MEK inhibitor, binimetinib, and cMET inhibitor, crizotinib, to evaluate the combination in patients with tumors harboring activating GNAQ or GNA11 hotspot mutations.

Under the Supply Agreement, the Company will sponsor a Phase 1/2 clinical trial for its product candidate, IDE196, and Pfizer will supply the Company with binimetinib and crizotinib for use in the clinical trial at no cost to the Company.

The Supply Agreement provides that the Company and Pfizer will jointly own clinical data generated from the clinical trial.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 for the GSK Collaboration Agreement (see No.

10, Significant Agreements).

Contract balances

As of September 30, 2020, the company had $91.0 million of contract liabilities, and no balance of accounts receivable or contract asset related to the GSK Collaboration Agreement.

The timing of revenue recognition, billings, and cash collections results in accounts receivable, contract assets, and contract liabilities on the balance sheets.

Subsequent to each quarter end, when the Company and GSK finalizes the reimbursable program costs, the Company recognizes accounts receivable, which are derecognized upon reimbursement.

When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded.

Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

Performance obligations

The Company has identified the following six performance obligations associated with the GSK Collaboration Agreement:

Preclinical and Phase 1 Monotherapy clinical research and development services under the MAT2A program (“MAT2A R&D Services”)

Preclinical research services and the related license to IDEAYA-owned technology under the Pol Theta program (“Pol Theta R&D Services”)

Preclinical research services and the related license to IDEAYA-owned technology under the WRN program (“WRN R&D Services”)

Material right associated with the option to license IDEAYA-owned technology under the MAT2A program (defined as the “Option” in Note 10)

Material right associated with the option to license to IDEAYA-owned technology under the MAT2A program to the extent necessary for preclinical activities in preparation for the MAT2A Combination Trial (“Preclinical MAT2A License”)

Material right associated with the supply of MAT2A product for the MAT2A Combination Trial (“MAT2A Supply”)

The Company will recognize revenue related to amounts allocated to the MAT2A R&D services as the underlying services are performed over the period through the delivery of the data package, which will be generated from its conduct of the MAT2A Phase 1 monotherapy clinical trial.

The Company uses its internal research and development capability and may also engage third-party clinical research organizations, or CROs, in transferring the MAT2A R&D services, for which the Company acts as a principal.

With respect to the Pol Theta and WRN programs, the Company identified two promises:

(1) granting of the license to develop and commercialize Pol Theta and WRN products, respectively, and (2) the preclinical research services.

The Company has determined that these two promises are not distinct within the context of the contract.

As of the effective date of the GSK Collaboration Agreement, both programs were at an early stage, and the Company was yet to identify any development candidate for either program, which will require the completion of certain preclinical studies.

After the Company and GSK identify a development candidate, a series of IND-enabling studies will be conducted before an Investigational New Drug application is submitted to the FDA.

Due to the early stage of development, the Company’s preclinical research services are expected to transform the underlying technology and significantly modify or customize the license.

Therefore, the two promises are not distinct from each other and are accounted for as a single performance obligation for each of the Pol Theta and WRN programs, respectively.

The Company will recognize revenue related to amounts allocated to the Pol Theta R&D Services and WRN R&D Services as the underlying services are performed over the period through the completion of the Pol Theta and WRN preclinical research programs, respectively.

Within 90 days from the end of each calendar quarter, GSK will reimburse the Pol Theta program costs incurred by the Company.

Within 75 days from the end of each calendar quarter, the Company and GSK will determine the amounts of WRN program costs incurred by both parties and the net amount owed by GSK to the Company or by the Company to GSK, which will be paid within 75 days from such determination by a reimbursing party.

The Company uses its internal research capability and may also engage third-party clinical research organizations, or CROs, in transferring the Pol Theta R&D services and WRN R&D services, for which the Company acts as a principal.

Upon exercise of the Option, GSK will obtain the license to develop and commercialize MAT2A products.

The Company has concluded that this Option results in a material right as the option exercise fee contains a discount that GSK would not have otherwise received.

The Company has determined the nature of the license to develop and commercialize MAT2A products to be functional.

After exercise of the Option, the Company will recognize revenue, when it makes the underlying MAT2A technology available to GSK, which will immediately be able to use and benefit from its right to use the intellectual property.

The Company has identified two additional customer options under the MAT2A program, both of which have been determined a material right.

G SK may elect to conduct certain pre clinical activities in preparation for the MAT2A Combination Trial and may elect to exercise the option to license to MAT2A technology.

GSK may be able to use and exploit the license to the extent necessary for GSK’s performance of such preclinical activit ies.

The Company will not receive any consideration for providing such license and has concluded that this license option results in a material right as it involves a discount that GSK would not have otherwise received.

The Company has determined the natur e of such license to MAT2A technology to be functional.

As of September 30, 2020, GSK has exercised the Preclinical MAT2A License, and t he Company has made the underlying MAT2A technology available to GSK, which is immediately able to use and benefit from its right to use the intellectual property.

Accordingly, the Company recognized revenue from the Preclinical MAT2A License in the quarter ended September 30, 2020.

If GSK elects to conduct the MAT2A Combination Trial, the Company will supply MAT2A product to be used for the MAT2A Combination Trial at its own cost.

The Company has concluded that this supply option results in a material right as it involves a discount that GSK would not have otherwise received.

The Company will recognize revenue, as it transfers the control of the MAT2A product to GSK.

The Company has not supplied MAT2A product as of September 30, 2020.

Transaction price allocated to the remaining performance obligations

At inception of the GSK Collaboration Agreement, the Company determined that the transaction price was $108.5 million, including the Upfront Payment, and the estimated reimbursable program costs.

The remaining aggregated performance obligations as of September 30, 2020 were $96.6 million, $48.7 million of which is expected to be satisfied over the next 12 months.

The Company applies the sales-based royalty exception to the commercial milestones and tiered royalties for all programs because GSK would ascribe significantly more value to the license than to the other goods or services to which the commercial milestones and tiered royalties relate.

The Company will be entitled to receive the commercial milestones either when the first commercial sale occurs, or when the predefined net sales in a calendar year are achieved, upon which the variability will be resolved.

Also, the Company will be entitled to receive the tiered royalties during a calendar year when global net sales of each product occur, upon which the variability will be resolved.

Significant judgements

In applying ASC 606 to the GSK Collaboration Agreement, the Company made the following judgments that significantly affect the timing and amount of revenue recognition:

Determination of the transaction price, including whether any variable consideration is included at inception of the contract

The transaction price is the amount of consideration that the Company expects to be entitled to in exchange for transferring promised goods or services to the customer.

The transaction price must be determined at inception of a contract and may include amounts of variable consideration.

However, there is a constraint on inclusion of variable consideration in the transaction price, if there is uncertainty at inception of the contract as to whether such consideration will be recognized in the future.

The decision as to whether or not it is probable that a significant reversal of revenue will occur in the future, depends on the likelihood and magnitude of the reversal and is highly susceptible to factors outside the Company’s influence (for example, the Company cannot determine the outcome of clinical trials;

the Company cannot determine if or when the counterparty will initiate or complete clinical trials;

and the Company cannot determine if or when an regulatory agency provides any approval).

In addition, the uncertainty is not expected to be resolved for a long period and finally, the Company has limited experience in the field.

Therefore, at inception of the GSK Collaboration Agreement, development and regulatory milestones were fully constrained and were not included in the transaction price based on the factors noted above.

The Company constrains estimates of other variable consideration , such as reimbursable program costs, to amounts that are not expected to result in a significa nt revenue reversal in the future.

The Company re-evaluates the transaction price, including the estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved o r other changes in circumstances occur.

Determination of the estimate of the standalone selling price of performance obligations

In order to recognize revenue under ASC 606, for contracts for which more than one distinct performance obligation has been identified, the Company must allocate the transaction price to the performance obligations based upon their standalone selling prices.

The best evidence of standalone selling price is an observable price of a good or service when sold separately by an entity in similar circumstances to similar customers.

If such evidence is not available, standalone selling price should be estimated so that the amount that is allocated to each performance obligation equals the amount that the entity expects to receive for transferring goods or services.

The Company has identified more than one performance obligation in the GSK Collaboration Agreement.

Since evidence based on observable prices is not available for the performance obligations, the Company considered market conditions and entity-specific factors, including those contemplated in negotiating the agreements, as well as certain internally developed estimates.

The Company determined the estimate of standalone selling price of the MAT2A R&D Services, Pol Theta R&D Services, and WRN R&D Services by using the expected costs of satisfying the performance obligation, adjusted for probabilities of technical success where appropriate.

The Company determined the estimate of standalone selling price of the Option by using risk-adjusted net present value analysis.

Finally, the Company determined the estimate of standalone selling price of the Preclinical MAT2A License and MAT2A Supply by using the expected costs of satisfying the performance obligation.

Determination of the method of allocation of the transaction price to the distinct performance obligations

At inception of the GSK Collaboration Agreement, the Company allocated the transaction price among the six performance obligations based on their relative selling prices, determined as described above.

Determination of the timing of satisfaction of performance obligations

The Company recognizes revenue from the MAT2A R&D Services, Pol Theta R&D Services and WRN R&D Services over time, as GSK simultaneously receives and consumes the benefits provided by the Company’s performance as the Company performs.

The Company measures its progress toward complete satisfaction of the MAT2A R&D Services, Pol Theta R&D Services and WRN R&D Services based on the costs incurred as a percentage of the estimated total costs to be incurred to complete the performance obligations.

As the Company performs, it shares the results of research and development studies with GSK through the joint development committee.

Accordingly, the cost incurred method faithfully depicts the Company’s performance of the MAT2A R&D Services, Pol Theta R&D Services and WRN R&D Services.

The license to IDEAYA-owned technology under the MAT2A program underlying the Option and Preclinical MAT2A License is functional in nature.

Upon the exercise of the material right associated with the option to license to IDEAYA-owned technology under the MAT2A program, the Company will recognize revenue upon the later of transfer of the underlying technology to GSK and the beginning of the period during which GSK is able to use and benefit from its right to use the underlying technology.

After the exercise of the material right associated with the supply of MAT2A product for the MAT2A Combination Trial, the Company recognize revenue as it transfers the control of MAT2A product to GSK.

Net Loss Per Share Attributable to Common Stockholders

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net loss attributable to common stockholders

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The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:

As of June 30,

As of September 30,

Options to purchase common stock

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Unvested early exercised common stock options

As of June 30 , 2020, the Company has contributions from plan participant s of $0.

2 million under the ESPP, which if converted, would be equivalent to 24,863 shares based on 85% of the stock price at the beginning of the offering period .

Subsequent Events

Exercise of the Overallotment Option

On July 22, 2020, the Company sold and issued additional 500,000 shares of common stock upon the exercise of the overallotment option by the underwriters for gross proceeds of $7.5 million.

Effectiveness of the GSK Collaboration Agreement

On July 27, 2020, the Company and GSK received HSR Clearance, and the GSK Collaboration Agreement became effective.

On July 31, 2020, the Company received the Upfront Payment.

Private placement with GSK

Pursuant to the terms of the GSK Collaboration Agreement, the Company has entered into a stock purchase agreement with Glaxo Group Limited, or GGL, an entity affiliated with GSK, on June 17, 2020, pursuant to which GGL will purchase, subject to certain conditions, shares of the Company’s common stock.

Under the stock purchase agreement, GGL is obligated to purchase in a private placement, at a price of $15.00 per share, 1,333,333 shares of the Company’s common stock (“Private Placement”).

On August 3, 2020, the Private Placement was closed, and the Company sold 1,333,333 shares at a price of $15.00 per shares to GGL for gross proceeds of $20.0 million.

As of September 30, 2020, the Company has contributions from plan participants of $0.2 million under the ESPP, which if converted, would be equivalent to 22,236 shares based on 85% of the stock price at the beginning of the offering period.

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

What changed 10-Q

Item 1. Financial Statements