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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-22 · 236 added, 175 removed, 1055 unchanged (28% of the section changed)

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You should review the section titled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a biopharmaceutical company focused on discovering and developing novel small molecule therapeutics that selectively degrade disease-causing proteins by harnessing the body’s own natural protein degradation system.

Our proprietary targeted protein degradation, or TPD, platform, which we refer to as Pegasus, allows us to discover highly selective small molecule protein degraders with activity against disease-causing proteins throughout the body.

We believe that our small molecule protein degraders have unique advantages over existing therapies and allow us to address a large portion of the human genome that was previously intractable with traditional modalities.

We focus on biological pathways that have been clinically validated but where key biological nodes/proteins have not been drugged or are inadequately drugged.

To date, we have utilized our Pegasus platform to design novel protein degraders focused in the areas of immunology-inflammation and oncology, and we continue to apply our platform’s capabilities to additional therapeutic areas.

We have a mission to drug all target classes in human cells using TPD.

Our current clinical stage programs are IRAK4, STAT3, and MDM2, which each address high impact targets within biologically-proven pathways, providing the opportunity to treat a broad range of immuno-inflammatory diseases, hematologic malignancies, and/or solid tumors.

Our programs exemplify our focus on addressing high impact targets that have been elusive to conventional modalities and that drive the pathogenesis of multiple serious diseases with significant unmet medical needs.

Our disclosed preclinical programs target STAT6 and TYK2, two proteins in well-validated pathways where we believe our degrader technology has the potential to offer unique advantages as compared to competing therapies.

Both programs are currently in IND-enabling studies.

With respect to our IRAK4 program, we are collaborating with Sanofi S.A, or Sanofi, on the development of drug candidates targeting IRAK4 outside the oncology and immuno-oncology fields.

We are developing KT-474, a highly active and selective, orally bioavailable IRAK4 degrader, for the treatment of interleukin-1 receptor/toll-like receptor or IL-1R/TLR-driven immunology-inflammation conditions and diseases with high unmet medical need, including hidradenitis suppurativa, or HS, an inflammatory skin disease, as well as atopic dermatitis, or AD, and potentially other indications.

We have completed our Phase 1 trial of KT-474, which included cohorts of healthy volunteers, as well as patients with HS and AD.

Phase 2 clinical trials of KT-474, conducted by Sanofi, are initially investigating its potential in HS and AD.

The clinical trials for both indications have been initiated, and patient dosing is ongoing.

With respect to our clinical oncology programs, we are evaluating KT-333, a STAT3 degrader, in a Phase 1 clinical trial in patients with relapsed/refractory liquid and solid tumors, including aggressive lymphomas.

Patient enrollment and dosing are ongoing in the Phase 1a portion of the trial, and we expect to present additional clinical data in 2024.

In September 2023, we announced that the FDA, granted KT-333 Fast Track Designation for the treatment of relapsed/refractory peripheral T cell lymphoma, an indication for which we have previously received Orphan Drug Designation.

Our Phase 1 clinical trial of KT-253, our MDM2 degrader, was initiated in March 2023.

The study is evaluating the safety, tolerability, pharmacokinetics/pharmacodynamics, and clinical activity of ascending doses of KT-253 in adult patients with relapsed or refractory high grade myeloid malignancies, acute lymphocytic leukemia, or ALL, lymphomas, and solid tumors.

Patient enrollment and dosing are ongoing in the Phase 1a portion of the trial, and we provided initial safety, proof-of-mechanism and proof-of-concept data in November of 2023.

We expect to present additional clinical data in 2024.

In June 2023, KT-253 was granted orphan drug designation by the FDA for the treatment of acute myeloid leukemia.

In November 2023, we announced the decision to discontinue the development of our KT-413 (IRAKIMiD) program, despite reaching expected degradation levels and a lack of dose-limiting toxicities, in order to focus resources to support our growing immunology pipeline.

We are a clinical-stage biopharmaceutical company dedicated to reinventing the treatment of human disease through the development of innovative, highly differentiated medicines that address significant health problems and that meaningfully improve patients’ lives.

We are committed to advancing novel technologies to address targets that have known disease-causing biology, but which have not been drugged, or have been inadequately drugged, often based on limitations of existing technologies.

Our approach is intended to discover and develop a new generation of medicines in a disease-agnostic manner.

We are a leader in targeted protein degradation, or TPD, a next-generation small molecule therapeutic modality that engages the body’s natural cellular recycling system to selectively eliminate disease-causing proteins.

Our objective is to develop molecules that are both potent and highly selective, creating the potential for our medicines to uniquely address diseases that are poorly served by current treatment options.

To date, we have progressed five programs into clinical development and expect to advance at least one new molecular entity into clinical testing annually.

We intend to leverage our drug development expertise to become a fully integrated biopharmaceutical company with an industry-leading pipeline of novel medicines.

Our current focus is primarily directed at high-value targets in immunology.

We believe there are more than 160 million patients in the United States, Europe and Japan that are diagnosed with some of the most prevalent immune-inflammatory diseases that our programs are designed to address, nearly half of whom remain untreated.

Of those treated, most patients are treated with therapies that do not treat the underlying diseases but mostly their symptoms.

As a result, only a small percentage of patients, which we believe to be approximately 3% of the diagnosed population with severe inflammatory diseases, are currently treated with systemic advanced therapies, mostly injectable biologics.

While generally efficacious, biologics have drawbacks.

Biologics tend to be more expensive to manufacture, and the cost is typically passed on to patients and payors.

Patient access to therapy can also be a challenge, as biologics are more complex to prescribe and reimburse than small molecule medicines.

Additionally, biologics are administered as injections, a less preferred route of administration for patients as compared to oral medications, which offer greater flexibility for patients.

We believe we have the potential to deliver a compelling value proposition to a significant underserved patient population:

small molecule medicines with biologics-like activity through the convenience of oral administration of a pill.

Our publicly disclosed immunology programs target STAT6, TYK2 and IRAK4, each of which addresses targets within validated pathways, providing the opportunity to treat a broad range of diseases.

We are developing KT-621 as part of our STAT6 program, which is currently being evaluated in a Phase 1 clinical trial in healthy volunteers.

Our lead molecule in our TYK2 program is KT-295, which we anticipate will enter the clinic in the second quarter of 2025.

We are collaborating with Sanofi S.A., or Sanofi, on the development of drug candidates targeting IRAK4, including KT-474/SAR444656, outside of oncology and immuno-oncology fields.

Sanofi has initiated two Phase 2b clinical trials of KT-474 in patients with hidradenitis suppurativa (HS) and in patients with atopic dermatitis (AD).

Our pipeline focuses on addressing high impact targets that have been elusive to conventional modalities and that drive the pathogenesis of multiple serious diseases with significant unmet medical needs.

In addition to our immunology focus, we also have research initiatives in other therapeutic areas.

Additionally, we believe many of our key discovery and development capabilities have broad applicability, creating an opportunity for us to develop impactful therapeutics leveraging small-molecule modalities in addition to TPD.

Since our inception in 2015, we have devoted substantially all our efforts to organizing and staffing our company, research and development activities, business planning, raising capital, building our intellectual property portfolio and providing general and administrative support for these operations.

To date, we have received gross proceeds of $1.45 billion from sales of our convertible preferred stock, the sale of common stock including our August 2020 initial public offering, or IPO, and concurrent private placement, our July 2021 follow-on offering and concurrent private placement, our August 2022

private investment in public equity, or PIPE, offering, January 2024 follow-on offering, our sales agreement with Cowen and Company, LLC., and through our corporate collaborations.

To date, we have received gross proceeds of $1.71 billion from sales of our convertible preferred stock, the sale of common stock including our August 2020 initial public offering, or IPO, and concurrent private placement, our subsequent follow-on offerings and private placement offering, our prior sales agreement with Cowen and through our corporate collaborations.

We have incurred significant operating losses since inception.

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• advance research and development related activities to expand our product pipeline;

• expand and improve the capabilities of our Pegasus platform;

• expand and improve the capabilities of our drug discovery platform;

• seek regulatory approval for our product candidates that successfully complete clinical development;

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As of December 31, 2024, we had cash, cash equivalents and marketable securities of $850.9 million.

We believe the existing cash, cash equivalents and marketable securities on hand, together with the net proceeds from the first quarter of 2024 offerings and the $15 million milestone payment received in January of 2024 under our collaboration agreement with Sanofi, will be sufficient to fund our operations into the first half of 2027.

which is expected to take us beyond the Phase 2 data for KT-474, as well as additional proof-of-concept data for KT-253 and KT-333, and several clinical inflection points for our STAT6 and TYK2 programs.

We believe the existing cash, cash equivalents and marketable securities on hand will be sufficient to fund our operations into mid 2027, which will enable us to execute on multiple data readouts across our programs.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

See “—Liquidity and capital resources.”

See “Liquidity and capital resources” below.

Components of Our Results of Operations

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Our only revenues have been derived from research collaboration arrangements with Vertex Pharmaceuticals Incorporated, or Vertex, and Sanofi.

We expect that our revenue for the next several years will be derived primarily from our current collaboration agreements and any additional collaborations that we may enter into in the future.

We expect that our revenue for the next several years will be

derived primarily from our current collaboration agreements and any additional collaborations that we may enter into in the future.

To date, we have not received any royalties under any of the collaboration agreements.

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In addition, Sanofi may terminate the agreement for convenience or for a material safety event upon advance prior written notice, and we may terminate the agreement with respect to any collaboration candidate if, following Sanofi’s assumption of responsibility for the development, commercialization or manufacturing of collaboration candidates with respect to a particular target, Sanofi ceases to exploit any collaboration candidates directed to such target for a specified period.

In consideration for the exclusive licenses granted to Sanofi under the Sanofi Agreement, Sanofi made an upfront payment of $150.0 million.

In addition to the upfront payment, we are eligible to receive certain development milestone payments of up to $1.48 billion in the aggregate, of which more than $1.0 billion relates to the IRAK4 program, upon the achievement of certain developmental or regulatory events.

We will be eligible to receive certain commercial milestone payments up to $700.0 million in the aggregate, of which $400.0 million relates to the IRAK4 program, which are payable upon the achievement of certain net sales thresholds.

We will be eligible to receive tiered royalties for each program on net sales ranging from the high single digits to high teens, subject to low-single digits upward adjustments in certain circumstances.

As of December 31, 2023, we have achieved $55.0 million of milestones to date under the Sanofi Agreement related to certain IRAK4 clinical milestones.

In consideration for the exclusive licenses granted to Sanofi under the Sanofi Agreement, Sanofi paid to us an upfront payment of $150.0 million.

In addition to the upfront payment, under the agreement we were eligible to receive certain development milestone payments of up to $1.48 billion, and commercial milestone payments of up to $700.0 million, in the aggregate.

Of these milestones, we remain eligible to receive up to $1.0 billion in development milestones upon the achievement of certain developmental or regulatory events, and up to $400.0 million in commercial milestones which are payable upon the achievement of certain net sales thresholds, all of which are related to the IRAK4 program.

We will further be eligible to receive tiered royalties on net sales ranging from the high single digits to high teens, subject to low-single digits upward adjustments in certain circumstances.

As of December 31, 2024, we have achieved $55.0 million of milestones under the Sanofi Agreement related to certain IRAK4 clinical milestones.

On November 15, 2022, we entered into an Amended and Restated Collaboration and License Agreement with Sanofi, or the Amended Sanofi Agreement, which amended the Original Sanofi Agreement to revise certain research terms and responsibilities set forth under the Original Sanofi Agreement.

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Operating expenses

Our operating expenses since inception have consisted solely of research and development expenses and general and administrative expenses.

Our operating expenses since inception have consisted primarily of research and development expenses and general and administrative expenses.

Research and development expenses

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• employee-related expenses, including salaries, related benefits and stock-based compensation expense, for employees engaged in research and development functions;

• expenses incurred under agreements with organizations that support our platform program development;

• contract manufacturing organizations, or CMOs, that are primarily engaged to provide drug substance and product for our preclinical research and development programs, nonclinical studies and other scientific development services;

• the cost of acquiring and manufacturing nonclinical trial materials, including manufacturing registration and validation batches;

• costs incurred under agreements with third parties, including contract research organizations, or CROs, and other third parties that conduct clinical trials and preclinical activities on our behalf;

• the cost of acquiring and manufacturing clinical and nonclinical trial materials, including manufacturing registration and validation batches;

• facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance;

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Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

We expect that our research and development expenses will increase substantially in connection with our planned clinical development activities

in the near term and in the future.

We expect that our research and development expenses will increase substantially in connection with our planned clinical development activities in the near term and in the future.

At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the clinical development of any future product candidates.

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• the progress of the development efforts of parties with whom we may enter into collaboration arrangements;

• our ability to maintain our current development program and to establish new ones;

• our ability to maintain our current development programs and to establish new ones;

• our ability to establish new licensing or collaboration arrangements;

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We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support development of our product candidates and our continued research activities.

We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as legal, investor and public relations expenses associated with our continued growth as a public company.

Other Income (Expense)

Interest and other income and expense, net

Interest and other income and expense consists of interest earned on our invested cash balances and interest on our financing leases.

Interest and other income and expense consists of interest earned on our invested cash balances and interest expense related to our financing leases.

Results of Operations

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General and administrative

Impairment of long-lived assets

Total operating expenses

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We recognize revenue under each of our collaboration agreements based on our pattern of performance related to the respective identified performance obligation, which is the period over which we will perform research services under each of the respective agreements.

Collaboration revenues were $78.6 million for the year ended December 31, 2023, of which $8.4 million and $70.2 million were attributable to our collaboration agreements with Vertex and Sanofi, respectively.

Collaboration revenues were $47.1 million for the year ended December 31, 2024, the entirety of which was attributable to our collaboration agreement with Sanofi.

The increase in revenue is primarily attributable to the achievement of $55 million in milestones under the Sanofi agreement in the fourth quarter of 2023.

The decrease in revenue is primarily attributable to the achievement of $55 million in milestones under the Sanofi agreement in the fourth quarter of 2023 and the associated cumulative catch-up of revenue at that time.

Research and development expenses

The following table summarizes our research and development expenses for each period presented (program expenses are not disclosed prior to formal development candidate nomination):

The following table summarizes our research and development expenses for each period presented (program expenses are not separately included in the table below prior to the year they are disclosed):

Year ended December 31,

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External research and development costs:

Internal research and development costs

Research and development compensation and related personnel expense

Research and development overhead and administrative costs

Total research and development expenses

Research and development expenses were $240.2 million for the year ended December 31, 2024, compared to $189.1 million for the year ended December 31, 2023.

The increase of $24.8 million was primarily due to an increase of $19.5 million in personnel, stock-based compensation and occupancy costs due to increases in employee headcount in the research and development functions, a $10.2 million increase in other research and development expenses primarily associated with increased work on preclinical programs, as well as a $3.2 million increase in expenses on our STAT3 program due to the continued progression of the associated Phase-1 clinical trial.

These increases were primarily offset by a $8.0 million reduction in direct expenses related to our activities for our IRAK4, IRAKIMiD and MDM2 programs due to changes in the stage of development of these respective programs.

The increase of $51.2 million was primarily due to an increase of $58.4 million in costs related to our STAT6, TYK2 and MDM2 programs, as well as an increase of $21.1 million in personnel, stock-based compensation and occupancy costs due to increases in employee headcount in our research and development functions.

These increases were partially offset by a $10.9 million reduction in activities related to our IRAK4 and STAT3 programs and a $17.4 million reduction in our other research and development costs due to stage progression and breakout of STAT6 and TYK2 programs.

General and administrative expenses

General and administrative expenses were $63.5 million for the year ended December 31, 2024, compared to $55.0 million for the year ended December 31, 2023.

The $11.2 million increase was primarily due to a $8.8 million increase in personnel, stock-based compensation and occupancy costs due to increases in employee headcount in the general and administrative functions, and a $2.4 million increase in legal and professional services expenses to support our growth as a public company.

The $8.5 million increase was primarily due to a $7.0 million increase in personnel, stock-based compensation and occupancy costs due to increases in employee headcount in the general and administrative functions, and a $1.5 million increase in legal and professional services expenses to support our operations as a public company.

Impairment of long-lived assets

Impairment of long-lived assets was $4.9 million for the year ended December 31, 2024, compared to $0 for year ended December 31, 2023.

The increase of $4.9 million was as a result of the occupancy of the 2021 Lease facility in February of 2024 and the corresponding exit of the 2019 Lease facility, resulting in an impairment charge of $4.9 million in the year ended December 31, 2024.

Other Income, Net

Other income, net was $37.8 million for the year ended December 31, 2024, compared to $18.6 million for the year ended December 31, 2023.

The $12.2 million increase was primarily due to the prevailing interest rates in the respective periods.

The $19.2 million increase was primarily due to the increase in our investments balance as a result of 2024 financing activities as well as prevailing interest rates in the respective periods.

Results of Operations

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Collaboration revenues were $46.8 million for the year ended December 31, 2022, of which $10.8 million and $36.0 million were attributable to our collaboration agreements with Vertex and Sanofi, respectively.

The increase in revenue is primarily attributable to the achievement of $55 million in milestones under the Sanofi agreement in the fourth quarter of 2023.

Research and development expenses

The following table summarizes our research and development expenses for each period presented (program expenses are not disclosed prior to formal development candidate nomination):

The following table summarizes our research and development expenses for each period presented (program expenses are not separately included in the table below prior to the year they are disclosed):

Year ended December 31,

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External research and development costs:

Internal research and development costs

Research and development compensation and related personnel expense

Research and development overhead and administrative costs

Total research and development expenses

Research and development expenses were $189.1 million for the year ended December 31, 2023, compared to $164.2 million for the year ended December 31, 2022.

The increase of $27.2 million was primarily due to an increase of $22.4 million related to IND-enabling studies for our MDM2 program and increased investment in our other pipeline programs and platform, as well an additional $22.0 million increase in personnel, stock-based compensation and occupancy costs due to increases in employee headcount in the research and development functions.

These increases were primarily offset by a $17.2 million reduction in direct expenses related to our activities for our IRAK4, IRAKIMiD and STAT3 programs due to changes in the stage of development of these programs and the discontinuation of IRAKIMiD.

The increase of $24.8 million was primarily due to an increase of $19.5 million in personnel, stock-based compensation and occupancy costs due to increases in employee headcount in the research and development functions, a $9.9 million increase in other research and development expenses primarily associated with increased work on preclinical programs, as well as a $3.2 million increase in expenses on our STAT3 program due to the expenses associated with the Phase-1 clinical trial.

These increases were primarily offset by a $7.7 million reduction in direct expenses related to our activities for our IRAK4 and MDM2 programs due to changes in the stage of development of these respective programs.

General and administrative expenses

General and administrative expenses were $55.0 million for the year ended December 31, 2023, compared to $43.8 million for the year ended December 31, 2022.

The $7.5 million increase was primarily due to a $6.5 million increase in G&A employee compensation due to an increase in employee headcount, and a $1.0M increase in legal and professional services expenses to support our growth as a public company.

Other Income, Net

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We have not yet commercialized any products and we do not expect to generate revenue from sales of products for several years, if at all.

To date, we have received gross proceeds of $1.45 billion from sales of our convertible preferred stock, the sale of common stock including our August 2020 IPO and concurrent private placement, our July 2021 follow-on offering and concurrent private placement, our August 2022 PIPE offering, January 2024 follow-on offering, our sales agreement with Cowen and Company, LLC., and through our corporate collaborations.

To date, we have received gross proceeds of $1.71 billion from sales of our convertible preferred stock, the sale of common stock including our August 2020 initial public offering, or IPO, and concurrent private placement, our follow-on offerings and private placement offering, our prior sales agreement with Cowen, and through our corporate collaborations.

As of December 31, 2024, we had cash and cash equivalents and marketable securities of $850.9 million.

In October 2021, we entered into a sales agreement, or Sales Agreement, with Cowen and Company, LLC, or Cowen, pursuant to which we may offer and sell shares of our common stock having aggregate gross proceeds of up to $250.0 million from time to time in “at-the-market” offerings through Cowen, as our sales agent.

In October 2021, we entered into a sales agreement, or Cowen Sales Agreement, with Cowen, pursuant to which we were able to offer and sell shares of our common stock having aggregate gross proceeds of up to $250.0 million from time to time in “at-the-market” offerings through Cowen, as our sales agent.

We agreed to pay Cowen a commission of up to 3.0% of the gross proceeds of any shares sold by Cowen under the Sales Agreement.

There have been no shares of our common stock sold under the Sales Agreement as of December 31, 2023.

On February 7, 2024, we completed the sale of 1,519,453 shares of common stock under the Sales agreement resulting in gross proceeds of approximately $50 million.

As of December 31, 2024, we have sold 1,519,453 shares of common stock under the Sales Agreement resulting in gross proceeds of approximately $50 million.

On October 30, 2024, Cowen acknowledged and accepted our prior written notice to terminate the Cowen Sales Agreement, which termination was effective on October 30, 2024.

As a result of such termination, we will not offer or sell any additional shares of common stock under the Cowen Sales Agreement.

On October 31, 2024, we entered into an Open Market Sale Agreement SM , or Jefferies Sales Agreement, with Jefferies LLC, or Jefferies, pursuant to which we may offer and sell shares of our common stock having aggregate gross proceeds of up to $300.0 million from time to time in “at-the-market” offerings through Jefferies, as our sales agent.

We agreed to pay Jefferies a commission of up to 3.0% of the gross proceeds of any shares sold by Jefferies under the Jefferies Sales Agreement.

As of December 31, 2024, we have not sold any shares of common stock under the Jefferies Sales Agreement.

The following table summarizes our sources and uses of cash for each of the periods presented:

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During the year ended December 31, 2024, operating activities used $194.5 million of cash, primarily resulting from our net loss of $223.9 million during the period and a $41.1 million decrease in deferred revenue under our collaboration agreements.

These were partially offset by a $17.2 million net decrease in other operating assets and liabilities primarily driven by changes in accounts receivable, accounts payable, accrued expenses, operating lease liabilities as well as adjustments for non-cash items of $53.3 million (primarily consisting of stock-based compensation, lease impairment charge, depreciation & amortization and premiums & discounts on available-sale-securities).

During the year ended December 31, 2023, operating activities used $102.8 million of cash, primarily resulting from our net loss of $147.0 million during the period and a $8.6 million decrease in deferred revenue under our collaboration agreements.

These were offset by a $11.2 million net decrease in other operating assets and liabilities primarily driven by changes in accounts receivable, accounts payable, accrued expenses, operating lease liabilities as well as adjustments for non-cash items of $41.5 million (primarily consisting of stock-based compensation, depreciation & amortization and premiums & discounts on available-sale-securities).

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These were offset by adjustments for non-cash items of $39.3 million (primarily consisting of stock-based compensation, depreciation and amortization and premiums and discounts on available sale-securities) and a $0.2 million net increase in operating assets and liabilities primarily driven by changes in accounts payable and accrued expenses partially offset by changes in prepaid expenses and other operating assets and liabilities.

During the year ended December 31, 2021, operating activities used $128.9 million of cash, primarily resulting from our net loss of $100.2 million during the period and a $69.4 million decrease in deferred revenue under our Sanofi and Vertex collaboration agreements.

These were offset by adjustments for non-cash items of $33.2 million (primarily consisting of stock-based compensation, depreciation and amortization and premiums and discounts on available sale-securities) and a $7.5 million net increase in operating assets and liabilities primarily driven by changes in accounts payable and accrued expenses partially offset by changes in prepaid expenses and other operating assets and liabilities.

Cash Flow provided by (used in) Investing Activities

During the year ended December 31, 2024, cash used in investing activities was $404.1 million comprised of purchases of marketable securities of $901.2 million and purchases of property and equipment of $12.8 million partially offset by maturities of marketable securities of $509.9 million.

During the year ended December 31, 2023, cash provided by investing activities was $139.9 million comprised of maturities of marketable securities of $363.5 million partially offset by purchases of marketable securities of $189.2 million and purchases of property and equipment of $34.4 million.

During the year ended December 31, 2022, cash provided by investing activities was $20.5 million comprised of maturities of marketable securities of $469.3 million partially offset by purchases of marketable securities of $446.0 million and purchases of property and equipment of $2.8 million.

During the year ended December 31, 2021, cash used in investing activities was $99.8 million comprised of purchases of marketable securities of $456.4 million and purchases of property and equipment of $1.6 million offset by maturities of marketable securities of $358.2 million.

Cash Flow from Financing Activities

During the year ended December 31, 2024, net cash provided by financing activities was $608.9 million, consisting of $547.9 million in proceeds from issuance of common stock and accompanying pre-funded warrants, net of offering costs, $48.7 million in proceeds from the issuance of common stock through the Cowen Sales Agreement, net of issuance costs, $11.8 million in proceeds from the exercise of employee stock options, $2.0 million from proceeds from the employee stock purchase plan, partially offset by finance lease payments of $1.6 million.

During the year ended December 31, 2023, net cash provided by financing activities was $4.2 million, primarily consisting of $2.9 million in proceeds from the exercise of employee stock options, $1.4 million in proceeds from the issuance of shares under our employee stock purchase partially offset by finance lease payments of $0.1 million.

During the year ended December 31, 2022, net cash provided by financing activities was $153.0 million, primarily consisting of $149.8 million of net proceeds received in our August 2022 PIPE offering, $3.2 million in proceeds from the exercise of employee stock options, $1.1 million in proceeds from the issuance of shares under our employee stock purchase partially offset by finance lease payments of $1.1 million.

During the year ended December 31, 2021, net cash provided by financing activities was $250.3 million, primarily consisting of $240.8 million of net proceeds received in our July 2021 follow on offering, $2.3 million from our July 2021 concurrent private placement, $7.6 million in proceeds from the exercise of employee stock options, $0.8 million in proceeds from the issuance of shares under our employee stock purchase plan offset by the payment of $0.4 million in offering costs related to our August 2020 IPO and finance lease payments of $0.8 million.

Future funding requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the later-stage clinical development of our product candidates.

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

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

Because of the numerous risks and uncertainties associated with the development of our product candidates and programs and because the extent to which we may enter into collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.

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• our need to implement additional internal systems and infrastructure, including financial and reporting systems.

We believe the existing cash, cash equivalents and marketable securities of $436.3 million as of December 31, 2023, together with the net proceeds from the first quarter of 2024 offerings and the $15 million milestone payment received in

January of 2024 under our collaboration agreement with Sanofi, will be sufficient to fund our operations into the first half of 2027.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

We believe the existing cash, cash equivalents and marketable securities of $850.9 million as of December 31, 2024, will be sufficient to fund our operations into mid 2027.

We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

We expect that we will require additional funding to continue the clinical development of our clinical programs, commercialize our product candidates if we receive regulatory approval, and pursue in-licenses or acquisitions of other product candidates.

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In addition, our product candidates, if approved, may not achieve commercial success.

Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if ever.

Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if at all.

Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.

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The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements.

We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the

results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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

We evaluate our estimates and assumptions on an ongoing basis.

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As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses.

and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs.

This process involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs.

The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met;

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• CMOs in connection with drug substance and drug product formulation of preclinical studies.

We base the expense recorded related to external research and development on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CMOs and CROs that supply, conduct and manage nonclinical studies on our behalf.

The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.

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As a result of the inflationary environment, however, interest rates have increased, which has resulted in higher interest income rates than were previously realized.

government has imposed tariffs on certain foreign goods from a variety of countries and regions that it perceives as engaging in unfair trade practices.

Tariffs on certain foreign origin goods continue to put pressure on input costs.

If we become unable to recover a substantial portion of any increased tariff related costs from our customers, suppliers, collaborators or other third parties, the imposition of the new or increased international tariffs could materially and adversely affect our business, financial condition and results of operations.

We will continue to monitor international trade policy and will make adjustments where possible to mitigate the impact on our costs.

Financial Statement s and Supplementary Data.

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Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting F irm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Kymera Therapeutics, Inc.

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Collaboration Arrangements

Collaboration Arrangement

Description of

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For the year ended December 31, 2024, the Company has recognized $47.1 million in collaboration revenue.

Auditing the Company's accounting for revenues from collaboration arrangements was complex and required significant judgments primarily in evaluating estimates of the total expected costs under the input method for revenue recognized over time.

Auditing the progress toward completion of collaboration agreements was especially challenging because it involves subjective management assumptions used in estimating the remaining research and development costs necessary to satisfy the performance obligation.

Auditing the Company's accounting for revenues from collaboration arrangement was complex and required significant judgments primarily in evaluating estimates of the total expected costs under the input method for revenue recognized over time.

Auditing the progress toward completion of the collaboration arrangement was especially challenging because it involves subjective management assumptions used in estimating the remaining research and development costs necessary to satisfy the performance obligation.

The calculation of the total remaining estimated research and development cost includes forecasted costs associated with internal employee efforts, materials costs, and third-party contract costs.

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We evaluated and tested the design and operating effectiveness of internal controls over the Company’s process for developing the estimate, including controls to assess the completeness and accuracy of the data that supports management’s estimates.

To test the Company’s collaboration revenue, we performed audit procedures that included, among others, reading the collaboration agreements and testing the accuracy and completeness of the underlying data used in evaluating the estimates and significant judgments described above.

To test the Company’s collaboration revenue, we performed audit procedures that included, among others, reading the collaboration arrangement and testing the accuracy and completeness of the underlying data used in evaluating the estimates and significant judgments described above.

To assess the reasonableness of the Company's significant estimates and judgments, we compared cost estimates to costs previously incurred for similar activities, evaluated the remaining estimated level of effort required to complete the services, and inspected evidence of actual costs incurred.

We also discussed the basis for key assumptions with the Company's research and development personnel, who oversee the completion of the collaboration arrangements.

We also discussed the basis for key assumptions with the Company's research and development personnel, who oversee the completion of the collaboration arrangement.

/s/ Ernst & Young LLP

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Year ended December 31,

Statement of Operations Data:

Statement of Operations:

Collaboration revenue

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General and administrative

Impairment of long-lived assets

Total operating expenses

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Other comprehensive loss:

Unrealized gain (loss) on marketable securities

Unrealized (loss) gain on marketable securities

Total comprehensive loss

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Balance at December 31, 2021

Issuance of Common Stock and accompanying pre-funded

warrants at Private Placement, net of issuance cost of $ 174

Exercise of stock options

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Issuance of shares under ESPP

Issuance of vested restricted stock to consultants

Stock-based compensation expense

Unrealized loss on marketable securities

Issuance of shares in connection with public offering

net of underwriting discounts and costs of $ 16,207

Issuance of shares in concurrent private placement

Balance at December 31, 2022

Issuance of Common Stock and accompanying Pre-Funded

Warrants at Private Placement, net of issuance cost of $ 174

Exercise of Stock Options

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Stock-based compensation expense

Unrealized loss on marketable securities

Unrealized gain on marketable securities

Balance at December 31, 2023

Issuance of common stock and accompanying pre-funded warrants from January 2024 public offering, net of issuance costs of $ 14,877

Issuance of common stock through At-The Market Sales Agreement, net of issuance costs of $ 1,249

Issuance of common stock and accompanying pre-funded warrants from August 2024 public offering, net of issuance costs of $ 12,237

Exercise of Stock Options

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Stock-based compensation expense

Unrealized gain on marketable securities

Unrealized loss on marketable securities

Balance at December 31, 2024

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Stock-based compensation expense

Lease impairment charge

Depreciation and amortization

Premiums and discounts on available for sale marketable securities

Loss on disposal of property and equipment

Changes in operating assets and liabilities:

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Financing activities

Proceeds from issuance of common stock and accompanying

pre-funded warrants from private placement, net of issuance costs

Issuance of common stock and accompanying pre-funded warrants from January 2024 public offering, net of issuance costs of $ 14.9 million

Proceeds from issuance of common stock through At-The Market Sales Agreement, net of issuance costs of $ 1.2 million

Issuance of common stock and accompanying pre-funded warrants from August 2024 public offering, net of issuance costs of $ 12.2 million

Proceeds from 2022 issuance of common stock and accompanying pre-funded warrants from private placement, net of issuance costs of $ 0.2 million

Proceeds from stock option exercises

Proceeds from employee stock purchase plan

Payments of offering costs in connection with initial public offering

Payments on financing leases

Proceeds from follow-on public offering, net of underwriting discounts and

offering costs

Proceeds from concurrent private placement

Net cash provided by financing activities

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The Company has hi storical net losses and anticipates that it will continue to incur losses for the foreseeable future and had an accumulated deficit of $ 754.6 million as o f December 31, 2024.

The Company has funded these losses principally through issuance of preferred stock, convertible notes, common stock, including its initial public offering and concurrent private placement completed in August 2020, or the IPO, follow-on offering and concurrent private placement completed in July 2021, or Follow-on Offering, August 2022 Private Investment in Public Equity, or PIPE, offering, and from cash proceeds received in connection with the Company’s corporate collaboration agreements with Vertex Pharmaceuticals Incorporated, or Vertex, and Genzyme Corporation, or Sanofi, (see Note 5).

The Company has funded these losses principally through the issuance and sale of its convertible preferred stock to outside investors and collaborators in private equity financings, its initial public offering, or IPO, follow-on offerings, Private Investment in Public Equity, or PIPE offering and at-the market sales program as well as from cash proceeds received in connection with the Company’s corporate collaboration agreements (see Note 5).

The Company expects to continue to incur operating losses and negative operating cash flows until such time as it generates a level of revenue that is sufficient to support its cost structure.

As of December 31, 2023, the Company had cash, cash equivalents and marketable securit ies of $ 436.3 million.

As of December 31, 2024, the Company had cash, cash equivalents and marketable securities o f $ 850.9 million.

The Company believes these cash, cash equivalents and marketable securities will be sufficient to fund its operations and capital expenditure requirements through at least twelve months from the issuance of these consolidated financial statements.

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If the Company fails to obtain additional future capital, it may be unable to complete its planned preclinical studies and clinical trials.

2021 Follow-on Public Offering

On July 6, 2021, the Company completed a follow-on offering of its common stock and issued and sold 5,468,250 shares of common stock, including full exercise of the underwriters’ over-allotment option to purchase an additional 713,250 shares, at a public offering price of $ 47.00 per share.

The aggregate gross proceeds before deducting underwriting discounts and commissions, and other estimated offering expenses payable by the Company were approximately $ 257.0 million.

Concurrent with the follow-on offering, the Company issued and sold 49,928 shares of common stock at $ 47.00 per share in a private placement to Vertex and the aggregate proceeds were $ 2.3 million.

Private Investment in Public Equity “PIPE” offering

On August 18, 2022, the Company and certain accredited investors entered into a securities purchase agreement pursuant to which the Company agreed to sell and issue to such investors in a private placement (i) an aggregate of 2,769,228 shares of the Company’s common stock at a purchase price of $ 26.00 per share, and (ii) 3,000,000 Pre-Funded Warrants to purchase common stock, at a purchase price of $ 25.9999 per pre-funded warrant, (the “Pre-Funded Warrants”) .

The Pre-Funded Warrants will have an exercise price of $ 0.0001 per share of common stock.

On August 18, 2022, the Company and certain accredited investors entered into a securities purchase agreement pursuant to which the Company agreed to sell and issue to such investors in a private placement (i) an aggregate of 2,769,228 shares of the Company’s common stock at a purchase price of $ 26.00 per share, and (ii) 3,000,000 pre-funded warrants to purchase common stock, at a purchase price of $ 25.9999 per Pre-Funded Warrant.

The Pre-Funded Warrants have an exercise price of $ 0.0001 per share of common stock.

The offering closed on August 22, 2022, resulting in net proceeds of $ 149.8 million after offering expenses.

2024 Follow-on Public Offerings

On January 9, 2024, the Company completed a follow-on offering of its common stock and, in lieu of common stock to certain investors, pre-funded warrants to purchase shares of its common stock.

The Company issued and sold 3,884,158 shares of common stock, including full exercise of the underwriters’ over-allotment option to purchase an additional 1,633,663 shares, at a public offering price of $ 25.25 per share.

Additionally, in lieu of common stock to certain investors, the Company issued and sold pre-funded warrants to purchase 8,640,594 shares of its common stock at a public offering price of $ 25.2499 per pre-funded warrant, which represents the per share public offering price of each share of common stock less the $ 0.0001 per share exercise price for each pre-funded warrant.

The aggregate gross proceeds before deducting underwriting discounts and commissions, and other estimated offering expenses payable by the Company were approximately $ 316.2 million.

On August 21, 2024, the Company completed a follow-on offering of its common stock and, in lieu of common stock to certain investors, pre-funded warrants to purchase shares of its common stock.

The Company issued and sold 2,830,533 shares of common stock, including full exercise of the underwriters’ over-allotment option to purchase an additional 828,220 shares, at a public offering price of $ 40.75 per share.

Additionally, in lieu of common stock to certain investors, the Company issued and sold pre-funded warrants to purchase 3,519,159 shares of its common stock at a public offering price of $ 40.7499 per pre-funded warrant, which represents the per share public offering price of each share of common stock less the $ 0.0001 per share exercise price for each pre-funded warrant.

The aggregate gross proceeds before deducting underwriting discounts and commissions, and other estimated offering expenses payable by the Company were approximately $ 258.7 million.

Pre-funded warrants

In connection with certain offerings mentioned above the Company has issued pre-funded warrants to purchase common stock in lieu of common stock.

As the pre-funded warrants are indexed to the Company’s common stock (and otherwise meet the requirements to be classified in equity), the Company recorded the consideration received from the issuance of the pre-funded warrants as additional paid-in capital on the Company’s consolidated balance sheets.

The pre-funded warrants are exercisable at any time.

The holders of Pre-Funded Warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 4.99 % of the number of shares of the Common Stock outstanding immediately after giving effect to such

The holders of Pre-Funded Warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 4.99 % (or, at the election of the holder, 9.99 %) of the number of shares of the Common Stock outstanding immediately after giving effect to such exercise.

The holders of Pre-Funded Warrants may increase or decrease such percentages not in excess of 19.99 % by providing at least 61 days’ prior notice to the Company.

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In recording transactions and balances resulting from business operations, management makes estimates based on the best information available at the time the estimate is made.

Significant estimates relied upon in preparing these financial statements include revenue recognized under our collaboration agreement with Sanofi and Vertex, accrual for research and development expenses, and equity-based compensation expense.

Significant estimates relied upon in preparing these financial statements include revenue recognized under our collaboration agreements, accrual for research and development expenses, and equity-based compensation expense.

As better information becomes available or actual amounts are determinable, the recorded estimates are revised.

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Segment and Geographic Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

The Company’s chief operating decision maker is the Chief Executive Officer.

The Company views its operations and manages its business in one operating segment.

Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or CODM, in deciding how to allocate resources and in assessing performance.

The CODM is the Company's Chief Executive Officer.

The Company views its operations as and manages its business in one operating segment, which is the business of development of innovative, highly differentiated medicines that address significant health problems and that meaningfully improve patients’ lives.

Segment information is further described in Note 14 to the consolidated financial statements included in this Annual Report on Form 10-K.

Cash and Cash Equivalents

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The Company classifies marketable securities with a remaining maturity of greater than three months when purchased as available-for-sale.

The Company classifies investments available to fund current operations as current assets on its balance

The Company classifies investments available to fund current operations as current assets on its balance sheets.

Marketable securities with a remaining maturity date greater than one year are classified as non-current.

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Major additions and betterments are capitalized;

maintenance and repairs, which do not improve or extend the life of the respective assets, are charged to operations

maintenance and repairs, which do not improve or extend the life of the respective assets, are charged to operations as incurred.

Depreciation expense is recorded using the straight-line method over the estimated useful life of the related asset as follows:

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The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows.

During the year ended December 31, 2024, the Company recorded an impairment loss of $ 4.9 million related to its move into its new corporate headquarters and its subsequent effort to sublease the previous space.

The Company did no t record any impairment losses on long-lived assets during the years ended December 31, 2023 and 2022.

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Research and development costs consist primarily of costs incurred in connection with the discovery and development of targeted protein degradation therapeutics, including those in the Company’s most advanced clinical stage programs.

These research efforts and costs, which also support the development of, and enhancements to, the Company’s Pegasus TM targeted protein degradation platform, include external research costs, personnel costs, supplies, license fees and facility related expenses.

These research efforts and costs, include external research costs, personnel costs, supplies, license fees and facility related expenses.

The Company expenses research and development costs as incurred.

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(i) the customer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service is separately identifiable from other promises in the contract.

In assessing whether promised goods or services are distinct, the Company considers factors such as

the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on their own and whether the required expertise is readily available.

In assessing whether promised goods or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on their own and whether the required expertise is readily available.

For performance obligations which consist of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation in order to determine whether the combined performance obligation is satisfied over time or at a point in time.

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Amounts allocated to a material right are not recognized as revenue until, at the earliest, the option is exercised or expires.

Milestone Payments —At the inception of each arrangement that includes milestone payments based on certain events, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be

included in the transaction price using the most likely amount method.

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

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Stock-Based Compensation

The Company accounts for all stock-based awards granted to employees, directors, and nonemployees based on their fair value on the date of the grant and recognize compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award.

The Company accounts for all stock-based awards granted to employees, directors, and nonemployees based on their fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award.

Stock-based payments include stock options and grants of common stock, including common stock subject to vesting.

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The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes options-pricing model, which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and the Company’s expected dividend yield.

Prior to the IPO, as there was no active market for the Company’s common stock, the Company estimated the fair value of common stock on the date of grant based on the then current facts and circumstances.

Upon becoming a public company, the fair value of the underlying common shares equals the closing price of the Company’s stock on the date of grant.

The fair value of the underlying common shares equals the closing price of the Company’s stock on the date of grant.

As the Company’s IPO was in 2020, the Company lacks a sufficient period of company-specific historical and implied volatility information.

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Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.

Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not

expect to pay any cash dividends in the foreseeable future.

The fair value of each restricted common stock award is estimated on the date of grant based on the fair value of the Company’s common stock on that same date.

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The Company has generated a net loss in all periods presented, and therefore the basic and diluted net loss per share attributable to common stockholders are the same as the inclusion of the potentially dilutive securities would be anti-dilutive.

Recent Accounting Pronouncements

Recently Issued Accounting Standards

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires entities to disclose disaggregated information about their effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction.

The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively.

The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the disclosure requirements related to this new standard.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which is intended to improve disclosures by requiring additional information about specific expense categories in the notes to the financial statements on an annual and interim basis.

The standard will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The standard updates may be applied on either a prospective or retrospective basis.

We are currently evaluating the disclosure requirements related to this new standard.

Recently Adopted Accounting Standards

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses.

The standard became effective for us in the fourth quarter of 2024.

Please refer to Note 14, Segment Information, for additional disclosures related to this new standard.

Fair Value Measurements

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US treasuries

Commercial Paper

US government agencies

Marketable securities, current

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US government agencies

Commercial Paper

Corporate bonds

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Money market fund

US treasuries

Commercial Paper

Marketable securities, current

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December 31, 2024

treasury securities

US government agency securities

US treasury securities

US government agencies

Commercial Paper

Corporate securities

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Impairment is assessed at the individual security level.

of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency, any adverse legal or regulatory events affecting the issuer or issuer’s industry, and any significant deterioration in economic conditions.

Unrealized losses on available-for-sale securities presented in the previous table have not been recognized in the condensed consolidated statements of operations because the securities are high credit quality, investment grade securities that the Company does not intend to sell and will not be required to sell prior to their anticipated recovery, and the decline in fair value is attributable to factors other than credit losses.

Factors considered in determining whether a loss resulted from a credit loss or other factors include the Company’s intent and ability to hold the investment until the recovery of its amortized cost basis, the extent to which the fair value is less than the amortized cost basis, the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency, any adverse legal or regulatory events affecting the issuer or issuer’s industry, and any significant deterioration in economic conditions.

Unrealized losses on available-for-sale securities presented in the previous table have not been recognized in the consolidated statements of operations because the securities are high credit quality, investment grade securities that the Company does not intend to sell and will not be required to sell prior to their anticipated recovery, and the decline in fair value is attributable to factors other than credit losses.

Based on its evaluation, the Company determined it does no t have any credit losses related to its available-for-sale securities as of December 31, 2024 and 2023.

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In addition, Sanofi may terminate the Sanofi Agreement for convenience or for a material safety event upon advance prior written notice, and the Company may terminate the Sanofi Agreement with respect to any collaboration candidate if, following Sanofi’s assumption of responsibility for the development, commercialization or manufacturing of collaboration candidates with respect to a particular target, Sanofi ceases to exploit any collaboration candidates directed to such target for a specified period.

In consideration for the exclusive licenses granted to Sanofi under the Sanofi Agreement, Sanofi paid to the Company an upfront payment of $ 150.0 million.

The Company will also be reimbursed for certain research activities for a certain backup degrader under the IRAK4 program as well as contract manufacturing costs for the lead KT-474 program, unless certain criteria are not met for an initial IRAK4 degrader.

In addition to the upfront payment and the reimbursements, the Company is eligible to receive certain development milestone payments of up to $ 1.48 billion in the aggregate, of which more than $ 1.0 billion relates to the IRAK4 program, upon the achievement of certain developmental or regulatory events.

The Company will be eligible to receive certain commercial milestone payments up to $ 700.0 million in the aggregate, of which $ 400 million relates to the IRAK4 program, which are payable upon the achievement of certain net sales thresholds.

The Company will be eligible to receive tiered royalties for each program on net sales ranging from the high single digits to high teens, subject to low-single digits upward adjustments in certain circumstances.

In consideration for the exclusive licenses granted to Sanofi under the Sanofi Agreement, Sanofi paid to us an upfront payment of $ 150.0 million.

In addition to the upfront payment, under the agreement we were eligible to receive certain development milestone payments of up to $ 1.48 billion, and commercial milestone payments of up to $ 700.0 million, in the aggregate.

Of these milestones, we remain eligible to receive up to $ 1.0 billion in development milestones upon the achievement of certain developmental or regulatory events, and up to $ 400 million in commercial milestones which are payable upon the achievement of certain net sales thresholds, all of which are related to the IRAK4 program.

We will further be eligible to receive tiered royalties on net sales ranging from the high single digits to high teens, subject to low-single digits upward adjustments in certain circumstances.

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In the fourth quarter of 2023, the Company achieved two milestones of $ 40.0 million and $ 15.0 million relating to the dosing of the first patient in the Phase 2 clinical trial for the first and second indications, respectively.

As of December 31, 2023, the Company has received the $ 40.0 million milestone with the $ 15.0 million included within the accounts receivable on the consolidated balance sheet.

Further, in July 2024, the Company announced that Sanofi intends to expand the ongoing Phase 2 trials to more rapidly progress towards pivotal studies with the intention of accelerating overall timelines.

In September 2023, the Company and Sanofi mutually agreed to cease activities related to Collaboration Target 2.

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The performance obligation associated with Collaboration Target 1 has not been fully satisfied as of December 31, 2024.

The performance obligation associated with Collaboration Target 2 was fully satisfied as of December 31, 2023.

During the year ended December 31, 2023, the Company recognized $ 70.2 million in revenue under the Sanofi Agreement, of which $ 67.7 million was associated with Collaboration Target 1 and $ 2.5 million was associated with Collaboration Target 2.

The performance obligation associated with Collaboration Target 2 has been fully satisfied.

D uring the year ended December 31, 2024, the Company recognized $ 47.1 million in revenue under the Sanofi Agreement all of which was associated with Collaboration

Of the $ 47.1 million of revenue recognized in the year ended December 31, 2024, $ 41.5 million was recognized from amounts that were recorded in deferred revenue as of December 31, 2023.

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The aggregate amount of the transaction price allocated to the Company’s unsatisfied performance obligations and recorded in deferred revenue at December 31, 2022 was $ 54.9 million.

The aggregate amount of the transaction price allocated to the Company’s unsatisfied performance obligations and recorded in deferred revenue at December 31, 2023 is $ 54.7 million.

The decrease in deferred revenue between December 31, 2024 and December 31, 2023 is the result of on-going activity under the collaboration agreement as well as a $ 19.4 million cumulative catch-up to revenue related to the change in expected future costs to satisfy the Company’s performance obligation under Collaboration Target 1.

During the year ended December 31, 2022, the Company recognized $ 36.0 million in revenue under the Sanofi Agreement, of which $ 19.4 million was associated with Collaboration Target 1 and $ 16.6 million was associated with Collaboration Target 2.

During the years ended December 31, 2023 and 2022, the Company received $ 13.8 million and $ 6.7 million, respectively, in in cost reimbursement payments under the Sanofi Agreement.

During the years ended December 31, 2024 and 2023, the Company received $ 8.8 million and $ 13.8 million, respectively, in cost reimbursement payments under the Sanofi Agreement.

The Company recorded $ 0.9 million and $ 3.8 million of unbilled accounts receivable related to reimbursable research and development costs under the Sanofi Agreement as of December 31, 2024 and December 31, 2023, respectively.

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As part of its evaluation of constraining the milestones, the Company considered numerous factors, including the fact that the achievement of the research and development milestones are contingent upon the results of the underlying research and development activities and are thus outside of the control of the Company.

In the fourth quarter of 2023, the Company achieved two development milestones r elating to the dosing of the first patient in the KT-474 Phase 2 clinical trials for the first and second indications, respectively.

In the fourth quarter of 2023, the Company achieved two development milestones relating to the dosing of the first patient in the KT-474 Phase 2 clinical trials for the first and second indications, respectively.

In connection with these milestones the Company unconstrained $ 55.0 million of consideration resulting in a $ 40.3 million cumulative catch up recorded to revenue with the remaining $ 14.7 million recorded as deferred revenue as of December 31, 2023.

As of December 31, 2024, $ 51.4 million of the $ 55.0 million of consideration has been recorded as revenue, with the remaining $ 3.6 million recorded as deferred revenue.

Vertex Agreement

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and (3) the option to license each of the targets for development, manufacturing, and commercialization efforts.

The research and development services were determined not to be distinct from the research and development license and have been combined into a single performance obligation.

The research and development services

were determined not to be distinct from the research and development license and have been combined into a single performance obligation.

The Company determined that the option to license the targets in the future was not priced at a discount, and that the option exercise fee for each target is at or above the standalone selling price for research at this stage of development;

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Accordingly, the Company fully satisfied its performance obligation and recognized all remaining deferred revenue associated with the Vertex collaboration in May 2023.

D uring the years ended December 31, 2023, 2022 and 2021, the Company recognized $ 8.4 million, $ 10.8 million, $ 18.5 million, respectively, in revenue under the Vertex Agreement.

All $ 8.4 million revenue recognized during the year ended December 31, 2023 was recognized from amounts that were recorded in deferred revenue as of December 31, 2022 .

There were no unsatisfied performance obligations as of December 31, 2023.

The aggregate amount of the transaction price allocated to the Company’s unsatisfied performance obligation and recorded in deferred revenue at December 31, 2023 and 2022 is zero and $ 8.4 million, respectively.

The Company did no t recognize any revenue under the Vertex agreement during the year ended December 31, 2024.

During the years ended December 31, 2023 and 2022, the Company recognized $ 8.4 million, $ 10.8 million, respectively, in revenue under the Vertex Agreement.

The following table presents the changes in accounts receivable, contract assets and liabilities for the year ended December 31, 2024 (in thousands):

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Contract Liabilities:

Deferred Revenue – Vertex

Deferred Revenue – Sanofi

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Property and equipment consists of the following as of December 31, 2024 and 2023 (in thousands):

December 31, 2023

December 31, 2022

Lab and office equipment under finance right-of-use asset

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Included in property and equipment is lab and office equipment right-of-use assets under financing leases with a cost basis of $ 7.8 million and $ 6.7 million and accumulated amortization expense of $ 4.1 million and $ 4.1 million as of December 31, 2024 and 2023, respectively.

Amortization expense related to right-of-use assets wa s $ 1.5 million, $ 1.2 million and $ 0.9 million the years ended December 31, 2023, 2022 and 2021 and is included in depreciation expen se.

In October 2019, the Company entered into a noncancelable facility lease agreement (the “the 2019 Lease”) for 34,522 square feet of research and development and office space in Watertown, Massachusetts.

Amortization expense related to right-of-use assets was $ 1.4 million, $ 1.5 million and $ 1.2 million the years ended December 31, 2024, 2023 and 2022 and is included in depreciation expense.

In October 2019, the Company entered into a noncancelable facility lease agreement (the “2019 Lease”) for 34,522 square feet of research and development and office space in Watertown, Massachusetts.

The term of the 2019 Lease is 120 months and expires on March 31, 2030 .

The 2019 Lease has an option to be extended for an additional five year s.

The 2019 Lease has an option to be extended for an additional five years .

The lease is not reasonably certain to be extended and as such the additional term is not included in the measurement of the lease.

The 2019 Lease includes a rent escalation clause, and rent expense is being recorded on a straight-line basis.

The Company received a tenant incentive allowance of $ 5.5 million in 2020 as the tenant improvements were completed all of which has been collected from its landlord as of December 31, 2022.

In accordance with the lease agreement, the Company is required to maintain a security deposit and provided a letter of credit to the landlord, which is recorded in restricted cash as of December 31, 2024 and December 31, 2023.

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In connection with the signing of the 2021 Lease, the Company issued a letter of credit for $ 4.5 million which is classified as restricted cash as of December 31, 2024 and December 31, 2023.

The Company also paid first month’s rent of $ 0.8 million upon execution of the 2021 Lease in December 2021 which is classified as other current assets and other non-current assets as of December 31, 2023 and December 31, 2022 respectively.

The 2021 Lease required the landlord to build-out the base building prior to the construction of the Company’s premises.

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The Company concluded the improvements paid for by the landlord in connection with the tenant improvement allowance represent lessee assets and therefore recorded $ 20.1 million of leasehold improvements in property and equipment.

The Company recorded an additional $ 11.1 million of leasehold improvements in excess of the tenant improvement allowance, all of which were not placed in service as of December 31, 2023.

The Company’s financing lease obligations consist of certain property and equipment financed through capital leases.

The Company recorded an additional $ 17.9 million of leasehold improvements in excess of the tenant improvement allowance, all of which were placed in service as of December 31, 2024.

Upon occupancy of the 2021 Lease facility in February of 2024 , the Company exited the 2019 Lease facility and is actively looking to sublease the entire facility for the remaining noncancellable lease term through March 31, 2030.

These actions resulted in an impairment charge of $ 4.9 million in the year ended December 31, 2024.

The Company continues to evaluate the potential recovery of the ROU asset under sublease scenarios, and thus it is possible that additional impairments could be identified in future periods, and such amounts could be material.

The impairment charge reduces the carrying value of the associated ROU asset, leasehold improvements and certain furniture and fixture assets that remained in the facility to their estimated fair values.

The fair values were estimated using a discounted cash flows approach based on forecasted future cash flows expected to be derived from the property based on current sublease market rent, which is considered a level 3 input in the fair value hierarchy, and other key assumptions such as future sublease market conditions and the discount rate.

The Company’s finance lease obligations consist of certain property and equipment financed through finance leases.

The components of the lease costs for the years ended December 31, 2024 and 2023 (in thousands):

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Total lease costs

Variable lease cost includes payments for variable common area maintenance charges and real estate taxes.

Such amounts are not included in the measurement of lease liabilities.

Supplemental cash flow information relating to the Company’s leases for the years ended December 31, 2024 and 2023 were as follows (in thousands):

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Present value of lease liabilities

The undiscounted future lease payments in 2024 includes approximately $ 4.0 million of future reimbursements related to landlord funded tenant improvements in connection with the 2021 Lease.

Accrued Expenses

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The Company has initially reserved 4,457,370 shares of its common stock for the issuance of awards under the 2020 Plan, which includes the shares of common stock remaining available for issuance under its 2018 Plan as of the business day immediately prior to the effective date of the registration statement.

The 2020 Plan provides that the number of shares reserved and available for issuance will automatically increase on January 1, 2021, and each January 1 thereafter, by 4 % of the Company’s outstanding number of shares of common stock on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s compensation committee.

In June 2024, in connection with the Company’s 2024 annual shareholder meeting, shareholders approved an amendment to the 2020 stock option plan that redefined the definition of common stock outstanding for the purposes of calculating the annual increase to the shares available for issuance.

After the amendment, outstanding equity includes all outstanding common shares as well as outstanding pre-funded warrants.

The 2020 Plan provides that the number of shares reserved and available for issuance will automatically increase on January 1, 2021, and each January 1 thereafter, by 4 % of the Company’s outstanding number of shares of common stock, inclusive of outstanding pre-funded warrants, on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s compensation committee.

These limits are subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization.

As of December 31, 2023, there were an aggrega te of 3,797,548 shares remaining available for future grants.

As of December 31, 2024, there were an aggregate of 3,556,290 shar es remaining available for future grants.

2020 Employee Stock Purchase Plan

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Exercisable at December 31, 2024

The intrinsic value of stock options exercised during the years ended December 31, 2023, 2022 and 2021 wa s $ 9.1 million, $ 15.8 million and $ 67.6 million, respectively.

The intrinsic value of stock options exercised during the years ended December 31, 2024, 2023 and 2022 was $ 21.8 million, $ 9.1 million and $ 15.8 million, respectively.

The weighted-average fair value of options granted during the years ended December 31, 2024, 2023 and 2022 was $ 26.10 , $ 17.91 and $ 20.18 per share, respectively.

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The Company granted 400,917 , 404,844 , and 295,892 shares of restricted stock during the years ended December 31, 2023, December 31, 2022, and December 31 2021, respectively.

The Company granted no shares of restricted stock to consultants for the year ended December 31, 2023, granted no shares of restricted stock to consultants for the year ended December 31, 2022 and granted 12,500 shares of restricted stock to consultants for the year ended December 31, 2021.

All shares of restricted stock granted to consultants in 2023, 2022, and 2021 were fully vested as of December 31, 2023.

As of December 31, 2024, the total unrecognized stock-based compensation expense for unvested restricted stock was $ 17.1 million, which is expected to be recognized over 2.1 years.

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During the years ended December 31, 2024, 2023 and 2022 , the Company recorded stock-based compensation expense related to restricted stock of $ 4.8 million, $ 2.5 million and $ 1.1 million, respectively, within research and development.

During the years ended December 31, 2023, 2022 and 2021 , the Company recorded stock-based compensation expense related to restricted stock of $ 1.3 million, $ 0.3 million, and $ 0.6 million, respectively, within general and administrative.

During the years ended December 31, 2024,

2023 and 2022 , the Company recorded stock-based compensation expense related to restricted stock of $ 2.9 million, $ 1.3 million, and $ 0.3 million, respectively, within general and administrative.

Equity-Based Compensation Expense

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Related-Party Transactions

Other than the collaborations discussed in Note 5, the Company had no related party transactions for the periods presented in the accompanying consolidated financial statements, which have not otherwise been discussed in these notes to the consolidated financial statements.

John Maraganore is a member of the Company’s Board of Directors, and is affiliated with Jefferies LLC (“Jefferies”).

On October 31, 2024, prior to Dr.

Maraganore joining Jefferies, the Company entered into an Open Market Sale Agreement SM (the “Jefferies Sales Agreement”) with Jefferies, pursuant to which the Company may offer and sell shares of its common stock having aggregate gross proceeds of up to $ 300.0 million from time to time in “at-the-market” offerings through Jefferies, as its sales agent.

The Company agreed to pay Jefferies a commission of up to 3.0 % of the gross proceeds of any shares sold by Jefferies under the Jefferies Sales Agreement.

As of December 31, 2024, the Company has no t sold any shares of its common stock under the Jefferies Sales Agreement.

Other than the aforementioned agreement and the collaborations discussed in Note 5, the Company had no related party transactions for the periods presented in the accompanying consolidated financial statements, which have not otherwise been discussed in these notes to the consolidated financial statements.

The Company records income tax expense related to profits realized by its U.S.

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Tax effect at statutory rate

Stock compensation

Permanent differences

Federal research and development credits

Stock compensation

Disallowed Expenditures

Change in valuation allowance

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Deferred tax assets

Deferred Tax Liabilities:

Fixed and intangible assets

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Net deferred tax asset

The Company has had no income tax expense due to operating losses incurred since inception.

The Company has had immaterial income tax expense due to operating losses incurred since inception and no deferred tax provision in the current period.

ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more-likely-than-not that some portion or all the deferred tax assets will not be realized.

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Based on this, the Company has provided a valuation allowance for the full amount of the net deferred tax assets as the realization of the deferred tax assets is not determined to be more likely than not.

During 2023, the valuation allowance increased by $ 42 million primarily due to the increase in the Company's book loss reported in the period and the generation of additional research and development credits.

During 2024, the valuation allowance increased by approximately $ 74 million primarily due to the increase in the Company’s book loss reported in the period and the generation of additional research and development credits.

Beginning in 2022, Tax Cuts and Jobs Act (TCJA) amended Section 174 and now requires U.S.-based and non-U.S-based research and experimental (R&E) expenditures to be capitalized and amortized over a period of five or 15 years, respectively, for amounts paid in tax years starting after December 31, 2021.

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Net loss per share, basic and diluted

The Company’s potentially dilutive securities, which include restricted stock, and stock options, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

The Company’s potentially dilutive securities, which include restricted stock units, and stock options, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

The Company excluded the following from the computation of diluted net loss per share attributable to common stockholders at December 31, 2024, 2023 and 2022 because including them would have had an anti-dilutive effect:

Unvested Restricted Stock

Unvested Restricted Stock Units

Options to purchase Common Stock

Subsequent Events

On January 9, 2024, the Company completed a follow-on offering of its common stock and, in lieu of common stock to certain investors, pre-funded warrants to purchase shares of its common stock.

The aggregate gross proceeds before deducting underwriting discounts and commissions, and other estimated offering expenses payable by the Company were approximately $ 316.2 million.

On February 7, 2024, pursuant to its sales agreement with Cowen and Company, LLC, the Company completed the sale of 1,519,453 common shares to an institutional investor at an offering price of $ 32.90 resulting in net proceeds of approximately $ 48.7 million.

Segment Reporting

The Company operates and manages its business as one reportable segment and one operating segment, which is dedicated to reinventing the treatment of human disease through the development of innovative, highly differentiated medicines that address significant health problems and that meaningfully improve patients’ lives.

The Company’s chief operating decision maker, or CODM, is the chief executive officer.

The CODM assesses performance for the segment and decides how to allocate resources based on consolidated net loss that is also reported on the consolidated statements of operations.

The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.

All material long-lived assets are located in the United States.

Long-lived assets consist of property and equipment, net, and operating lease right-of-use assets.

The chief operating decision maker uses net loss to monitor budget versus actual results and to analyze cash flows in assessing performance of the segment and allocating resources.

Factors used in determining the reportable segment include the nature of the Company’s operating activities, the organizational and reporting structure and the type of information reviewed by the CODM to allocate resources and evaluate financial performance.

The accounting policies of the segment are the same as those described in Note 2 of the notes to the consolidated financial statements included in this Annual Report on Form 10-K.

The following table presents reportable segment profit and loss, including significant expense categories, attributable to the Company’s reportable segment for the periods presented:

Year ended December 31,

Research and development expenses

External research and development:

Other external research and development expense

Research and development compensation and related personnel expense (1)

Research and development overhead and administrative costs

General & administrative (2)

Interest and other expense (3)

Interest income

Segment net loss

(1) Research and development compensation and related personnel expense for the years ended December 31, 2024, 2023 and 2022 is inclusive of $ 27.8 million, $ 21.6 million, and $ 18.0 million of stock-based compensation expense, respectively.

(2) General and administrative expense for the years ended December 31, 2024, 2023 and 2022 is inclusive of $ 27.2 million, $ 21.6 million, and $ 17.5 million of stock-based compensation expense, respectively.

(3) Other expense for the year ended December 31, 2024 is inclusive of a $ 4.9 million impairment of long-lived assets.

Depreciation expense for the years ended December 31, 2024, 2023 and 2022 was $ 7.4 million, $ 3.6 million and $ 3.0 million, respectively.

Amortization expense related to right-of-use assets was $ 1.4 million, $ 1.5 million and $ 1.2 million the years ended December 31, 2024, 2023 and 2022 and is included in depreciation expense.

Changes in and Disagreements With Acco untants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis