What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-23 compared with 2020-03-24 · 412 added, 361 removed, 653 unchanged (54% of the section changed)

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Changes in Internal Control Over Financial Reporting

We completed an implementation of a new enterprise resource planning, or ERP, system during the fourth quarter of 2019.

The ERP system replaced or enhanced certain internal financial, operating and other systems that are critical to our business operations.

The ERP implementation affected the processes that constitute our internal control over financial reporting.

Management has taken steps to ensure that appropriate controls were designed and implemented as the new ERP system was implemented.

With the exception of the ERP implementation described above, there were no changes in the Company's internal control over financial reporting that occurred during the quarterly period ended December 31, 2019 that have materially affected, or are reasonably likely to materially effect, the Company's internal control over financial reporting.

There were no changes in the Company's internal control over financial reporting that occurred during the quarterly period ended December 31, 2020 that have materially affected, or are reasonably likely to materially effect, the Company's internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by the rules of the SEC for newly public companies.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).

Under the supervision of and with the participation of our principal executive officer and principal financial officer, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control—Integrated Framework” (2013).

Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2020.

This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm on our internal control over financial reporting due to an exemption established by the JOBS Act for “emerging growth companies.”

Other Information

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Employment Agreement by and between IDEAYA Biosciences, Inc.

and Julie Hambleton.

Employment Agreement by and between IDEAYA Biosciences, Inc.

and Mark Lackner.

Employment Agreement by and between IDEAYA Biosciences, Inc.

and Paul Stone.

Employment Agreement by and between IDEAYA Biosciences, Inc.

Amended and Restated Employment Agreement by and between IDEAYA Biosciences, Inc.

and Jason Throne.

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17, LLC dated September 30, 2019.

Clinical Trial Collaboration and Supply Agreement between IDEAYA Biosciences, Inc.

and Pfizer Inc.

dated as of March 11, 2020.

Amendment No.

1 to Clinical Trial Collaboration and Supply Agreement between Pfizer Inc.

and IDEAYA Biosciences, Inc.

dated as of September 23, 2020.

Collaboration, Option and License Agreement between GlaxoSmithKline Intellectual Property (No.

4) Limited and IDEAYA Biosciences, Inc.

dated as of June 15, 2020.

Consent of Independent Registered Public Accounting Firm.

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XBRL Taxonomy Extension Presentation Linkbase Document

Confidential treatment has been granted for certain information contained in this exhibit.

Such information has been omitted and filed separately with the SEC.

Certain information in this exhibit has been excluded pursuant to Regulation S-K, Item 601(b)(10).

Indicates management contract or compensatory plan.

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Notes to Financial Statements

Report of Independent Registe red Public Accounting Firm

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of IDEAYA Biosciences, Inc.

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We conducted our audits of these financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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Short-term marketable securities

Accounts receivable

Prepaid expenses and other current assets

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Property and equipment, net

Deferred offering costs

Right-of-use assets

Other non-current assets

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’

Equity (Deficit)

Liabilities and Stockholders’ Equity

Current liabilities

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Accrued liabilities

Deferred rent

Lease liabilities

Contract liability

Operating lease liabilities, current

Other current liabilities

Total current liabilities

Deferred rent

Long-term lease liabilities

Long-term contract liability

Long-term operating lease liabilities

Other non-current liabilities

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Commitments and contingencies (Note 6)

Series A redeemable convertible preferred stock, $0.0001 par value, no shares

authorized as of December 31, 2019 and 59,433,105 shares authorized as of

December 31, 2018;

no shares issued and outstanding as of December 31, 2019 and

5,794,727 shares issued and outstanding as of December 31, 2018;

value of $0 as of December 31, 2019 and $47,178 as of December 31, 2018

Series B redeemable convertible preferred stock, $0.0001 par value, no shares

authorized as of December 31, 2019 and 75,500,000 shares authorized as of

December 31, 2018;

no shares issued and outstanding as of December 31, 2019 and

7,345,067 shares issued and outstanding as of December 31, 2018;

value of $0 as of December 31, 2019 and $97,520 as of December 31, 2018

Stockholders’ equity (deficit)

Stockholders’ equity

Preferred stock, $0.0001 par value, 10,000,000 shares authorized as of December 31,

2019 and no shares authorized as of December 31, 2018;

no shares issued

and outstanding as of December 31, 2019 and December 31, 2018

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

December 31, 2019 and 170,800,000 shares authorized as of December 31, 2018;

20,339,461 and 1,335,690 shares issued and outstanding as of December 31, 2019

2020 and December 31, 2019;

no shares issued and outstanding as of

December 31, 2020 and December 31, 2019

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

December 31, 2020 and December 31, 2019;

29,537,216 and 20,339,461 shares

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

Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

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

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Year Ended December 31,

Collaboration revenue

Total revenue

Operating expenses

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Loss from operations

Interest income

Other income (expense), net

Unrealized gains (losses) on marketable securities

Comprehensive income (loss)

Net loss per share attributable to common stockholders, basic and

Weighted-average shares used in computing net loss per share

attributable to common stockholders, basic and diluted

Interest income and other income (expense), net

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

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

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Redeemable Convertible

Stockholders'

Preferred Stock

Comprehensive

Stockholders'

Income (Loss)

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convertible preferred stock liability of $3,137

Issuance of common stock upon exercise of stock options

Early exercised common stock options

Vesting of early exercised common stock options and restricted stock

Stock-based compensation

Other comprehensive loss

Balances as of December 31, 2017

Issuance of Series A redeemable convertible preferred stock,

net of issuance costs of $5, adjusted for the redeemable

convertible preferred stock liability of $3,137

Issuance of Series B redeemable convertible preferred stock,

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Issuance of common stock upon initial public offering, net of

issuance cost

issuance costs

Issuance of common stock upon exercise of stock options

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Balances as of December 31, 2019

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 related to at-the-market offering program,

net of issuance costs

Issuance of common stock upon exercise of stock options

Employee stock purchase plan (ESPP) purchase

Repurchase of early exercised shares

Vesting of early exercised common stock options

Stock-based compensation

Other comprehensive loss

Balances as of December 31, 3020

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

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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

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Stock-based compensation

Issuance of Series B redeemable convertible preferred stock pursuant to license

Issuance of Series B redeemable convertible preferred stock pursuant to

license agreement

Change in fair value of redeemable convertible preferred stock liability

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Changes in assets and liabilities

Accounts receivable

Prepaid expenses and other assets

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Accrued and other liabilities

Contract liabilities

Deferred rent

Lease liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities

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Sales of marketable securities

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities

Proceeds from issuance of redeemable convertible preferred stock,

net of issuance costs

Proceeds from issuance of common stock in initial public offering,

net of issuance costs

Proceeds from exercise of common stock options

Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs

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

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

Proceeds from issuance of common stock related to at-the-market offering

program, net of issuance costs

Proceeds from exercise of common stock options, net of repurchases

Proceeds from ESPP purchases

Payments of deferred offering costs

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash

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Supplemental non-cash investing and financing activities:

Issuance of Series B redeemable convertible preferred stock pursuant to license

Leasehold improvements acquired through tenant improvement allowance

Right-of-use asset obtained in exchange for new operating lease liability

Issuance of Series B redeemable convertible preferred stock pursuant to license agreement

Unpaid deferred offering costs

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IDEAYA Biosciences, Inc.

(the “Company”) is an oncology-focused precision medicine company committed to the discovery and development of targeted therapeutics for patient populations selected using molecular diagnostics.

(the “Company”) is a synthetic lethality-focused precision medicine oncology company committed to the discovery and development of targeted therapeutics for patient populations selected using molecular diagnostics.

The Company is headquartered in South San Francisco, California and was incorporated in the State of Delaware in June 2015.

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The Company received an aggregate of $50.2 million in cash, net of underwriting discounts and commissions of $4.0 million, and after deducting offering costs of $3.3 million.

Follow-On Offering

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.

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 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.

At-the-Market Offering

On June 1, 2020, the Company entered into an open market sale agreement with Jefferies LLC (“Jefferies”), pursuant to which the Company may offer and sell shares of its common stock with an aggregate offering price of up to $50.0 million under an “at the market” offering program (the “ATM Offering”).

For the year ended December 31, 2020, the Company sold an aggregate of 410,896 shares for net proceeds of $6.6 million after deducting sales commission and other expenses.

From January 2021 through March 22, 2021, the Company additionally sold an aggregate of 2,709,385 shares for gross proceeds of $43.3 million in the ATM Offering.

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $127.0 million as of December 31, 2020.

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

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 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.

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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 December 31, 2019, the Company had cash, cash equivalents and marketable securities of $100.5 million.

As of December 31, 2020 , the Company had cash, cash equivalents and m arketable securities of $ 283.6 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.

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The preparation of financial statements in conformity with U.S.

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, income taxes, and prior to the IPO, the valuation of the redeemable convertible preferred stock liability.

Actual results could differ from those estimates.

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.

On an ongoing basis, management reviews these estimates and assumptions.

Changes in facts and circumstances may alter such estimates and actual results could differ from those estimates.

The Company operates and manages its business as one operating and reportable segment, which is the business of research and development for oncology-focused precision medicine.

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Risks and Uncertainties

The Company operates in a dynamic and highly competitive industry and is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations.

The Company operates in a dynamic and highly competitive industry and is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer, contract research organizations and collaboration partners, compliance with government regulations and the need to obtain additional financing to fund operations.

Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies and clinical trials and regulatory approval, prior to commercialization.

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advances and trends in new technologies and industry standards;

results of clinical trials;

results of clinical trials and collaboration activities;

regulatory approval and market acceptance of the Company’s products;

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certain strategic relationships;

litigation or claims against the Company base on intellectual property, patent, product, regulatory, or other factors;

litigation or claims against the Company based on intellectual property, patent, product, regulatory, or other factors;

and the Company’s ability to attract and retain employees necessary to support its growth.

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In addition, the Company is dependent upon the services of its employees, consultants and other third parties.

In December 2019, a novel strain of coronavirus was reported in Wuhan, China.

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 and suppliers, all of which are uncertain and cannot be predicted.

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.

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.

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Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents and marketable securities.

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, marketable securities and accounts receivable.

Substantially all the Company’s cash is held by one financial institution that management believes is of high credit quality.

Such deposits may, at times, exceed federally insured limits.

The Company’s investment policy

addresses credit ratings, diversification, and maturity dates.

The Company’s investment policy addresses credit ratings, diversification, and maturity dates.

The Company invests its cash equivalents and marketable securities in money market funds, U.S.

government securities, commercial paper, corporate bonds, and asset-backed securities.

government securities, commercial paper, and corporate bonds.

The Company limits its credit risk associated with cash equivalents and marketable securities by placing them with banks and institutions it believes are highly creditworthy and in highly rated investments and, by policy, limits the amount of credit exposure with any one commercial issuer.

The Company has not experienced any credit losses on its deposits of cash, cash equivalents or marketable securities.

Deferred Initial Public Offering Costs

Deferred offering costs, consisting of legal, accounting and other fees and costs relating to the Company’s IPO, are capitalized and recorded on the balance sheet.

As of December 31, 2018, $0.6 million of deferred offering costs were recorded on the balance sheet.

During the year ended December 31, 2019, an additional $2.7 million in deferred offering costs were incurred.

In connection with the IPO, all deferred offering costs reduced the gross proceeds from the IPO and were recorded within additional paid-in capital on the accompanying balance sheet as of December 31, 2019.

Accounts receivable represents amounts due from GlaxoSmithKline.

The Company monitors economic conditions to identify facts or circumstances that may indicate that any of its accounts receivable are at risk of collection.

Cash and Cash Equivalents

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Fair Value of Financial Instruments

The carrying amounts of the Company’s certain financial instruments, including cash equivalents, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities and market interest rates if applicable.

The carrying amount of the redeemable convertible preferred stock liability represents its fair value.

The carrying amounts of the Company’s certain financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities and market interest rates if applicable.

Refer to Note 3 for details on the fair value of marketable securities.

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Maintenance and repairs are charged to expense as incurred.

When assets are retired or otherwise disposed of, the cost and accumulated

depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the statements of operations and comprehensive loss in the period realized.

When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the statements of operations and comprehensive loss in the period realized.

Impairment of Long-Lived Assets

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There have been no such impairments of long-lived assets for the years ended December 31, 2020 and December 31, 2019.

The Company leases its facilities and meets the requirements to account for these leases as operating leases.

For the year ended December 31, 2018, for facility leases that contain rent escalations or rent concession provisions, the Company records its lease expense during the lease term on a straight-line basis over the term of the lease.

As of December 31, 2018, the Company recorded the difference between the rent paid and the straight-line rent as a deferred rent liability.

As of December 31, 2018, leasehold improvements funded by landlord incentives or allowances were recorded as leasehold improvement assets and a corresponding deferred rent liability.

The leasehold improvement asset is amortized over the lesser of the term of the lease or life of the asset.

For the year ended December 31, 2018, the deferred rent liability is amortized on a straight-line basis as a reduction to rent expense over the term of the lease agreement.

Upon adoption of ASC 842, Leases , as described below under Recently Adopted Accounting Pronouncements, on January 1, 2019, the Company determines if an arrangement is a lease, or contains a lease, at inception.

Upon adoption of ASC 842, Leases on January 1, 2019, the Company determined if any arrangement is a lease, or contains a lease, at inception.

Operating leases are included in right-of-use (“ROU”) assets, lease liabilities, and long-term lease liabilities on the Company’s balance sheet.

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

Operating leases are included in right-of-use (“ROU”) assets, lease liabilities, and long-term lease liabilities on the Company’s balance sheet .

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

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Lease expense for lease payments is recognized on a straight-line basis over the lease term.

For lease agreements entered into or reassessed after the adoption of ASC 842, the Company combines lease and nonlease components.

Redeemable Convertible Preferred Stock

The Company recorded all shares of redeemable convertible preferred stock at their respective fair values on the dates of issuance, net of issuance costs.

The redeemable convertible preferred stock was recorded outside of permanent equity because while it was not mandatorily redeemable, in certain events considered not solely within the Company’s control, such as a merger, acquisition, or sale of all or substantially all of the Company’s assets (each, a “deemed liquidation event”), the convertible preferred stock would become redeemable at the option of the holders of at least a majority of the then outstanding such shares.

The Company did not adjust the carrying values of the redeemable convertible preferred stock to its liquidation preference because a deemed liquidation event obligating the Company to pay the liquidation preferences to holders of shares of redeemable convertible preferred stock was not probable of occurring.

Subsequent adjustments to the carrying values to the liquidation preferences would have been made only when it became probable that such a deemed liquidation event would occur.

Redeemable Convertible Preferred Stock Liability

The obligation to issue additional shares of Series A redeemable convertible preferred stock at future dates pursuant to a preferred stock purchase agreement was determined to be a freestanding instrument that should be accounted for as a liability.

At initial recognition, the Company recorded the redeemable convertible preferred stock liability on the balance sheet at its fair value.

The liability was subject to remeasurement at each balance sheet date, with changes in fair value recognized as a component of other income (expense), net in the statements of operations and comprehensive loss until it was extinguished upon issuance of Series A redeemable convertible preferred stock in January 2018.

The Company combines lease and nonlease components.

Revenue Recognition

The Company follows Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

The Company applies the five-step model to contracts when (1) parties have approved the contract and are committed to performing respective obligations, (2) the Company can identify each party’s rights regarding the goods or services to be transferred, (3) the Company can identify the payment terms for the goods or services to be transferred, (4) the contract has commercial substance, and (5) it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, the Company assesses the goods or services promised within each contract and determines the performance obligations by assessing whether each promised good or service is distinct.

Goods or services that are not distinct are bundled with other goods or services in the contract until a bundle of goods or services that is distinct is created.

The Company then recognizes as revenue the amount of the transaction price that

is allocated to the respective performance obligations when (or as) the performance obligations are satisfied.

The Company constrains its estimate of the transaction price up to the amount (the “variable consideration constraint”) that a significant reversal of recognized revenue is not probable.

Licenses of intellectual property:

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 goods or services, the Company applies 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 toward satisfying the performance obligation for purposes of recognizing revenue from 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:

At the inception of each arrangement or amendment that includes development, regulatory or commercial milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price.

ASC 606 prescribes two methods to use when estimating the amount of variable consideration:

the expected value method and the most likely amount method.

Under the expected value method, an entity considers the sum of probability-weighted amounts in a range of possible consideration amounts.

Under the most likely amount method, an entity considers the single most likely amount in a range of possible consideration amounts.

Whichever method is used, it should be consistently applied throughout the life of the contract;

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

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.

Milestone payments that are highly susceptible to factors outside the Company’s influence, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

If there is more than one performance obligation, the transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis.

The Company recognizes revenue as or when the performance obligations under the contract are satisfied.

At the end of each subsequent reporting period, the Company re-evaluates the probability or achievement of each milestone and any related constraint, and if necessary, adjusts its estimates of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Upfront payments and fees are recorded as contract liabilities upon receipt or when due and may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements.

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

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 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 services 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 distinct 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, therefore, 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 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).

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.

As such, the Company does not adjust its revenues for the effects of a significant financing component.

Research and Development Expenses

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The Company accounts for stock-based compensation arrangements with employees in accordance with ASC 718, Stock Compensation.

The Company accounts for stock-based compensation arrangements with employees using a fair value method which requires the recognition of compensation expense related to all stock-based awards.

The Company accounts for stock-based compensation arrangements using a fair value method which requires the recognition of compensation expense related to all stock-based awards.

The fair value method requires the Company to estimate the fair value of stock option awards on the date of grant using an option pricing model.

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Generally, the stock options the Company has granted to its employees have a 10 year term and vest over a 4-year period with 1-year cliff vesting.

For the years ended December 31, 2018 and December 31, 2017, the Company accounted for stock options issued to non-employees based on the estimated fair value of the awards using the Black-Scholes option pricing model in accordance with ASC 505-50, Equity-Based Payment to Non-employees .

Stock-based compensation expense related to stock options granted to non-employees is recognized as the stock options vest.

For the year ended December 31, 2018, the Company accounted for stock options issued to non-employees based on the estimated fair value of the awards using the Black-Scholes option pricing model in accordance with ASC 505-50, Equity-Based Payment to Non-employees .

Stock-based compensation expense related to stock options granted to non-employees was recognized as the stock options vested.

The Company believes that the fair value of the stock options is more reliably measurable than the fair value of the services received.

Stock options granted to non-employees are recorded at their fair value on the measurement date and are subject to periodic adjustments as such options vest and at the end of each reporting period, and the resulting change in value, if any, is recognized in the Company’s statements of operations and comprehensive loss during the period the related services are rendered.

Stock options granted to non-employees were recorded at their fair

value on the measurement date and we re subject to periodic adjustments as such options vest ed and at the end of each reporting period , and the resulting change in value, if any, wa s recognized in the Company’s statements of operations and comprehensive loss during the period the related services we re rendered.

Upon adoption of ASU 2018-07, Compensation–Stock Compensation (Topic 718):

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For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock, stock options and restricted stock that is subject to repurchase at the original purchase price are considered to be potentially dilutive securities.

Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities as the redeemable convertible preferred stock is considered a participating security because it participates in dividends with common stock.

The Company also considers the shares issued upon the early exercise of stock options subject to repurchase to be participating securities, because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock.

The holders of all series of redeemable convertible preferred stock and the holders of early exercised shares subject to repurchase do not have a contractual obligation to share in the Company’s losses.

Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities.

The Company considers the shares issued upon the early exercise of stock options subject to repurchase to be participating securities, because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock.

The holders of early exercised shares subject to repurchase do not have a contractual obligation to share in the Company’s losses.

As such, the net loss was attributed entirely to common stockholders.

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Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASC 842”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e.

lessees and lessors).

The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.

This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively.

A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.

Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today.

ASC 842 supersedes the previous leases standard, ASC 840, Leases .

For public business entities, this ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements on fair value measurements.

ASU 2018-13 removes the requirement to disclose:

the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy;

the policy for timing of transfers between levels;

and the valuation processes for Level 3 fair value measurements.

For public business entities, this ASU is effective for fiscal years beginning after

December 15, 2019, and interim periods within those fiscal years.

Early adoption is permitted.

The FASB subsequently issued supplemental adoption guidance and clarification to ASC 842 within ASU 2018-10, Codification Improvements to Topic 842, Leases , ASU 2018-11, Leases (Topic 842):

Targeted Improvements and ASU 2019-01, Leases (Topic 842):

Codification Improvements.

ASU 2018-11 provides another transition method in addition to the existing modified retrospective transition method by allowing entities to initially apply the new leasing standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

The Company adopted these ASUs on January 1, 2019.

Prior period amounts have not been adjusted and continue to be reflected in accordance with the Company’s historical accounting for leases.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard which, among other things, allows companies to carry forward their historical lease classification.

The Company recognized right-of-use assets of $6.1 million and lease liabilities of $8.0 million for its operating leases as of January 1, 2019, including deferred rent of $1.9 million .

The adoption of these ASUs did not have any impact on the statements of operations and comprehensive loss and statements of cash flows.

See Note 5 for more information related to the Company’s lease obligations.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260);

Distinguishing Liabilities from Equity (Topic 480);

Derivatives and Hedging (Topic 815):

(Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception .

This update simplifies the accounting for certain financial instruments with down round features, a provision in an equity-linked financial instrument (or embedded feature) that provides a downward adjustment of the current exercise price based on the price of future equity offerings.

Down round features are common in warrants, preferred shares and convertible debt instruments issued by private companies and early-stage public companies.

This update requires companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification.

For public business entities, this ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

Early adoption is permitted, including adoption in any interim period.

The amendments in Part I should be applied (1) retrospectively to outstanding financial instruments with a down round feature by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the first fiscal year and interim periods;

(2) retrospectively to outstanding financial instruments with a down round feature for each prior reporting period presented.

The Company adopted this ASU on January 1, 2020 .

The adoption did not result in a material impact on the Company’s financial statements and related disclosures.

In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

This ASU addresses a specific consequence of the Tax Cuts and Jobs Act (“U.S Tax Reform”) and allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from U.S.

Consequently, the update eliminates the stranded tax effects that were created as a result of the historical U.S.

federal corporate income tax rate to the newly enacted U.S.

federal corporate income tax rate.

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.

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

Early adoption is permitted.

The Company adopted this ASU on January 1, 2019.

The Company adopted this ASU on January 1, 2020, using the prospective transition method.

The adoption did not result in a material impact on the Company’s financial statements and related disclosures.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718):

Improvements to Non-employee Share-Based Payment Accounting , which expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from non-employees.

ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment awards.

ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606.

The transition method provided by ASU 2018-07 is a modified retrospective basis, which recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

For public business entities, this ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606.

In November 2018, the FASB issued ASU 2018-18, Collaborative arrangements (Topic 808)—Clarifying the interaction between Topic 808 and Topic 606 .

ASU 2018-18 (i) clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account, (ii) adds unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606, and (iii) requires that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer.

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

Early adoption is permitted.

The Company adopted this ASU on January 1, 2020.

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Early adoption is permitted.

The Company is currently evaluating the impact the adoption of these ASUs will have on its financial statements and related disclosures, and the adoption timing of these ASUs .

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements on fair value measurements.

ASU 2018-13 removes the requirement to disclose:

the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy;

the policy for timing of transfers between levels;

and the valuation processes for Level 3 fair value measurements.

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

The Company is currently evaluating the impact the adoption of this ASU will have on its financial statements and related disclosures.

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.

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

The Company is currently evaluating the impact the adoption of this ASU will have on its financial statements and related disclosures.

The Company is currently evaluating the impact the adoption of these ASUs will have on its financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and improves consistent application of and simplify GAAP for other areas of Topic 740 by clarifying existing guidance.

ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying existing guidance.

For public business entities, this ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

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The Company is currently evaluating the impact the adoption of this ASU will have on its financial statements and related disclosures .

Fair Value Measurement

Fair Value Measurement and Marketable Securities

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis.

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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.

The Company’s Level 3 liabilities consist of the redeemable convertible preferred stock liability.

The determination of the fair value of the redeemable convertible preferred stock liability is discussed in Note 8.

As of December 31, 2019, financial assets and liabilities measured and recognized at fair value are as follows (in thousands):

As of December 31, 2020, financial assets measured and recognized at fair value are as follows (in thousands):

December 31, 2020

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Commercial paper

Asset-backed securities

Marketable securities

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Included in cash and cash equivalents on the balance sheet

As of December 31, 2019, marketable securities had a remaining maturity of twenty months or less.

As of December 31, 2018, marketable securities had a remaining maturity of twelve months or less.

As of December 31, 2020, all marketable securities had a remaining maturity of one year or less.

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 million that had maturities of one to two years.

There were no financial liabilities measured and recognized at fair value as of December 31, 2020 and December 31, 2019.

The following tables set forth the changes in the fair value of Level 3 financial liabilities (in thousands):

Preferred Stock

Fair value as of January 1, 2018

Issuance of redeemable convertible preferred stock

Change in fair value included in other income (expense), net

Fair value as of December 31, 2018

The Company used the Black-Scholes option pricing model (“OPM”) to estimate the fair value of the redeemable convertible preferred stock liability (see Note 8).

Balance Sheet Components

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As of December 31,

Accrued salaries and benefits

Accrued research and development expenses

Accrued salaries and benefits

Legal and professional fees

Accrued liabilities

Leases, Lease Commitments and Contingencies

Operating Leases

The Company leases its laboratory and office facilities in South San Francisco, California, and through September 30, 2019 in San Diego, California under non-cancelable operating leases with expiration dates in July 2024 and March 2020, respectively.

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 will account for the Second Amendment as a separate contract and will recognize a related ROU asset and lease liability on the lease commencement date of the additional office spaces, which is currently expected in early 2020.

On September 30, 2019, the Company and the landlord of the laboratory and office facilities in San Diego agreed to terminate the lease.

No penalty was incurred as a result of the termination.

Accordingly, the Company derecognized the remaining balances of the ROU asset and lease liability.

As part of the lease agreement for the laboratory and office facilities in South San Francisco, the Company was provided a tenant improvement allowance of $1.6 million.

In May 2018, the Company entered into an amendment to the lease agreement to expand the size of the laboratory and office facilities leased in South San Francisco, California by adding additional space to the lease commencing June 1, 2018.

As part of the amendment, the landlord provided an additional tenant improvement allowance of $0.4 million.

The Company was amortizing the tenant improvement allowances over the term of the lease agreement through December 31, 2018.

Rent expense was $1.4 million and $0.8 million for the years ended December 31, 2018 and December 31, 2017, respectively.

As of December 31, 2018, $1.9 million of deferred rent representing future minimum rental payments for leases with scheduled rent escalations and tenant improvement allowances was included in current and long-term liabilities.

Future minimum lease payments under the non-cancelable operating leases as of December 31, 2018 are as follows (in thousands):

As of December 31, 2018:

Operating Leases

Total lease payments

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 December 31, 2020 are as follows (in thousands):

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Total lease liabilities

Operating lease cost was $1.5 million for the year ended December 31, 2019.

Operating lease cost was $1.5 million and $1.5 million for the years ended December 31, 2020 and December 31, 2019, respectively.

As of December 31, 2020 , the ROU assets of $5.2 million are included in non-current assets on the balance sheet, and lease liabilities of $6.7 million are included in current liabilities and non-current liabilities on the balance sheet.

As of December 31, 2019, the remaining term for the operating lease in South San Francisco, California is 4.6 years, and the discount rate used to measure the lease liability for such operating lease upon recognition is 7.0%.

The Company has one right to extend the lease term of the operating leases in South San Francisco for two years by giving the landlord written notice.

The remaining term does not include additional two years, as the Company assessed at commencement date that it was not reasonably certain to extend the lease term.

During the year ended December 31, 2019, cash paid for amounts included in operating lease liabilities of $1.7 million is included in cash flows from operating activities on the statement of cash flows.

As of December 31, 2020, the remaining term for the operating lease in South San Francisco, California is 3.6 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.

The Company has one right to extend the lease term of the operating lease in South San Francisco for two years by giving the landlord written notice.

The remaining term does not include the additional two years, as the Company assessed at commencement date that it was not reasonably certain to extend the lease term.

During the years ended December 31, 2020 and December 31, 2019 , cash paid for amounts included in operating lease liabilities of $1.7 million and $1.7 million, respectively, is included in cash flows from operating activities on the statement of cash flows.

Commitments and Contingencies

Contingencies

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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.

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Change in fair value of redeemable convertible preferred stock liability

Remeasurement of deferred tax due to tax law change

Provision for income taxes

On December 22, 2017, the U.S.

government enacted comprehensive tax legislation through the Tax Act.

The Tax Act significantly revises the future ongoing U.S.

corporate income tax by, among other things, lowering the U.S.

corporate income tax rates and implementing a territorial tax system.

The corporate tax rate was reduced from 34% to 21% for tax years beginning after December 31, 2017.

Changes in tax law are accounted for in the period of enactment.

As such, the Company’s financial statements as of December 31, 2017 reflect the impact of the Tax Act, which primarily consisted of remeasuring the Company’s deferred tax assets, deferred tax liabilities and valuation allowance using the newly enacted U.S.

corporate tax rate.

This rate change resulted in a $2.3 million reduction in the Company’s net deferred tax assets from the prior year with a corresponding offset to the valuation allowance.

Under the Tax Act, net operating losses arising after December 31, 2017 do not expire and cannot be carried back.

However, the Tax Act limits the amount of net operating losses that can be used annually to 80% of taxable income for net operating losses arising in periods beginning after December 31, 2017.

Existing net operating losses arising in years ending on or before December 31, 2017 are not affected by these provisions.

The tax effects of temporary differences and carryforwards of the deferred tax assets are presented below (in thousands):

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Intangible assets

Accruals and reserves

Stock-based compensation

Accruals and reserves

Deferred revenue

Gross deferred tax assets

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Property and equipment

Stock-based compensation

Net deferred tax assets

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As of December 31, 2020, the Company had net operating loss carryforwards of $83.8 million available to reduce future taxable income, if any, for California state income tax purposes.

If not utilized, the federal carryforwards of $18.9 million and state carryforwards of $84.6 million will begin to expire in 2036.

If not utilized, the federal carryforwards of $11.7 million and the state carryforwards of $83.8 million will begin to expire in 2037 and 2036, respectively.

The federal net operating loss carryforwards of $24.1 million arising after December 31, 2017 do not expire.

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The annual limitation may result in the expiration of net operating losses and credits before utilization.

The Company does not expect any previous ownership changes, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, to result in a limitation that will materially reduce the total amount of net operating loss carryforwards and credits that can be utilized.

The Company performed a Section 382 analysis through December 31, 2020.

As a result, the Company reduced its deferred tax assets and related valuation allowance to take into account net operating losses and research and development credits that would expire unused.

The Company does not expect any ownership changes, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, during the year ended December 31, 2019 to result in a limitation that would materially reduce the total amount of net operating loss carryforwards and credits that can be utilized.

The Company has experienced ownership changes in the past and in the current year.

As a result of the ownership changes, some of the tax attribute carryforwards may be permanently limited as they will expire unused.

The Company is continuing to analyze the impact of the limitation.

Subsequent ownership changes may affect the limitation in future years.

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For jurisdictions in which tax filings have been filed, all tax years remain open for examination by the federal and California state authorities for three and four years, respectively, from the date of utilization of any net operating losses or credits.

Redeemable Convertible Preferred Stock

In March 2016, the Company issued 1,630,910 shares of Series A redeemable convertible preferred stock at $8.1415 per share for gross proceeds of $13.3 million, and the Company issued 626,787 shares of Series A redeemable convertible preferred stock to convert a $4.1 million balance in convertible promissory notes at $6.5132 per share.

In February 2017, the Company issued an additional 2,122,219 shares of Series A redeemable convertible preferred stock at $8.1415 per share for gross proceeds of $17.3 million.

In January 2018, the Company issued 1,414,811 shares of Series A redeemable convertible preferred stock at $8.1415 per share for gross proceeds of $11.5 million.

In January 2018, the Company issued 6,328,265 shares of a newly authorized series of preferred stock, Series B redeemable convertible preferred stock, at $13.2769 per share for gross proceeds of $84.0 million.

Subsequently, in March 2018, the Company issued additional 753,187 shares of Series B redeemable convertible preferred stock at $13.2769 per share for gross proceeds of $10.0 million.

In September 2018, the Company issued 263,615 shares of Series B redeemable convertible preferred stock with a total fair value of $3.8 million to an affiliate of Novartis in connection with the license agreement with Novartis (see note 13).

As of December 31, 2019 and December 31, 2018, the Company’s certificate of incorporation authorized the Company to issue zero and 134,933,105 shares of redeemable convertible preferred stock, respectively, at a par value of $0.0001 per share.

Issued and outstanding redeemable convertible preferred stock and its principal terms as of December 31, 2018 were as follows (in thousands, except share and per share amounts) :

Redeemable Convertible

Preferred Stock

Series A redeemable convertible preferred stock

Series B redeemable convertible preferred stock

Following the closing of the IPO in May, all outstanding shares of the redeemable convertible preferred stock converted into 13,139,794 shares of common stock and the related carrying value was reclassified to common stock and additional paid-in capital.

There were no shares of redeemable convertible preferred stock outstanding as of December 31, 2019.

The holders of the redeemable convertible preferred stock had various rights and preferences as follows:

Voting Rights

The holders of redeemable convertible preferred stock were entitled to vote on all matters on which the common stockholders were entitled to vote.

Each holder of redeemable convertible preferred stock was entitled to the number of votes equal to the number of shares of common stock into which the shares of redeemable convertible preferred stock held by such holder could be converted as of the record date.

Holders of redeemable convertible preferred stock and common stock generally voted as a single class.

The holders of redeemable convertible preferred stock were entitled to receive annual dividends when, as and if declared by the Company’s Board of Directors, prior to any preference to the common stock, at a rate of $0.6513 and $1.0626 per share on each outstanding share of Series A redeemable convertible preferred stock and Series B redeemable convertible preferred stock, respectively.

All dividends to holders of preferred stock would have been paid on a pari passu basis.

Dividends were noncumulative, and none were declared as of December 31, 2018.

In the event of any liquidation, dissolution or winding up of the Company, a merger, acquisition or consolidation of the Company, any transaction or series of transactions in which more than 50% of the voting power of the Company had been transferred, or a sale, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, of all or substantially all of the assets of the Company, the holders of redeemable convertible preferred stock would have been entitled to receive prior to and in preference to any distribution to holders of common stock, an amount equal to the original issue price, adjusted for any stock splits, stock dividends, recapitalizations, reclassifications, combinations or similar transactions (“anti-dilution adjustments”), plus all declared and unpaid dividends on such shares.

The remaining assets, if any, would have been distributed to the holders of redeemable convertible preferred stock and holders of common stock on a pro rata basis until the holders of redeemable convertible preferred stock would have received up to three times their liquidation preference.

Should the Company’s legally available assets have been insufficient to satisfy the liquidation preferences, the funds would have been distributed with equal priority and pro rata among the holders of redeemable convertible preferred stock in proportion to the preferential amount each holder was otherwise entitled to receive.

Notwithstanding the above, for purposes of determining the amount each holder of shares of redeemable convertible preferred stock was entitled to receive with respect to a liquidation event, each such holder of shares of a series of redeemable convertible preferred stock would be deemed to have converted such holder’s shares of such series into shares of common stock immediately prior to the liquidation event if, as a result of an actual conversion, such holder would receive, in the aggregate, an amount greater than the amount that would be distributed to such holder if such holder did not convert such series of redeemable convertible preferred stock into shares of common stock.

If any such holder would be deemed to have converted shares of redeemable convertible preferred stock into common stock pursuant to this paragraph, then such holder would be entitled to receive any distribution that would otherwise be made to holders of redeemable convertible preferred stock that had not converted into shares of common stock.

Each share of redeemable convertible preferred stock was convertible, at the option of the holder, into the number of fully-paid and non-assessable shares of common stock that resulted from dividing the applicable original issue price per share by the applicable conversion price per share at the time of conversion, as adjusted for any anti-dilution adjustments.

If, after the issuance date of the redeemable convertible preferred stock, the Company issued or sold, or was deemed to have sold, additional shares of common stock at a price lower than the original issuance price, except for certain exceptions allowed, the conversion price of the redeemable convertible preferred stock would have been adjusted.

As of December 31, 2018, the Company’s redeemable convertible preferred stock was convertible into the Company’s shares of common stock on a one-for-one basis.

Each share of redeemable convertible preferred stock was convertible into common stock automatically immediately upon (i) the Company’s receipt of a written request for such conversion from the holders of 65% of the then outstanding shares of redeemable convertible preferred stock on an as-converted to common stock basis, or (ii) the consummation of an underwritten public offering of common stock pursuant to the Securities Act of 1933, in which the aggregate gross proceeds to the Company were not less than $50.0 million (before deductions of underwriters discounts and commissions) (“Qualified IPO”).

Balance Sheet Classification

The redeemable convertible preferred stock was recorded outside of permanent equity because while it was not mandatorily redeemable, it would have become redeemable upon the occurrence of certain deemed liquidation events that were considered not solely within the Company’s control.

Accordingly, the redeemable convertible preferred stock was presented in the mezzanine section of the balance sheet.

Redeemable Convertible Preferred Stock Liability

In March 2016, the Company executed a Series A Preferred Stock Purchase Agreement to sell shares of Series A redeemable convertible preferred stock.

The Series A redeemable convertible preferred stock issuance was structured in three tranches:

(i) $17.4 million for 2,257,697 shares (the “First Tranche”), including 626,787 shares of Series A redeemable convertible preferred stock to convert a $4.1 million balance in convertible promissory notes at $6.5132 per share, (ii) $17.3 million for 2,122,219 shares on milestone achievement (the “Second Tranche Option”) and (iii) $11.5 million or 1,414,811 shares on milestone achievement (the “Third Tranche Option”).

In March 2016, the Company recognized a redeemable convertible preferred stock liability as investors received the right to purchase from the Company, on the same terms, additional shares of Series A redeemable convertible preferred stock, in future tranches on achievement of milestones.

As the Series A investors

hold a majority of the board seats, the decision to complete the Second Tranche and Third Tranche Options was deemed to be outside of the control of the Company.

The redeemable convertible preferred stock liability was valued using an option pricing model (“OPM”), which resulted in an initial fair value of $4.8 million and $4.8 million for the Company’s obligation to sell the redeemable convertible preferred stock related to the Second and Third Tranche Options, respectively.

On December 31, 2016, the redeemable convertible preferred stock liability was revalued to $2.2 million and $3.5 million for the Second and Third Tranche Options, respectively.

On February 15, 2017, the Company issued an additional 2,122,219 shares of Series A redeemable convertible preferred stock at $8.1415 per share thereby extinguishing the redeemable convertible preferred stock liability for the Second Tranche Option.

Immediately prior to the closing of the Second Tranche, the Company remeasured the redeemable convertible preferred stock liability to its then fair value and recorded a gain of $2.1 million in other income (expense), net.

Upon extinguishment of the redeemable convertible preferred stock liability for the Second Tranche Option, its fair value of $0.1 million was reclassified to redeemable convertible preferred stock on the balance sheet.

As of December 31, 2017, the Company remeasured the redeemable convertible preferred stock liability for the Third Tranche Option to its fair value and recorded a gain of $0.3 million in other income (expense), net.

As of December 31, 2017, the Company had a redeemable convertible preferred stock liability of $3.2 million on its balance sheet for the Third Tranche Option representing its fair value.

On January 22, 2018, the Company issued 1,414,811 shares of Series A redeemable convertible preferred stock at $8.1415 per share for gross proceeds of $11.5 million, thereby extinguishing the Third Tranche Option redeemable convertible preferred stock liability.

Immediately prior to the closing of the Third Tranche, the Company remeasured the redeemable convertible preferred stock liability to its then fair value and recorded a gain of $0.1 million in other income (expense), net.

Upon extinguishment of the redeemable convertible preferred stock liability for the Third Tranche Option, its fair value of $3.1 million was reclassified to redeemable convertible preferred stock on the balance sheet.

The redeemable convertible preferred stock liability for the Third Tranche Option was valued using the following assumptions under the OPM:

January 22, 2018

Expected term (years)

Expected volatility

Risk-free interest rate

Dividend yield

As of December 31, 2019 and December 31, 2018, the Company’s certificate of incorporation authorized the Company to issue 300,000,000 and 170,800,000 shares of common stock, respectively, at a par value of $0.0001 per share.

As of December 31, 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, subject to prior rights of the preferred stockholders.

The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Company’s board of directors.

As of December 31, 2020, no dividends have been declared to date.

The Company had reserved common stock, on an as-converted basis, for future issuance as follows:

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

As of December 31,

Conversion of Series A redeemable convertible preferred stock

Conversion of Series B redeemable convertible preferred stock

Exercise of outstanding options under the 2015 and 2019 Plans

Issuance of common stock options under the 2019 Plan

Issuance of common stock options under the Employee Stock Purchase Plan

Stock Option Plan

Stock-Based Compensation

2019 Incentive Award Plan

The Company’s board of directors adopted and the Company’s stockholders approved, effective on the day immediately prior to the effectiveness of the registration statement on Form S-1, the 2019 Incentive Award Plan (the “2019 Plan”), under which the Company may grant cash and equity-based incentive awards to the Company’s employees, consultants and directors.

In May 2019, the Company’s board of directors adopted and the Company’s stockholders approved the 2019 Incentive Award Plan (the “2019 Plan”), under which the Company may grant cash and equity-based incentive awards to the Company’s employees, consultants and directors.

Following the effectiveness of the 2019 Plan, the Company will not make any further grants under the 2015 Equity Incentive Plan (the “2015 Plan”).

However, the 2015 Plan will continue to govern the terms and conditions of the outstanding awards granted under it.

However, the 2015 Plan continues to govern the terms and conditions of the outstanding awards granted under it.

Shares of common stock subject to awards granted under the 2015 Plan that are forfeited or lapse unexercised and which following the effective date of the 2019 Plan are not issued under the 2015 Plan will be available for issuance under the 2019 Plan.

2 unchanged sentences

NSOs may be granted to Company employees and consultants.

The exercise price of an ISO and NSO shall not be less than 100% of the estimated fair value of the shares on the date of grant, respectively.

The exercise price of an ISO and NSO shall not be less than 100% of the estimated fair value of the shares on the date of grant.

The exercise price of an ISO granted to an employee who, at the time of grant, owns stock representing more than 10% of the voting power of all classes of stock of the Company (a “10% stockholder”) shall be no less than 110% of the estimated fair value of the shares on the date of grant.

To date, options granted under the 2019 Plan have a term of 10 years (or five years if granted to a 10% stockholder) and generally vest over a 4-year period with 1-year cliff vesting.

Options granted under the 2019 Plan have a term of 10 years (or five years if granted to a 10% stockholder) and generally vest over a 4-year period with 1-year cliff vesting.

2015 Equity Incentive Plan

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2019 Employee Stock Purchase Plan

The ESPP provides eligible employees with the opportunity to acquire an ownership interest in the Company through periodic payroll deductions (at the rate of 1-15% of eligible compensation), over a six-month offering period, pursuant to the ESPP the offering period is determined by the Company in its discretion but may not exceed 27 months, at a price equal to the lesser of 85% of the fair market value of the common stock at either the first business day or last business day of the relevant offering period, provided that no more than 4,000 shares of common stock may be purchased by any one employee during each offering period.

In May 2019, the Company’s board of directors adopted and the Company’s stockholders approved the 2019 Employee Stock Purchase Plan (the “ESPP”).

The ESPP provides eligible employees with the opportunity to acquire an ownership interest in the Company through periodic payroll deductions up to 15% of eligible compensation.

The offering period is determined by the Company in its discretion but may not exceed 27 months.

The per-share purchase price on the applicable exercise date for an offering period is equal to the lesser of 85% of the fair market value of the common stock at either the first business day or last business day of the offering period, provided that no more than 4,000 shares of common stock may be purchased by any one employee during each offering period.

The ESPP is intended to constitute an “employee stock purchase plan” under Section 423(b) of the Internal Revenue Code of 1986, as amended.

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 year ended December 31, 2019, the Company recorded less than $0.1 million of compensation expense related to participation in the ESPP.

For the years ended December 31, 2020 and December 31, 2019, the Company recorded $0.2 million and less than $0.1 million of compensation expense related to participation in the ESPP.

Stock-Based Compensation Expense

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Stock Options

Activity under the Company’s stock option plan is set forth below:

Activity under the Company’s 2015 and 2019 Plans is set forth below:

Outstanding Options

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As of December 31, 2020, the total unrecognized stock-based compensation expense for stock options was $8.5 million, which is expected to be recognized over a weighted-average period of 2.51 years.

The total fair value of options vested for the years ended December 31, 2019 and December 31, 2018 was $2.0 million and $0.3 million, respectively.

Early Exercise of Stock Options

The terms of the 2015 Plan permit the exercise of options granted under the 2015 Plan prior to vesting, subject to required approvals.

The shares so acquired prior to vesting are subject to a lapsing repurchase right in favor of the Company, exercisable upon a termination of the holder’s service with the Company prior to full vesting at the original purchase price of such shares.

The shares so acquired prior to vesting are subject to a lapsing repurchase right in favor of the Company at the original purchase price of such shares, exercisable upon a termination of the holder’s service with the Company prior to full vesting.

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.

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As of December 31, 2020 and December 31, 2019, shares that were subject to repurchase were 14,460 and 84,964, respectively.

The aggregate exercise price of early exercised shares as of December 31, 2019 and December 31, 2018 was $0.1 million and $0.2 million, respectively, which were recorded in other current liabilities and other non-current liabilities.

Stock - Based Compensation Associated with Awards to Employees

During the years ended December 31, 2019 and December 31, 2018, the Company granted stock options to employees to purchase 667,067 and 1,417,674 shares of common stock, respectively.

The aggregate exercise price of early exercised shares as of December 31, 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:

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Fair Value of Common Stock

Prior to the IPO, the fair value of the Company’s common stock was determined by the board of directors with assistance from management and, in part, on input from an independent third-party valuation firm.

The board of directors determined the fair value of common stock by considering a number of objective and subjective factors, including valuations of comparable companies, sales of redeemable convertible preferred stock, operating and financial performance, the lack of liquidity of the Company’s common stock and the general and industry-specific economic outlook.

Subsequent to the Company’s IPO, the fair value of the Company’s common stock is determined based on its closing market price on the date of grant on the NASDSQ Global Select Market.

Stock - Based Compensation Associated with Awards to Non-employees

During the years ended December 31, 2019 and December 31, 2018 , the Company granted stock options to non-employees to purchase zero and 7,800 shares of common stock , respectively .

Stock-based compensation expense related to options granted to non-employees was not material.

The fair value of the Company’s common stock is determined based on its closing market price on the date of grant.

Restricted Stock

Restricted stock activity was as follows:

Number of Shares

of Restricted

Stock Outstanding

Number of Shares Underlying Outstanding Restricted

Unvested, December 31, 2019

Unvested, December 31, 2020

During the years ended December 31, 2015 and 2016, the Company issued 346,579 shares of restricted stock to its founders under founder stock purchase agreements.

Under the terms of these agreements, the restricted stock vests either over the requisite service periods, or the achievement of pre-defined business development milestones.

Holders of restricted stock have voting and dividend rights with respect to such shares held without regard to vesting.

As of December 31, 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.

The holder of restricted stock has voting and dividend rights with respect to such shares held without regard to vesting.

Shares of restricted stock are subject to a right of repurchase at the original purchase price held by the Company.

As the restricted stock was purchased by employees 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 years ended December 31, 2019 and December 31, 2018, was $0.1 million and less than $0.1 million, respectively.

As of December 31, 2019 and December 31, 2018, 14,625 and 19,492 shares of restricted stock, respectively, were outstanding and subject to a right of repurchase, with an aggregate purchase price of less than $0.1 million, which is recorded in other current liabilities and other non-current liabilities on the balance sheets.

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 years ended December 31, 2020 and December 31, 2019 was zero and $0.1 million in each period.

Significant Agreements

GlaxoSmithKline Collaboration, Option and License Agreement

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 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.

MAT2A Program

For the MAT2A program, the Company will lead research and development through early clinical development.

GSK has an exclusive option to obtain an exclusive license to continue development of and commercialize MAT2A products arising out of the MAT2A program, or the Option, exercisable within a specified time period after the Company delivers to GSK a data package resulting from its conduct of a MAT2A Phase 1 monotherapy clinical trial.

At such time of exercise, GSK has agreed to pay the Company an option exercise payment of $50.0 million.

GSK may initiate, or request that the Company initiates, a Phase 1 combination clinical trial for a MAT2A product and GSK’s Type I PRMT inhibitor (GSK3368715) product, or the MAT2A Combination Trial, prior to GSK’s exercise of the Option.

The Company will be responsible for the costs of research and early clinical development activities that the Company conducts for the MAT2A program prior to GSK’s exercise of the Option, excluding the costs of conducting the MAT2A Combination Trial.

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.

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

Subject to GSK’s exercise of the Option, the Company will be eligible to receive future development and regulatory milestones of up to $465.0 million, and commercial milestones of up to $475.0 million, with respect to each MAT2A product.

Additionally, the Company is entitled to receive 50% of U.S.

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

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.

net profit share and corresponding development cost share for the MAT2A program, in which case the Company would be eligible to receive tiered royalties on U.S.

net sales of MAT2A products by GSK, its affiliates and their sublicensees at the same royalty rates as for global non-U.S.

net sales thereafter, with economic adjustments based on the stage of the MAT2A program at the time of opt-out.

Pol Theta Program

Pursuant to the GSK Collaboration Agreement, GSK holds a global, exclusive license to develop and commercialize POLQ products arising out of the POLQ program.

GSK and the Company will collaborate on ongoing preclinical research for the POLQ program, and GSK will lead clinical development for the POLQ program.

GSK will be responsible for all research and development costs for the POLQ program, including those incurred by the Company.

The Company will be eligible to receive future development and regulatory milestones of up to $485.0 million, with respect to each POLQ product, including as applicable, for multiple POLQ products that target certain alternative protein domains or are based on alternative modalities.

Additionally, the Company is eligible to receive up to $475.0 million of commercial milestones with respect to each POLQ product.

The Company is also entitled to receive tiered royalties on global net sales of POLQ products by GSK, its affiliates and their sublicensees ranging from high single digit to sub-teen double digit percentages, subject to certain customary reductions.

Pursuant to the GSK Collaboration Agreement, GSK holds a global, exclusive license to develop and commercialize WRN products arising out of the WRN program.

The Company and GSK will collaborate on ongoing preclinical research for the WRN program, and GSK will lead clinical development for the WRN program, with IDEAYA responsible for 20% and GSK responsible for 80% of such global research and development costs.

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

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

The Company will be eligible to receive future development milestones of up to $485.0 million, with respect to each WRN product, including as applicable, for multiple WRN products that are based on alternative modalities.

Additionally, the Company will be eligible to receive up to $475.0 million of commercial milestones with respect to each WRN product.

The Company will be entitled to receive 50% of U.S.

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

net sales of WRN 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.

net profit share and corresponding research and development cost share for the WRN program, and would be eligible to receive tiered royalties on U.S.

net sales of WRN products by GSK, its affiliates and their sublicensees at the same royalty rates as for global non-U.S.

net sales thereafter, with economic adjustments based on the stage of the WRN program at the time of opt-out.

Under the terms of the GSK Collaboration Agreement, subject to certain exceptions, the Company and GSK will not, directly or through third parties, develop or commercialize other products whose primary and intended mechanism of action is the modulation of WRN, POLQ, or MAT2A (unless GSK does not exercise the Option, in which case such restriction shall cease to apply with respect to MAT2A) for an agreed upon period of time.

The Company and GSK will form a joint steering committee, joint development committees, and joint commercialization committees responsible for coordinating all activities under the GSK Collaboration Agreement.

Ownership of intellectual property developed under the GSK Collaboration Agreement is allocated between or shared by the parties depending on development and subject matter.

GSK’s royalty obligations continue with respect to each country and each product until the later of (i) the date on which such product is no longer covered by certain intellectual property rights in such country and (ii) the 10th anniversary of the first commercial sale of such product in such country.

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 to 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 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, 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.

Novartis License Agreement

In September 2018, the Company entered into a license agreement with Novartis International Pharmaceuticals Ltd.

(“Novartis”) to develop and commercialize Novartis’ LXS196 (also known as IDE196), a Phase 1 protein kinase C (“PKC”) inhibitor for the treatment of cancers having GNAQ and GNA11 mutations.

In consideration of license and rights granted under the license agreement, the Company made a one-time cash payment of $2.5 million to Novartis and issued 263,615 shares of Series B redeemable convertible preferred stock with a fair value of $3.8 million to an affiliate of Novartis, which were recorded within research and development expenses on the Company’s statements of operations and comprehensive loss, as the products have not reached technological feasibility and do not have alternative future use.

Under the license agreement, the Company is liable to make contingent development and sales milestone payments of up to $29.0 million and mid to high single digit royalty payments of the net sales of licensed products.

Revenue Recognition

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

10, Significant Agreements).

Disaggregation of Revenue

The following table presents revenue disaggregated by research program (in thousands):

Year Ended December 31, 2020

Total collaboration revenue

Contract balances

As of December 31, 2020 , the Company had $1.9 million of accounts receivable and $83.8 million of contract liabilities related to the GSK Collaboration Agreement.

The following table presents the significant changes in the balance of contract liabilities during the year ended December 31, 2020 (in thousands):

Contract liabilities

Receipt of the Upfront Payment

Reclassification to revenue, as the result of performance obligations satisfied

Cash received for cost reimbursement

Increase in accounts receivable

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

Based on the estimated reimbursable program costs for a quarter, 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.

GSK may elect to conduct certain preclinical 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 activities.

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 nature of such license to MAT2A technology to be functional.

As of December 31, 2020 , GSK has exercised the Preclinical MAT2A License, and the 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 year ended December 31, 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 December 31, 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 following table presents the transaction price allocated to the remaining performance obligations as of December 31, 2020 (in thousands):

Performance Obligations

Allocation of Transaction Price

MAT2A R&D Services

Pol Theta R&D Services

WRN R&D Services

Total transaction price allocated to the remaining performance obligations

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 significant 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 or 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 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 Pol Theta R&D Services and WRN R&D Services by using a combination of risk-adjusted net present value analysis and 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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Restricted stock acquired upon early exercise of stock options

As of December 31, 2019, the Company has contributions from plan participant of less than $0.1 million under the ESPP, which if converted, would be equivalent to 4,378 shares based on 85% of the stock price at the beginning of the offering period.

As of December 31, 2020, the Company has contributions from plan participant of $0.3 million under the ESPP, which if converted, would be equivalent to 30,454 shares based on 85% of the stock price at the beginning of the offering period.

401(k) Retirement Savings Plan

4 unchanged sentences

For the year s ended December 31, 2020 , December 31, 2019 and December 31, 2018 , the Company made matching contributions of $0.2 million, $0.2 million and less than $0.1 million, respectively.

License Agreements

Novartis International Pharmaceuticals Ltd.

In September 2018, the Company entered into a license agreement with Novartis International Pharmaceuticals Ltd.

(“Novartis”) to develop and commercialize Novartis’ LXS196 (also known as IDE196), a Phase 1 protein kinase C (“PKC”) inhibitor for the treatment of cancers having GNAQ and GNA11 mutations.

Related Party Transactions

The Company incurred $1.3 million and $0.3 million of research and development expenses during the years ended December 31, 2018 and December 31, 2017, respectively, in relation to agreements for pharmaceutical research, development and manufacturing activities with entities affiliated with a former director of the Company, Edward Hu.

As of December 31, 2018, $0.2 million is included in accounts payable in the Company’s balance sheets.

The Company incurred $1.3 million of research and development expenses during the year ended December 31, 2018 in relation to agreements for pharmaceutical research, development and manufacturing activities with entities affiliated with a former director of the Company, Edward Hu.

Hu resigned from the Company’s board of directors in January 2019.

Supplementary Financial Data (Unaudited)

The following table presents the supplementary quarterly financial data for the years ended December 31, 2019 and December 31, 2018.

Three Months Ended

September 30 (1)

Total operating expenses

Net loss attributable to common stockholders

Net loss per share attributable to common stockholders,

basic and diluted

Total operating expenses

Net loss attributable to common stockholders

Net loss per share attributable to common stockholders,

basic and diluted

Results for the quarter ended September 30, 2018 included a $6.3 million expense related to the Novartis license fee (as further described in Note 13 to the financial statements).

Subsequent Event

From January 2021 through March 22, 2021, the Company sold an aggregate of 2,709,385 shares for gross proceeds of $43.3 million in the ATM Offering.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in South San Francisco, California on March 23, 2021.

10 unchanged sentences

/s/ Paul Stone, J.D.

Chief Financial Officer (Principal Financial and Accounting Officer)

Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

March 23, 2021

Paul Stone, J.D.

/s/ John Diekman, Ph.D.

/s/ Timothy Shannon, M.D.

Chairman of the Board of Directors

March 23, 2021

John Diekman, Ph.D.

Timothy Shannon, M.D.

/s/ Garret Hampton, Ph.D.

March 23, 2021

Garret Hampton, Ph.D.

March 23, 2021

/s/ Scott Morrison

4 unchanged sentences

Terry Rosen, Ph.D.

/s/ Thilo Schroeder, Ph.D.

March 24, 2020

Thilo Schroeder, Ph.D.

/s/ Timothy Shannon, M.D.

March 24, 2020

Timothy Shannon, M.D.

/s/ Jeffrey Stein, Ph.D.

4 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data