What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-04-08 compared with 2024-10-11 · 114 added, 123 removed, 215 unchanged (52% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) the unaudited condensed consolidated financial statements and the related notes included in Part I, Item 1 of this Quarterly Report on Form 10‑Q and (2) the audited financial statements and related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended November 30, 2023 included in our Annual Report on Form 10‑K filed on February 15, 2024.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (1) the unaudited condensed financial statements and the related notes included in Part I, Item 1 of this Quarterly Report on Form 10‑Q and (2) the audited financial statements and related notes and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended November 30, 2024, included in our Annual Report on Form 10‑K filed on January 28, 2025.

As discussed in the section titled “Special Note Regarding Forward Looking Statements,” the following discussion and analysis contains forward looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward looking statements.

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 II, Item 1A of this Quarterly Report on Form 10‑Q.

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.

5 unchanged sentences

Targeted Protein Degradation

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 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 bexobrutideg (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.

Bexobrutideg (NX-5948):

We are currently conducting a Phase 1a/1b dose-escalation and cohort expansion study in patients with relapsed or refractory B-cell malignancies and we expect to initiate a Phase 2 clinical trial of bexobrutideg in 2025.

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).

Food and Drug Administration (FDA) granted Fast Track designation for bexobrutideg 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.

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

In December 2024, the FDA granted Fast Track designation for bexobrutideg for the treatment of adult patients with Waldenström macroglobulinemia (WM) after at least two lines of therapy, including a BTKi.

In March 2025, the FDA granted Orphan Drug Designation to bexobrutideg for the treatment of adult patients with WM.

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.

1 unchanged sentence

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.

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.

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.

In aggregate, we have received $435.0 million in non-dilutive financing from our collaborators to date, and as of August 31, 2024, we are eligible to receive up to $7.1 billion in potential future fees and milestone payments, as well as royalties on future product sales.

In aggregate, we have received $440.0 million in non-dilutive financing from our collaborators to date and as of February 28, 2025, we are eligible to receive up to $7.1 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.

Collaboration 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.

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 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.

5 unchanged sentences

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.

10 unchanged sentences

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 August 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 August 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.

In addition, from the signing of the Gilead Agreement to February 28, 2025, 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 February 28, 2025, 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.

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.

We recognized collaboration revenue from the Gilead Agreement of $2.4 million and $11.9 million during the three and nine months ended August 31, 2024, respectively, and $11.6 million and $24.7 million during the three and nine months ended August 31, 2023, respectively.

As of August 31, 2024 and November 30, 2023, there was $13.1 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.

We recognized collaboration revenue from the Gilead Agreement of $1.7 million and $4.6 million during the three months ended February 28, 2025 and February 29, 2024, respectively.

As of February 28, 2025 and November 30, 2024, there was $9.3 million and $11.0 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 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.

14 unchanged sentences

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.

2 unchanged sentences

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 August 31, 2024, we have received payments of $13.0 million for research milestones.

As of August 31, 2024, we are eligible to receive up to approximately $2.0 billion in total additional payments based on certain additional fees, payments and the successful completion of certain research development, regulatory and sales milestones.

In addition, from the signing of the Sanofi Agreement to February 28, 2025, we have received payments of $13.0 million for research milestones.

As of February 28, 2025, 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.

We recognized collaboration revenue from the Sanofi Agreement of $5.9 million and $16.2 million during the three and nine months ended August 31, 2024, respectively, and $6.8 million and $17.1 million during the three and nine months ended August 31, 2023, respectively.

As of August 31, 2024 and November 30, 2023, there was $14.6 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 $12.8 million and $8.3 million during the three months ended February 28, 2025 and February 29, 2024, respectively.

As of February 28, 2025, there was a net contract asset of $3.6 million compared to a deferred revenue of $9.1 million as of November 30, 2024.

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

(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.

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.

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

Under the Pfizer Agreement, Pfizer has the option to obtain exclusive licenses to develop and commercialize certain degraders, while we retain an option for U.S.

5 unchanged sentences

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

In addition, from the signing of the Pfizer Agreement to August 31, 2024, we have received a payment of $5.0 million in connection with the achievement of a research milestone.

In addition, from the signing of the Pfizer Agreement to February 28, 2025, we have received a payment of $10.0 million for research milestones.

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.

1 unchanged sentence

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 $4.2 million and $13.1 million during the three and nine months ended August 31, 2024, respectively.

As of August 31, 2024 and November 30, 2023, there was $50.2 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 $4.0 million and $3.7 million during the three months ended February 28, 2025 and February 29, 2024, respectively.

As of February 28, 2025 and November 30, 2024, there was $45.5 million and $44.5 million, respectively, of deferred revenue related to payments received by us under the Pfizer Agreement.

Financial Overview

3 unchanged sentences

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

During the nine months ended August 31, 2024 and 2023, we incurred net losses of $135.0 million and $102.0 million, respectively.

As of August 31, 2024, we had an accumulated deficit of $680.2 million.

During the three months ended February 28, 2025 and February 29, 2024, we incurred net losses of $56.4 million and $41.5 million, respectively.

As of February 28, 2025, we had an accumulated deficit of $795.1 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.

2 unchanged sentences

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;

3 unchanged sentences

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;

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 August 31, 2024, we had $457.5 million in cash, cash equivalents and marketable securities.

As of February 28, 2025, we had $549.7 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.

6 unchanged sentences

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 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 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.

20 unchanged sentences

• payroll and personnel expenses, including benefits, stock-based compensation and travel expenses, for our research and development functions;

• costs associated with our research and development platform used across programs, process development, manufacturing and preclinical research and development for earlier stage programs and new technologies;

• depreciation of research and development equipment, allocated overhead and facilities-related expenses.

External research and development expenses consist primarily of costs incurred for the development of our drug candidates and may include:

External expenses for clinical development programs and other research and development expenses include:

• fees paid to third parties such as consultants, contractors and contract research organizations to conduct our clinical trials, discovery programs and preclinical studies;

1 unchanged sentence

• expenses related to laboratory supplies and services.

We do not allocate our internal costs by product candidate.

With respect to internal costs, several of our departments support multiple product candidate research and development programs, and therefore the costs cannot be allocated to a particular product candidate or development program.

Our research and development expenses for the three months ended February 28, 2025, and February 29, 2024, are summarized as follows (in thousands):

Three Months Ended Change

February 28, 2025 February 29, 2024

External clinical development expenses:

Bexobrutideg (NX-5948) $ 15,720 $ 5,078 $ 10,642

NX-2127 1,106 1,299 (193)

NX-1607 1,960 1,758 202

Internal research and development expenses 50,877 41,870 9,007

Total research and development expenses $ 69,663 $ 50,005 $ 19,658

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.

6 unchanged sentences

General and administrative expenses consist primarily of payroll and personnel expenses, including benefits and stock-based compensation, facilities-related expenses and professional fees for legal, consulting and audit and tax services.

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

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 (SEC) and listing standards applicable to companies listed on a national securities exchange, additional insurance, investor relations activities and other administrative and professional services.

4 unchanged sentences

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.

We have generated net operating losses 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

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S.

This discussion and analysis of our financial condition and results of operations is based on our condensed financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles (U.S.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods.

The preparation of these condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods.

Our estimates are based on our historical experience and on other relevant assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

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 and nine months ended August 31, 2024.

Our critical accounting policies and more significant areas involving management’s judgments and estimates used in preparation of our condensed 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, 2024.

There have been no significant changes to these policies for the three months ended February 28, 2025.

Recent Accounting Pronouncements

See Note 2, “Summary of Significant Accounting Policies—Recently Adopted Accounting Pronouncements” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

Refer to Note 2, “Summary of Significant Accounting Policies—Recently Adopted Accounting Pronouncements” to our condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

Results of Operations

Comparison of the three and nine months ended August 31, 2024 and 2023

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

Three Months Ended

August 31, Change Nine Months Ended

August 31, Change

2024 2023 2024 2023

Comparison of the three months ended February 28, 2025 and February 29, 2024

Our results of operations are summarized as follows (in thousands):

Three Months Ended Change

February 28, 2025 February 29, 2024

Collaboration revenue $ 18,453 $ 16,585 $ 1,868

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

Total revenue 18,453 16,585 1,868

9 unchanged sentences

Collaboration Revenue

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

Three Months Ended

August 31, Change Nine Months Ended

August 31, Change

2024 2023 2024 2023

Our collaboration revenue is summarized as follows (in thousands):

Three Months Ended Change

February 28, 2025 February 29, 2024

Gilead $ 1,706 $ 4,616 $ (2,910)

2 unchanged sentences

Total collaboration revenue $ 18,453 $ 16,585 $ 1,868

Our collaboration revenue decreased by $5.9 million during the three months ended August 31, 2024, compared to the three months ended August 31, 2023, primarily due to a decrease in revenue from our collaboration with Gilead as we concluded the initial research term for certain drug targets.

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

Our collaboration revenue decreased by $0.6 million during the nine months ended August 31, 2024, compared to the nine months ended August 31, 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.

The decrease in collaboration revenue was 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 zero and $20.0 million for the three and nine months ended August 31, 2023, and is related to the Gilead License Option Exercise.

There was no license revenue for the three and nine months ended August 31, 2024.

Our collaboration revenue increased by $1.9 million during the three months ended February 28, 2025, compared to the three months ended February 29, 2024, primarily due to increased revenue from our collaboration with Sanofi due to the achievement of research milestones and increased effort resulting in a higher percentage of completion of performance obligation under our collaboration with Pfizer in the current period.

The increase in collaboration revenue was offset by the decrease in revenue from our collaboration with Gilead as we concluded the initial research term for certain drug targets.

Research and Development Expenses

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

Three Months Ended

August 31, Change Nine Months Ended

August 31, Change

2024 2023 2024 2023

Compensation and related personnel costs $ 17,216 $ 17,707 $ (491) $ 53,401 $ 55,508 $ (2,107)

Stock-based compensation 4,631 4,552 79 12,743 14,565 (1,822)

Supplies, contract research and consulting 12,474 10,895 1,579 34,074 30,754 3,320

Preclinical activities 804 686 118 1,502 1,166 336

Contract manufacturing 4,935 2,127 2,808 10,253 5,387 4,866

Clinical costs 6,782 4,870 1,912 18,336 12,510 5,826

Facility and other costs 8,639 7,019 1,620 24,099 19,545 4,554

Total research and development expenses $ 55,481 $ 47,856 $ 7,625 $ 154,408 $ 139,435 $ 14,973

Our research and development expenses increased by $7.6 million during the three months ended August 31, 2024 compared to the three months ended August 31, 2023.

There was an increase in clinical, contract manufacturing and consulting costs as we continued to accelerate the enrollment of NX-5948 and progress our other clinical trial programs for NX-2127 and NX-1607, and an increase in contract research costs to support our ongoing collaborations.

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.

Our research and development expenses increased by $15.0 million during the nine months ended August 31, 2024 compared to the nine months ended August 31, 2023.

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

Our research and development expenses increased by $19.7 million during the three months ended February 28, 2025, compared to the three months ended February 29, 2024.

There was an increase in clinical, contract manufacturing and consulting costs as we continued to accelerate the enrollment of patients in the ongoing clinical trials of bexobrutideg (NX-5948) and prepare for the initiation of pivotal trials, and an increase in contract research costs to support our ongoing collaborations.

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

General and Administrative Expenses

Our general and administrative expenses increased by $1.1 million during the three months ended August 31, 2024 compared to the three months ended August 31, 2023.

There was an increase in costs related to investor relations and other professional services and in local taxes, offset by a decrease in professional costs related to the Seagen Agreement.

There were also deferred issuance costs charged to expense during the period.

Our general and administrative expenses increased by $3.1 million during the nine months ended August 31, 2024 compared to the nine months ended August 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 outside consulting and professional service costs and an increase in local taxes.

Our general and administrative expenses decreased by $0.1 million during the three months ended February 28, 2025, compared to the three months ended February 29, 2024.

There was a decrease in legal fees and local taxes related to the Pfizer upfront payment offset by an increase in costs related to investor relations and other professional services.

Liquidity and Capital Resources

12 unchanged sentences

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 (as amended, the Amended 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.

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.

1 unchanged sentence

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).

As of August 31, 2024, we had $107.1 million of common stock remaining available for sale under the Amended Equity Distribution Agreement.

In October 2024, we issued and sold 3,711,770 shares of common stock under the Amended Equity Distribution Agreement at $21.50 per share for total net proceeds of $78.4 million after deducting offering commissions and expenses paid by us (the October 2024 ATM Financing).

Following the October 2024 ATM Financing, we had $27.3 million of common stock remaining available for sale under the Amended Equity Distribution Agreement.

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 February 28, 2025, we had $204.6 million of common stock remaining available for sale under the Second Amended 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 (the 2022 Pre-Funded Warrants).

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

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

As of February 28, 2025, 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 August 31, 2024, all of the 2024 Pre-Funded Warrants remained available for exercise.

Subsequent to August 31, 2024, a holder of the 2024 Pre-Funded Warrants exercised a warrant to purchase 19,751 shares of our common stock, resulting in the issuance of 19,750 shares of our common stock through a cashless exercise.

As of February 28, 2025, 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.

2 unchanged sentences

Funding Requirements

As of August 31, 2024, our operations have primarily been funded through the net proceeds from equity offerings of $929.7 million and proceeds from collaborations of $435.0 million.

As of February 28, 2025, our operations have primarily been funded through the net proceeds from equity offerings of $1.1 billion and proceeds from collaborations of $440.0 million.

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

As of August 31, 2024, we had $457.5 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.

As of February 28, 2025, we had $549.7 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 bexobrutideg (NX-5948), NX-2127 and NX-1607 and the expansion of our intellectual property portfolio and infrastructure, for at least the next 12 months.

We will need substantial additional funding to support our continuing operations and pursue our long-term business plan.

2 unchanged sentences

In the long term, our ability to support our working capital and capital expenditure requirements will depend on many factors, including the following:

• the progress, costs and results of our ongoing Phase 1 clinical trials for our lead drug candidates NX-5948, NX-2127 and NX-1607, and any future clinical development of such drug candidates;

• the progress, costs and results of our ongoing Phase 1 clinical trials for our lead drug candidates bexobrutideg, NX-2127 and NX-1607, and any future clinical development of such drug candidates;

• the scope, progress, costs and results of preclinical and clinical development for our other drug candidates and development programs;

• 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;

8 unchanged sentences

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 facilities in San Francisco, California and The Woodlands, Texas.

Our total operating lease commitments as of August 31, 2024, were approximately $37.6 million, of which $6.7 million is expected to be paid within the next 12 months.

This excludes the minimum rent payable pursuant to lease amendments entered into in September 2024.

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

Our total operating lease commitments as of February 28, 2025, were approximately $36.3 million, of which $6.8 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 nine months ended August 31, 2024 and 2023 are summarized as follows (in thousands):

Nine Months Ended

Our cash flows are summarized as follows (in thousands):

Three Months Ended

February 28, 2025 February 29, 2024

Cash used in operating activities $ (61,087) $ (41,951)

Cash (used in) provided by investing activities (116,896) 82,674

Cash provided by investing activities 25,533 35,513

Cash provided by financing activities 1,473 1,624

Net increase (decrease) in cash, cash equivalents and restricted cash $ 44,417 $ (22,170)

Net decrease in cash, cash equivalents and restricted cash $ (34,081) $ (4,814)

Operating activities

Net cash used in operating activities was $123.8 million for the nine months ended August 31, 2024 and consisted of a net loss of $135.0 million and an increase in net assets of $18.9 million, offset by non-cash adjustments of $30.0 million.

The increase in net assets consisted of a decrease in deferred revenue of $15.3 million as we increased effort in our programs and recognized revenue, a decrease in operating lease liabilities of $4.8 million due to lease payments made during the period, a decrease in accounts payable of $2.4 million from payments to vendors, offset by an increase in accrued expenses and other liabilities of $2.8 million primarily due to the accrual of compensation and other related personnel costs and costs related to our clinical trials and a decrease in prepaid and other assets of $0.8 million primarily due to the recognition of expenses for prepaid services.

Net cash used in operating activities was $61.1 million for the three months ended February 28, 2025 and consisted of a net loss of $56.4 million and an increase in net assets of $14.0 million, offset by non-cash adjustments of $9.3 million.

The increase in net assets consisted of a decrease in deferred revenue of $9.8 million as we increased effort in our programs and recognized revenue, a decrease in operating lease liabilities of $1.7 million due to lease payments made during the period, a decrease in accounts payable of $3.2 million from payments to vendors, an increase in prepaid and other assets of $6.3 million primarily due to the recognition of expenses for prepaid services, offset by an increase in accrued expenses and other liabilities of $6.9 million primarily due to the accrual of compensation and other related personnel costs and costs related to our clinical trials.

Non-cash adjustments primarily consisted of stock-based compensation expenses of $8.7 million, depreciation and amortization expenses of $2.4 million and amortization of operating lease right-of-use (ROU) assets of $1.8 million, offset by net accretion of discount on marketable securities of $3.6 million.

Net cash used in operating activities was $108.1 million for the nine months ended August 31, 2023 and consisted of a net loss of $102.0 million and an increase in net assets of $38.7 million, offset by non-cash adjustments of $32.6 million.

The increase in net assets consisted of a decrease in deferred revenue of $31.3 million, which included an increase in contract assets of $6.0 million related to the achievement of a milestone under the Gilead Agreement, as we increased effort in our programs and recognized revenue, a decrease in operating lease liabilities of $4.9 million due to lease payments made during the period, a decrease in accounts payable of $3.0 million from payments to vendors and an increase in accounts receivable of $2.0 million related to the achievement of a milestone under the Sanofi Agreement, offset by decrease in prepaid and other assets of $2.6 million primarily due to the recognition of expenses for prepaid services.

Non-cash adjustments primarily consisted of stock-based compensation expenses of $25.6 million, depreciation and amortization expenses of $5.6 million, amortization of operating lease ROU assets of $4.3 million, offset by net accretion of discount on marketable securities of $3.5 million.

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 ROU assets of $1.8 million and net accretion of discount on marketable securities of $1.9 million.

Investing activities

Net cash used in investing activities was $116.9 million for the nine months ended August 31, 2024 and primarily consisted of the purchase of marketable securities of $409.7 million, offset by the maturity of marketable securities of $300.0 million.

Net cash provided by investing activities was $82.7 million for the nine months ended August 31, 2023 and consisted of the maturity of marketable securities of $246.4 million, offset by the purchase of marketable securities of $157.9 million and the purchase of property and equipment of $5.8 million.

Net cash provided by investing activities was $25.5 million for the three months ended February 28, 2025 and primarily consisted of the maturity of marketable securities of $139.2 million, offset by the purchase of marketable securities of $110.2 million and the purchase of property and equipment of $3.5 million.

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.

Financing activities

Net cash provided by financing activities was $285.1 million for the nine months ended August 31, 2024 and consisted primarily of net proceeds from our 2024 Public Offering, the May 2024 ATM Financing and the August 2024 ATM Financing.

Net cash provided by financing activities was $3.2 million for the nine months ended August 31, 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 $1.5 million for the three months ended February 28, 2025 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 $1.6 million for the three months ended February 29, 2024 and consisted primarily of proceeds from the issuance of common stock under our ESPP.

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 .

Our market risks, as of February 28, 2025, have not changed materially from those discussed in “Item 7A.

Quantitative and Qualitative Disclosures About Market Risk” of Part II of our Annual Report on Form 10-K for the year ended November 30, 2024, filed with the SEC on January 28, 2025.

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