What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-09 compared with 2025-07-09 · 50 added, 50 removed, 302 unchanged (25% of the section changed)

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

In aggregate, we have received $482.0 million in non-dilutive financing from our collaborators to date and as of May 31, 2025, we are eligible to receive up to $6.1 billion in potential future fees and milestone payments, as well as royalties on future product sales.

In aggregate, we have received $482.0 million in non-dilutive financing from our collaborators to date, and as of August 31, 2025, we are eligible to receive up to $6.1 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.

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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 May 31, 2025, we have received payments of $47.0 million for research milestones and additional payments, $20.0 million for a license option exercise payment, $15.0 million in research term extension fees and $5.0 million for a clinical milestone payment.

As of May 31, 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.

In addition, from the signing of the Gilead Agreement to August 31, 2025, we have received payments of $47.0 million for research milestones and additional payments, $20.0 million for a license option exercise payment, $15.0 million in research term extension fees and $5.0 million for a clinical milestone payment.

As of August 31, 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 $1.6 million and $3.3 million during the three and six months ended May 31, 2025, respectively, and $4.9 million and $9.5 million during the three and six months ended May 31, 2024, respectively.

As of May 31, 2025 and November 30, 2024, there was $7.6 million and $11.0 million, respectively, of deferred revenue related to payments received by us under the Gilead Agreement.

We recognized collaboration revenue from the Gilead Agreement of $2.1 million and $5.5 million during the three and nine months ended August 31, 2025, respectively, and $2.4 million and $11.9 million during the three and nine months ended August 31, 2024, respectively.

As of August 31, 2025 and November 30, 2024, there was $5.5 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.

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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 May 31, 2025, we have received payments of $16.0 million for research milestones and $15.0 million for a license extension fee.

As of May 31, 2025, we are eligible to receive up to approximately $949.0 million in total additional payments based on successful completion of certain research development, regulatory and sales milestones.

In addition, from the signing of the Sanofi Agreement to August 31, 2025, we have received payments of $20.0 million for research milestones and $30.0 million for license extension fees.

As of August 31, 2025, we are eligible to receive up to approximately $930.0 million in total additional payments based on 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 $3.4 million and $16.1 million during the three and six months ended May 31, 2025, respectively, and $2.0 million and $10.3 million during the three and six months ended May 31, 2024, respectively.

We also recognized $30.0 million in license revenue pursuant to the Sanofi License Extensions during the three and six months ended May 31, 2025.

As of May 31, 2025 and November 30, 2024, there was $19.0 million and zero, respectively, of accounts receivable related to billed amounts receivable by us under the Sanofi Agreement.

As of May 31, 2025 and November 30, 2024, there was zero and $9.1 million, respectively, of deferred revenue related to payments received by us under the Sanofi Agreement.

We recognized collaboration revenue from the Sanofi Agreement of zero and $16.1 million during the three and nine months ended August 31, 2025, respectively, and $5.9 million and $16.2 million during the three and nine months ended August 31, 2024, respectively.

We also recognized $30.0 million in license revenue received pursuant to the Sanofi License Extensions during the nine months ended August 31, 2025.

As of August 31, 2025 and November 30, 2024, there was zero and $9.1 million, respectively, of deferred revenue related to payments received by us under the Sanofi Agreement.

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

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

In addition, from the signing of the Pfizer Agreement to May 31, 2025, we have received a payment of $10.0 million for research milestones.

In addition, from the signing of the Pfizer Agreement to August 31, 2025, we have received payments 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.

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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 $4.0 million and $8.0 million during the three and six months ended May 31, 2025, respectively, and $5.2 million and $8.9 million during the three and six months ended May 31, 2024, respectively.

As of May 31, 2025 and November 30, 2024, there was $41.5 million and $44.5 million, respectively, of deferred revenue related to payments received by us under the Pfizer Agreement.

We recognized collaboration revenue from the Pfizer Agreement of $5.8 million and $13.8 million during the three and nine months ended August 31, 2025, respectively, and $4.2 million and $13.1 million during the three and nine months ended August 31, 2024, respectively.

As of August 31, 2025 and November 30, 2024, there was $35.7 million and $44.5 million, respectively, of deferred revenue related to payments received by us under the Pfizer Agreement.

Financial Overview

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

During the six months ended May 31, 2025 and 2024, we incurred net losses of $99.8 million and $86.1 million, respectively.

As of May 31, 2025, we had an accumulated deficit of $838.6 million.

During the nine months ended August 31, 2025 and 2024, we incurred net losses of $186.2 million and $135.0 million, respectively.

As of August 31, 2025, we had an accumulated deficit of $925.0 million.

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

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

As of May 31, 2025, we had $485.8 million in cash, cash equivalents and marketable securities.

As of August 31, 2025, we had $428.8 million in cash, cash equivalents and marketable securities.

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

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Three Months Ended

May 31, Change Six Months Ended

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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 and six months ended May 31, 2025.

There have been no significant changes to these policies for the three and nine months ended August 31, 2025.

Recent Accounting Pronouncements

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Results of Operations

Comparison of the three and six months ended May 31, 2025 and 2024

Comparison of the three and nine months ended August 31, 2025 and 2024

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

Three Months Ended

May 31, Change Six Months Ended

May 31, Change

August 31, Change Nine Months Ended

August 31, Change

2025 2024 2025 2024

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Three Months Ended

May 31, Change Six Months Ended

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Total collaboration revenue $ 7,894 $ 12,588 $ (4,694) $ 40,403 $ 41,265 $ (862)

Our collaboration revenue increased by $2.0 million during the three months ended May 31, 2025, compared to the three months ended May 31, 2024, primarily due to increased revenue from our collaboration with Gilead due to the achievement of a clinical milestone and increased revenue from our collaboration with Sanofi due to the achievement of research milestones.

The increase in collaboration revenue was partially offset by the decrease in revenue from our collaboration with Pfizer due to a lower percentage of completion of performance obligations in the current period.

Our collaboration revenue increased by $3.8 million during the six months ended May 31, 2025, compared to the six months ended May 31, 2024, primarily due to increased revenue from our collaboration with Sanofi due to the achievement of research milestones.

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

Our collaboration revenue decreased by $4.7 million during the three months ended August 31, 2025, compared to the three months ended August 31, 2024, primarily due to decreased revenue from our collaboration with Sanofi as we concluded the initial research term for certain drug targets.

The decrease in collaboration revenue was partially offset by the increase in revenue from our collaboration with Pfizer due to a higher percentage of completion of performance obligations in the current period.

Our collaboration revenue decreased by $0.9 million during the nine months ended August 31, 2025, compared to the nine months ended August 31, 2024, primarily due to decreased revenue from our collaboration with Gilead as we concluded the initial research term for certain drug targets.

License Revenue

Our license revenue was $30.0 million for the three and six months ended May 31, 2025 and is related to the Sanofi License Extensions.

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

Our license revenue was $30.0 million for the nine months ended August 31, 2025 and is related to the Sanofi License Extensions.

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

Research and Development Expenses

Our research and development expenses increased by $29.2 million and $48.8 million during the three and six months ended May 31, 2025, compared to the three and six months ended May 31, 2024, respectively.

Our research and development expenses increased by $30.6 million and $79.5 million during the three and nine months ended August 31, 2025, compared to the three and nine months ended August 31, 2024, respectively.

For all periods presented, 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.

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General and Administrative Expenses

Our general and administrative expenses increased by $2.6 million and $2.4 million during the three and six months ended May 31, 2025, compared to the three and six months ended May 31, 2024, respectively.

For all periods presented, there was an increase in compensation and related personnel costs due to an increase in headcount and an increase in consulting costs.

Our general and administrative expenses increased by $1.4 million during the three months ended August 31, 2025, compared to the three months ended August 31, 2024.

There was an increase in compensation and related personnel costs due to an increase in headcount.

Our general and administrative expenses increased by $3.9 million during the nine months ended August 31, 2025, compared to the nine months ended August 31, 2024.

There was an increase in compensation and related personnel costs due to an increase in headcount and an increase in consulting costs, partially offset by a decrease in legal costs.

Liquidity and Capital Resources

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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 May 31, 2025, we had $204.6 million of common stock remaining available for sale under the Second Amended Equity Distribution Agreement.

As of August 31, 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 May 31, 2025, a total of 6,097,560 of the 2022 Pre-Funded Warrants remained available for exercise.

As of August 31, 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 May 31, 2025, a total of 1,480,349 of the 2024 Pre-Funded Warrants remained available for exercise.

As of August 31, 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.

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Funding Requirements

As of May 31, 2025, our operations have primarily been funded through the net proceeds from equity offerings of $1.1 billion and proceeds from collaborations of $463.0 million.

As of August 31, 2025, our operations have primarily been funded through the net proceeds from equity offerings of $1.1 billion and proceeds from collaborations of $482.0 million.

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

As of May 31, 2025, we had $485.8 million in cash, cash equivalents and marketable securities.

As of August 31, 2025, we had $428.8 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), zelebrudomide (NX-2127) and NX-1607 and the expansion of our intellectual property portfolio and infrastructure, for at least the next 12 months.

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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 May 31, 2025, were approximately $78.7 million, of which $6.1 million is expected to be paid within the next 12 months.

Our total operating lease commitments as of August 31, 2025, were approximately $84.2 million, of which $5.7 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.

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

Six Months Ended

Nine Months Ended

Cash used in operating activities $ (181,633) $ (123,833)

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Operating activities

Net cash used in operating activities was $124.2 million for the six months ended May 31, 2025, and consisted of a net loss of $99.8 million and an increase in net assets of $46.5 million, offset by non-cash adjustments of $22.1 million.

The increase in net assets consisted of a decrease in deferred revenue of $15.5 million as we increased effort in our programs and recognized revenue, a decrease in operating lease liabilities of $3.1 million due to lease payments made during the period, a decrease in accounts payable of $5.9 million from payments to vendors, an increase in accounts receivable of $19.0 million related to the Second Sanofi License Extension and a milestone under the Sanofi Agreement, and an increase in prepaid and other assets of $3.0 million primarily due to the recognition of expenses for prepaid services.

Net cash used in operating activities was $181.6 million for the nine months ended August 31, 2025, and consisted of a net loss of $186.2 million and an increase in net assets of $30.0 million, offset by non-cash adjustments of $34.6 million.

The increase in net assets consisted of a decrease in deferred revenue of $23.4 million as we increased effort in our programs and recognized revenue, a decrease in operating lease liabilities of $4.3 million due to lease payments made during the period, a decrease in accounts payable of $3.7 million from payments to vendors, an increase in prepaid and other assets of $4.9 million primarily due to security deposit payments related to the Brisbane Lease, offset by an increase in accrued expenses and other accrued liabilities of $6.3 million primarily due to the accrual of costs related to our clinical trials.

Non-cash adjustments primarily consisted of stock-based compensation expenses of $28.9 million, depreciation and amortization expenses of $6.6 million and amortization of operating lease right-of-use (ROU) assets of $7.6 million, offset by net accretion of discount on marketable securities of $8.5 million.

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

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

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.

Non-cash adjustments primarily consisted of stock-based compensation expenses of $25.4 million, depreciation and amortization expenses of $6.8 million and amortization of operating lease ROU assets of $5.4 million, offset by net accretion of discount on marketable securities of $7.8 million.

Investing activities

Net cash provided by investing activities was $97.0 million for the six months ended May 31, 2025, and primarily consisted of the maturity of marketable securities of $281.5 million, offset by the purchase of marketable securities of $178.4 million and the purchase of property and equipment of $6.2 million.

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

Net cash provided by investing activities was $147.5 million for the nine months ended August 31, 2025, and primarily consisted of the maturity of marketable securities of $437.7 million, partially offset by the purchase of marketable securities of $281.4 million and the purchase of property and equipment of $8.9 million.

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, partially offset by the maturity of marketable securities of $300.0 million.

Financing activities

Net cash provided by financing activities was $1.5 million for the six months ended May 31, 2025, and consisted primarily of proceeds from the issuance of common stock under our Employee Stock Purchase Plan.

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

Net cash provided by financing activities was $2.6 million for the nine months ended August 31, 2025, and consisted primarily of proceeds from the issuance of common stock under our Employee Stock Purchase Plan.

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.

Quantitative and Qualitative Disclosures About Market Risk

Our market risks, as of May 31, 2025, have not changed materially from those discussed in “Item 7A.

Our market risks, as of August 31, 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