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Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-08-10 · 125 added, 113 removed, 353 unchanged (40% of the section changed)

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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.

Our most advanced synthetic lethality product candidate is IDE397, a clinical-stage methionine adenosyltransferase 2a, or MAT2A, inhibitor being developed for solid tumors with S-methyl-5'-thioadenosine phosphorylase, or 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 the 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.

Because of this enhanced dependence, loss of MTAP results in synthetic lethality mediated through endogenous MTA and the methyl donor SAM when MAT2A is pharmacologically inhibited.

MAT2A inhibition results in a mechanism of action, or MOA, which is biologically distinct from the MOA of direct PRMT5 inhibition.

Notably, PRMT5 is a pan-essential protein whereas MAT2A is a selectively-essential protein.

We believe that, generally, targeting selectively-essential proteins, rather than pan-essential proteins, may be more tolerable and potentially enable a broader therapeutic window.

(Chang et al., Cancer Cell 39:4, 466-479).

MAT2A inhibition results in reduced levels of tumor SAM – which is the methyl donor substrate for Type I protein arginine methyl transferases, or PRMTs (such as PRMT1), as well as for Type II PRMTs (such as PRMT5).

We have shown preclinical data demonstrating that modulating SAM through MAT2A inhibition can impact the protein methylation function of both Type I PRMTs and Type II PRMTs, as evidenced by reduced asymmetrical dimethyl arginine, or ADMA and reduced symmetrical dimethyl arginine, or SDMA, respectively.

The prevalence of MTAP deletions is estimated to be approximately 15% of 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.

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

As of June 25, 2021, we have enrolled patients in the IDE397 clinical trial having multiple solid tumor types with MTAP-deletion, including non-small cell lung cancer, pancreatic cancer, thymic cancer and adenoid cystic carcinoma.

As of June 25, 2021, IDE397 has been generally well tolerated with only grade 1 drug-related adverse events, including onstipation, nausea and fatigue;

there were no reported drug-related serious adverse events and no reported myelosuppression, or changes to bilirubin or to aminotransaminase (AST) or alanine aminotransferase (ALT) enzymes.

We are enrolling patients into the fifth dose escalation cohort of this trial.

As of November 5, 2021, we have enrolled patients in the Phase 1 IDE397 clinical trial having multiple solid tumor types with MTAP-deletion, including non-small cell lung cancer, pancreatic cancer, thymic cancer, adenoid cystic carcinoma and gastroesophageal cancer.

As of November 5, 2021, IDE397 has been generally well tolerated with only grade 1/2 drug-related adverse events;

there were no reported drug-related serious adverse events, no reported myelosuppression or liver toxicity, and IDE397 has not yet reached its maximum tolerated dose, or MTD.

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 .

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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 observed a reduction in plasma S-adenosylmethionine, or SAM, a proximal pharmacodynamic marker, in each of the first two cohorts of the IDE397 Phase 1 dose escalation study, satisfying the clinical protocol threshold of approximately 60% or greater to initiate the tumor biopsy cohort of the IDE397 Phase 1 clinical trial to evaluate tumor pharmacodynamic, or PD, biomarkers.

We observed preliminary clinical activity with monotherapy in early dose escalation cohorts, including pharmacodynamic response in plasma SAM and tumor reductions in multiple patients with MTAP deleted advanced or metastatic solid tumors.

We observed a reduction in plasma SAM, a proximal pharmacodynamic marker, in each of the first three cohorts of the IDE397 Phase 1 dose escalation clinical trial, satisfying the clinical protocol threshold of approximately 60% or greater.

We have initiated tumor biopsy cohorts in the IDE397 Phase 1 clinical trial to evaluate tumor pharmacodynamic, or PD, biomarkers.

The clinical protocol threshold was established based on IDE397 preclinical in vivo efficacy data in MTAP-deletion xenograft models.

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

We are targeting initiation of the tumor biopsy cohort in the third quarter of 2021 to evaluate tumor pharmacodynamic, or PD, biomarkers, and have a program objective to obtain tumor PD data, including tumor SAM and tumor SDMA, in the fourth quarter of 2021.

We are obtaining patient biopsies for translational research from dose escalation cohorts and tumor biopsy backfill cohorts in the IDE397 Phase 1 clinical trial and we also plan to obtain patient biopsies from expansion cohorts in the clinical trial.

We are evaluating PD biomarkers, such as plasma SAM and tumor SAM as well as SDMA.

We also observed tumor shrinkage in multiple patients in early dose escalation Cohorts 2 and 3 (n=3, n=2, respectively), including in a Cohort 2 NSCLC patient (~15% reduction in target lesions) and in a Cohort 3 adenoid cystic carcinoma patient with a lung metastasis (~11% reduction in target lesions), pursuant to RESIST v1.1 criteria.

We plan to submit a protocol amendment to the FDA by year end 2021 to support cohort expansion as monotherapy in NSCLC and other indications.

This amendment will also support evaluation of IDE397 combination therapies with taxanes and other potential combination agents.

Subject to satisfactory progression of the dose escalation portion of the Phase 1 clinical trial, we are targeting cohort expansion in the first half of 2022 with a clinical trial design that includes an aggregate of 150 or more patients across expansion cohorts.

Subject to initiation of an expansion cohort or establishing a MTD, we are targeting submission of an IDE397 option data package to GSK in the first half of 2022, which would trigger an evaluation period for GSK to make an opt‐in decision.

Subject to GSK’s election to opt‐in and , if required, HSR clearance, we are entitled to receive a $50 million opt‐in payment from GSK.

We are leading 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 expect that the PD data to be obtained from the IDE397 tumor biopsy cohort will support an option data package for review by GSK in consideration of whether to exercise its option to develop IDE397.

We expect that the PD data to be obtained from the IDE397 tumor biopsy cohorts will support an option data package for review by GSK for consideration of whether to exercise its option to develop IDE397.

The GSK option is exercisable within a certain period after we deliver a data package comprising preclinical data and clinical data from the IDE397 monotherapy dose escalation study of the Phase 1 clinical trial, including safety and tolerability data, pharmacokinetic data and pharmacodynamic modulation of SAM and tumor SDMA.

If GSK exercises its option and makes the related payment to us of fifty million dollars ($50,000,000), GSK would lead later-stage global clinical development.

For future development costs we will be responsible for 20% and GSK will be responsible for 80%.

If GSK exercises its option and makes the related $50 million payment to us, GSK would lead later-stage global clinical development.

We will be responsible for 20% of future development costs and GSK will be responsible for 80%.

Assuming GSK decides to exercise the option, we will be eligible to receive future development and regulatory milestones of up to $465 million, 50% of U.S.

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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 showed in vivo efficacy in multiple MTAP-null xenograft models demonstrating tumor growth inhibition when MAT2A was pharmacologically inhibited with IDE397 as monotherapy.

Results of this IDE397 MTAP-deletion PDX p anel s tudy 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.

In NSCLC, data from the preclinical PDX Panel Study has shown > 60% TGI in 12 independent NSCLC PDX models out of 14 models evaluated, including in seven NSCLC adenocarcinoma PDX models out of nine evaluated and in five NSCLC squamous carcinoma PDX models out of five evaluated.

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

Additionally, we have observed preclinical dose-dependent modulation of selected PD biomarkers, including SDMA, ADMA 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 PD modulation in MTAP-deletion CDX model in NSCLC.

We have ongoing mechanistic studies, including evaluating various pathway constituents such as SAM, MTA, SDMA, ADMA and other downstream metabolic and gene expression changes,in 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.

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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.

We have also observed in vivo efficacy with enhanced tumor growth inhibition in CDX / PDX models for IDE397 in combination with other DNA Damage Response, or DDR, target inhibitors, and for IDE397 in combination with certain precision medicine target inhibitors in tumors having certain identified genetic alterations as co-alterations with MTAP.

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.

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In vivo studies in CDX and PDX models 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.

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

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.

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 plan to identify a PARG inhibitor development candidate in the fourth quarter of 2021.

We have selected a PARG inhibitor potential development candidate and are initiating further toxicology studies.

We are planning to initiate further preclinical development studies, including IND-enabling studies of the selected lead compound.

We are also continuing preclinical evaluation of additional compounds in the lead series as an additional potential development candidate or back-up compound.

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.

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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.

We have demonstrated synergistic in vivo efficacy of a Pol Theta inhibitor with niraparib:

the combination of our Pol Theta inhibitor with niraparib enhanced the activity of niraparib in the DLD1 BRCA2-/- xenograft model.

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

We have shown combination activity of our Pol Theta helicase inhibitor with multiple PARP inhibitors, including niraparib.

We have demonstrated synergistic in vivo efficacy of a Pol Theta ATPase inhibitor with niraparib:

the combination of our Pol Theta ATPase inhibitor with niraparib enhanced the activity of niraparib in the DLD1 BRCA2-/- xenograft model.

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

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 planning to select a development candidate for a Pol Theta small molecule inhibitor in the fourth quarter of 2021.

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 planning to select a development candidate for a Pol Theta small molecule inhibitor in December 2021.

We have the potential to receive up to $20 million in aggregate milestone payments from GSK for certain milestones, which may occur as we, in collaboration with GSK, advance a Pol Theta helicase inhibitor from preclinical development into early Phase 1 clinical trials.

Werner Helicase

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

We have the potential to receive up to $20 million in aggregate milestone payments from GlaxoSmithKline for certain milestones which may occur as we, in collaboration with GSK, advance a Werner Helicase inhibitor from preclinical into early Phase 1 clinical trials.

Other Synthetic Lethality Pipeline Programs

We have initiated early preclinical research programs to identify small molecule inhibitors for a target in the MTAP-synthetic lethality pathway, or MTAP-SL.

We believe an MTAP-SL inhibitor may be complementary to our IDE397 clinical candidate targeting MAT2A.

We believe an MTAP-SL inhibitor may be complementary to our IDE397 clinical candidate targeting MAT2A as a combination of two synthetic lethality therapeutics for patients selected based on tumors harboring MTAP deletion.

We have also initiated early preclinical research programs targeting multiple distinct DNA Damage Targets, or DDTs, for patients with solid tumors characterized by proprietary biomarkers or gene signatures.

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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 L aboratory CRISPR paralog screening platform to evaluate functionally redundant paralogous genes across ovarian cancer subtypes.

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.

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

As of June 22, 2021, we have enrolled 30 MUM patients into the darovasertib/binimetinib combination arm, and 15 MUM patients into the darovasertib /crizotinib combination arm, and we are continuing patient enrollment in the dose expansion cohort of each of these combination arms .

We are expecting a clinical data update for the darovasertib combination(s) in the fourth quarter of 2021.

We are continuing patient enrollment in dose expansion cohorts of each of these combination arms of the Phase 1/2 clinical trial.

We are targeting a clinical data update of darovasertib in in the fourth quarter of 2021 , including an updated adverse event profile, clinical efficacy and a potential Phase 2 expansion dose of the darovasertib and crizotinib MUM combination arm of the darovasertib Phase 1/2 clinical trial .

We are evaluating darovasertib in combination with binimetinib, and independently, with 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 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.

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

We are coordinating with St.

Vincent’s Hospital Sydney Limited to initiate an Investigator Sponsored Trial , or IST, to evaluate IDE196 in a neo-adjuvant and adjuvant setting in non-metastatic uveal melanoma, or UM, patients.

Data from this potential clinical trial may offer proof of concept on our hypothesis that earlier treatment of UM patients with IDE196, prior to tumor metastasis, may lead to improved patient outcomes.

We are also continuing to evaluate darovasertib in patients having non-MUM cancers harboring GNAQ/11 mutations, with a focus in skin melanoma.

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.

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Darovasertib / Binimetinib Combination Therapy

A combination arm of our Phase 1/2 clinical trial is evaluating darovasertib in combination with binimetinib in patients having tumors harboring activating GNAQ or GNA11 hotspot mutations.

We are evaluating darovasertib in combination with binimetinib in a combination arm of our Phase 1/2 clinical trial 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 with a 40.5% tumor reduction, which was subsequently confirmed with a 51.7% tumor reduction after the next scan following the data cut-off date.

This reflects two confirmed PR out of nine evaluable MUM patients with at least two post-baseline scans (22%) per 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/binimetinib combination arm in MUM as related to darovasertib as of June 22, 2021 primarily include:

serious adverse events of liver toxicity, nausea and vomiting, syncope and fall;

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

As of November 5, 2021, we have enrolled 32 MUM patients into the darovasertib/binimetinib combination arm and are continuing patient enrollment in the dose expansion cohort of this combination arm.

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

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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 was subsequently confirmed with a 56.5% tumor reduction after the next scan following the data cut-off date.

This represents the deepest response observed in the Phase 1/2 clinical trial evaluating darovasertib as monotherapy or in combinations, as reflected by the largest percentage reduction in tumor size.

Drug-related adverse events observed in the darovasertib/crizotinib combination arm in MUM as of June 22, 2021, based on preliminary data from an unlocked database, primarily include:

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

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

The observed syncope and hypotension were transient, often occurring in the first week of dosing, and are being managed and mitigated through a one week run-in dosing regimen and by limiting use of certain concurrent medications, such as diuretics.

As of November 5, 2021, we have enrolled 28 MUM patients into the darovasertib/crizotinib combination arm.

We are continuing patient enrollment in the dose expansion cohort of this combination arm.

In June 2021, we initiated the dose expansion cohort of the darovasertib/crizotinib combination arm in MUM based on the observed early clinical activity of this combination.

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

We and Pfizer amended the Pfizer Agreement in August 2021 to support a n additional 40 patients in the Phase 1 study in MUM .

We and Pfizer amended the Pfizer Agreement in August 2021 to support an additional 40 patients in the darovasertib and crizotinib MUM combination arm of our Phase 1/2 clinical trial.

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.

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

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.

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.

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.

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Regulatory Strategy

We are planning to seek FDA regulatory guidance for darovasertib monotherapy based on observed overall survival data in MUM in the second half of 2021, and/or for darovasertib combination(s) on potential registration-enabling trial design in MUM in the first half of 2022.

We are planning to seek FDA regulatory guidance in the first half of 2022 for a potentially registration-enabling trial design with one or more darovasertib combinations in 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.

Other Potential Indications

We are continuing our preclinical evaluation and are evaluating the potential for clinical evaluation of darovasertib in GNAQ mutation-mediated rare diseases, including in Sturge-Weber Syndrome, or SWS, and Port Wine Stains, or PWS, neurocutaneous disorders characterized by capillary malformations and associated with mutations in GNAQ.

We are targeting FDA clearance in the first half of 2022 to initiate a Phase 1 clinical trial to evaluate darovasertib in SWS and, subject to further preclinical and clinical data, potentially also in PWS patients with extensive involvement.

We are continuing our preclinical evaluation and are evaluating the potential for clinical evaluation of darovasertib in GNAQ mutation-mediated rare diseases, including in Sturge-Weber Syndrome, or SWS, and Port-Wine Stain, or PWS, neurocutaneous disorders characterized by capillary malformations and associated with mutations in GNAQ.

Subject to FDA feedback and guidance, we are planning to initiate a Phase 1 clinical trial to evaluate darovasertib in SWS and, subject to further preclinical and clinical data, potentially also in PWS patients with extensive involvement, which means they have port-wine stain over the trunk and extremities as well as the head and neck.

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.

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.

The US/EU5 prevalence of SWS patients who may potentially benefit from long term chronic treatment is approximately 13,000 to 33,000 patients.

PWS is a potential related indication with an estimated US/EU5 prevalence of patients with extensive involvement – who have port-wine-stain over the trunk and extremities as well as the head and neck, of approximately 235,000 patients.

The prevalence of SWS patients in the US and EU5 who may potentially benefit from long term chronic treatment is approximately 13,000 to 33,000 patients .

PWS is a potential ly related indication with an estimated prevalence of approximately 235,000 patients in the US and EU5 with extensive involvement .

We entered into a Sponsored Research Agreement with Boston Children’s Hospital for preclinical evaluation of the role of PKC in SWS.

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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.

Certain of our CROs have clinical trial support personnel, including personnel related to our data management and master file management, that are 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.

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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.

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.

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During the three months ended June 30, 2021, we sold an aggregate of 695,218 shares of our common stock for net proceeds of $15.4 million at a weighted average sales price of approximately $22.95 per share under an at-the-market offering pursuant to the January 2021 Sales Agreements with Jefferies as sales agent.

During the three months ended September 30, 2021, we did not sell any shares of our common stock under the ATM facility.

As of September 30, 2021, approximately $73.8 million of common stock remained available to be sold under the ATM facility.

Public Offering and Sale of IDEAYA Common Stock

On July 12, 2021, we closed on an underwritten public offering, or the Offering, of 5,333,333 shares of our common stock at an offering price of $17.25 per share, including 695,652 shares of common stock upon the exercise in full of the overallotment option by the underwriters, pursuant to which we received aggregate net proceeds of $86.5 million, after deducting underwriting discounts and commissions but before deducting other offering expenses.

On July 12, 2021, we completed an underwritten public offering of 5,333,333 shares of our common stock at an offering price to the public of $17.25 per share, including 695,652 shares of common stock upon the exercise in full of the overallotment option by the underwriters, pursuant to which we received aggregate net proceeds of $86.0 million, after deducting underwriting discounts and commissions and other offering expenses.

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 June 30, 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 underwritten public offering in June 2020, a direct private placement equity investment by Glaxo Group Limited, or GGL, an affiliate of GlaxoSmithKline, in June 2020, 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, and through a follow-on underwritten public offering in July 2021.

We have funded our operations through September 30, 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 underwritten public offering in June 2020, a direct private placement equity investment by Glaxo Group Limited, or GGL, an affiliate of GlaxoSmithKline, in June 2020, 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, and through a follow-on underwritten public offering in July 2021.

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

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

Our net losses were $20.0 million and $24.4 million for the six months ended June 30, 2021 and June 30, 2020, respectively.

As of June 30, 2021, we had an accumulated deficit of $147.0 million.

Our net losses were $31.6 million and $29.4 million for the nine months ended September 30, 2021 and September 30, 2020, respectively.

As of September 30, 2021, we had an accumulated deficit of $158.5 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 darovasertib monotherapy arm of our IDE196-001 clinical trial, (ii) our PARG program and (iii) our earlier pipeline programs, including our MTAP-SL program and our DNA Damage Target or DDT programs.

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 MTAP-SL program and our DNA Damage Target or DDT programs .

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.

We are collaborating with GSK on preclinical research for our Pol T heta and Werner H elicase programs, pursuant to the GSK Collaboration Agreement .

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings, or other capital sources, including potential collaborations with other companies or other strategic transactions.

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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 June 30, 2021, we had cash, cash equivalents, and short-term and long-term marketable securities of $312.4 million.

As of September 30, 2021, we had cash, cash equivalents, and short-term and long-term marketable securities of $385.8 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.

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Costs of certain activities, such as preclinical studies, are generally recognized based on an evaluation of the progress to completion of specific tasks.

Nonrefundable payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized as prepaid expenses and other current assets on our balance sheet.

Nonrefundable payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized as prepaid

expenses and other current assets on our balance sheet.

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

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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 June 30, 2021 and March 31, 2021:

The following table summarizes our external clinical development expenses by program for the three months ended September 30, 2021 and June 30, 2021:

Three Months Ended

September 30, 2021

June 30, 2021

March 31, 2021

External clinical development expenses (1) :

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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 six months ended June 30, 2021 and June 30, 2020:

Six Months Ended

June 30, 2021

June 30, 2020

The following table summarizes our external clinical development expenses by program for the nine months ended September 30, 2021 and September 30, 2020:

Nine Months Ended

September 30, 2021

September 30, 2020

External clinical development expenses (1) :

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General and administrative expenses consist primarily of payroll and personnel-related expenses, including salaries, employee benefit costs and stock-based compensation expense, professional fees for legal, patent, consulting, accounting and tax services, allocated overhead, including rent, equipment, depreciation, information technology costs and utilities, and other general operating expenses not otherwise classified as research and development expenses.

We anticipate that our general and administrative expenses will increase, as a result of increased personnel costs, including salaries, benefits and stock-based compensation expense, patent costs for our product candidates, expanded infrastructure and higher consulting, legal and accounting services associated with maintaining compliance with our NASDAQ stock exchange listing and requirements of the Securities and Exchange Commission, or the SEC, investor relations costs and director and officer insurance policy premiums associated with being a public company.

compliance with our NASDAQ stock exchange listing and requirements of the Securities and Exchange Commission, or the SEC, investor relations costs and director and officer insurance policy premiums associated with being a public company .

Other Income (Expense)

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Results of Operations

Comparison of Three Months Ended June 30, 2021 and March 31, 2021

Comparison of Three Months Ended September 30, 2021 and June 30, 2021

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

Three Months Ended

September 30, 2021

June 30, 2021

March 31, 2021

Collaboration revenue

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Collaboration Revenue

Collaboration revenue increased by $ 1.5 million, or 21%, in from the three months ended March 31, 2021 to the three months ended June 30, 2021.

Collaboration revenue increased by $0.2 million, or 3%, in from the three months ended June 30, 2021 to the three months ended September 30, 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.

Revenue we recognize from satisfaction of performance obligations under the GSK Collaboration Agreement is impacted by our estimates of the remaining costs 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 March 31, 2021 to the three months ended June 30, 2021 is due to timing of services performed.

The fluctuation from the three months ended June 30, 2021 to the three months ended September 30, 2021 is due to timing of services performed.

Research and Development Expenses

Research and development expenses increased by $3.4 million, or 30%, from the three months ended March 31, 2021 to the three months ended June 30, 2021.

The increase in research and development expenses was primarily due to an increase in fees paid to CROs, CMOs and consultants of $2.5 million related to the advancement of our lead product candidates through preclinical studies, an increase in payroll expenses, including salaries, benefits and stock-based compensation expense of $0.6 million related to an increase in headcount to support our growth, an increase in external clinical development expenses for darovasertib of $0.3 million related to support costs for our Phase 1/2 clinical trial to evaluate darovasertib in solid tumors, and 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 IDE397 of $0.2 million related to manufacturing and method validation activities for our Phase 1 clinical trial.

Research and development expenses increased by $0.5 million, or 3%, from the three months ended June 30, 2021 to the three months ended September 30, 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 $0.3 million related to an increase in headcount to support our growth, and an increase in fees paid to CROs and consultants of $0.2 million related to the advancement of our lead product candidates through preclinical and clinical studies.

General and Administrative Expenses

General and administrative expenses were in line from the three months ended March 31, 2021 to the three months ended June 30, 2021.

Increase in general and administrative expenses due to an increase in payroll expenses, including salaries, benefits and stock-based compensation expense of $0.1 million related to increased headcount to support our growth as a public company were offset by a decrease in audit fees for the comparative periods.

General and administrative expenses increased by $0.4 million, or 7%, from the three months ended June 30, 2021 to the three months ended September 30, 2021.

The increase in general and administrative expenses was due to an increase in IT expenses of $0.2 million and an increase in legal expense of $0.2 million.

Interest Income and Other Income (Expense), Net

Interest income and other income (expense), net decreased by $10,000, or 9%, from the three months ended March 31, 2021 to the three months ended June 30, 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 Six Months Ended June 30, 2021 and 2020

Interest income and other income (expense), net increased by $27,000, or 26%, from the three months ended June 30, 2021 to the three months ended September 30, 2021, primarily due to an increase in interest income on our cash, cash equivalents and marketable securities balances, which increased during the nine months ended September 30, 2021 as a result of the net proceeds from our follow-on offering in July 2021 and sales under our ATM facility during the nine months ended September 30, 2021.

Comparison of Nine Months Ended September 30, 2021 and 2020

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

Six Months Ended June 30,

Nine Months Ended September 30,

Collaboration revenue

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Collaboration Revenue

Collaboration revenue increased by $16.0 million in the six months ended June 30, 2021.

Collaboration revenue increased by $16.0 million in the nine months ended September 30, 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 six months ended June 30, 2021.

The fluctuation was due to revenue recognized only in the third quarter in 2020 after the effectiveness of the GSK Collaboration Agreement, as compared to revenue that we recognized during the full nine months ended September 30, 2021.

Research and Development Expenses

Research and development expenses increased by $8.9 million, or 51%, from the six months ended June 30, 2020 to the six months ended June 30, 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 $3.6 million related to an increase in headcount to support our growth, an increase in fees paid to CROs, CMOs and consultants of $2.5 million related to the advancement of our lead product candidates through preclinical studies, an increase in external clinical development expenses for IDE397 of $1.6 million related to manufacturing and clinical startup activities for our Phase 1 clinical trial, and an increase in costs for laboratory supplies, facilities and software to support our research programs of $1.6 million, partially offset by a decrease in external clinical development expenses for darovasertib of $0.3 million related to a decrease in manufacturing and clinical startup activities.

Research and development expenses increased by $14.4 million, or 52%, from the nine months ended September 30, 2020 to the nine months ended September 30, 2021.

The increase in research and development expenses was primarily due to an increase in payroll expenses, including salaries and benefits expense, of $4.0 million related to an increase in headcount to support our growth, an increase in fees paid to CROs, CMOs and consultants of $3.5 million related to the advancement of our lead product candidates through preclinical and clinical studies, an increase in costs for laboratory supplies, facilities and software to support our research programs of $2.5 million, an increase in clinical trial costs of $2.4 million related to the advancement of IDE 397 and darovasertib, and an increase in stock-based compensation expense of $1.8 million due to increased headcount to support our growth and an overall increase in our stock prices.

General and Administrative Expenses

General and administrative expenses increased by $2.2 million, or 30%, from the six months ended June 30, 2020 to the six months ended June 30, 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 $2.0 million related to increased headcount to support our growth as a public company, an increase in software licenses and facilities expenses of $0.4 million, and an increase in directors’ and officers’ liability insurance premiums of $0.2 million, partially offset by a decrease in legal costs of $0.3 million related to the GSK Collaboration Agreement, and a decrease in costs associated with the filing of a shelf registration statement on Form S-3 of $0.2 million.

General and administrative expenses increased by $3.4 million, or 30%, from the nine months ended September 30, 2020 to the nine months ended September 30, 2021.

The increase in general and administrative expenses was primarily due to an increase in stock-based compensation expense of $1.8 million due to increased headcount to support our growth and an overall increase in our stock prices, an increase in payroll expenses, including salaries and benefits expense, of $1.0 million related to increased headcount to support our growth, an increase in facility expense of $0.4 million due to the second expansion of our facility lease, and an increase in software costs of $0.3 million.

Interest Income and Other Income (Expense), Net

Interest income and other income (expense), net decreased by $0.4 million, or 66%, from the six months ended June 30, 2020 to the six months ended June 30, 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.

Interest income and other income (expense), net decreased by $0.4 million, or 50%, from the nine months ended September 30, 2020 to the nine months ended September 30, 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 June 30, 2021, we had cash, cash equivalents and marketable securities of $312.4 million, consisting primarily of money market funds, U.S.

As of September 30, 2021, we had cash, cash equivalents and marketable securities of $385.8 million, consisting primarily of money market funds, U.S.

government securities, commercial paper, and corporate bonds.

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We have incurred net losses since our inception.

For the six months ended June 30, 2021 and June 30, 2020, we had net losses of $20.0 million and $24.4 million, respectively, and we expect to incur substantial additional losses in future periods.

As of June 30, 2021, we had an accumulated deficit of $147.0 million.

For the nine months ended September 30, 2021 and September 30, 2020, we had net losses of $31.6 million and $29.4 million, respectively, and we expect to incur substantial additional losses in future periods.

As of September 30, 2021, we had an accumulated deficit of $158.5 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 in support of our long-term cash requirements.

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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 June 30, 2021, we expect to make the total lease payments of $6.6 million through July 2024.

As of September 30, 2021, we expect to make the total lease payments of $6.2 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.

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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):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash provided by (used in):

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Cash Flows from Operating Activities

Net cash used in operating activities was $26.7 million for the six months ended June 30, 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 $20.0 million, adjusted for a decrease in contract liabilities of $13.6 million due primarily to revenue recognized during six months ended June 30, 2021, offset by the cost reimbursement that became unconditionally due as of June 30, 2021, and an increase in prepaid expenses and other assets of $1.7 million due to advance payment for our D&O insurance policy premiums , partially offset by stock-based compensation expense of $4.0 million, an increase in accounts payable and accrued and other liabilities of $2.5 million due primarily to fees to third parties in support of clinical and preclinical activities, amortization of premiums on marketable securities of $0.9 million, and depreciation expense of $0.8 million.

Net cash used in operating activities was $23.2 million for the six months ended June 30, 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 $24.4 million, adjusted for an increase in prepaid expenses and other assets of $0.8 million mainly due to advance payment for our D&O insurance policy premiums, and a decrease in lease liabilities of $0.6 million due to lease amortization, partially offset by stock-based compensation expense of $1.6 million, depreciation and amortization expense of $0.7 million and a decrease in right-of-use assets of $0.5 million due to lease amortization.

Net cash used in operating activities was $39.1 million for the nine months ended September 30, 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 $31.6 million, adjusted for a decrease in contract liabilities of $21.6 million due primarily to revenue recognized during the nine months ended September 30, 2021, offset by the cost reimbursement that became unconditionally due as of September 30, 2021, and a decrease in lease liability of $1.1 million due to lease amortization, partially offset by stock-based compensation expense of $6.1 million, an increase in accounts payable and accrued and other liabilities of $4.9 million due primarily to fees to third parties in support of clinical and preclinical activities, amortization of premiums on marketable securities of $1.4 million, depreciation expense of $1.3 million, and an decrease in right-of-use asset of $1.0 million due to lease amortization.

Net cash provided by 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.

Cash Flows from Investing Activities

Net cash used in investing activities was $12.9 million for the six months ended June 30, 2021, which consisted of $133.0 million used to purchase marketable securities and $1.6 million used to purchase property and equipment, partially offset by $117.7 million provided by maturities of marketable securities and $4.0 million provided by sales of marketable securities.

Net cash provided by investing activities was $41.9 million for the six months ended June 30, 2020, which consisted of $68.2 million provided by maturities of marketable securities, partially offset by $26.2 million used to purchase marketable securities and $0.1 million used to purchase property and equipment.

Net cash used in investing activities was $69.3 million for the nine months ended September 30, 2021, which consisted of $282.4 million used to purchase marketable securities and $2.0 million used to purchase property and equipment, partially offset by $211.2 million provided by maturities of marketable securities and $4.0 million provided by sales of marketable securities.

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.

Cash Flows from Financing Activities

Net cash provided by financing activities was $58.0 million for the six months ended June 30, 2021, which consisted of $57.3 million of net proceeds from ATM offering, $0.3 million of proceeds from exercise of common stock options, and $0.3 million of proceeds from ESPP purchase.

Net cash provided by financing activities was $94.7 million for the six months ended June 30, 2020, which consisted of $93.9 million of net proceeds from our follow-on offering, $0.7 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 $144.8 million for the nine months ended September 30, 2021, which consisted of $86.0 million of net proceeds from our follow-on offering in July 2021, $57.3 million of net proceeds from sales under our ATM facility, $1.2 million of proceeds from exercise of common stock options, and $0.3 million of proceeds from ESPP purchase.

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 in June 2020, $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.

Critical Accounting Policies

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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 and six months ended June 30, 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.

During the three and nine months ended September 30, 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.

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