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Item 8. Financial Statements and Supplementary Data

2023-02-09 compared with 2022-01-28 · 369 added, 419 removed, 514 unchanged (61% of the section changed)

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INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Fir m (PCAOB ID 238 )

Consolidated Balance Sheets

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Consolidated Statements of Comprehensive Loss

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinions on the Financial Statements and Internal Control over Financial Reporting

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Nurix Therapeutics, Inc.

and its subsidiaries (the “Company”) as of November 30, 2021 and 2020, and the related consolidated statements of operations, of comprehensive loss, of redeemable convertible preferred stock and stockholders’ equity (deficit) and of cash flows for each of the three years in the period ended November 30, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of November 30, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of November 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of November 30, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial repo rting existed as of that date related to the Company not designing and maintaining effective (a) controls over certain information technology general controls, and (b) segregation of duty controls over the review and approval of account reconciliations and manual journal entries.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses referred to above are described in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases on December 1, 2020.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

and its subsidiaries (the “Company”) as of November 30, 2022 and 2021, and the related consolidated statements of operations, of comprehensive loss, of stockholders' equity and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

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

Such procedures included examining, on a test basis, evidence regarding the amounts and

disclosures in the consolidated financial statements.

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

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

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

Accordingly, we express no such opinion.

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

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We believe that our audits provide a reasonable basis for our opinion.

Emphasis of Matter

As discussed in Note 1 to the consolidated financial statements, the Company will require substantial additional funding to support its continuing operations and pursue its long-term business plan.

Management’s plans in regard to this matter are described in Note 1.

Critical Audit Matters

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Total estimated costs are primarily driven by the number of estimated FTEs, which requires significant management judgment.

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The principal considerations for our determination that performing procedures relating to revenue recognition - estimated costs of internal FTEs is a critical audit matter are (i) the high degree of auditor judgment and subjectivity in performing procedures relating to the estimated costs of internal FTEs due to the significant judgment by management when determining the estimate and (ii) the significant audit effort in evaluating the significant assumption related to the number of estimated FTEs.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls related to the revenue recognition process, including controls over the determination of the estimated costs

of internal FTEs.

These procedures also included, among others, evaluating and testing management’s process for determining the estimated costs of internal FTEs, which included evaluating the reasonableness of the significant assumption related to the number of estimated FTEs, by (i) performing a comparison of management’s estimated costs of internal FTEs to the actual internal FTE costs;

These procedures included, among others, evaluating and testing management’s process for determining the estimated costs of internal FTEs, which included evaluating the reasonableness of the significant assumption related to the number of estimated FTEs, by (i) performing a comparison of management’s estimated costs of internal FTEs to the actual internal FTE costs;

(ii) testing the completeness and accuracy of the data used by management in the estimate;

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San Jose, California

January 28, 2022

February 9, 2023

We have served as the Company’s auditor since 2014.

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NURIX THERAPEUTICS, INC.

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Cash and cash equivalents $ 64,474 $ 80,506

Short-term investments

Marketable securities, current 244,667 215,214

Accounts receivable — 6,000

Contract assets

Income tax receivable — 204

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Total current assets 318,449 311,118

Long-term investments

Marketable securities, non-current 63,879 137,189

Operating lease right-of-use assets 12,345 14,005

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Restricted cash 901 286

Other assets 4,022 2,833

Total assets $ 416,759 $ 476,771

Liabilities and stockholders' equity

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Accrued expenses and other current liabilities 22,428 14,549

Operating lease current liabilities

Operating lease liabilities, current 5,530 3,847

Deferred revenue, current 37,633 41,212

Total current liabilities 70,655 66,258

Operating lease long-term liabilities

Operating lease liabilities, net of current portion 6,434 9,189

Deferred revenue, net of current portion 35,974 59,022

Other long-term liabilities

Total liabilities 113,063 134,469

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Stockholders’ equity:

Preferred stock, $ 0.001 par value— 10,000,000 shares authorized

and 0 shares issued and outstanding as of November 30, 2021

and November 30, 2020

Common stock, $ 0.001 par value— 500,000,000 shares authorized as of

November 30, 2021 and November 30, 2020;

44,664,371 and

38,864,872 shares issued and outstanding as of November 30, 2021

and November 30, 2020, respectively

Preferred stock, $ 0.001 par value— 10,000,000 shares authorized as of November 30, 2022 and 2021;

0 shares issued and outstanding as of November 30, 2022 and 2021

Common stock, $ 0.001 par value— 500,000,000 shares authorized as of November 30, 2022 and 2021;

47,172,299 and 44,664,371 shares issued and outstanding as of November 30, 2022 and 2021, respectively

Additional paid-in capital 709,220 563,757

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss ( 4,319 ) ( 608 )

Accumulated deficit ( 401,252 ) ( 220,892 )

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

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NURIX THERAPEUTICS, INC.

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Loss before income taxes ( 180,360 ) ( 117,063 )

Provision for (benefit from) income taxes

Provision for income taxes — 131

Net loss $ ( 180,360 ) $ ( 117,194 )

Net loss per share, basic and diluted $ ( 3.71 ) $ ( 2.73 )

Weighted-average number of shares outstanding,

basic and diluted

Collaboration revenue for the years ended November 30, 2021, 2020 and 2019 includes related party revenue of $ 0 , $ 0 and $ 28.4 million, respectively.

Weighted-average number of shares outstanding, basic and diluted 48,607,990 42,895,383

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

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NURIX THERAPEUTICS, INC.

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Year Ended November 30,

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on available-for-sale investments

Net loss $ ( 180,360 ) $ ( 117,194 )

Other comprehensive loss, net of tax:

Unrealized loss on available-for-sale marketable securities ( 3,711 ) ( 695 )

Total comprehensive loss $ ( 184,071 ) $ ( 117,889 )

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

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NURIX THERAPEUTICS, INC.

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

Redeemable convertible

preferred stock

Common stock Additional

capital Accumulated

comprehensive

income (loss) Accumulated

deficit Total

stockholders’

income (loss)

Balance as of November 30,

Exercise of stock options

Repurchase of unvested

early exercised stock

Vesting of early-

exercised stock options

Unrealized gain on

available-for-sale

Shares Amount

Balance as of November 30, 2020 38,864,872 $ 39 $ 393,841 $ 87 $ ( 103,698 ) $ 290,269

Issuance of Series D

redeemable convertible

preferred stock at

$ 12.75 per share, net of

issuance costs of

Conversion of

preferred stock

into common stock

Issuance of common

stock upon initial

public offering, net

offering costs of

Issuance of common stock in connection with equity offering, net of offering costs of $ 643

5,175,000 5 150,152 — — 150,157

Exercise of stock options 522,006 1 1,665 — — 1,666

Repurchase of unvested

early exercised stock

Vesting of early-

exercised stock options

Unrealized gain on

available-for-sale

Repurchase of unvested early exercised stock options ( 971 ) — — — — —

Vesting of early exercised stock options — — 239 — — 239

Issuance under employee stock purchase plan 103,464 — 2,060 — — 2,060

Stock-based compensation — — 15,800 — — 15,800

Unrealized loss on available-for-sale marketable securities — — — ( 695 ) — ( 695 )

Net loss — — — — ( 117,194 ) ( 117,194 )

Balance as of November 30, 2021 44,664,371 45 563,757 ( 608 ) ( 220,892 ) 342,302

Redeemable convertible

preferred stock

comprehensive

stockholders’

income (loss)

Issuance of common

stock in connection

with equity offering,

net of offering

costs of $ 643

Issuance of pre-funded warrants, net of issuance costs of $ 234

— — 94,759 — — 94,759

Issuance of common stock in "at the market" financing, net of issuance costs of $ 672

2,000,000 2 19,326 — — 19,328

Exercise of stock options 325,596 — 1,078 — — 1,078

Repurchase of unvested

early exercised stock

Vesting of early-

exercised stock options

Issuance under employee

stock purchase plan

Unrealized loss on

available-for-sale

Vesting of restricted stock units 46,028 — — — — —

Vesting of early exercised stock options — — 145 — — 145

Issuance under employee stock purchase plan 136,304 — 1,955 — — 1,955

Stock-based compensation — — 28,200 — — 28,200

Unrealized loss on available-for-sale marketable securities — — — ( 3,711 ) — ( 3,711 )

Net loss — — — — ( 180,360 ) ( 180,360 )

Balance as of November 30, 2022 47,172,299 $ 47 $ 709,220 $ ( 4,319 ) $ ( 401,252 ) $ 303,696

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

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NURIX THERAPEUTICS, INC.

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Cash flows from operating activities

Adjustments to reconcile net loss to net cash (used in)

provided by operating activities:

Net loss $ ( 180,360 ) $ ( 117,194 )

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

Depreciation and amortization 5,349 2,790

Stock-based compensation 28,131 15,800

Net amortization (accretion) of premium (discount)

on investments

Net amortization of premium on marketable securities 426 1,706

Loss on disposal of property and equipment 9 128

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Changes in operating assets and liabilities:

Contract assets

Accounts receivable 6,000 ( 6,000 )

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Accrued expenses and other liabilities 7,485 6,218

Net cash (used in) provided by operating activities

Net cash used in operating activities ( 159,807 ) ( 84,365 )

Cash flows from investing activities

Purchases of investments

Sales of investments

Maturities of investments

Purchases of marketable securities ( 239,366 ) ( 348,497 )

Sales of marketable securities — 6,994

Maturities of marketable securities 278,808 238,913

Purchases of property and equipment ( 12,244 ) ( 5,661 )

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities 27,198 ( 108,251 )

Cash flows from financing activities

Proceeds from issuance of common stock, net of underwriting

discounts and commissions and offering costs

Proceeds from issuance of redeemable convertible

preferred stock, net of issuance costs

Proceeds from issuances of pre-funded warrants, net of issuance costs 94,759 —

Proceeds from issuances of common stock in equity financing, net of issuance costs 19,400 150,157

Proceeds from exercise of stock options 1,078 1,666

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Net cash provided by financing activities 117,192 153,882

Net (decrease) increase in cash, cash equivalents and

restricted cash

Net decrease in cash, cash equivalents and restricted cash ( 15,417 ) ( 38,734 )

Cash, cash equivalents and restricted cash at beginning of period 80,792 119,526

Cash, cash equivalents and restricted cash at end of period $ 65,375 $ 80,792

Year Ended November 30,

Supplementary disclosures of cash flow information:

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Supplemental disclosures of non-cash investing and financing activities:

Right-of-use assets recognized in exchange for lease obligations

Additions to property and equipment included in accounts

payable and accrued expenses and other liabilities

Additions to property and equipment included in accounts payable and accrued expenses and other liabilities $ 1,373 $ 2,505

Capitalized stock-based compensation related to internal-use software development

Vesting of early exercised stock options $ 145 $ 239

Conversion of redeemable convertible preferred stock into

common stock upon closing of initial public offering

Deferred issuance costs recognized related to equity financing $ 72 $ —

As of November 30,

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

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NURIX THERAPEUTICS, INC.

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Nurix Therapeutics, Inc.

(the Company) previously known as Nurix, Inc., was incorporated in the state of Delaware on August 27, 2009 and is headquartered in San Francisco, California.

The Company is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of small molecule therapies designed to modulate cellular protein levels as a novel treatment approach for cancer and other challenging diseases.

(the Company), was incorporated in the state of Delaware on August 27, 2009 and is headquartered in San Francisco, California.

The Company is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of small molecule and cell therapies based on the modulation of cellular protein levels as a novel treatment approach for cancer and other challenging diseases.

Leveraging the Company’s expertise in E3 ligases together with its proprietary DNA-encoded libraries, the Company has built DELigase, an integrated discovery platform to identify and advance novel drug candidates targeting E3 ligases, a broad class of enzymes that can modulate proteins within the cell.

The Company’s drug discovery approach is to either harness or inhibit the natural function of E3 ligases within the ubiquitin-proteasome system to selectively decrease or increase cellular protein levels to treat disease.

The Company’s wholly owned, clinical stage pipeline includes targeted protein degraders of Bruton’s tyrosine kinase, a B-cell signaling protein, and inhibitors of Casitas B-lineage lymphoma proto-oncogene B, an E3 ligase that regulates activation of multiple immune cell types including T cells and NK cells.

The Company’s partnered drug discovery pipeline consists of ten programs under collaboration agreements with Sanofi S.A.

(Sanofi) and Gilead Sciences, Inc.

(Gilead), within which the Company retains options for co-development and co-commercialization rights in the United States for up to four drug candidates.

Initial Public Offering

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In addition, the underwriters exercised their option to purchase an additional 1,550,000 shares of the Company’s common stock on July 31, 2020, and this transaction closed on August 4, 2020.

Immediately prior to the closing of the IPO, all outstanding shares of the Company’s redeemable convertible preferred stock automatically converted into 22,245,251 shares of common stock.

Net proceeds from the IPO, including the exercise of the underwriters’ option to purchase additional shares, were $ 218.1 million, after deducting underwriting discounts and commissions of $ 16.7 million and expenses of $ 3.6 million.

Subsequent to the closing of the IPO, there were no shares of preferred stock outstanding.

In connection with the closing of the IPO, the Company restated its Restated Certificate of Incorporation to change the authorized capital stock to 500,000,000 shares designated as common stock, and 10,000,000 shares designated as preferred stock, all with a par value of $ 0.001 per share.

Net proceeds from the IPO were $ 218.1 million, after deducting underwriting discounts and commissions of $ 16.7 million and expenses of $ 3.6 million.

Follow-on Offering

In March 2021, the Company completed a follow-on offering and issued 5,175,000 shares of common stock (including the exercise by the underwriters of their option to purchase an additional 675,000 shares of common stock) at a price to the public of $ 31.00 per share for net proceeds of approximately $ 150.2 million, after deducting underwriting discounts and commissions of $ 9.6 million and expenses of $ 0.6 million.

In March 2021, the Company completed a follow-on offering and issued 5,175,000 shares of common stock (including the exercise by the underwriters of their option to purchase an additional 675,000 shares of common stock) at a price to the public of $ 31.00 per share for net proceeds of $ 150.2 million, after deducting underwriting discounts and commissions of $ 9.6 million and expenses of $ 0.6 million.

Equity Distribution Agreement

In August 2021, the Company filed a shelf registration statement on Form S-3 with the SEC.

This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer and sell registered common stock, preferred stock, debt securities, warrants, subscriptions rights and or units or any combination of securities described in the prospectus in one or more offerings.

In August 2021, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (SEC) which was amended in February 2023.

This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer and sell up to $ 450.0 million of the Company’s registered common stock, preferred stock, debt securities, warrants, subscriptions rights and or units or any combination of securities described in the prospectus in one or more offerings.

In addition, in August 2021, the Company entered into an Equity Distribution Agreement with Piper Sandler & Co.

(Piper Sandler) pursuant to which, from time to time, the Company may offer and sell through Piper Sandler up to $ 150.0 million of the common stock registered under the shelf registration statement pursuant to one or more “at the market” offerings.

The Company is no t required to sell any shares at any time during the term of the Equity Distribution Agreement.

The Company is not required to sell any shares at any time during the term of the Equity Distribution Agreement.

The Company agreed to pay Piper Sandler a commission of 3 % of the gross sales price of any shares sold pursuant to the Equity Distribution Agreement.

As of November 30, 2021, the Company has not sold any shares of common stock pursuant to the Equity Distribution Agreement and $150.0 million in shares remained available under the Equity Distribution Agreement.

In June 2022, the Company issued and sold 2,000,000 shares of common stock under the Equity Distribution Agreement at a price of $ 10.0001 per share of common stock for net proceeds of approximately $ 19.3 million, after deducting offering commissions and expenses paid by the Company.

As of November 30, 2022, the Company had $ 130.0 million of common stock remaining available for sale under the Equity Distribution Agreement.

Registered Direct Offerings

In July 2022, the Company entered into separate securities purchase agreements with certain purchasers to issue and sell pre‑funded warrants to purchase an aggregate of 6,814,920 shares of the Company’s common stock in registered direct offerings (RDOs) at a price of $ 13.939 per pre-funded warrant.

Net proceeds from the RDOs were approximately $ 94.8 million, after deducting offering expenses of $ 0.2 million.

Refer to Note 7 for more information regarding the pre-funded warrants issued in the RDOs.

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Liquidity and Management Plans

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

The Company’s operations have historically been financed through the issuance of common and redeemable convertible preferred stock and proceeds received under the Company’s collaboration and license agreements.

As of November 30, 2022, the Company had cash, cash equivalents and short-term marketable securities of $ 309.1 million, working capital of $ 247.8 million and an accumulated deficit of $ 401.3 million.

The Company’s operations have historically been financed through the issuance of common stock, redeemable convertible preferred stock and pre-funded warrants and proceeds received under the Company’s collaboration and license agreements.

Since inception, the Company has generally incurred significant losses and negative net cash flows from operations.

During the year ended November 30, 2021, the Company incurred a net loss of $ 117.2 million and had negative net cash flows from operating activities of $ 84.4 million.

The Company had an accumulated deficit of $ 220.9 million as of November 30, 2021 and will require substantial additional capital for research and development activities.

The Company does not expect its existing cash, cash equivalents and marketable securities to be sufficient to fund the completion of its clinical trials through commercialization and will need substantial additional funding to support its continuing operations and pursue its long-term business plan.

The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its drug candidates currently in development.

As of November 30, 2021, the Company had cash, cash equivalents and short-term investments of $ 295.7 million and working capital of $ 244.9 million.

Management believes that its cash, cash equivalents and short-term investments are sufficient to continue operating activities for at least 12 months following the issuance date of these consolidated financial statements.

Future capital requirements will depend on many factors, including the timing and extent of spending on research and development and payments the Company may receive under its collaboration agreements with Sanofi S.A.

(Sanofi) and Gilead Sciences, Inc.

(Gilead) or future collaboration agreements, if any.

Management believes that its cash, cash equivalents and short-term marketable securities are sufficient to continue operating activities for at least 12 months following the issuance date of these consolidated financial statements.

There can be no assurance that, in the event the Company requires additional financing, such financing will be available at terms acceptable to the Company if at all.

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Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including DeCART Therapeutics Inc., and have been prepared in accordance with U.S.

The Company’s consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (U.S.

GAAP) and include the accounts of the Company and its wholly owned subsidiaries, including DeCART Therapeutics Inc., which was legally dissolved in July 2022.

All intercompany balances and transactions have been eliminated in consolidation.

Reverse Stock Split

On July 17, 2020, the Company filed an amendment to the Company’s amended and restated certificate of incorporation to effect a reverse split of shares of the Company’s common stock and redeemable convertible preferred stock, each on a 1-for-3 basis (reverse stock split).

The par value and authorized shares of the common stock and redeemable convertible preferred stock were not adjusted as a result of the reverse stock split.

All issued and outstanding common stock, options to purchase common stock and per share amounts contained in the consolidated financial statements have been retroactively adjusted to give effect to the reverse stock split for all periods presented.

Certain prior year amounts have been reclassified for consistency with the current year cash flow presentation.

The reclassification did not impact total cash flow from operating, investing or financing activities.

Use of Estimates

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Concentration of Credit Risk

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

The Company’s investments consist of debt securities issued by highly rated corporate entities, the U.S.

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

The Company’s marketable securities consist of debt securities issued by highly rated corporate entities, the U.S.

federal government or state and local governments.

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The Company invests its cash equivalents in highly rated money market funds.

During the periods presented, the Company has not experienced any losses on its deposits of cash, cash equivalents or investments.

During the periods presented, the Company has not experienced any losses on its deposits of cash, cash equivalents or marketable securities.

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Other Risks and Uncertainties

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risks related to the successful discovery and development of its drug candidates, ability to raise additional capital, development of new technological innovations by its competitors and delay or inability to obtain drug substance and finished drug product from the Company’s third-party contract manufacturers necessary for the Company’s drug candidates, including due to the impact of the current coronavirus (COVID-19) pandemic, protection of intellectual property rights, litigation or claims against the Company based on intellectual property rights and regulatory clearance and market acceptance for any of the Company’s products candidates for which the Company receives marketing approval.

Moreover, the current COVID-19 pandemic, which is impacting worldwide economic activity, poses the risk that the Company or its employees, contractors, suppliers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities.

The extent to which the COVID-19 pandemic will impact the Company’s business will depend on future developments that are highly uncertain and cannot be predicted at this time.

Moreover, the Company is subject to risks and uncertainties as a result of the current COVID-19 pandemic and increasing financial market volatility and uncertainty.

The COVID-19 pandemic, including the resurgence of cases relating to the spread of new variants, continues to impact worldwide economic activity and poses the risk that the Company or its employees, contractors, suppliers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities.

The extent to which the COVID-19 pandemic and increasing financial market volatility and uncertainty will impact the Company’s business will depend on future developments that are highly uncertain and cannot be predicted at this time.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

The extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s financial statements is highly uncertain and subject to change.

The extent to which the COVID-19 pandemic and the increasing financial market volatility and uncertainty may directly or indirectly impact the Company’s financial statements is highly uncertain and subject to change.

Management considered the potential impact of the COVID-19 pandemic on its estimates and assumptions and there was not a material impact to the Company’s consolidated financial statements as of and for the year ended November 30, 2022;

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Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

The Company considers all highly liquid marketable securities with a maturity of three months or less when purchased to be cash equivalents.

Cash equivalents, which consist of money market funds, are stated at fair value.

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The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts payable and accrued liabilities included in the Company’s consolidated financial statements approximate their fair value due to the nature of the financial instruments.

Refer to Note 5 for more information regarding the fair value of the Company’s investments.

The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments , on December 1, 2020.

Investments consist of money market funds, U.S.

Refer to Note 5 for more information regarding the fair value of the Company’s marketable securities.

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Marketable Securities

Marketable securities consist of money market funds, U.S.

Treasuries, corporate debt securities, U.S.

government agency securities, corporate commercial paper and municipal securities.

The Company’s investments are classified as available-for-sale and carried at estimated fair values and reported in cash equivalents, short-term investments or long-term investments.

Management determines the appropriate classification of the investments at the time they are acquired and evaluates the appropriateness of such classifications at each consolidated balance sheet date.

Investments with contractual maturities greater than 12 months are considered long-term investments.

The Company regularly reviews its investments for declines in estimated fair value below amortized cost.

The factors considered in determining whether a credit loss exists include the creditworthiness of the security issuers, the number of investments in an unrealized loss position, the severity and duration of the unrealized losses, and whether it is more likely than not that the Company will be required to sell the investments before the recovery of their amortized cost basis.

The cost of investments sold is based on the specific identification method.

government agency securities, corporate commercial paper, foreign government securities and municipal securities.

The Company’s marketable securities are classified as available-for-sale and carried at estimated fair values and reported in cash equivalents, short-term marketable securities or long-term marketable securities.

Management determines the appropriate classification of the marketable securities at the time they are acquired and evaluates the appropriateness of such classifications at each consolidated balance sheet date.

Marketable securities with contractual maturities greater than 12 months are considered long-term marketable securities.

The Company regularly reviews its marketable securities for declines in estimated fair value below amortized cost.

The factors considered in determining whether a credit loss exists include the creditworthiness of the security issuers, the number of marketable securities in an unrealized loss position, the severity and duration of the unrealized losses, and whether it is more likely than not that the Company will be required to sell the marketable securities before the recovery of their amortized cost basis.

The cost of marketable securities sold is based on the specific identification method.

In circumstances when an unrealized loss is determined to be credit-related, or when the Company intends to sell or is more likely than not required to sell a security before it recovers its amortized cost basis, the difference between the fair value and the amortized cost of the security is recognized as interest and other income, net in the consolidated statements of operations, and an allowance for credit loss is recorded on the consolidated balance sheet.

In circumstances when the decline in fair value is non-credit related, the difference is reported in accumulated other comprehensive income (loss), net of tax as a separate component of stockholders’ equity (deficit).

Property and Equipment

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When assets are retired or disposed of, the cost together with related accumulated depreciation is removed from the Company’s accounts and the resulting gain or loss is reflected in the Company’s consolidated statements of operations.

The Company adopted ASU No.

2016-02, Leases (Topic 842) on December 1, 2020 using the alternative modified transition method, which applies Topic 842 as of the adoption date and therefore, the Company has not applied the standard to the comparative periods presented in the Company's consolidated financial statements.

Prior period amounts continue to be reported in accordance with the historic guidance under ASC 840, Leases .

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

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The Company expenses costs incurred related to the planning and post-implementation phases of development as incurred.

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Long-Lived Assets

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Should a planned equity financing be abandoned, terminated or significantly delayed, the deferred offering costs are immediately written off to operating expenses.

As of November 30, 2021, there was $ 0.5 million of deferred offering costs included in other assets on the consolidated balance sheet.

There were no deferred offering costs capitalized as of November 30, 2020.

As of both November 30, 2022 and 2021, there was $ 0.5 million of deferred offering costs included in other assets on the consolidated balance sheet.

Revenue Recognition

Prior to December 1, 2019, the Company recognized revenue in accordance with the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 605, Revenue Recognition .

Accordingly, revenue is recognized for each unit of accounting when all of the following criteria are met:

Persuasive evidence of an arrangement exists;

Delivery has occurred or services have been rendered;

The seller’s price to the buyer is fixed or determinable;

Collectability is reasonably assured.

The Company evaluates multiple element arrangements to determine if each deliverable represents a separate unit of accounting based on the following criteria:

Delivered item or items have value to the customer on a standalone basis, and

If the arrangement includes a general right of return relative to the delivered item or items, delivery or performance of the undelivered item or items is considered probable and substantially in control of the Company.

The arrangement’s consideration that is fixed or determinable is then allocated to each separate unit of accounting based on the relative selling price methodology in accordance with the selling price hierarchy, which includes vendor-specific objective evidence (VSOE) of selling price, if available, or third-party evidence of selling price if VSOE is not available, or the best estimate of selling price, if neither VSOE nor third-party evidence is available.

The provisions of ASC 605 are then applied to each unit of accounting to determine the appropriate revenue recognition.

In the event that a deliverable of a multiple element arrangement does not represent a separate unit of accounting, primarily because a deliverable does not provide value on a standalone basis, the Company recognizes revenue from the combined unit of accounting using the input/proportional performance approach as research is delivered or on a straight-line basis over the estimated period of performance when there is no discernable pattern of performance.

The Company evaluates potential milestone payments associated with research and development arrangements in accordance with ASC 605-28, Milestone Method.

Under the milestone method, the Company may recognize revenue contingent upon the achievement of a milestone in its entirety in the period in which the milestone is achieved, only if the milestone meets all the criteria within the guidance to be considered a substantive milestone.

The Company evaluates each contingent payment on an individual basis to determine whether they are considered substantive milestones, specifically reviewing factors such as the degree of certainty in achieving the milestone, the research and development risk and other risks that must be overcome to achieve the milestone, as well as the level of effort and investment required and whether the milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement.

This evaluation includes an assessment of whether (a) the consideration is commensurate with either (1) the entity’s performance to achieve the milestone, or (2) the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity’s performance to achieve the milestone, (b) the consideration relates solely to past performance and (c) the consideration is reasonable relative to all of the deliverables and payment terms within the arrangement.

Revenues from milestones, if they are nonrefundable and deemed substantive, are recognized upon achievement of the milestones.

To the extent that non-substantive milestones are achieved, and the Company has remaining deliverables, milestone payments are deferred and recognized as revenue over the estimated remaining performance period using the appropriate measure of progress as determined for each agreement.

The Company recognizes revenue associated with the non-substantive milestones upon achievement of the milestone if the Company has no remaining deliverables.

During the year ended November 30, 2019, no milestone payments were received, no milestone revenues were recognized and no milestones were considered substantive.

Effective December 1, 2019, the Company adopted Topic 606, Revenue from Contracts with Customers using the modified retrospective method, which was only applied to contracts that were not completed as of the adoption date.

As of the adoption date, the Company had only one contract, a collaboration agreement with Gilead, not completed.

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

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

identify the contract(s) with a customer;

identify the performance obligations in the contract;

determine the transaction price;

allocate the transaction price to the performance obligations in the contract;

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

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

To recognize revenue from a contract with a customer, the Company performs the following five steps:

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

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

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

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

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

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

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Sales-based milestones and royalties :

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The current portion of deferred revenue represents the amount to be recognized within one year from the consolidated balance sheet date based on the estimated performance period of the underlying performance obligation.

The noncurrent portion of deferred revenue represents amounts to be recognized after one year through the end of the performance period of the performance obligation.

The non-current portion of deferred revenue represents amounts to be recognized after one year through the end of the performance period of the performance obligation.

All revenue was derived from customers located in the United States during the years ended November 30, 2022 and 2021.

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Stock-Based Compensation

The Company accounts for stock-based compensation using a fair value-based method, which requires the recognition of compensation expense for costs related to all stock-based payments including stock options, restricted stock units (RSUs) and purchase rights under the Employee Stock Purchase Plan (ESPP).

The Company estimates the fair value of stock options and purchase rights granted under the ESPP on the date of grant using the Black-Scholes option pricing model, which is impacted by the fair value of the Company’s common stock, as well as changes in assumptions regarding a number of highly complex and subjective variables.

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Subsequent to the IPO, the Company determines the fair value of stock options, RSUs and purchase rights under the ESPP using the market closing price of the Company’s common stock on the date of grant.

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For stock-based payments with service conditions only, the Company uses the straight-line method to allocate compensation cost to reporting periods over the requisite service period, which is generally the vesting period.

Subsequent to the adoption of ASU 2018-07, Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting as of December 1, 2019, stock-based compensation expense for non-employee stock-based awards is also measured based on the grant date fair value with the estimated fair value expensed over the period for which the non-employee is required to provide service in exchange for the award.

Stock-based compensation expense for non-employee stock-based awards is also measured based on the grant date fair value with the estimated fair value expensed over the period for which the non-employee is required to provide service in exchange for the award.

For stock-based payments with performance conditions, the Company evaluates the probability of achieving performance conditions at each reporting date.

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Other comprehensive income (loss) reflects certain gains and losses that are recorded as a component of stockholders’ equity (deficit) and are not reflected in the consolidated statements of operations.

The Company’s other comprehensive income (loss) consists of changes in unrealized gains and losses on available-for-sale investments.

The Company’s other comprehensive income (loss) consists of changes in unrealized gains and losses on available-for-sale marketable securities.

Net loss per share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities.

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock (including non-voting common stock and pre-funded warrants) outstanding during the period, without consideration for all other common stock equivalents.

Shares of common stock into which the pre-funded warrants may be exercised are considered outstanding for the purposes of computing net loss per share because the shares may be issued for little or no consideration, are fully vested and are exercisable after the original issuance date.

Diluted net loss is calculated by dividing the net loss by the weighted-average number of common stock and potentially dilutive securities outstanding for the period.

For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock, stock options, RSUs, common stock subject to repurchase related to unvested restricted stock awards and early exercise of stock options are considered to be potentially dilutive securities.

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

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

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

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

Because the Company has reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for those periods.

For purposes of the diluted net loss per share calculation, options to purchase common stock, options early exercised subject to vesting, RSUs and shares expected to be purchased under the ESPP are considered to be potentially dilutive securities.

Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive given the net loss for each period presented.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) (ASU 2016-02) , which requires the lessee to recognize a ROU asset and a lease liability for operating leases, initially measured at the present value of lease payments, in its consolidated balance sheet.

The Company adopted ASU 2016-02 effective December 1, 2020 using the alternative modified transition method, which applies ASU 2016-02 as of the adoption date and therefore, the Company has not applied the standard to the comparative periods presented in the Company's consolidated financial statements.

The Company elected the “package of practical expedients,” which permits the Company to not reassess its prior conclusions about lease identification, lease classification and initial direct costs.

The Company also elected the hindsight practical expedient to determine the lease term, the practical expedient to not separate lease and non-lease components and the policy election to not recognize ROU assets or lease liabilities for short-term leases.

As of the adoption date of December 1, 2020, the Company recognized an operating lease ROU asset of $ 13.3 million, operating lease current liabilities of $ 3.3 million and operating lease long-term liabilities of $ 10.9 million.

The difference between the operating lease ROU asset and operating lease liabilities primarily represented the existing deferred rent liability balance as of the adoption date of $ 0.9 million.

Operating lease ROU assets are presented within other assets, operating lease current liabilities are presented within current liabilities and operating lease long-term liabilities are presented within non-current liabilities on the consolidated balance sheet.

See Note 6 “Commitments and Contingencies” for additional details.

In June 2016, the FASB issued ASU No.

2016-13, Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires that financial assets measured at amortized cost be presented at the net amount expected to be collected.

The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect collectability.

ASU 2016-13 also eliminates the concept of “other-than-temporary” impairment when evaluating available-for-sale debt investments and instead focuses on determining whether any impairment is a result of a credit loss or other factors.

An entity will recognize an allowance for credit losses on available-for-sale debt investments rather than an other-than-temporary impairment that reduces the cost basis of the investment.

The Company adopted ASU 2016-13 as of December 1, 2020 .

The adoption did not have an impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurements (Topic 820):

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13), which modifies the disclosure requirements on fair value measurements by removing the requirement to disclose amounts of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation process for Level 3 fair value measurements, among other modifications to fair value measurement disclosure requirements.

The Company adopted ASU 2018-13 as of December 1, 2020 .

The adoption did not have an impact on the Company’s consolidated financial statements.

In November 2018, the FASB issued ASU No.

2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction between Topic 808 and Topic 606 (ASU 2018-18).

ASU 2018-18 clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer.

ASU 2018‑18 requires retrospective adoption to the date the Company adopted Topic 606 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings of the earliest annual period presented.

The Company adopted ASU 2018-18 as of December 1, 2020 .

The adoption did not have an impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes (ASU 2019-12), which is intended to simplify accounting for income taxes.

It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application.

ASU 2019-12 is effective for annual periods beginning after December 15, 2020, and interim periods within those fiscal years.

Early adoption is permitted.

The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements and does not expect the adoption to have a material impact on its consolidated financial statements.

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No.

2019‑12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes (ASU 2019-12), which is intended to simplify accounting for income taxes and eliminate certain exceptions from Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

ASU 2019-12 also requires the amount of tax that is based on income to be accounted for under Topic 740 as an income-based tax, with any incremental amount accounted for as a non-income-based tax recognized entirely in the period incurred.

The Company adopted ASU 2019-12 as of December 1, 2021 using the modified retrospective method, and recognized an immaterial non-income-based tax within operating expenses in the current period.

The adoption had no other impact on the Company’s consolidated financial statements.

Collaboration Agreements

Celgene (A Related Party)

In September 2015, the Company entered into a collaboration agreement with Celgene Corporation (the Celgene Agreement and Celgene, respectively), which was later acquired by Bristol-Myers Squibb Company (BMS) in November 2019, with an initial research term of four years for the discovery, development and commercialization of novel small molecule therapeutics in oncology, inflammation and immunology.

Under the terms of the Celgene Agreement, the Company received an upfront payment of $ 150.0 million in September 2015.

In addition, in September 2015, Celgene purchased 1,622,222 shares of the Company’s Series C redeemable convertible preferred stock at a price of $ 10.50 per share, resulting in net proceeds of $ 17.0 million.

As of November 30, 2019, BMS held approximately 10 % of total shares outstanding on an as-converted basis.

In January 2019, Celgene and BMS entered into a definitive merger agreement pursuant to which Celgene agreed to be acquired by BMS.

Based on the Company’s request for notification of the future disposition of the agreement, in June 2019, Celgene notified the Company that it was terminating the Celgene Agreement.

Upon termination of the Celgene Agreement in June 2019, any rights that Celgene had under the agreement reverted to the Company and no termination payments were due or payable.

The Company determined it had no remaining deliverables to be performed under the Celgene Agreement and as a result recognized all remaining deferred revenue in June 2019.

Collaboration revenue related to the Celgene Agreement was $ 0 , $ 0 and $ 28.4 million for the years ended November 30, 2021, 2020 and 2019, respectively.

As of November 30, 2021, there was no deferred revenue recorded on the consolidated balance sheet.

In June 2019, the Company entered into a global strategic collaboration agreement with Gilead, which was amended in August 2019 (the Gilead Agreement), to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with cancer and other challenging diseases using the Company’s DELigase platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.

In June 2019, the Company entered into a global strategic collaboration agreement with Gilead (as subsequently amended, the Gilead Agreement) to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with cancer and other challenging diseases using the Company’s DELigase platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.

In August 2019 and September 2022, the Company entered into the First Amendment and the Second Amendment, respectively, to the Gilead Agreement to clarify certain language of the Gilead Agreement.

These amendments had no impact on revenue recognition.

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Under the Gilead Agreement, Gilead has the option to license drug candidates directed to up to five targets resulting from the collaboration and is responsible for the clinical development and commercialization of drug candidates resulting from the collaboration.

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For drug targets that are subject to the collaboration, the Company is obligated to use commercially reasonable efforts to undertake a research program in accordance with a research plan agreed to by the parties and established on a target-by-target basis.

The Company has primary responsibility under the agreement for performing preclinical research activities (including target validation, drug discovery, identification or synthesis) pursuant to a research plan.

The Company has primary responsibility under the Gilead Agreement for performing preclinical research activities (including target validation, drug discovery, identification or synthesis) pursuant to a research plan.

Each party will bear its own costs in the conduct of research activities.

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Upon signing the Gilead Agreement, Gilead paid the Company an upfront payment of $ 45.0 million plus $ 3.0 million in additional fees.

From the signing of the Gilead Agreement to November 30, 2021, the Company has received payments of $ 18.5 million for research milestones and additional payments, including $ 5.0 million, which was received in the fourth quarter of 2021.

Additionally, in November 2021, the Company recognized a research milestone and received a payment of $ 6.0 million in the first quarter of 2022.

In addition, from the signing of the Gilead Agreement to November 30, 2022, the Company has received payments of $ 34.5 million for research milestones and additional payments.

As of November 30, 2022, the Company is eligible to receive up to approximately $ 2.3 billion in total additional payments, including up to $ 667.5 million upon the achievement of specified development milestones, up to $ 1.5 billion upon the achievement of specified sales milestones, subject to reduction for any product for which the Company exercises its option to co-develop and co-promote, and up to $ 136.8 million in certain additional fees related to target licensing, reservation and selection and research term extensions.

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The Company identified the following promises in the Gilead Agreement:

(1) the research licenses, (2) the research services, including selection campaign research services for certain replacement targets and (3) the obligation to share information during the research and to participate in the joint research committee and joint steering committee.

(1) the research licenses, (2) the research services, including selection campaign research services for certain replacement targets and (3) the obligation to share information during the research term and to participate in the joint research committee and joint steering committee.

The Company determined that the research licenses are not capable of being distinct due to the specialized nature of the research services to be provided by the Company, and, accordingly, this promise was combined with the research services and participation in the joint research committee as one single performance obligation.

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The Company concluded that Gilead’s target reservation right is not a performance obligation as it does not require any specific action from the Company and it is rather an exclusivity right and an attribute of other performance obligations in the Gilead Agreement, such as the research licenses.

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In order to determine the transaction price, the Company evaluated all the payments to be received during the duration of the contract.

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The contract term was determined to be the five-year initial research term which represents the estimated timing of completion of the identified deliverables.

Additionally, the Company considered the impact of Gilead terminating the agreement prior to the completion of the research services during the initial five-year research term and determined that there were significant economic costs to Gilead for doing so, and as such, did not adjust the contract term.

Additionally, the Company considered the impact of Gilead terminating the Gilead Agreement prior to the completion of the research services during the initial five-year research term and determined that there were significant economic costs to Gilead for doing so, and as such, did not adjust the contract term.

Using the cost-based input method, which the Company determined most faithfully depicts the transfer of its performance obligation to Gilead, the Company recognizes revenue based on actual costs incurred as a percentage of total estimated costs as the Company completes its performance obligation under the contract.

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For the year ended November 30, 2021, the Company recognized collaboration revenue related to the Gilead Agreement of $ 16.6 million, of which $ 11.1 million was included in deferred revenue as of November 30, 2020, and $ 3.1 million was related to performance obligations satisfied in previous periods.

For the year ended November 30, 2019, the Company recognized revenue related to the Gilead Agreement of $ 2.7 million.

As of November 30, 2021, $ 41.1 million was recorded as deferred revenue, of which $ 19.9 million was current, on the consolidated balance sheet related to the Gilead Agreement.

As of November 30, 2022, deferred revenue related to the Gilead Agreement was $ 27.4 million, of which $ 18.2 million was current.

As of November 30, 2021, deferred revenue related to the Gilead Agreement was $ 41.1 million, of which $ 19.9 million was current.

Additionally, as of November 30, 2021, $ 6.0 million was included in accounts receivable which represents the billed revenue related to the research milestone recognized in November 2021.

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In January 2021, as part of the existing collaboration agreement, Sanofi paid the Company $ 22.0 million to exercise its option to expand the number of targets in the collaboration agreement from three to a total of five targets.

The Company and Sanofi also entered into a first amendment to the collaboration agreement in January 2021 to modify the research term on all targets (the First Sanofi Amendment) .

In January 2021, the Company and Sanofi entered into the First Amendment to the Sanofi Agreement to modify the research term on all targets (the First Sanofi Amendment).

Over time and subject to certain limitations, Sanofi may elect to replace the drug targets with other reserved targets.

In December 2021, the Company and Sanofi entered into the Second Amendment to the Sanofi Agreement to extend the substitution deadline on certain targets.

In July 2022, the Company entered into the Third Amendment to the Sanofi Agreement to further extend the substitution deadline on certain targets.

The extensions of the substitution deadline had no impact on revenue recognition.

Also in July 2022, Sanofi elected to replace certain drug targets, and the substitution extended the research term of those targets by one year to 5.25 years and increased overall forecasted costs, which had an immaterial impact on revenue recognition.

In August 2022, the Company entered into the Fourth Amendment to the Sanofi Agreement to modify the research plan for a certain target, which had no impact on revenue recognition.

Under the Sanofi Agreement, Sanofi has exclusive rights and is responsible for the clinical development, commercialization and manufacture of drug candidates resulting from the collaboration while the Company retains the option to co-develop, co-promote and co-commercialize up to two targets, one of which must be selected from a list of targets designated at the execution of the Sanofi Agreement and one of which must be selected from targets identified by Sanofi in the future.

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The collaboration excludes the Company’s current internal protein degradation programs for which it retains all rights, and also excludes future internal programs, provided that the Company distinguished future programs as excluded from the scope of the collaboration.

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For drug targets that are subject to the collaboration, the Company has primary responsibility for conducting preclinical research activities (including target validation, drug discovery, identification or synthesis) in accordance with the applicable research plan agreed to by the parties and established on a target-by-target basis.

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Subsequently, in January 2021, Sanofi paid the Company an additional $ 22.0 million to exercise its option to expand the number of targets beyond the initial targets included in the collaboration.

The Company is eligible to receive additional payments if Sanofi exercises an option to extend the license term with respect to a particular target.

From the signing of the Sanofi Agreement to November 30, 2021, the Company has received a payment of $ 1.0 million for research milestones.

In addition, from the signing of the Sanofi Agreement to November 30, 2022, the Company has received payments of $ 3.0 million for research milestones.

As of November 30, 2022, the Company is eligible to receive up to approximately $ 2.5 billion in total payments, including payments of up to $ 496.0 million upon the achievement of specified development milestones, up to $ 625.0 million upon the achievement of specified regulatory milestones and up to $ 1.3 billion upon the achievement of certain sales milestones, as well as up to $ 126.5 million in certain additional fees related to target licensing and reservation.

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The practical alternative can be applied as the research activities for the two additional targets are similar to the research activities for the initial three targets.

Consequently, for the purpose of applying the practical alternative to estimating the standalone selling price of the material right, an expected consideration of $ 77.0 million was used for revenue recognition allocation, which represents the $ 55.0 million paid upfront for the three initial drug targets, and the $ 22.0 million for the additional consideration related to two additional targets which was included as part of applying the practical alternative, which was subsequently exercised by Sanofi.

Subsequently, upon the achievement of research milestones, $ 1.0 million in variable consideration was added to the transaction price, and a cumulative effect was recorded as revenue in the period the transaction price increased.

Revenue is recognized over the research term of 4.25 years, the revised research period that was agreed to in January 2021 in the First Sanofi Amendment, using the cost-based input method.

Using the cost-based input method, which the Company determined most faithfully depicts the transfer of its performance obligation to Sanofi, the Company recognizes revenue based on actual costs incurred as a percentage of total estimated costs as the Company completes its performance obligation under the contract.

Costs consist primarily of internal FTE and third-party contract costs related to the Sanofi Agreement.

The cumulative effect of revisions to estimated costs to complete the Company’s performance obligation is recorded in the period in which changes are identified and amounts can be reasonably estimated.

T otal estimated costs are primarily driven by the number of estimated FTEs, which requires significant management judgment.

Subsequently, upon the achievement of research milestones, $ 4.0 million in variable consideration was added to the transaction price, which includes $ 1.0 million added during the three months ended November 30, 2022, and a cumulative effect was recorded as revenue in the period the transaction price increased.

Revenue is recognized using the cost-based input method over the research term of 4.25 years, the revised research period that was agreed to in January 2021 in the First Sanofi Amendment, for certain targets, and 5.25 years, the revised research period due to the target substitutions in July 2022, for certain other targets.

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The Company accounted for the First Sanofi Amendment as if it were part of the existing contract with Sanofi as the remaining goods and services to be provided after the contract modification are not distinct from the goods and services already provided and, therefore, form part of a single performance obligation that is partially satisfied at the date of the contract modification.

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The effect of the revised research period on the Company’s measure of progress toward complete satisfaction of the performance obligation was recognized as an adjustment to revenue at the date of the contract modification on a cumulative catch-up basis.

Costs consist primarily of internal FTE and third-party contract costs related to the Sanofi Agreement.

Total estimated costs are primarily driven by the number of estimated FTEs, which requires significant management judgment.

For the year ended November 30, 2022, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 15.0 million, of which $ 14.0 million was included in deferred revenue as of November 30, 2021, and $ 0.6 million was related to performance obligations satisfied in previous periods.

For the year ended November 30, 2020, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 5.7 million.

As of November 30, 2021, $ 59.2 million was recorded as deferred revenue, of which $ 21.3 million was current, on the consolidated balance sheet related to the Sanofi Agreement.

For the year ended November 30, 2021, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 13.2 million, of which $ 13.0 million was included in deferred revenue as of November 30, 2020, and $ 0.1 million was related to performance obligations satisfied in previous periods.

As of November 30, 2022, deferred revenue related to the Sanofi Agreement was $ 46.2 million, of which $ 19.4 million was current and includes $ 1.0 million in contract assets representing the unbilled amount related to the research milestone recognized in November 2022.

As of November 30, 2021, deferred revenue related to the Sanofi Agreement was $ 59.2 million, of which $ 21.3 million was current .

Consolidated Balance Sheet Components

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Furniture and fixtures 452 437

Software 4,688 3,349

Software in progress 697 491

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Total property and equipment, net $ 17,163 $ 11,340

Depreciation and amortization expense was $ 2.8 million, $ 2.2 million and $ 2.4 million for the years ended November 30, 2021, 2020 and 2019, respectively.

For the years ended November 30, 2022 and 2021, depreciation and amortization expense was $ 5.3 million and $ 2.8 million, respectively, which includes amortization expense related to capitalized internal-use software of $ 1.2 million and $ 0.8 million, respectively.

All long-lived assets are maintained in the United States.

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Accrued taxes 85 75

Other 1,503 659

Total accrued expenses and other current liabilities $ 22,428 $ 14,549

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Fair Value Measurements

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and considers factors specific to the asset or liability.

The following tables presents the Company’s investments, which consist of cash equivalents and investments classified as available-for-sale investments, that are measured at fair value on a recurring basis as of November 30, 2021 and 2020 (in thousands):

November 30, 2021

Money market funds

treasury securities

Corporate debt securities

government agency securities

Corporate commercial paper

Municipal securities

Long-term investments:

treasury securities

Corporate debt securities

government agency securities

Municipal securities

The following tables present the Company’s investments, which consist of cash equivalents and available-for-sale marketable securities, that are measured at fair value on a recurring basis as of November 30, 2022 and 2021 (in thousands):

November 30, 2022 Level Amortized

cost Unrealized

gain Unrealized

loss Estimated

Money market funds Level 1 $ 59,452 $ — $ — $ 59,452

treasury securities Level 1 75,322 — ( 1,120 ) 74,202

Corporate debt securities Level 2 81,026 — ( 1,279 ) 79,747

government agency securities Level 2 8,998 — ( 135 ) 8,863

Corporate commercial paper Level 2 74,896 — — 74,896

Foreign government securities Level 2 7,051 — ( 92 ) 6,959

Long-term marketable securities:

treasury securities Level 1 5,779 — ( 98 ) 5,681

Corporate debt securities Level 2 3,492 — ( 217 ) 3,275

government agency securities Level 2 56,301 1 ( 1,379 ) 54,923

Total $ 372,317 $ 1 $ ( 4,320 ) $ 367,998

Included in cash and cash equivalents $ 59,452 $ — $ — $ 59,452

Included in Short-term investments

Included in Long-term investments

November 30, 2020

Money market funds

treasury securities

Corporate debt securities

government agency securities

Corporate commercial paper

Municipal securities

Long-term investments:

Corporate debt securities

government agency securities

Municipal securities

Included in marketable securities, current $ 247,293 $ — $ ( 2,626 ) $ 244,667

Included in marketable securities, non-current $ 65,572 $ 1 $ ( 1,694 ) $ 63,879

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November 30, 2021 Level Amortized

cost Unrealized

gain Unrealized

loss Estimated

Money market funds Level 1 $ 73,438 $ — $ — $ 73,438

treasury securities Level 1 20,608 — ( 9 ) 20,599

Corporate debt securities Level 2 46,599 1 ( 54 ) 46,546

government agency securities Level 2 16,496 1 ( 14 ) 16,483

Corporate commercial paper Level 2 121,495 — — 121,495

Municipal securities Level 2 10,082 9 — 10,091

Long-term marketable securities:

treasury securities Level 1 39,932 — ( 85 ) 39,847

Corporate debt securities Level 2 74,334 — ( 365 ) 73,969

government agency securities Level 2 16,236 — ( 67 ) 16,169

Municipal securities Level 2 7,229 — ( 25 ) 7,204

Total $ 426,449 $ 11 $ ( 619 ) $ 425,841

Included in cash and cash equivalents $ 73,438 $ — $ — $ 73,438

Included in Short-term investments

Included in Long-term investments

As of November 30, 2021 and 2020, the accrued interest receivable related to the Company’s investments was $ 0.9 million and $ 0.4 million, respectively, and was included in prepaid expenses and other current assets on the consolidated balance sheet.

Included in marketable securities, current $ 215,280 $ 11 $ ( 77 ) $ 215,214

Included in marketable securities, non-current $ 137,731 $ — $ ( 542 ) $ 137,189

As of November 30, 2022 and 2021, the accrued interest receivable related to the Company’s marketable securities was $ 1.1 million and $ 0.9 million, respectively, and was included in prepaid expenses and other current assets on the consolidated balance sheet.

Long-term marketable securities held by the Company generally mature within two years from the balance sheet date.

The Company classifies its money market funds and U.S.

treasury securities, which are valued based on quoted market prices in active markets with no valuation adjustment, as Level 1 assets within the fair value hierarchy.

The Company classifies its investments in corporate debt securities, U.S.

government agency securities, corporate commercial paper, and municipal securities as Level 2 assets within the fair value hierarchy.

The fair values of these investments are estimated by taking into consideration valuations obtained from third-party pricing services.

The Company classifies its marketable securities in corporate debt securities, U.S.

government agency securities, corporate commercial paper, foreign government securities and municipal securities as Level 2 assets within the fair value hierarchy.

The fair values of these marketable securities are estimated by taking into consideration valuations obtained from third-party pricing services.

The pricing services utilize industry standard valuation models, including both income- and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value.

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There were no transfers of financial instruments between valuation levels during the years ended November 30, 2022 and 2021.

As of November 30, 2021, the unrealized losses for available-for-sale investments were non-credit related, and the Company does not intend to sell the investments that were in an unrealized loss position, nor will it be required to sell those investments before recovery of their amortized cost basis, which may be maturity.

As of November 30, 2020, none of the Company’s available-for-sale investments that were in an unrealized loss position had been in an unrealized loss position for more than 12 months.

As of November 30, 2021, no allowance for credit losses for the Company’s investments was recorded.

During the years ended November 30, 2021, 2020 and 2019, the Company did no t recognize any impairment losses related to investments.

As of November 30, 2022 and 2021, the unrealized losses for available-for-sale marketable securities were non-credit related, and the Company does not intend to sell the securities that were in an unrealized loss position, nor will it be required to sell those securities before recovery of their amortized cost basis, which may be maturity.

As of November 30, 2022 and 2021, no allowance for credit losses for the Company’s marketable securities was recorded.

During the years ended November 30, 2022 and 2021, the Company did not recognize any impairment losses related to marketable securities.

Commitments and Contingencies

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As of November 30, 2022, the Company was not a party to any material legal proceedings.

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Indemnifications

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Operating Leases

The Company leases office and laboratory facilities in San Francisco, California under a lease agreement.

The original lease term was scheduled to end 60 months following the Company’s full occupancy of the leased premises, which occurred in April 2015.

In October 2015, the Company entered into a second lease agreement for additional space in the same building as its existing office and laboratory facilities.

In November 2017, the Company entered into an amendment to its original lease agreement that combined the Company’s two leases into a single lease agreement and extended the term of the lease agreement through April 30, 2025 .

The Company has an option to renew this lease for an additional two years which has not been included in the lease term used to calculate the ROU asset and lease liability as it is not reasonably certain that the Company will exercise this option.

The Company leases office and laboratory facilities totaling approximately 57,902 square feet within the same building in San Francisco, California under several lease agreements.

The terms of these lease agreements expire on April 30, 2025.

The Company has an option to renew these leases for an additional two years , which has not been included in the lease term used to calculate the right-of-use asset and lease liability as it is not reasonably certain that the Company will exercise this option.

The Company is required to pay base rent plus the tenant’s proportionate share of operating expenses as defined in the lease agreement.

Under the terms of the lease agreement, the Company paid the landlord security deposits totaling $ 91 thousand and issued a letter of credit to the landlord in the amount of $ 70 thousand, which is collateralized by a restricted deposit of $ 70 thousand.

In June 2020, the Company entered into a new lease agreement for additional space in the same building as the Company’s existing office for a 14 -month term ending on July 31, 2021 .

In December 2015, the Company entered into its first sublease agreement under which a portion of the Company’s leased space is subleased to another tenant.

The term of the sublease, which was originally scheduled to end on December 31, 2017, was extended through December 31, 2018 as the result of an amendment executed in November 2017.

The sublessee defaulted on this sublease agreement in August 2018, upon which a new creditor negotiated a second amendment to sublease dated October 2018 and the sublease agreement became a month-to-month agreement that ended in February 2019.

The Company entered into its second sublease agreement with a different tenant in November 2018, which was subsequently amended in March 2019 to increase the size of the space.

The term of the second sublease ended in August 2019.

In July 2021, the Company entered into a lease agreement for the lease of approximately 19,320 square feet of office space located at 455 Mission Bay Boulevard South, San Francisco, California, for a research and development laboratory and related uses (Mission Bay Lease).

In July 2021, the Company entered into a lease agreement for the lease of approximately 19,320 square feet of office space in a different building in San Francisco, California.

The lease commenced on December 1, 2021 and will expire on June 30, 2024, unless terminated earlier.

The minimum rent payable by the Company under the lease will be approximately $ 0.1 million per month and increase by 3 % per year for total minimum rent payments of $ 3.8 million over the lease term.

The Company will also be responsible for the payment of additional rent to cover the Company’s share of the annual operating and tax expenses and utilities costs for the building.

Under the terms of the lease agreement, the Company issued a letter of credit to the landlord in the amount of $ 0.1 million, which is collateralized by a restricted deposit of $ 0.1 million.

The Company has not recognized a ROU asset or aggregate lease liability as of November 30, 2021 for the minimum rental payments related to the Mission Bay Lease as the Company did not control the underlying assets at any time in the year ended November 30, 2021.

As of November 30, 2021, operating lease ROU assets were $ 14.0 million, operating lease current liabilities were $ 3.8 million and operating lease long-term liabilities were $ 9.2 million.

For the year ended November 30, 2021, cash paid for operating lease liabilities was $ 4.0 million.

The Company is required to pay base rent plus the tenant’s proportionate share of operating expenses as defined in the lease agreement.

The leased premises were subject to additional variable lease payments related to landlord-owned improvements which were not estimable at lease inception.

The right-of-use assets recognized in exchange for lease obligations for these additional variable lease payments were $ 1.2 million and $ 0.3 million for the years ended November 30, 2022 and 2021, respectively.

In March 2022, the Company entered into a lease agreement for the lease of approximately 46,434 square feet of office space in The Woodlands, Texas, for a research and development laboratory and related uses.

The Company obtained access to the premise on August 1, 2022 to commence construction of landlord-owned improvements, and the lease is expected to commence in fiscal year 2023 when the underlying assets become available for use and will expire on March 1, 2035, unless terminated earlier.

The Company has an option to renew for two additional terms of five years each, and it is not reasonably certain that the Company will exercise this option.

The minimum rent payable by the Company under the lease will be approximately $ 205,000 per month, beginning on March 1, 2023, which amount will increase by 3 % per year over the term of the lease;

provided that, for the period between March 1, 2023 and February 29, 2024, the minimum rent payable by the Company under the lease will be approximately $ 154,000 per month.

The Company will also be responsible for the payment of the tenant’s proportionate share of operating expenses as defined in the lease agreement.

Operating lease expenses, excluding additional rent charges for utilities, maintenance and real estate taxes, were $ 5.9 million and $ 3.8 million for the years ended November 30, 2022 and 2021, respectively.

Short-term lease expense was not material for all periods presented.

As of November 30, 2022, the weighted average remaining lease term was 2.2 years and the weighted average discount rate was 2.98 %.

For the year ended November 30, 2021, total operating lease expense was $ 3.8 million and short-term lease expense was not material.

Prior to the adoption of Topic 842 on December 1, 2020, operating lease expense and sublease income was as follows (in thousands):

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Other information related to leases were as follows (in thousands):

Year Ended November 30,

Operating lease expense

Operating sublease income

Net operating lease expense

Cash paid for amounts included in the measurement of lease liabilities:

Cash flows from operating leases $ 6,578 $ 4,026

Supplemental disclosures of non-cash investing and financing activities:

Right-of-use assets recognized in exchange for lease obligations $ 5,068 $ 2,371

The undiscounted future non-cancellable lease payments under the Company’s lease agreement as of November 30, 2022 were as follows (in thousands):

Year ending November 30,

Year ending November 30, Operating

2028 to 2035 22,556

Total undiscounted lease payments 46,708

Undiscounted lease payments related to Mission Bay Lease

imputed interest ( 430 )

Total lease liabilities

Operating lease current liabilities

Operating lease long-term liabilities

Total lease liabilities

undiscounted lease payments related to the lease in The Woodlands, Texas ( 34,314 )

Total operating lease liabilities $ 11,964

Operating lease liabilities, current $ 5,530

Operating lease liabilities, net of current portion 6,434

Total operating lease liabilities $ 11,964

The Company’s Restated Certificate of Incorporation authorizes the Company to issue up to 500,000,000 shares of common stock, $ 0.001 par value per share, as of November 30, 2022 and 2021.

Holders of common stock are entitled to dividends when and if declared by the Company’s board of directors, subject to the prior rights of the preferred stockholders.

Holders of common stock are entitled to dividends when and if declared by the Company’s board of directors, subject to the prior rights of the holders of shares of preferred stock.

The holder of each share of common stock is entitled to one vote.

As of November 30, 2022, no dividends have been declared.

Common stock reserved for future issuance, on an as-if converted basis, as of November 30, 2021 and 2020, consists of the following and has been adjusted for the 1-for-3 reverse stock split:

Issuance of options under stock option plan

In July 2022, the Company issued pre-funded warrants to purchase an aggregate of 6,814,920 shares of the Company’s common stock in RDOs at a price of $ 13.939 per pre-funded warrant.

The pre-funded warrants were immediately exercisable, have an exercise price of $ 0.001 and may be exercised at any time after the date of issuance.

A holder of pre-funded warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 9.99 % of the number of shares of the Company’s common stock outstanding immediately after giving effect to such exercise.

A holder of the pre-funded warrants may increase or decrease this percentage not in excess of 19.99 % by providing at least 61 days’ prior notice to the Company.

As of November 30, 2022, all of the pre-funded warrants remained available for exercise.

The pre-funded warrants were classified as a component of permanent equity in the Company's consolidated balance sheet as they are freestanding financial instruments that are immediately exercisable, do not embody an obligation for the Company to repurchase its own shares and permit the holders to receive a fixed number of shares of common stock upon exercise.

All of the shares underlying the pre-funded warrants have been included in the weighted-average number of shares of common stock used to calculate net loss per share attributable to common stockholders because the shares may be issued for little or no consideration, are fully vested and are exercisable after the original issuance date of the pre-funded warrants.

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Common stock reserved for future issuance, on an as-if converted basis, as of November 30, 2022 and 2021, consists of the following:

Options to purchase common stock issued and outstanding 8,256,957 5,878,552

Shares available for future stock option grants 834,291 2,562,570

Shares available for issuance under employee stock

purchase plan

Shares available for issuance under employee stock purchase plan 1,325,523 1,015,184

Restricted stock units issued and outstanding 784,824 20,000

Pre-funded warrants issued and outstanding 6,814,920 —

Total common stock reserved for future issuance 18,016,515 9,476,306

Redeemable Convertible Preferred Stock

The Company’s Restated Certificate of Incorporation authorizes the Company to issue zero shares of redeemable convertible preferred stock as of November 30, 2021 and 2020 and there was no outstanding redeemable convertible preferred stock as of November 30, 2021 and 2020.

In March 2020, the Company issued 9,431,364 shares of Series D redeemable convertible preferred stock at an issuance price of $ 12.75 per share, resulting in net proceeds of $ 119.9 million.

The Series D redeemable convertible preferred stock had a liquidation price per share equal to the original issue price per share.

Immediately prior to the closing of the IPO in July 2020, all shares of redeemable convertible preferred stock then outstanding, including 9,431,364 shares of Series D redeemable convertible preferred stock, converted into 22,245,251 shares of common stock.

Stock-Based Compensation

Equity Incentive Plans

The 2020 Equity Incentive Plan (2020 Plan) serves as the successor to the 2012 Equity Incentive Plan (2021 Plan, and together with the 2020 Plan, the Stock Plans) and provides for the granting of stock options, stock appreciation rights (SARs), restricted stock awards (RSAs), restricted stock units (RSUs), performance awards and stock bonus awards to employees, directors, consultants, independent contractors and advisors of the Company.

The Company’s 2020 Equity Incentive Plan (the 2020 Plan) serves as the successor to the Company’s 2012 Equity Incentive Plan (together with the 2020 Plan, the Stock Plans) and provides for the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units (RSUs), performance awards and stock bonus awards to employees, directors, consultants, independent contractors and advisors of the Company.

Under the Stock Plans, the Company generally grants stock-based awards with service-based vesting conditions only.

Options granted typically vest over a four-year period but may be granted with different vesting terms.

Options granted typically vest under various different vesting terms over a four-year period and expire ten years from the date of grant.

In the case of an incentive stock option granted to an employee who at the time of grant owns stock representing more than 10 % of the total combined voting power of all classes of stock, the exercise price shall be no less than 110 % of the fair value per share on the date of grant, and the award shall expire five years from the date of grant.

In the case of all other stock options, the per share exercise price shall be no less than 100 % of the fair value per share on the date of grant.

RSUs issued typically vest over a two‑year period, but may be granted with different vesting terms, and expire ten years from the date of grant.

RSUs issued typically vest under various different vesting terms over a two - to four-year period.

Following the effectiveness of the 2020 Plan on July 22, 2020, the Company ceased making grants under the 2012 Plan.

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As of November 30, 2022, there were 834,291 shares of common stock reserved for future issuance pursuant to the 2020 Plan.

Option activity under the Stock Plans is set forth below and has been adjusted for the 1-for-3 reverse stock split (in thousands, except per share data):

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Stock options

Option activity under the Stock Plans is set forth below:

outstanding Weighted-

price Weighted-

(in years) Aggregate

(in thousands)

Balances as of November 30, 2021 5,878,552 $ 19.42 8.67 $ 65,692

4 unchanged sentences

Options vested and expected to vest as of November 30, 2022 (2)

8,279,203 $ 19.43 8.44 $ 13,322

Options exercisable as of November 30, 2022 3,629,383 $ 16.14 7.65 $ 12,473

____________________________

The aggregate intrinsic values were calculated as the pre-tax difference between the exercise price of stock options and the quoted market price of the Company’s common stock on November 30, 2022 for all in‑the‑money stock options.

The total intrinsic value of stock options exercised during the years ended November 30, 2021, 2020 and 2019, was $ 15.9 million, $ 3.4 million and $ 0.1 million, respectively.

The total intrinsic value of stock options exercised during the years ended November 30, 2022 and 2021 was $ 4.5 million and $ 15.9 million, respectively.

Certain stock options granted by the Company prior to the date of IPO are exercisable at the date of grant, with unvested shares subject to repurchase by the Company in the event of the voluntary or involuntary termination of employment of the stockholder.

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The corresponding exercise value of $ 0.2 million as of November 30, 2022 is recorded as a stock-based compensation liability.

RSU activity was as follows:

Number of RSUs

Weighted-average grant date fair value

Balance as of November 30, 2020

RSUs forfeited

Balance as of November 30, 2021

Employee Stock Purchase Plan

Under the 2020 Employee Stock Purchase Plan (ESPP), eligible employees are offered the option to purchase shares of common stock at a discount over a series of offering periods.

Each offering period may consist of one or more purchase periods.

The purchase price for shares of common stock purchased under the ESPP will be 85 % of the lesser of the fair market value of the Company’s common stock on (i) the first trading day of the applicable offering period or (ii) the last trading day of each purchase period in the applicable offering period.

During the year-ended November 30, 2021, the Company issued 103,464 shares pursuant to the ESPP at a weighted-average price of $ 19.92 per share.

As of November 30, 2021, there were 1,015,184 shares of common stock reserved for issuance pursuant to the ESPP.

Stock-Based Compensation

During the years ended November 30, 2021, 2020 and 2019, the weighted-average grant date fair value of options granted was $ 21.15 , $ 9.50 and $ 1.41 per share, respectively, and the total fair value of employee options vested was $ 12.0 million, $ 3.1 million and $ 0.5 million, respectively.

The Company estimated the fair value of stock options and purchase rights under ESPP using the Black-Scholes option pricing model.

The fair value of these stock awards was estimated using the following assumptions:

The fair value of options granted during the years ended November 30, 2022 and 2021 was estimated using the Black-Scholes option pricing model on the grant date using the following assumptions:

Expected term (years) 5.50 - 6.07

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0.52 % - 1.24 %

0.34% - 1.79%

1.42% - 2.55%

Dividend yield 0 % 0 %

The expected term represents the weighted-average period the stock-based payments are expected to remain outstanding.

The expected term assumption for stock options was determined using the simplified method.

The expected term assumption for stock options was determined using the simplified method for “plain-vanilla” options.

The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company does not have sufficient trading history for its common stock.

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The expected dividend yield is 0 % as the Company has not paid and does not anticipate paying dividends on its common stock.

The following table sets forth stock-based compensation expense related to stock options, RSUs and ESPP that is included in the Company’s consolidated statements of operations (in thousands):

During the years ended November 30, 2022 and 2021, the weighted-average grant date fair value of options granted was $ 11.80 and $ 21.15 per share, respectively.

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Restricted stock units

RSU activity under the Stock Plans is set forth below:

Number of RSUs Weighted-average grant date fair value

Balances as of November 30, 2021 20,000 $ 27.42

RSUs granted 858,582 19.11

RSUs vested ( 46,028 ) 20.40

RSUs forfeited ( 47,730 ) 23.62

Balances as of November 30, 2022 784,824 $ 18.97

During the years ended November 30, 2022 and 2021, the weighted-average grant date fair value of RSUs granted was $ 19.11 and $ 27.42 per share, respectively, and the total fair value of RSUs vested was $ 0.9 million and zero , respectively.

Employee Stock Purchase Plan

Under the Company’s 2020 Employee Stock Purchase Plan (the ESPP), eligible employees are entitled to purchase shares of common stock at a discount with accumulated payroll deductions.

During the year ended November 30, 2022, the Company issued 136,304 shares pursuant to the ESPP at a weighted-average price of $ 14.34 per share.

As of November 30, 2022, there were 1,325,523 shares of common stock reserved for issuance pursuant to the ESPP.

The fair value of ESPP granted during the years ended November 30, 2022 and 2021 was estimated using the Black-Scholes option pricing model on the grant date using the following assumptions:

Expected term (years) 0.5

Expected volatility 70 % - 101 %

Risk-free interest rate 0.67 % - 3.12 %

0.05 % - 0.06 %

Dividend yield 0 % 0 %

Stock-Based Compensation

Stock-based compensation expense related to the Stock Plans and the ESPP that is included in the Company’s consolidated statements of operations is as follows (in thousands):

Year Ended November 30,

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Total stock-based compensation $ 28,131 $ 15,800

During the years ended November 30, 2022 and 2021, capitalized stock-based compensation related to internal-use software development was $ 69,000 and zero , respectively.

As of November 30, 2022, the total compensation cost related to stock-based awards not yet recognized was $ 79.3 million, which is expected to be amortized on a straight-line basis over the weighted-average remaining vesting period of approximately 2.73 years.

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Defined Contribution Plan

The Company sponsors a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code (the 401(k) Plan), which provides for the Company to make discretionary matching or discretionary annual contributions to the 401(k) Plan, for its employees.

The Company sponsors a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (the 401(k) Plan), which provides for the Company to make discretionary matching or discretionary annual contributions to the 401(k) Plan, for its employees.

Substantially all of the Company’s employees are eligible to participate in the 401(k) Plan.

Employees may contribute a percentage of their annual compensation to the plan, subject to statutory limitations.

The Company has made contributions to the 401(k) Plan and recorded contribution expense of $ 0.7 million, $ 0.4 million and $ 0.3 million during the years ended November 30, 2021, 2020 and 2019, respectively.

The Company recorded a current income tax expense of $ 0.1 million for the year ended November 30, 2021, primarily due to state taxes offset by a federal income tax refund.

The Company recorded a current income tax benefit of $ 20.5 million for the year ended November 30, 2020, primarily due to carryback of net operating losses to prior years and changes in reserves for unrecognized tax benefits.

The Company recorded a current income tax expense of $ 0.2 million for the year ended November 30, 2019, primarily due to reserves for unrecognized tax benefits, minimum state taxes and a true-up from the prior year.

The Company has made contributions to the 401(k) Plan and recorded contribution expense of $ 0.9 million and $ 0.7 million during the years ended November 30, 2022 and 2021, respectively.

For the year ended November 30, 2022, the Company did not record any current income tax benefit or provision, and for the year ended November 30, 2021, the Company recorded a current income tax provision of $ 0.1 million primarily due to state taxes offset by a federal income tax refund.

The Company had generated net operating losses (NOLs) since inception and has established a valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets.

Loss before provision for income taxes includes the following component (in thousands):

The provision for (benefit from) income taxes consists of the following (in thousands):

Total provision for (benefit from) income taxes

Domestic $ ( 180,360 ) $ ( 117,063 )

$ ( 180,360 ) $ ( 117,063 )

The provision for income taxes consists of the following (in thousands):

Federal $ — $ ( 203 )

Total provision for income taxes $ — $ 131

The effective tax rate differs from the federal statutory rate as follows:

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Research and development tax credits 3.5 4.5

Unrecognized income tax benefits

Federal rate impact due to CARES Act

Stock-based compensation ( 2.0 ) ( 1.2 )

Change in valuation allowance ( 28.4 ) ( 29.3 )

Other — ( 0.1 )

Total — % ( 0.1 ) %

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Deferred Tax Assets and Liabilities

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Realization of the deferred tax assets is dependent upon future taxable income, the amount, if any, and timing of which are uncertain.

The Company has established a valuation allowance to offset deferred tax assets as of November 30, 2021 and 2020 due to the uncertainty of realizing future tax benefits from its net operating loss (NOL) carryforwards and other deferred tax assets.

The valuation allowance increased by $ 36.1 million during the year ended November 30, 2021, primarily related to an increase on the deferred tax asset for deferred revenue, research and development (R&D) credits and NOL carryforwards.

The valuation allowance increased by $ 7.6 million during the year ended November 30, 2020, primarily due to an increase on the deferred tax asset for deferred revenue.

The valuation allowance increased by $ 8.5 million during the year ended November 30, 2019, primarily due to an increase in NOL carryforwards.

The Company has established a valuation allowance to offset deferred tax assets as of November 30, 2022 and 2021 due to the uncertainty of realizing future tax benefits from its NOL carryforwards and other deferred tax assets.

The valuation allowance increased by $ 54.8 million during the year ended November 30, 2022, primarily related to an increase on the deferred tax asset for research and development (R&D) credits and NOL carryforwards.

The valuation allowance increased by $ 36.1 million during the year ended November 30, 2021, primarily due to an increase on the deferred tax asset for deferred revenue, R&D credits and NOL carryforwards.

As of November 30, 2022, the Company had NOL carryforwards available to reduce future taxable income, if any, for federal and state income tax purposes of $ 276.3 million and $ 299.6 million, respectively.

Federal NOL carryforwards generated for tax years beginning before December 31, 2017 can be carried forward twenty years and begin expiring in 2029 .

Federal NOL carryforwards generated for tax years beginning before December 31, 2017 can be carried forward 20 years and begin expiring in 2029 .

Federal NOL carryforwards of $ 272.9 million for tax years beginning after December 31, 2017 can be carried forward indefinitely.

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If not utilized, the federal credit carryforwards will begin expiring in 2032 and the state credits carry forward indefinitely .

Internal Revenue Code Section 382 places a limitation on the utilization of NOL and tax credit carryforwards in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50 percentage points.

Internal Revenue Code of 1986, as amended (IRC), Section 382 places a limitation on the utilization of NOL and tax credit carryforwards in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50 percentage points.

The Company has identified two ownership changes that have triggered a limitation on pre-change NOLs under Section 382.

A majority of the Company’s pre-change NOLs remain available within the carryforward period provided by the Internal Revenue Code, subject to availability of taxable income.

A majority of the Company’s pre-change NOLs remain available within the carryforward period provided by the IRC, subject to availability of taxable income.

As a result of the ownership changes, the Company has determined that approximately $ 0.4 million of NOLs will expire unutilized, and as such, these NOLs are not reflected in the Company’s deferred tax asset balance.

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Unrecognized Tax Benefits

7 unchanged sentences

Balance at beginning of period $ 6,331 $ 5,361

Additions based on tax positions related to

current period

Additions based on tax positions related to prior period — 1

Additions based on tax positions related to current period 3,930 2,282

Settlements — ( 1,313 )

Balance at end of period $ 10,261 $ 6,331

5 unchanged sentences

The Company continues to maintain an unrecognized tax benefit related to federal R&D credits generated in years not covered by the examination.

Additionally, in January 2019 the California Franchise Tax Board (FTB) initiated an examination of the Company’s California tax return for the years ending in 2015, 2016, 2017, and 2018.

Additionally, in January 2019 the California Franchise Tax Board (FTB) initiated an examination of the Company’s California tax return for the tax years ending in 2015, 2016, 2017 and 2018.

During the year ended November 30, 2021, the FTB issued proposed audit assessments related to revenue sourcing and R&D credits.

2 unchanged sentences

The Company maintains an unrecognized tax benefit related to its California R&D credits for all years.

All of the Company’s tax years will remain open for examination by the federal and state authorities for three and four years , respectively, from the date of the utilization of any net operating losses.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic.

All of the Company’s tax years will remain open for examination by the federal and state authorities for three and four years , respectively, from the date of the utilization of any NOLs.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic.

The CARES Act, among other things, allows NOLs incurred in taxable years 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

2 unchanged sentences

These refund claims were approved by Congressional Joint Committee on Taxation during the year ended November 30, 2021.

As of November 30, 2021, the Company has received the full amount of these refund claims.

As of November 30, 2021, the Company had received the full amount of these refund claims.

In August 2022, the U.S.

Inflation Reduction Act (the Act) was enacted into law.

The Act includes various tax provisions, including an excise tax on stock repurchases, expanded tax credits for clean energy incentives and a corporate alternative minimum tax that generally applies to U.S.

corporations with adjusted financial statement income in excess of $1.0 billion.

The Company does not expect the Act to have a material impact on its financial statements.

In December 2017, the Tax Cuts and Jobs Act (TCJA) was signed into law, significantly reforming the Internal Revenue Code of 1986, as amended (IRC).

The TCJA contained certain provisions that went into effect on January 1, 2022, including a provision impacting Section 174 of the IRC whereby for tax years beginning on or after January 1, 2022, taxpayers are required to capitalize and amortize, rather than deduct, research and experimental (R&E) expenses.

The R&E expenses under Section 174 must be amortized over five years for research performed in the U.S.

and 15 years for research performed outside the U.S.

The provisions of Section 174 are not applicable to the financial statements as of and for the year ended November 30, 2022.

The Company is closely monitoring these provisions and is in the process of analyzing the potential impact to its income taxes and financial position in future years.

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Net Loss Per Share

The following table sets forth the computation of the Company’s basic and diluted net loss per share, which excludes shares which are legally outstanding but subject to repurchase by the Company (in thousands, except share and per share data):

The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common stockholders, which excludes shares which are legally outstanding but subject to repurchase by the Company (in thousands, except share and per share data):

Year Ended November 30,

Weighted-average number of shares outstanding,

basic and diluted

Net loss $ ( 180,360 ) $ ( 117,194 )

Weighted-average number of shares outstanding, basic and diluted (1)

48,607,990 42,895,383

Net loss per share, basic and diluted $ ( 3.71 ) $ ( 2.73 )

The shares underlying the pre-funded warrants to purchase an aggregate of 6,814,920 shares of the Company’s common stock have been included in the calculation of the weighted-average number of shares outstanding, basic and diluted, for the year ended November 30, 2022.

The following potentially dilutive securities were excluded from the computation of the diluted net loss per share of common stock for the periods presented because their effect would have been anti-dilutive:

Redeemable convertible preferred stock on an as-

converted basis

Options to purchase common stock

Years ended November 30,

Options to purchase common stock issued and outstanding 8,256,957 5,878,552

Options early exercised subject to vesting 22,246 58,794

Shares expected to be purchased under employee

stock purchase plan

Restricted stock

Restricted stock units issued and outstanding 784,824 20,000

Shares expected to be purchased under employee stock purchase plan 123,194 50,882

Total 9,187,221 6,008,228

Related Party Transactions

Following its acquisition of Celgene, BMS owned 1,622,222 shares of the Company’s Series C redeemable convertible preferred stock that automatically converted into shares of the Company’s common stock immediately prior to the closing of the Company’s IPO.

In June 2019, the Celgene Agreement was terminated in its entirety with no further payments from Celgene and no remaining deliverables from the Company.

Upon the termination, BMS ceased to be a related party of the Company.

For the year ended November 30, 2019, the Company recorded collaboration revenue under the Celgene Agreement of $ 28.4 million.

The Company’s Chief Financial Officer is a trustee for the multiple employer welfare association that facilitates the acquisition and administration of the Company’s healthcare plans.

Expenses related to the healthcare plan premiums were $ 2.6 million, $ 1.6 million and $ 1.4 million for the years ended November 30, 2021, 2020 and 2019, respectively.

Expenses related to the healthcare plan premiums were $ 4.0 million and $ 2.6 million for the years ended November 30, 2022 and 2021, respectively.

As of November 30, 2022 and 2021, the amount recorded in accounts payable and accrued expenses and other current liabilities in connection with this healthcare plan provider was not material.

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Changes in and Disagreements with Accountants 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 8. Financial Statements and Supplementary Data