What changed in this filing

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Item 1. Financial Statements

2023-10-12 compared with 2023-07-13 · 106 added, 70 removed, 479 unchanged (27% of the section changed)

7 unchanged sentences

Marketable securities, current 216,548 244,667

Accounts receivable 2,000 —

Prepaid expenses and other current assets 7,097 9,308

18 unchanged sentences

Stockholdersʼ equity:

Preferred stock, $ 0.001 par value— 10,000,000 shares authorized as of May 31, 2023 and November 30, 2022;

no shares issued and outstanding as of May 31, 2023 and November 30, 2022

Common stock, $ 0.001 par value— 500,000,000 shares authorized as of May 31, 2023 and November 30, 2022;

47,631,208 and 47,172,299 shares issued and outstanding as of May 31, 2023 and November 30, 2022, respectively

Preferred stock, $ 0.001 par value— 10,000,000 shares authorized as of August 31, 2023 and November 30, 2022;

no shares issued and outstanding as of August 31, 2023 and November 30, 2022

Common stock, $ 0.001 par value— 500,000,000 shares authorized as of August 31, 2023 and November 30, 2022;

48,503,768 and 47,172,299 shares issued and outstanding as of August 31, 2023 and November 30, 2022, respectively

Additional paid-in capital 738,240 709,220

8 unchanged sentences

Three Months Ended

May 31, Six Months Ended

August 31, Nine Months Ended

2023 2022 2023 2022

16 unchanged sentences

Three Months Ended

May 31, Six Months Ended

August 31, Nine Months Ended

2023 2022 2023 2022

29 unchanged sentences

Balance as of May 31, 2022 45,040,068 45 578,605 ( 3,085 ) ( 308,826 ) 266,739

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 24,147 — 174 — — 174

Vesting of restricted stock units 18,469 — — — — —

Vesting of early exercised stock options — — 32 — — 32

Issuance under employee stock purchase plan 65,097 — 891 — — 891

Stock-based compensation — — 6,988 — — 6,988

Unrealized loss on available-for-sale marketable securities — — — ( 657 ) — ( 657 )

Net loss — — — — ( 45,709 ) ( 45,709 )

Balance as of August 31, 2022 47,147,781 $ 47 $ 700,775 $ ( 3,742 ) $ ( 354,535 ) $ 342,545

Common stock Additional

22 unchanged sentences

Balance as of May 31, 2023 47,631,208 48 728,038 ( 1,903 ) ( 466,262 ) 259,921

Exercise of pre-funded warrants 568,863 1 — — — 1

Exercise of stock options 101,219 — 927 — — 927

Vesting of restricted stock units 100,729 — — — — —

Vesting of early exercised stock options — — 29 — — 29

Issuance under employee stock purchase plan 101,749 — 776 — — 776

Stock-based compensation — — 8,470 — — 8,470

Unrealized gain on available-for-sale marketable securities — — — 675 — 675

Net loss — — — — ( 36,982 ) ( 36,982 )

Balance as of August 31, 2023 48,503,768 $ 49 $ 738,240 $ ( 1,228 ) $ ( 503,244 ) $ 233,817

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

2 unchanged sentences

(in thousands)

Six Months Ended May 31,

Nine Months Ended August 31,

Cash flows from operating activities

18 unchanged sentences

Purchases of property and equipment ( 5,816 ) ( 9,679 )

Net cash provided by investing activities 59,899 35,266

Net cash provided by (used in) investing activities 82,674 ( 27,810 )

Cash flows from financing activities

Proceeds from issuances of pre-funded warrants, net of issuance costs — 94,942

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

Proceeds from exercise of stock options and pre-funded warrants 981 1,030

8 unchanged sentences

Vesting of early exercised stock options $ 91 $ 114

As of May 31,

Issuance costs related to pre-funded warrants included in accrued expenses and other liabilities $ — $ 183

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

As of August 31,

Reconciliation of cash, cash equivalents and restricted cash:

12 unchanged sentences

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, two for each collaboration.

The Company’s partnered drug discovery pipeline consists of multiple programs under collaboration agreements with Gilead Sciences, Inc.

(Gilead), Sanofi S.A.

(Sanofi) and Seagen Inc.

(Seagen), within which the Company retains certain options for co-development, co-commercialization and profit sharing in the United States for multiple drug candidates.

Equity Distribution Agreement

6 unchanged sentences

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 $ 19.3 million, after deducting offering commissions and expenses paid by the Company.

As of May 31, 2023, the Company had $ 130.0 million of common stock remaining available for sale under the Equity Distribution Agreement.

As of August 31, 2023, the Company had $ 130.0 million of common stock remaining available for sale under the Equity Distribution Agreement.

Registered Direct Offerings

3 unchanged sentences

Liquidity and Management Plans

As of May 31, 2023, the Company had cash, cash equivalents and short-term marketable securities of $ 281.2 million and an accumulated deficit of $ 466.3 million.

As of August 31, 2023, the Company had cash, cash equivalents and short-term marketable securities of $ 258.9 million and an accumulated deficit of $ 503.2 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.

3 unchanged sentences

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 condensed 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 and Gilead or future collaboration agreements, if any.

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 Gilead, Sanofi and Seagen or future collaboration agreements, if any.

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.

5 unchanged sentences

GAAP) and applicable rules and regulations of the SEC regarding interim financial reporting.

The Company’s condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair statement of the Company’s financial position as of and for the three and six months ended May 31, 2023.

The condensed consolidated balance sheet as of November 30, 2022, was derived from the audited annual financial statements as of that date.

24 unchanged sentences

The Company is closely monitoring ongoing events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, including Silicon Valley Bank (SVB).

On March 10, 2023, SVB, where the Company maintained an operating account with a cash balance of less than 1% of the Company's total cash, cash equivalents and marketable securities, was closed by the California Department of Financial Protection and Innovation and the FDIC was appointed as receiver.

On March 12, 2023, the U.S.

Department of the Treasury, Federal Reserve Board, and FDIC released a joint statement announcing that the FDIC would complete its resolution of SVB in a manner that fully protected all depositors at SVB and that depositors would have access to all of their money starting March 13, 2023.

On March 26, 2023, it was announced that First-Citizens Bank & Trust Company would assume all of SVB's deposits and loans as of March 27, 2023.

As of March 27, 2023, in connection with the closure of SVB by the California Department of Financial Protection and Innovation and the FDIC, First-Citizens Bank & Trust Company assumed all of SVB’s deposits and loans.

Prior to SVB’s closure, the Company maintained with SVB an operating account with a cash balance of less than 1 % of the Company’s total cash, cash equivalents and marketable securities.

In light of the foregoing, the Company does not believe that it has exposure to loss as a result of SVB’s receivership.

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

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

Other Risks and Uncertainties

1 unchanged sentence

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, 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 Company is subject to risks and uncertainties as a result of macroeconomic events and conditions, including increasing financial market volatility and uncertainty, inflation, increasing interest rates, the federal debt ceiling and budget, instability in the global banking system, the impact of war or military conflict, including the war in Ukraine, and public health pandemics.

The extent to which macroeconomic factors, including 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.

Moreover, the Company is subject to risks and uncertainties as a result of global business, political and macroeconomic events and conditions, including increasing financial market volatility and uncertainty, inflation, increasing interest rates, uncertainty with respect to the federal budget and debt ceiling, instability in the global banking system, cybersecurity events, the impact of war or military conflict, including regional conflicts around the world, and public health pandemics.

The extent to which business, political and macroeconomic factors, including 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.

52 unchanged sentences

Recently Adopted Accounting Pronouncements

There have been no recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the six months ended May 31, 2023 that are of significance or potential significance to the Company.

There have been no recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the nine months ended August 31, 2023 that are of significance or potential significance to the Company.

Collaboration Agreements

9 unchanged sentences

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

In addition, from the signing of the Gilead Agreement to May 31, 2023, the Company has received payments of $ 41.0 million for research milestones and additional payments.

As of May 31, 2023, the Company is eligible to receive up to approximately $ 2.3 billion in total additional payments based on certain additional fees, payments and the successful completion of certain preclinical, clinical, development and sales milestones.

In addition, the Company is eligible to receive tiered royalties from mid-single digit to low tens percentages on annual net sales from any commercial products directed to the optioned collaboration targets, subject to certain reductions and excluding sales in the United States of any products for which the Company exercises its option to co-develop and co-promote, for which the Company and Gilead share profits and losses evenly.

In addition, from the signing of the Gilead Agreement to August 31, 2023, the Company has received payments of $ 41.0 million for research milestones and additional payments.

Additionally, the Company achieved a research milestone in August 2023 and received a payment of $ 6.0 million in the fourth fiscal quarter of 2023.

As of August 31, 2023, the Company is eligible to receive up to approximately $ 2.3 billion in total additional payments based on certain additional fees, payments and the successful completion of certain preclinical, clinical, development and sales milestones.

The Company also is eligible to receive mid-single digit to low tens percentage tiered royalties on annual net sales from any commercial products directed to the optioned collaboration targets, subject to certain reductions and excluding sales in the United States of any products for which the Company exercises its option to co-develop and co-promote, for which the Company and Gilead share profits and losses evenly.

The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

2 unchanged sentences

The transaction price is recognized as collaboration revenue using the cost-based input method over the estimated contract term of five years .

For the three and six months ended May 31, 2023, the Company recognized collaboration revenue related to the Gilead Agreement of $ 5.7 million and $ 13.1 million, respectively, of which $ 5.7 million and $ 8.5 million, respectively, was included in deferred revenue as of November 30, 2022, and zero and $ 4.1 million, respectively, was related to activities satisfied in previous periods.

The Company also recognized $ 20.0 million in license revenue received pursuant to the Gilead License Option Exercise during the three and six months ended May 31, 2023.

For the three and six months ended May 31, 2022, the Company recognized collaboration revenue related to the Gilead Agreement of $ 6.1 million and $ 12.3 million, respectively, of which $ 5.3 million and $ 8.6 million, respectively, was included in deferred revenue as of November 30, 2021, and $ 0.6 million and $ 3.1 million, respectively, was related to activities satisfied in previous periods.

As of May 31, 2023, deferred revenue related to the Gilead Agreement was $ 20.8 million, of which $ 20.4 million was included as deferred revenue, current.

For the three and nine months ended August 31, 2023, the Company recognized collaboration revenue related to the Gilead Agreement of $ 11.6 million and $ 24.7 million, respectively, of which $ 6.6 million and $ 15.1 million, respectively, was included in deferred revenue as of November 30, 2022, and $ 4.7 million and $ 8.0 million, respectively, was related to activities satisfied in previous periods.

The Company also recognized $ 20.0 million in license revenue received pursuant to the Gilead License Option Exercise during the nine months ended August 31, 2023.

For the three and nine months ended August 31, 2022, the Company recognized collaboration revenue related to the Gilead Agreement of $ 7.2 million and $ 19.5 million, respectively, of which $ 5.6 million and $ 14.3 million, respectively, was included in deferred revenue as of November 30, 2021, and $ 0.6 million and $ 4.1 million, respectively, was related to activities satisfied in previous periods.

As of August 31, 2023, deferred revenue related to the Gilead Agreement was $ 9.2 million, all of which was current and includes $ 6.0 million in contract assets representing the unbilled amount related to the research milestone achieved in August 2023.

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

10 unchanged sentences

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.

In addition, from the signing of the Sanofi Agreement to May 31, 2023, the Company has received payments of $ 5.0 million for research milestones.

As of May 31, 2023, the Company is eligible to receive up to approximately $ 2.5 billion in total additional payments based on certain additional fees, payments and the successful completion of certain research development, regulatory and sales milestones, as well as tiered royalties ranging from mid-single digit to low teen percentages on annual net sales of any commercial products that may result from the collaboration, subject to certain reductions and excluding sales in the United States of any products for which the Company exercises its option to co-develop and co-promote, for which the parties share profits and losses evenly.

In addition, from the signing of the Sanofi Agreement to August 31, 2023, the Company has received payments of $ 5.0 million for research milestones.

Additionally, the Company achieved a research milestone in August 2023 and received a payment of $ 2.0 million in the fourth fiscal quarter of 2023.

As of August 31, 2023, the Company is eligible to receive up to approximately $ 2.5 billion in total additional payments based on certain additional fees, payments and the successful completion of certain research development, regulatory and sales milestones, as well as mid-single digit to low teen percentage tiered royalties on annual net sales of any commercial products that may result from the collaboration, subject to certain reductions and excluding sales in the United States of any products for which the Company exercises its option to co-develop and co-promote, for which the parties share profits and losses evenly.

The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

2 unchanged sentences

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.

For the three and six months ended May 31, 2023, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 5.0 million and $ 10.3 million, respectively, of which $ 5.0 million and $ 9.8 million, respectively, was included in deferred revenue as of November 30, 2022, and zero and $ 0.4 million, respectively, was related to activities satisfied in previous periods.

For the three and six months ended May 31, 2022, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 5.3 million and $ 8.7 million, respectively, of which $ 5.3 million and $ 8.2 million, respectively, was included in deferred revenue as of November 30, 2021 and zero and $ 0.5 million, respectively, was related to activities satisfied in previous periods.

As of May 31, 2023, deferred revenue related to the Sanofi Agreement was $ 37.9 million, of which $ 23.7 million was included as deferred revenue, current.

For the three and nine months ended August 31, 2023, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 6.8 million and $ 17.1 million, respectively, of which $ 5.6 million and $ 15.4 million, respectively, was included in deferred revenue as of November 30, 2022, and $ 1.1 million and $ 1.1 million, respectively, was related to activities satisfied in previous periods.

For the three and nine months ended August 31, 2022, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 3.6 million and $ 12.4 million, respectively, of which $ 3.6 million and $ 11.8 million, respectively, was included in deferred revenue as of November 30, 2021 and zero and $ 0.4 million, respectively, was related to activities satisfied in previous periods.

As of August 31, 2023, deferred revenue related to the Sanofi Agreement was $ 33.1 million, of which $ 22.8 million was included as deferred revenue, current.

Additionally, as of August 31, 2023, $ 2.0 million was recorded in accounts receivable representing the billed amount related to the research milestone achieved in August 2023.

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

In September 2023, the Company entered into a strategic collaboration with Seagen (the Seagen Agreement) to develop a suite of targeted protein degraders against multiple targets nominated by Seagen that are suitable for antibody conjugation.

Seagen will be responsible for conjugating these degraders to antibodies to make Degrader-Antibody Conjugates (DACs), a new class of medicines for use in cancer treatment, and advancing these DAC drug candidates through preclinical and clinical development and commercialization.

Subject to earlier expiration in certain circumstances, the Seagen Agreement expires on a licensed product-by-licensed product and country-by-country basis upon on the later of (i) the expiration of the last-to-expire patent with a valid claim covering the applicable licensed product in the applicable country, (ii) the expiration of any regulatory exclusivity for the applicable licensed product in the applicable country or (iii) ten years after the first commercial sale of the applicable licensed product in the applicable country covered by the Seagen Agreement.

If Seagen does not exercise an option to license a product, then the Seagen Agreement will terminate at the end of the last-to-expire option period.

Under the terms of the Seagen Agreement, the Company received an upfront payment of $ 60.0 million.

In addition, the Company is eligible to receive up to approximately $ 3.4 billion in contingent payments based on specified research, development, regulatory and commercial milestones across multiple programs, and is eligible for mid-single to low double digit tiered royalties on future sales.

The Company retains an option for U.S.

profit sharing and co-promotion on two products arising from the collaboration.

Condensed Consolidated Balance Sheet Components

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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 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 May 31, 2023 and November 30, 2022 (in thousands):

May 31, 2023 Level Amortized

August 31, 2023 Level Amortized

cost Unrealized

30 unchanged sentences

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

The accrued interest receivable related to the Company’s marketable securities was $ 1.0 million and $ 1.1 million as of May 31, 2023 and November 30, 2022, respectively, and was included in prepaid expenses and other current assets on the condensed consolidated balance sheet.

The accrued interest receivable related to the Company’s marketable securities was $ 0.8 million and $ 1.1 million as of August 31, 2023 and November 30, 2022, respectively, and was included in prepaid expenses and other current assets on the condensed consolidated balance sheet.

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

6 unchanged sentences

These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.

There were no transfers of financial instruments between valuation levels during the three and six months ended May 31, 2023 and 2022.

As of May 31, 2023 and November 30, 2022, the unrealized losses for available-for-sale 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 May 31, 2023 and November 30, 2022, no allowance for credit losses for the Company’s marketable securities was recorded.

During the three and six months ended May 31, 2023 and 2022, the Company did not recognize any impairment losses related to marketable securities.

There were no transfers of financial instruments between valuation levels during the three and nine months ended August 31, 2023 and 2022.

As of August 31, 2023 and November 30, 2022, the unrealized losses for available-for-sale 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 August 31, 2023 and November 30, 2022, no allowance for credit losses for the Company’s marketable securities was recorded.

During the three and nine months ended August 31, 2023 and 2022, the Company did not recognize any impairment losses related to marketable securities.

Commitments and Contingencies

4 unchanged sentences

Legal fees and other costs associated with such actions are expensed as incurred.

As of May 31, 2023, the Company was not a party to any material legal proceedings.

As of August 31, 2023, the Company was not a party to any material legal proceedings.

Indemnifications

11 unchanged sentences

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

In July 2021, the Company entered into a lease agreement for the lease of approximately 19,320 square feet of office space in San Francisco, California, for a research and development laboratory and related uses.

In July 2021, and as subsequently amended in June 2023, the Company entered into a lease agreement for the lease of approximately 19,320 square feet of office space in San Francisco, California, for a research and development laboratory and related uses.

The lease will expire on June 30, 2024, unless terminated earlier.

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.

In August 2023, the lease agreement was amended to increase the square footage of the leased premise to 50,094 square feet.

The Company obtained access to the premise on August 1, 2022 to commence construction of landlord-owned improvements.

The lease is expected to commence in the second half of fiscal year 2023 when the underlying assets become available for use and the Company obtains control and will expire on March 1, 2035, unless terminated earlier.

The lease commenced in September 2023 when the underlying assets became available for use and the Company obtained control 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 the operating expenses as defined in the lease agreement.

Operating lease expenses, excluding additional rent charges for utilities, maintenance and real estate taxes, were $ 1.5 million for each of the three months ended May 31, 2023 and 2022, and $ 3.0 million and $ 2.8 million for the six months ended May 31, 2023 and 2022, respectively.

Pursuant to the terms of the lease agreement, the minimum rent payable by the Company under the lease will be approximately $ 154,000 per month for the period between March 1, 2023 and February 29, 2024, and approximately $ 211,000 per month thereafter;

provided that the minimum rent payable by the Company will increase by 3 % per year over the term of the lease.

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

Operating lease expenses, excluding additional rent charges for utilities, maintenance and real estate taxes, were $ 1.5 million for each of the three months ended August 31, 2023 and 2022, and $ 4.5 million and $ 4.4 million for the nine months ended August 31, 2023 and 2022, respectively.

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

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

Six Months Ended May 31,

Nine Months Ended August 31,

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

2 unchanged sentences

Right-of-use assets recognized in exchange for lease obligations $ — $ 5,060

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 May 31, 2023 and November 30, 2022.

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 August 31, 2023 and November 30, 2022.

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 May 31, 2023, no dividends have been declared.

As of August 31, 2023, no dividends have been declared.

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.

2 unchanged sentences

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 May 31, 2023, there were pre-funded warrants to purchase an aggregate of 6,666,423 shares of the Company's common stock that remained available for exercise.

In June 2023, pre-funded warrants to purchase a total of 568,863 shares of the Company’s common stock were exercised.

As of June 30, 2023, pre-funded warrants to purchase a total of 6,097,560 shares of the Company’s common stock remained available for exercise.

As of August 31, 2023, there were pre-funded warrants to purchase an aggregate of 6,097,560 shares of the Company's common stock that remained available for exercise.

The pre-funded warrants were classified as a component of permanent equity in the Company's condensed 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.

Common stock reserved for future issuance, on an as-if converted basis, as of May 31, 2023 and November 30, 2022, consists of the following:

Common stock reserved for future issuance, on an as-if converted basis, as of August 31, 2023 and November 30, 2022, consists of the following:

2023 November 30,

14 unchanged sentences

Options forfeited ( 1,511,938 ) 21.75

Balances as of May 31, 2023 8,949,950 $ 17.58

Balances as of August 31, 2023 8,487,135 $ 17.26

RSU activity under the Stock Plans is set forth below:

4 unchanged sentences

RSUs forfeited ( 172,290 ) 14.35

Balances as of May 31, 2023 1,489,429 $ 14.13

Balances as of August 31, 2023 1,434,888 $ 13.94

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 with accumulated payroll deductions.

During the six months ended May 31, 2023, the Company issued 165,215 shares of common stock pursuant to the ESPP at a weighted-average price of $ 8.80 per share.

During the nine months ended August 31, 2023, the Company issued 266,964 shares of common stock pursuant to the ESPP at a weighted-average price of $ 8.35 per share.

Stock-Based Compensation

1 unchanged sentence

Three Months Ended,

May 31, Six Months Ended

August 31, Nine Months Ended

2023 2022 2023 2022

2 unchanged sentences

Total stock-based compensation $ 8,445 $ 6,988 $ 25,649 $ 19,834

As of May 31, 2023, the total compensation cost related to stock-based awards not yet recognized was $ 70.9 million, which is expected to be amortized on a straight-line basis over the weighted-average remaining vesting period of approximately 2.4 years.

As of August 31, 2023, the total compensation cost related to stock-based awards not yet recognized was $ 62.8 million, which is expected to be amortized on a straight-line basis over the weighted-average remaining vesting period of approximately 2.2 years.

Defined Contribution Plan

2 unchanged sentences

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 $ 0.2 million during each of the three months ended May 31, 2023 and 2022, and $ 0.8 million and $ 0.7 million during the six months ended May 31, 2023 and 2022, respectively.

For the three and six months ended May 31, 2023 and 2022, the Company did not record any current income tax expense or provision.

The Company has made contributions to the 401(k) Plan and recorded contribution expense of $ 0.2 million and $ 0.1 million during the three months ended August 31, 2023 and 2022, respectively, and $ 1.0 million and $ 0.8 million during the nine months ended August 31, 2023 and 2022, respectively.

For the three and nine months ended August 31, 2023 and 2022, the Company did not record any current income tax expense or provision.

Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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 generated losses since inception and has established a valuation allowance to offset deferred tax assets as of May 31, 2023 and 2022 due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets.

The Company has generated losses since inception and has established a valuation allowance to offset deferred tax assets as of August 31, 2023 and 2022 due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets.

Under an Organization for Economic Co-operation and Development Inclusive Framework, more than 140 countries agreed to enact a two-pillar solution to address the challenges arising from the digitalization of the world economy (Pillar Two).

16 unchanged sentences

Three Months Ended

May 31, Six Months Ended

August 31, Nine Months Ended

2023 2022 2023 2022

3 unchanged sentences

Net loss per share, basic and diluted $ ( 0.68 ) $ ( 0.90 ) $ ( 1.88 ) $ ( 2.85 )

(1) The shares underlying the pre-funded warrants to purchase 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 three and six months ended May 31, 2023.

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:

6 unchanged sentences

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 $ 1.1 million and $ 0.9 million for the three months ended May 31, 2023 and 2022, respectively, and $ 2.3 million and $ 1.9 million for the six months ended May 31, 2023 and 2022, respectively.

As of May 31, 2023 and November 30, 2022, the amount recorded in accounts payable and accrued expenses and other current liabilities in connection with this healthcare plan provider was not material.

Expenses related to the healthcare plan premiums were $ 1.1 million and $ 1.0 million for the three months ended August 31, 2023 and 2022, respectively, and $ 3.3 million and $ 2.9 million for the nine months ended August 31, 2023 and 2022, respectively.

As of August 31, 2023 and November 30, 2022, the amount recorded in accounts payable and accrued expenses and other current liabilities in connection with this healthcare plan provider was not material.

Subsequent Events

Refer to Note 7 for more information on the exercise of pre-funded warrants.

Refer to Note 3 for more information on the Seagen Agreement.

Refer to Note 6 for more information on the commencement of the lease in The Woodlands, Texas.

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

What changed 10-Q

Item 1. Financial Statements