What changed in this filing

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Item 1. Financial Statements

2021-10-14 compared with 2021-07-13 · 182 added, 152 removed, 504 unchanged (40% of the section changed)

6 unchanged sentences

Short-term investments

Accounts receivable

Contract assets

15 unchanged sentences

Commitments and contingencies (Note 6)

Stockholders’ equity (deficit):

Stockholders’ equity:

Preferred stock, $ 0.001 par value— 10,000,000 shares

authorized as of May 31, 2021 and

authorized as of August 31, 2021 and

November 30, 2020;

0 shares issued and outstanding

as of May 31, 2021 and November 30, 2020

as of August 31, 2021 and November 30, 2020

Common stock, $ 0.001 par value— 500,000,000 shares

authorized as of May 31, 2021 and

authorized as of August 31, 2021 and

November 30, 2020;

44,556,604 and 38,864,872 shares

issued and outstanding as of May 31, 2021 and

issued and outstanding as of August 31, 2021 and

November 30, 2020, respectively

Additional paid-in-capital

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Accumulated deficit

2 unchanged sentences

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

N URIX THERAPEUTICS, INC.

NURIX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

Three Months Ended May 31,

Six Months Ended May 31,

Three Months Ended August 31,

Nine Months Ended August 31,

Collaboration revenue

7 unchanged sentences

Provision (benefit) for income taxes

Net income (loss)

Net income (loss) per share attributable to common

stockholders, basic

Weighted-average number of shares outstanding,

Net income (loss) per share attributable to common

stockholders, diluted

Net loss per share attributable to common

stockholders, basic and diluted

Weighted-average number of shares outstanding,

basic and diluted

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NURIX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

Three Months Ended May 31,

Six Months Ended May 31,

Net income (loss)

Three Months Ended August 31,

Nine Months Ended August 31,

Other comprehensive income (loss):

1 unchanged sentence

available-for-sale investments

Total comprehensive income (loss)

Total comprehensive loss

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NURIX THERAPEUTICS, INC.

CONDENSED CONSOLI DATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share amounts)

27 unchanged sentences

Balance as of May 31, 2020

Conversion of redeemable

convertible preferred stock

into common stock

Issuance of common stock upon

initial public offering, net of

offering costs of $ 20,308

Exercise of stock options

Repurchase of unvested early

exercised stock options

Vesting of early-exercised

stock options

Stock-based compensation

Unrealized gain (loss) on

available-for-sale

Net income (loss)

Balance as of August 31, 2020

Redeemable convertible

28 unchanged sentences

Balance as of May 31, 2021

Exercise of stock options

Vesting of early-exercised

stock options

Issuance under employee

stock purchase plan

Stock-based compensation

Unrealized gain (loss) on

available-for-sale

Net income (loss)

Balance as of August 31, 2021

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended May 31,

Nine Months Ended August 31,

Cash flows from operating activities

4 unchanged sentences

Net amortization (accretion) of premium (discount) on investments

Loss on disposal of property and equipment

Changes in operating assets and liabilities:

Contract assets

Accounts receivable

Income tax receivable

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Cash flows from financing activities

Proceeds from issuance of common stock, net of offering costs

Proceeds from issuance of redeemable convertible preferred stock,

net of offering costs

Proceeds from issuance of common stock, net of offering costs

Proceeds from exercise of stock options

1 unchanged sentence

Proceeds from issuance under employee stock purchase plan

Payments of deferred offering costs

Net cash provided by financing activities

6 unchanged sentences

Vesting of early exercised stock options

Deferred offering costs included in accounts payable and accrued liabilities

As of May 31,

Offering costs included in accounts payable and accrued liabilities

Conversion of redeemable convertible preferred stock into common stock

upon closing of initial public offering

As of August 31,

Reconciliation of cash, cash equivalents and restricted cash as shown

25 unchanged sentences

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

Equity Distribution Agreement

In August 2021, the Company filed a shelf registration statement on Form S-3 with the SEC.

This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer and sell registered common stock, preferred stock, debt securities, warrants, subscriptions rights and or units or any combination of securities described in the prospectus in one or more offerings.

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

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

The Company is no t required to sell any shares at any time during the term of the Equity Distribution Agreement.

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

As of August 31, 2021, the Company has not sold any shares of common stock pursuant to the Equity Distribution Agreement and $150.0 million in shares remained available under the Equity Distribution Agreement.

The Company’s operations have historically been financed through the issuance of common and redeemable convertible preferred stock and proceeds received under the Company’s collaboration and license agreements.

Since inception, the Company has generally incurred significant losses and negative net cash flows from operations.

During the six months ended May 31, 2021, the Company incurred a net loss of $50.7 million and had negative net cash flows from operating activities of $23.5 million.

The Company had an accumulated deficit of $154.4 million as of May 31, 2021 and will require substantial additional capital for research and development activities.

The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its drug candidates currently in development.

As of May 31, 2021, the Company had cash, cash equivalents and investments of $496.5 million.

During the nine months ended August 31, 2021, the Company incurred a net loss of $ 79.5 million and had negative net cash flows from operating activities of $ 53.5 million.

The Company had an accumulated deficit of $ 183.2 million as of August 31, 2021 and will require substantial additional capital for research and development activities.

The Company anticipates incurring additional losses until such time, if ever, that it can generate

significant sales of its drug candidates currently in development.

As of August 31, 2021 , the Company had cash, cash equivalents and investments of $ 465.4 million .

Management believes that its cash, cash equivalents and investments are sufficient to continue operating activities for at least 12 months following the issuance date of these condensed consolidated financial statements.

9 unchanged sentences

GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting.

The Company’s condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair statement of the Company’s financial position as of and for the three and six months ended May 31, 2021.

The condensed consolidated balance sheet as of November 30, 2020 was derived from the audited annual financial statements as of that date.

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Moreover, the current COVID-19 pandemic, which is impacting worldwide economic activity, poses the risk that the Company or its employees, contractors, suppliers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities.

The extent to which the

COVID-19 pandemic will impact the Company’s business will depend on future developments that are highly uncertain and cannot be predicted at this time.

The extent to which the COVID-19 pandemic will impact the Company’s business will depend on future developments that are highly uncertain and cannot be predicted at this time.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

The extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s financial statements is highly uncertain and subject to change.

Management considered the potential impact of the COVID-19 pandemic on its estimates and assumptions and there was not a material impact to the Company’s condensed consolidated financial statements as of and for the three and six months ended May 31, 2021;

however, actual results could differ from those estimates and there may be changes to management’s estimates in future periods.

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The Company uses the most likely amount method for research, development and regulatory milestone payments.

Under the most likely amount method, an entity considers the single most likely amount in a range of possible consideration amounts.

Under the most likely amount method, an entity considers the single most likely amount in a range of possible

consideration amounts.

If it is probable that a significant revenue reversal would not occur, the associated milestone amount is included in the transaction price.

6 unchanged sentences

The Company allocates the transaction price to material rights based on the standalone selling price.

a practical alternative to estimating the standalone selling price of a material right when the underlying goods or services are both (i) similar to the original goods or services in the contract and (ii) provided in accordance with the terms of the original contract, the Company allocates the total amount of consideration expected to be received from the customer to the total goods or services expected to be provided to the customer.

As a practical alternative to estimating the standalone selling price of a material right when the underlying goods or services are both (i) similar to the original goods or services in the contract and (ii) provided in accordance with the terms of the original contract, the Company allocates the total amount of consideration expected to be received from the customer to the total goods or services expected to be provided to the customer.

Amounts allocated to any material right are recognized as revenue when or as the related future goods or services are transferred or when the option expires.

9 unchanged sentences

Recent Accounting Pronouncements

The Company is an “emerging growth company” (EGC), as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the JOBS Act).

As of August 31, 2021, the Company is an “emerging growth company” (EGC), as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the JOBS Act).

Under the JOBS Act, EGCs can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

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In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) (ASU 2016-02) , which for operating leases requires the lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of lease payments, in its balance sheet.

A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, including a number of optional practical expedients that entities may elect to apply.

ASU 2016-02 is effective for annual periods beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022.

Early adoption is permitted.

The Company is in the process of evaluating the impact of this new guidance on its financial statements and expects to recognize a right-of-use asset and a lease liability on the Company’s consolidated balance sheet, which will increase the Company’s assets and liabilities.

For EGCs, ASU 2016-02 is effective for annual periods beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022.

For public business entities, ASU 2016-02 is effective for annual periods beginning after December 15, 20 18 and interim periods within those fiscal years.

As of November 30, 2021, t he Company will no longer be considered an EGC and will be required to adopt ASU 2016-02 at the beginning of the fiscal year that EGC status is lost .

As such, the Company will ad opt ASU 2016-02 effective December 1, 2020 using the alternative modified transition method, which applies ASU 2016-02 as of the effective date and therefore, the Company will not be required to apply the standard to the comparative periods presented in the Company's consolidated financial statements.

The Company is in the process of evaluating the impact of this new guidance on its financial statements ;

however, the Company expects to recognize a right-of-use asset and a lease liability on the Company’s consolidated balance sheet, which will materially increase the Company’s assets and liabilities.

The Company does not expect the adoption to have a material impact on the consolidated statement of operations.

The Company plans to elect the “package of practical expedients , ” which permits the Company to not reassess its prior conclusions about lease identification, lease classification and initial direct costs.

The Company also plans to elect the hindsight practical expedient to determine the lease term and the practical expedient to not separate lease and non-lease components .

In June 2016, the FASB issued ASU No.

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An entity will recognize an allowance for credit losses on available-for-sale debt investments rather than an other-than-temporary impairment that reduces the cost basis of the investment.

ASU 2016-13 is effective for annual periods beginning after December 15,

2022, including interim periods within those annual periods.

Early adoption is permitted.

The Company is in the process of evaluating the impact of this new guidance on its financial statements.

For EGCs, ASU 2016-13 is effective for annual periods beginning after December 15, 2022 and interim periods within those fiscal years.

For public business entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2019 and interim periods within those fiscal years.

As of November 30, 2021, the Company will no longer be considered an EGC and will be required to adopt ASU 2016-13 at the beginning of the fiscal year that EGC status is lost.

As such, the Company will adopt ASU 2016-13 effective December 1, 2020.

The Company does not expect the adoption to have a material impact on its financial statements.

In November 2018, the FASB issued ASU No.

2 unchanged sentences

ASU 2018-18 clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer.

ASU 2018-18 is effective for annual periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021.

For EGCs, ASU 2018-18 is effective for annual periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021.

For public business entities, ASU 2018-18 is effective for annual periods beginning after December 15, 2019 and interim periods within those fiscal years.

As of November 30, 2021, the Company will no longer be considered an EGC and will be required to adopt ASU 2018-18 at the beginning of the fiscal year that EGC status is lost.

As such, the Company will adopt ASU 2018-18 effective December 1, 2020.

ASU 2018-18 requires retrospective adoption to the date the Company adopted Topic 606 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings of the earliest annual period presented.

4 unchanged sentences

It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application.

ASU 2019-12 is effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022.

For EGCs, ASU 2019-12 is effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022.

For public business entities, ASU 2019-12 is effective for annual periods beginning after December 15, 2020 and interim periods within those fiscal years.

Early adoption is permitted.

2 unchanged sentences

In June 2019, the Company entered into a global strategic collaboration agreement with Gilead, which was amended in August 2019 (the Gilead Agreement), to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with cancer and other challenging diseases using the Company’s DELigase platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.

Under the Gilead Agreement, Gilead has the option to license drug candidates directed to up to five targets resulting from the collaboration and is responsible for the clinical development and commercialization of drug candidates resulting from the collaboration.

The Company retains the option to co-develop and co-promote, under a profit share structure, up to two drug candidates in the United States, provided that the Company may only exercise such option once per licensed product and Gilead retains the right to veto the Company’s option selection for any one drug candidate of its choice.

The collaboration excludes the Company’s current internal protein degradation programs for which the Company retains all rights, and also excludes the Company’s future internal programs, provided that the Company has distinguished future programs as excluded from the scope of the collaboration.

The Company retains the option to co-develop and co-promote, under a profit share structure, up to two drug candidate s in the United States, provided that the Company may only exercise such option once per licensed product and Gilead retains the right to veto the Company’s option selection for any one drug candidate of its choice.

The collaboration excludes the Company’s current internal protein degradation programs for which the Company retain s all rights, and also excludes the Company’s future internal programs, provided that the Company has distinguished future programs as excluded from the scope of the collaboration.

Over time, Gilead may elect to replace the initial drug targets with other drug targets.

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

Subsequently, the Company received payments of $13.5 million for research milestones and additional payments, including $2.5 million in the second quarter of 2021.

As of May 31, 2021, the Company is eligible to receive up to approximately $2.3 billion in total additional payments, including up to $688.5 million upon the achievement of specified development milestones, up to $1.5 billion upon the achievement of specified sales milestones, subject to reduction for any product for which the Company exercises its option to co-develop and co-promote, and up to $138.8 million in certain additional fees related to target licensing, reservation and selection and research term extensions.

Since the signing of the Gilead Agreement, the Company has received payments of $ 13.5 million for research milestones and additional payments, including $ 2.5 million, which was received in the third quarter of 2021.

Additionally, in August 2021, the Company recognized a research milestone, resulting in a $ 5.0 million additional due payment, which will be received in the fourth quarter of 2021.

As of August 31, 2021, the Company is eligible to receive up to approximately $ 2.3 billion in total additional payments, including up to $ 683.5 million upon the achievement of specified development milestones, up to $ 1.5 billion upon the achievement of specified sales milestones, subject to reduction for any product for which the Company exercises its option to co-develop and co-promote, and up to $ 136.8 million in certain additional fees related to target licensing, reservation and selection and research term extensions.

In addition, the Company is eligible to receive tiered royalties from mid-single digit to low tens percentages 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 the Company exercises its option to co-develop and co-promote, for which the Company and Gilead 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

the Company’s exercise of its option to co-develop and co-promote such licensed product.

If Gilead does not exercise an option to license a drug candidate, then the Gilead Agreement will terminate at the end of the last to expire option period.

5 unchanged sentences

In order to determine the transaction price, the Company evaluated all the payments to be received during the duration of the contract.

Certain milestones and additional fees were considered variable consideration, which were not included in the transaction price based on the most likely amount method as of May 31, 2021.

Certain milestones and additional fees were considered variable consideration, which were not included in the transaction price based on the most likely amount method as of August 31, 2021 .

The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

The Company determined that the transaction price at the inception of the Gilead Agreement consists of the upfront payment of $ 45.0 million and $ 3.0 million in additional fees.

Subsequently, upon the achievement of research milestones and target reservations, $13.5 million in variable consideration was added to the transaction price, and a cumulative effect was recorded as revenue in the period the transaction price increased.

Subsequently, u pon the achievement of research milestone s and target reservation s, $ 18.5 million in variable consideration was added to the transaction price, and a cumulative effect was recorded as revenue in the period the transaction price increased .

The transaction price is recognized as collaboration revenue using the cost-based input method over the estimated contract term of five years .

4 unchanged sentences

These actual costs consist primarily of internal employee and third-party contract costs related to the Gilead Agreement.

For the three and six months ended May 31, 2021, the Company recognized collaboration revenue related to the Gilead Agreement of $3.7 million and $6.5 million, respectively, of which $2.9 million and $5.6 million, respectively, were included in deferred revenue as of November 30, 2020, and $0.6 million and $0.6 million, respectively, were related to activities satisfied in previous periods.

For the three and six months ended May 31, 2020, the Company recognized revenue related to the Gilead Agreement of $2.4 million and $4.8 million, respectively.

As of May 31, 2021, $40.2 million was recorded as deferred revenue, of which $14.7 million was current, on the condensed consolidated balance sheet related to the Gilead Agreement.

For the three and nine months ended August 31, 2021, the Company recognized collaboration revenue related to the Gilead Agreement of $ 6.1 million and $ 12.5 million, respectively, of which $ 4.0 million and $ 9.6 million, respectively, were included in deferred revenue as of November 30, 2020, and $ 1.2 million and $ 1.9 million, respectively, were related to activities satisfied in previous periods.

For the three and nine months ended August 31, 2020, the Company recognized revenue related to the Gilead Agreement of $ 2.1 million and $ 6.9 million, respectively.

As of August 31, 2021, $ 39.1 million was recorded as deferred revenue, of which $ 15.4 million was current, on the condensed consolidated balance sheet related to the Gilead Agreement.

As of August 31, 2021, the Company recognized contract assets of $ 5.0 million on the consolidated balance sheet related to the Gilead Agreement.

The contract assets represent unbilled revenue related to the research milestones recognized in August 2021.

The Company invoiced Gilead in September 2021 and expects to receive the payment in the fourth quarter of 2021.

In December 2019, the Company 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 the Company’s DELigase platform to identify small molecules designed to induce degradation of three specified initial drug targets.

5 unchanged sentences

The collaboration excludes the Company’s current internal protein degradation programs for which it retains all rights, and also excludes future internal programs, provided that the Company distinguished future programs as excluded from the scope of the collaboration.

For drug targets that are subject to the collaboration, the Company has primary responsibility for conducting preclinical research

activities (including target validation, drug discovery, identification or synthesis) in accordance with the applicable research plan agreed to by the parties and established on a target-by-target basis.

The Company is obligated to use commercially reasonable efforts to identify relevant target binders and c himeric t argeting m olecules in order to identify development candidates.

For drug targets that are subject to the collaboration, the Company has primary responsibility for conducting preclinical research activities (including target validation, drug discovery, identification or synthesis) in accordance with the applicable research plan agreed to by the parties and established on a target-by-target basis.

The Company is obligated to use commercially reasonable efforts to identify relevant target binders and chimeric targeting molecules in order to identify development candidates.

Subject to certain exceptions, each party will bear its own costs in the conduct of such research.

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The Company is eligible to receive additional payments if Sanofi exercises an option to extend the license term with respect to a particular target.

As of May 31, 2021, the Company is eligible to receive up to approximately $2.5 billion in total payments, including payments of up to $500.0 million upon the achievement of specified development milestones, up to $625.0 million upon the achievement of specified regulatory milestones and up to $1.3 billion upon the achievement of certain sales milestones, as well as up to $163.1 million in certain additional fees related to target licensing and reservation.

Since the signing of the Sanofi Agreement, the Company has received a payment of $ 1.0 million for research milestones, all of which was received in the third quarter of 2021.

As of August 31, 2021, the Company is eligible to receive up to approximately $ 2.5 billion in total payments, including payments of up to $ 499.0 million upon the achievement of specified development milestones, up to $ 625.0 million upon the achievement of specified regulatory milestones and up to $ 1.3 billion upon the achievement of certain sales milestones, as well as up to $ 141.1 million in certain additional fees related to target licensing and reservation.

In addition, the Company is eligible to receive tiered royalties ranging from mid-single digit to low teen percentages 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 the Company exercises its option to co-develop and co-promote, for which the parties share profits and losses evenly.

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In order to determine the transaction price, the Company evaluated all the payments to be received during the duration of the contract.

Milestone and additional fees were considered variable consideration, which were not included in the transaction price based on the most likely amount method as of May 31, 2021.

Certain milestone and additional fees were considered variable consideration, which were not included in the transaction price based on the most likely amount method as of August 31, 2021.

The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

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The practical alternative can be applied as the research activities for the two additional targets are similar to the research activities for the initial three targets.

Consequently, for the purpose of applying the practical alternative to estimating the standalone selling price of the material right, an expected consideration of $77.0 million was used for revenue recognition allocation, which represents the $55.0 million paid upfront for the three initial drug targets, and the $22.0 million for the additional consideration related to two additional targets which was included as part of applying the practical alternative, which was subsequently exercised by Sanofi .

Revenue is recognized over the research term of 4.25 years, the revised research period which was agreed to in January 2021, using the cost-based input method, which the Company determined most faithfully depicts the transfer of its performance obligations to Sanofi, based on actual costs incurred as a percentage of total estimated costs as the Company completes its performance obligations.

Consequently, for the purpose of applying the practical alternative to estimating the standalone selling price of the material right, an expected consideration of $ 77.0 million was used for revenue recognition allocation, which represents the $ 55.0 million paid upfront for the three initial drug targets, and the $ 22.0 million for the additional consideration related to two additional targets that was included as part of applying the practical alternative, which was subsequently exercised by Sanofi.

Subsequently, upon the achievement of research milestones, $ 1.0 million in variable consideration was added to the transaction price, and a cumulative effect was recorded as revenue in the period the transaction price increased.

Revenue is recognized over the research term of 4.25 years, the revised research period that was agreed to in January 2021, using the cost-based input method, which the Company determined most faithfully depicts the transfer of its performance obligations to Sanofi, based on actual costs incurred as a percentage of total estimated costs as the Company completes its performance obligations.

The cumulative effect of revisions to estimated costs to complete the Company’s performance obligations will be recorded in the period in which changes are identified and amounts can be reasonably estimated.

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The effect of the revised research period on the Company’s measure of progress toward complete satisfaction of the performance obligation was recognized as an adjustment to revenue at the date of the contract modification on a cumulative catch-up basis.

For the three and six months ended May 31, 2021 , the Company recognized collaboration revenue related to the Sanofi Agreement of $3.3 million and $5.6 million , respectively , all of which was included in deferred revenue as of November 30, 2020.

For the three and six months ended May 31, 2020 , the Company recognized revenue related to the Sanofi Agreement of $1.8 million and $2.2 million , respectively .

As of May 31, 2021 , $65.7 million was recorded as deferred revenue, of which $19.0 million was current, on the condensed consolidated balance sheet related to the Sanofi Agreement.

For the three and nine months ended August 31, 2021, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 4.2 million and $ 9.8 million, respectively, of which $ 4.0 million and $ 9.6 million, respectively, was included in deferred revenue as of November 30, 2020.

For the three and nine months ended August 31, 2020, the Company recognized revenue related to the Sanofi Agreement of $ 2.0 million and $ 4.2 million, respectively.

As of August 31, 2021, $ 62.5 million was recorded as deferred revenue, of which $ 19.9 million was current, on the condensed consolidated balance sheet related to the Sanofi Agreement.

Condensed Consolidated Balance Sheet Components

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Total property and equipment, net

Depreciation and amortization expense was $0.6 million and $0.5 million for the three months ended May 31, 2021 and 2020, respectively, and $1.3 million and $1.0 million for the six months ended May 31, 2021 and 2020, respectively.

Depreciation and amortization expense was $ 0.7 million and $ 0.6 million for the three months ended August 31, 2021 and 2020, respectively, and $ 2.0 million and $ 1.5 million for the nine months ended August 31, 2021 and 2020, respectively.

All long-lived assets are maintained in the United States.

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and considers factors specific to the asset or liability.

The following tables presents the Company’s financial assets, which consist of cash equivalents and investments classified as available-for-sale investments, that are measured at fair value on a recurring basis as of May 31, 2021 and November 30, 2020 (in thousands):

August 31, 2021

Money market funds

32 unchanged sentences

These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities, prepayment/default projections based on historical data and other observable inputs.

As of May 31, 2021 and November 30, 2020, none of the Company’s available-for-sale investments that were in an unrealized loss position had been in an unrealized loss position for more than 12 months.

During the three and six months ended May 31, 2021 and 2020, the Company did not recognize any other-than-temporary impairment losses.

As of August 31, 2021 and November 30, 2020, none of the Company’s available-for-sale investments that were in an unrealized loss position had been in an unrealized loss position for more than 12 months.

During the three and nine months ended August 31, 2021 and 2020, the Company did no t recognize any other-than-temporary impairment losses.

The Company’s short-term investments have maturities of less than one year from the respective condensed consolidated balance sheet dates.

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Legal fees and other costs associated with such actions are expensed as incurred.

As of May 31, 2021, the Company had no outstanding, pending or threatened litigation.

As of August 31, 2021, the Company had no outstanding, pending or threatened litigation.

Indemnifications

15 unchanged sentences

The Company is required to pay base rent plus the tenant’s proportionate share of operating expenses as defined in the lease agreement.

Under the terms of the lease agreement, the Company paid the landlord security deposits totaling $91,000 and issued a letter of credit to the landlord in the amount of $70,000, which is collateralized by a restricted deposit of $70,000.

Under the terms of the lease agreement, the Company paid the landlord security deposits totaling $ 91 thousand and issued a letter of credit to the landlord in the amount of $70 thousand, which is collateralized by a restricted deposit of $ 70 thousand.

In June 2020, the Company entered into a new lease agreement for additional space in the same building as the Company’s existing office for a 14 -month term ending on July 31, 2021 .

Rent expense was $0.9 million and $0.7 million for the three months ended May 31, 2021 and 2020, respectively, and $1.7 million and $1.5 million for the six months ended May 31, 2021 and 2020, respectively.

Future minimum lease payments under the Company’s lease agreement as of May 31, 2021 were as follows (in thousands):

In July 2021, the Company entered into a lease agreement for the lease of approximately 19,320 square feet of office space located at 455 Mission Bay Boulevard South, San Francisco, California, for a research and development laboratory and related uses.

The commencement date of the lease is expected to be on or about December 1, 2021 and the lease will expire on June 30, 2024 , unless terminated earlier.

The minimum rent payable by the Company under the lease will be approximately $ 0.1 million per month, beginning on December 1, 2021, which amount will increase by 3 % per year over the term, for total minimum rent payments of $ 3.8 million over the lease term.

The Company will also be responsible for the payment of additional rent to cover the Company’s share of the annual operating and tax expenses and utilities costs for the building.

Under the terms of the lease agreement, the Company paid the landlord security deposits totaling $ 0.1 million and issued a letter of credit to the landlord in the amount of $0.1 million, which is collateralized by a restricted deposit of $ 0.1 million.

Rent expense was $ 0.9 million and $ 0.8 million for the three months ended August 31, 2021 and 2020, respectively, and $ 2.6 million and $ 2.2 million for the nine months ended August 31, 2021 and 2020, respectively.

Future minimum lease payments under the Company’s lease agreements as of August 31, 2021 were as follows (in thousands):

Year ending November 30,

4 unchanged sentences

The holder of each share of common stock is entitled to one vote.

As of May 31, 2021, no dividends have been declared.

C ommon stock reserved for future issuance, on an as-if converted basis , as of May 31, 2021 and November 30, 2020 , consists of the following and ha s been adjusted for the 1-for-3 reverse stock split :

As of August 31, 2021, no dividends have been declared.

Common stock reserved for future issuance, on an as-if converted basis, as of August 31, 2021 and November 30, 2020, consists of the following and has been adjusted for the 1-for-3 reverse stock split:

Issuance of options under stock option plan

14 unchanged sentences

Shares of common stock subject to awards granted under the 2012 Plan that cease to be subject to such awards by forfeiture or otherwise after the termination of the 2012 Plan will be available for issuance under the 2020 Plan.

As of May 31, 2021, there were 3,542,030 shares of common stock reserved for future issuance pursuant to the 2020 Plan.

As of August 31, 2021, there were 2,955,477 shares of common stock reserved for future issuance pursuant to the 2020 Plan.

2012 Equity Incentive Plan

3 unchanged sentences

Options granted under the 2012 Plan may, but need not, be exercisable immediately, with any shares issued on exercise being subject to the Company’s right of repurchase.

As of May 31, 2021, there were no shares of common stock reserved for issuance pursuant to the 2012 Plan.

Activity under the 2020 Plan and 2012 Plan is set forth below and has been adjusted for the 1-for-3 reverse stock split (in thousands, except per share data):

As of August 31, 2021, there were no shares of common stock reserved for issuance pursuant to the 2012 Plan.

Activity under the 2020 Plan and 2012 Plan is set forth below and has been adjusted for the 1-for-3 reverse stock split (in thousands, except share and per share data):

Balances as of November 30, 2020

2 unchanged sentences

Options forfeited

Balances as of May 31, 2021

Options vested and expected to vest as of May 31, 2021 (2)

Options exercisable as of May 31, 2021

The aggregate intrinsic values were calculated as the pre-tax difference between the exercise price of stock options and the quoted market price of the Company’s common stock on May 31, 2021 for all in-the-money stock options.

Balances as of August 31, 2021

Options vested and expected to vest as of August 31, 2021 (2)

Options exercisable as of August 31, 2021

Certain stock options granted by the Company prior to the date of IPO are exercisable at the date of grant, with unvested shares subject to repurchase by the Company in the event of voluntary or involuntary termination of employment of the stockholder.

Such exercises are recorded as a liability in the condensed consolidated balance sheets and reclassified into equity as the options vest.

As of May 31, 2021 , a total of 95,124 share s of common stock were subject to repurchase by the Company at the lower of (i) the fair market value of such shares on the date of repurchase, or (ii) the original exercise price of such shares.

The corresponding exercise value of $0.4 million as of May 31, 2021 is recorded in share-based compensation liability.

As of August 31, 2021, a total of 76,175 shares of common stock were subject to repurchase by the Company at the lower of (i) the fair market value of such shares on the date of repurchase, or (ii) the original exercise price of such shares.

The corresponding exercise value of $ 0.4 million as of August 31, 2021 is recorded in share-based compensation liability.

2020 Employee Stock Purchase Plan

4 unchanged sentences

The purchase price for shares of common stock purchased under the 2020 ESPP will be 85 % of the lesser of the fair market value of the Company’s common stock on (i) the first trading day of the applicable offering period or (ii) the last trading day of each purchase period in the applicable offering period.

As of May 31, 2021, there were 1,054,059 shares of common stock reserved for issuance pursuant to the 2020 ESPP.

As of August 31, 2021, there were 1,015,184 shares of common stock reserved for issuance pursuant to the 2020 ESPP.

The first offering period commenced as of July 23, 2020, the date on which the Company’s registration statement on Form S-1 relating to its IPO of common stock became effective and ended on February 15, 2021.

1 unchanged sentence

Stock-Based Compensation

The following table sets forth stock-based compensation expense related to stock options and ESPP that is included in the Company’s condensed consolidated statements of operations (in thousands):

Three Months Ended May 31,

Six Months Ended May 31,

The following table sets forth stock-based compensation expense related to stock options and the 2020 ESPP that is included in the Company’s condensed consolidated statements of operations (in thousands):

Three Months Ended August 31,

Nine Months Ended August 31,

Research and development

1 unchanged sentence

Total stock-based compensation

As of May 31, 2021, the total compensation cost related to stock-based awards not yet recognized was $48.9 million, which is expected to be amortized on a straight-line basis over the weighted-average remaining vesting period of approximately 3.3 years.

As of August 31, 2021, the total compensation cost related to stock-based awards not yet recognized was $ 54.9 million, which is expected to be amortized on a straight-line basis over the weighted-average remaining vesting period of approximately 3.2 years.

Defined Contribution Plan

2 unchanged sentences

Employees may contribute a percentage of their annual compensation to the plan, subject to statutory limitations.

During the three and six months ended May 31, 2021 and 2020, the Company made contributions to the 401(k) Plan.

The Company recorded contribution expense of $0.2 million and $0.2 million during the three months ended May 31, 2021 and 2020, respectively and $0.4 million and $0.3 million during the six months ended May 31, 2021 and 2020, respectively.

Income tax expense was $0.1 million and $0.2 million for the three and six months ended May 31, 2021.

Income tax benefit was $20.6 million for the three and six months ended May 31, 2020.

The Company has made contributions to the 401(k) Plan and recorded contribution expense of $ 0.1 million during both the three months ended August 31, 2021 and 2020 and $ 0.5 million and $ 0.3 million during the nine months ended August 31, 2021 and 2020, respectively.

Income tax was a benefit of $ 0.1 million and an expense of $ 0.1 million for the three and nine months ended August 31, 2021, respectively.

Income tax benefit was $ 0 and $ 20.6 million for the three and nine months ended August 31, 2020, respectively.

Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Realization of the deferred tax assets is dependent upon future taxable income, the amount, if any, and timing of which are uncertain.

The Company has generated losses since inception and has established a valuation allowance to offset deferred tax assets as of May 31, 2021 and November 30, 2020 due to the uncertainty of realizing future tax benefits from its NOL carryforwards and other deferred tax assets.

The Company has generated losses since inception and has established a valuation allowance to offset deferred tax assets as of August 31, 2021 and November 30, 2020 due to the uncertainty of realizing future tax benefits from its net operating loss (NOL) carryforwards and other deferred tax assets.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was enacted in response to the COVID-19 pandemic.

The CARES Act, among other things, permits net operating loss (NOL) carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021.

In addition, the CARES Act allows NOLs incurred in taxable years 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

Any tax benefit as a result of the CARES Act is primarily due to the carryback of NOLs to prior taxable years and increased interest expense deductions.

In fiscal 2020, the Company filed refund claims of $19.6 million to carryback its NOLs generated in the fiscal years ended November 30, 2018 and 2019.

In fiscal 2020, the Company received cash of $16.3 million including interest income

of $ 0.6 million.

In March 2021, the Company received cash of $ 0.8 million.

As of May 31, 2021 , the Company has an income ta x receivable of $3.1 million on the condensed consolidated balance sheet for the remaining tax refund claims , which includes interest accrued of $ 0.1 million .

Net Income (Loss) Per Share

The Company follows the two-class method when computing net income (loss) per common share when shares are issued that meet the definition of participating securities.

The two-class method determines net income (loss) per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings.

The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

The Company’s redeemable convertible preferred stock contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in the Company’s losses.

The holders of redeemable convertible preferred stock are entitled to participate in noncumulative dividends on common stock at the rate of 8% of the applicable original issue price per share per annum based on the number of shares of common stock held on an as-converted basis.

As of May 31, 2021, no dividends on redeemable convertible preferred stock or common stock were declared or have ever been declared by the Company’s board of directors.

However, in accordance with ASC 260, Earnings Per Share , undistributed earnings are hypothetically allocated to holders of redeemable convertible preferred stock and are subtracted from net income in determining net income attributable to common stockholders.

Basic net income (loss) per share is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding.

For periods in which the Company reports net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders because potentially dilutive shares of common stock are not assumed to have been issued if their effect is anti-dilutive.

The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share attributable to common stockholders, which excludes shares which are legally outstanding but subject to repurchase by the Company (in thousands, except share and per share data):

Three Months Ended May 31,

Six Months Ended May 31,

Net income (loss)

noncumulative dividend to

preferred stockholders

Net income (loss) attributable to common

stockholders, basic and diluted

Weighted-average number of shares

outstanding, basic

Weighted-average dilutive effect of

stock options

The CARES Act, among other things, allows NOLs incurred in taxable years 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

The fiscal 2020 tax benefit was primarily due to the carryback of NOLs to prior taxable years as allowed under the CARES Act.

In fiscal 2020, the Company filed refund claims of $ 19.6 million to carryback NOLs generated in fiscal years ended November 30, 2018 and 2019.

These refund claims were approved by Congressional Joint Committee on Taxation during the three months ended August 31, 2021.

As of August 31, 2021, the Company has received the full amount of these refund claims.

In February 2018, the Internal Revenue Service (IRS) commenced an examination of the Company’s U.S.

income tax returns for the tax years ending in 2016, 2017, 2018 and 2019.

As of the August 31, 2021, the examination procedures are substantially complete and the Company expects the IRS exam to be formally closed in 2021.

Additionally, in January 2019, the California Franchise Tax Board (FTB) initiated an examination of the Company’s California tax return for the years ending in 2015, 2016, 2017, and 2018.

During the three months ended August 31, 2021, the FTB issued a proposed audit assessment related to revenue sourcing that would result in additional income tax expense and interest for a cash liability of approximately $ 0.6 million.

The Company does not agree with the FTB position and intends to challenge the assessment.

Pursuant to a measurement analysis, the Company has not recorded an unrecognized tax benefit related to the FTB’s sourcing position.

Net Loss Per Share

The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common stockholders, which excludes shares which are legally outstanding but subject to repurchase by the Company (in thousands, except share and per share data):

Three Months Ended August 31,

Nine Months Ended August 31,

Weighted-average number of shares

outstanding, diluted

Net income (loss) per share attributable to

common stockholders, basic

Net income (loss) per share attributable to

common stockholders, diluted

(1) Q2 2020 Revision of Basic and Diluted Net Income (Loss) per Share

During the second quarter of 2021, the Company identified an error in the computation and disclosure of the basic and diluted net income per share and the diluted weighted-average number of shares outstanding for the three months ended May 31, 2020 included in the Quarterly Financial Information (unaudited) footnote in its Annual Report on Form 10-K for the fiscal year ended November 31, 2020.

The three months ended May 31, 2020 was the first and only time the Company was in a net income position for the fiscal year ended November 30, 2020.

The error resulted from the exclusion of a hypothetical

noncumulative dividend attributable to participating preferred stockholders from net income and the exclusion of dilutive stock options from diluted weighted-average number of shares outstanding.

outstanding, basic and diluted

Net loss per share attributable to

common stockholders, basic and diluted

Q3 2020 Revision of Net Loss per Share

During the fourth quarter of 2020, the Company identified an error in the computation and disclosure of the basic and diluted weighted-average number of shares outstanding and the basic and diluted net loss per share for the three and nine months ended August 31, 2020 included in its Quarterly Report on Form 10-Q for the period ended August 31, 2020.

The error primarily resulted from the inclusion of the absolute number of shares converted from redeemable convertible preferred stock into common stock rather than the weighted-average number of shares converted from redeemable convertible preferred stock into common stock as a result of the closing of the IPO.

The Company evaluated the materiality of the error in accordance with SEC Staff Accounting Bulletin No.

99, Materiality and ASC 250, Accounting for Changes and Error Corrections , and concluded the error was not material to the previously issued consolidated financial statements.

However, the Company has revised its previously reported diluted weighted-average number of shares outstanding and basic and diluted net income per share, which increases the diluted weighted-average number of shares outstanding from 3,731,838 to 4,909,829 and decreases the basic and diluted net income per share from $ 2.03 to $ 0.00 for the three months ended May 31, 2020 .

99, Materiality and ASC 250, Accounting for Changes and Error Corrections , and concluded the error was not material to the previously issued condensed consolidated financial statements.

However, the Company has revised its previously reported basic and diluted weighted-average number of shares outstanding and basic and diluted net loss per share, which decreased the weighted-average number of shares outstanding from 31,383,936 to 16,937,934 and increased the basic and diluted net loss per share from $ 0.59 to $ 1.09 for the three months ended August 31, 2020.

It also decreased the weighted-average number of shares outstanding from 27,688,972 to 8,052,905 and increased the basic and diluted net loss per share from $ 0.84 to $ 2.90 for the nine months ended August 31, 2020.

The following potentially dilutive securities were excluded from the computation of the diluted net income (loss) per share of common stock for the periods presented because their effect would have been anti-dilutive:

Three Months Ended May 31,

Six Months Ended May 31,

Redeemable convertible preferred stock

on an as-converted basis

Three and Nine Months Ended August 31,

Options to purchase common stock

2 unchanged sentences

employee stock purchase plan

Subsequent Events

On July 8, 2021, the Company entered into a lease agreement for the lease of approximately 19,320 square feet of office space located at 455 Mission Bay Boulevard South, San Francisco, California, for a research and development laboratory and related uses.

The commencement date of the lease is expected to be on or about December 1, 2021 and the lease will expire on June 30, 2024, unless terminated earlier.

The minimum rent payable by the Company under the lease will be approximately $0.1 million per month, beginning on December 1, 2021, which amount will increase by 3% per year over the term.

The Company will also be responsible for the payment of additional rent to cover the Company’s share of the annual operating and tax expenses and utilities costs for the building.

Restricted stock

Related Party Transactions

The Company’s Chief Financial Officer is a trustee for the Company’s healthcare plan provider.

Expenses related to the healthcare plan premiums were $ 0.7 million and $ 0.4 million for the three months ended August 31, 2021 and 2020, respectively, and $ 1.8 million and $ 1.2 million for the nine months ended August 31, 2021 and 2020, respectively.

As of August 31, 2021 and November 30, 2020, $ 0 was recorded in accrued liabilities and accounts payable in connection with this healthcare plan provider.

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 1. Financial Statements