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Item 2. Management’s Discussion and Analysis

2021-05-10 compared with 2020-11-12 · 295 added, 285 removed, 170 unchanged (77% of the section changed)

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Please also see the section of this Quarterly Report on Form 10-Q titled “Forward-Looking Statements.”

We are an oncology-focused precision medicine company committed to the discovery and development of targeted therapeutics for patient populations selected using molecular diagnostics.

We are a synthetic lethality focused precision medicine oncology company committed to the discovery and development of targeted therapeutics for patient populations selected using molecular diagnostics.

Our approach integrates small molecule drug discovery with extensive capabilities in identifying and validating translational biomarkers to develop targeted therapies for select patient populations most likely to benefit.

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We are applying these capabilities to develop a robust pipeline in precision medicine oncology, with a research focus in synthetic lethality – which represents an emerging class of precision medicine targets.

IDE397 – MAT2A Inhibitor Development Candidate

Our lead synthetic lethality research program targets methionine adenosyltransferase 2a, or MAT2A, for solid tumors with MTAP deletions, a patient population estimated to represent approximately 15% of solid tumors.

Our MAT2A inhibitor development candidate is designated as IDE397.

Our preclinical activities continue to support IDE397 as a development candidate and a potential clinical candidate.

We are evaluating the efficacy of monotherapy IDE397 in over forty solid tumor patient derived xenograft, or PDX, models with homozygous MTAP deletions.

Preliminary results show in vivo efficacy in multiple MTAP-null xenograft models demonstrating tumor growth inhibition when MAT2A is pharmacologically inhibited with IDE397 as monotherapy, including in non-small cell lung cancer.

We have completed the in-life phase of our ongoing good laboratory practice, or GLP, compliant toxicology studies with IDE397 in multiple species.

Subject to satisfactory completion of GLP toxicology studies and completion of chemistry, manufacturing and control, or CMC, certification requirements, we are targeting to submit an investigational new drug application, or IND, to the FDA for IDE397 in December 2020.

Subject to effectiveness of the IND, we anticipate initiating a Phase 1 clinical trial for clinical evaluation of IDE397 as monotherapy in the first half of 2021.

Preclinical combination tolerability and efficacy studies are ongoing with IDE397 and GSK3368715, GSK’s Phase 1 Type 1 PRMT inhibitor, including in multiple MTAP-null in vivo efficacy models.

IDE397 – MAT2A Inhibitor Clinical Candidate

Our most advanced synthetic lethality product candidate is IDE397, a clinical-stage methionine adenosyltransferase 2a, or MAT2A, inhibitor being developed for solid tumors with MTAP deletions.

MTAP-null cells lack the ability to metabolize 5-methylthioadenosine, or MTA, which is an essential step in a biochemical pathway involved in salvaging metabolite S-adenosyl methionine, or SAM.

Increased levels of MTA partially inhibit the methyltransferase PRMT5 for which SAM is the methyl-donor substrate for methylation of various proteins.

This partial inhibition of PRMT5 by increased levels of MTA renders MTAP-null cells more dependent on the activity of methionine adenosyltransferase II alpha or MAT2A, an enzyme that is responsible for the synthesis of SAM.

Because of this enhanced dependence, loss of MTAP results in synthetic lethality when MAT2A is pharmacologically inhibited.

The prevalence of MTAP deletions is estimated to be approximately 15% of all human tumors, translating to an estimated addressable population in major market countries, consisting of the US, EU5 and Japan, for patients having solid tumors with MTAP deletion to be approximately 75,000 annually.

We have initiated a Phase 1 clinical trial, designated as IDE397-001 (ClinicalTrials.gov Identifier:

NCT04794699) to evaluate IDE397 under an investigational new drug application, or IND.

We have dosed IDE397 into a first patient and completed enrollment into a first dose escalation cohort of this Phase 1 clinical trial.

Our initial clinical development plans to evaluate IDE397 include a dose escalation portion of the Phase 1 clinical trial in which we are enrolling patients having solid tumors with MTAP deletion identified by commercial or institutional next generation sequencing, or NGS, panels or by MTAP immunohistochemistry, or IHC, assay with confirmation by NGS.

Following and subject to satisfactory completion of the dose escalation portion of the Phase 1 clinical trial, we plan to enroll patients having solid tumors with MTAP deletion into one or more expansion arms focused on one or more selected solid tumor indications.

Potential solid tumors we are considering for future evaluation in one or more expansion arm(s) of the clinical trial evaluating IDE397 include non-small cell lung cancer, or NSCLC, head and neck cancer, bladder cancer, gastric cancer, pancreatic cancer and esophageal cancer, among others.

We plan to obtain patient biopsies from the dose escalation and expansion portions of the clinical trial for translational research, including evaluation of certain pharmacodynamic, or PD, biomarkers, such as peripheral S-adenosyl methionine, or SAM, and tumor SAM as well as tumor symmetric dimethylarginine, or SDMA.

We have a program objective to obtain preliminary clinical PD data from the dose-escalation portion of the IDE397 monotherapy Phase 1 clinical trial in the second half of 2021.

Our evaluation of IDE397 as a clinical candidate is supported by preclinical data.

We have evaluated the efficacy of IDE397 as monotherapy in over forty solid tumor patient derived xenograft, or PDX, models with homozygous MTAP deletions.

Results of this IDE397 MTAP-deletion PDX Panel Study were reported at AACR 2021 and show ed in vivo efficacy in multiple MTAP-null xenograft models demonstrating tumor growth inhibition when MAT2A was pharmacologically inhibited with IDE397 as monotherapy.

In this study, we observed > 60% tumor growth inhibition, or TGI, in ~ 75% of the models and > 75% TGI in ~ 50% of models, in each case across major solid tumor types.

We also observed tumor regressions, with > 100% TGI, in multiple PDX models and across multiple solid tumor types , including in NSCLC as well as in bladder and gastric cancer PDX models.

In NSCLC, data from the preclinical PDX Panel Study has shown > 60% TGI in 11 independent NSCLC PDX models out of 13 models evaluated, including in seven NSCLC adenocarcinoma PDX models out of 9 evaluated and in four NSCLC squamous carcinoma PDX models out of 4 evaluated.

Tumor regressions were observed in 2 of 4 NSCLC squamous PDX models, including a complete response in one model.

Additionally, we have observed dose-dependent modulation of selected PD biomarkers, including SDMA and SAM, in these in vivo models, including in NSCLC and HCT-116 MTAP deletion CDX models.

We also observed a correlation of in vivo efficacy with dose-dependent pharmacodynamic PD modulation in MTAP-deletion CDX model in NSCLC.

We have observed IDE397 dose dependent increases in MTA levels and a variety of downstream metabolic and gene expression changes in our studies with in vitro and in vivo models.

Through our participation in the DepMap (Cancer Dependency Map) consortium led by the Broad Institute of MIT and Harvard, or Broad Institute, and in collaboration with GSK, we have conducted a PRISM screen of a panel of over 800 cell lines for pharmacological sensitivity to IDE397.

This PRISM screen has identified differential selectivity across tumor lineages, potentially enabling additional biomarker discovery and clinical opportunity expansion for IDE397.

Preclinical tolerability and efficacy studies are ongoing with IDE397 and various potential combination agents.

Based on preliminary results, we have observed in vivo efficacy with enhanced tumor growth inhibition for IDE397 in combination with a taxane in a pancreatic cancer PDX model and in combination with a PRMT inhibitor in an HCT116 MTAP-null cell derived xenograft, or CDX, model.

We plan to lead research and development of IDE397 through early clinical development, in collaboration with GlaxoSmithKline pursuant to the Collaboration, Option and License Agreement, or the GSK Collaboration Agreement, with an affiliate of GlaxoSmithKline, GLAXOSMITHKLINE INTELLECTUAL PROPERTY (NO.

4), Limited, or GSK.

We are advancing our preclinical research for an inhibitor of poly (ADP-ribose) glycohydrolase, or PARG, for patients having tumors with BRCA2 mutations and potentially other genetic and/or molecular signatures.

One of our PARG inhibitor compounds, designated as IDB-PARG, has demonstrated dose-dependent in vivo efficacy as monotherapy with tumor regression or stasis in multiple PDX models.

We are continuing to evaluate the efficacy of IDB-PARG as monotherapy across a panel of additional solid tumor PDX models with specific genetic alterations.

We entered into a strategic collaboration with the Broad Institute of MIT and Harvard focused on synthetic lethality target and biomarker discovery.

Among other objectives, our collaboration with the Broad Institute will evaluate paralog CRISPR knockdown in selected cell lines in conjunction with pharmacological inhibition of PARG to inform patient selection and combination strategies in ovarian and breast cancer.

We are advancing our preclinical research for an inhibitor of poly (ADP-ribose) glycohydrolase, or PARG, for patients having tumors with homologous recombination deficiencies, or HRD, and potentially other genetic and/or molecular signatures.

PARG is a novel target in a clinically validated biological pathway.

PARG functions as a regulator of DNA repair in the same biochemical pathway as poly (ADP-ribose) polymerase, or PARP.

PARG hydrolyzes poly (ADP-ribose), or PAR, chains that are polymerized by PARP enzymes, completing the PAR cycle.

Small molecule inhibitors of PARG result in a dose dependent increase in cellular PAR after DNA damage.

Depletion of certain base-excision repair components sensitizes cancer cells to pharmacological PARG inhibition in vitro .

We are evaluating the efficacy of our PARG inhibitors as monotherapy across a number of solid tumor CDX and PDX models with specific genetic alterations.

One of our PARG inhibitor compounds, designated as IDB-PARG, has demonstrated dose-dependent in vivo efficacy as monotherapy with tumor regression or stasis in multiple CDX models and PDX models, including in ovarian cancer, gastric cancer and breast cancer models.

In vivo studies have shown evidence of differentiation from a PARP inhibitor, niraparib, including enhanced TGI relative to such PARP inhibitor and, in certain models, tumor regressions in models which are refractory to such PARP inhibitor.

We have also observed dose-dependent modulation of a PD biomarker, poly (ADP-ribose), or PAR, polymer chains across multiple in vivo CDX models, including in ovarian cancer, gastric cancer and breast cancer models.

Through our participation in the DepMap consortium, we have conducted a PRISM screen of a panel of over 800 cell lines for pharmacological sensitivity to our IDB-PARG inhibitor compound.

This PRISM screen has identified additional tumor lineages, potentially enabling additional biomarker discovery and clinical opportunity expansion for our PARG inhibitors.

In addition, we have established a strategic collaboration with the Broad Institute focused on synthetic lethality target and biomarker discovery.

Through this collaboration with the Broad Institute, we are evaluating paralog CRISPR knockdown in selected cell lines in conjunction with pharmacological inhibition of PARG to inform patient selection and combination strategies in ovarian and breast cancer.

We own or control all commercial rights in our PARG program, subject to certain economic obligations pursuant to our exclusive, worldwide license with Cancer Research UK / University of Manchester.

Subject to further preclinical studies, we are targeting to identify a PARG inhibitor development candidate in 2021.

Werner Helicase

We are also continuing to advance our preclinical research in collaboration with GSK for an inhibitor targeting Werner Helicase, or WRN, for patients having tumors with high microsatellite instability, or MSI.

We have observed dose-dependent cellular viability effect and a dose-dependent cellular pharmacodynamic, or PD, response in multiple endogenous MSI high cell lines.

For this program, we plan to continue further development in collaboration with GSK pursuant to the GSK Collaboration Agreement.

We are progressing our program targeting DNA Polymerase Theta, or Pol Theta or POLQ, in collaboration with GSK, for patients having solid tumors with BRCA or other homologous recombination deficiency, or HRD, mutations.

Pol Theta is involved in a DNA repair process called microhomology mediated end joining, or MMEJ, that is utilized when homologous recombination mediated repair is compromised, as happens in the case of certain BRCA1 or BRCA2 mutations.

The expression of Pol Theta is largely absent in normal cells, but tumor cells harboring double strand break repair defects, such as BRCA1 or BRCA2, show synthetic lethality when Pol Theta is knocked down with siRNA.

Pol Theta is a large protein with two functional domains:

a DNA polymerase domain and an ATP-dependent DNA helicase domain, alternatively referred to as a helicase domain or as an ATPase domain, linked by a RAD51 binding domain.

We have established independent research programs to discover small molecule inhibitors of each of the Pol Theta polymerase domain and ATPase domain.

We also have established an independent research approach targeting Pol Theta based on a protein degradation.

We have shown combination activity with multiple PARP inhibitors, including niraparib.

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Tumor regressions were observed for all animals in the study which were administered the combination.

Through our participation in the DepMap consortium, and in collaboration with GSK, we have conducted a PRISM screen of a panel of over 800 cell lines for pharmacological sensitivity to one of our Pol Theta ATPase inhibitor compounds.

This PRISM screen has identified additional tumor lineages, potentially enabling additional biomarker discovery and clinical opportunity expansion for our Pol Theta inhibitors.

We plan to continue further development of our POLQ program, including both protein degraders and small molecule inhibitors in collaboration with GSK pursuant to the GSK Collaboration Agreement, and are targeting selecting a development candidate for a Pol Theta small molecule inhibitor in 2021.

DNA Damage Target

We have initiated early preclinical research programs to identify small molecule inhibitors for multiple distinct DNA Damage Targets, or DDTs, for patients with solid tumors characterized by a proprietary biomarker or a gene signature.

Werner Helicase

WRN protein is a RecQ enzyme involved in the maintenance of genome integrity.

Germline loss of function mutations in WRN lead to premature aging and pre-disposition to cancer.

MSI is a change in the DNA content of a tumor cell in which the number of repeats of microsatellites, short repeated sequences of DNA, differ as cells divide.

High MSI is present in about 15% of gastrointestinal tumor cancers, including in approximately 22% of stomach adenocarcinoma and 16% of colorectal cancer.

Tumors with high MSI are routinely assessed in multiple diagnostic profiling tests.

WRN is a protein having several functional domains, and we have shown that the helicase functional domain of WRN is responsible for this synthetic lethal interaction, as reflected in our publication in Cell Press - iScience, Werner Syndrome Helicase is Required for the Survival of Cancer Cells with Microsatellite Instability (March 2019).

We have observed dose-dependent cellular viability effect and a dose-dependent cellular PD, response in multiple endogenous MSI high cell lines.

We have also demonstrated in vivo efficacy and PD response in a relevant MSI high model.

For this program, we plan to continue further development in collaboration with GSK pursuant to the GSK Collaboration Agreement.

Other Synthetic Lethality Pipeline Programs

We have initiated early preclinical research programs to identify small molecule inhibitors for an MTAP-synthetic lethality, or MTAP-SL, target, as well as for multiple distinct DNA Damage Targets, or DDTs, for patients with solid tumors characterized by a proprietary biomarker or a gene signature.

We own or control all commercial rights in our MTAP-SL and DDT programs.

Synthetic Lethality Target and Biomarker Discovery Platform

Synthetic lethality continues to be our core research focus.

We have invested significantly and continue to invest in capabilities for identification and validation of new synthetic lethality targets.

For targets of interest, we advance our research to discover therapeutic drugs and relevant biomarkers.

We have invested significantly and continue to invest in capabilities for identification and validation of new synthetic lethality targets and biomarkers for patient selection.

For targets of interest, we advance our research to discover therapeutic drug candidates and to further qualify relevant biomarkers.

Our synthetic lethality research platform integrates a broad set of computational and functional capabilities.

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We have established a comprehensive platform to computationally and empirically identify high value synthetic lethal pairs in defined patient populations.

This platform integrates across parallel data sets, each including orthogonal content based on particular screening efforts.

These screens include evaluation of curated, genetically define d and preselected model cell sets indicative of targeted patient populations.

Our platform includes a proprietary library and data set resulting from our DECIPHER™ Dual CRISPR Synthetic Lethality library constructed in collaboration with University of Cal ifornia, San Diego.

The platform will also include data from our recently announced proprietary PAGEO™ , or Paralogous Gene Evaluation in Ovarian cancer, library being developed in collaboration with the Broad Institute utilizing the Sellers laboratory CRI SPR paralog screening platform to evaluate functionally redundant paralogous genes across ovarian cancer subtypes.

Additionally, we are members of the DepMap (Cancer Dependency Map) consortium led by the Broad Institute, through which we have access to a comprehensive data set of genome-wide cell-based screens, including isogenic screens, conducted by the Broad Institute and other contributing institutes, including pre-publication access to new data releases.

As a further component of our synthetic lethali ty platform, we are conducting computational data mining and analysis of relevant public databases, such as The Cancer Genome Atlas, or TCGA, cBioPortal, and Cancer Cell Line Encyclopedia, or CCLE, among others.

Such computational approaches include our p roprietary algorithms which enable us to determine synthetic lethality targets and biomarkers enabling patient stratification.

This platform integrates information across parallel data sets, each including orthogonal content based on particular screening efforts.

These screens include evaluation of curated, genetically defined and preselected model cell sets indicative of targeted patient populations.

Our platform includes a proprietary library and data set resulting from our DECIPHER™ Dual CRISPR Synthetic Lethality library constructed in collaboration with University of California, San Diego.

The platform includes data from our proprietary Paralogous Gene Evaluation in Ovarian cancer, or PAGEO™, library being developed in collaboration with the Broad Institute utilizing the Sellers laboratory CRISPR paralog screening platform to evaluate functionally redundant paralogous genes across ovarian cancer subtypes.

Additionally, we are members of the DepMap consortium through which we have access to a comprehensive data set of genome-wide cell-based screens, including isogenic screens, conducted by the Broad Institute and other contributing institutes, including pre-publication access to new data releases.

As a further component of our synthetic lethality platform, we are conducting computational data mining and analysis of relevant public databases, such as The Cancer Genome Atlas, or TCGA, cBioPortal, and Cancer Cell Line Encyclopedia, or CCLE, among others.

Such computational approaches include our proprietary algorithms which enable us to determine synthetic lethality targets and biomarkers enabling patient stratification.

We have established internal bioinformatics capabilities, which are supplemented by external resources.

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PAGEO™ Paralogous Gene Evaluation in Ovarian Cancer and Dep Map Consortium – Broad Institute

On October 21, 2020, we entered into a strategic collaboration with the Broad Institute of MIT and Harvard focused on synthetic lethality target and biomarker discovery.

In October 2020, we entered into a strategic collaboration with the Broad Institute of MIT and Harvard focused on synthetic lethality target and biomarker discovery.

This collaboration will use the large-scale CRISPR paralog screening platform developed at the laboratory of William R.

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Sellers, who also serves on our Scientific Advisory Board, is the principal investigator for the strategic collaboration.

We have also become a member of the Broad DepMap (Cancer Dependency Map) consortium led by the Broad Institute to further enhance our efforts in bioinformatics and cell-based screening for synthetic lethality target and biomarker discovery and validation.

We have also become a member of the Broad DepMap consortium to further enhance our efforts in bioinformatics and cell-based screening for synthetic lethality target and biomarker discovery and validation.

We are also continuing to invest in our capabilities to advance our research on newly identified synthetic lethality targets of interest, including to enable discovery of therapeutic drugs and relevant biomarkers.

These investments include both additional research personnel and capital investments, which will enhance our capabilities broadly, including in target validation, biological assay development, protein synthesis, structural biology, computational chemistry, and analytical chemistry, among other core functional areas.

Collaboration, Option and License Agreement with GSK for Synthetic Lethality Programs

On June 15, 2020, we entered into the GSK Collaboration Agreement, with GSK, pursuant to which we and GSK have entered into a strategic partnership and collaboration for our synthetic lethality programs targeting MAT2A, Pol Theta and Werner Helicase.

On July 27, 2020, or the Effective Date, the GSK Collaboration Agreement became effective upon t he parties’ receipt of Hart-Scott-Rodino Antitrust Improvements Act clearance, or HSR Clearance.

We received from GSK an up-front payment of $100.0 million in cash following the Effective Date.

GSK Collaboration – MAT2A Program

For the MAT2A program, we will continue to 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 we deliver to GSK a data package resulting from our conduct of a MAT2A Phase 1 monotherapy clinical trial.

GSK’s exercise of the Option may be subject to HSR Clearance therefor at such time of exercise, and following exercise and HSR Clearance, GSK has agreed to pay us an option exercise payment of $50.0 million.

GSK may initiate, or request that we initiate, 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.

We will be responsible for the costs of research and early clinical development activities that we conduct for the MAT2A program prior to GSK’s exercise of the Option (including during any interim waiting period for HSR Clearance for such Option exercise, if applicable), 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 us at our own cost.

Subject to GSK’s exercise of the Option (and HSR Clearance thereof, if applicable), 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 (and HSR Clearance thereof, if applicable), we 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, we are 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.

We 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 we 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.

GSK Collaboration - 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 we 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 us.

We 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, we are eligible to receive up to $475.0 million of commercial milestones with respect to each POLQ product.

We are 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.

We believe there are potential synergies to evaluate a combination between our Pol Theta program and GSK’s approved PARP inhibitor, Zejula™, targeting the BRCA and HRD patient population.

GSK Collaboration - We rner Helicase Program

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

We 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.

We 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, we will be eligible to receive up to $475.0 million of commercial milestones with respect to each WRN product.

We 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.

We 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.

GSK Collaboration - General

Under the terms of the GSK Collaboration Agreement, subject to certain exceptions, we 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 or HSR Clearance does not occur with respect thereto, in which case such restriction shall cease to apply with respect to MAT2A) for an agreed upon period of time.

We 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.

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

We 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 us.

The GSK Collaboration Agreement contains various representations, warranties, covenants, dispute resolution mechanisms, indemnities and other provisions generally customary for transactions of this nature.

IDE196 - PKC Inhibitor Clinical Candid ate

We continue to execute on our ongoing Phase 1/2 clinical trial and preclinical research activities for our clinical candidate IDE196, a protein kinase C, or PKC, inhibitor for genetically-defined cancers having activating GNAQ or GNA11 hotspot mutations, including in metastatic uveal melanoma, or MUM, skin melanoma and other solid tumors.

Our clinical trial strategy is to pursue IDE196 combination therapies in MUM, including with binimetinib, a MEK inhibitor, and independently with crizotinib, a cMET inhibitor, each pursuant to our Clinical Trial Collaboration and Supply Agreement, or Pfizer Agreement, with Pfizer.

We have formed a joint development committee with Pfizer responsible for coordinating all regulatory and other activities under the Pfizer Agreement, including for both the IDE196/binimetinib combination study and IDE196/crizotinib combination study.

Darovasertib (IDE196) Overview – PKC Inhibitor for Patients having Tumors with GNAQ or GNA11 Mutations

Darovasertib (IDE196) is a clinical-stage, potent and selective small molecule inhibitor of protein kinase C, or PKC, for genetically-defined cancers having GNAQ or GNA11 gene mutations.

PKC is a protein kinase that functions downstream of the GTPases GNAQ and GNA11.

We initiated a Phase 1/2 clinical trial IDE196-001 in June 2019 to evaluate darovasertib in solid tumors harboring GNAQ or GNA11 hotspot mutations in a basket trial design, including in metastatic uveal melanoma, or MUM, and other solid tumor indications such as skin (cutaneous) melanoma.

Our clinical trial strategy in MUM includes darovasertib combination therapies, including with binimetinib, a MEK inhibitor, and independently with crizotinib, a cMET inhibitor.

We are continuing to enroll MUM patients into each of these combination arms of the Phase 1/2 clinical trial.

We anticipate providing a clinical data update for the darovasertib combination(s) in the second half of 2021.

We are evaluating darovasertib in combination with binimetinib and crizotinib pursuant to our Clinical Trial Collaboration and Supply Agreement, or Pfizer Agreement, with Pfizer, Inc.

We and Pfizer have formed a joint development committee responsible for coordinating all regulatory and other activities under the Pfizer Agreement, including for both the darovasertib / binimetinib combination arm and the darovasertib / crizotinib combination arm of the clinical trial.

If the clinical data from either or both of these combination studies is positive, we plan to enter into good faith negotiations with Pfizer to determine a regulatory submission strategy.

We are continuing to evaluate IDE196 as monotherapy in non-MUM cancers, including in skin melanoma, where we recently announced meeting the clinical protocol criteria for an expansion cohort, based on observing one confirmed partial response in an initial four evaluable patients.

IDE196 / Binimetinib Combination Therapy

On June 26, 2020, we initiated a combination arm of our Phase 1/2 clinical trial to evaluate IDE196 in combination with binimetinib in patients having tumors harboring activating GNAQ or GNA11 hotspot mutations.

An initial dose escalation portion of this arm of the clinical trial is evaluating the safety and efficacy of IDE196 in combination with binimetinib at various dose combinations, initially in patients with metastatic uveal melanoma, or MUM.

Following our evaluation of tolerability and preliminary efficacy from the IDE196 / binimetinib combination arm of the clinical trial in MUM, we may also evaluate IDE196 / binimetinib combination therapy in patients having other solid tumors with activating GNAQ/11 hotspot mutations outside of uveal melanoma, such as skin melanoma.

The IDE196 / binimetinib combination arm of our Phase 1/2 clinical trial is supported through the Pfizer Agreement, pursuant to which Pfizer supplies us with their MEK inhibitor, binimetinib.

We have established a joint development committee with Pfizer to facilitate combination arm drug supply, trial initiation and ongoing development.

We are continuing patient enrollment into the IDE196 / binimetinib combination arm under the clinical trial collaboration and supply agreement with Pfizer and are targeting combination expansion in the first quarter of 2021.

We anticipate interim data from the IDE196 / binimetinib combination therapy Phase 1/2 portion of the clinical trial in MUM patients in 2021.

IDE196 / Crizotinib Combination Therapy

On September 23, 2020, we expanded the scope of our Pfizer Agreement to evaluate IDE196 and crizotinib as a combination therapy in patients having tumors harboring activating GNAQ or GNA11 hotspot mutations.

We identified cMET as a potential biomarker and a cMET inhibitor as potential combination agent though our ongoing translational research.

We observed preclinical synergies in cellular models, and a retrospective analysis of human clinical samples from the Novartis Phase 1 clinical trial also independently supported cMET expression / activation as potential biomarker / combo agent.

We are the sponsor of this arm of the clinical trial and are targeting initiation in late 2020 to early 2021 to evaluate the combination of IDE196 and crizotinib.

An initial dose escalation portion of this arm of the clinical trial will be evaluating the safety and efficacy of IDE196 in combination with crizotinib at various dose combinations, initially in patients with metastatic uveal melanoma, or MUM.

Following our evaluation of tolerability and preliminary efficacy from the IDE196 / crizotinib combination arm of the clinical trial in MUM, we may also evaluate IDE196 / crizotinib combination therapy in patients having other solid tumors with activating GNAQ/11 hotspot mutations outside of uveal melanoma, such as skin melanoma.

Pursuant to the Pfizer Agreement, Pfizer will supply us with their cMET inhi bitor, crizotinib.

We have established a joint development committee with Pfizer to facilitate combination arm drug supply, trial initiation and ongoing development.

IDE196 Monotherapy

Our ongoing monotherapy arm of the Phase 1/2 clinical trial was initiated in June 2019 to evaluate IDE196 in solid tumors harboring GNAQ or GNA11 hotspot mutations in a basket trial design.

We are also continuing to evaluate darovasertib as monotherapy in MUM and non-MUM cancers.

In skin melanoma arm of the clinical trial, we are continuing to enroll into an expansion cohort .

Based on preliminary darovasertib monotherapy clinical data and its mechanism of action, we anticipate darovasertib clinical activity independent of Human Leukocyte Antigen, or HLA status in GNAQ/11-mutation cancers.

Scientific Rationale and Opportunity

PKC belongs to a family of closely related protein kinases that are involved in various aspects of signal transduction, such as transmitting extracellular growth factor or cytokine signals to other protein kinases involved in cellular proliferation or transcription regulation.

PKC is important for signal transduction and survival of cells with constitutively active mutations in GNAQ or GNA11.

Inactivation of PKC by specific inhibitors or reduction in protein expression using RNA all highlight the essential role of PKC in cells with GNAQ or GNA11 mutations.

Activating mutations in GNAQ or GNA11 are found in approximately 90% of uveal melanoma patients, resulting in a dependency on PKC activity which we believe may sensitize these tumors to the effects of darovasertib.

Uveal melanoma is a cancer of the eye and the most common primary intraocular malignancy in adults.

Treatment of the primary lesion involves radiation therapy, laser therapy and/or removal of the affected eye, and is effective in preventing local recurrence in over 80% of cases.

However, approximately 50% of uveal melanoma patients treated in this manner will eventually develop metastatic disease, most commonly in the liver.

We have estimated the addressable population in major market countries, consisting of the US, the five major countries in Europe, or EU5, and Japan, for patients having solid tumors with GNAQ or GNA11 mutations to include an annual incidence of about 3,500 in metastatic uveal melanoma.

For solid tumor indications other than metastatic uveal melanoma, we believe about 2,500 patients annually have tumors with GNAQ or GNA11 “hotspot” mutations that are potentially pathogenic, based on the loci of such mutations relative to the loci of mutations in uveal melanoma.

Thus, the addressable population in such major market countries is estimated to be about 6,000 patients having metastatic uveal melanoma or other solid tumors with potentially pathogenic GNAQ or GNA11 “hotspot” mutations.

Patients with metastatic uveal melanoma have a very poor prognosis, and there are no FDA-approved therapies for this disease.

Metastases are most frequently localized to the liver where curative surgical approaches are rare, and chemotherapy or immunotherapy has limited efficacy.

Without treatment, median overall survival of patients with metastatic uveal melanoma is approximately two to eight months.

Historical response rates for uveal melanoma generally range from 0% to 10% across treatment types.

A meta-analysis of 29 Phase 2 clinical trials of various therapies in metastatic uveal melanoma from 1988 to 2015 demonstrated no improvement in clinical response, with a median progression free survival of 3.29 months, median overall survival of 10.2 months, and a 1-year overall survival rate of 43%.

A more recent meta-analysis of overall survival of patients with metastatic uveal melanoma based on PubMed publications over a broader time frame from 1980 to 2017 evaluated by treatment modality and lines of treatment reported a median overall survival of approximately 7 months, and a 1-year overall survival rate of 37%, in each case for patients with similar pretreatment as those in our ongoing Phase 1/2 monotherapy study.

(Rantala et al.

Melanoma Res.

The poor prognosis associated with metastatic disease and the lack of effective therapies highlight the need for novel therapeutic approaches that specifically target metastatic uveal melanoma.

Darovasertib / Binimetinib Combination Therapy

In June 2020, we initiated a combination arm of our Phase 1/2 clinical trial to evaluate darovasertib in combination with binimetinib in patients having tumors harboring activating GNAQ or GNA11 hotspot mutations.

An ongoing dose expansion portion of this arm of the clinical trial is evaluating the safety and efficacy of darovasertib in combination with binimetinib in patients with MUM.

Following our evaluation of tolerability and preliminary efficacy from the darovasertib / binimetinib combination arm of the clinical trial in MUM, we may also evaluate darovasertib / binimetinib combination therapy in patients having other solid tumors with activating GNAQ/11 hotspot mutations outside of uveal melanoma, such as skin melanoma.

As of April 13, 2021, 24 MUM patients have enrolled in the darovasertib and binimetinib combination study and 14 of these patients were evaluable, including eight patients dosed in the Phase 1/2 dose expansion cohort of the combination study.

As of April 13, 2021 data and analyses cutoff, based on preliminary data from an unlocked database, we observed two partial responses, or PRs, including one confirmed PR and one unconfirmed PR, out of nine evaluable MUM patients with at least two post-baseline scans (22%) pursuant to RECIST 1.1 guidelines.

We also observed tumor reduction in 11 patients, reflecting seventy-nine percent (79%) of 14 evaluable MUM patients with at least one post-baseline scan.

Drug-related adverse events observed in the darovasertib and binimetinib combination arm in MUM as of April 13, 2021, based on preliminary data from an unlocked database, primarily include:

serious adverse events for liver toxicity, nausea and vomiting, and syncope;

and adverse events that occurred in greater than 10% of patients of nausea, vomiting, diarrhea, rash, edema, aminotransaminase, or AST increase, alanine aminotransferase, or ALT, increase and creatine phosphokinase, or CK, increase.

We are continuing patient enrollment into the darovasertib / binimetinib combination Phase 1/2 expansion arm under the Pfizer Agreement.

We and Pfizer amended the Pfizer Agreement in April 2021 to support a target enrollment of approximately 40 patients in the darovasertib and binimetinib clinical combination arm of the Phase 1/2 clinical trial evaluating darovasertib in MUM.

Darovasertib / Crizotinib Combination Therapy

In September 2020, we expanded the scope of our Pfizer Agreement to evaluate darovasertib and crizotinib as a combination therapy in patients having tumors harboring activating GNAQ or GNA11 hotspot mutations.

In December 2020, we initiated a combination arm of our Phase 1/2 clinical trial to evaluate darovasertib in combination with crizotinib in patients having tumors harboring activating GNAQ or GNA11 hotspot mutations.

An initial dose escalation portion of this arm of the clinical trial is evaluating the safety and efficacy of darovasertib in combination with crizotinib at various dose combinations, initially in patients with MUM.

Following our evaluation of tolerability and preliminary efficacy from the darovasertib / crizotinib combination arm of the clinical trial in MUM, we may also evaluate darovasertib / crizotinib combination therapy in patients having other solid tumors with activating GNAQ/11 hotspot mutations outside of uveal melanoma, such as skin melanoma.

As of May 5, 2021, 6 MUM patients have enrolled in the darovasertib and crizotinib combination study and 2 of these patients were evaluable for response with one post-baseline scan.

As of data and analyses cutoff on May 5, 2021 and based on preliminary data from an unlocked database, we observed early clinical efficacy of the darovasertib and crizotinib combination in MUM with tumor reduction in 2 of 2 evaluable patients in a first cohort, including one unconfirmed partial response in a 3rd-line patient with a 54% tumor reduction, which is the deepest response, as reflected by the largest percentage reduction in tumor size, reported in the darovasertib clinical trial to date;

this patient is awaiting a confirmatory scan.

Drug-related adverse events observed in the darovasertib and crizotinib combination arm in MUM as of May 5, 2021, based on preliminary data from an unlocked database, primarily include:

serious adverse events of syncope and hypotension, each of which resolved with continued dosing;

and adverse events that occurred in at least two of the six treated patients of nausea, diarrhea, vomiting, edema, decreased appetite, and syncope.

We have initiated dose expansion for a cohort of the darovasertib / crizotinib combination arm and are continuing patient enrollment into the Phase 1/2 darovasertib / crizotinib combination arm.

We identified cMET as a potential biomarker and a cMET inhibitor as potential combination agent though our translational research studies, or IDE196 cMET Translational Studies.

In these studies, we observed preclinical synergies between darovasertib and crizotinib in relevant cellular models under conditions simulating a tumor microenvironment in the liver, the site of approximately 90% of uveal melanoma metastases.

Additionally, we conducted a retrospective analysis of human clinical samples from the Novartis darovasertib Phase 1 clinical trial, which correlated cMET express and activation to clinical response, and independently supported cMET expression /

activation as potential biomarker / combination agent.

We presented data summarizing the preclinical synergy results of the IDE196 cMET Translational Studies at AACR 2021.

Darovasertib Monotherapy

Our ongoing monotherapy arm of the Phase 1/2 clinical trial was initiated in June 2019 to evaluate darovasertib in solid tumors harboring GNAQ or GNA11 hotspot mutations in a basket trial design.

We have completed enrollment in the monotherapy arm of the Phase 1/2 clinical trial in MUM.

We are also enrolling other, non-MUM solid tumors harboring GNAQ or GNA11 hotspot mutations, such as skin melanoma.

In the Phase 2 basket arm evaluating IDE196 as monotherapy in non-MUM solid tumors harboring GNAQ or GNA11 hotspot mutations (GNAQ/11), the clinical protocol criteria have been met for cohort expansion in cutaneous melanoma, or skin melanoma.

We are continuing enrollment of patients having other, non-MUM solid tumors harboring GNAQ or GNA11 hotspot mutations, such as skin melanoma into the monotherapy Phase 2 basket arm of the clinical trial.

There have been 81 darovasertib monotherapy BID MUM and seven darovasertib monotherapy BID skin melanoma patients enrolled across the IDEAYA and Novartis Phase 1/2 clinical trials at the time of data and analyses cutoff on April 13, 2021, with an aggregate of 88 patients evaluable for safety and an aggregate of 80 patients evaluable for efficacy pursuant to RECIST 1.1.

In the MUM cohort of the monotherapy arm, as of April 13, 2021 data and analyses cutoff based on preliminary data from an unlocked database, we observed (i) a fifty-seven percent (57%) 1-Year overall survival (OS) in predominantly second line, third line and heavily pre-treated (out to 7 and 8 lines of prior treatment) MUM patients with ninety-five percent (95%) confidence interval (44%, 69%), (ii) a median OS of 13.2 months in predominantly second line, third line and heavily pre-treated (out to 7 and 8 lines of prior treatment) MUM patients with ninety-five percent (95%) confidence interval (10.7 months, not reached), and (iii) sixty-one percent (61%) (n=46) of MUM patients out of 75 evaluable had tumor reduction pursuant toRECIST 1.1guidelines, including 15 patients (20%) with greater than thirty percent (30%) target lesion reduction, including one confirmed complete response.

The company’s development strategy in the monotherapy non-MUM GNAQ/11 arm of the clinical trial is focused on skin melanoma.

We are actively enrolling for this Phase 2 cohort expansion in skin melanoma.

Of 4 evaluable skin melanoma patients harboring GNAQ/11 hotspot mutations (excluding 1 non-evaluable) as of August 1, 2020, a 100% Disease Control Rate was observed, and one confirmed partial response (cPR) was determined by RESIST, or Response Evaluation Criteria in Solid Tumors, 1.1 guidelines, satisfying the protocol requirement of at least one RECIST response in the first Stage 1 cohort (n=9) in order to expand into a second Stage 2 cohort (n=15).

Following satisfaction of the clinical protocol criteria, we can enroll an additional 15 skin melanoma patients harboring GNAQ/11 mutations into the Stage 2 cohort expansion, for a total planned enrollment of 24 patients in the skin melanoma cohort.

As of November 1, 2020, we have enrolled a total of seven patients with solid tumors other than MUM, including six patients with skin melanoma, into the Phase 2 monotherapy basket arm.

We have added and are continuing to access potential additional clinical trial sites to supplement enrollment into the Phase 2 basket arm of the IDE196 clinical trial.

We have established a relationship with Tempus and with CARIS, in each case through which we are accessing their network of clinical trial sites into which we can enroll qualifying patients having tumors harboring GNAQ/11 hotspot mutations.

We anticipate disclosing interim data from the monotherapy arm of our ongoing IDE196-001 Phase 1/2 basket trial in 2021.

IDE196 was initially developed by Novartis, and we obtained an exclusive, worldwide license to IDE196 from Novartis in September 2018.

Pursuant to our license agreement with Novartis, except for Novartis’ ongoing Phase 1 clinical trial, we control all future clinical development, and all commercial rights to IDE196, and may rely on and incorporate data previously submitted to the FDA by Novartis into our own regulatory submissions.

Novartis has completed enrollment in a Phase 1 clinical trial it is conducting to evaluate IDE196 in metastatic uveal melanoma.

In the skin melanoma cohort of the monotherapy arm, as of April 13, 2021 data and analyses cutoff based on preliminary data from an unlocked database, four of five evaluable patients (80%) had tumor reduction pursuant to RECIST 1.1guidelines, including one confirmed PR.

The overall safety profile of darovasertib monotherapy is consistent with prior experience and includes primarily common low grade but manageable GI and skin toxicities.

Drug-related adverse events observed with darovasertib as monotherapy include:

serious adverse events of hypotension, nausea, vomiting, rash and liver toxicity;

and adverse events that occurred in greater than 10% of patients of nausea, vomiting, diarrhea, fatigue, rash, edema, and abdominal distention.

Preliminary clinical data from darovasertib monotherapy arm shows that darovasertib activity is independent of HLA status.

Darovasetib was initially developed as a monotherapy by Novartis, and we obtained an exclusive, worldwide license to darovasetib from Novartis in September 2018.

Pursuant to our license agreement with Novartis, except for Novartis’ ongoing Phase 1 clinical trial, we control all future clinical development, and all commercial rights to darovasetib, and may rely on and incorporate data previously submitted to the FDA by Novartis into our own regulatory submissions.

Novartis has completed enrollment in a Phase 1 clinical trial it is conducting to evaluate darovasetib in metastatic uveal melanoma.

Phase 1 monotherapy data from Novartis was presented at the American Association for Cancer Research, or AACR, in April 2019.

Regulatory / Potentially Registration-Enabling Clinical Trial

In an end of Phase 1 meeting with the FDA in the fourth quarter of 2019, the FDA indicated that our proposed single-arm Phase 2 portion of the IDE196 001 Phase 1/2 clinical trial may be adequate to support a new drug application, or NDA, seeking Accelerated Approval for IDE196 monotherapy in MUM.

The FDA indicated that such a single-arm, potentially registration enabling part of the Phase 1/2 clinical trial could target enrollment of 60 evaluable MUM patients with the primary endpoint of overall response rate, or ORR, as determined by blinded independent central review, or BICR, supported by BICR determined duration of response, or DOR, as a secondary endpoint.

We initiated 13-week good laboratory practice-, or GLP-, compliant toxicology studies in two species in November 2019, in support of an FDA requirement that results of these studies be submitted prior to enrollment of more than approximately 50 patients in the potentially registrational arm that will support a marketing application.

We have completed the 13-week preclinical toxicology studies of IDE196 in two species.

We plan to evaluate clinical tolerability and efficacy data from each of th e ongoing IDE196 monotherapy Phase 1 portion of the clinical trial in MUM patients and the IDE196 combination therapy Phase 1/2 portions of the clinical trial in MUM patients, as well as potential strategic partnering of the IDE196 program, prior to initia tion of a potentially registrational clinical trial in MUM.

We will provide updated guidance on timing for a potential NDA submission for IDE196 in MUM after making such decision on a potential registrational pathway in MUM.

Regulatory Strategy

We are targeting FDA guidance in the second half of 2021 for evaluating darovasertib in a potential registrational study in patients with MUM.

We believe that the darovasertib monotherapy BID MUM data observed as of the April 13, 2021 data and analyses cutoff, and based on preliminary data from an unlocked database, supports a potential registrational study with a

randomized design and OS endpoint in first line (1L) or second, third line or later lines (2L/3L+) of therapy MUM patients.

We also believe that the preliminary data for the darovasertib / binimetinib combination therapy reported as of the April 13, 2021 data and analyses cutoff, and based on preliminary data from an unlocked database, subject to the data maturing with similar or improved efficacy and acceptable tolerability, may support a potential registrational study with a single arm design and an overall response rate, or ORR, endpoint in 1L or in 2L/3L+ MUM patients, and potentially with an accelerated approval pathway.

Based on the target product profile darovasertib – including as an oral therapy and anticipated clinical activity independent of HLA status – we believe we may have optionality to pursue a registrational path in MUM 1L (e.g., in HLA‐A201 negative patients) or in MUM 2L/3L+ (independent of HLA Status).

As context, in a prior end-of-Phase 1 meeting with the FDA for darovasertib in the fourth quarter of 2019, the FDA indicated that our proposed single-arm Phase 2 portion of the IDE196-001 Phase 1/2 clinical trial may be adequate to support a new drug application, or NDA, seeking Accelerated Approval for darovasertib monotherapy in MUM.

The FDA indicated that such a single-arm, potentially registration enabling part of the Phase 1/2 clinical trial could target enrollment of 60 evaluable MUM patients with the primary endpoint of ORR as determined by blinded independent central review, or BICR, supported by BICR determined duration of response, or DOR, as a secondary endpoint.

We plan to evaluate clinical tolerability and efficacy data from each of the ongoing darovasertib monotherapy Phase 1 portion of the clinical trial in MUM patients and the darovasertib combination therapy Phase 1/2 portions of the clinical trial in MUM patients, as well as potential strategic partnering of the darovasertib program, prior to initiation of a potentially registrational clinical trial in MUM.

We will provide updated guidance on timing for a potential NDA submission for darovasertib in MUM after making such decision on a potential registrational pathway in MUM.

Other Potential Indications

We are continuing our preclinical evaluation of IDE196 in Sturge-Weber Syndrome, or SWS, a rare neurocutaneous disorder characterized by capillary malformations and associated with mutations in GNAQ.

We are continuing our preclinical evaluation and are evaluating the potential for clinical evaluation of darovasertib in Sturge-Weber Syndrome, or SWS, a rare neurocutaneous disorder characterized by capillary malformations and associated with mutations in GNAQ.

Our preclinical evaluation will include potential feasibility for pediatric use.

Impact of COVID-19 Pandemic on IDE-001 Phase 1/2 Clinical Trial and IDE196 Preclinical Research

We continue to monitor the COVID-19 pandemic and its potential impact on the ongoing IDE196 clinical program.

GNAQ/11 patients enrolled in the ongoing Phase 1/2 clinical trial and sites affected by COVID-19 restrictions are adapting to logistical constraints on activities, such as travel and site visits.

For example, patients are continuing on IDE196 therapy, which is an oral drug and is being shipped to and self-administered by patients at home.

Patients are being monitored through a combination of telemedicine visits and local visits.

COVID‐19 infection rates have increased recently in several states in which our clinical trial sites are located.

As such, ongoing monitoring of enrolled patients, including obtaining patient computed tomography, or CT, scans, may be impacted;

the specific impact is currently uncertain.

Additionally, enrollment into the Phase 2 expansion arm for IDE196 as a monotherapy in non-MUM solid tumors having GNAQ or GNA11 hotspot mutations may be delayed by circumstances resulting from the COVID-19 pandemic, including for example, as a result of recent increases in COVID-19 infection rates in several states in which our clinical trial sites are located, and by clinical site-specific policies and practices related to COVID-19.

The specific impact on enrollment into the Phase 2 expansion of the monotherapy arm for non-MUM solid tumors having GNAQ or GNA11 hotspot mutations is currently uncertain.

Enrollment into the combination arm evaluating IDE196 and binimetinib and/or the combination arm of IDE196 and crizotinib, in each case as combination therapy in MUM and non-MUM solid tumors having GNAQ or GNA11 hotspot mutations, may be delayed by circumstances resulting from the COVID-19 pandemic, including for example, by clinical site-specific policies and practices related to COVID-19.

The specific impact on enrollment into this combination arm of the Phase 1/2 clinical trial is currently uncertain.

SWS is associated with a somatic, activating hotspot mutation in GNAQ through which PKC may mediate disease pathology, as reported by Shirley et al., NEJM (2013).

SWS is physiologically characterized by facial birthmark (e.g., a port-wine stain), neurological abnormalities (e.g., seizures) and glaucoma.

SWS, also known as encephalofacial angiomatosis, is a neurocutaneous disorder that occurs as a sporadic congenital condition.

It is understood to affect the skin in the distribution of the ophthalmic branch of the trigeminal nerve and is associated with venous-capillary abnormalities of the leptomeninges.

In January 2020, we entered into a Sponsored Research Agreement with Boston Children’s Hospital for preclinical evaluation of the role of PKC in SWS.

Under the agreement, we are collaborating with and support research at Boston Children’s Hospital in the laboratory of Dr.

Joyce Bischoff, Ph.D., Research Associate, Department of Surgery and Professor, Harvard Medical School, who is Principal Investigator of the research studies.

The preclinical research is evaluating darovasertib in vitro to assess whether pharmacological inhibition of PKC in endothelial cells having GNAQ mutations will restore normal cell function, as well as in vivo to assess whether pharmacological inhibition of PKC can regulate blood vessel size in murine models that recapitulate enlarged vessels seen in SWS capillary malformations.

Impact of COVID-19 Pandemic on IDE397-001 Phase 1 Clinical Trial and IDE196-001 Phase 1/2 Clinical Trial

We continue to monitor the COVID-19 pandemic and its potential impact on the ongoing IDE397 and darovasertib (IDE196) clinical programs and timing of clinical data results.

Generally, initiation of clinical trial sites, patient enrollment, ongoing monitoring of enrolled patients, including obtaining patient computed tomography (CT) scans, and trial data management may be impacted for our clinical trials evaluating IDE397 and darovasertib;

the specific impacts are currently uncertain.

For the darovasertib (IDE196) clinical program, GNAQ/11 patients enrolled in the ongoing Phase 1/2 clinical trial and sites affected by COVID-19 restrictions are adapting to logistical constraints on activities, such as travel and site visits.

For example, patients are continuing on darovasertib therapy, which is an oral drug and is being shipped to and self-administered by patients at home.

Patients are being monitored through a combination of telemedicine visits

and local visits.

COVID‐19 infection rates have fluctuated over the course of the pandemic in several states in which our clinical trial sites are located.

Additionally, enrollment into the IDE397 and/or darovasertib clinical trials, including the Phase 1 dose escalation arm for IDE397 as monotherapy or the Phase 2 expansion arm for darovasertib as a monotherapy in non-MUM solid tumors having GNAQ or GNA11 hotspot mutations, may be delayed by circumstances resulting from the COVID-19 pandemic, including for example, as a result of increases in COVID-19 infection rates in several states in which our clinical trial sites are located, and by clinical site-specific policies and practices related to COVID-19.

The specific impact on enrollment into these clinical trials is currently uncertain.

Enrollment into the combination arm evaluating darovasertib and binimetinib and/or the combination arm of darovasertib and crizotinib, in each case as combination therapy in MUM and non-MUM solid tumors having GNAQ or GNA11 hotspot mutations, may be delayed by circumstances resulting from the COVID-19 pandemic, including for example, by clinical site-specific policies and practices related to COVID-19.

The specific impact on enrollment into these combination arms of the Phase 1/2 clinical trial is currently uncertain.

We plan to continue to use third-party service providers, including clinical research organizations, or CROs, and clinical manufacturing organizations, or CMOs, to carry out our preclinical and clinical development and manufacture and supply of our preclinical and clinical materials to be used during the development of our product candidates.

To date, the COVID-19 pandemic has not materially affected our supply chain or development schedule, but further escalation of the health crisis has the potential to cause delays in our supply chain and manufacturing operations, which could materially adversely impact our business.

Clinical Trial Collaboration and Supply Agreement for IDE196 Program

On March 11, 2020, we entered into the Pfizer Agreement with Pfizer Inc., pursuant to which Pfizer will supply us with their MEK inhibitor, binimetinib, to evaluate the combination in patients with tumors harboring activating GNAQ or GNA11 hotspot mutations.

On September 23, 2020, we expanded the scope of our clinical trial collaboration and supply agreement with Pfizer, pursuant to which Pfizer will supply us with their cMET inhibitor, crizotinib to evaluate IDE196 and crizotinib as a combination therapy in patients having tumors harboring activating GNAQ or GNA11 hotspot mutations.

For each of the IDE196/binimetinib and IDE196/crizotinib combination arms of the clinical trial, we have established a joint development committee, and there will be joint decision ma king and data sharing of the clinical trial results between the parties.

We will sponsor the clinical studies and Pfizer will provide the binimetinib and crizotinib drug supply.

If there is clinical data from the collaboration studies that could be used to obtain regulatory approvals or label changes, we will enter into good faith negotiations with Pfizer to determine a regulatory submission strategy.

Public Offering and Sale of IDEAYA Common Stock

On June 22, 2020, we closed on an underwritten public offering, or the Offering, of 6,666,667 shares of our common stock at an offering price of $15.00 per share, pursuant to which we received gross proceeds of $100.0 million, before deducting underwriting discounts and commissions and other offering expenses.

On July 22, 2020, as part of the Offering, 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 before deducting underwriting discounts and commissions and other offering.

We realized aggregate gross proceeds of $107.5 million from the Offering, including gross proceeds from the sale of shares in the base Offering and the sale of shares from exercise of the overallotment option, and before deducting underwriting discounts and commissions and other offering expenses payable by us.

Private Placement of IDEAYA Common Stock with GSK

On June 17, 2020, we entered into a stock purchase agreement with Glaxo Group Limited, or GGL, an affiliate of GlaxoSmithKline, pursuant to which GGL agreed to purchase in a private placement, subject to certain conditions, 1,333,333 shares of our common stock at a price per share of $15.00, which is equal to the public offering price per share in the Offering.

The common stock sold pursuant thereto was not registered under the Securities Act of 1933, as amended, or the Securities Act.

The closing of this private placement occurred on August 3, 2020, following HSR Clearance of the associated GSK Collaboration Agreement, described below, and satisfaction of other certain customary closing conditions, pursuant to which we received proceeds of $20.0 million.

On August 3, 2020, following HSR Clearance of the associated GSK Collaboration Agreement, we closed on the private placement of 1,333,333 shares of our common stock to Glaxo Group Limited, or GGL, an affiliate of GlaxoSmithKline, at a price per share of $15.00, which is equal to the public offering price per share in the Offering.

The common stock sold pursuant thereto was not registered under the Securities Act of 1933, as amended, or the Securities Act.

We received proceeds of $20.0 million from the sale of these shares in this private placement.

Certain of our CROs have clinical trial support personnel, including related to data management and master file management, based in India which has experienced a recent surge in COVID-19 infections.

To date, the COVID-19 pandemic has not materially affected our supply chain or development schedule, but further escalation of the health crisis has the potential to cause delays in our supply chain, manufacturing operations and trial support services, which could materially adversely impact our business.

Prospectus Supplement - At-the-Market Facility

On August 12, 2020, we filed a prospectus supplement to the prospectus dated June 10, 2020, activating our at-the-market, or ATM, facility by entering into a sales agreement with Jefferies LLC, or Jefferies, relating to shares of our common stock offered by the prospectus supplement and the accompanying prospectus.

Pursuant to the terms of the sales agreement, we may offer and sell shares of our common stock, $0.0001 par value per share, having an aggregate offering price of up to $50,000,000 from time to time through Jefferies acting as agent.

During the three months ended September 30, 2020, we did not make any sales under the ATM facility.

On August 12, 2020, we filed a prospectus supplement to the prospectus dated June 10, 2020, activating our at-the-market, or ATM, facility by entering into an Open Market Sale Agreement, or August 2020 Sales Agreement, with Jefferies LLC, or Jefferies, relating to shares of our common stock offered by the prospectus supplement and the accompanying prospectus.

Pursuant to the terms of the August 2020 Sales Agreement, we could offer and sell shares of our common stock, $0.0001 par value per share, having an aggregate offering price of up to $50.0 million from time to time through Jefferies acting as agent.

As of January 15, 2021, we exhausted all sales under the August 2020 Sales Agreement.

On January 20, 2021, we entered into a new Open Market Sale Agreement, or January 2021 Sale Agreement, with Jefferies, with respect to an at-the-market offering program under which we may offer and sell, from time to time at our sole discretion, shares of its common stock, par value $0.0001 per share (the “Common Stock”), having aggregate gross proceeds of up to $90.0 million through Jefferies as its sales agent.

Pursuant to each of the August 2020 Sales Agreement and the January 2021 Sales Agreement, Jefferies, as sales agent, receives a commission of 3.0% of the aggregate gross proceeds that the Company receives from each sale of its shares of common stock sold under the August 2020 Sales Agreement.

During the three months ended March 31, 2021, we sold an aggregate of 2,712,654 shares of our common stock for net proceeds of $41.9 million at a weighted average sales price of approximately $15.98 per share under an at-the-market offering pursuant to the August 2020 and January 2021 Sales Agreements with Jefferies as sales agent.

Subsequent to March 31, 2021, from April 1, 2021 through May 9, 2021, we sold an additional 633,304 shares of our common stock for aggregate gross proceeds of $14.6 million at a weighted average sales price of approximately $22.99 per share under an at-the-market offering pursuant to the January 2021 Sales Agreements with Jefferies as sales agent.

Corporate Update

We do not have any products approved for sale and have not generated any revenue since inception.

We have funded our operations through September 30, 2020 primarily through the sale and issuance of common stock, redeemable convertible preferred stock, and convertible promissory notes.

In May 2019, we completed our initial public offering, or IPO.

In June and July 2020, we added an aggregate of $227.5 million to our balance sheet from a follow-on public offering of $107.5 million in gross proceeds, a direct private placement equity investment by GGL with $20.0 million in gross proceeds, and a non-dilutive upfront cash payment of $100 million from GSK.

We have funded our operations through March 31, 2021 primarily through the sale and issuance of common stock, redeemable convertible preferred stock, and convertible promissory notes, including our initial public offering, or IPO, in May 2019, a follow-on public offering in June 2020, a direct private placement equity investment by Glaxo Group Limited, or GGL, an affiliate of GlaxoSmithKline, in June 2020, and through the sale and issuance of common stock under our at-the-market facility pursuant to the August 2020 and January 2021 Sales Agreements

with Jefferies as sales agent.

In July 2020, we received a non-dilutive upfront cash payment from GSK in connection with the GSK Collaboration Agreement .

Since our inception in June 2015, we have devoted substantially all of our resources to discovering and developing our product candidates.

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and hire additional personnel.

Certain program costs that contribute to our operating e xpenses will be reimbursed by GSK pursuant to the GSK Collaboration Agreement , including 100% of costs we incur for research we perform in connection with the Pol T heta program and 80% of the aggregate program costs incurred by us and GSK for research each of us performs for the Werner Helicase program, and if GSK exercises the Option, also the MAT2A program .

Certain program costs that contribute to our operating expenses will be reimbursed by GSK pursuant to the GSK Collaboration Agreement, including 100% of costs we incur for research we perform in connection with the Pol Theta program and 80% of the aggregate program costs incurred by us and GSK for research each of us performs for the Werner Helicase program, and if GSK exercises their exclusive option to obtain an exclusive license to continue development of and commercialize MAT2A products arising out of the MAT2A program, also the MAT2A program.

In addition, we expect to incur additional costs associated with operating as a public company.

Our net losses were $29.4 million and $31.2 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

As of September 30, 2020, we had an accumulated deficit of $121.9 million.

Our net losses were $9.0 million and $12.0 million for the three months ended March 31, 2021 and March 31, 2020, respectively.

As of March 31, 2021, we had an accumulated deficit of $136.0 million.

Our ability to generate product revenue will depend on the successful development, regulatory approval and eventual commercialization of one or more of our product candidates, ourselves, or for some programs, in collaboration with our strategic partners.

We are leading and solely responsible for preclinical, translational and clinical research and development, as applicable, for (i) the IDE196 monotherapy arm of our IDE196-001 clinical trial, (ii) our PARG program and (iii) our DNA Damage Target or DDT program.

We are leading clinical development in the ongoing IDE196 / binimetinib combination arm and the planned IDE196/crizotinib combination arm of our IDE196-001 clinical trial, in each case in coordination with Pfizer pursuant to the Clinical Trial Collaboration and Supply Agreement.

We are leading preclinical development and plan to lead early-stage clinical development for evaluation of IDE397 in a clinical trial which we plan to initiate in the first half of 2020, in coordination with GSK pursuant to the GSK Collaboration Agreement.

We are leading and solely responsible for preclinical, translational and clinical research and development, as applicable, for (i) the darovasertib monotherapy arm of our IDE196-001 clinical trial, (ii) our PARG program and (iii) our earlier pipeline programs, including our DNA Damage Target or DDT programs and our MTAP-SL program.

We are leading clinical development in the ongoing darovasertib / binimetinib combination arm and the ongoing darovasertib /crizotinib combination arm of our IDE196-001 clinical trial, in each case in coordination with Pfizer pursuant to the Pfizer Agreement.

We are leading preclinical development and early-stage clinical development for evaluation of IDE397 in the ongoing IDE397-001 Phase 1 clinical trial, in coordination with GSK pursuant to the GSK Collaboration Agreement.

We are collaborating with GSK on preclinical research for our Pol Theta and Werner Helicase programs, pursuant to the GSK Collaboration Agreement.

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If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our product candidates.

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

We believe that our cash, cash equivalents and marketable securities will be sufficient to fund our planned operations for at least 12 months from the date of the issuance of these financial statements.

As of March 31, 2021, we had cash, cash equivalents, and short-term and long-term marketable securities of $310.4 million.

We believe that our cash, cash equivalents, and short-term and long-term marketable securities will be sufficient to fund our planned operations for at least 12 months from the date of the issuance of these financial statements.

These funds will support our efforts through potential achievement of multiple preclinical and clinical milestones across multiple programs.

Anticipated clinical milestones in our synthetic lethality pipeline include Phase 1 monotherapy interim data for IDE397, our MAT2A inhibitor development candidate, Phase 1 monotherapy interim data for our Pol theta inhibitor development candidate, which we are targeting to designate in 2021, and Phase 1 initiation for our PARG inhibitor development candidate, which we are targeting to select in 2021.

Anticipated clinical milestones for our IDE196 Phase 1/2 clinical trial include initiation of a Phase 1 dose escalation arm of our clinical trial for evaluating IDE196 and crizotinib as combination therapy in the first half of 2021, expansion of IDE196 / binimetinib combination arm of clinical trial, interim data for IDE196 monotherapy in MUM and other GNAQ/11 solid tumors, as well as interim data for IDE196 and binimetinib as combination therapy in 2021.

Components of Operating Results

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To date, we have not generated any revenue from product sales, and we do not expect to generate any revenue from product sales for the foreseeable future.

Our revenue primarily consists of collaboration revenue under the GSK Collaboration Agreement, including amounts that are recognized related to upfront payments and amounts due to us for research and development services.

Our revenue exclusively consists of collaboration revenue under the GSK Collaboration Agreement, including amounts that are recognized related to upfront payments and amounts due to us for research and development services.

In the future, revenue may include additional milestone payments, option exercise payments, profit sharing, and royalties on any net product sales under our collaborations.

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Substantially all of our research and development expenses consist of expenses incurred in connection with discovery and development of our product candidates.

These expenses include certain payroll and personnel-related expenses, including salaries, employee benefit costs and stock-based compensation expenses for our research and product development employees, fees to third parties to conduct certain research and development activities on our behalf including fees to CMOs and CROs in support of manufacturing and clinical activity for IDE 196, consulting costs, costs for laboratory supplies, costs for product licenses and allocated overhead, including rent, equipment, depreciation, information technology costs and utilities.

These expenses include certain payroll and personnel-related expenses, including salaries, employee benefit costs and stock-based compensation expenses for our research and product development employees, fees to third parties to conduct certain research and development activities on our behalf including fees to CMOs and CROs in support of manufacturing and clinical activity for darovasertib (IDE196), consulting costs, costs for laboratory supplies, costs for product licenses and allocated overhead, including rent, equipment, depreciation, information technology costs and utilities.

We expense both internal and external research and development expenses as they are incurred.

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The capitalized amounts are recognized as expense as the goods are delivered or the related services are performed.

We do not allocate our internal costs by product candidate, including internal costs, such as payroll and other personnel expenses, laboratory supplies and allocated overhead.

With respect to internal costs, several of our departments support multiple product candidate research and development programs, and therefore the costs cannot be allocated to a particular product candidate or development program.

The following table summarizes our external clinical development expenses by program for the three months ended March 31, 2021 and December 31, 2020:

Three Months Ended

March 31, 2021

December 31, 2020

External clinical development expenses (1) :

Personnel related and stock-based compensation

Other research and development expenses

Total research and development expenses

External clinical development expenses include manufacturing and clinical trial costs.

These expenses are primarily for services provided by external consultants, CMOs and CROs.

The following table summarizes our external clinical development expenses by program for the three months ended March 31, 2021 and March 31, 2020:

Three Months Ended March 31,

External clinical development expenses (1) :

Personnel related and stock-based compensation

Other research and development expenses

Total research and development expenses

External clinical development expenses include manufacturing and clinical trial costs.

These expenses are primarily for services provided by external consultants, CMOs and CROs.

We are focusing substantially all of our resources on the development of our product candidates.

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Results of Operations

Comparison of Three Months Ended September 30, 2020 and 2019

Pursuant to Item 303(c)(2)(ii) of Regulation S-K, amended by Release No.

33-10890, we have elected to discuss any material changes in our results of operations, by comparing our most recently completed quarter to the immediately preceding quarter.

We believe the comparison of the most recently completed quarter to the immediately preceding quarter provides more relevant information for our investors to analyze our business activities.

We also continue to discuss any material changes in our results of operations for the most recent fiscal year-to-date period, compared to the corresponding year-to-date period of the preceding fiscal year, pursuant to Item 303(c)(2)(i) of Regulation S-K.

Comparison of Three Months Ended March 31, 2021 and December 31, 2020

The following table summarizes our results of operations for the periods indicated (in thousands):

Three Months Ended

September 30,

March 31, 2021

December 31, 2020

Collaboration revenue

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Loss from operations

Interest income and other income (expense), net

Interest income and other income

(expense), net

Collaboration Revenue

Collaboration revenue increased by $9.0 million in the three months ended September 30, 2020.

Collaboration revenue decreased by $3.3 million, or 31%, in from the three months ended December 31, 2020 to the three months ended March 31, 2021.

In July 2020, the GSK Collaboration Agreement became effective, and we started recognizing collaboration revenue, which consists of revenue from preclinical and Phase 1 monotherapy clinical research and development services under the MAT2A program as well as preclinical research services and the related license under the Pol Theta and WRN programs.

Collaboration revenue recognized in the three months ended September 30, 2020 also included revenue from the exercise by GSK of the material right associated with the option to license IDEAYA-owned technology under the MAT2A program to the extent necessary for preclinical activities.

Revenue we recognize from satisfaction of performance obligations under the GSK Collaboration Agreement is impacted by our estimates of the remaining cots to complete our obligations, which require significant judgment, and may cause fluctuation in the revenue recognized from period to period.

The fluctuation from the three months ended December 31, 2020 to the three months ended March 31, 2021 is due to timing of services performed.

Research and Development Expenses

Research and development expenses increased by $1.1 million, or 12%, from the three months ended September 30, 2019 to the three months ended September 30, 2020.

The increase in research and development expenses was primarily due to an increase in fees to CROs of $1.2 million as well as fees to contractors of $0.5 million related to support costs for our Phase 1/2 clinical trial to evaluate IDE196 in solid tumors, the advancement of our lead product candidates through preclinical studies and regulatory support activity, which was partially offset by a decrease in costs for laboratory supplies used in support of our research programs of $0.4 million and a decrease in payroll expenses, including salaries, benefits and stock-based compensation expense, of $0.2 million.

Research and development expenses decreased by $0.5 million, or 4%, from the three months ended December 31, 2020 to the three months ended March 31, 2021.

The decrease in research and development expenses was primarily due to a decrease in fees paid to CROs, CMOs and consultants of $1.3 million related to the advancement of our lead product candidates through preclinical studies, a decrease in external clinical development expenses for IDE397 of $0.5 million related to manufacturing and clinical startup activities for our Phase 1 clinical trial, a decrease in external clinical development expenses for darovasertib of $0.1 million related to support costs for our Phase 1/2 clinical trial to evaluate darovasertib in solid tumors, partially offset by an increase in payroll expenses, including salaries, benefits and stock-based compensation expense of $1.2 million related to an increase in headcount to support our growth, and an increase in costs for laboratory supplies used in support of our research programs of $0.2 million.

General and Administrative Expenses

General and administrative expenses increased by $1.2 million, or 46%, from the three months ended September 30, 2019 to the three months ended September 30, 2020.

General and administrative expenses increased by $1.0 million, or 27%, from the three months ended December 31, 2020 to the three months ended March 31, 2021.

Interest Income and Other Income (Expense), Net

Interest income and other income (expense), net decreased by $0.6 million, or 89%, from the three months ended September 30, 2019 to the three months ended September 30, 2020, primarily due to a decrease in interest rate yields on our cash, cash equivalents and marketable securities balances during the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Comparison of Nine months Ended September 30, 2020 and 2019

Interest income and other income (expense), net decreased by $31,000, or 21%, from the three months ended December 31, 2020 to the three months ended March 31, 2021, primarily due to a decrease in interest income on our cash, cash equivalents, and short-term and long-term marketable securities balances, as a result of the lower interest rate yields.

Comparison of Three Months Ended March 31, 2021 and 2020

The following table summarizes our results of operations for the periods indicated (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Collaboration revenue

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Loss from operations

Interest income and other income (expense), net

Interest income and other income

(expense), net

Collaboration Revenue

Collaboration revenue increased by $9.0 million in the nine months ended September 30, 2020.

Collaboration revenue recognized in the nine months ended September 30, 2020 also included revenue from the exercise by GSK of the material right associated with the option to license IDEAYA-owned technology under the MAT2A program to the extent necessary for preclinical activities.

Collaboration revenue increased by $7.2 million in the three months ended March 31, 2021.

In July 2020, the GSK Collaboration Agreement became effective, and we started recognizing collaboration revenue.

We recognized revenue from preclinical and Phase 1 monotherapy clinical research and development services under the MAT2A program as well as preclinical research services and the related license under the Pol Theta and WRN programs in the three months ended March 31, 2021.

Research and Development Expenses

Research and development expenses increased by $1.9 million, or 7%, from the nine months ended September 30, 2019 to the nine months ended September 30, 2020.

The increase in research and development expenses was primarily due to an increase in fees to CROs of $3.3 million as well as fees to contractors of $1.1 million related to support costs for our Phase 1/2 clinical trial to evaluate IDE196 in solid tumors and the advancement of our lead product candidates through preclinical studies, which was partially offset by a decrease in payroll expenses, including salaries, benefits and stock-based compensation expense, of $1.4 million, and a decrease in costs for laboratory supplies used in support of our research programs of $1.4 million.

Research and development expenses increased by $2.5 million, or 28%, from the three months ended March 31, 2020 to the three months ended March 31, 2021.

The increase in research and development expenses was primarily due to an increase in payroll expenses, including salaries, benefits and stock-based compensation expense, of $1.3 million related to an increase in headcount to support our growth, an increase in external clinical development expenses for IDE397 of $1.0 million related to related to manufacturing and clinical startup activities for our Phase 1 clinical trial, an increase in fees paid to CROs, CMOs and consultants of $0.2 million related to the advancement of our lead product candidates through preclinical studies, an increase in costs for laboratory supplies used in support of our research programs of $0.2 million, partially offset by a decrease in external clinical development expenses for darovasertib of $0.2 million related to increased patient enrollment in our Phase 1/2 clinical trial to evaluate darovasertib in solid tumors.

General and Administrative Expenses

General and administrative expenses increased by $4.2 million, or 59%, from the nine months ended September 30, 2019 to the nine months ended September 30, 2020.

The increase in general and administrative expenses was primarily due to an increase in payroll expenses, including salaries, benefits and stock-based compensation expense, of $2.3 million related to increased headcount to support our growth as a public company, an increase in D&O insurance policy premiums of $0.9 million as a public company, an increase in legal expense of $0.3 million related to an increase in patent filings, an increase in costs associated with the filing of a shelf registration statement on Form S-3 of $0.2 million, and an increase in consulting expenses of $0.2 million related to human resources and information technology projects.

General and administrative expenses increased by $1.4 million, or 40%, from the three months ended March 31, 2020 to the three months ended March 31, 2021.

The increase in general and administrative expenses was primarily due to an increase in payroll expenses, including salaries, benefits and stock-based compensation expense, of $1.0 million related to increased headcount to support our growth as a public company, an increase in directors’ and officers’ liability insurance premiums of $0.1 million, an increase in costs associated with the filing of a shelf registration statement on Form S-3 of $0.1 million, and an increase in software licenses of $0.1 million

Interest Income and Other Income (Expense), Net

Interest income and other income (expense), net decreased by $1.1 million, or 60%, from the nine months ended September 30, 2019 to the nine months ended September 30, 2020, primarily due to a decrease in interest rate yields on our cash, cash equivalents and marketable securities balances during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Interest income and other income (expense), net decreased by $0.3 million, or 74%, from the three months ended March 31, 2020 to the three months ended March 31, 2021, primarily due to a decrease in interest income on our cash, cash equivalents, and short-term and long-term marketable securities balances, as a result of the lower interest rate yields.

Liquidity and Capital Resources ;

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We have funded our operations primarily through the sale and issuance of common stock, redeemable convertible preferred stock, and convertible promissory notes, as well as the up-front payment received from GSK.

As of September 30, 2020, we had cash, cash equivalents and marketable securities of $288.8 million, consisting primarily of money market funds, U.S.

As of March 31, 2021, we had cash, cash equivalents and marketable securities of $310.4 million, consisting primarily of money market funds, U.S.

government securities, commercial paper, and corporate bonds.

Future Funding Requirements

Material Cash Requirements

We have incurred net losses since our inception.

For the nine months ended September 30, 2020 and September 30, 2019, we had net losses of $29.4 million and $31.2 million, respectively, and we expect to incur substantial additional losses in future periods.

As of September 30, 2020, we had an accumulated deficit of $121.9 million.

Based on our current business plan, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our planned operations for at least 12 months from the date of the issuance of these financial statements.

For the three months ended March 31, 2021 and March 31, 2020, we had net losses of $9.0 million and $12.0 million, respectively, and we expect to incur substantial additional losses in future periods.

As of March 31, 2021, we had an accumulated deficit of $136.0 million.

Based on our current business plan, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our planned operations into 2025.

To date, we have not generated any product revenue.

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We will continue to require additional capital to develop our product candidates and fund operations for the foreseeable future.

We may seek to raise capital through private or public equity or debt financings, collaborative or other arrangements with corporate sources, or through other sources of financing.

We may seek to raise capital through private or public equity or debt financings, collaboration or other arrangements with corporate sources, or through other sources of financing.

Adequate additional funding may not be available to us on acceptable terms or at all.

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We may also be required to sell or license to others rights to our product candidates in certain territories or indications that we would prefer to develop and commercialize ourselves.

We lease our laboratory and office facilities in South San Francisco, California under non-cancelable operating leases with expiration dates in July 2024.

In May 2018, we amended our South San Francisco facility lease agreement to expand the size of the original premises by adding approximately 7,340 rentable square feet of additional space.

In September 2019, we further amended our South San Francisco facility lease agreement to expand the size of the premises by adding 5,588 rentable square feet of additional space.

As of March 31, 2021, we expect to make the total lease payments of $7.1 million through July 2024.

We enter into contracts in the normal course of business with third-party contract organizations for preclinical and clinical studies and testing, manufacture and supply of our preclinical and clinical materials and providing other services and products for operating purposes.

These contracts generally provide for termination following a certain period after notice, and therefore we believe that our non-cancelable obligations under these agreements are not material.

Pursuant to the GSK Collaboration Agreement, subject to GSK’s exercise of the Option, we will be responsible for 20% of further development costs for the MAT2A program thereafter.

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.

Also, we will be responsible for 20% of global research and development costs for the WRN program.

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.

We may opt out of 50% U.S.

net profit share and corresponding development cost share for the MAT2A program and/or WRN program.

In September 2018, we entered into a license agreement with Novartis International Pharmaceuticals Ltd., or Novartis, to develop and commercialize Novartis’ LXS196 (also known as IDE196), a PKC inhibitor for the treatment of cancers having GNAQ and GNA11 mutations.

Under the license agreement, we agreed 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.

Such milestones and royalties are dependent on future activity or product sales and are not provided for in the table above as the timing and amounts, if any, are not estimable.

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements.

Adequate additional funding may not be available to us on acceptable terms or at all.

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The following table sets forth the primary sources and uses of cash, cash equivalents, and restricted cash for each of the periods presented below (in thousands):

Nine Months Ended

September 30,

Three Months Ended March 31,

Net cash provided by (used in):

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Cash Flows from Operating Activities

Net cash provided operating activities was $67.1 million for the nine months ended September 30, 2020.

Cash provided by operating activities was primarily due to an increase in contract liability of $91.0 million as a result of the up-front payment received from GSK, stock-based compensation expense of $2.6 million, an increase of accrued and other liabilities of $1.2 million due to fees to CROs and CMOs in support of research and manufacturing activities and an increase in accrued payroll expenses due to increased headcounts, depreciation and amortization expense of $1.0 million and an increase in accounts payable of $0.7 million due to fees to CROs and CMOs in support of research and manufacturing activities, partially offset by the use of funds in our operations to develop our product candidates resulting in a net loss of $29.4 million.

Net cash used in operating activities was $30.6 million for the nine months ended September 30, 2019.

Cash used in operating activities was primarily due to the use of funds in our operations to develop our product candidates resulting in a net loss of $31.2 million, adjusted for the net amortization of premiums and discounts on marketable securities of $0.5 million and an increase in prepaid expenses and other assets of $2.1 million mainly due to advance payment for director’s and officers’ liability insurance premiums and CRO fees, partially offset by depreciation and amortization expense of $0.9 million and stock-based compensation expense of $1.4 million, and an increase in accrued and other liabilities of $1.0 million mainly due to fees to CMOs in support of manufacturing activity for IDE196 and for external research and personnel-related expenses.

Net cash used in operating activities was $13.7 million for the three months ended March 31, 2021.

Cash used in operating activities was primarily due to the use of funds in our operations to develop our product candidates resulting in a net loss of $9.0 million, a decrease in contract liabilities of $6.2 million due to revenue recognized during three months ended March 31, 2021, offset by the cost reimbursement that became unconditionally due as of March 31, 2021, and an increase in accounts receivable from GSK of $1.0 million due to the expected costs reimbursement for the quarter, partially offset by stock-based compensation expense of $1.9 million, and amortization of premiums on marketable securities of $0.5 million.

Net cash used in operating activities was $9.5 million for the three months ended March 31, 2020.

Cash used in operating activities was primarily due to the use of funds in our operations to develop our product candidates resulting in a net loss of $12.0 million, partially offset by depreciation and amortization expense of $0.3 million and stock-based compensation expense of $0.8 million, a decrease in prepaid expenses and other assets of $1.1 million due to the amortization of advance payments to CROs and CMOs, and prepayment for director and officer, or D&O, insurance, and an increase in accrued and other liabilities of $0.4 million mainly due to fees to third parties in support of clinical and preclinical activities.

Cash Flows from Investing Activities

Net cash used in investing activities was $141.7 million for the nine months ended September 30, 2020, which consisted of $214.4 million used to purchase marketable securities and $0.3 million used to purchase property and equipment, partially offset by $73.0 million provided by maturities of marketable securities.

Net cash used in investing activities was $1.6 million for the nine months ended September 30, 2019, which consisted of $86.1 million used to purchase marketable securities and $1.1 million used to purchase property and equipment, offset by $67.5 million provided by maturities of marketable securities and $18.1 million from sales of marketable securities.

Net cash provided by investing activities was $36.4 million for the three months ended March 31, 2021, which consisted of $76.2 million provided by maturities of marketable securities, partially offset by $38.7 million used to purchase marketable securities and $1.0 million used to purchase property and equipment.

Net cash provided investing activities was $10.9 million for the three months ended March 31, 2020, which consisted of $22.2 million provided by maturities of marketable securities , partially offset by $11.3 million used to purchase marketable securities.

Cash Flows from Financing Activities

Net cash provided by financing activities was $121.8 million for the nine months ended September 30, 2020, which consisted of $100.7 million of net proceeds from our follow-on offering, $20.0 million of net proceeds from our private placement of common stock, $1.0 million of proceeds from exercise of common stock options, and $0.1 million of proceeds from ESPP purchase.

Net cash provided by financing activities was $50.6 million for the nine months ended September 30, 2019, which consisted primarily of $50.2 million of net proceeds from our IPO.

Contractual Obligations and Commitments

The disclosure of our contractual obligations and commitments is set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations” in our Annual Report on Form 10-K filed with the SEC on March 24, 2020.

We lease our laboratory and office facilities in South San Francisco, California under a non-cancelable operating lease with an expiration date in July 2024, dated August 26, 2016 and amended in May 2018.

In September 2019, we further amended our South San Francisco facility lease agreement to expand the size of the premises by adding 5,588 rentable square feet of additional space, which we took possession of in August 2020 (“Second Expansion”).

The Second Expansion increased our operating lease obligations by $1.2 million as of September 30, 2019.

Other than the increase in our operating lease obligations due to the Second Expansion, there have been no material changes in our contractual obligations and commitments since December 31, 2019.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Policies , Significant Judgments and Use of Estimates

Net cash provided by financing activities was $42.0 million for the three months ended March 31, 2021, which consisted of $41.9 million of net proceeds from ATM offering, and $0.1 million of proceeds from exercise of common stock options.

Net cash provided by financing activities was less than $0.1 million for the three months ended March 31, 2020, which consisted of proceeds from exercise of common stock options.

Critical Accounting Policies

Our financial statements have been prepared in accordance with U.S.

generally accepted accounting principles, or GAAP.

The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported expenses incurred during the reporting periods.

Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

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We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in our Annual Report on Form 10-K filed with the SEC on March 24, 2020, and the notes to the financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

During the nine months ended September 30, 2020, except as described in Note 2 to the unaudited interim condensed financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K filed with the SEC on March 24, 2020.

Revenue Recognition

We follow Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform 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) we satisfy a performance obligation.

We apply the five-step model to contracts when (1) parties have approved the contract and are committed to performing respective obligations, (2) we can identify each party’s rights regarding the goods or services to be transferred, (3) we 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 we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer.

At contract inception, we assess the goods or services promised within each contract and determine 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.

We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligations when (or as) the performance obligations are satisfied.

We constrain our 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 our intellectual property is determined to be distinct from the other promised goods or services identified in an arrangement, we recognize 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, we utilize 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.

We evaluate 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 our 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 op tion has a material right, we assess 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 t he customer option is determined to represent a material right, the material right is recognized as a separate performance obligation.

We allocate 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, we evaluate 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 us 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 our 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.

We recognize revenue as or when the performance obligations under the contract are satisfied.

At the end of each subsequent reporting period, we re-evaluate 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 is deemed to be the predominant item to which the royalties relate, we recognize 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 we perform its obligations under these arrangements.

Amounts payable to us are recorded as accounts receivable when our right to consideration is unconditional.

Amounts payable to us and not yet billed to the collaboration partner are recorded as contract assets.

We do 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.

We include an expected value in the transaction price.

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

We include an expected value in the transaction price.

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

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

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

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

If a contract modification is not accounted for as a separate contract, we account 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 t he remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification.

We account for a contract modification as if it were a part of the existing contract if the remaining goods or services a re 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 meas ure 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 cumu lative catch-up basis).

Upfront payment contract liabilities resulting from our 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 us.

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

For more detail on our critical accounting policies, refer to Note 2 to the unaudited interim condensed financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, and the notes to the financial statements appearing elsewhere in our Annual Report on Form 10-K filed with the SEC on March 23, 2021.

During the three months ended March 31, 2021, except as described in Note 2 to the unaudited interim condensed financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K filed with the SEC on March 23, 2021.

Quantitative and Qualitati ve Disclosures About Market Risk.

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The market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates or exchange rates.

As of September 30, 2020, we had cash equivalents and marketable securities of $288.7 million, consisting of interest-bearing money market funds, investments in U.S.

As of March 31, 2021, we had cash equivalents and marketable securities of $310.1 million, consisting of interest-bearing money market funds, investments in U.S.

government securities, commercial paper, and corporate bonds, for which the fair value would be affected by changes in the general level of U.S.

3 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-Q

Item 2. Management’s Discussion and Analysis