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Item 2. Management’s Discussion and Analysis

2026-07-09 compared with 2026-04-08 · 81 added, 49 removed, 276 unchanged (32% of the section changed)

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

Powered by a fully AI-integrated discovery engine capable of tackling any protein class, and coupled with leading ligase expertise, we have built a significant advantage in translating the science of protein degradation into clinical advancements with the aim of establishing degrader-based treatments at the forefront of patient care.

Powered by a fully AI-integrated discovery engine capable of tackling any protein class, and coupled with leading ligase expertise, we hold a differentiated position in translating the science of protein degradation into clinical advancements with the aim of establishing degrader-based treatments at the forefront of patient care.

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.

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(Gilead), Sanofi S.A.

(Sanofi) and Pfizer Inc.

(Sanofi) and Seagen Inc.

(now a part of Pfizer Inc.

(Pfizer)), within which we retain certain options for co-development, co-commercialization and profit sharing in the United States for multiple drug candidates.

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

In June 2026, we entered into a global collaboration agreement with F.

Hoffmann-La Roche Ltd.

and Genentech, Inc.

(together, Roche), to develop, manufacture, commercialize and otherwise exploit bexobrutideg (NX-5948) (the Roche Collaboration Agreement), which we expect to become effective in the third fiscal quarter of 2026.

For more information regarding the Roche Collaboration Agreement, see “Collaboration and License Agreements – Roche” below.

Zelebrudomide (NX‑2127):

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Dose escalation with the new drug form is ongoing with a focus on patients with aggressive forms of B-cell lymphoma, such as DLBCL and MCL.

Enrollment in the current dose escalation cohorts of the Phase 1 trial has been completed and we are reviewing the data to determine next steps.

Degradation Inhibitor

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We have entered into several revenue generating collaborations with large biopharmaceutical companies, including Gilead, Sanofi and Pfizer, to leverage our DEL-AI platform for drug discovery.

In aggregate, we have received $487.0 million in non-dilutive financing from our collaborators to date and, as of February 28, 2026, 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, as of May 31, 2026, we had received $489.0 million in non-dilutive financing from these collaborators to date and we were eligible to receive up to $6.1 billion in potential future fees and milestone payments, as well as royalties on future product sales.

In June 2026, we also entered into the Roche Collaboration Agreement, which we expect to become effective in the third fiscal quarter of 2026.

Under the terms of the Roche Collaboration Agreement, we will receive an upfront cash payment of $700 million and will be eligible to receive development, regulatory and sales milestone payments for potential total payments of up to $2.3 billion, including the upfront payment.

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 February 28, 2026, 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 February 28, 2026, we are eligible to receive up to approximately $1.8 billion in total additional payments based on certain additional fees, payments and the successful completion of certain preclinical, clinical, development and sales milestones.

In addition, from the signing of the Gilead Agreement to May 31, 2026, 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, 2026, 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 $1.5 million and $1.7 million during the three months ended February 28, 2026 and 2025, respectively.

As of February 28, 2026 and November 30, 2025, there was $2.3 million and $3.8 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 $3.6 million during the three and six months ended May 31, 2026, respectively, and $1.6 million and $3.3 million during the three and six months ended May 31, 2025, respectively.

As of May 31, 2026 and November 30, 2025, there was $0.2 million and $3.8 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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In March 2024, we 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.

In April 2026, we entered into the Seventh Amendment to the Sanofi Agreement to enable Sanofi to continue research activities for the collaboration target STAT6 and for an additional collaboration target after the expiration of the original research term.

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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Subsequently, in January 2021, Sanofi paid us an additional $22.0 million to exercise its option to expand the number of targets beyond the initial targets included in the collaboration.

In addition, from the signing of the Sanofi Agreement to February 28, 2026, we have received payments of $20.0 million for research milestones and $30.0 million for license extension fees.

As of February 28, 2026, we are eligible to receive up to approximately $930.0 million 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 May 31, 2026, we have received payments of $22.0 million for research milestones and $30.0 million for license extension fees.

As of May 31, 2026, we are eligible to receive up to approximately $937.0 million 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 no collaboration revenue from the Sanofi Agreement during the three months ended February 28, 2026, and $12.8 million of collaboration revenue during the three months ended February 28, 2025.

As of February 28, 2026 and November 30, 2025, there was no deferred revenue related to payments received by us under the Sanofi Agreement and all performance obligations were satisfied.

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 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 $2.0 million during the three and six months ended May 31, 2026, and $3.4 million and $16.1 million of collaboration revenue during the three and six months ended May 31, 2025, respectively.

As of May 31, 2026 and November 30, 2025, there was no deferred revenue related to payments received by us under the Sanofi Agreement and all performance obligations were satisfied.

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 February 28, 2026, we have received payments of $15.0 million for research milestones.

In addition, from the signing of the Pfizer Agreement to May 31, 2026, we have received payments of $15.0 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 $4.7 million and $4.0 million during the three months ended February 28, 2026 and 2025, respectively.

As of February 28, 2026 and November 30, 2025, there was $24.0 million and $23.8 million, respectively, of deferred revenue related to payments received by us under the Pfizer Agreement.

We recognized collaboration revenue from the Pfizer Agreement of $5.0 and $9.7 million during the three and six months ended May 31, 2026, respectively, and $4.0 million and $8.0 million during the three and six months ended May 31, 2025, respectively.

As of May 31, 2026 and November 30, 2025, there was $19.1 million and $23.8 million, respectively, of deferred revenue related to payments received by us under the Pfizer Agreement.

On June 6, 2026, we entered into the Roche Collaboration Agreement to develop, manufacture, commercialize and otherwise exploit bexobrutideg (NX-5948).

Under the terms of the Roche Collaboration Agreement, we will receive an upfront cash payment of $700.0 million and are eligible to receive development, regulatory and sales milestone payments for potential total payments of up to $2.3 billion, including the upfront payment.

Development costs will be shared 40% by us and 60% by Roche, subject to specified exceptions.

The parties will equally split the profits and losses from U.S.

commercialization.

We and Roche will co-develop and co-commercialize bexobrutideg in the United States across all indications.

Outside of the United States, Roche will be responsible for development and commercialization, and we are eligible to receive tiered royalties at rates ranging from the low teens to the high teens on ex-U.S.

The Roche Collaboration Agreement will become effective upon the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the expiration, termination or resolution of all other required waiting periods, clearance decisions or outstanding inquiries under antitrust laws.

Financial Overview

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

During the three months ended February 28, 2026 and 2025, we incurred net losses of $87.2 million and $56.4 million, respectively.

As of February 28, 2026, we had an accumulated deficit of $1.1 billion.

During the six months ended May 31, 2026 and 2025, we incurred net losses of $176.7 million and $99.8 million, respectively.

As of May 31, 2026, we had an accumulated deficit of $1.2 billion.

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

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

As of February 28, 2026, we had $540.7 million in cash, cash equivalents and marketable securities.

As of May 31, 2026, we had $443.5 million in cash, cash equivalents and marketable securities, and we expect to receive a $700.0 million upfront payment from Roche in the third fiscal quarter of 2026.

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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If a milestone is considered probable of being reached, and if it is probable that a significant revenue reversal would not occur, the associated milestone amount would also be included in the transaction price.

We expect that any collaboration revenue we generate from our current collaboration and license agreements, and from any future collaboration partners, will fluctuate in the future as a result of the timing and amount of upfront, milestones and other collaboration agreement payments and other factors.

We expect that any collaboration revenue we generate from our current collaboration and license agreements, and from any future collaboration partners, will fluctuate in the future as a result of the timing and amount of upfront, milestone and other collaboration agreement payments and other factors.

Research and Development Expenses

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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, 2025.

There have been no significant changes to these policies for the three months ended February 28, 2026.

There have been no significant changes to these policies for the three and six months ended May 31, 2026.

Recent Accounting Pronouncements

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.

Refer to Note 2, “Summary of Significant Accounting Policies—Recent Accounting Pronouncements Not Yet Adopted” in our condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

Results of Operations

Comparison of the three months ended February 28, 2026 and 2025

Comparison of the three and six months ended May 31, 2026 and 2025

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

Three Months Ended

February 28, Change

May 31, Change Six Months Ended

May 31, Change

2026 2025 2026 2025

Collaboration revenue $ 9,043 $ 14,056 $ (5,013) $ 15,295 $ 32,509 $ (17,214)

License revenue — 30,000 (30,000) — 30,000 (30,000)

Total revenue 9,043 44,056 (35,013) 15,295 62,509 (47,214)

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Interest and other income, net 4,398 5,618 (1,220) 9,719 12,131 (2,412)

Loss before income taxes (89,806) (42,704) (47,102) (176,980) (99,055) (77,925)

Provision for (benefit from) income taxes (271) 760 (1,031) (271) 760 (1,031)

Net loss $ (89,535) $ (43,464) $ (46,071) $ (176,709) $ (99,815) $ (76,894)

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Three Months Ended

February 28, Change

May 31, Change Six Months Ended

May 31, Change

2026 2025 2026 2025

Gilead $ 2,083 $ 6,643 $ (4,560) $ 3,603 $ 8,349 $ (4,746)

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Total collaboration revenue $ 9,043 $ 14,056 $ (5,013) $ 15,295 $ 32,509 $ (17,214)

Our collaboration revenue decreased by $12.2 million during the three months ended February 28, 2026, compared to the three months ended February 28, 2025, 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 $5.0 million and $17.2 million during the three and six months ended May 31, 2026, compared to the three and six months ended May 31, 2025, respectively.

For all periods presented, the decrease in revenue from our collaborations with Gilead and Sanofi was primarily attributable to the conclusion of 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, 2026.

Research and Development Expenses

Our research and development expenses increased by $14.5 million during the three months ended February 28, 2026, compared to the three months ended February 28, 2025.

Our research and development expenses increased by $9.6 million during the three months ended May 31, 2026, compared to the three months ended May 31, 2025.

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 additional trials, and an increase in contract research costs to support our ongoing collaborations.

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

Our research and development expenses increased by $24.0 million during the six months ended May 31, 2026, compared to the six months ended May 31, 2025.

There was also an increase in personnel related costs attributable to higher average employee compensation and an increase in non-cash stock-based compensation expense primarily driven by the increased issuance of restricted stock units and incentive stock options.

General and Administrative Expenses

Our general and administrative expenses increased by $3.0 million during the three months ended February 28, 2026, compared to the three months ended February 28, 2025.

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

Our general and administrative expenses increased by $1.3 million during the three months ended May 31, 2026, compared to the three months ended May 31, 2025.

There was an increase in legal costs for collaboration and business development activities.

Our general and administrative expenses increased by $4.3 million during the six months ended May 31, 2026, compared to the six months ended May 31, 2025.

There was an increase in personnel related costs attributable to higher average employee compensation, an increase in non-cash stock-based compensation expense primarily driven by the increased issuance of restricted stock units and incentive stock options and an increase in legal costs for collaboration and business development activities.

Liquidity and Capital Resources

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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.

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 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 $10.00 per share for gross proceeds of $20.0 million, before deducting offering commissions and expenses paid by us.

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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.

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, subscription 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.

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In January 2026, we issued and sold 1,000,000 shares of common stock under the Second Amended Equity Distribution Agreement at a price of $18.25 per share for total gross proceeds of $18.3 million, before deducting offering commissions and expenses paid by us (the January 2026 ATM Financing).

As of February 28, 2026, we had $186.3 million of common stock remaining available for sale under the Second Amended Equity Distribution Agreement.

On March 6, 2026, we entered into Amendment No.

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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 Third Amended Equity Distribution Agreement.

As of May 31, 2026, we had $300.0 million of common stock remaining available for sale under the Third 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 February 28, 2026, a total of 6,097,560 of the 2022 Pre-Funded Warrants remained available for exercise.

As of May 31, 2026, 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 February 28, 2026, a total of 1,480,349 of the 2024 Pre-Funded Warrants remained available for exercise.

As of May 31, 2026, 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 February 28, 2026, our operations have primarily been funded through the net proceeds from equity offerings of $1.4 billion and proceeds from collaborations of $487.0 million.

As of May 31, 2026, our operations have primarily been funded through the net proceeds from equity offerings of $1.4 billion and proceeds from collaborations of $489.0 million.

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

As of February 28, 2026, we had $540.7 million in cash, cash equivalents and marketable securities.

As of May 31, 2026, we had $443.5 million in cash, cash equivalents and marketable securities, and we expect to receive an additional $700.0 million upfront payment from Roche in the third fiscal quarter of 2026.

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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• 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;

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

• the costs, timing and outcome of regulatory review of our drug candidates;

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

Our total operating lease commitments as of February 28, 2026, were approximately $85.1 million, of which $8.2 million is expected to be paid within the next 12 months.

Our total operating lease commitments as of May 31, 2026, were approximately $83.6 million, of which $9.0 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):

Three Months Ended

Six Months Ended

Cash used in operating activities $ (168,487) $ (124,248)

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Operating activities

Net cash used in operating activities was $71.9 million for the three months ended February 28, 2026, and consisted of a net loss of $87.2 million, offset by a decrease in net assets of $3.9 million and non-cash adjustments of $11.4 million.

The decrease in net assets consisted of a decrease in deferred revenue of $1.3 million as we increased effort in our programs and recognized revenue, a decrease in accounts payable of $0.5 million from payments to vendors, a decrease in prepaid and other assets of $1.3 million primarily due to the recognition of expenses for prepaid services, offset by an increase in accrued expenses and other accrued liabilities of $4.1 million primarily due to the accrual of compensation and other related personnel costs and costs related to our clinical trials.

Net cash used in operating activities was $168.5 million for the six months ended May 31, 2026, and consisted of a net loss of $176.7 million, offset by a increase in net assets of $16.8 million and non-cash adjustments of $25.0 million.

The increase in net assets consisted of a decrease in deferred revenue of $8.3 million as we increased effort in our programs and recognized revenue and a decrease in accrued expenses and other accrued liabilities of $11.1 million primarily due to the payment of compensation and other related personnel costs and costs related to our clinical trials, offset by a decrease in prepaid and other assets of $1.6 million primarily due to the recognition of expenses for prepaid services and an increase in accounts payable of $1.4 million from payments to vendors.

Non-cash adjustments primarily consisted of stock-based compensation expenses of $20.8 million, depreciation and amortization expenses of $4.5 million and amortization of operating lease right-of-use (ROU) assets of $3.2 million, offset by net accretion of discount on marketable securities of $3.5 million.

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 related to increased contract assets, prepaid clinical costs and software license costs, 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.

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 payment under the Sanofi Agreement, and an increase in other assets of $3.0 million primarily for the Brisbane lease security deposit.

Non-cash adjustments primarily consisted of stock-based compensation expenses of $19.1 million, depreciation and amortization expenses of $4.6 million and amortization of operating lease ROU assets of $4.6 million, offset by net accretion of discount on marketable securities of $6.3 million.

Investing activities

Net cash used in investing activities was $123.8 million for the three months ended February 28, 2026, and primarily consisted of the purchase of marketable securities of $255.9 million and the purchase of property and equipment of $1.0 million, partially offset by the maturity of marketable securities of $133.2 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 used in investing activities was $30.8 million for the six months ended May 31, 2026, and primarily consisted of the purchase of marketable securities of $280.6 million and the purchase of property and equipment of $3.0 million, partially offset by the maturity of marketable securities of $252.7 million.

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.

Financing activities

Net cash provided by financing activities was $20.0 million for the three months ended February 28, 2026, and consisted primarily of proceeds from the January 2026 ATM financing and issuance of common stock under our Employee Stock Purchase Plan (ESPP).

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

Net cash provided by financing activities was $20.0 million for the six months ended May 31, 2026, and consisted primarily of proceeds from the January 2026 ATM financing and issuance of common stock under our Employee Stock Purchase Plan (ESPP).

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 ESPP.

Quantitative and Qualitative Disclosures About Market Risk

Our market risks, as of February 28, 2026, have not changed materially from those discussed in “Item 7A.

Our market risks, as of May 31, 2026, 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, 2025, filed with the SEC on January 28, 2026.

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