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Item 7. Management’s Discussion and Analysis

2025-01-28 compared with 2024-02-15 · 107 added, 78 removed, 267 unchanged (41% of the section changed)

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Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

We are 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 our extensive expertise in E3 ligases together with our proprietary DNA-encoded libraries, we have 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.

Our drug discovery approach is to either harness or inhibit the natural function of E3 ligases within the ubiquitin-proteasome system to selectively decrease or increase cellular protein levels.

We are a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of medicines based on targeted protein degradation, the next frontier in innovative drug design aimed at improving treatment options for patients with cancer and autoimmune diseases.

Powered by our prolific DEL-AI discovery engine and leading ligase expertise, capable of tackling any protein class, we have built a significant advantage in translating the science of degradation into clinical advancements.

We aim to establish degrader-based treatments at the forefront of patient care, writing medicine’s next chapter with a new script to outmatch disease.

We leverage our proprietary DEL-AI platform, employing advanced automated chemistry synthesis and direct-to-biology technologies, to rapidly generate degraders and degrader antibody conjugates (DACs) as first-in-class or best-in-class drug candidates.

Harnessing validated binding data collected from DEL screens of hundreds of diverse targets, our DEL-AI platform can prospectively identify binders to genetically validated, high value targets that have yet to be drugged.

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

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Targeted Protein Degradation

Our portfolio of targeted protein degraders of BTK, a B‑cell signaling protein, comprises NX‑5948, an orally bioavailable BTK degrader for the treatment of relapsed or refractory B-cell malignancies and potentially autoimmune diseases, and NX‑2127, an orally bioavailable BTK degrader that also degrades cereblon neosubstrates IKZF1 (Ikaros) and IKZF3 (Aiolos) for the treatment of relapsed or refractory B‑cell malignancies.

We are currently treating patients in a Phase 1a/1b dose-escalation and cohort expansion study in patients with relapsed or refractory B-cell malignancies.

Our portfolio of targeted protein degraders of BTK, a B‑cell signaling protein, comprises NX‑5948, an investigational, orally bioavailable degrader of BTK for the treatment of relapsed or refractory B-cell malignancies and potentially autoimmune diseases, and NX‑2127, an investigational orally bioavailable degrader of BTK that also degrades cereblon neosubstrates IKZF1 (Ikaros) and IKZF3 (Aiolos) for the treatment of relapsed or refractory B‑cell malignancies.

We are currently conducting a Phase 1a/1b dose-escalation and cohort expansion study in patients with relapsed or refractory B-cell malignancies.

We also recently initiated a Phase 1 healthy volunteer study to assess food effects and drug-drug interactions in anticipation of the planned initiation of pivotal development in 2025.

In January 2024, the U.S.

Food and Drug Administration (FDA) granted Fast Track designation for NX-5948 for the treatment of adult patients with relapsed or refractory chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL) after at least two lines of therapy, including a BTK inhibitor (BTKi) and a B-cell lymphoma 2 (BCL2) inhibitor.

We are currently treating patients in a Phase 1a/1b dose-escalation and cohort expansion study of NX-2127 in patients with relapsed or refractory B-cell malignancies.

We have initiated Phase 1b expansion cohorts for patients with relapsed CLL, diffuse large B-cell lymphoma (DLBCL) and mantle cell lymphoma (MCL).

Enrollment of new patients in this clinical trial is paused pending resolution of a partial clinical hold, which followed our communication to the FDA of our intention to transition to an improved manufacturing process.

Patients already enrolled who are receiving clinical benefit may continue treatment.

Targeted Protein Elevation

Our targeted protein elevation program includes NX-1607, an orally bioavailable inhibitor of CBL-B, an E3 ligase that regulates the activation of multiple immune cell types including T cells and NK cells.

In November 2024, the European Medicines Agency granted PRIME designation for NX-5948 in CLL or SLL after at least a BTKi and a BCL-2 inhibitor.

In December 2024, the FDA granted Fast Track designation for NX-5948 for the treatment of adult patients with Waldenstrom’s macroglobulinemia after at least two lines of therapy, including a BTKi.

We are currently conducting a Phase 1a/1b dose-escalation and cohort expansion study of NX-2127 in patients with relapsed or refractory B-cell malignancies.

We have initiated Phase 1b expansion cohorts for patients with relapsed CLL, diffuse large B-cell lymphoma and mantle cell lymphoma.

In March 2024, the FDA lifted the partial clinical hold on the U.S.

Phase 1a/1b study evaluating NX-2127 in adults with relapsed/refractory B-cell malignancies.

In August 2024, we reinitiated enrollment with a new chirally controlled drug product, which is being evaluated in a dose escalation study within the Phase 1a/b trial.

Degradation Inhibitor

Our degradation inhibitor program includes NX-1607, an orally bioavailable inhibitor of CBL-B, an E3 ligase that regulates the activation of multiple immune cell types including T cells and NK cells.

NX-1607 is targeted for immuno-oncology indications.

We are currently treating patients in a Phase 1a/1b dose-escalation and cohort expansion study of NX-1607 in patients with a range of oncology indications.

We are currently conducting a Phase 1a/1b dose-escalation and cohort expansion study of NX-1607 in patients with a range of oncology indications.

This study also includes a cohort within the Phase 1a dose escalation study testing NX-1607 in combination with paclitaxel, a taxane chemotherapy commonly used across a range of relapsed and refractory solid tumor indications.

NX-1607 was awarded an Innovative Passport from the UK Medicines and Healthcare products Regulatory Agency to accelerate time to market and facilitate patient access to novel drugs to treat serious and life-threatening diseases.

In 2022, NX-1607 was awarded an Innovation Passport from the UK Medicines and Healthcare products Regulatory Agency to accelerate time to market and facilitate patient access to novel drugs to treat serious and life-threatening diseases.

Drug Discovery Pipeline

In addition to our clinical stage drug candidates, we are extending our protein modulation portfolio, both on our own and with partners by developing new targeted protein degraders and ligase inhibitors for a number of targets for which we believe the protein modulation modality can be clinically advantageous over existing therapies.

In addition to our clinical stage drug candidates, we are extending our protein degrader and ligase inhibitor portfolio, both on our own and with partners, by developing new targeted protein degraders and ligase inhibitors for a number of targets for which we believe these modalities can be clinically advantageous over existing therapies.

These existing and future programs may have the potential to address diseases with significant unmet need, including cancer, autoimmunity, inflammation, and other challenging diseases.

We have entered into several revenue generating collaborations with large biopharmaceutical companies, including with Gilead, Sanofi and Seagen (now a part of Pfizer), to leverage our DELigase platform for drug discovery.

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

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Collaborations and License Agreements

In June 2019, we 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 our DELigase platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.

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

In June 2019, we 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 our DEL-AI platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.

In August 2019 and September 2022, we 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.

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 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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The collaboration excludes our current internal protein degradation programs for which we retain all rights, and also excludes our future internal programs, provided that we have distinguished future programs as excluded from the scope of the collaboration.

In March 2023, Gilead exercised the option, which did not represent a material right at contract inception, since it was not offered for free or at a discount, to exclusively license one target (Gilead License Option Exercise), the first development candidate resulting from the Gilead Agreement.

In March 2023, Gilead exercised its option, which did not represent a material right at contract inception, since it was not offered for free or at a discount, to exclusively license one target (Gilead License Option Exercise), the first development candidate resulting from the Gilead Agreement.

Pursuant to the Gilead Agreement, we received a license option exercise payment of $20.0 million in April 2023 for the Gilead License Option Exercise.

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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 November 30, 2023, we received payments of $47.0 million for research milestones and additional payments and $20.0 million for a license option exercise payment.

In addition, from the signing of the Gilead Agreement to November 30, 2024, we 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 November 30, 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.

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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 our exercise of our option to co-develop and co-promote such licensed product.

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 $14.0 million and $29.9 million during the years ended November 30, 2024 and 2023, respectively.

As of November 30, 2024 and 2023, there was $11.0 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.

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 DEL-AI platform to identify small molecules designed to induce degradation of three specified initial drug targets.

In January 2021, as part of the existing Sanofi Agreement, Sanofi paid us $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, we entered into the First Amendment to the Sanofi Agreement to modify the research term on all targets.

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

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

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

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

In July 2022, we 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.

In August 2022 and November 2023, we 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.

In August 2022 and November 2023, we 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.

In March 2024, we 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, which is expected to increase overall forecasted costs and have an impact on revenue recognition.

Under the Sanofi Agreement, Sanofi has exclusive rights and is responsible for the clinical development, commercialization and manufacture of drug candidates resulting from the collaboration while we retain 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.

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For those programs that we exercise our option to co-develop, co-promote and co-commercialize, we will be responsible for a portion of the U.S.

development costs, and the parties will split U.S.

development costs, the parties will split U.S.

profits and losses evenly, and we will be eligible to receive royalties on ex-U.S.

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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 November 30, 2023, we received payments of $7.0 million for research milestones.

Additionally, we achieved two research milestones in November 2023 and received payments totaling $4.0 million in January 2024 as a result.

As of November 30, 2023, we are 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 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 November 30, 2024, we have received payments of $13.0 million for research milestones.

As of November 30, 2024, we are eligible to receive up to approximately $1.9 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.

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For the targets nominated by Pfizer under the collaboration, we shall use commercially reasonable efforts to identify, synthesize, characterize and deliver targeted protein degraders that selectively bind to and degrade such targets.

Development of licensed degraders, with the exception of licensed products for which we exercised our profit-share options, will be at Pfizer’s sole cost and expense.

Development of licensed degraders, with the exception of licensed products for which we exercise our profit-share options, will be at Pfizer’s sole cost and expense.

For the profit-share products, the parties will share net profits and net losses and global development costs, and we will be eligible to receive royalty and milestone payments on such optioned products.

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, from the signing of the Pfizer Agreement to November 30, 2024, we have received a payment of $5.0 million in connection with the achievement of a research milestone.

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 $1.7 million during the year ended November 30, 2023.

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

We recognized collaboration revenue from the Pfizer Agreement of $18.8 million and $1.7 million during the years ended November 30, 2024 and 2023, respectively.

As of November 30, 2024 and 2023, there was $44.5 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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enter advanced clinical development and scale up external manufacturing capabilities to supply clinical trials;

apply our DELigase platform to advance additional drug candidates and expand the capabilities of our platform;

apply our DEL-AI platform to advance additional drug candidates and expand the capabilities of our platform;

seek marketing approvals for any drug candidates that successfully complete clinical trials;

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Furthermore, we expect to continue incurring costs associated with operating as a public company, including significant legal, accounting, insurance, investor relations and other administrative and professional services expenses.

Our net losses and cash flows may fluctuate significantly from period to period, depending on, among other things, variations in the level of expense related to the ongoing development of our drug candidates, our DELigase platform or future development programs;

the delay, addition or termination of clinical trials;

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Uncertainty in the global business, political and macroeconomic environments present significant risks to our business.

We are subject to continuing risks and uncertainties, 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, 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.

We are closely monitoring the impact of these factors on all aspects of our business, including the impacts on our clinical trial patients, employees, partner, suppliers, and vendors.

The ultimate extent of the impact of global economic conditions on our business remains highly uncertain and will depend on future developments and factors that continue to evolve.

We are subject to continuing risks and uncertainties, including increasing financial market volatility and uncertainty, inflation, interest rate fluctuations, uncertainty with respect to the federal budget and debt ceiling and potential government shutdowns related thereto, 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.

We closely monitor the impact of these factors on all aspects of our business, including the impacts on our clinical trial patients, employees, partner, suppliers, and vendors.

The ultimate impact of global economic conditions on our business remains highly uncertain and will depend on future developments and factors that continue to evolve.

Most of these developments and factors are outside of our control and could exist for an extended period of time.

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• expenses related to laboratory supplies and services.

We expect our research and development expenses to increase substantially for the foreseeable future as we conduct clinical trials for our drug candidates, continue to invest in research and development activities for discovery programs and preclinical studies, pursue regulatory approval of our drug candidates and expand our drug candidate pipeline.

We expect our research and development expenses to increase for the foreseeable future as we conduct clinical trials for our drug candidates, continue to invest in research and development activities for discovery programs and preclinical studies, pursue regulatory approval of our drug candidates and expand our drug candidate pipeline.

The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming.

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We expect our general and administrative expenses to increase for the foreseeable future as we continue to improve our infrastructure and operate as a public company.

This may include expenses related to compliance with the rules and regulations of the Securities and Exchange Commission and listing standards applicable to companies listed on a national securities exchange, additional insurance, investor relations activities and other administrative and professional services.

We also expect our intellectual property expenses to increase as we expand our intellectual property portfolio.

This may include expenses related to compliance with the rules and regulations of the Securities and Exchange Commission (SEC) and listing standards applicable to companies listed on a national securities exchange, additional insurance, investor relations activities and other administrative and professional services.

Interest and Other Income, Net

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We expect interest income to vary each reporting period depending on our average bank deposit, money market fund and marketable securities balances during the period and market interest rates.

Provision for Income Taxes

The provision for income taxes primarily consists of reserves for unrecognized tax benefits and state taxes.

We have generated NOLs since inception and have established a full valuation allowance against our deferred tax assets due to the uncertainty surrounding the realization of such assets.

Critical Accounting Policies and Estimates

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We believe that the following discussion addresses our most critical accounting policies and estimates, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.

We determine if an arrangement contains a lease and the classification of the lease at inception.

An arrangement contains a lease if there is an identified asset and if we control the use of the identified asset throughout the period of use.

The evaluation of whether the lease is an operating or a finance lease requires judgments in determining the fair value of the leased asset.

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.

We use our incremental borrowing rate, if an implicit rate is not readily available, and the information available at the date of lease commencement in determining our lease liabilities.

Our incremental borrowing rate is based on the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment, and the determination of the rate requires us to make certain assumptions and judgements, including on our synthetic credit rating.

Leases may include options to extend or early terminate the lease term.

If we, using judgement, are reasonably certain that an option will be exercised, then the option will be included in the calculation of the lease term.

The determination of the lease liabilities is sensitive to the incremental borrowing rate and the expected lease term.

Lease expense for operating leases is recognized on a straight-line basis over the lease term.

We do not have any finance leases.

Revenue Recognition

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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.

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.

For performance obligations satisfied over time, we recognize revenue using the cost-based input method and evaluate the measure of proportional performance each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

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Interest and other income, net 19,728 11,115 8,613

Loss before income taxes (193,299) (143,948) (49,351)

Provision for income taxes 270 — 270

Net loss $ (193,569) $ (143,948) $ (49,621)

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Total collaboration revenue $ 54,549 $ 56,987 $ (2,438)

Our collaboration revenue increased by $18.4 million during the year ended November 30, 2023, compared to the year ended November 30, 2022, primarily due to increased effort resulting in a higher percentage of completion of performance obligations under our collaborations with Gilead and Sanofi in the current period.

The increase was also due to higher achievement of research milestones that resulted in higher revenue recognized in each period and impacted the cumulative catch up in revenue for activities satisfied in previous periods.

In addition, we recognized revenue of $1.7 million related to activities performed during the fourth fiscal quarter ended November 30, 2023 pursuant to the Pfizer Agreement.

Our collaboration revenue decreased by $2.4 million during the year ended November 30, 2024, compared to the year ended November 30, 2023, primarily due to a decrease in revenue from our collaboration with Gilead as we concluded the initial research term for certain drug targets and due to fewer milestone payments being achieved.

There was also a decrease in revenue from our collaboration with Sanofi due to fewer milestone payments being achieved and 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, that increased forecasted expenditures.

The decrease in collaboration revenue was mainly offset by the recognition of revenue from our collaboration agreement with Pfizer that we entered into in September 2023.

License Revenue

Our license revenue was $20.0 million for the year ended November 30, 2023, and is related to the Gilead License Option Exercise.

There was no license revenue for the year ended November 30, 2024.

Our license revenue was $20.0 million for the year ended November 30, 2023 and is related to the Gilead License Option Exercise.

Research and Development Expenses

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Our research and development expense increased by $32.5 million during the year ended November 30, 2024, compared to the year ended November 30, 2023.

There was an increase in compensation and related personnel costs and in non-cash stock-based compensation expense that were primarily attributable to higher headcount and the issuance of restricted stock units (RSUs) and incentive stock options.

There was also an increase in clinical costs as we continued our clinical trial programs and ongoing patient enrollment and an increase in facility and other costs primarily driven by investments in equipment and expenses related to our leases of office and laboratory space, including the lease in The Woodlands, Texas.

There was a decrease in research related costs as we concluded certain studies and sponsored research agreements and a decrease in contract manufacturing as we stabilized the supply needed for our clinical trials.

There was an increase in clinical, contract manufacturing, and consulting costs primarily driven by our continued efforts to accelerate enrollment for NX-5948.

The increase was also attributable to increased supplies and contract research costs in connection with supporting our collaborations with Pfizer and Sanofi.

There was also an increase in facility costs primarily driven by lease expense and equipment costs related to our lease in The Woodlands, Texas, which commenced in September 2023.

There was a decrease in non-cash stock-based compensation expense primarily due to the departures of certain executives.

General and Administrative Expenses

Our general and administrative expenses increased by $3.0 million during the year ended November 30, 2024, compared to the year ended November 30, 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 related to the Pfizer Agreement, offset by a decrease in outside consulting costs.

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

Interest and Other Income, Net

Our interest and other income, net increased by $8.6 million during the year ended November 30, 2024, compared to the year ended November 30, 2023, primarily attributable to higher interest rates earning higher interest income on our deposits, money market funds and marketable securities.

Comparison of the Years Ended November 30, 2023 and 2022

Discussion and analysis of the results of operations for the year ended November 30, 2023, compared to the year ended November 30, 2022, is included under the heading “Comparison of the years ended November 30, 2023 and 2022” in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K as filed with the SEC on February 15, 2024, and incorporated by reference into this Annual Report on Form 10-K.

Liquidity and Capital Resources

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

In August 2021, we entered into an Equity Distribution Agreement with Piper Sandler & Co.

(Piper Sandler) pursuant to which, from time to time, we may offer and sell through Piper Sandler up to $150.0 million of the common stock registered under our shelf registration statement on Form S-3 pursuant to one or more “at the market” offerings.

In August 2021, we filed a shelf registration statement on Form S-3 with the SEC, which was amended in February 2023 (the Shelf Registration Statement) and which expired in August 2024 with respect to additional sales of securities.

The Shelf Registration Statement, which included a base prospectus, allowed us to offer and sell up to $450.0 million of 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.

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

(Piper Sandler) pursuant to which, from time to time, we could offer and sell through Piper Sandler up to $150.0 million of the common stock registered under the Shelf Registration Statement pursuant to one or more “at the market” offerings.

We are not required to sell any shares at any time during the term of the Equity Distribution Agreement.

We agreed to pay Piper Sandler a commission of 3.0% 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 November 30, 2023, 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.

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.

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 for net proceeds of $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 per share for total net proceeds of $48.5 million, after deducting offering commissions and expenses paid by us (the May 2024 ATM Financing).

In June 2024, we filed an automatic shelf registration statement on Form S-3 (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 Amendment No.

1 to the Equity Distribution Agreement (as amended, the Amended Equity Distribution Agreement), pursuant to which, from time to time, we could 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.

We are not required to sell any shares at any time during the term of the Amended Equity Distribution Agreement.

We agreed to pay Piper Sandler a commission of up to 3.0% of the gross sales price of any shares sold pursuant to the Amended Equity Distribution Agreement.

In August 2024, we issued and sold 2,145,000 shares of common stock under the Amended Equity Distribution Agreement at $20.00 per share for total net proceeds of $42.0 million after deducting offering commissions and expenses paid by us (the August 2024 ATM Financing).

In October 2024, we issued and sold 4,803,573 shares of common stock under the Amended Equity Distribution Agreement at various prices ranging from $21.50 to $25.00 per share for total net proceeds of $105.3 million after deducting offering commissions and expenses paid by us (the October 2024 ATM Financing).

On October 31, 2024, we entered into Amendment No.

2 to the Equity Distribution Agreement (as amended, the Second Amended Equity Distribution Agreement), pursuant to which, from time to time, we may offer and sell through Piper Sandler up to $300.0 million of common stock registered under the Automatic Shelf Registration Statement pursuant to one or more “at the market” offerings.

We are not required to sell any shares at any time during the term of the Second Amended Equity Distribution Agreement.

We agreed to pay Piper Sandler a commission of up to 3.0% of the gross sales price of any shares sold pursuant to the Second Amended Equity Distribution Agreement.

In November 2024, we issued and sold 3,634,393 shares of common stock under the Second Amended Equity Distribution Agreement at $26.25 per share for total net proceeds of $93.6 million after deducting offering commissions and expenses paid by us (the November 2024 ATM Financing).

As of November 30, 2024, we had $204.6 million of common stock remaining available for sale under the Second Amended Equity Distribution Agreement.

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

As of November 30, 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 November 30, 2024, a total of 1,480,349 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 November 30, 2023, a total of 6,097,560 pre-funded warrants remained available for exercise.

Funding Requirements

As of November 30, 2023, our operations have primarily been funded through the net proceeds from equity offerings of $650.5 million and proceeds from collaborations of $409.0 million.

As of November 30, 2024, our operations have primarily been funded through the net proceeds from equity offerings of $1.1 billion and proceeds from collaborations of $435.0 million.

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

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• the number and development requirements of other drug candidates that we pursue;

• the scope of, and costs associated with, future advancements to our DELigase platform;

• the scope of, and costs associated with, future advancements to our DEL-AI platform;

• the success of our collaborations with Gilead, Sanofi, Pfizer and any other collaborations we may establish;

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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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If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

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

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 November 30, 2024, were approximately $38.5 million, of which $8.2 million is expected to be paid within the next 12 months.

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Year ended November 30,

2024 2023 2022

Cash used in operating activities $ (172,584) $ (81,365) $ (159,807)

Cash provided by investing activities 68,301 27,198

Cash (used in) provided by investing activities (257,713) 68,301 27,198

Cash provided by financing activities 485,667 3,217 117,192

Net decrease in cash, cash equivalents and restricted cash $ (9,847) $ (15,417)

Net increase (decrease) in cash, cash equivalents and restricted cash $ 55,370 $ (9,847) $ (15,417)

Operating activities

Net cash used in operating activities was $172.6 million for the year ended November 30, 2024, and consisted of our net loss of $193.6 million and an increase in net assets of $18.4 million, offset by non-cash adjustments of $39.4 million.

The increase in net assets consisted of a decrease in deferred revenue of $28.5 million as we increased effort in our programs and recognized revenue, a decrease in operating lease liabilities of $6.4 million due to lease payments made during the period, offset by an increase in accrued expenses and other liabilities of $11.8 million primarily related to the accrual of annual incentive compensation, an increase in accounts payable of $5.2 million from outstanding payments to vendors, an increase in prepaid expenses and other assets of $0.5 million primarily due to the recognition of expenses for prepaid services.

Non-cash adjustments primarily consisted of stock-based compensation expenses of $33.9 million, depreciation and amortization expenses of $9.3 million and amortization of operating lease ROU assets of $7.1 million, offset by net accretion of discount on marketable securities of $11.3 million.

Net cash used in operating activities was $81.4 million for the year ended November 30, 2023, and consisted of our net loss of $143.9 million, offset by non-cash adjustments of $42.5 million and a decrease in net assets of $20.1 million.

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Investing activities

Net cash used in investing activities was $257.7 million for the year ended November 30, 2024, and consisted of purchases of marketable securities of $707.9 million and purchases of property and equipment of $9.3 million, offset by the maturity of marketable securities of $459.5 million.

Net cash provided by investing activities was $68.3 million for the year ended November 30, 2023, and consisted of the maturity of marketable securities of $323.0 million, offset by the purchase of marketable securities of $246.3 million and purchases of property and equipment of $8.4 million.

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Financing activities

Net cash provided by financing activities was $485.7 million for the year ended November 30, 2024, and consisted primarily of net proceeds from our 2024 Public Offering, the May 2024 ATM Financing, the August 2024 ATM Financing, the October 2024 ATM Financing and the November 2024 ATM Financing.

Net cash provided by financing activities was $3.2 million for the year ended November 30, 2023, and consisted primarily of proceeds from the issuance of common stock under our Employee Stock Purchase Plan.

Net cash provided by financing activities was $117.2 million for the year ended November 30, 2022, and consisted primarily of net proceeds from the issuance of pre-funded warrants in the RDOs of $94.8 million and from the issuance of common stock in the June 2022 ATM Offering of $19.4 million.

Net cash provided by financing activities was $117.2 million for the year ended November 30, 2022, and consisted primarily of net proceeds from the issuance of the 2022 Pre-Funded Warrants in the RDOs of $94.8 million and from the issuance of common stock in the June 2022 ATM Offering of $19.4 million.

Information About Segments

We currently operate in a single business segment.

See additional information in our financial statements contained in Part II, Item 8 of this Annual Report on Form 10-K.

Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide this information.

See additional information in our consolidated financial statements contained in Part II, Item 8 of this Annual Report on Form 10-K.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis