What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-05 · 207 added, 323 removed, 356 unchanged (60% of the section changed)

3 unchanged sentences

(In thousands, except for share and per share amounts)

September 30,

Current assets:

1 unchanged sentence

Marketable securities (Note 4)

Contract assets

Accounts receivable—due from related parties

Contract assets—due from related parties

Prepaid expenses and other current assets

3 unchanged sentences

Right-of-use assets, operating leases

Other non-current assets

Restricted cash

Liabilities and Stockholders’ Equity

2 unchanged sentences

Accrued expenses (Note 8)

Deferred revenue, current

Operating lease liabilities, current portion

Finance liabilities, current portion

Deferred revenue

Operating lease liabilities

Finance lease liabilities

Other current liabilities

Total current liabilities

3 unchanged sentences

Finance lease liabilities, net of current portion

Other non-current liabilities

Total liabilities

Commitments and contingencies (Note 9)

Series Seed Convertible Preferred Stock, $0.0001 par value;

0 and 3,000,000 shares authorized, issued and

outstanding at September 30, 2020 and December 31, 2019, respectively

Series A Convertible Preferred Stock, $0.0001 par value;

0 and 14,886,305 shares authorized and issued at

September 30, 2020 and December 31, 2019, respectively and 0 and 14,720,126 shares outstanding at

September 30, 2020 and December 31, 2019, respectively

Series B Convertible Preferred Stock, $0.0001 par value;

0 shares and 16,009,848 authorized at

September 30, 2020 and December 31, 2019, respectively and 0 and 14,827,580 shares issued

and outstanding at September 30, 2020 and December 31, 2019, respectively

Series B-1 Convertible Preferred Stock, $0.0001 par value;

0 and 3,059,695 shares authorized, issued

and outstanding at September 30, 2020 and December 31, 2019, respectively

Stockholders’ equity (deficit):

Stockholders’ equity:

Preferred stock, $0.0001 par value;

10,000,000 and 0 shares authorized as of September 30, 2020 and

December 31, 2019, respectively;

0 shares issued or outstanding as of September 30, 2020 and

December 31, 2019

10,000,000 shares authorized as of March 31, 2021 and December 31, 2020;

0 shares issued or outstanding as of March 31, 2021 and December 31, 2020

Common stock, $0.0001 par value;

150,000,000 and 45,000,000 shares authorized at September 30, 2020 and

December 31, 2019, 44,581,051 and 2,208,982 shares issued at September 30, 2020 and December 31, 2019,

respectively, and 44,447,734 and 1,929,516 shares outstanding at September 30, 2020 and December 31,

2019, respectively

150,000,000 shares authorized at March 31, 2021 and December 31, 2020, 44,971,052 and 44,592,288 shares issued at March 31, 2021 and December 31, 2020, respectively;

44,879,376 and 44,482,186 shares outstanding at March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive (loss) income

Total stockholders’ equity (deficit)

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

Accumulated other comprehensive loss

Total stockholders’ equity

Total liabilities and stockholders’ equity

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

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three and Nine Months Ended September 30, 2020 and 2019

Three Months Ended March 31, 2021 and 2020

(In thousands, except for share and per share amounts)

Three Months Ended

September 30,

Nine Months Ended

September 30,

Collaboration Revenue—from related parties

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Other comprehensive loss:

Unrealized loss on marketable securities

Unrealized gain on marketable securities

Total comprehensive loss

4 unchanged sentences

Net loss per share attributable to common stockholders, basic

Weighted average common stocks outstanding, basic and diluted

Weighted average common stock outstanding, basic and diluted

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

KYMERA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY

For the three months ended September 30, 2020 and 2019

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

For the three months ended March 31, 2021

(In thousands, except for share amounts)

1 unchanged sentence

Stockholders’

Income (Loss)

Balance at June 30, 2019

Vesting of Series A Preferred

Stock in connection with

collaboration arrangement

Exercise of Stock Options

Vesting Restricted Stock

Stock-based compensation

Balance at September 30, 2019

Balance at June 30, 2020

Balance at December 31, 2020

Exercise of stock options

Vesting restricted stock

Stock-based compensation

Unrealized loss on marketable

Issuance of shares in connection

with initial public offering net

of underwriting discounts and

offering costs of $17,003

Conversion of convertible

preferred stock into

Issuance of shares in concurrent

private placement

Balance at September 30, 2020

Stock-based compensation expense

Unrealized gain on marketable securities

Balance at March 31, 2021

KYMERA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY (continued)

For the nine months ended September 30, 2020 and 2019

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (continued)

For the three months ended March 31, 2020

(In thousands, except for share amounts)

Preferred Stock

Comprehensive

Stockholders'

Income (Loss)

Balance at December 31, 2019

2 unchanged sentences

collaboration arrangement

Issuance of Series B-1 Preferred

Stock, net of issuance costs

Exercise of Stock Options

Vesting Restricted Stock

Stock-based compensation

Balance at September 30, 2019

Balance at December 31, 2019

Vesting of Series A Preferred

Stock in connection with

collaboration arrangement

Issuance of Series B Preferred

Stock, net of issuance costs

Issuance of Series C Preferred

Stock, net of issuance costs

Exchange of Series A

Convertible Preferred Stock for

Series C Preferred Convertible

Preferred Stock

Exercise of Stock Options

Issuance of Series B Preferred Stock, net of issuance costs of $0

Issuance of Series C Preferred Stock,

net of issuance costs of $320

Exchange of Series A Convertible Preferred Stock for Series C Preferred Convertible Preferred Stock

Vesting restricted stock

Stock-based compensation

Unrealized loss on marketable

Issuance of shares in connection

with initial public offering net

of underwriting discounts and

offering costs of $17,003

Conversion of convertible

preferred stock into

Issuance of shares in concurrent

private placement

Balance at September 30, 2020

Unrealized gain on marketable

Balance at March 31, 2020

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2021 and 2020

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities

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

Stock-based compensation

Stock-based compensation expense

Depreciation and amortization

Premiums and discounts on available-for-sale marketable securities

Non-cash research and development expense

1 unchanged sentence

Prepaid expenses and other assets

Other receivables—due from related parties

Receivables—due from related parties

Contract asset—due from related parties

4 unchanged sentences

Operating lease liabilities

Other non-current assets and liabilities

Net cash provided by operating activities

Other liabilities

Net cash used in operating activities

Investing activities

Purchase of property and equipment, net

Purchase of marketable securities

Maturities of marketable securities

Net cash used in investing activities

Purchases of investments

Maturities of investments

Net cash provided by (used in) investing activities

Financing activities

2 unchanged sentences

Proceeds from stock option exercises

Payments on financing leases

Proceeds from initial public offering, net of underwriting discounts and offering costs

Proceeds from concurrent private placement

Payments of offering costs in connection with initial public offering

Payments on finance leases

Net cash provided by financing activities

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Cash paid for interest

Supplemental disclosure of noncash investing activities

Supplemental disclosure of noncash investing and financing activities

Offering costs included in accrued liabilities

Property and equipment purchases included in accounts payable and accrued expenses

Supplemental disclosure of noncash operating activities

Right-of-use assets obtained in exchange for operating lease liabilities

Tenant improvement receivable included in other assets

Reduction of right-of-use asset and liability due to lease modification

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of each of the periods shown above:

September 30,

Cash and cash equivalents

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Principal among these risks are the uncertainties of the product discovery and development process, dependence on key individuals, development of the same or similar technological innovations by the Company’s competitors, protection of proprietary technology, compliance with government regulations and approval requirements, the Company’s ability to access capital and uncertainty of market acceptance of products.

The Company has historical net losses and anticipates that it will continue to incur losses for the foreseeable future and had an accumulated deficit of $116.1 million as of September 30, 2020.

The Company has funded these losses principally through issuance common stock, including its initial public offering (“IPO), which was completed in August 2020, preferred stock, convertible notes and from cash proceeds received in connection with the Company’s collaboration agreements with Vertex Pharmaceuticals Incorporated (“Vertex”) and Genzyme Corporation (“Sanofi”) (see Note 5).

The Company has historical net losses and anticipates that it will continue to incur losses for the foreseeable future and had an accumulated deficit of $141.8 million as of March 31, 2021.

The Company has funded these losses principally through issuance of common stock, including its initial public offering (“IPO”), which was completed in August 2020, preferred stock, convertible notes and from cash proceeds received in connection with the Company’s collaboration agreements with Vertex Pharmaceuticals Incorporated (“Vertex”) and Genzyme Corporation (“Sanofi”) (see Note 5).

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

As of September 30, 2020, the Company had cash, cash equivalents and marketable securities of $481.3 million.

As of March 31, 2021, the Company had cash, cash equivalents and marketable securities of $435.2 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 condensed consolidated financial statements.

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On August 20, 2020, the Company’s registration statement on Form S-1 relating to its initial public offering of its common stock was declared effective by the Securities and Exchange Commission (“SEC”).

In the IPO, which closed on August 25, 2020, the Company issued and sold 9,987,520 shares of common stock, including full exercise of the underwriters’ over-allotment option to purchase an additional 1,302,720 shares, at a public offering price of $20.00 per share and the aggregate gross proceeds before deducting before deducting underwriting discounts and commissions, and other estimated offering expenses payable by the Company, were approximately $199.8 million.

Concurrent with the IPO, the Company issued and sold 676,354 shares of common stock at $20.00 per share in a private placement to Vertex.

In the IPO, which closed on August 25, 2020, the Company issued and sold 9,987,520 shares of common stock, including full exercise of the underwriters’ over-allotment option to purchase an additional 1,302,720 shares, at a public offering price of $20.00 per share and the aggregate gross proceeds before deducting underwriting discounts and commissions, and other estimated offering expenses payable by the Company, were approximately $199.8 million.

Concurrent with the IPO, the Company issued and sold 676,354 shares of common stock at $20.00 per share in a private placement to Vertex and the aggregate proceeds were $13.5 million.

Summary of Significant Accounting Policies

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All intercompany transactions and balances have been eliminated in consolidation.

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Since the date of such audited consolidated financial statements, there have been no changes to the Company’s significant accounting policies except as noted below.

Basis of Presentation

The unaudited interim condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) as found in the Accounting Standards Codification (“ASC”), Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations.

Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2019 included in the Company’s final prospectus for its IPO filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Securities Act”), with the SEC on August 21, 2020.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2019, and, in the opinion of management, reflect all adjustments necessary, all of which were normal and recurring, for the fair statement of the Company’s financial position as of September 30, 2020, and the results of operations for the three and nine months ended September 30, 2020 and 2019 and cash flows for the nine months ended September 30, 2020 and 2019.

The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results for the year ended December 31, 2020 or for any future period.

Cash and Cash Equivalents

Cash equivalents are highly liquid investments that are readily convertible into cash with original maturities of three months or less when purchased.

These assets include investments in money market funds that invest in U.S.

Treasury obligations and corporate bonds.

The Company maintains its bank accounts at major financial institutions.

Restricted Cash

Restricted cash represents the cash held to secure letters of credit associated with the Company’s facility leases.

Common and Preferred Stock Valuation

The Company utilized significant estimates and assumptions in determining the fair value of its equity and equity-based awards.

The Company utilized various valuation methodologies in accordance with the framework of the 2013 American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of its equity awards.

The Company used a hybrid of the probability-weighted expected returns method (“PWERM”), and the option pricing method (“OPM”) when allocating enterprise value to classes of securities.

Under the probability-weighted expected return method, or PWERM, the value of an enterprise, and its underlying common securities, are estimated based on an analysis of future values for the enterprise, assuming various outcomes.

The value of the common securities is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes and the rights of each class of equity.

The future values of the common securities under the various outcomes are discounted back to the valuation date at an appropriate risk-adjusted discount rate and then probability weighted to determine the value for the common securities.

The option pricing method, or OPM, treats common securities and preferred securities as call options on the enterprise’s equity value, with exercise prices based on the liquidation preferences of the preferred securities.

Under this method, the common securities

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

have value only if the funds available for distribution to shareholders exceed the value of the liquidation preferences at the time of a liquidity event.

The Black-Scholes model is used to price the call option, and the model includes assumptions for the time to liquidity and the volatility of equity value.

The hybrid method is a hybrid between the PWERM and OPM, estimating the probability-weighted value across multiple scenarios but using the OPM to estimate the allocation of value within one or more of those scenarios.

Valuations performed in the year ended December 31, 2019 and the nine months ended September 30, 2020, used a hybrid of the PWERM and OPM when allocating the Company’s enterprise value to classes of securities.

When using the hybrid method, the Company assumed two scenarios:

an IPO scenario and a trade-sale scenario.

The IPO scenario estimated an equity value based on the guideline public company method under a market approach.

The guideline public companies considered for this scenario consist of biopharmaceutical companies with recently completed initial public offerings.

The Company converted its estimated future value in an IPO to present value using a risk-adjusted discount rate.

The equity value for the trade-sale scenario was estimated using the price of a recently issued preferred security, as well as a milestone-based tranche closing.

The Company utilized an option pricing model to quantify or attribute value to these economic rights of convertible preferred stock vs.

the common stock (e.g.

liquidation preferences, dividend provisions, participation rights after liquidation preferences.)

In the OPM, volatility is estimated based on the trading histories of selected guideline public companies.

The relative probability of each scenario was determined based on an assessment of then-current market conditions and the Company’s expectations as to timing and prospects of an IPO.

Each valuation methodology includes estimates and assumptions that require significant judgment.

These estimates and assumptions include a number of objective and subjective factors, including the prices at which shares were traded between holders of the Company, external market conditions, the prices at which the Company sold convertible preferred shares, the superior rights and preferences of securities senior to common shares at the time, and the likelihood of achieving a voluntary or involuntary liquidity event.

Significant changes to the key assumptions used in the valuations could result in different fair values of common shares at each valuation date, as applicable.

Comprehensive Loss

Comprehensive loss includes net loss as well as unrealized gains on marketable securities and other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders.

Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 11, 2021.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2020, and, in the opinion of management, reflect all adjustments necessary, all of which were normal and recurring, for the fair statement of the Company’s financial position as of March 31, 2021, and the results of operations and cash flows for the three months ended March 31, 2021 and 2020.

The results for the three months ended March 31, 2021 are not necessarily indicative of the results for the year ended December 31, 2021 or for any future period.

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, 2021 are consistent with those discussed in Note 2 to the consolidated financial statements in the 2020 Annual Report on Form 10-K.

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments .

This update provides clarifications for three topics related to financial instruments accounting, some of which apply to the Company.

The Company adopted as of January 1, 2020 and it did not have a significant impact on its financial position or results of operation

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

The new standard will align the requirements for capitalizing implementation costs for hosting arrangements (services) with costs for internal-use software (assets).

As a result, certain implementation costs incurred in hosting arrangements will be deferred and amortized.

The Company adopted as of January 1, 2020 and it did not have a significant impact on its financial position or results of operation.

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

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.

The new standard will be effective beginning January 1, 2020.

The Company adopted as of January 1, 2020 and it did not have a significant impact on its financial position or results of operation.

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

Simplifying the Accounting for Income Taxes , which is intended to simplify the accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

The new standard was effective beginning January 1, 2021.

The Company adopted this standard as of January 1, 2021 and it did not have a material impact on its financial position or results of operation .

Recently Issued Accounting Standards Not Yet Adopted

4 unchanged sentences

As an emerging growth company, the Company expects to delay adoption until January 1, 2023 and is evaluating the impact that the adoption of ASU 2016-13 will have on its condensed consolidated financial statements.

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Fair Value Measurements

The following table presents information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of September 30, 2020 and December 31, 2019 (in thousands):

The following table presents information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of March 31, 2021 and December 31, 2020 (in thousands):

Fair Value Measurements at

September 30, 2020:

March 31, 2021:

Cash equivalents

Money market fund

Corporate bonds

Marketable securities, current

7 unchanged sentences

December 31, 2020:

Marketable securities

Cash equivalents

Money market fund

Corporate bonds

Marketable securities, current

US treasuries

Corporate bonds

Marketable securities, non-current

US treasuries

Corporate bonds

Restricted cash

During the nine months ended September 30, 2020 and the year ended December 31, 2019, there were no transfers between Level 1, Level 2 and Level 3.

During the three months ended March 31, 2021 and the year ended December 31, 2020, there were no transfers between Level 1, Level 2 and Level 3.

Marketable Securities

The following table summarizes the available-for-sale debt securities held at September 30, 2020 and December 31, 2019 and (in thousands):

September 30, 2020

The following table summarizes the available-for-sale debt securities held at March 31, 2021 and December 31, 2020 and (in thousands):

March 31, 2021

treasury securities

4 unchanged sentences

treasury securities

As of September 30, 2020, the Company held 60 securities that had been in an unrealized loss position for less than 12 months with an aggregate fair value of $377.4 million.

As of December 31, 2019, the Company did not hold any securities that were in an unrealized loss position.

As of September 30, 2020, the Company had 42 securities with a fair value of $253.0 million with a contractual maturity of less than 12 months and 26 securities with a fair value of $187.5 million with a contractual maturity of greater than 12 months.

As of December 31, 2019, all of the Company’s marketable securities had remaining contractual maturity dates of less than one year from the condensed consolidated balance sheet date.

There were no sales of marketable securities during the nine months ended September 30, 2020 and year ending December 31, 2019.

The Company evaluates securities for other-than-temporary impairments based on quantitative and qualitative factors, and considered the decline in market value for the 60 securities in an unrealized loss position as of September 30, 2020, to be primarily attributable to the then current econom ic and market conditions.

Corporate securities

As of March 31, 2021, the Company held 32 securities that had been in an unrealized loss position for less than 12 months with an aggregate fair value of $137.7 million.

As of December 31, 2020, the Company held 65 securities that had been in an unrealized loss position for less than 12 months with an aggregate fair value of $392.2 million.

As of March 31, 2021, the Company had 47 securities with a fair value of $280.4 million with a contractual maturity of less than 12 months and 15 securities with a fair value of $101.6 million with a contractual maturity of greater than 12 months.

As of December 31, 2020, the Company had 48 securities with a fair value of $295.6 million with a contractual maturity of less than 12 months and 25 securities with a fair value of $162.5 million with a contractual maturity of greater than 12 months.

There were no sales of marketable securities during the three months ending March 31, 2021 and 2020.

The Company evaluates securities for other-than-temporary impairments based on quantitative and qualitative factors, and considered the decline in market value for the 32 securities in an unrealized loss position as of March 31, 2021 , to be primarily attributable to the then current economic and market conditions.

The Company neither intends to sell these investments nor concludes that it is more-likely-than-not that the Company will have to sell them before recovery of their carrying values.

The Company also believe that it will be able to collect both principal and interest amounts due to it at maturity.

The Company also believes that it will be able to collect both principal and interest amounts due to it at maturity.

Collaborations

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In consideration for t he exclusive licenses granted to Sanofi under the Sanofi Agreement, Sanofi paid to the Company an upfront payment of $150 .0 million.

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, unless certain criteria are not met for an initial IRAK4 degrader.

In addition to the upfront payment and the reimbursements , the Com pany 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 b e 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 r eceive 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 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 $ 40 0.

0 million relate 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.

Accounting Treatment

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The Company determined the total transaction price to be $ 150.0 million, which consists solely of the upfront payment.

All milestones payments and option payments are constrained as the achievement of such milestones are contingent upon the success of the underlying research and development activities and are generally outside the control of the Company.

All milestone payments and option payments are constrained as the achievement of such milestones are contingent upon the success of the underlying research and development activities and are generally outside the control of the Company.

The reimbursement of costs for the IRAK4 backup degrader is also treated as constrained variable consideration as the criteria for reimbursement may not always be met, under which circumstances the Company would be responsible for the costs related to the backup degrader.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company recogniz es revenue associated with each performance obligation as the research and development services are provided using an input method, using an input method, according to costs incurred as related to the research and development activities for each individual program and the costs expected to be incurred in the future to satisfy that individual performance obligation.

The transfer of control occurs over this time period and, in management’s judgment, is the best measure of progress towards satisfying each perf ormance obligation.

The amounts received that have not yet been recognized as revenue are deferred as a contract liability on the Company’s consolidated balance sheet and will be recognized over the remaining research and development period until the perfo rmance obligation is satisfied.

The Company recognizes revenue associated with each performance obligation as the research and development services are provided using an input method, according to costs incurred as related to the research and development activities for each individual program and the costs expected to be incurred in the future to satisfy that individual performance obligation.

The transfer of control occurs over this time period and, in management’s judgment, is the best measure of progress towards satisfying each performance obligation.

Reimbursement consideration added to the transaction price will be recognized as revenue on the same pattern as Collaboration Target 1, with a cumulative catch-up upon becoming unconstrained.

The performance obligation has not been fully satisfied as of September 30, 2020.

In the three and nine months ended September 30, 2020, the Company recognized $10.

9 million in revenue under the Sanofi Agreement, of which $10.

2 million was associated with Collaboration Target 1 and $0.

7 million was associated with Collaboration Target 2.

The aggregate amount of the transaction price allocated to the Company’s unsatisfied performance obligations and recorded in deferred revenue at September 30, 2020 is $139.

The Company will rec ognize the deferred revenue related to the research and development services based on a cost input method, as described, over the remaining research term , which is a maximum of three years as of September 30, 2020.

The performance obligation has not been fully satisfied as of March 31, 2021 .

In the thre e months ended March 31, 2021 , the Company recognized $ 1 1.6 million in revenue under the Sanofi Agreement, of which $ 9.5 million was associated with Collaboration Target 1 and $ 2.1 million was associated with Collaboration Target 2.

The aggregate amount of the transaction price allocated to the Company’s unsatisfied performance obligations and recorded in deferred revenue at March 31, 2021 and December 3 1 , 2020 is $ 1 22.0 million and $ 132.6 million, respectively .

During the three months ended March 31, 2021, the Company received $ 0.6 million in cost reimbursement payments .

N o milestone or royalty payments have been received under the Sanofi Agreement.

As of March 31, 2021, the Company recorded unbilled accounts receivable of $ 0.9 million related to reimbursable research and development costs under the Sanofi Agreement for activities performed during the first quarter of 2021.

As of March 31, 2021, the Company recorded $ 0.9 million in accounts receivable for amounts billed under the Sanofi Agreement .

The Company will recognize the deferred revenue related to the research and development services based on a cost input method, as described, over the remaining research term , which is a maximum of three years as of March 31, 2021 .

Any consideration related to performance based milestones will be recognized when the risk of probable reversal is resolved, at which point the Company shall adjust the transaction price determined for the agreement accordingly and recognize revenue on a cumulative-catch up basis, reallocating the revised arrangement consideration to the performance obligations.

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The initial research term of the collaboration is four (4) years, extendable for an additional one (1) year period upon mutual agreement by the parties and payment by Vertex of certain per-target fees.

Vertex provided the Company with a non-refundable upfront payment of $50.0 million and purchased 3,059,695 shares of the Company’s Series B-1 Convertible Preferred Stock (“Series B-1”) at $6.54 a share, pursuant to a separate, but simultaneously executed Share Purchase Agreement.

Vertex provided the Company with a non-refundable upfront payment of $50.0 million and purchased 3,059,695 shares of the Company’s Series B-1 Convertible Preferred Stock (the “Series B-1 Preferred Stock”) at $6.54 a share, pursuant to a separate, but simultaneously executed Share Purchase Agreement.

The shares were purchased at a premium of $5.9 million, which was included in the transaction price and will be recognized as revenue over the period of performance.

6 unchanged sentences

Vertex also has the ability to terminate for convenience with prior written notice to the Company, and either party may terminate for an uncured material breach.

Accounting Treatment

The Company analyzed the joint research activities required under the Vertex Agreement and concluded that the arrangement was indicative of a vendor-customer relationship and would be accounted for under ASC 606.

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Accounting Treatment

The Company identified the following material promises under the arrangement:

(1) the non-exclusive, royalty-free research license;

and (2) the research and development services to be performed on up to six targets;

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

(2) the research and development services to be performed on up to six targets;

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 Com pany 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;

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;

as such, the options and the underlying licenses are excluded from the performance obligation and the option exercise fees are excluded from the transaction price until the underlying option is exercised.

As part of its evaluation of constraining the research and development 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.

At the commencement of the arrangement, two units of accounting were identified, the issuance of 3,059,695 shares of the Company’s Series B-1 Convertible Preferred Stock and the research activities the Company will perform over the Research Term.

The Company determined the total transaction price to be $55.9 million, which consists of $5.9 million attributed to the premium from the Series B-1 shares sold to Vertex and the $50.0 million upfront payment.

To determine the fair value of the Series B-1 issued to Vertex, the Company performed a valuation of the shares of the Company’s common and preferred stock, which took into consideration recent financings, and the Company’s recent development and future exit strategies, as well as a discount for lack of marketability.

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

At the commencement of the arrangement, two units of accounting were identified:

the issuance of 3,059,695 shares of the Series B-1 Preferred Stock and the research activities the Company will perform over the Research Term.

The Company determined the total transaction price to be $55.9 million, which consists of $5.9 million attributed to the premium from the shares of Series B-1 Preferred Stock sold to Vertex and the $50.0 million upfront payment.

To determine the fair value of the Series B-1 Preferred Stock issued to Vertex, the Company performed a valuation of the shares of the Company’s common and preferred stock, which took into consideration recent financings, and the Company’s recent development and future exit strategies, as well as a discount for lack of marketability.

The Company recognizes revenue associated with the performance obligation as the research and development services are provided using an input method, according to the costs incurred as related to the research and development activities on each program and the costs expected to be incurred in the future to satisfy the performance obligation.

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The performance obligation has not been fully satisfied as of September 30, 2020.

During the three and nine months ended September 30, 2020 and 2019, the Company recognized $3.6 million and $1.0 million, and $10.3 million and $1.1 million respectively, in revenue under the Vertex Agreement.

All $10.3 million revenue recognized in the nine months ended September 30, 2020 was recognized from amounts that were recorded in deferred revenue as of December 31, 2019.

The aggregate amount of the transaction price allocated to the Company’s unsatisfied performance obligation and recorded in deferred revenue at September 30, 2020 and December 31, 2019 and September 30, 2020 is $42.6 million and $53.0 million, respectively.

The Company will recognize the deferred revenue related to the research and development services based on a cost input method, over the remaining research term, which is a maximum of 2.6 years as of September 30, 2020.

Any consideration related to sales milestone payments (including royalties) will be recognized when the related milestone events or sales occur and therefore are recognized at the later of when the related sales occur or the relevant performance obligation is satisfied.

The performance obligation has not been fully satisfied as of March 31, 2021.

During the three months ended March 31, 2021 and 2020, the Company recognized $7.1 million and $3.4 million in revenue under the Vertex Agreement.

All $7.1 million revenue recognized in the three months ended March 31, 2021 was recognized from amounts that were recorded in deferred revenue as of December 31, 2020.

The aggregate amount of the transaction price allocated to the Company’s unsatisfied performance obligation and recorded in deferred revenue at March 31, 2021 and December 31, 2020 is $30.6 million and $37.7 million, respectively.

Any consideration related to sales milestone payments (including royalties) will be recognized when the related milestone events or sales occur and therefore is recognized at the later of when the related sales occur or the relevant performance obligation is satisfied.

Compound Collaboration

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On November 1, 2018, these Series A Preferred Units were exchanged on a one-for-one basis for shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”).

These shares vest in equal installments over three years.

The Company is recording expense over the remaining vesting period based on the fair value of the shares under the Collaboration.

The Company recorded $0.3 million to research and development expense related to the vesting of 166,183 shares of Series A Preferred Stock for each of the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, all shares under the Collaboration were fully vested and all expense had been recognized.

These shares vested in equal installments over three years and the Company recorded expense over the vesting period based on the fair value of the shares under the Collaboration.

The Company recorded $0.1 million to research and development expense related to the vesting of 55,394 shares of Series A Preferred Stock for the three months ended March 31, 2020.

As of December 31, 2020, all shares under the Collaboration were fully vested and all expenses had been recognized.

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The royalty payments are contingent and as such are not being recorded until incurr ed.

The royalty payments are contingent and as such are not being recorded until incurred.

The Company determined that the license is representative of an in-process research and development asset, with no future alternative use.

1 unchanged sentence

The Collaboration can be terminated by either party for convenience with 60-days written notice and may also be terminated in the event of a material breach.

The following table presents the changes in accounts receivable, contract assets and liabilities for the nine months ended September 30, 2020 (in thousands)

The following table presents the changes in accounts receivable, contract assets and liabilities for the three months ended March 31, 2021 (in thousands):

Balance at December 31, 2020

Balance at March 31, 2021

Accounts receivable and contract assets:

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Property and Equipment

Property and equipment consist of the following as of September 30, 2020 and December 31, 2019 (in thousands):

September 30,

Lab and office equipment under and financing

Property and equipment consists of the following as of March 31, 2021 and December 31, 2020 (in thousands):

Lab and office equipment under finance

right-of-use asset

7 unchanged sentences

Property and equipment, net

Depreciation expense for the three-months ended September 30, 2020 and 2019 was $0.5 million and $0.2 million, respectively.

Depreciation expense for the nine months ended September 30, 2020 and 2019 was $1.3 million and $0.5 million, respectively.

Included in property and equipment is lab and office equipment right-of-use assets under financing leases with a cost basis as of September 30, 2020 and December 31, 2019 of $2.8 million and accumulated amortization expense of $1.0 million and $0.5 million, respectively.

Amortization expense related to right-of-use assets during the three months ended September 30, 2020 and 2019 was $0.2 million and $0.1 million, respectively.

Amortization expense related to right-of-use assets during the nine months ended September 30, 2020 and 2019 was $0.5 million and $0.2 million, respectively, and is included in depreciation expense.

Depreciation expense for the three months ended March 31, 2021 and 2020 was $0.5 million and $0.4 million, respectively.

Included in property and equipment is lab and office equipment right-of-use assets under finance leases with a cost basis of $2.8 million as of March 31, 2021 and December 31, 2020 and accumulated amortization expense of $1.4 million and $1.2 million, respectively.

Amortization expense related to right-of-use assets was $0.2 million during both the three months ended March 31, 2021 and 2020.

KYMERA THERAPEUTICS, INC.

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In March 2020, the Company signed a termination agreement for this lease which was determined to be a lease modification that resulted in a reduction of the right-of-use asset and liability of $2.2 million.

The lease termination was effective July 31, 2020 and the Company no longer has any obligations under the Lease.

In accordance with the lease agreement, the Company was required to maintain a security deposit and provided a letter of credit to the landlord for $0.2 million, which was recorded in other assets as of December 31, 2019 and other current assets as of September 30, 2020.

In October 2020, the Company was released from the security deposit and letter of credit and collected the $0.2 million previously classified in other current assets.

The lease termination was effective July 31, 2020 at which point the Company no longer had any obligations under the Lease.

In accordance with the Lease, the Company was required to maintain a security deposit and provided a letter of credit to the landlord for $0.2 million, which was subsequently collected in October 2020 following the Company’s release from the security deposit and letter of credit.

In April 2019, the Company entered into a facility sublease agreement (the “Sublease”) for 1,471 square feet of office space in Cambridge, Massachusetts.

The term of the lease began on June 24, 2019 and terminated on June 30, 2020, and following termination, the Company had no further obligations under the Sublease.

The term of the Sublease began on June 24, 2019 and terminated on June 30, 2020, and following termination, the Company had no further obligations under the Sublease.

The Sublease required the Company to share in prorated operating expenses and property taxes based upon actual amounts incurred;

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

The Company will receive a tenant incentive allowance of $5.5 million in 2020 as the tenant improvements are completed and submitted for reimbursement.

In accordance with the lease agreement, the Company is required to maintain a security deposit and provided a letter of credit to the landlord for $1.6 million, which is recorded in other assets as of September 30, 2020.

The Company has received $5.3 million of cash reimbursements from the landlord through September 30, 2020.

The tenant improvement receivable in other current assets is $0.2 million at September 30, 2020.

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

The components of the lease costs for the three and nine months ended September 30, 2020 and 2019 were as follows (in thousands):

The Company was eligible for and received a tenant incentive allowance of $5.5 million in 2020 as the tenant improvements were completed.

The full allowance amount had been collected from the landlord as of December 31, 2020.

In accordance with the New Lease, the Company is required to maintain a security deposit and provided a letter of credit to the landlord for $1.6 million, which is classified as restricted cash on the condensed consolidated balance sheets as of March 31, 2021.

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

The components of the lease costs for the three months ended March 31, 2021 and 2020, were as follows (in thousands):

Three Months Ended

September 30, 2020

Nine Months Ended

September 30,

Operating lease costs

Financing lease costs:

Amortization of right-to-use assets, financing leases

Interest expense for financing lease liabilities

Finance lease costs:

Amortization of right-to-use assets, finance leases

Interest expense for finance lease liabilities

Variable lease costs

Total lease costs

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Supplemental cash flow information relating to the Company’s leases for the nine months ended September 2020 and 2019 was as follows (in thousands):

Nine Months Ended

September 30,

Cash paid for amounts included in the measurement of

lease liabilities:

Operating cash flows used in (provided by) operating

Supplemental cash flow information relating to the Company’s leases for the three months ended March 31, 2021 and 2020 was as follows (in thousands):

Three Months Ended

Cash paid for amounts included in the measurement

of lease liabilities:

Operating cash flows used in (provided by)

operating leases

Operating cash flows used in finance leases

Financing cash flows used in finance leases

Weighted average remaining lease terms and discount rates as of September 30, 2020 and December 31, 2019 were as follows:

September 30,

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Weighted average remaining lease terms and discount rates as of March 31, 2021 and 2020 were as follows:

Three Months Ended

Remaining lease term:

Operating lease

Financing lease

Finance lease

Discount Rate:

Operating lease

Financing lease

The undiscounted future lease payments for operating and finance leases as of September 30, 2020, were as follows (in thousands):

2020 (excluding the nine months ended September 30,

Finance lease

The undiscounted future lease payments for operating and finance leases as of March 31, 2021, were as follows (in thousands):

2021 (excluding the first quarter)

Total minimum lease payments

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Accrued Expenses

Accrued expenses consist of the following as of September 30, 2020 and December 31, 2019 (in thousands):

September 30,

Accrued expenses consist of the following as of March 31, 2021 and December 31, 2020 (in thousands):

Research and development expenses

2 unchanged sentences

Accrued expenses

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Other Commitments and Contingencies

9 unchanged sentences

The Company enters into standard indemnification agreements in the ordinary course of business.

Pursuant to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners or customers, in connection with any U.S.

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

connection with any U.S.

patent or any copyright or other intellectual property infringement claim by any third party with respect to the Company’s products.

The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited.

The Company is not aware of any claims under indemnification arrangements, and it has not accrued any liabilities related to such obligations as of September 30, 2020 or December 31, 2019.

The Company is not aware of any claims under indemnification arrangements, and it has no t accrued any liabilities related to such obligations as of March 31, 2021 or December 31, 20 20 .

Convertible Preferred Stock

Immediately prior to the IPO, the Company’s Articles of Association (the “Articles”), as further amended and restated (the “2018 Amended Articles”), authorized a total of 52,483,788 convertible preferred stocks with a par value of $0.0001 per share, of which 3,000,000 shares have been designated as Series Seed Preferred Stock, 14,886,305 shares have been designated as Series A Preferred Stock, 16,009,845 shares have been designated as Series B Preferred Stock, 3,059,695 shares have been designated as Series B-1 Preferred Stock and 15,527,943 shares have been designated as Series C Preferred Stock.

The Series A, Series B, Series B-1 and Series C convertible preferred stocks will be collectively referred to as the Convertible Preferred Stock.

In January 2020, the Company issued 1,182,265 shares of Series B Preferred Stock at $4.06 per share to complete the second closing of the Series B Preferred Stock issuance for total proceeds of $4.8 million.

The issuance costs related to the second tranche was insignificant.

In March 2020, the Company executed a Series C Preferred Stock Purchase Agreement (the “Series C SPA”) to issue 13,539,141 shares of Series C Preferred Stock at a purchase price of $6.5366 per share for a total consideration of $88.2 million, net of issuance costs of $0.3 million.

In conjunction with the Series C SPA, the Company exchanged 1,988,802 shares of Series A Preferred Stock for an equal number of shares of Series C Preferred Stock related to a transaction amongst investors.

The issuance costs related to the second tranche were insignificant.

In March 2020, the Company executed a Series C Preferred Stock Purchase Agreement (the “Series C SPA”) to issue 13,539,141 shares of Series C Convertible Preferred Stock (the “Series C Preferred Stock”) at a purchase price of $6.5366 per share for a total consideration of $88.2 million, net of issuance costs of $0.3 million.

In conjunction with the Series C SPA, the Company exchanged 1,988,802 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”) for an equal number of shares of Series C Preferred Stock related to a transaction amongst investors.

This resulted in a total issuance of 15,527,943 shares of Series C Preferred Stock.

The fair value of the shares of Series C Preferred Stock issued exceeded the carrying value of the shares of Series A Preferred Stock exchanged by $9.1 million, which was recognized as a deemed dividend through a reduction of $2.3 million to additional paid-in capital and an increase of $6.7 million to the accumulated deficit.

The $9.1 million deemed dividend increased the net loss for the nine months ended September 30, 2020 to arrive at net loss attributable to common stockholders in the calculation of earnings per share.

In connection with the Company’s August 21, 2020, IPO all issued and outstanding Convertible Preferred Stock of 50,439,595 were converted to 31,625,534 shares of the Company’s common stock and are no longer issued or outstanding as of September 30, 2020.

The $9.1 million deemed dividend increased the net loss for the three months ended March 31, 2020 to arrive at net loss attributable to common stockholders in the calculation of earnings per share.

Immediately prior to the IPO, the Company’s Articles of Association (the “Articles”), as further amended and restated (the “2018 Amended Articles”), authorized a total of 52,483,788 shares of convertible preferred stock with a par value of $0.0001 per share, of which 3,000,000 shares have been designated as Series Seed Convertible Preferred Stock, 14,886,305 shares have been designated as Series A Preferred Stock, 16,009,845 shares have been designated as Series B Preferred Stock (the “Series B Preferred Stock”), 3,059,695 shares have been designated as Series B-1 Preferred Stock and 15,527,943 shares have been designated as Series C Preferred Stock.

The Series A, Series B, Series B-1 and Series C Preferred Stock are collectively referred to as the Convertible Preferred Stock.

In connection with the Company’s August 21, 2020 IPO all issued and outstanding 50,439,595 shares of Convertible Preferred Stock were converted into 31,625,534 shares of the Company’s common stock and are no longer issued or outstanding following the completion of the offering.

Equity-Based Compensation

2018 Stock Option and Grant Plan

In November 2018, the Company adopted, and its stockholders approved, the 2018 Stock Option and Grant Plan (the “2018 Plan”), which provides for the granting of stock options and other equity-based awards at the discretion of the Board of Directors or any subcommittee of the Board of Directors to its employees, officers, directors, and independent contractors.

In November 2018, the Company adopted, and its stockholders approved, the 2018 Stock Option and Grant Plan (the “2018 Plan”), which provides for the granting of stock options and other equity-based awards at the discretion of the Board of Directors or any subcommittee of the Board of Directors to the Company’s employees, officers, directors, and independent contractors.

No further grants will be made under the 2018 Plan.

1 unchanged sentence

To the extent outstanding options granted under the 2018 Plan are cancelled, forfeited or otherwise terminated without being exercised and would otherwise have been returned to the share reserve under the 2018 Plan, the number of shares underlying such awards will be available for future grant under the 2020 Stock Option and Incentive Plan.

Following the completion of the Company’s initial public offering no additional shares will be granted under the 2018 Plan.

However, the 2018 Plan will continue to govern outstanding equity awards granted thereunder.

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

2020 Stock Option and Incentive Plan

5 unchanged sentences

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 September 30, 2020, there were an aggregate of 3,340,887 shares remaining available for future grants.

As of March 31, 2021, there were an aggregate of 3,563,845 shares remaining available for future grants.

2020 Employee Stock Purchase Plan

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

In August 2020, the Company and its stockholders approved the 2020 Employee Stock Purchase Plan (the “2020 ESPP”), which became effective August 20, 2020 .

3 unchanged sentences

Stock Options

A summary of stock option activity under the 2020 Stock Option and Grant Plan during the nine months ended September 30, 2020 is as follows (in thousands except share and per share data):

A summary of stock option activity under the 2020 Stock Option and Grant Plan during the three months ended March 31, 2021 is as follows (in thousands except share and per share data):

Outstanding at December 31, 2020

Outstanding at September 30, 2020

Exercisable at September 30, 2020

The i ntrinsic value of stock options exercised during the nine months ended September 30, 2020 and 2019 $0.5 million and $0.1 million, respectively.

The weighted-average fair value of options granted during the three- and nine-months ended September 30, 2020 and 2019 was $12.04 and $1.65 and $7.63 and $1.67, respectively.

As of September 30, 2020, the total unrecognized stock-based compensation expense for unvested stock options was $23.2 million, which is expected to be recognized over 3.4 years.

The total fair value of stock options vested during the three-and nine- months end September 30, 2020 and 2019 was $1.9 million and $0.1 million and $2.7 million and $0.5 million, respectively.

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table outlines our equity-based compensation expense for stock options for the three - and nine - months ended September 30, 2020 and 2019:

Outstanding at March 31, 2021

Exercisable at March 31, 2021

The i ntrinsic value of stock options exercised during the three months ended March 31, 2021 was $19.9 million.

No options were exercised during the three months ended March 31, 2020.

The weighted-average fair value of options granted during the three months ended March 31, 2021 and 2020 was $29.25 and $3.57, respectively.

As of March 31, 2021, the total unrecognized stock-based compensation expense for unvested stock options was $62.8 million, which is expected to be recognized over 3.0 years.

The following table outlines our equity-based compensation expense for stock options for the three months ended March 31, 2021 and 2020:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

1 unchanged sentence

Total equity-based compensation

The weighted-average assumptions that the Company used in Black-Scholes option pricing model to determine the grant date fair value of stock options granted to employees and non-employees for the three- and nine-months ended September 30, 2020 and 2019 were as follows:

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The weighted-average assumptions that the Company used in the Black-Scholes option pricing model to determine the grant date fair value of stock options granted to employees and non-employees for the three months ended March 31, 2021 and 2020 were as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

Expected term (in years)

3 unchanged sentences

The Company has granted shares of restricted common stock with service-based and performance-based vesting conditions.

A summary of restricted stock activity under the 2018 Plan during the nine months ended September 30, 2020 is as follows:

A summary of restricted stock activity under the 2018 Plan during the three months ended March 31, 2021 is as follows:

Unvested at December 31, 2020

Unvested at September 30, 2020

No restricted stock awards were granted during the three and nine months ended September 30, 2020 and 2019.

As of September 30, 2020, the total unrecognized stock-based compensation expense for unvested restricted stock was $0.3 million, which is expected to be recognized over 1.6 years.

The total fair value of restricted stock vested during the nine months ended September 30, 2020 and 2019 was $0.1 million and $0.4 million, respectively.

During both the three months ended September 30, 2020 and 2019, the Company recognized stock-based compensation expense of $0.1 million for restricted stock of which $0.1 million and an immaterial amount were included research and development and general and administrative expense, respectively.

During the nine months ended September 30, 2020 and 2019, the Company recorded stock-based-compensation expense for restricted stock of $0.2 million and $0.4 million, respectively, of which $0.2 million and $0.2 million was included in research and development expense and an immaterial amount and $0.2 million was included in general and administrative expense.

Included within the general and administrative stock-based compensation expense for the nine months ended September 30, 2019 was $0.1 million from a modification of an employee’s awards.

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Unvested at March 31, 2021

No restricted stock awards were granted during the three months ended March 31, 2021 and 2020.

As of March 31, 2021, the total unrecognized stock-based compensation expense for unvested restricted stock was $0.2 million, which is expected to be recognized over 1.3 years.

During both the three months ended March 31, 2021 and 2020, the Company recognized equity-based compensation expense of approximately $0.1 million for restricted stock of which $0.1 million and an immaterial amount were included in research and development and general and administrative expense, respectively.

Equity-Based Compensation Expense

Total equity-based compensation expense recorded as research and development and general and administrative expenses for employees, directors, and non-employees during the three and nine months ended September 30, 2019 and 2020 is as follows (in thousands):

Total equity-based compensation expense recorded as research and development and general and administrative expenses for employees, directors, and non-employees during the three months ended March 31, 2021 and 2020 is as follows (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

2 unchanged sentences

Related-Party Transactions

In addition to the collaborations discussed in Note 5, the Company had the following related party transactions for the period presented in the accompanying consolidated financial statements, which has not otherwise been discussed in these notes to the consolidated financial statements.

The Company made payments of $0.8 million and $0.9 million to an investor for rent expenses during both the nine months ended September 30, 2020 and 2019, respectively.

Income taxes for the three and nine months ended September 20, 2020 and 2019 have been calculated based on an estimated annual effective tax rate and certain discrete items.

For the three and nine months end September 30, 2020 and 2019, the Company recorded income tax expense of $0 million.

In addition to the collaborations discussed in Note 5, the Company had the following related party transactions for the period presented in the accompanying condensed consolidated financial statements, which have not otherwise been discussed in these notes to the condensed consolidated financial statements.

The Company made payments of $0.4 million to an investor for rent expenses during the three months ended March 31, 2020.

No such payments were made during the three months ended March 31, 2021.

Income taxes for the three months ended March 31, 2021 and 2020 have been calculated based on an estimated annual effective tax rate and certain discrete items.

For the three months ended March 31, 2021 and 2020, no income tax was recorded.

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic.

7 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Deemed dividend from exchange of convertible preferred

2 unchanged sentences

Net loss per share, basic and diluted

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company’s potentially dilutive securities, which include convertible preferred stock, 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.

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 September 30, 2020 and 2019 because including them would have had an anti-dilutive effect:

Nine Months Ended

September 30,

The Company excluded the following from the computation of diluted net loss per share attributable to common stockholders at March 31, 2021 and 2020 because including them would have had an anti-dilutive effect:

Three Months Ended

Convertible preferred stock

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements