7 unchanged sentences
Marketable securities, current 194,180 233,281
−Removed: Accounts receivable 2,000 —
Prepaid expenses and other current assets 6,976 7,595
18 unchanged sentences
Stockholdersʼ equity:
−Removed: Preferred stock, $ 0.001 par value— 10,000,000 shares authorized as of August 31, 2023 and November 30, 2022;
−Removed: no shares issued and outstanding as of August 31, 2023 and November 30, 2022
−Removed: Common stock, $ 0.001 par value— 500,000,000 shares authorized as of August 31, 2023 and November 30, 2022;
−Removed: 48,503,768 and 47,172,299 shares issued and outstanding as of August 31, 2023 and November 30, 2022, respectively
+Added: Preferred stock, $ 0.001 par value— 10,000,000 shares authorized as of February 29, 2024 and November 30, 2023;
+Added: no shares issued and outstanding as of February 29, 2024 and November 30, 2023
+Added: Common stock, $ 0.001 par value— 500,000,000 shares authorized as of February 29, 2024 and November 30, 2023;
+Added: 49,136,954 and 48,718,552 shares issued and outstanding as of February 29, 2024 and November 30, 2023, respectively
Additional paid-in capital 755,767 746,299
8 unchanged sentences
Three Months Ended
−Removed: August 31, Nine Months Ended
−Removed: 2023 2022 2023 2022
+Added: February 29, 2024 February 28, 2023
Collaboration revenue $ 16,585 $ 12,685
−Removed: License revenue — — 20,000 —
Total revenue 16,585 12,685
5 unchanged sentences
Interest and other income, net 3,791 2,219
+Added: Loss before income taxes ( 41,428 ) ( 40,733 )
+Added: Provision for income taxes 90 —
Net loss $ ( 41,518 ) $ ( 40,733 )
6 unchanged sentences
Three Months Ended
−Removed: August 31, Nine Months Ended
−Removed: 2023 2022 2023 2022
+Added: February 29, 2024 February 28, 2023
Net loss $ ( 41,518 ) $ ( 40,733 )
15 unchanged sentences
Exercise of stock options 8,768 — 28 — — 28
−Removed: Vesting of early exercised stock options — — 47 — — 47
−Removed: Issuance under employee stock purchase plan 71,207 — 1,064 — — 1,064
−Removed: Stock-based compensation — — 6,071 — — 6,071
−Removed: Unrealized loss on available-for-sale marketable securities — — — ( 1,458 ) — ( 1,458 )
−Removed: Net loss — — — — ( 42,533 ) ( 42,533 )
−Removed: Balance as of February 28, 2022 44,853,448 45 571,363 ( 2,066 ) ( 263,425 ) 305,917
−Removed: Exercise of stock options 173,155 — 432 — — 432
Vesting of restricted stock units 98,571 — — — — —
Vesting of early exercised stock options — — 31 — — 31
−Removed: Stock-based compensation — — 6,775 — — 6,775
−Removed: Unrealized loss on available-for-sale marketable securities — — — ( 1,019 ) — ( 1,019 )
−Removed: Net loss — — — — ( 45,401 ) ( 45,401 )
−Removed: Balance as of May 31, 2022 45,040,068 45 578,605 ( 3,085 ) ( 308,826 ) 266,739
−Removed: Issuance of pre-funded warrants, net of issuance costs of $ 234
−Removed: — — 94,759 — — 94,759
−Removed: Issuance of common stock in “at the market” financing, net of issuance costs of $ 672
−Removed: 2,000,000 2 19,326 — — 19,328
−Removed: Exercise of stock options 24,147 — 174 — — 174
−Removed: Vesting of restricted stock units 18,469 — — — — —
−Removed: Vesting of early exercised stock options — — 32 — — 32
Issuance under employee stock purchase plan 165,215 — 1,453 — — 1,453
Stock-based compensation — — 8,505 — — 8,505
−Removed: Unrealized loss on available-for-sale marketable securities — — — ( 657 ) — ( 657 )
+Added: Unrealized gain on available-for-sale marketable securities — — — 1,072 — 1,072
Net loss — — — — ( 40,733 ) ( 40,733 )
−Removed: Balance as of August 31, 2022 47,147,781 $ 47 $ 700,775 $ ( 3,742 ) $ ( 354,535 ) $ 342,545
+Added: Balance as of February 28, 2023 47,444,853 $ 47 $ 719,237 $ ( 3,247 ) $ ( 441,985 ) $ 274,052
Common stock Additional
9 unchanged sentences
Vesting of early exercised stock options — — 21 — — 21
+Added: Repurchase of unvested early exercised stock ( 1,548 ) — — — — —
Issuance under employee stock purchase plan 173,558 — 1,269 — — 1,269
3 unchanged sentences
Balance as of February 29, 2024 49,136,954 $ 49 $ 755,767 $ ( 350 ) $ ( 586,718 ) $ 168,748
−Removed: Exercise of pre-funded warrants 148,497 1 — — — 1
−Removed: Exercise of stock options 5,597 — 24 — — 24
−Removed: Vesting of restricted stock units 32,261 — — — — —
−Removed: Vesting of early exercised stock options — — 31 — — 31
−Removed: Stock-based compensation — — 8,746 — — 8,746
−Removed: Unrealized gain on available-for-sale marketable securities — — — 1,344 — 1,344
−Removed: Net loss — — — — ( 24,277 ) ( 24,277 )
−Removed: Balance as of May 31, 2023 47,631,208 48 728,038 ( 1,903 ) ( 466,262 ) 259,921
−Removed: Exercise of pre-funded warrants 568,863 1 — — — 1
−Removed: Exercise of stock options 101,219 — 927 — — 927
−Removed: Vesting of restricted stock units 100,729 — — — — —
−Removed: Vesting of early exercised stock options — — 29 — — 29
−Removed: Issuance under employee stock purchase plan 101,749 — 776 — — 776
−Removed: Stock-based compensation — — 8,470 — — 8,470
−Removed: Unrealized gain on available-for-sale marketable securities — — — 675 — 675
−Removed: Net loss — — — — ( 36,982 ) ( 36,982 )
−Removed: 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)
−Removed: Nine Months Ended August 31,
+Added: Three Months Ended
+Added: February 29, 2024 February 28, 2023
Cash flows from operating activities
7 unchanged sentences
Changes in operating assets and liabilities:
−Removed: Accounts receivable ( 2,000 ) 6,000
Prepaid expenses and other assets 1,168 ( 1,627 )
2 unchanged sentences
Operating lease liabilities ( 1,458 ) ( 1,302 )
−Removed: Accrued expenses and other liabilities 48 4,189
+Added: Accrued expenses and other current liabilities 3,593 ( 6,905 )
Net cash used in operating activities ( 41,951 ) ( 48,452 )
3 unchanged sentences
Purchases of property and equipment ( 2,884 ) ( 2,277 )
−Removed: Net cash provided by (used in) investing activities 82,674 ( 27,810 )
+Added: Net cash provided by investing activities 35,513 16,068
Cash flows from financing activities
−Removed: Proceeds from issuances of pre-funded warrants, net of issuance costs — 94,942
−Removed: Proceeds from issuances of common stock in equity financing, net of issuance costs — 19,400
−Removed: Proceeds from exercise of stock options and pre-funded warrants 981 1,030
+Added: Proceeds from exercise of stock options 355 28
Proceeds from issuance under employee stock purchase plan 1,269 1,453
4 unchanged sentences
Supplemental disclosures of non-cash investing and financing activities:
−Removed: Additions to property and equipment included in accounts payable and accrued expenses and other liabilities $ 1,054 $ 1,726
+Added: Additions to property and equipment included in accounts payable and accrued expenses and other current liabilities $ 855 $ 1,434
Capitalized stock-based compensation related to internal-use software development $ 1 $ 24
Vesting of early exercised stock options $ 21 $ 31
−Removed: Issuance costs related to pre-funded warrants included in accrued expenses and other liabilities $ — $ 183
−Removed: Deferred issuance costs recognized related to equity financing $ — $ 72
−Removed: As of August 31,
+Added: Repurchase of unvested early exercised stock options included in accrued expenses and other current liabilities $ 15 $ —
+Added: Three Months Ended
+Added: February 29, 2024 February 28, 2023
Reconciliation of cash, cash equivalents and restricted cash:
8 unchanged sentences
(the Company) was incorporated in the state of Delaware on August 27, 2009, and is headquartered in San Francisco, California.
−Removed: The Company is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of medicines based on the modulation of cellular protein levels as a novel treatment approach for cancer and other challenging diseases.
+Added: The Company is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of innovative small molecules and antibody therapies based on the modulation of cellular protein levels as a novel treatment approach for cancer, inflammatory conditions 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.
4 unchanged sentences
(Sanofi) and Seagen Inc.
−Removed: (Seagen), within which the Company retains certain options for co-development, co-commercialization and profit sharing in the United States for multiple drug candidates.
+Added: (now a part of Pfizer Inc.
+Added: (Pfizer)), 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.
−Removed: As of August 31, 2023, the Company had $ 130.0 million of common stock remaining available for sale under the Equity Distribution Agreement.
+Added: As of February 29, 2024, 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
−Removed: 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.
2 unchanged sentences
The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its drug candidates currently in development.
+Added: The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
+Added: As of February 29, 2024, the Company had cash, cash equivalents and short-term marketable securities of $ 244.0 million and an accumulated deficit of $ 586.7 million.
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.
−Removed: 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.
+Added: 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, Gilead and Pfizer 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.
If additional capital is not available, failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending could have a material adverse effect on the Company’s ability to achieve its intended business objectives.
+Added: Management considered whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern and evaluated the funds necessary to maintain operations.
+Added: If the Company is unable to obtain additional funding, management will be required to implement plans that are within the Company’s control, which may include the delay or scaling back of certain research and development programs, to maintain liquidity and operations.
+Added: Based on the Company’s current forecast of future operating results and management’s plans to improve liquidity, the Company has concluded 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.
Summary of Significant Accounting Policies
3 unchanged sentences
GAAP) and applicable rules and regulations of the SEC regarding interim financial reporting.
−Removed: 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 nine months ended August 31, 2023.
+Added: 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 months ended February 29, 2024.
The condensed consolidated balance sheet as of November 30, 2023, was derived from the audited annual financial statements as of that date.
2 unchanged sentences
These interim financial statements and related disclosures have been prepared with the presumption that users of the interim financial statements have read or have access to the audited annual financial statements for the preceding fiscal year.
−Removed: Accordingly, these financial statements should be read in conjunction with the audited annual financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended November 30, 2022, as filed with the SEC.
+Added: Accordingly, these financial statements should be read in conjunction with the audited annual financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended November 30, 2023, as filed with the SEC on February 15, 2024.
These interim results are not necessarily indicative of results to be expected for the full fiscal year or any future interim period.
−Removed: Certain prior year amounts have been reclassified for consistency with the current year cash flow presentation.
−Removed: The reclassification did not impact total cash flow from operating, investing or financing activities.
Principles of Consolidation
−Removed: The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including DeCART Therapeutics Inc, which was legally dissolved in July 2022.
+Added: The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary.
All intercompany balances and transactions have been eliminated in consolidation.
3 unchanged sentences
On an ongoing basis, management evaluates its estimates, including those related to the useful lives of long-lived assets, the measurement of stock-based compensation, accruals for research and development activities, income taxes and revenue recognition.
+Added: The Company also makes certain commencement date estimates for its leases, including the incremental borrowing rate, the expected lease term and the fair value of the leased asset.
The Company bases its estimates on historical experience and on other relevant assumptions that are reasonable under the circumstances.
3 unchanged sentences
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents and marketable securities.
−Removed: The Company invests its cash equivalents in highly rated money market funds.
−Removed: The Company’s marketable securities consist of debt securities issued by highly rated corporate entities, foreign governments, the U.S.
+Added: 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.
−Removed: The Company’s exposure to any individual corporate entity is limited by policy, and its ongoing cash management strategy is to maintain diversity in its deposit accounts across financial institutions;
−Removed: however, the Company is exposed to credit risk on deposits in the event of default by the financial institutions to the extent account balances exceed the amount insured by the Federal Deposit Insurance Corporation (FDIC).
−Removed: 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).
−Removed: 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.
−Removed: 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.
−Removed: In light of the foregoing, the Company does not believe that it has exposure to loss as a result of SVB’s receivership.
−Removed: During the periods presented, the Company has not experienced any realized losses on its deposits of cash, cash equivalents or marketable securities.
+Added: The Company’s exposure to any individual corporate entity is limited by policy.
+Added: Deposits may, at times, exceed federally insured limits.
+Added: The Company invests its cash equivalents in highly rated money market funds.
+Added: During the periods presented, the Company has not experienced any 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.
−Removed: 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.
+Added: 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 and potential government shutdowns related thereto, potential 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.
−Removed: 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.
+Added: 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 condensed consolidated financial statements and accompanying notes.
The extent to which the increasing financial market volatility and uncertainty may directly or indirectly impact the Company’s financial statements is highly uncertain and subject to change.
1 unchanged sentence
Disruption from these manufacturers or suppliers would have a negative impact on the Company’s business, financial position and results of operations.
−Removed: The Company determines if an arrangement contains a lease at inception.
−Removed: Lease right-of-use (ROU) assets, current lease liabilities and long-term lease liabilities are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term at the commencement date.
−Removed: ROU assets also include any initial direct costs incurred and any lease payments made on or before the lease commencement date, less lease incentives received.
−Removed: The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as the Company’s leases generally do not provide an implicit rate.
−Removed: The incremental borrowing rate, the ROU asset and the lease liability are reevaluated upon a lease modification.
−Removed: The Company determines its incremental borrowing rate based on the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term, in an amount equal to the lease payments in a similar economic environment.
−Removed: Lease terms may include options to extend or terminate the lease when the Company is reasonably certain that the option will be exercised.
+Added: The Company determines if an arrangement contains a lease and the classification of the lease at inception.
+Added: An arrangement contains a lease if there is an identified asset and if the Company controls the use of the identified asset throughout the period of use.
+Added: The evaluation of whether the lease is an operating or a finance lease requires judgments in determining the fair value of the leased asset.
+Added: Lease right-of-use (ROU) assets and lease liabilities are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term at the commencement date.
+Added: ROU assets also include any initial direct costs incurred and any lease payments made on or before the lease commencement date, less any lease incentives received.
+Added: The Company uses its incremental borrowing rate, if an implicit rate is not readily available, and the information available at the date of lease commencement in determining its lease liabilities.
+Added: The Company’s incremental borrowing rate is based on the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment, and the determination of the rate requires the Company to make certain assumptions and judgements, including on its synthetic credit rating.
+Added: Leases may include options to extend or early terminate the lease term.
+Added: If the Company, using judgement, is reasonably certain that an option will be exercised, then the option will be included in the calculation of the lease term.
+Added: The Company elected to combine lease and non-lease components for all underlying assets groups, and not recognize ROU assets or lease liabilities for short-term leases.
+Added: A short-term lease is a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
Lease expense for operating leases is recognized on a straight-line basis over the lease term.
The Company does not have any finance leases.
−Removed: The Company elected to apply each of the practical expedients described in Topic 842 which allow companies (i) not to reassess prior conclusions on whether any expired or existing contracts are or contain a lease, lease classification, and initial direct costs, (ii) combine lease and non-lease components for all underlying assets groups, and (iii) not recognize ROU assets or lease liabilities for short-term leases.
−Removed: A short-term lease is a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
Revenue Recognition
33 unchanged sentences
Amounts allocated to any material right are recognized as revenue when or as the related future goods or services are transferred or when the option expires.
+Added: If the option does not provide a material right, then the option is considered a marketing offer, which would be accounted for as a separate contract upon exercise.
Deferred revenue, which is a contract liability, represents net amounts received by the Company for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met.
−Removed: The current portion of deferred revenue represents the amount to be recognized within one year from the condensed consolidated balance sheet date based on the estimated performance period of the underlying performance obligation.
+Added: The current portion of deferred revenue represents the amount to be recognized within one year from the balance sheet date based on the estimated performance period of the underlying 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.
−Removed: Recently Adopted Accounting Pronouncements
−Removed: 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.
+Added: Recent Accounting Pronouncements Not Yet Adopted
+Added: In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No.
+Added: 2023‑07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (ASU 2023-07), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.
+Added: ASU 2023-07 should be applied on a retrospective basis.
+Added: ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
+Added: Early adoption is permitted.
+Added: The Company is in the process of evaluating the impact of this new guidance on its disclosures.
+Added: In December 2023, the FASB issued ASU 2023-09—Income Taxes (Topic 740):
+Added: Improvements to Income Tax Disclosures (ASU 2023-09), which is intended to enhance the transparency and decision usefulness of income tax disclosures, primarily by amending disclosure requirements for the effective tax rate reconciliation and income taxes paid.
+Added: ASU 2023-09 should be applied on a prospective basis, and retrospective application is permitted.
+Added: ASU 2023-09 is effective for annual periods beginning after December 15, 2024.
+Added: Early adoption is permitted.
+Added: The Company is in the process of evaluating the impact of this new guidance on its disclosures.
Collaboration Agreements
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.
−Removed: 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.
+Added: In August 2019 and September 2022, the Company and Gilead 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.
+Added: In February and March 2024, as part of the existing collaboration agreement, Gilead elected to extend the five-year initial research term by two years for certain drug targets (Gilead Research Term Extension).
+Added: The Gilead Research Term Extension triggered a $ 15.0 million payment that the Company expects to receive in the second quarter of fiscal year 2024.
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.
4 unchanged sentences
The license to the functional intellectual property and all goods and services related to the Gilead License Option Exercise were transferred during the second quarter of fiscal year 2023.
+Added: Over time, Gilead may elect to replace the initial drug targets with other drug targets.
+Added: 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.
+Added: 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.
+Added: Each party will bear its own costs in the conduct of research activities.
+Added: Gilead will be responsible for any development, commercialization and manufacturing activities, unless the Company exercises its co-development and co-promotion option.
+Added: For those programs that the Company exercises its option to co-develop and co-promote, the Company and Gilead will split U.S.
+Added: development costs as well as U.S.
+Added: profits and losses evenly, and the Company will be eligible to receive royalties on net ex-U.S.
+Added: sales and reduced milestone payments.
Upon signing the Gilead Agreement, Gilead paid the Company an upfront payment of $ 45.0 million plus $ 3.0 million in additional fees.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: In addition, from the signing of the Gilead Agreement to February 29, 2024, the Company has received payments of $ 47.0 million for research milestones and additional payments and $ 20.0 million for a license option exercise payment.
+Added: As of February 29, 2024, the Company is eligible to receive up to approximately $ 1.8 billion in total additional payments based on certain additional fees, payments and the successful completion of certain preclinical, clinical, development and sales milestones.
+Added: 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 parties share profits and losses evenly.
+Added: Subject to earlier expiration in certain circumstances, the Gilead Agreement expires on a licensed product-by-licensed product and country-by-country basis upon the later of (1) the expiration of the last to expire patent with a valid claim covering the applicable licensed product in the applicable country, (2) the expiration of any regulatory exclusivity for the applicable licensed product in the applicable country or (3) ten years after the first commercial sale of the applicable licensed product in the applicable country covered by the Gilead Agreement, provided that the term for any profit-shared licensed product in the United States will expire upon the expiration or termination of the applicable profit-share term as set forth in an applicable profit-share agreement to be negotiated upon the Company’s exercise of its option to co-develop and co-promote such licensed product.
+Added: If Gilead does not exercise an option to license a drug candidate, then the Gilead Agreement will terminate at the end of the last to expire option period.
+Added: The Company identified the following promises in the Gilead Agreement:
+Added: (1) the research licenses, (2) the research services, including selection campaign research services for certain replacement targets, (3) the obligation to share information during the research term and (4) the participation in the joint research committee and joint steering committee.
+Added: The Company determined that the research licenses, the obligation to share information and the participation in joint committees are not capable of being distinct from the research services due to the specialized nature of the research services to be provided by the Company, and, accordingly, the promises identified were combined as one single performance obligation.
+Added: The Company also concluded that, at the inception of the Gilead Agreement, Gilead’s options to obtain an exclusive development, manufacturing and commercialization license for each collaboration target, to extend the five-year research term and to perform selection campaign research services for certain replacement targets do not represent material rights and are not considered performance obligations because they do not contain a significant and incremental discount.
+Added: 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.
+Added: In order to determine the transaction price, the Company evaluated all the payments to be received during the duration of the contract.
+Added: Certain milestone payments and additional fees were considered variable consideration, which were not included in the transaction price based on the most likely amount method as of February 29, 2024.
The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
1 unchanged sentence
Upon the achievement of research milestones and additional fees related to target reservations, $ 47.0 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.
−Removed: The transaction price is recognized as collaboration revenue using the cost-based input method over the estimated contract term of five years .
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: The transaction price is recognized as collaboration revenue using the cost-based input method over the estimated research term of five years .
+Added: The contract term was determined to be the five-year initial research term which represents the estimated timing of completion of the identified deliverables.
+Added: 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.
+Added: The Gilead Research Term Extension, which has a term of two years and did not represent a material right at the inception of the Gilead Agreement, because it does not contain a significant and incremental discount, will be accounted for as a separate contract commencing in June 2024.
+Added: 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.
+Added: Costs consist primarily of internal full-time employee (FTE) and third-party contract costs related to the Gilead Agreement.
+Added: 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.
+Added: Total estimated costs are primarily driven by the number of estimated FTEs, which requires significant management judgment.
+Added: For the three months ended February 29, 2024, the Company recognized collaboration revenue related to the Gilead Agreement of $ 4.6 million, all of which was included in deferred revenue as of November 30, 2023.
+Added: For the three months ended February 28, 2023, the Company recognized collaboration revenue related to the Gilead Agreement of $ 7.4 million, of which $ 2.8 million was included in deferred revenue as of November 30, 2022, and $ 4.1 million was related to activities satisfied in previous periods.
+Added: As of February 29, 2024, deferred revenue related to the Gilead Agreement was $ 5.3 million, all of which was current.
+Added: As of November 30, 2023, deferred revenue related to the Gilead Agreement was $ 10.0 million, all of which was current.
In December 2019, the Company entered into a strategic collaboration with Genzyme Corporation, a subsidiary of Sanofi, which became effective in January 2020 (as subsequently expanded and amended, the Sanofi Agreement), to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with challenging diseases in multiple therapeutic areas using the Company’s DELigase platform to identify small molecules designed to induce degradation of three specified initial drug targets.
−Removed: 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.
+Added: In January 2021, as part of the existing Sanofi Agreement, Sanofi paid the Company $ 22.0 million to exercise its option to expand the number of targets in the Sanofi Agreement from three to a total of five targets.
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).
−Removed: 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.
−Removed: In July 2022, the Company entered into the Third Amendment to the Sanofi Agreement to further extend the substitution deadline on certain targets.
+Added: In July 2022, the Company and Sanofi 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.
−Removed: 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.
+Added: In August 2022 and November 2023, the Company and Sanofi entered into the Fourth Amendment and Fifth Amendment, respectively, to the Sanofi Agreement to modify the research plan for certain targets, which had no impact on revenue recognition.
+Added: In March 2024, the Company and Sanofi entered into the Sixth Amendment to the Sanofi Agreement to extend the research term for the collaboration target STAT6 (signal transducer and activator of transcription 6), a key drug target in type 2 inflammation, by two years (the Sixth Sanofi Amendment), which is expected to increase overall forecasted costs and have an impact on revenue recognition.
+Added: 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 all drug candidates in the United States directed to up to two targets, one of which must be selected from a list of targets designated at the execution of the Sanofi Agreement or any replacement of such targets, and one of which must be selected from targets identified by Sanofi as part of their January 2021 expansion.
+Added: The Company’s right to exercise its option to co-develop, co-promote and co-commercialize a given target is dependent on its ability to demonstrate, within a given timeframe, that it has sufficient cash resources and personnel to commercialize the product.
+Added: 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.
+Added: 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.
+Added: The Company is obligated to use commercially reasonable efforts to identify relevant target binders and targeted protein degraders in order to identify development candidates.
+Added: Subject to certain exceptions, each party will bear its own costs in the conduct of such research.
+Added: Sanofi will be responsible for any development and commercialization activities unless the Company exercises its co-development and co-promotion option.
+Added: For those programs that the Company exercises its option to co-develop, co-promote and co-commercialize, the Company will be responsible for a portion of the U.S.
+Added: development costs, and the parties will split U.S.
+Added: profits and losses evenly and the Company will be eligible to receive royalties on ex-U.S.
+Added: net sales and reduced milestone payments on such optioned products.
Upon signing the Sanofi Agreement, Sanofi paid the Company an upfront payment of $ 55.0 million.
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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: In addition, from the signing of the Sanofi Agreement to February 29, 2024, the Company has received payments of $ 11.0 million for research milestones.
+Added: Additionally, the Company achieved a research milestone in February 2024 and received a payment of $ 2.0 million in the second quarter of fiscal year 2024.
+Added: As of February 29, 2024, the Company is eligible to receive up to approximately $ 2.4 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.
+Added: Subject to earlier expiration in certain circumstances, the Sanofi Agreement expires on a licensed product-by-licensed product or profit-shared licensed product-by-profit-shared licensed product basis and country-by-country basis upon on the later of (1) the expiration of the last-to-expire patent with a valid claim covering the applicable licensed product in the applicable country, (2) the expiration of any regulatory exclusivity for the applicable licensed product in the applicable country or (3) ten years after the first commercial sale of the applicable licensed product in the applicable country covered by the Sanofi Agreement.
+Added: The Company identified the following promises in the Sanofi Agreement:
+Added: (1) the research licenses, (2) the research services, (3) the obligation to share information during the research term and (4) the participation of alliance managers in the joint research committee and joint patent committee.
+Added: The Company determined that the research licenses, the obligation to share information and the participation in the joint committees are not capable of being distinct from the research services due to the specialized nature of the research services to be provided by the Company, and, accordingly, the promises identified were combined as one single performance obligation.
+Added: The Company also determined that Sanofi’s exclusive right to add up to two additional targets constitutes a material right as it represents a significant and incremental discount that Sanofi would not have received without entering into the Sanofi Agreement.
+Added: The option to extend the license term does not represent a material right because it does not contain a significant and incremental discount.
+Added: In order to determine the transaction price, the Company evaluated all the payments to be received during the duration of the contract.
+Added: Certain milestone payments and additional fees were considered variable consideration, which were not included in the transaction price based on the most likely amount method as of February 29, 2024.
The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
At the inception of the Sanofi Agreement, the Company determined that the transaction price consisted of the upfront payment of $ 55.0 million for three initial drug targets and $ 22.0 million for two additional targets.
−Removed: Subsequently, upon the achievement of research milestones, $ 7.0 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.
+Added: Subsequently, upon the achievement of research milestones, $ 13.0 million in variable consideration was added to the transaction price, which includes $ 2.0 million added during the three months ended February 29, 2024, 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Under the terms of the Seagen Agreement, the Company received an upfront payment of $ 60.0 million.
−Removed: 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.
−Removed: The Company retains an option for U.S.
+Added: The research period for STAT6 will be extended as part of the Sixth Sanofi Amendment in the second quarter of fiscal year 2024 and a cumulative effect is expected to be recorded.
+Added: 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.
+Added: Costs consist primarily of internal FTE and third-party contract costs related to the Sanofi Agreement.
+Added: 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.
+Added: Total estimated costs are primarily driven by the number of estimated FTEs, which requires significant management judgment.
+Added: For the three months ended February 29, 2024, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 8.3 million, of which $ 6.8 million was included in deferred revenue as of November 30, 2023, and $ 1.3 million was related to activities satisfied in previous periods.
+Added: For the three months ended February 28, 2023, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 5.3 million, of which $ 4.9 million was included in deferred revenue as of November 30, 2022 and $ 0.4 million was related to activities satisfied in previous periods.
+Added: As of February 29, 2024, deferred revenue related to the Sanofi Agreement was $ 22.5 million, of which $ 21.5 million was included as deferred revenue, current, and included $ 2.0 million in contract assets representing the unbilled amount related to the research milestone achieved in February 2024.
+Added: As of November 30, 2023, deferred revenue related to the Sanofi Agreement was $ 24.9 million, of which $ 20.3 million was included as deferred revenue, current, and included $ 4.0 million in contract assets representing the unbilled amount related to the research milestone achieved in November 2023.
+Added: In September 2023, the Company entered into a strategic collaboration with Seagen Inc.
+Added: (now a part of Pfizer Inc.) (the Pfizer Agreement) to develop a suite of targeted protein degraders against multiple targets nominated by Pfizer that are suitable for antibody conjugation.
+Added: Pfizer 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.
+Added: Under the Pfizer Agreement, Pfizer has the option to obtain exclusive licenses to develop and commercialize certain degraders, while the Company retains an option for U.S.
profit sharing and co-promotion on two products arising from the collaboration.
+Added: The collaboration excludes the Company’s current internal protein degradation programs for which the Company retains all rights, and also excludes the Company’s future internal programs, provided that the Company has distinguished future programs as excluded from the scope of the collaboration.
+Added: For the targets nominated by Pfizer under the collaboration, the Company shall use commercially reasonable efforts to identify, synthesize, characterize and deliver targeted protein degraders that selectively bind to and degrade such targets.
+Added: Development of licensed degraders, with the exception of licensed products for which the Company exercises its profit-share options, will be at Pfizer’s sole cost and expense.
+Added: For the profit-share products, the parties will share net profits and net losses and global development costs, and the Company will be eligible to receive royalty and milestone payments on such optioned products.
+Added: Under the terms of the Pfizer Agreement, the Company received an upfront payment of $ 60.0 million.
+Added: 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 percentage tiered royalties on future sales.
+Added: Subject to the exceptions described in the Pfizer Agreement, the Pfizer Agreement expires upon the first to occur of (1) the expiration of the last-to-expire option exercise period under the Pfizer Agreement if no such option has been exercised prior to such expiration and (2) the expiration of the last-to-expire royalty term under the Pfizer Agreement.
+Added: The Company identified the following promises in the Pfizer Agreement:
+Added: (1) the research licenses, (2) the research services, (3) the participation of a gatekeeper and an alliance managers and the participation in various joint committees, and (4) the obligation to share information during the research term.
+Added: The Company determined that the research licenses, the participation in the joint committees and the obligation to share information are not capable of being distinct from the research services, and, accordingly, the identified promises were combined as one single performance obligation.
+Added: The Company also determined that, at the inception of the Pfizer Agreement, Pfizer’s options to obtain an exclusive development, manufacturing and commercialization license for each collaboration target and to extend the four-year research term do not represent material rights and are not considered performance obligations because they do not contain a significant and incremental discount.
+Added: Additionally, Pfizer’s target reservation right is not a performance obligation as it is an exclusivity right and an attribute of other performance obligations in the Pfizer Agreement, such as the research licenses, and does not require any specific actions from the Company.
+Added: In order to determine the transaction price, the Company evaluated all the payments to be received during the duration of the contract.
+Added: Milestone payments and additional fees were considered variable consideration, which were not included in the transaction price based on the most likely amount method as of February 29, 2024.
+Added: The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
+Added: The Company determined that the transaction price at the inception of the Pfizer Agreement consisted of the upfront payment of $ 60.0 million.
+Added: The Company has not yet achieved any research milestones and no variable consideration has been added to the transaction price.
+Added: The transaction price is recognized as collaboration revenue using the cost-based input method over the estimated research term of four years , which represents the estimated period to complete the identified deliverables.
+Added: Additionally, the Company considered the impact of Pfizer terminating the Pfizer Agreement prior to the completion of the research services during the initial four-year research term and determined that there were significant economic costs to Pfizer for doing so, and as such, did not adjust the contract term.
+Added: Using the cost-based input method, which the Company determined most faithfully depicts the transfer of its performance obligation to Pfizer, 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.
+Added: Costs consist primarily of internal FTE and third-party contract costs related to the Pfizer Agreement.
+Added: 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.
+Added: Total estimated costs are primarily driven by the number of estimated FTEs, which requires significant management judgment.
+Added: For the three months ended February 29, 2024, the Company recognized collaboration revenue related to the Pfizer Agreement of $ 3.7 million, all of which was included in deferred revenue as of November 30, 2023.
+Added: As of February 29, 2024, deferred revenue related to the Pfizer Agreement was $ 54.7 million, of which $ 21.2 million was included as deferred revenue, current.
+Added: As of November 30, 2023, deferred revenue related to the Pfizer Agreement was $ 58.3 million, of which $ 17.9 million was included as deferred revenue, current.
Condensed Consolidated Balance Sheet Components
15 unchanged sentences
Accrued compensation $ 16,763 $ 15,303
−Removed: Accrued contract research and lab supplies 7,955 6,426
+Added: Accrued clinical, contract research and lab supplies 8,583 7,131
Accrued professional services 1,809 1,755
12 unchanged sentences
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.
−Removed: 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 August 31, 2023 and November 30, 2022 (in thousands):
−Removed: August 31, 2023 Level Amortized
+Added: 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 February 29, 2024 and November 30, 2023 (in thousands):
+Added: February 29, 2024 Level Amortized
cost Unrealized
5 unchanged sentences
government agency securities Level 2 49,384 4 ( 266 ) 49,122
−Removed: Corporate commercial paper Level 2 — — — —
Long-term marketable securities:
12 unchanged sentences
government agency securities Level 2 69,389 5 ( 567 ) 68,827
−Removed: Corporate commercial paper Level 2 74,896 — — 74,896
−Removed: Foreign government securities Level 2 7,051 — ( 92 ) 6,959
Long-term marketable securities:
−Removed: treasury securities Level 1 5,779 — ( 98 ) 5,681
−Removed: Corporate debt securities Level 2 3,492 — ( 217 ) 3,275
government agency securities Level 2 7,490 — ( 69 ) 7,421
3 unchanged sentences
Included in marketable securities, non-current $ 7,490 $ — $ ( 69 ) $ 7,421
−Removed: 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.
+Added: The accrued interest receivable related to the Company’s marketable securities was $ 0.8 million as of both February 29, 2024 and November 30, 2023 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.
−Removed: There were no transfers of financial instruments between valuation levels during the three and nine months ended August 31, 2023 and 2022.
−Removed: 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.
−Removed: As of August 31, 2023 and November 30, 2022, no allowance for credit losses for the Company’s marketable securities was recorded.
−Removed: During the three and nine months ended August 31, 2023 and 2022, the Company did not recognize any impairment losses related to marketable securities.
+Added: There were no transfers of financial instruments between valuation levels during the three months ended February 29, 2024 and February 28, 2023.
+Added: As of February 29, 2024 and November 30, 2023, 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.
+Added: As of February 29, 2024 and November 30, 2023, no allowance for credit losses for the Company’s marketable securities was recorded.
+Added: During the three months ended February 29, 2024 and February 28, 2023, 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.
−Removed: As of August 31, 2023, the Company was not a party to any material legal proceedings.
+Added: As of February 29, 2024, the Company was not a party to any material legal proceedings.
Indemnifications
10 unchanged sentences
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.
−Removed: The terms of these lease agreements expire on April 30, 2025.
−Removed: 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.
−Removed: The lease will expire on June 30, 2024, unless terminated earlier.
−Removed: 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.
+Added: The terms of these lease agreements expire in April 2025.
+Added: The Company has an option to renew these leases for an additional two years , and the renewal term 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 the option.
+Added: 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.
+Added: The lease commenced in December 2021 and will expire in June 2024, unless terminated earlier.
+Added: 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.
In August 2023, the lease agreement was amended to increase the square footage of the leased premise to 50,094 square feet.
−Removed: The Company obtained access to the premise on August 1, 2022 to commence construction of landlord-owned improvements.
−Removed: 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.
−Removed: 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.
−Removed: 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;
−Removed: provided that the minimum rent payable by the Company will increase by 3 % per year over the term of the lease.
−Removed: The Company will also be responsible for the payment of its proportionate share of the operating expenses as defined in the lease agreement.
−Removed: 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.
−Removed: Short-term lease expense was not material for all periods presented.
+Added: The amendment had no impact on the accounting for the lease.
+Added: The Company has an option to renew for two additional terms of five years each, and the renewal terms have 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 the option.
+Added: The lease commenced in September 2023 when the underlying assets became available for use and will expire in March 2035.
+Added: The Company is required to pay base rent plus its proportionate share of operating expenses, as defined in the applicable lease agreement on all of its leases.
+Added: Variable lease payments related to operating expenses including utilities, maintenance costs and real estate taxes were $ 1.5 million and $ 1.2 million for the three months ended February 29, 2024 and February 28, 2023, respectively.
+Added: Operating lease expenses, excluding variable lease payments, were $ 2.3 million and $ 1.5 million for the three months ended February 29, 2024 and February 28, 2023, respectively.
+Added: Short-term lease expense was not material for the periods presented.
Other information related to leases were as follows (in thousands):
−Removed: Nine Months Ended August 31,
+Added: Three Months Ended
+Added: February 29, 2024 February 28, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Cash flows from operating leases $ 1,918 $ 1,388
−Removed: Supplemental disclosures of non-cash investing and financing activities:
−Removed: Right-of-use assets recognized in exchange for lease obligations $ — $ 5,060
−Removed: 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.
+Added: 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 February 29, 2024 and November 30, 2023.
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.
−Removed: As of August 31, 2023, no dividends have been declared.
+Added: As of February 29, 2024, 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.
−Removed: 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.
+Added: As of February 29, 2024, 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.
−Removed: 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:
+Added: Common stock reserved for future issuance, on an as-if converted basis, as of February 29, 2024 and November 30, 2023, consists of the following:
2024 November 30,
14 unchanged sentences
Options forfeited ( 283,417 ) 17.64
−Removed: Balances as of August 31, 2023 8,487,135 $ 17.26
+Added: Balances as of February 29, 2024 9,931,118 $ 15.59
RSU activity under the Stock Plans is set forth below:
4 unchanged sentences
RSUs forfeited ( 142,137 ) 12.06
−Removed: Balances as of August 31, 2023 1,434,888 $ 13.94
+Added: Balances as of February 29, 2024 2,268,207 $ 10.17
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.
−Removed: 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.
+Added: During the three months ended February 29, 2024, the Company issued 173,558 shares of common stock pursuant to the ESPP at a weighted-average price of $ 7.31 per share.
Stock-Based Compensation
1 unchanged sentence
Three Months Ended
−Removed: August 31, Nine Months Ended
−Removed: 2023 2022 2023 2022
+Added: February 29, 2024 February 28, 2023
Research and development $ 3,827 $ 5,154
1 unchanged sentence
Total stock-based compensation $ 7,822 $ 8,481
−Removed: 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.
+Added: As of February 29, 2024, the total compensation cost related to stock-based awards not yet recognized was $ 65.3 million, which is expected to be amortized on a straight-line basis over the weighted-average remaining vesting period of approximately 2.3 years.
Defined Contribution Plan
2 unchanged sentences
Employees may contribute a percentage of their annual compensation to the plan, subject to statutory limitations.
−Removed: 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.
−Removed: For the three and nine months ended August 31, 2023 and 2022, the Company did not record any current income tax expense or provision.
+Added: The Company has made contributions to the 401(k) Plan and recorded contribution expense of $ 0.4 million and $ 0.6 million during the three months ended February 29, 2024 and February 28, 2023, respectively.
+Added: For the three months ended February 29, 2024, the Company recorded an income tax provision of $ 90,000 .
+Added: For the three months ended February 28, 2023, 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.
−Removed: 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.
−Removed: 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).
−Removed: Pillar Two introduces a global minimum Effective Tax Rate (ETR) via a system where multinational groups with consolidated revenue over €750M are subject to a minimum ETR of 15% on income arising in low-tax jurisdictions.
−Removed: Rules under Pillar Two are expected to be enacted beginning January 1, 2024.
−Removed: The Company will continue to monitor the impact of Pillar Two;
−Removed: however, the Company has minimal international activity and is not expecting Pillar Two to have an impact on its condensed consolidated financial statements.
−Removed: 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.
+Added: The Company has generated losses since inception and has established a valuation allowance to offset deferred tax assets as of February 29, 2024 and February 28, 2023 due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets.
+Added: The Company files income tax returns in the United States and in various states.
+Added: In January 2019, the California Franchise Tax Board (FTB) initiated an examination of the Company’s California tax return for 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.
−Removed: The Company does not agree with the FTB assessments and intends to challenge the assessments.
+Added: The Company did not agree with the FTB’s assessments and challenged the assessments.
Pursuant to a measurement analysis, the Company has not recorded an unrecognized tax benefit related to the FTB’s sourcing position.
The Company maintains an unrecognized tax benefit related to its California R&D credits for all years.
−Removed: 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).
−Removed: The TCJA included a provision impacting Section 174 that requires taxpayers to capitalize and amortize, rather than deduct, research and experimental (R&E) expenses for tax years beginning on or after January 1, 2022.
−Removed: For the year ending November 30, 2023, the Company anticipates capitalizing a significant portion of its total R&E expenses.
−Removed: The Company does not expect a significant current income tax liability as a result of the enactment of IRC Section 174.
−Removed: The Company will continue to monitor IRS guidance on this provision.
+Added: 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.
Net Loss Per Share
1 unchanged sentence
Three Months Ended
−Removed: August 31, Nine Months Ended
−Removed: 2023 2022 2023 2022
+Added: February 29, 2024 February 28, 2023
Net loss $ ( 41,518 ) $ ( 40,733 )
2 unchanged sentences
Net loss per share, basic and diluted $ ( 0.76 ) $ ( 0.75 )
−Removed: (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 nine months ended August 31, 2023 and 2022.
+Added: (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 months ended February 29, 2024 and February 28, 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:
+Added: February 29, February 28,
Options to purchase common stock issued and outstanding 9,931,118 9,535,402
5 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.
−Removed: 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.
−Removed: 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.
+Added: Expenses related to the healthcare plan premiums were $ 1.1 million for both the three months ended February 29, 2024 and February 28, 2023.
+Added: As of February 29, 2024 and November 30, 2023, 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
−Removed: Refer to Note 3 for more information on the Seagen Agreement.
−Removed: Refer to Note 6 for more information on the commencement of the lease in The Woodlands, Texas.
+Added: Refer to Note 3 for more information on the Company's collaborations with Gilead and Sanofi under the Gilead Agreement and the Sanofi Agreement, respectively.
+Added: In March 2024, the Company entered into a second amendment (the "Second Amendment") to the Lease Agreement (the “Lease Agreement”), dated as of June 21, 2021, by and between the Company and ARE-San Francisco No.
+Added: 19 LLC (the “Lessor”), as amended by the First Amendment to Lease Agreement, dated June 28, 2023, by and between the Company and Lessor.
+Added: The Second Amendment extends the lease of approximately 19,320 square feet of office space in San Francisco, California by approximately ten months .
+Added: The minimum rent payable by the Company under the Second Amendment will be approximately $ 0.1 million per month.
+Added: The Company will also be required to pay its proportionate share of operating expenses, as defined in the Lease Agreement.
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.