What changed in this filing

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Item 1. Financial Statements

2025-08-06 compared with 2025-05-06 · 113 added, 75 removed, 374 unchanged (33% of the section changed)

18 unchanged sentences

Accrued expenses and other payables

Deferred revenue

Income taxes payable

Deferred revenue

Operating lease liability

8 unchanged sentences

Common stock, $ 0.00001 par value, 180,000,000 shares authorized;

61,928,760 and 61,035,139 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

62,107,572 and 61,035,139 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Accumulated deficit

6 unchanged sentences

Three Months Ended

Six Months Ended

License and collaboration revenue

5 unchanged sentences

Interest income

Other income (expense), net

(Loss) income before income tax expense

Income tax expense

Other income, net

(Loss) income before income tax expense (benefit)

Income tax expense (benefit)

Net (loss) income

8 unchanged sentences

Three Months Ended

Six Months Ended

Net (loss) income

Other comprehensive (loss) income:

Unrealized gain (loss) on marketable securities

Unrealized (loss) gain on marketable securities

Comprehensive (loss) income

6 unchanged sentences

(Loss) Income

Three months ended March 31, 2025

Three months ended June 30, 2025

Balance at March 31, 2025

Issuance of common stock under equity incentive and employee stock purchase plans

Stock-based compensation expense

Other comprehensive loss

Balance at June 30, 2025

Comprehensive

Stockholders’

(Loss) Income

Three months ended June 30, 2024

Balance at March 31, 2024

Issuance of common stock under equity incentive and employee stock purchase plans

Stock-based compensation expense

Other comprehensive loss

Balance at June 30, 2024

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

PROTAGONIST THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

Comprehensive

Stockholders’

(Loss) Income

Six months ended June 30, 2025

Balance at December 31, 2024

3 unchanged sentences

Other comprehensive income

Balance at March 31, 2025

Balance at June 30, 2025

Comprehensive

1 unchanged sentence

(Loss) Income

Three months ended March 31, 2024

Six months ended June 30, 2024

Balance at December 31, 2023

4 unchanged sentences

Other comprehensive loss

Balance at March 31, 2024

Balance at June 30, 2024

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

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash Flows from Operating Activities

Net (loss) income

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

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

Stock-based compensation

8 unchanged sentences

Accrued expenses and other payables

Deferred revenue

Payable to collaboration partner

Income taxes payable

Deferred revenue

Operating lease liability

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash Flows from Investing Activities

3 unchanged sentences

Purchases of property and equipment

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash Flows from Financing Activities

2 unchanged sentences

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

2 unchanged sentences

Purchases of property and equipment in accounts payable and accrued liabilities

Right-of-use asset obtained in exchange for lease obligation

Leasehold improvements obtained under tenant improvement allowance

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

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(i) inflammatory and immunomodulatory (“I&I”) diseases and (ii) hematology and blood disorders.

Two novel peptides derived from the Company’s proprietary discovery technology platform, icotrokinra (formerly known as JNJ-2113) and rusfertide, are currently in advanced Phase 3 clinical development.

Two novel peptides derived from the Company’s proprietary discovery technology platform, icotrokinra and rusfertide, are currently in advanced Phase 3 clinical development.

Icotrokinra is a first-in-class investigational targeted oral peptide that selectively blocks the Interleukin-23 receptor (“IL-23R”) and is licensed to J&J Innovative Medicines (“JNJ”), formerly Janssen Biotech, Inc.

Following icotrokinra’s joint discovery by the Company and JNJ scientists pursuant to their IL-23R collaboration, the Company was primarily responsible for the development of icotrokinra through Phase 1, with JNJ assuming responsibility for development in Phase 2 and beyond.

Rusfertide, an injectable mimetic of the natural hormone hepcidin, is currently in development for treatment of the rare blood disorder polycythemia vera (“PV”).

In July 2025, a New Drug Application (“NDA”) was submitted to the U.S.

Food and Drug Administration (“FDA”) by JNJ seeking the first approval of icotrokinra for the treatment of adults and pediatric patients 12 years of age or older with moderate-to-severe plaque psoriasis.

Rusfertide, a first-in-class investigational injectable mimetic of the natural hormone hepcidin, is currently in development for treatment of the rare blood disorder polycythemia vera (“PV”).

Rusfertide is being co-developed and will be co-commercialized with Takeda Pharmaceuticals, Inc.

(“Takeda”), with the Company remaining primarily responsible for clinical development through a potential New Drug Application (“NDA”) filing.

The Company also has a number of pre-clinical stage oral drug discovery programs addressing biologically and commercially validated targets, including the IL-17 oral peptide antagonist PN-881, an oral hepcidin program and an oral anti-obesity program.

(“Takeda”), with the Company remaining primarily responsible for clinical development through a potential NDA filing.

The Company also has a number of pre-clinical stage drug discovery programs addressing biologically and commercially validated targets, including IL-17 oral peptide antagonist PN-881, obesity triple agonist peptide PN-477, and oral hepcidin.

The Company is headquartered in Newark, California and has one wholly owned subsidiary, Protagonist Pty Limited (“Protagonist Australia”), located in Brisbane, Queensland, Australia.

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See Note 10 to these condensed consolidated financial statements for the Company’s interim disclosures related to the adoption of ASU 2023-07 Segment Reporting (Topic 280) Improvements to Reporting Segment Disclosures for interim periods beginning on January 1, 2025.

As of March 31, 2025, the Company had cash, cash equivalents and marketable securities of $ 697.9 million.

The Company has incurred an accumulated deficit from inception through March 31, 2025 of $ 352.2 million.

As of June 30, 2025, the Company had cash, cash equivalents and marketable securities of $ 673.0 million.

The Company has incurred an accumulated deficit from inception through June 30, 2025 of $ 386.9 million.

The Company’s ultimate success depends upon the outcome of its research and development and collaboration activities.

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The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting.

As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted and, accordingly, the condensed consolidated balance sheet as of March 31, 2025 has been derived from the Company’s unaudited consolidated financial statements at that date but does not include all of the information required by GAAP for complete consolidated financial statements.

As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted and, accordingly, the condensed consolidated balance sheet as of June 30, 2025 has been derived from the Company’s unaudited consolidated financial statements at that date but does not include all of the information required by GAAP for complete consolidated financial statements.

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair presentation of the Company’s condensed consolidated financial statements.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any future period.

The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any future period.

The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 21, 2025.

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Actual results may differ materially from these estimates.

There has been uncertainty and disruption in the global economy and financial markets due to a number of factors, including geopolitical instability, inflationary pressures, high interest rates, a recessionary environment, domestic and global monetary and fiscal policy, changes in trade policy, including tariffs or other trade restrictions or the threat of such actions, banking and other financial institution instability and other factors.

Our business may also be impacted by changes or disruptions at the U.S.

Food and Drug Administration (“FDA”) and other government agencies.

There has been uncertainty and disruption in the global economy and financial markets due to a number of factors, including but not limited to geopolitical instability, high interest rates, and changes in trade policies, including tariffs or other trade restrictions or the threat of such actions and retaliatory actions.

Our business may also be impacted by changes or disruptions at the FDA and other government agencies.

The Company has taken into consideration any known impacts to its accounting estimates to date and is not aware of any additional specific events or circumstances that would require any additional updates to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the filing date of this Quarterly Report on Form 10-Q.

7 unchanged sentences

Total cash reported on condensed consolidated statements of cash flows

The increase in restricted cash – noncurrent as of June 30, 2025 was due to a $ 65.0 thousand deposit held as security in connection with the issuance of a bank guarantee in May 2025 to maintain the active status of the Company’s value-added tax registration.

Stock-Based Compensation Expense

8 unchanged sentences

The cumulative effect on current and prior periods of a change in the estimated number of PSUs expected to be earned is recognized as compensation expense or as reduction of previously recognized compensation expense in the period of the revised estimate.

The Company recognized $ 1.8 million of stock-based compensation expense related to PSUs for the three months ended March 31, 2025.

The Company recognized $ 1.8 million of stock-based compensation expense related to PSUs for the six months ended June 30, 2025.

The Company recognizes forfeitures of stock-based awards as they occur.

1 unchanged sentence

Three Months Ended

Six Months Ended

Research and development

2 unchanged sentences

Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2025, as compared to those disclosed in Note 2.

There have been no material changes to the Company’s significant accounting policies during the three and six months ended June 30, 2025, as compared to those disclosed in Note 2.

Summary of Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Recently Issued Accounting Pronouncements Not Yet Adopted as of March 31, 2025

Recently Issued Accounting Pronouncements Not Yet Adopted as of June 30, 2025

In December 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update No.

14 unchanged sentences

In July 2021, the Company entered into an Amended and Restated License and Collaboration Agreement with JNJ, formerly Janssen Biotech, Inc., which amended and restated the License and Collaboration Agreement, effective July 2017, by and between the Company and JNJ, as amended in May 2019 (together, the “JNJ License and Collaboration Agreement”).

The JNJ License and Collaboration Agreement relates to the development, manufacture and commercialization of oral IL-23 receptor antagonist drug candidates and enables JNJ to develop collaboration compounds for multiple indications.

The JNJ License and Collaboration Agreement relates to the development, manufacture and commercialization of oral IL-23R antagonist drug candidates and enables JNJ to develop collaboration compounds for multiple indications.

Under the JNJ License and Collaboration Agreement, JNJ is required to use commercially reasonable efforts to develop at least one collaboration compound for at least two indications.

4 unchanged sentences

The Company earned the $ 165.0 million milestone payment described above during the fourth quarter of 2024.

The Company has earned a total of $ 337.5 million in non-refundable payments from JNJ from inception in 2017 through March 31, 2025.

The Company has earned a total of $ 337.5 million in non-refundable payments from JNJ from inception in 2017 through June 30, 2025.

Upcoming potential milestones under the JNJ License and Collaboration Agreement include:

9 unchanged sentences

Takeda is solely and exclusively responsible for the development and commercialization of the Licensed Products in all other countries (the “Takeda Territory”).

The Company and Takeda share the costs of the development, manufacture and commercialization activities for the Licensed Products in the Profit-Share Territory, provided that (i) the Company leads, and is solely responsible for its costs associated with, completion of the ongoing Phase 3 VERIFY program evaluating rusfertide for the treatment of PV;

The Company and Takeda share the costs of the development, manufacture and commercialization activities for the Licensed Products in the Profit-Share Territory, provided that (i) the Company leads, and is solely responsible for its costs associated with, completion of the ongoing Phase 3 VERIFY trial evaluating rusfertide for the treatment of PV;

(ii) Takeda leads, and is solely responsible for its costs associated with, U.S.

3 unchanged sentences

The Company granted Takeda a non-transferable, sublicensable and, except for certain specified exceptions, exclusive license to certain intellectual property of the Company to exercise its rights and perform its obligations under the Takeda Collaboration Agreement.

In March 2025, the Company and Takeda agreed, pursuant to the provisions of the Takeda Collaboration Agreement, as amended, that Takeda will assume responsibility for leading and implementing the regulatory strategy and associated activities for preparation of the NDA related to rusfertide in PV which is expected to be submitted with the FDA.

The transition to Takeda of leadership for NDA preparation is underway.

In March 2025, the Company and Takeda agreed, pursuant to the provisions of the Takeda Collaboration Agreement, as amended, that Takeda would assume responsibility for leading and implementing the regulatory strategy and associated activities for preparation of the NDA related to rusfertide in PV, which is expected to be submitted to the FDA.

The Company remains primarily responsible for clinical development activities through the NDA filing.

2 unchanged sentences

In addition, the Company is eligible to receive additional worldwide development, regulatory and commercial milestone payments for rusfertide of up to $ 305.0 million, and tiered royalties from 10 % to 17 % on net sales of the Licensed Products in the Takeda Territory.

The Company and Takeda also share equally in profits and losses ( 50 % to the Company and 50 % to Takeda) for Licensed Products in the Profit-Share Territory.

The Company and Takeda will also share equally in profits and losses ( 50 % to the Company and 50 % to Takeda) for Licensed Products in the Profit-Share Territory.

Takeda will book sales of the Licensed Products globally.

1 unchanged sentence

and (ii) for convenience without receipt of the Opt-out Payment (as defined below) (generally following the Initial Opt-out Period).

In addition, if the Company does not exercise the Full Opt-out Right, the Company may opt-out of any Licensed Product other than rusfertide on a Licensed Product-by-Licensed Product basis (each, a “Partial Opt-out Right” and either the Full Opt-out Right or a Partial Opt-out right being an “Opt-out Right”).

In addition, if

the Company does not exercise the Full Opt-out Right, the Company may opt-out of any Licensed Product other than rusfertide on a Licensed Product-by-Licensed Product basis (each, a “Partial Opt-out Right” and either the Full Opt-out Right or a Partial Opt-out right being an “Opt-out Right”).

Following the Company’s exercise of an Opt-out Right, the Company has agreed to transition applicable development and commercial activities to Takeda, and Takeda has agreed to assume sole operational and financial responsibility for such activities in the United States.

10 unchanged sentences

As of the effective date of the Takeda Collaboration Agreement, the Company identified two distinct performance obligations:

(i) the rusfertide license delivered upon the effectiveness of the Takeda Collaboration Agreement and (ii) certain development services to be provided prior to the Initial Opt-out Period, including the Company’s responsibilities to complete the VERIFY Phase 3 clinical trial in PV and associated manufacturing services.

The Company determined that the initial transaction price totaled $ 300.0 million, comprised of the upfront payment.

The Company has excluded any future estimated milestones or royalties from this transaction price to date, all of which are either currently constrained or subject to the sales-and usage-based royalty exception.

As part of the Company’s evaluation of this variable consideration constraint, it determined that the potential payments are contingent upon developmental and regulatory milestones that are uncertain and are highly susceptible to factors outside of its control.

(i) the rusfertide license delivered upon the effectiveness of the Takeda Collaboration Agreement and (ii) certain development services to be provided prior to the Initial Opt-out Period, including the Company’s responsibilities to complete the Phase 3 VERIFY trial in PV and associated manufacturing services.

The Company determined that the initial transaction price totaled $ 300.0 million, which was comprised of the upfront payment.

The Company initially excluded any future estimated milestones or royalties from this transaction price, all of which were either constrained or subject to the sales-and usage-based royalty exception.

As part of the Company’s evaluation of this variable consideration constraint, it determined that the potential payments were contingent upon developmental and regulatory milestones that were uncertain and were highly susceptible to factors outside of its control.

The Company allocated $ 254.1 million of the initial transaction price to the license and $ 45.9 million to the development services based upon the relative standalone selling price of each performance obligation.

The estimate of standalone selling price for the license was determined based on discounted cash flows for the expected development and commercialization of rusfertide and includes assumptions for forecasted revenues, development timelines and expenses, discount rates, and probabilities of technical and regulatory success.

The estimate of standalone selling price for the license was determined based on discounted cash flows for the expected development and commercialization of rusfertide and included assumptions for forecasted revenues, development timelines and expenses, discount rates, and probabilities of technical and regulatory success.

The estimate of standalone selling price for the development services was determined based on forecasted costs and expenses over the expected development period.

For the license of rusfertide, the Company determined that Takeda could benefit from the license at the time the license was granted and therefore, the related performance obligation was satisfied at a point in time.

The amount allocated to the license, which represents functional intellectual property that was transferred at a point in time, was satisfied upon transfer of the license to Takeda.

1 unchanged sentence

The Company determined that the Takeda Collaboration Agreement met the definition of a collaborative arrangement under ASC Topic 808.

Both parties are active participants in directing and carrying out the development of the Licensed Products and both are exposed to the significant risk and rewards related to the commercial success of the Products.

Both parties are active participants in directing and carrying out the development of

the Licensed Products and both are exposed to the significant risk and rewards related to the commercial success of the Products.

If the Company does not exercise an Opt-out Right (“Company Opt-in”), the Company and Takeda would co-detail the Licensed Products in the U.S.

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The Company determined that development costs subsequent to the Company Opt-in date are within the scope of ASC Topic 808, which does not provide recognition and measurement guidance.

As such, the Company determined that Accounting Standards Codification Topic 730, “ Research and Development,” was appropriate to analogize to based on the cost-

sharing provisions of the agreement.

As such, the Company determined that Accounting Standards Codification Topic 730, “ Research and Development,” was an appropriate analogy based on the cost-sharing provisions of the agreement.

The Company concluded that payments to or reimbursements from Takeda related to these services will be accounted for as an increase to or reduction of research and development expense, respectively.

In March 2025, the $ 25.0 million milestone deemed probable of achievement due to the Phase 3 VERIFY trial of rusfertide in PV meeting its primary endpoint was no longer considered constrained and was added to the initial transaction price for a total transaction price of $ 325.0 million.

In March 2025, the $ 25.0 million milestone was deemed probable of achievement due to the Phase 3 VERIFY trial meeting its primary endpoint, was no longer considered constrained and was added to the initial transaction price for a total transaction price of $ 325.0 million.

The additional $ 25.0 million was then allocated proportionally to each performance obligation under the agreement, resulting in an additional $ 21.3 million allocated to the license and an additional $ 3.7 million allocated to the development services under the agreement.

Revenue Recognition

For the three months ended March 31, 2025, the Company recognized license and collaboration revenue of $ 28.3 million related to the Takeda Collaboration Agreement, including i) $ 22.8 million related to the proportional recognition of the $ 25.0 milestone deemed probable of being achieved due to the Phase 3 VERIFY trial meeting its primary endpoint and (ii) $ 5.5 million related to the initial transaction price for development services provided by the Company during the period.

Revenue recognition for the $ 25.0 million milestone, which is payable upon completion of the VERIFY clinical study report, was allocated based on the initial standalone selling price of each performance obligation under the agreement.

The remaining $ 2.2 million in revenue related to the milestone will be recognized through the conclusion of the development services performance obligation.

The Company recorded a corresponding contract asset of $ 22.8 million on its condensed consolidated balance sheet for the three months ended March 31, 2025.

For the three months ended March 31, 2024, the Company recognized license and collaboration revenue of $ 255.0 million related to the Takeda Collaboration Agreement transaction price, including $ 254.1 million allocated to the rusfertide license delivered to Takeda upon effectiveness of the agreement in March 2024 and $ 0.9 million for development services provided by the Company during the period based on the cost-based input method.

The remaining unrecognized transaction price amount of $ 45.0 million related to the Takeda Collaboration Agreement was recorded as deferred revenue on the Company’s condensed consolidated balance sheet as of March 31, 2024 and will be recognized over time based on a measure of the Company’s efforts toward satisfying the performance obligation relative to the total expected efforts or inputs to satisfy the performance obligation (e.g.

For the three months ended June 30, 2025, the Company recognized license and collaboration revenue of $ 5.5 million related to the Takeda Collaboration Agreement, including (i) $ 5.0 million related to the initial transaction price for development services provided by the Company during the period based on the cost-based input method and (ii) $ 0.5 million related to the proportional recognition of the $ 25.0 million milestone deemed probable of being achieved due to the Phase 3 VERIFY trial meeting its primary endpoint.

For the six months ended June 30, 2025, the Company recognized license and collaboration revenue of $ 33.9 million related to the Takeda Collaboration Agreement, including (i) $ 23.4 million related to the proportional recognition of the $ 25.0 million milestone deemed probable of being achieved due to the Phase 3 VERIFY trial meeting its primary endpoint and (ii) $ 10.5 million related to the initial transaction price for development services provided by the Company during the period based on the cost-based input method.

As of June 30, 2025, the remaining $ 1.6 million in revenue related to the $ 25.0 million milestone will be recognized through the conclusion of the development services performance obligation.

The Company recorded a corresponding contract asset of $ 23.4 million on its condensed consolidated balance sheet as of June 30, 2025.

For the three months ended June 30, 2024, the Company recognized license and collaboration revenue of $ 4.2 million related to the initial Takeda Collaboration Agreement transaction price for development services provided by the Company during the period based on the cost-based input method.

For the six months ended June 30, 2024, the Company recognized license and collaboration revenue of $ 259.1 million related to the Takeda Collaboration Agreement transaction price, including (i) $ 254.1 million allocated to the rusfertide license delivered to Takeda upon effectiveness of the agreement in March 2024 and (ii) $ 5.0 million for development services provided by the Company during the period based on the cost-based input method.

The remaining unrecognized transaction price amount of $ 40.9 million related to the Takeda Collaboration Agreement was recorded as deferred revenue on the Company’s condensed consolidated balance sheet as of June 30, 2024 to be recognized over time based on a measure of the Company’s efforts toward satisfying the performance obligation relative to the total expected efforts or inputs to satisfy the performance obligation (e.g.

costs incurred compared to total budget).

For the three months ended March 31, 2025, the Company recognized $ 5.5 million of revenue that was included in the deferred revenue liability balance at the beginning of the period.

For the three months ended March 31, 2024, the Company did not recognize revenue from any amounts included in the deferred revenue contract liability balance at the beginning of the period.

For the three and six months ended June 30, 2025, the Company recognized $ 5.0 million and $ 10.5 million of revenue, respectively, that was included in the deferred revenue liability balance at the beginning of each period.

For the three months ended June 30, 2024, the Company recognized $ 4.2 million of revenue that was included in the deferred revenue liability balance at the beginning of the period.

For the six months ended June 30, 2024, the Company did no t recognize revenue from any amounts included in the deferred revenue contract liability balance at the beginning of the period.

None of the costs to obtain or fulfill the contracts were capitalized.

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The following tables present the fair value of the Company’s financial assets determined using the inputs defined above (in thousands):

March 31, 2025

June 30, 2025

Money market funds

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Cash equivalents and marketable securities consisted of the following (in thousands):

March 31, 2025

June 30, 2025

Gross Unrealized

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All of the Company’s marketable securities are classified as available-for-sale.

Current marketable securities of $ 434.7 million and $ 321.7 million held as of March 31, 2025 and December 31, 2024, respectively, had contractual maturities of less than one year .

Noncurrent marketable securities of $ 123.5 million and $ 140.3 million held as of March 31, 2025 and December 31, 2024, respectively, had contractual maturities of at least one year but no more than two years .

Current marketable securities of $ 401.9 million and $ 321.7 million held as of June 30, 2025 and December 31, 2024, respectively, had contractual maturities of less than one year .

Noncurrent marketable securities of $ 102.5 million and $ 140.3 million held as of June 30, 2025 and December 31, 2024, respectively, had contractual maturities of at least one year but no more than two years .

The Company does not intend to sell its securities that are in an unrealized loss position, and it is not more likely than not that the Company will be required to sell its securities before recovery of their amortized cost basis, which may be at maturity.

During the three months ended March 31, 2025, the Company sold $ 7.0 million of marketable securities and recognized a net realized loss of $ 5.0 thousand.

There were no realized gains or realized losses on marketable securities for the three months ended March 31, 2024.

The Company evaluated securities with unrealized losses to determine whether such losses, if any, were due to credit-related factors and determined that there were no credit-related losses to be recognized as of March 31, 2025 and December 31, 2024.

During the six months ended June 30, 2025, the Company sold $ 7.0 million of marketable securities and recognized a net realized loss of $ 5.0 thousand.

There were no realized gains or realized losses on marketable securities for the three months ended June 30, 2025 and three and six months ended June 30, 2024.

Balance Sheet Components

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Prepaid clinical and research related expenses

Prepaid insurance

Prepaid licenses

Prepaid insurance

Other prepaid expenses

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In August 2023, prior to the expiration of the Warrants, the Company entered into certain agreements with the Investors and their affiliates under which the Company agreed to allow the Warrants to be exercised in exchange for pre-funded warrants representing the same number of Warrant Shares underlying the Warrants with an exercise price of $ 0.001 per share (the “Pre-Funded Warrants”).

Subsequent to the execution of the agreements and prior to the expiration of the Warrants, all outstanding Warrants were exercised for gross proceeds of $ 34.4 million in exchange for 44,748 shares of the Company’s common stock and Pre-Funded Warrants to purchase 2,705,252 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Pre-Funded Warrants) with an exercise price of $ 0.001 per share.

Subsequent to the execution of the agreements and prior to the expiration of the Warrants in August 2023, all outstanding Warrants were exercised for gross proceeds of $ 34.4 million in exchange for 44,748 shares of the Company’s common stock and Pre-Funded Warrants to purchase 2,705,252 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Pre-Funded Warrants) with an exercise price of $ 0.001 per share.

The Pre-Funded Warrants will expire on the day they are exercised in full.

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In accordance with ASC Topic 260, “ Earnings Per Share” , outstanding Pre-Funded Warrants are included in the computation of basic net (loss) income per share because the exercise price is negligible, and they are fully vested and exercisable after the original issuance date.

No Pre-Funded Warrants were exercised during the three months ended March 31, 2025.

During the three months ended March 31, 2024, Pre-Funded Warrants to purchase 84,992 shares were net exercised, resulting in the issuance of 84,989 shares of common stock.

As of March 31, 2025, Pre-Funded Warrants to purchase 1,500,000 shares of common stock remained outstanding.

No income tax expense was recorded by the Company for the three months ended March 31, 2025.

The Company recorded income tax expense of $ 3.3 million for the three months ended March 31, 2024.

The difference in income tax expense as compared to the prior year was primarily due to taxable income for the three months ended March 31, 2024 resulting from the recognition of revenue in connection with the Takeda Collaboration Agreement.

The tax provision for the three months ended March 31, 2024 was determined using an estimated annual effective tax rate, adjusted for discrete items, if any.

No Pre-Funded Warrants were exercised during the six months ended June 30, 2025.

During the six months ended June 30, 2024, Pre-Funded Warrants to purchase 84,992 shares were net exercised, resulting in the issuance of 84,989 shares of common stock.

As of June 30, 2025, Pre-Funded Warrants to purchase 1,500,000 shares of common stock remained outstanding.

The Company recorded income tax expense of $ 0.2 million for the three and six months ended June 30, 2025, which consisted of adjustments to estimated tax payments.

The Company recorded an income tax benefit of $ 0.7 million and income tax expense of $ 2.7 million for the three and six months ended June 30, 2024, respectively.

The primary difference in income tax expense as compared to the prior year was due to taxable income for the six months ended June 30, 2024 resulting from the recognition of revenue in connection with the Takeda Collaboration Agreement.

The tax provision for the three and six months ended June 30, 2024 was determined using an estimated annual effective tax rate, adjusted for discrete items, if any.

Net (Loss) Income per Share

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Three Months Ended

Six Months Ended

Net (loss) income

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Diluted net (loss) income per share of common stock

Approximately 9.7 million potentially dilutive shares of common stock (consisting of shares subject to outstanding stock options, RSUs, PSUs, and under the ESPP) were excluded from the diluted net loss per share of common stock computation for the three months ended March 31, 2025 due to the Company’s net loss for the period.

Approximately 4.2 million potentially dilutive shares of common stock (consisting of shares subject to outstanding stock options, RSUs, PSUs, and under the ESPP, as applicable) were excluded from the diluted net income per share of common stock computation for the three months ended March 31, 2024 because their effect was anti-dilutive.

Approximately 9.5 million potentially dilutive shares of common stock (consisting of shares subject to outstanding stock options, RSUs, PSUs, and under the ESPP) were excluded from the diluted net loss per share of common stock computation for the three and six months ended June 30, 2025 due to the Company’s net losses for these periods.

Approximately 9.9 million potentially dilutive shares of common stock (consisting of shares subject to outstanding stock options, RSUs, PSUs, and under the ESPP) were excluded from the diluted net loss per share of common stock computation for the three months ended June 30, 2024 due to the Company’s net loss for the period.

Approximately 3.4 million potentially dilutive shares of common stock (consisting of shares subject to outstanding stock options, RSUs, PSUs, and under the ESPP) were excluded from the diluted net income per share of common stock computation for the six months ended June 30, 2024 because their effect was anti-dilutive.

Segment Reporting

6 unchanged sentences

Three Months Ended

Six Months Ended

Discovery department expense (1)(2)

7 unchanged sentences

Interest income

Income tax expense

Income tax (expense) benefit

Segment (loss) profit

3 unchanged sentences

(1) Amounts exclude employee wages and benefits, stock-based compensation and expense allocations.

(2) As of April 1, 2025, the information regularly provided to the CODM was changed to reclassify pre-clinical expenses from development expense to discovery expense.

Prior period segment information has been recast to reflect this change.

(3) Other segment items include foreign currency related income (expense) and other miscellaneous income (expense).

3 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements