What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-11 compared with 2024-04-10 · 84 added, 59 removed, 244 unchanged (37% of the section changed)

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These collaborations allow us to further advance our future pipeline with multiple currently identified targets included in these collaborations.

In aggregate, we have received $413.0 million in non-dilutive financing from our collaborators to date, and as of February 29, 2024, we are eligible to receive up to $7.6 billion in potential future fees and milestone payments, as well as royalties on future product sales.

In aggregate, we have received $430.0 million in non-dilutive financing from our collaborators to date, and as of May 31, 2024, we are eligible to receive up to $7.6 billion in potential future fees and milestone payments, as well as royalties on future product sales.

We retain certain options for co-development, co-commercialization and profit sharing in the United States for multiple drug candidates, pursuant to these collaborations.

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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).

The Gilead Research Term Extension triggered a $15.0 million payment that we expect to receive in the second quarter of fiscal year 2024.

The Gilead Research Term Extension triggered a $15.0 million payment that we received 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.

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

In addition, from the signing of the Gilead Agreement to February 29, 2024, we have received payments of $47.0 million for research milestones and additional payments and $20.0 million for a license option exercise payment.

As of February 29, 2024, we are 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.

In addition, from the signing of the Gilead Agreement to May 31, 2024, we have received payments of $47.0 million for research milestones and additional payments, $20.0 million for a license option exercise payment and $15.0 million in research term extension fees.

As of May 31, 2024, we are 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.

We also are 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 we exercise our option to co-develop and co-promote, for which the parties share profits and losses evenly.

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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.

We recognized collaboration revenue from the Gilead Agreement of $4.6 million and $7.4 million during the three months ended February 29, 2024 and February 28, 2023, respectively.

As of February 29, 2024 and November 30, 2023, there was $5.3 million and $10.0 million, respectively, of deferred revenue related to payments received by us under the Gilead Agreement.

We recognized collaboration revenue from the Gilead Agreement of $4.9 million and $9.5 million during the three and six months ended May 31, 2024, respectively, and $5.7 million and $13.1 million during the three and six months ended May 31, 2023, respectively.

As of May 31, 2024 and November 30, 2023, there was $15.5 million and $10.0 million, respectively, of deferred revenue related to payments received by us under the Gilead Agreement.

In December 2019, we 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 our DELigase platform to identify small molecules designed to induce degradation of three specified initial drug targets.

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Subsequently, in January 2021, Sanofi paid us 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 February 29, 2024, we received payments of $11.0 million for research milestones.

Additionally, we achieved a research milestone in February 2024 and received a payment of $2.0 million in the second quarter of fiscal year 2024.

As of February 29, 2024, we are 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 we exercise our 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 May 31, 2024, we received payments of $13.0 million for research milestones.

As of May 31, 2024, we are 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.

We are also eligible to receive 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 we exercise our option to co-develop and co-promote, for which the parties share profits and losses evenly.

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.

We recognized collaboration revenue from the Sanofi Agreement of $8.3 million and $5.3 million during the three months ended February 29, 2024 and February 28, 2023, respectively.

As of February 29, 2024 and November 30, 2023, there was $22.5 million and $24.9 million, respectively, of deferred revenue related to payments received by us under the Sanofi Agreement.

We recognized collaboration revenue from the Sanofi Agreement of $2.0 million and $10.3 million during the three and six months ended May 31, 2024, respectively, and $5.0 million and $10.3 million during the three and six months ended May 31, 2023, respectively.

As of May 31, 2024 and November 30, 2023, there was $20.5 million and $24.9 million, respectively, of deferred revenue related to payments received by us under the Sanofi Agreement.

In September 2023, we entered into a strategic collaboration with Seagen Inc.

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Under the terms of the Pfizer Agreement, we received an upfront payment of $60.0 million.

We are 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 are eligible for mid-single to low double digit percentage tiered royalties on future sales.

In addition, we achieved a research milestone in May 2024 and expect to receive a payment of $5.0 million in the third quarter of fiscal year 2024.

We are eligible to receive up to approximately $3.4 billion in contingent payments based on specified research, development, regulatory and commercial milestones across multiple programs.

We are also eligible for mid-single to low double digit percentage tiered royalties on future sales.

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.

We recognized collaboration revenue from the Pfizer Agreement of $3.7 million during the three months ended February 29, 2024.

As of February 29, 2024 and November 30, 2023, there was $54.7 million and $58.3 million, respectively, of deferred revenue related to payments received by us under the Pfizer Agreement.

We recognized collaboration revenue from the Pfizer Agreement of $5.2 million and $8.9 million during the three and six months ended May 31, 2024, respectively.

As of May 31, 2024 and November 30, 2023, there was $54.4 million and $58.3 million, respectively, of deferred revenue related to payments received by us under the Pfizer Agreement.

Financial Overview

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Since inception, we have generally incurred significant losses and negative cash flows from operations.

During the three months ended February 29, 2024 and February 28, 2023, we incurred net losses of $41.5 million and $40.7 million, respectively.

As of February 29, 2024, we had an accumulated deficit of $586.7 million.

During the six months ended May 31, 2024 and 2023, we incurred net losses of $86.1 million and $65.0 million, respectively.

As of May 31, 2024, we had an accumulated deficit of $631.3 million.

These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations.

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and the execution of any additional collaboration, licensing or similar arrangements, and the timing of payments we may make or receive under such arrangements.

As of February 29, 2024, we had $254.3 million in cash, cash equivalents and marketable securities.

As of May 31, 2024, we had $452.5 million in cash, cash equivalents and marketable securities.

We expect that our existing cash, cash equivalents and marketable securities are sufficient to fund our operations for at least the next 12 months.

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Our critical accounting policies and more significant areas involving management’s judgments and estimates used in preparation of our condensed consolidated financial statements are discussed in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended November 30, 2023.

There have been no significant changes to these policies for the three months ended February 29, 2024.

There have been no significant changes to these policies for the three and six months ended May 31, 2024.

Recent Accounting Pronouncements

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Results of Operations

Comparison of the three months ended February 29, 2024 and February 28, 2023

Our results of operations for the three months ended February 29, 2024 and February 28, 2023 are summarized as follows (in thousands):

Three Months Ended Change

February 29, 2024 February 28, 2023

Comparison of the three and six months ended May 31, 2024 and 2023

Our results of operations for the three and six months ended May 31, 2024 and 2023 are summarized as follows (in thousands):

Three Months Ended

May 31, Change Six Months Ended

May 31, Change

2024 2023 2024 2023

Collaboration revenue $ 12,092 $ 10,676 $ 1,416 $ 28,677 $ 23,361 $ 5,316

License revenue — 20,000 (20,000) — 20,000 (20,000)

Total revenue 12,092 30,676 (18,584) 28,677 43,361 (14,684)

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Collaboration Revenue

Our collaboration revenue for the three months ended February 29, 2024 and February 28, 2023 is summarized as follows (in thousands):

Three Months Ended Change

February 29, 2024 February 28, 2023

Our collaboration revenue for the three and six months ended May 31, 2024 and 2023 is summarized as follows (in thousands):

Three Months Ended

May 31, Change Six Months Ended

May 31, Change

2024 2023 2024 2023

Gilead $ 4,862 $ 5,708 $ (846) $ 9,478 $ 13,066 $ (3,588)

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Total collaboration revenue $ 12,092 $ 10,676 $ 1,416 $ 28,677 $ 23,361 $ 5,316

Our collaboration revenue increased by $3.9 million during the three months ended February 29, 2024 compared to the three months ended February 28, 2023 primarily due to the recognition of revenue from our collaboration with Pfizer that was entered into in the fourth quarter of fiscal year 2023, and increased effort resulting in a higher percentage of completion of performance obligation under our collaboration with Sanofi in the current period.

The increase in revenue under our collaboration with Sanofi was also due to the achievement of a research milestone that resulted in the cumulative catch up in revenue for activities satisfied in previous periods.

The decrease in revenue under our collaboration with Gilead was primarily due to a decrease in activity as we approach the end of the initial five year research term.

Our collaboration revenue increased by $1.4 million during the three months ended May 31, 2024 compared to the three months ended May 31, 2023 primarily due to the recognition of revenue from our collaboration agreement with Pfizer that was entered into in the fourth quarter of fiscal year 2023.

This increase in collaboration revenue was primarily offset by a decrease in revenue from our collaboration with Sanofi due to the extension of the research period and the associated increase in overall forecasted costs for the collaboration target STAT6 (signal transducer and activator of transcription 6), a key drug target in type 2 inflammation, pursuant to the Sixth Amendment to the Sanofi Agreement that we entered into in March 2024.

The research period extension had a cumulative impact that decreased the revenue recognized in the current period.

There was also a decrease in revenue from our collaboration with Gilead that was primarily due to a decrease in activity as we approach the end of the initial five year research term.

Our collaboration revenue increased by $5.3 million during the six months ended May 31, 2024 compared to the six months ended May 31, 2023 primarily due to the recognition of revenue from our collaboration agreement with Pfizer that we entered into in the fourth quarter of fiscal year 2023.

This increase in collaboration revenue was offset by a decrease in revenue from our collaboration with Gilead that was primarily due to a decrease in activity as we approach the end of the initial five year research term.

Additionally, there was an increase in revenue from our collaboration with Sanofi due to increased effort that resulted in a higher percentage of completion of our performance obligation and the achievement of a research milestone that resulted in the cumulative catch up in revenue for activities satisfied in previous periods, offset by a decrease in revenue due to the extension of the research period for a target pursuant to the Sixth Amendment to the Sanofi Agreement that we entered into in March 2024.

The research period extension had a cumulative impact that decreased the revenue recognized in the current period.

License Revenue

Our license revenue was $20.0 million for the three and six months ended May 31, 2023 and is related to the Gilead License Option Exercise.

There was no license revenue for the three and six months ended May 31, 2024.

Research and Development Expenses

Our research and development expenses for the three months ended February 29, 2024 and February 28, 2023 are summarized as follows (in thousands):

Three Months Ended Change

February 29, 2024 February 28, 2023

Our research and development expenses for the three and six months ended May 31, 2024 and 2023 are summarized as follows (in thousands):

Three Months Ended

May 31, Change Six Months Ended

May 31, Change

2024 2023 2024 2023

Compensation and related personnel costs $ 16,501 $ 17,626 $ (1,125) $ 36,185 $ 37,800 $ (1,615)

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Total research and development expenses $ 48,922 $ 45,763 $ 3,159 $ 98,927 $ 91,579 $ 7,348

Our research and development expenses increased by $4.2 million during the three months ended February 29, 2024 compared to the three months ended February 28, 2023.

There was an increase in clinical costs and contract manufacturing costs as we continued our clinical trial programs and ongoing patient enrollment and an increase in supplies to support our collaboration with Pfizer.

Our research and development expenses increased by $3.2 million and $7.3 million during the three and six months ended May 31, 2024 compared to the three and six months ended May 31, 2023, respectively.

For all periods presented, there was an increase in clinical costs and contract manufacturing costs as we continued our clinical trial programs and as a result of ongoing patient enrollment and an increase in supplies to support our collaboration with Pfizer.

There was also an increase in facility and other costs primarily driven by our lease in The Woodlands, Texas.

There was a decrease in non-cash stock-based compensation expense primarily due to the cancellation of incentive stock options and restricted stock units (RSUs).

There was a decrease in compensation and related personnel costs and non-cash stock-based compensation expense due to a decrease in headcount.

General and Administrative Expenses

Our general and administrative expenses increased by $2.0 million during the three months ended February 29, 2024 compared to the three months ended February 28, 2023.

There was an increase in non-cash stock-based compensation expense primarily driven by the increased issuance of RSUs and incentive stock options and an increase in professional service costs and other costs.

Our general and administrative expenses increased by $32,000 during the three months ended May 31, 2024 compared to the three months ended May 31, 2023.

There was an increase in local taxes related to the upfront payment received pursuant to the Pfizer Agreement, offset by a decrease in professional service costs.

Our general and administrative expenses increased by $2.0 million during the six months ended May 31, 2024 compared to the six months ended May 31, 2023.

There was an increase in non-cash stock-based compensation expense primarily driven by the increased issuance of restricted stock units and incentive stock options, an increase in local taxes related to the upfront payment received pursuant to the Pfizer Agreement and an increase in facility and other costs primarily driven by our lease in The Woodlands, Texas.

Liquidity and Capital Resources

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

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

As of February 29, 2024, we had $130.0 million of common stock remaining available for sale under the Equity Distribution Agreement.

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

In June 2022, we issued and sold 2,000,000 shares of common stock under the Equity Distribution Agreement at a price of $10.00 per share of common stock for net proceeds of approximately $19.3 million after deducting offering commissions and expenses paid by us.

In May 2024, we issued and sold 3,194,809 shares of common stock under the Equity Distribution Agreement at various prices ranging from $15.50 to $16.00 for total net proceeds of $48.5 million, after deducting offering commissions and expenses paid by us (the May 2024 ATM Financing).

As of May 31, 2024, we had $79.8 million of common stock remaining available for sale under the Equity Distribution Agreement.

In June 2024, we filed an automatic shelf registration statement on Form S-3ASR (the Automatic Shelf Registration Statement).

The Automatic Shelf Registration Statement, which includes a base prospectus, allows us at any time to offer and sell our registered common stock, preferred stock, debt securities, warrants, subscriptions rights and/or units or any combination of securities described in the prospectus in one or more offerings.

On July 11, 2024, we entered into an amendment to the Equity Distribution Agreement, pursuant to which, from time to time, we may offer and sell through Piper Sandler up to $150.0 million of common stock registered under the Automatic Shelf Registration Statement pursuant to one or more “at the market” offerings.

As of July 11, 2024, we had $150.0 million of common stock remaining available for sale under the Equity Distribution Agreement.

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

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

As of May 31, 2024, a total of 6,097,560 of the 2022 Pre-Funded Warrants remained available for exercise.

In April 2024, we completed an underwritten public offering (the 2024 Public Offering) and issued (a) 11,916,667 shares of common stock, which included 1,750,000 shares issued upon the exercise in full by our underwriters of their option to purchase additional shares of common stock, at a public offering price of $15.00 per share, and (b) pre-funded warrants to purchase 1,500,100 shares of our common stock (the 2024 Pre-Funded Warrants) at a public offering price of $14.999 per pre-funded warrant, which represents the per share public offering price for the common stock less a $0.001 per share exercise price for each pre-funded warrant.

The net proceeds from this offering were approximately $188.7 million, after deducting underwriting discounts and commissions and offering expenses.

As of May 31, 2024, all of the 2024 Pre-Funded Warrants remained available for exercise.

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

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

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

As of February 29, 2024, a total of 6,097,560 pre-funded warrants remained available for exercise.

Funding Requirements

As of February 29, 2024, our operations have primarily been funded through the net proceeds from equity offerings of $650.5 million and proceeds from collaborations of $413.0 million.

As of May 31, 2024, our operations have primarily been funded through the net proceeds from equity offerings of $887.7 million and proceeds from collaborations of $430.0 million.

We do not have any products approved for sale, and we have not generated any revenue from product sales.

As of February 29, 2024, we had $254.3 million in cash, cash equivalents and marketable securities.

As of May 31, 2024, we had $452.5 million in cash, cash equivalents and marketable securities.

We expect that our existing cash, cash equivalents and marketable securities are sufficient to meet our cash requirements and continue operating activities, including the clinical trials of our drug candidates NX-5948, NX-2127 and NX-1607 and the expansion of our intellectual property portfolio and infrastructure, for at least the next 12 months.

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We considered whether there are conditions or events that raise substantial doubt about our ability to continue as a going concern and evaluated the funds necessary to maintain operations.

If we are unable to obtain additional funding, we will be required to implement plans that are within our control, which may include the delay or scaling back of certain research and development programs, to maintain liquidity and operations.

Additionally, we may be required to obtain funds through arrangements with others that may require us to relinquish rights to certain of our technologies or products that we would otherwise seek to develop or commercialize ourselves, or cease operations.

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Our contractual obligations mostly consist of our operating lease obligations for facilities in San Francisco, California and The Woodlands, Texas.

Our total operating lease commitments as of February 29, 2024, were approximately $40.5 million, of which $7.5 million is expected to be paid within the next 12 months.

Our total operating lease commitments as of May 31, 2024, were approximately $39.8 million, of which $8.1 million is expected to be paid within the next 12 months.

In addition, we enter into agreements in the normal course of business with contract research organizations for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are generally cancelable upon written notice.

We did not have during the periods presented, and we do not currently have, any commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.

Our cash flows for the three months ended February 29, 2024 and February 28, 2023 are summarized as follows (in thousands):

Three Months Ended

February 29, 2024 February 28, 2023

Our cash flows for the six months ended May 31, 2024 and 2023 are summarized as follows (in thousands):

Six Months Ended

Cash used in operating activities $ (81,656) $ (66,921)

Cash provided by investing activities 35,513 16,068

Cash (used in) provided by investing activities (95,557) 59,899

Cash provided by financing activities 239,376 1,506

Net decrease in cash, cash equivalents and restricted cash $ (4,814) $ (30,903)

Net increase (decrease) in cash, cash equivalents and restricted cash $ 62,163 $ (5,516)

Operating activities

Net cash used in operating activities was $42.0 million for the three months ended February 29, 2024 and consisted of a net loss of $41.5 million and an increase in net assets of $10.2 million, offset by non-cash adjustments of $9.8 million.

The increase in net assets consisted of a decrease in deferred revenue of $12.6 million, which included an increase in contract assets of $2.0 million related to the achievement of a milestone under the Sanofi Agreement, as we increased effort in our programs and recognized revenue, a decrease in operating lease liabilities of $1.5 million due to lease payments made during the period and a decrease in accounts payable of $0.9 million from payments to vendors, offset by an increase in accrued expenses and other liabilities of $3.6 million primarily due to the accrual of compensation and other related personnel costs and a decrease in prepaid and other assets of $1.2 million primarily due to the recognition of expenses for prepaid services.

Non-cash adjustments primarily consisted of stock-based compensation expenses of $7.8 million, depreciation and amortization expenses of $2.0 million, amortization of operating lease right-of-use (ROU) assets of $1.8 million and net accretion of discount on marketable securities of $1.9 million.

Net cash used in operating activities was $48.5 million for the three months ended February 28, 2023 and consisted of a net loss of $40.7 million and an increase in net assets of $18.6 million, offset by non-cash adjustments of $10.9 million.

The increase in net assets consisted of a decrease in deferred revenue of $9.2 million as we increased effort in our programs and recognized revenue, a decrease in accrued expenses and other liabilities of $6.9 million primarily related to the payment of annual incentive compensation, an increase in prepaid expenses and other assets of $1.6 million primarily related to reimbursement receivables for landlord-owned improvements and a decrease in operating lease liabilities of $1.3 million due to lease payments made during the period.

Net cash used in operating activities was $81.7 million for the six months ended May 31, 2024 and consisted of a net loss of $86.1 million and an increase in net assets of $16.1 million, offset by non-cash adjustments of $20.6 million.

The increase in net assets consisted of a decrease in deferred revenue of $7.7 million, which included an increase in contract assets of $5.0 million related to the achievement of a milestone under the Pfizer Agreement, as we increased effort in our programs and recognized revenue, a decrease in accounts payable of $3.5 million from payments to vendors, a decrease in accrued expenses and other liabilities of $3.2 million primarily due to the payment of compensation and other related personnel costs and a decrease in operating lease liabilities of $3.1 million due to lease payments made during the period, offset by a decrease in prepaid and other assets of $1.3 million primarily due to the recognition of expenses for prepaid services.

Non-cash adjustments primarily consisted of stock-based compensation expenses of $16.7 million, depreciation and amortization expenses of $4.4 million and amortization of operating lease right-of-use (ROU) assets of $3.6 million, offset by net accretion of discount on marketable securities of $4.1 million.

Net cash used in operating activities was $66.9 million for the six months ended May 31, 2023 and consisted of a net loss of $65.0 million and an increase in net assets of $23.9 million, offset by non-cash adjustments of $22.0 million.

The increase in net assets consisted of a decrease in deferred revenue of $14.9 million as we increased effort in our programs and recognized revenue, a decrease in accrued expenses and other liabilities of $4.6 million primarily related to the payment of annual incentive compensation in the first quarter of fiscal year 2023, a decrease in operating lease liabilities of $3.1 million due to lease payments made during the period and a decrease in accounts payable of $1.8 million from payments to vendors.

Non-cash adjustments primarily consisted of stock-based compensation expenses of $17.2 million, depreciation and amortization expenses of $3.6 million and amortization of operating lease ROU assets of $2.9 million.

Investing activities

Net cash provided by investing activities was $35.5 million for the three months ended February 29, 2024 and consisted of the maturity of marketable securities of $93.2 million, offset by the purchase of marketable securities of $54.8 million and the purchase of property and equipment of $2.9 million.

Net cash provided by investing activities was $16.1 million for the three months ended February 28, 2023 and consisted of the maturity of marketable securities of $41.0 million, offset by the purchase of marketable securities of $22.6 million and the purchase of property and equipment of $2.3 million.

Net cash used in investing activities was $95.6 million for the six months ended May 31, 2024 and primarily consisted of the purchase of marketable securities of $279.9 million, offset by the maturity of marketable securities of $189.2 million.

Net cash provided by investing activities was $59.9 million for the six months ended May 31, 2023 and consisted of the maturity of marketable securities of $146.6 million, offset by the purchase of marketable securities of $83.4 million and the purchase of property and equipment of $3.4 million.

Financing activities

Net cash provided by financing activities was $1.6 million for the three months ended February 29, 2024 and consisted primarily of proceeds from the issuance of common stock under our Employee Stock Purchase Plan (ESPP).

Net cash provided by financing activities was $1.5 million for the three months ended February 28, 2023 and consisted primarily of proceeds from the issuance of common stock under our ESPP.

Net cash provided by financing activities was $239.4 million for the six months ended May 31, 2024 and consisted primarily of net proceeds from our 2024 Public Offering and the May 2024 ATM Financing.

Net cash provided by financing activities was $1.5 million for the six months ended May 31, 2023 and consisted primarily of proceeds from the issuance of common stock under our Employee Stock Purchase Plan.

Quantitative and Qualitative Disclosures About Market Risk

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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 2. Management’s Discussion and Analysis