What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-01-28 compared with 2021-02-16 · 350 added, 305 removed, 583 unchanged (53% of the section changed)

10 unchanged sentences

To the Board of Directors and Stockholders of Nurix Therapeutics, Inc.

Opinion on the Financial Statements

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Nurix Therapeutics, Inc.

and its subsidiary (the “Company”) as of November 30, 2020 and 2019, and the related consolidated statements of operations, of comprehensive loss, of redeemable convertible preferred stock and stockholders’ equity (deficit) and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

and its subsidiaries (the “Company”) as of November 30, 2021 and 2020, and the related consolidated statements of operations, of comprehensive loss, of redeemable convertible preferred stock and stockholders’ equity (deficit) and of cash flows for each of the three years in the period ended November 30, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of November 30, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of November 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of November 30, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial repo rting existed as of that date related to the Company not designing and maintaining effective (a) controls over certain information technology general controls, and (b) segregation of duty controls over the review and approval of account reconciliations and manual journal entries.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses referred to above are described in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases on December 1, 2020.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and

disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition - Estimated Costs of Internal Full-Time Employees (FTEs)

As described in Note 3 to the consolidated financial statements, the Company’s consolidated revenue was $29.8 million for the year ended November 30, 2021 and was generated from the Company’s collaboration agreements.

During the contract term, management uses a cost-based input method to recognize revenue based on the actual costs incurred as a percentage of total estimated costs as the Company completes its performance obligation under the contract.

Costs consist primarily of internal FTE and third-party contract costs related to the collaboration agreements.

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

Total estimated costs are primarily driven by the number of estimated FTEs, which requires significant management judgment.

The principal considerations for our determination that performing procedures relating to revenue recognition - estimated costs of internal FTEs is a critical audit matter are (i) the high degree of auditor judgment and subjectivity in performing procedures relating to the estimated costs of internal FTEs due to the significant judgment by management when determining the estimate and (ii) the significant audit effort in evaluating the significant assumption related to the number of estimated FTEs.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls related to the revenue recognition process, including controls over the determination of the estimated costs

of internal FTEs.

These procedures also included, among others, evaluating and testing management’s process for determining the estimated costs of internal FTEs, which included evaluating the reasonableness of the significant assumption related to the number of estimated FTEs, by (i) performing a comparison of management’s estimated costs of internal FTEs to the actual internal FTE costs;

(ii) testing the completeness and accuracy of the data used by management in the estimate;

(iii) evaluating management’s timely identification of changes in estimated costs of internal FTEs;

and (iv) evaluating whether the estimate and assumption were consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP

San Jose, California

February 16, 2021

January 28, 2022

We have served as the Company’s auditor since 2014.

5 unchanged sentences

Short-term investments

Accounts receivable

Contract assets

3 unchanged sentences

Long-term investments

Operating lease right-of-use assets

Property and equipment, net

Restricted cash

Liabilities, redeemable convertible preferred stock and stockholders'

equity (deficit)

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

Accrued and other current liabilities

Accrued expenses and other current liabilities

Operating lease current liabilities

Deferred revenue, current

Total current liabilities

Operating lease long-term liabilities

Deferred revenue, net of current portion

2 unchanged sentences

Commitments and contingencies (Note 6)

Redeemable convertible preferred stock, $0.001 par value— 0 and

48,441,667 shares authorized as of November 30, 2020 and

November 30, 2019, respectively;

0 and 12,813,887 shares

issued and outstanding (liquidation value—$0 and $48,383)

as of November 30, 2020 and November 30, 2019, respectively

Stockholders’ equity (deficit):

Preferred stock, $0.001 par value— 10,000,000 and 0 shares authorized

as of November 30, 2020 and November 30, 2019, respectively;

0 shares issued and outstanding as of November 30, 2020 and

November 30, 2019, respectively

Common stock, $0.001 par value— 500,000,000 and 65,000,000 shares

authorized as of November 30, 2020 and November 30, 2019,

respectively;

38,864,872 and 3,595,334 shares issued and outstanding

as of November 30, 2020 and November 30, 2019, respectively

Stockholders’ equity:

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

and 0 shares issued and outstanding as of November 30, 2021

and November 30, 2020

Common stock, $ 0.001 par value— 500,000,000 shares authorized as of

November 30, 2021 and November 30, 2020;

44,664,371 and

38,864,872 shares issued and outstanding as of November 30, 2021

and November 30, 2020, respectively

Additional paid-in-capital

1 unchanged sentence

Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities, redeemable convertible preferred stock and

stockholders’ equity (deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

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

11 unchanged sentences

Loss before income taxes

(Benefit) provision for income taxes

Net loss per share attributable to common stockholders, basic and diluted

Weighted-average number of shares outstanding, basic and diluted

Provision for (benefit from) income taxes

Net loss per share, basic and diluted

Weighted-average number of shares outstanding,

basic and diluted

Collaboration revenue for the years ended November 30, 2021, 2020 and 2019 includes related party revenue of $ 0 , $ 0 and $ 28.4 million, respectively.

4 unchanged sentences

Year Ended November 30,

Other comprehensive income:

Unrealized gain on available-for-sale investments

Other comprehensive income (loss), net of tax:

Unrealized gain (loss) on available-for-sale investments

Total comprehensive loss

37 unchanged sentences

Balance as of November 30,

Redeemable convertible

preferred stock

comprehensive

stockholders’

income (loss)

Issuance of common

stock in connection

with equity offering,

net of offering

costs of $ 643

Exercise of stock options

Repurchase of unvested

early exercised stock

Vesting of early-

exercised stock options

Issuance under employee

stock purchase plan

Unrealized loss on

available-for-sale

Balance as of November 30,

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

4 unchanged sentences

Cash flows from operating activities

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Adjustments to reconcile net loss to net cash (used in)

provided by operating activities:

Depreciation and amortization

Stock-based compensation

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

Net amortization (accretion) of premium (discount)

on investments

Loss on disposal of property and equipment

Amortization of operating lease right-of-use assets

Changes in operating assets and liabilities:

Contract assets

Accounts receivable

Income tax receivable

2 unchanged sentences

Deferred revenue

Accrued and other liabilities

Operating lease liabilities

Accrued expenses and other liabilities

Net cash (used in) provided by operating activities

1 unchanged sentence

Purchases of investments

Sales of investments

Maturities of investments

2 unchanged sentences

Cash flows from financing activities

Proceeds from issuance of common stock upon initial public offering, net of

offering costs

Proceeds from issuance of redeemable convertible preferred stock, net of

issuance costs

Proceeds from issuance of common stock, net of underwriting

discounts and commissions and offering costs

Proceeds from issuance of redeemable convertible

preferred stock, net of issuance costs

Proceeds from exercise of stock options

Proceeds from issuance under employee stock purchase plan

Repurchase of unvested early exercised stock options

Net cash provided by financing activities

Net increase in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and

restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Year Ended November 30,

Supplementary disclosures of cash flow information:

1 unchanged sentence

Supplemental disclosures of non-cash investing and financing activities:

Additions to property and equipment included in accounts payable and

accrued liabilities

Right-of-use assets recognized in exchange for lease obligations

Additions to property and equipment included in accounts

payable and accrued expenses and other liabilities

Vesting of early exercised stock options

Conversion of redeemable convertible preferred stock into common stock

upon closing of initial public offering

Conversion of redeemable convertible preferred stock into

common stock upon closing of initial public offering

As of November 30,

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents

Restricted cash

Cash, cash equivalents and restricted cash

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

4 unchanged sentences

(the Company) previously known as Nurix, Inc., was incorporated in the state of Delaware on August 27, 2009 and is headquartered in San Francisco, California.

The Company is a biopharmaceutical company focused on the discovery, development and commercialization of small molecule therapies designed to modulate cellular protein levels as a novel treatment approach for cancer and immune disorders.

The Company is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of small molecule therapies designed to modulate cellular protein levels as a novel treatment approach for cancer and other challenging diseases.

Leveraging the Company’s expertise in E3 ligases together with its proprietary DNA-encoded libraries, the Company has built DELigase, an integrated discovery platform to identify and advance novel drug candidates targeting E3 ligases, a broad class of enzymes that can modulate proteins within the cell.

The Company’s drug discovery approach is to either harness or inhibit the natural function of E3 ligases within the ubiquitin-proteasome system to selectively decrease or increase cellular protein levels to treat disease.

The Company wholly owns a subsidiary, DeCART Therapeutics Inc.

(DeCART), which was incorporated in the state of Delaware on June 22, 2020 and holds a license to three of the Company’s compounds, including NX-0255, for drug-enhanced isolation of T cells nonexclusively with respect to one chimeric antigen receptor T cell (CAR-T) therapy target and exclusively with respect to three novel CAR-T therapy targets.

Initial Public Offering

7 unchanged sentences

In connection with the closing of the IPO, the Company restated its Restated Certificate of Incorporation to change the authorized capital stock to 500,000,000 shares designated as common stock, and 10,000,000 shares designated as preferred stock, all with a par value of $ 0.001 per share.

Follow-on Offering

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 November 30, 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.

Liquidity and Management Plans

4 unchanged sentences

The Company had an accumulated deficit of $ 220.9 million as of November 30, 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 product candidates currently in development.

As of November 30, 2020, the Company had cash and cash equivalents of $119.4 million and working capital of $253.9 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 consolidated financial statements.

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 November 30, 2021, the Company had cash, cash equivalents and short-term investments of $ 295.7 million and working capital of $ 244.9 million.

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

Future capital requirements will depend on many factors, including the timing and extent of spending on research and development and payments the Company may receive under its collaboration agreements with Sanofi S.A.

4 unchanged sentences

Summary of Significant Accounting Policies

Basis of Presentation

The Company’s consolidated financial statements have been prepared in accordance with U.S.

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including DeCART Therapeutics Inc., and have been prepared in accordance with U.S.

generally accepted accounting principles (U.S.

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

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Nurix Therapeutics, Inc.

and its wholly owned subsidiary, DeCART.

All intercompany balances and transactions have been eliminated in consolidation.

9 unchanged sentences

Actual results could materially differ from those estimates.

Refer to Note 3 for more information regarding the estimates related to revenue recognition.

Concentration of Credit Risk

3 unchanged sentences

The Company’s exposure to any individual corporate entity is limited by policy.

Deposits may, at times, exceed federally insured limits, but minimal credit risk exists.

Deposits may, at times, exceed federally insured limits.

The Company invests its cash equivalents in highly rated money market funds.

The Company has not experienced any credit losses on its deposits of cash and cash equivalents.

During the periods presented, the Company has not experienced any losses on its deposits of cash, cash equivalents or investments.

Other Risks and Uncertainties

The Company is subject to a number of risks similar to other early-stage biopharmaceutical companies, including, but not limited to, changes in any of the following areas that the Company believes could have a material adverse effect on its future financial position or results of operations:

risks related to the successful discovery and development of its product candidates, ability to raise additional capital, development of new technological innovations by its competitors and delay or inability to obtain drug substance and finished drug product from the Company’s third-party contract manufacturers necessary for the Company’s product candidates, including due to the impact of the current coronavirus (COVID-19) pandemic, protection of intellectual property rights, litigation or claims against the Company based on intellectual property rights and regulatory clearance and market acceptance for any of the Company’s products candidates for which the Company receives marketing approval.

The Company is subject to a number of risks similar to other clinical-stage biopharmaceutical companies, including, but not limited to, changes in any of the following areas that the Company believes could have a material adverse effect on its future financial position or results of operations:

risks related to the successful discovery and development of its drug candidates, ability to raise additional capital, development of new technological innovations by its competitors and delay or inability to obtain drug substance and finished drug product from the Company’s third-party contract manufacturers necessary for the Company’s drug candidates, including due to the impact of the current coronavirus (COVID-19) pandemic, protection of intellectual property rights, litigation or claims against the Company based on intellectual property rights and regulatory clearance and market acceptance for any of the Company’s products candidates for which the Company receives marketing approval.

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.

4 unchanged sentences

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

The Company relies on single source manufacturers and suppliers for the supply of its product candidates.

The Company relies on single source manufacturers and suppliers for the supply of its drug candidates.

Disruption from these manufacturers or suppliers would have a negative impact on the Company’s business, financial position and results of operations.

The Company operates and manages its business as one reportable and operating segment.

The Company’s Chief Executive Officer, who is the chief operating decision maker, reviews consolidated financial information on a company-wide basis for purposes of allocating resources and assessing financial performance.

Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by the chief operating decision maker (CODM) in deciding how to allocate resources and assess performance.

The Company’s CODM is the Chief Executive Officer, who reviews consolidated financial information on a company-wide basis for purposes of allocating resources and assessing financial performance.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Cash equivalents, which consist primarily of money market funds, are stated at fair value.

Cash, cash equivalents and restricted cash as reported within the consolidated statements of cash flows as of November 30, 2020 and 2019 consisted of the following (in thousands):

Cash and cash equivalents

Restricted cash

Cash, cash equivalents and restricted cash

Cash equivalents, which consist of money market funds, are stated at fair value.

Restricted Cash

The Company had $170,000 of restricted cash recorded as a non-current asset as of November 30, 2020 and 2019.

Restricted cash consisted of $100,000 that serves as collateral for a business credit card account and $70,000 for a letter of credit required under a facility operating lease executed in 2014.

The Company had $ 0.3 million and $ 0.2 million of restricted cash recorded as a non-current asset as of November 30, 2021 and 2020, respectively.

Restricted cash as of November 30, 2021 consisted of $ 0.1 million that serves as collateral for a business credit card account and $ 0.2 million for letters of credit required under operating leases.

Restricted cash as of November 30, 2020 consisted of $ 0.1 million that serves as collateral for a business credit card account and $ 0.1 million for a letter of credit required under an operating lease.

These balances are included within the cash, cash equivalents and restricted cash balance in the accompanying consolidated statements of cash flows.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash equivalents, investments, accounts payable and accrued liabilities included in the Company’s consolidated financial statements approximate their fair value due to short maturities or the nature of the financial instruments.

The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts payable and accrued liabilities included in the Company’s consolidated financial statements approximate their fair value due to the nature of the financial instruments.

Refer to Note 5 for more information regarding the fair value of the Company’s investments.

The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments , on December 1, 2020.

Investments consist of money market funds, U.S.

1 unchanged sentence

government agency securities, corporate commercial paper and municipal securities.

All of the Company’s investments are classified as available-for-sale and carried at estimated fair values and reported in cash equivalents, short-term investments or long-term investments.

Management determines the appropriate classification of the investments at the time they are acquired and evaluates the appropriateness of such classifications at each balance sheet date.

The Company’s investments are classified as available-for-sale and carried at estimated fair values and reported in cash equivalents, short-term investments or long-term investments.

Management determines the appropriate classification of the investments at the time they are acquired and evaluates the appropriateness of such classifications at each consolidated balance sheet date.

Investments with contractual maturities greater than 12 months are considered long-term investments.

Unrealized gains and losses on available-for-sale investments are reported in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity (deficit).

Investments are regularly reviewed for other-than-temporary declines in fair value.

The review includes the consideration of the cause of the impairment, including the creditworthiness of the security issuers, the number of investments in an unrealized loss position, the severity and duration of the unrealized losses, and whether it is more likely than not that the Company will be required to sell the investments before the recovery of their amortized cost basis.

The Company regularly reviews its investments for declines in estimated fair value below amortized cost.

The factors considered in determining whether a credit loss exists include the creditworthiness of the security issuers, the number of investments in an unrealized loss position, the severity and duration of the unrealized losses, and whether it is more likely than not that the Company will be required to sell the investments before the recovery of their amortized cost basis.

The cost of investments sold is based on the specific identification method.

In circumstances when an unrealized loss is determined to be credit-related, or when the Company intends to sell or is more likely than not required to sell a security before it recovers its amortized cost basis, the difference between the fair value and the amortized cost of the security is recognized as interest and other income, net in the consolidated statements of operations, and an allowance for credit loss is recorded on the consolidated balance sheet.

In circumstances when the decline in fair value is non-credit related, the difference is reported in accumulated other comprehensive income (loss), net of tax as a separate component of stockholders’ equity (deficit).

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation.

Property and equipment are stated at cost, net of accumulated depreciation and amortization.

Major improvements are capitalized, while maintenance and repairs are expensed when incurred.

2 unchanged sentences

Tenant improvements are depreciated over the shorter of the lease term or the estimated useful life of the improvements.

When assets are retired or disposed of, the cost together with related accumulated depreciation is removed from the Company’s accounts and the resulting gain or loss is reflected in the Company’s statements of operations.

The Company adopted ASU No.

2016-02, Leases (Topic 842) on December 1, 2020 using the alternative modified transition method, which applies Topic 842 as of the adoption date and therefore, the Company has not applied the standard to the comparative periods presented in the Company's consolidated financial statements.

Prior period amounts continue to be reported in accordance with the historic guidance under ASC 840, Leases .

The Company determines if an arrangement contains a lease at inception.

Lease right-of-use (ROU) assets, current lease liabilities and long-term lease liabilities are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term at the commencement date.

ROU assets also include any initial direct costs incurred and any lease payments made on or before the lease commencement date, less lease incentives received.

The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as the Company’s leases generally do not provide an implicit rate.

The incremental borrowing rate , the ROU asset and the lease liability are reevaluated upon a lease modification.

The Company determines its incremental borrowing rate based on the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment .

Lease terms may include options to extend or terminate the lease when the Company is reasonably certain that the option will be exercised.

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

The Company does not have any finance leases .

The Company elected to apply each of the practical expedients described in Topic 842 which allow companies (i) not to reassess prior conclusions on whether any expired or existing contracts are or contain a lease, lease classification, and initial direct costs, (ii) combine lease and non-lease components for all underlying assets groups, and (iii) not recognize ROU assets or lease liabilities for short-term leases.

A short-term lease is a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Internal-Use Software Development Costs

The Company capitalizes qualifying costs incurred during the application development stage related to software developed for internal-use and amortize them over the estimated useful life of three years.

The Company capitalizes qualifying costs incurred during the application development stage related to software developed for internal-use and amortizes them over the estimated useful life of three years .

Amortization of such costs begins when the project is substantially complete and ready for its intended use.

Capitalized software development costs are classified as property and equipment, net on the balance sheet.

Capitalized software development costs are classified as property and equipment, net on the consolidated balance sheet.

The Company expenses costs incurred related to the planning and post-implementation phases of development as incurred.

7 unchanged sentences

The Company capitalizes within other assets certain legal, accounting and other third-party fees that are directly related to the Company’s in-process equity financings, including the IPO, until such financings are consummated.

After consummation of an equity financing, these costs are recorded as a reduction of the carrying value of redeemable convertible preferred stock or, for issuances of common stock, in stockholder’s equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering.

After consummation of an equity financing, these costs are recorded in stockholder’s equity as a reduction of additional paid-in capital generated as a result of the offering.

Should a planned equity financing be abandoned, terminated or significantly delayed, the deferred offering costs are immediately written off to operating expenses.

There were no deferred offering costs capitalized as of November 30, 2020 and 2019.

Upon the closing of the IPO on July 28, 2020, the offering costs of $20.3 million were recorded in stockholder’s equity (deficit) as a reduction of additional paid-in capital.

As of November 30, 2021, there was $ 0.5 million of deferred offering costs included in other assets on the consolidated balance sheet.

There were no deferred offering costs capitalized as of November 30, 2020.

Revenue Recognition

18 unchanged sentences

The Company recognizes revenue associated with the non-substantive milestones upon achievement of the milestone if the Company has no remaining deliverables.

During the years ended November 30, 20 19 , no milestone payments were received, no milestone revenues were recognized and no milestones were considered substantive.

During the year ended November 30, 2019, no milestone payments were received, no milestone revenues were recognized and no milestones were considered substantive.

Effective December 1, 2019, the Company adopted Topic 606, Revenue from Contracts with Customers using the modified retrospective method, which was only applied to contracts that were not completed as of the adoption date.

36 unchanged sentences

The Company expenses all research and development costs as incurred.

Research and development costs include, but are not limited to, payroll and personnel expenses, laboratory supplies, preclinical studies, compound manufacturing costs, consulting costs and allocated overhead, including rent, equipment, depreciation and utilities.

Research and development costs include, but are not limited to, payroll and personnel expenses, laboratory supplies, preclinical study costs, clinical trial costs, compound manufacturing costs, consulting costs and allocated overhead, including rent, equipment, depreciation and utilities.

The Company records accrued expenses for estimated costs of research and development activities conducted by third-party service providers, which include preclinical studies and clinical trials and contract manufacturing activities.

6 unchanged sentences

Stock-Based Compensation

The Company accounts for stock-based compensation using a fair value-based method, which requires the recognition of compensation expense for costs related to all stock-based payments including stock options and purchase rights under the employee stock purchase plan.

The Company estimates the fair value of stock-based payment awards on the date of grant using the Black-Scholes option pricing model.

The Company accounts for stock-based compensation using a fair value-based method, which requires the recognition of compensation expense for costs related to all stock-based payments including stock options, restricted stock units (RSUs) and purchase rights under the Employee Stock Purchase Plan (ESPP).

The Company estimates the fair value of stock options and purchase rights granted under the ESPP on the date of grant using the Black-Scholes option pricing model, which is impacted by the fair value of the Company’s common stock, as well as changes in assumptions regarding a number of highly complex and subjective variables.

The model requires management to make a number of assumptions including expected volatility, expected term, risk-free interest rate and expected dividend yield.

Prior to its IPO, the fair value of the Company’s common stock was determined by the Company’s board of directors with assistance from management and an independent third party valuation firm, using significant judgment and several factors including important developments in the Company’s operations, sales of preferred stock and the lack of liquidity of the common stock.

Subsequent to the IPO, the Company determines the fair value using the market closing price of the Company’s common stock on the date of grant.

Prior to its IPO, the fair value of the Company’s common stock was determined by the Company’s board of directors with assistance from management and an independent third-party valuation firm, using significant judgment and several factors including important developments in the Company’s operations, sales of redeemable convertible preferred stock and the lack of liquidity of the common stock.

Subsequent to the IPO, the Company determines the fair value of stock options, RSUs and purchase rights under the ESPP using the market closing price of the Company’s common stock on the date of grant.

For stock-based payments with service conditions only, the Company uses the straight-line method to allocate compensation cost to reporting periods over the requisite service period, which is generally the vesting period.

10 unchanged sentences

Comprehensive loss

Comprehensive loss represents the net loss for the period and other comprehensive income.

Other comprehensive income reflects certain gains and losses that are recorded as a component of stockholders’ deficit and are not reflected in the statements of operations.

The Company’s other comprehensive income consists of changes in unrealized gains and losses on available-for-sale investments.

Comprehensive loss represents the net loss for the period and other comprehensive income (loss).

Other comprehensive income (loss) reflects certain gains and losses that are recorded as a component of stockholders’ equity (deficit) and are not reflected in the consolidated statements of operations.

The Company’s other comprehensive income (loss) consists of changes in unrealized gains and losses on available-for-sale investments.

Net loss per share

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities.

Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock and potentially dilutive securities outstanding for the period.

For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock, stock options, common stock subject to repurchase related to unvested restricted stock awards and early exercise of stock options are considered to be potentially dilutive securities.

Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities as the redeemable convertible preferred stock is considered a participating security because it participates in dividends with common stock.

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities.

Diluted net loss is calculated by dividing the net loss by the weighted-average number of common stock and potentially dilutive securities outstanding for the period.

For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock, stock options, RSUs, common stock subject to repurchase related to unvested restricted stock awards and early exercise of stock options are considered to be potentially dilutive securities.

Basic and diluted net loss per share is presented in conformity with the two-class method required for participating securities as the redeemable convertible preferred stock is considered a participating security because it participates in dividends with common stock.

The Company also considers the shares issued upon the early exercise of stock options subject to repurchase to be participating securities because holders of such shares have non-forfeitable dividend rights in the event a dividend is paid on common stock.

2 unchanged sentences

Because the Company has reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for those periods.

Recent Accounting Pronouncements

The Company is an “emerging growth company” (EGC), as defined in 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.

The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act.

As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of the public company effective dates.

Recently Adopted Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update No.

2014-09, Revenue from Contracts with Customers (Topic 606) and has subsequently issued a number of amendments to Topic 606.

As amended, Topic 606 provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific guidance.

The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.

Topic 606 also requires entities to disclose both qualitative and quantitative information that enables users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including disclosure of significant judgments affecting the recognition of revenue.

The Company adopted Topic 606 as of December 1, 2019 using the modified retrospective method, which was only applied to contracts that were not completed as of the adoption date.

As of the adoption date, the Company had only one contract, the collaboration agreement with Gilead, not completed.

The Company did not elect to use any of the practical expedients permitted related to adoption.

The adoption of Topic 606 did not result in a cumulative adjustment to the accumulated deficit as it did not change the timing and pattern of revenue recognition for the collaboration agreement with Gilead.

For the year ended November 30, 2020, there would have been no difference between the revenue recognized under Topic 606 and the revenue recognized under ASC 605 for the collaboration agreement with Gilead.

The adoption of Topic 606 did not have a material impact on the Company’s consolidated financial statements.

In June 2018, the FASB issued ASU No.

2018-07, Compensation – Stock Compensation (Topic 718):

Improvements to Non-employee Share-Based Payment Accounting (ASU 2018-07), which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees.

An entity should apply the requirements of Topic 718 to non-employee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period).

ASU 2018-07 is effective for annual periods beginning after December 15, 2019, and interim periods within annual periods beginning after December 15, 2020.

Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606.

The Company adopted ASU 2018-07 as of December 1, 2019.

The adoption did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

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.

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

The Company adopted ASU 2016-02 effective December 1, 2020 using the alternative modified transition method, which applies ASU 2016-02 as of the adoption date and therefore, the Company has not applied the standard to the comparative periods presented in the Company's consolidated financial statements.

The Company elected 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 elected the hindsight practical expedient to determine the lease term, the practical expedient to not separate lease and non-lease components and the policy election to not recognize ROU assets or lease liabilities for short-term leases.

As of the adoption date of December 1, 2020, the Company recognized an operating lease ROU asset of $ 13.3 million, operating lease current liabilities of $ 3.3 million and operating lease long-term liabilities of $ 10.9 million.

The difference between the operating lease ROU asset and operating lease liabilities primarily represented the existing deferred rent liability balance as of the adoption date of $ 0.9 million.

Operating lease ROU assets are presented within other assets, operating lease current liabilities are presented within current liabilities and operating lease long-term liabilities are presented within non-current liabilities on the consolidated balance sheet.

See Note 6 “Commitments and Contingencies” for additional details.

In June 2016, the FASB issued ASU No.

3 unchanged sentences

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.

The Company adopted ASU 2016-13 as of December 1, 2020 .

The adoption did not have an impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No.

1 unchanged sentence

Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13), which modifies the disclosure requirements on fair value measurements by removing the requirement to disclose amounts of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation process for Level 3 fair value measurements, among other modifications to fair value measurement disclosure requirements.

ASU 2018-13 is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2019.

Early adoption is permitted.

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

The Company adopted ASU 2018-13 as of December 1, 2020 .

The adoption did not have an impact on the Company’s consolidated 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.

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.

Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606.

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

The Company adopted ASU 2018-18 as of December 1, 2020 .

The adoption did not have an impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU No.

1 unchanged sentence

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.

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

Early adoption is permitted.

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

The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements and does not expect the adoption to have a material impact on its consolidated financial statements.

Collaboration Agreements

2 unchanged sentences

Under the terms of the Celgene Agreement, the Company received an upfront payment of $ 150.0 million in September 2015.

In addition, in September 2015, Celgene purchased 1,622,222 shares of Series C redeemable convertible preferred stock at a price of $10.50 per share, resulting in net proceeds of $17.0 million.

In addition, in September 2015, Celgene purchased 1,622,222 shares of the Company’s Series C redeemable convertible preferred stock at a price of $ 10.50 per share, resulting in net proceeds of $ 17.0 million.

As of November 30, 2019, BMS held approximately 10 % of total shares outstanding on an as-converted basis.

4 unchanged sentences

Collaboration revenue related to the Celgene Agreement was $ 0 , $ 0 and $ 28.4 million for the years ended November 30, 2021, 2020 and 2019, respectively.

As of November 30, 2020 and 2019 , deferred revenue of $ 0 was recorded on the consolidated balance sheet.

As of November 30, 2021, there was no deferred revenue recorded on the consolidated balance sheet.

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 product candidates resulting from the collaboration.

The Company retains the option to co-develop and co-promote, under a profit share structure, up to two product 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 product candidate of its choice.

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.

9 unchanged sentences

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

From the signing of the Gilead Agreement to November 30, 2021, the Company has received payments of $ 18.5 million for research milestones and additional payments, including $ 5.0 million, which was received in the fourth quarter of 2021.

Additionally, in November 2021, the Company recognized a research milestone and received a payment of $ 6.0 million in the first quarter of 2022.

As of November 30, 2021, the Company is eligible to receive up to approximately $ 2.3 billion in total additional payments, including up to $ 677.5 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 $ 139.8 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.

In June 2019, the Company received the $45.0 million upfront payment and $3.0 million in additional fees.

In February 2020, the Company achieved a research milestone, resulting in a $2.5 million additional payment, which was received by the Company in April 2020.

In May 2020, the Company recorded $1.0 million in additional fees related to certain target reservation, which was received in June 2020.

In November 2020, the Company recognized two research milestones, resulting in a $7.5 million additional payment, which was received in January 2021.

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.

9 unchanged sentences

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.

Upon the achievement of research milestones in February and November 2020, and additional fees related to a target reservation in May 2020, $11.0 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.

Upon the achievement of research milestones and fees added related to target reservations, $ 24.5 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 .

1 unchanged sentence

Additionally, the Company considered the impact of Gilead terminating the agreement prior to the completion of the research services during the initial five-year research term and determined that there were significant economic costs to Gilead for doing so, and as such, did not adjust the contract term.

Using the cost-based input method, which the Company determined most faithfully depicts the transfer of its performance obligation to Gilead, the Company recognizes revenue based on actual costs incurred as a percentage of total estimated costs as the Company completes its performance obligation.

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

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

For the year ended November 30, 2020, the Company recognized collaboration revenue related to the Gilead Agreement of $12.1 million, of which $9.4 million was included in deferred revenue as of November 30, 2019, and $0.9 million was related to performance obligation satisfied in previous periods.

Costs consist primarily of internal full-time employee (FTE) and third-party contract costs related to the Gilead Agreement.

Total estimated costs are primarily driven by the number of estimated FTEs, which requires significant management judgment.

For the year ended November 30, 2021, the Company recognized collaboration revenue related to the Gilead Agreement of $ 16.6 million, of which $ 11.1 million was included in deferred revenue as of November 30, 2020, and $ 3.1 million was related to performance obligations satisfied in previous periods.

For the year ended November 30, 2020, the Company recognized collaboration revenue related to the Gilead Agreement of $ 12.1 million, of which $ 9.4 million was included in deferred revenue as of November 30, 2019, and $ 0.9 million was related to performance obligations satisfied in previous periods.

For the year ended November 30, 2019, the Company recognized revenue related to the Gilead Agreement of $ 2.7 million.

As of November 30, 2021, $ 41.1 million was recorded as deferred revenue, of which $ 19.9 million was current, on the consolidated balance sheet related to the Gilead Agreement.

As of November 30, 2020, the Company recognized contract assets of $7.5 million on the consolidated balance sheet related to the Gilead Agreement.

The contract assets represent unbilled revenue related to the research milestones achieved in November 2020.

The Company invoiced Gilead in December 2020 and Gilead paid the amount in January 2021.

In December 2019, the Company entered into a strategic collaboration with Sanofi, which became effective in January 2020 and was subsequently expanded and amended in January 2021 (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, with an option by Sanofi to expand to a total of five targets.

Additionally, as of November 30, 2021, $ 6.0 million was included in accounts receivable which represents the billed revenue related to the research milestone recognized in November 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.

In January 2021, as part of the existing collaboration agreement, Sanofi paid the Company $ 22.0 million to exercise its option to expand the number of targets in the collaboration agreement from three to a total of five targets.

The Company and Sanofi also entered into a first amendment to the collaboration agreement in January 2021 to modify the research term on all targets (the First Sanofi Amendment) .

Over time and subject to certain limitations, Sanofi may elect to replace the drug targets with other reserved targets.

Under the Sanofi Agreement, Sanofi has exclusive rights and is responsible for the clinical development, commercialization and manufacture of product candidates resulting from the collaboration while the Company retains the option to co-develop, co-promote and co-commercialize up to two targets, one of which must be selected from a list of targets designated at the execution of the Sanofi Agreement and one of which must be selected from targets identified by Sanofi in the future.

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 the Company retains the option to co-develop, co-promote and co-commercialize up to two targets, one of which must be selected from a list of targets designated at the execution of the Sanofi Agreement and one of which must be selected from targets identified by Sanofi in the future.

The Company’s right to exercise its option to co-develop, co-promote and co-commercialize a given target is dependent on its ability to demonstrate, within a given timeframe, that it has sufficient cash resources and personnel to commercialize the product.

8 unchanged sentences

net sales and reduced milestone payments on such optioned products.

Upon signing the Sanofi Agreement, Sanofi paid the Company an upfront payment of $55.0 million, which was received in January 2020.

Upon signing the Sanofi Agreement, Sanofi paid the Company an upfront payment of $ 55.0 million.

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

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

From the signing of the Sanofi Agreement to November 30, 2021, the Company has received a payment of $ 1.0 million for research milestones.

As of November 30, 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 $ 143.8 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.

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 the expiration of (i) the last-to-expire patent with a valid claim covering the applicable licensed product in the applicable country, (ii) the expiration of any regulatory exclusivity for the applicable licensed product in the applicable country or (iii) ten years after the first commercial sale of the applicable licensed product in the applicable country covered by the Sanofi Agreement.

The Company identified the following promises in the Sanofi Agreement:

10 unchanged sentences

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 four years, the contractual initial research period, 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.

These actual costs consist primarily of internal FTE efforts and third-party contract costs related to the Sanofi Agreement.

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 in the First Sanofi Amendment, using the cost-based input method.

Using the cost-based input method, which the Company determined most faithfully depicts the transfer of its performance obligation to Sanofi, the Company recognizes revenue based on actual costs incurred as a percentage of total estimated costs as the Company completes its performance obligation under the contract.

Costs consist primarily of internal FTE and third-party contract costs related to the Sanofi Agreement.

T otal estimated costs are primarily driven by the number of estimated FTEs, which requires significant management judgment.

The Company accounted for the First Sanofi Amendment as if it were part of the existing contract with Sanofi as the remaining goods and services to be provided after the contract modification are not distinct from the goods and services already provided and, therefore, form part of a single performance obligation that is partially satisfied at the date of the contract modification.

The contract modification did not have an effect on the contract transaction price.

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 year ended November 30, 2021, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 13.2 million, of which $ 13.0 million was included in deferred revenue as of November 30, 2020, and $0.1 million was related to performance obligations satisfied in previous periods.

For the year ended November 30, 2020, the Company recognized collaboration revenue related to the Sanofi Agreement of $ 5.7 million.

11 unchanged sentences

Total property and equipment, net

Depreciation and amortization expense was $2.2 million and $2.4 million for the years ended November 30, 2020 and 2019, respectively.

Depreciation and amortization expense was $ 2.8 million, $ 2.2 million and $ 2.4 million for the years ended November 30, 2021, 2020 and 2019, respectively.

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

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

Accrued compensation

12 unchanged sentences

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 November 30, 2020 and 2019 (in thousands):

The following tables presents the Company’s investments, 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 November 30, 2021 and 2020 (in thousands):

November 30, 2021

6 unchanged sentences

Long-term investments:

treasury securities

Corporate debt securities

9 unchanged sentences

government agency securities

Corporate commercial paper

Municipal securities

Long-term investments:

Corporate debt securities

government agency securities

Municipal securities

Included in Cash and cash equivalents

1 unchanged sentence

Included in Long-term investments

As of November 30, 2021 and 2020, the accrued interest receivable related to the Company’s investments was $ 0.9 million and $ 0.4 million, respectively, and was included in prepaid expenses and other current assets on the consolidated balance sheet.

The Company classifies its money market funds and U.S.

6 unchanged sentences

There were no transfers of financial instruments between valuation levels during the years ended November 30, 2021 and 2020.

As of November 30, 2020 and 2019, 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 years ended November 30, 2020 and 2019, the Company did not recognize any other-than-temporary impairment losses.

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

The Company’s long-term investments have maturities of between one and two years from the respective consolidated balance sheet dates.

As of November 30, 2021, the unrealized losses for available-for-sale investments were non-credit related, and the Company does not intend to sell the investments that were in an unrealized loss position, nor will it be required to sell those investments before recovery of their amortized cost basis, which may be maturity.

As of 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.

As of November 30, 2021, no allowance for credit losses for the Company’s investments was recorded.

During the years ended November 30, 2021, 2020 and 2019, the Company did no t recognize any impairment losses related to investments.

Commitments and Contingencies

4 unchanged sentences

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

As of November 30, 2020, the Company had no outstanding, pending or threatened litigation.

As of November 30, 2021, the Company was not a party to any material legal proceedings.

Indemnifications

13 unchanged sentences

In November 2017, the Company entered into an amendment to its original lease agreement that combined the Company’s two leases into a single lease agreement and extended the term of the lease agreement through April 30, 2025 .

The Company has an option to renew this lease for an additional two years which has not been included in the lease term used to calculate the ROU asset and lease liability as it is not reasonably certain that the Company will exercise this option.

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 .

4 unchanged sentences

The term of the second sublease ended in August 2019.

Rent expense and sublease income was 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 (Mission Bay Lease).

The lease commenced on December 1, 2021 and 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 and increase by 3 % per year 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 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.

The Company has not recognized a ROU asset or aggregate lease liability as of November 30, 2021 for the minimum rental payments related to the Mission Bay Lease as the Company did not control the underlying assets at any time in the year ended November 30, 2021.

As of November 30, 2021, operating lease ROU assets were $ 14.0 million, operating lease current liabilities were $ 3.8 million and operating lease long-term liabilities were $ 9.2 million.

For the year ended November 30, 2021, cash paid for operating lease liabilities was $ 4.0 million.

As of November 30, 2021, the weighted average remaining lease term was 3.5 years and the weighted average discount rate was 3.13 %.

For the year ended November 30, 2021, total operating lease expense was $ 3.8 million and short-term lease expense was not material.

Prior to the adoption of Topic 842 on December 1, 2020, operating lease expense and sublease income was as follows (in thousands):

Year Ended November 30,

Rent expense under operating leases

Sublease income

Net rent expense

Future minimum lease payments under the Company’s lease agreement as of November 30, 2020 were as follows (in thousands):

Operating lease expense

Operating sublease income

Net operating lease expense

The undiscounted future non-cancellable lease payments under the Company’s lease agreement as of November 30, 2021 were as follows (in thousands):

Year ending November 30,

Total minimum lease payments

The Company’s Certificate of Incorporation, as amended, authorizes the Company to issue up to 500,000,000 and 65,000,000 shares of $0.001 par value common stock as of November 30, 2020 and 2019, respectively.

Total undiscounted lease payments

Undiscounted lease payments related to Mission Bay Lease

imputed interest

Total lease liabilities

Operating lease current liabilities

Operating lease long-term liabilities

Total lease liabilities

The Company’s Restated Certificate of Incorporation authorizes the Company to issue up to 500,000,000 shares of common stock, $ 0.001 par value per share, as of November 30, 2021 and 2020.

Holders of common stock are entitled to dividends when and if declared by the Company’s board of directors, subject to the prior rights of the preferred stockholders.

2 unchanged sentences

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

Conversion of redeemable convertible preferred

Issuance of options under stock option plan

2 unchanged sentences

purchase plan

Restricted stock units issued and outstanding

Total common stock reserved for future issuance

Redeemable Convertible Preferred Stock

The Company’s Certificate of Incorporation, as amended, authorizes the Company to issue zero and 48,441,667 shares of redeemable convertible preferred stock as of November 30, 2020 and 2019, respectively, with a par value of $0.001 per share.

Designated and outstanding redeemable convertible preferred stock and its principal terms were as follows at November 30, 2019 (in thousands, except share amounts):

The Company’s Restated Certificate of Incorporation authorizes the Company to issue zero shares of redeemable convertible preferred stock as of November 30, 2021 and 2020 and there was no outstanding redeemable convertible preferred stock as of November 30, 2021 and 2020.

In March 2020, the Company issued 9,431,364 shares of Series D redeemable convertible preferred stock at an issuance price of $ 12.75 per share, resulting in net proceeds of $ 119.9 million.

1 unchanged sentence

Immediately prior to the closing of the IPO in July 2020, all shares of redeemable convertible preferred stock then outstanding, including 9,431,364 shares of Series D redeemable convertible preferred stock, converted into 22,245,251 shares of common stock.

There were no shares of redeemable convertible preferred stock outstanding as of November 30, 2020.

The redeemable convertible preferred stock was recorded in mezzanine equity because while it was not mandatorily redeemable, it would have become redeemable at the option of the preferred stockholders upon the occurrence of a deemed liquidation event that was considered not solely within the Company’s control.

Stock-Based Compensation

2020 Equity Incentive Plan

In July 2020, the Company’s board of directors approved, and the Company adopted the 2020 Equity Incentive Plan (the 2020 Plan).

The 2020 Plan became effective on July 22, 2020.

The 2020 Plan provides for the granting of stock options, stock appreciation rights (SARs), restricted stock awards (RSAs), restricted stock units (RSUs), performance awards and stock bonus awards to employees, directors, consultants, independent contractors and advisors of the Company.

Under the 2020 Plan, the Company generally grants stock-based awards with service-based vesting conditions only.

Equity Incentive Plans

The 2020 Equity Incentive Plan (2020 Plan) serves as the successor to the 2012 Equity Incentive Plan (2021 Plan, and together with the 2020 Plan, the Stock Plans) and provides for the granting of stock options, stock appreciation rights (SARs), restricted stock awards (RSAs), restricted stock units (RSUs), performance awards and stock bonus awards to employees, directors, consultants, independent contractors and advisors of the Company.

Under the Stock Plans, the Company generally grants stock-based awards with service-based vesting conditions only.

Options granted typically vest over a four-year period but may be granted with different vesting terms.

1 unchanged sentence

In the case of all other stock options, the per share exercise price shall be no less than 100 % of the fair value per share on the date of grant.

Following the effectiveness of the 2020 Plan, the Company ceased making grants under the 2012 Equity Incentive Plan (the 2012 Plan).

RSUs issued typically vest over a two‑year period, but may be granted with different vesting terms, and expire ten years from the date of grant.

Following the effectiveness of the 2020 Plan on July 22, 2020, the Company ceased making grants under the 2012 Plan.

However, the 2012 Plan continues to govern the terms and conditions of the outstanding awards granted under it.

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.

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

As of November 30, 2021, there were 2,562,570 shares of common stock reserved for future issuance pursuant to the 2020 Plan.

In December 2020, an additional 1,554,594 shares of common stock were reserved for issuance pursuant to the 2020 Plan.

2012 Equity Incentive Plan

In April 2012, the Company’s board of directors approved, and the Company adopted the 2012 Plan.

The 2012 Plan provides for the granting of stock options, SARs, RSAs, and RSUs to employees, directors, consultants and advisors of the Company.

Options granted under the 2012 Plan generally vest over four years.

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 November 30, 2020, 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):

Option activity under the Stock Plans is set forth below and has been adjusted for the 1-for-3 reverse stock split (in thousands, except per share data):

Balances as of November 30, 2020

6 unchanged sentences

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 November 30, 2021 for all in‑the‑money stock options.

The total intrinsic value of stock options exercised during the years ended November 30, 2020 and 2019, was $3.4 million and $0.1 million, respectively.

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.

The total intrinsic value of stock options exercised during the years ended November 30, 2021, 2020 and 2019, was $ 15.9 million, $ 3.4 million and $ 0.1 million, respectively.

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 the voluntary or involuntary termination of employment of the stockholder.

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

As of November 30, 2020, a total of 141,512 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 $0.5 million as of November 30, 2020 is recorded in share-based compensation liability.

As of November 30, 2021, a total of 58,794 shares of common stock were subject to repurchase by the Company at the lower of (i) the fair value of such shares on the date of repurchase, or (ii) the original exercise price of such shares.

The corresponding exercise value of $ 0.3 million as of November 30, 2021 is recorded as a stock-based compensation liability.

RSU activity was as follows:

Number of RSUs

Weighted-average grant date fair value

Balance as of November 30, 2020

RSUs forfeited

Balance as of November 30, 2021

Employee Stock Purchase Plan

In July 2020, the Company’s board of directors adopted the 2020 Employee Stock Purchase Plan (the 2020 ESPP) that became effective upon the date of the IPO in order to enable eligible employees to purchase shares of common stock with accumulated payroll deductions.

The 2020 ESPP is intended to qualify under Section 423 of the Internal Revenue Code, as amended.

Under the 2020 ESPP, eligible employees are offered the option to purchase shares of common stock at a discount over a series of offering periods.

Under the 2020 Employee Stock Purchase Plan (ESPP), eligible employees are offered the option to purchase shares of common stock at a discount over a series of offering periods.

Each offering period may consist of one or more purchase periods.

The purchase price for shares of common stock purchased under the 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.

During the year-ended November 30, 2021, the Company issued 103,464 shares pursuant to the ESPP at a weighted-average price of $ 19.92 per share.

As of November 30, 2021, there were 1,015,184 shares of common stock reserved for issuance pursuant to the 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.

The first purchase period was the same as the first offering period and the first purchase date was the last trading day of the purchase period, which was February 12, 2021.

In December 2020, an additional 388,648 shares of common stock were reserved for issuance pursuant to the 2020 ESPP.

Stock-Based Compensation

During the years ended November 30, 2020 and 2019, the weighted-average grant date fair value of options granted was $9.50 and $1.41 per share, respectively.

The total fair value of employee options vested during the years ended November 30, 2020 and 2019 was $3.1 million and $0.5 million, respectively.

The Company estimated the fair value of stock options using the Black-Scholes option pricing model.

The fair value of employee stock options is amortized on a straight-line basis over the requisite service period of the awards.

The fair value of the employee stock options granted during the following years was estimated using the following assumptions:

Expected term

5.41 - 6.98 years

5.92 - 6.08 years

During the years ended November 30, 2021, 2020 and 2019, the weighted-average grant date fair value of options granted was $ 21.15 , $ 9.50 and $ 1.41 per share, respectively, and the total fair value of employee options vested was $ 12.0 million, $ 3.1 million and $ 0.5 million, respectively.

The Company estimated the fair value of stock options and purchase rights under ESPP using the Black-Scholes option pricing model.

The fair value of these stock awards was estimated using the following assumptions:

Expected term (years)

Expected volatility

1 unchanged sentence

0.52% - 1.24%

0.34% - 1.79%

1.42% - 2.55%

Dividend yield

The expected term of stock options represents the weighted-average period the stock options are expected to remain outstanding.

The expected term assumption was determined based on the expected term as disclosed for comparable publicly traded biopharmaceutical companies since the Company does not have sufficient experience to estimate the expected term based on historical exercises.

The expected term represents the weighted-average period the stock-based payments are expected to remain outstanding.

The expected term assumption for stock options was determined using the simplified method.

The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company does not have sufficient trading history for its common stock.

The risk-free rate assumption is based on the U.S.

Treasury instruments whose term was consistent with the expected term of the Company’s stock options.

Treasury instruments.

The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.

The expected dividend yield is 0 % as the Company has not paid and does not anticipate paying dividends on its common stock.

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

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

Year Ended November 30,

5 unchanged sentences

The Company sponsors a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code (the 401(k) Plan), which provides for the Company to make discretionary matching or discretionary annual contributions to the 401(k) Plan, for its employees.

Substantially all of the Company’s employees are eligible to participate.

Substantially all of the Company’s employees are eligible to participate in the 401(k) plan.

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

The Company made contributions to the 401(k) Plan during the years ended November 30, 2020 and 2019.

The Company recorded contribution expense of $0.4 million and $0.3 million during the years ended November 30, 2020 and 2019, respectively.

The Company has made contributions to the 401(k) Plan and recorded contribution expense of $ 0.7 million, $ 0.4 million and $ 0.3 million during the years ended November 30, 2021, 2020 and 2019, respectively.

The Company recorded a current income tax expense of $ 0.1 million for the year ended November 30, 2021, primarily due to state taxes offset by a federal income tax refund.

The Company recorded a current income tax benefit of $ 20.5 million for the year ended November 30, 2020, primarily due to carryback of net operating losses to prior years and changes in reserves for unrecognized tax benefits.

2 unchanged sentences

Loss before provision for income taxes includes the following component (in thousands):

The provision for income taxes consists of the following:

(in thousands):

Total (benefit) provision for income taxes

The provision for (benefit from) income taxes consists of the following (in thousands):

Total provision for (benefit from) income taxes

The effective tax rate differs from the federal statutory rate as follows:

4 unchanged sentences

Federal rate impact due to CARES Act

Stock-based compensation

Change in valuation allowance

8 unchanged sentences

Stock based compensation

Accruals and other

Accrued expenses and other liabilities

Operating lease liabilities

Gross deferred tax assets

2 unchanged sentences

Deferred tax liabilities:

Property and equipment

Operating lease right-of-use assets

Total deferred tax liabilities

1 unchanged sentence

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 established a valuation allowance to offset deferred tax assets as of November 30, 2020 and 2019 due to the uncertainty of realizing future tax benefits from its NOL carryforwards and other deferred tax assets.

The valuation allowance increased by $7.6 million during the year ended November 30, 2020.

The increase in the valuation allowance in 2020 is primarily related to an increase on the deferred tax asset for deferred revenue.

The valuation allowance increased by $8.5 million during the year ended November 30, 2019.

The increase in the valuation allowance for 2019 is primarily due to an increase in NOL carryforwards.

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

The valuation allowance increased by $ 36.1 million during the year ended November 30, 2021, primarily related to an increase on the deferred tax asset for deferred revenue, research and development (R&D) credits and NOL carryforwards.

The valuation allowance increased by $ 7.6 million during the year ended November 30, 2020, primarily due to an increase on the deferred tax asset for deferred revenue.

The valuation allowance increased by $ 8.5 million during the year ended November 30, 2019, primarily due to an increase in NOL carryforwards.

As of November 30, 2021, the Company had NOL carryforwards available to reduce future taxable income, if any, for federal and state income tax purposes of $ 116.3 million and $ 192.0 million, respectively.

10 unchanged sentences

The Company has recorded a liability related to uncertain tax positions in the financial statements.

The Company believes that it is reasonably possible that unrecognized income tax benefits will decrease by $1.5 million within the next twelve months as a result of audit settlements with the Internal Revenue Service (IRS).

It is the Company’s policy to include penalties and interest expense related to income taxes as a component for the provision for income taxes.

5 unchanged sentences

Balance at beginning of period

Additions based on tax positions related to prior

Additions based on tax positions related to current

Additions based on tax positions related to

current period

Balance at end of period

The Company files income tax returns in the United States and in various states.

The Internal Revenue Service (the IRS) commenced an examination of the Company’s U.S.

income tax return for the year ended December 31, 2016 in the first quarter of 2018 that is anticipated to be completed in 2021.

In September 2020, the Company and the IRS reached a settlement on a R&D credit issue.

The Company removed the associated unrecognized tax benefit reserve and decreased its R&D credit carryforward by $1.0 million.

The Company also increased its uncertain tax benefit reserve related to its 2018 and 2019 R&D credits.

Additionally, the California Franchise Tax Board (the FTB) initiated an examination of the Company’s California tax return for the years ended December 31, 2015 and 2016.

As of the filing date, the FTB has not yet issued any assessments.

All of the Company’s tax years will remain open for examination by the federal and state authorities for three and four years, respectively, from the date of utilization of any net operating loss or credits.

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 April 2020, the Company filed a refund claim of $15.7 million to carryback its NOLs generated in the fiscal year ended November 30, 2018, and in November 2020, the Company filed an additional refund claim to carryback its NOLs generated in the fiscal year ended November 30, 2019 to recover an additional $3.9 million of income tax.

Additionally, as a result of the CARES Act, NOL carryback claims displaced certain research and development credits that were originally used to offset previous tax expense.

As a result, the Company recorded an income tax benefit of $20.6 million, which consist of the carryback claims and the reversal of the uncertain tax liabilities.

The Company received the cash for the first refund claim of $16.3 million including an interest income of $0.6 million, leaving the remaining income tax receivable of $3.9 million for the anticipated tax refund claims on the consolidated balance sheet as of November 30, 2020.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (TCJA) was enacted into law and the effect of the tax law change was reflected in the period of enactment.

Most significantly for the Company, the TCJA reduced the income tax rate to 21% effective January 1, 2018.

The Company included the impact of the reduced tax rate in its fiscal year ended November 30, 2018.

The Company's 2018 and 2019 net operating losses were carried back to pre-2017 years when the tax rate was 35%.

The Company recorded an income tax benefit for the use of the net operating losses at the higher rate.

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

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

All tax issues under examination were effectively settled during the year ended November 30, 2021.

As a result, the Company removed the associated unrecognized tax benefit reserves and decreased its R&D credit carryforward by $ 1.3 million.

The Company continues to maintain an unrecognized tax benefit related to federal R&D credits generated in years not covered by the examination.

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 year ended November 30, 2021, the FTB issued proposed audit assessments related to revenue sourcing and R&D credits.

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

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

The Company maintains an unrecognized tax benefit related to its California R&D credits for all years.

All of the Company’s tax years will remain open for examination by the federal and state authorities for three and four years , respectively, from the date of the utilization of any net operating losses.

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

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 year ended November 30, 2021.

As of November 30, 2021, the Company has received the full amount of these refund claims.

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):

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

Year Ended November 30,

1 unchanged sentence

basic and diluted

Net loss per share attributable to common

stockholders, basic and diluted

Net loss per share, basic and diluted

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

5 unchanged sentences

stock purchase plan

Restricted stock

Related Party Transactions

As of November 30, 2020 and 2019, post-acquisition of Celgene, BMS owned 1,622,222 shares of the Company’s common stock and 1,622,222 shares of the Company’s Series C redeemable convertible preferred stock, respectively.

For the years ended November 30, 2020 and 2019, the Company recorded collaboration revenue under the Celgene Agreement of $0 and $28.4 million, respectively.

As of November 30, 2020 and 2019, deferred revenue related to the Celgene Agreement was $0.

Following its acquisition of Celgene, BMS owned 1,622,222 shares of the Company’s Series C redeemable convertible preferred stock that automatically converted into shares of the Company’s common stock immediately prior to the closing of the Company’s IPO.

In June 2019, the Celgene Agreement was terminated in its entirety with no further payments from Celgene and no remaining deliverables from the Company.

See Note 3, “Collaboration agreements—Celgene (a related party)” for a discussion of the Celgene Agreement.

Subsequent Events

In December 2020, the Company submitted an investigational new drug application (IND) with the U.S.

Food and Drug Administration (FDA) for NX-2127, an orally available BTK degrader for the treatment of relapsed or refractory B-cell malignancies.

On January 15, 2021, the Company received a study-may-proceed letter from the FDA to conduct a Phase 1 clinical trial to assess the safety and efficacy of NX-2127.

The Phase 1 clinical program is intended to support the clinical development of NX-2127 in multiple indications, including non-Hodgkin lymphoma and chronic lymphocytic leukemia.

In January 2021, the Company entered into the first amendment to a global strategic collaboration with Genzyme Corporation, a subsidiary of Sanofi S.A.

(the Sanofi Agreement), to expand the number of drug targets under the Sanofi Agreement.

See Note 3, “Collaboration agreements—Sanofi)” for a discussion of the Sanofi Agreement.

Quarterly Financial Information (unaudited)

The following table provides selected unaudited quarterly financial data for the years ended November 30, 2020 and 2019 (in thousands, except share and per share data):

Three Months Ended

February 29, 2020

August 31, 2020 (1)

November 30, 2020

Collaboration revenue

Weighted-average number of shares

outstanding, basic and diluted

Net loss per share attributable to common

stockholders, basic and diluted

Three Months Ended

February 28, 2019

August 31, 2019

November 30, 2019

Collaboration revenue

Weighted-average number of shares

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 the 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 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 error will be corrected in the Company’s future filings that contain such financial information.

Changes in and Disagreements w ith Accountants on Accounting and Financial Disclosure

Upon the termination, BMS ceased to be a related party of the Company.

For the year ended November 30, 2019, the Company recorded collaboration revenue under the Celgene Agreement of $ 28.4 million.

The Company’s Chief Financial Officer is a trustee for the multiple employer welfare association that facilitates the acquisition and administration of the Company’s healthcare plans.

Expenses related to the healthcare plan premiums were $ 2.6 million, $ 1.6 million and $ 1.4 million for the years ended November 30, 2021, 2020 and 2019, respectively.

As of November 30, 2021 and 2020, the amount recorded in accounts payable and accrued expenses and other current liabilities in connection with this healthcare plan provider was not material.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data