3 unchanged sentences
(In thousands, except share and per share amounts)
−Removed: September 30,
Current assets:
9 unchanged sentences
Restricted cash
−Removed: Other long-term assets
+Added: Other long-term assets ($ 1,135 and $ 0 from a related party)
+Added: LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
7 unchanged sentences
Operating lease liabilities, noncurrent
−Removed: Other long-term liabilities ($ 9,703 and $ 9,703 to a related party)
+Added: Other long-term liabilities
Total liabilities
1 unchanged sentence
Stockholders’
−Removed: Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized as of September 30, 2021 and December 31, 2020;
−Removed: no shares issued and outstanding as of September 30, 2021 and December 31, 2020
−Removed: Common stock, $ 0.0001 par value, 400,000,000 shares authorized as of September 30, 2021 and December 31, 2020;
−Removed: 70,241,590 and 65,114,685 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.
−Removed: Shares outstanding includes 39,142 and 1,422,784 shares issued but subject to vesting as of September 30, 2021 and December 31, 2020, respectively
+Added: Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized as of March 31, 2022 and December 31, 2021;
+Added: no shares issued and outstanding as of March 31, 2022 and December 31, 2021
+Added: Common stock, $ 0.0001 par value, 400,000,000 shares authorized as of March 31, 2022 and December 31, 2021;
+Added: 71,622,313 and 70,781,736 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.
+Added: Shares outstanding includes zero and 9,946 shares issued but subject to vesting as of March 31, 2022 and December 31, 2021, respectively.
Additional paid-in capital
Accumulated deficit
−Removed: Accumulated other comprehensive (loss) income
+Added: Accumulated other comprehensive loss
Total stockholders’
5 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
−Removed: License revenue ($ 0 , $ 55,096 , $ 0 and $ 55,096 from a related party)
−Removed: Collaboration revenue ($ 7,711 , $ 7,684 , $ 23,133 and $ 7,684 from a related party)
+Added: Other collaboration revenue ($ 8,316 and $ 7,711 from a related party)
+Added: License and development service revenue ($ 7,939 from a related party)
Total revenues
1 unchanged sentence
Research and development (($ 30,299 ) and ($ 4,924 ) from a related party)
−Removed: General and administrative
+Added: General and administrative (($ 98 ) and $ 0 from a related party)
Total operating expenses
−Removed: Income (loss) from operations
+Added: Loss from operations
Non-operating income (expense):
Interest and other income, net
−Removed: Gain on deemed sale from equity method investee
−Removed: Share of loss from equity method investee
+Added: Effective interest on liability for sale of future royalties
Total non-operating income, net
−Removed: Net income (loss)
−Removed: Other comprehensive income (loss)
−Removed: Comprehensive income (loss)
−Removed: Net income (loss) per share, basic
−Removed: Weighted-average number of shares used to
−Removed: compute basic net income (loss) per share
−Removed: Net income (loss) per share, diluted
+Added: Net loss before income taxes
+Added: Income tax expense
+Added: Other comprehensive loss
+Added: Comprehensive loss
+Added: Net loss per share, basic and diluted
Weighted-average number of shares used to
−Removed: compute diluted net income (loss) per share
+Added: compute basic and diluted net loss per share
The accompanying notes are an integral part of these condensed consolidated financial statements.
6 unchanged sentences
Balance at December 31, 2020
−Removed: Issuance of common stock upon exercise of stock options
−Removed: Vesting of early exercised stock options
−Removed: Stock-based compensation
−Removed: Other comprehensive income
−Removed: Balance at March 31, 2020
−Removed: Issuance of common stock in public offering, net of $ 21,629 offering costs ( 2,200,000 shares and $ 56,738 , net of $ 3,762 offering costs, from a related party)
−Removed: Issuance of common stock upon exercise of stock options
−Removed: Vesting of early exercised stock options
−Removed: Issuance of common stock under Employee Stock Purchase Plan
−Removed: Stock-based compensation
−Removed: Other comprehensive loss
−Removed: Balance at June 30, 2020
−Removed: Issuance of common stock and rights to purchase additional shares to related party in accordance with Gilead Purchase Agreement, net of $ 1,931 offering costs
−Removed: Issuance of common stock upon exercise of stock options
−Removed: Vesting of early exercised stock options
−Removed: Stock-based compensation
−Removed: Other comprehensive loss
−Removed: Balance at September 30, 2020
−Removed: Balance at December 31, 2020
−Removed: Issuance of common stock and rights to purchase additional shares in accordance with Amended and Restated Gilead Purchase Agreement, net of $ 55 offering costs
+Added: Issuance of common stock and rights to purchase additional shares
+Added: in accordance with Amended and Restated Gilead Purchase
+Added: Agreement, net of $ 55 offering costs
Issuance of common stock upon exercise of stock options
4 unchanged sentences
Balance at March 31, 2021
+Added: Balance at December 31, 2021
Issuance of common stock upon exercise of stock options
1 unchanged sentence
Vesting of early exercised stock options
−Removed: Issuance of common stock under Employee Stock Purchase Plan
Stock-based compensation
Other comprehensive loss
−Removed: Balance at June 30, 2021
−Removed: Issuance of common stock upon exercise of stock options and vesting of restricted stock
−Removed: Vesting of early exercised stock options
−Removed: Stock-based compensation
−Removed: Other comprehensive loss
−Removed: Balance at September 30, 2021
+Added: Balance at March 31, 2022
The accompanying notes are an integral part of these condensed consolidated financial statements.
2 unchanged sentences
(In thousands)
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Three Months Ended
Cash flow from operating activities
2 unchanged sentences
Depreciation and amortization
−Removed: Amortization of right-of-use assets
+Added: Noncash lease expense
Amortization of premiums on investments
+Added: Acquired in-process research and development
+Added: Effective interest on liability for sale of future royalties
Changes in operating assets and liabilities:
1 unchanged sentence
Prepaid expenses and other current assets
−Removed: Other long-term assets
+Added: Other long-term assets (($ 1,135 ) and $ 0 to a related party)
Accounts payable
1 unchanged sentence
Other accrued liabilities
−Removed: Other current liabilities ($ 0 and $ 1,869 to a related party)
Deferred revenue (($ 16,255 ) and ($ 7,711 ) to a related party)
Operating lease liabilities
−Removed: Other long-term liabilities ($ 0 and $ 7,344 to a related party)
−Removed: Net cash used in operating activities
+Added: Other long-term liabilities
+Added: Net cash provided by (used in) operating activities
Cash flow from investing activities
3 unchanged sentences
Purchases of property and equipment
−Removed: Net cash used in investing activities
+Added: Net cash provided by (used in) investing activities
Cash flow from financing activities
Proceeds from issuance of common stock ($ 0 and $ 220,235 from a related party)
+Added: Proceeds from sale of future royalties
Proceeds from issuance of common stock pursuant to equity award plans
−Removed: Repurchase of unvested shares of stock
Net cash provided by financing activities
2 unchanged sentences
Cash, cash equivalents and restricted cash at end of period
−Removed: Supplemental disclosures:
−Removed: Cash paid for amounts included in measurement of lease liabilities
−Removed: Cash received from tenant improvement allowances
Non-cash investing and financing activities:
−Removed: Right-of-use assets obtained in exchange for new operating lease liabilities
−Removed: Recognition of tenant improvement allowance receivable included in other current assets
+Added: Unpaid acquisition of in-process research and development
Unpaid portion of property and equipment purchases included in accounts payable and accrued liabilities
−Removed: Unpaid portion of other assets included in accrued research and development
Vesting of early exercised stock options and restricted stock
−Removed: Unpaid portion of financing costs included in accrued liabilities
The accompanying notes are an integral part of these condensed consolidated financial statements.
4 unchanged sentences
(the Company) is a clinical-stage biopharmaceutical company focused on creating best-in-class cancer therapies.
−Removed: The Company’s initial focus has been on well-characterized biological pathways with significant scientific data supporting their importance.
−Removed: Since its inception in 2015, the Company has built a robust and highly efficient drug discovery capability to create highly differentiated small molecules, which the Company is developing in combination with its in-licensed monoclonal antibodies through rationally designed, indication-specific clinical trial designs.
+Added: Using its robust and highly efficient drug discovery capability, the Company has now advanced six investigational products into clinical development, with its most advanced molecule, an anti-TIGIT antibody, now in two Phase 3 registrational studies.
+Added: The Company’s deep portfolio of novel small molecules and enabling antibodies allows it to create highly differentiated combination therapies, which the Company is developing to treat multiple large tumor types including lung, colorectal, prostate and pancreatic cancers.
+Added: The Company expects its clinical-stage portfolio to continue to expand and to include molecules targeting both immuno-oncology and cancer cell-intrinsic pathways.
+Added: The Company’s vision is to create, develop and commercialize highly differentiated combination cancer therapies that have a meaningful impact on patients.
The Company currently has six investigational products in clinical development:
−Removed: domvanalimab (formerly referred to as AB154), etrumadenant (formerly referred to as AB928), quemliclustat (formerly referred to as AB680), zimberelimab (formerly referred to as AB122), AB308 and AB521.
+Added: domvanalimab (previously referred to as AB154), etrumadenant (previously referred to as AB928), quemliclustat (previously referred to as AB680), zimberelimab (previously referred to as AB122), AB308 and AB521.
+Added: In 2020, the Company entered into an Option, License and Collaboration Agreement (Gilead Collaboration Agreement) with Gilead Sciences, Inc.
+Added: (Gilead), whereby Gilead obtained an exclusive license to zimberelimab and time-limited exclusive options to all of the Company's then-current and future programs during the 10-year collaboration term.
+Added: In December 2021, Gilead obtained rights to an additional four of the Company's investigational products:
+Added: domvanalimab, etrumadenant, quemliclustat and AB308.
+Added: For each program to which Gilead exercised or exercises its option, the parties will co-develop globally and co-commercialize the program in the U.S., subject to certain exceptions, and Gilead will have the right to commercialize the program outside of the United States, subject to the rights of our existing partners in certain territories.
Liquidity and Capital Resources
−Removed: As of September 30, 2021, the Company had cash and investments of $ 743.4 m illion, which are cash, cash equivalents, and investments in marketable securities, which the Company believes will be sufficient to fund its planned operations for a period of at least twelve months following the date of filing of this report.
+Added: As of March 31, 2022, the Company had cash and investments of $ 1,342.4 m illion, which are cash, cash equivalents, and investments in marketable securities, which the Company believes will be sufficient to fund its planned operations for a period of at least twelve months following the date of filing of this report.
Significant Accounting Policies
6 unchanged sentences
In the Company’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the results of operations and cash flows for the periods presented have been included.
−Removed: Operating results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or for any future period.
+Added: Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or for any future period.
The balance sheet as of December 31, 2021 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S.
20 unchanged sentences
Reconciliation of Cash, Cash Equivalents, and Restricted Cash as Reported in Condensed Consolidated Statements of Cash Flows
−Removed: Restricted cash at September 30, 2021 and 2020 represents cash balances held as security in connection with the Company’s facility lease agreements.
+Added: Restricted cash at March 31, 2022 and 2021 represents cash balances held as security in connection with the Company’s facility lease agreements.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the condensed consolidated balance sheets to the total shown in the condensed consolidated statements of cash flows (in thousands):
−Removed: September 30,
Cash and cash equivalents
1 unchanged sentence
Cash, cash equivalents and restricted cash
−Removed: Concentration of Credit Risk
+Added: Concent ration of Credit Risk
Cash equivalents, short-term and long-term investments are financial instruments that potentially subject the Company to concentrations of credit risk.
−Removed: The Company invests in money market funds, treasury bills and notes, government bonds, commercial paper and corporate notes.
+Added: The Company invests in money market funds, treasury bills and notes, government bonds, commercial paper, corporate notes, and certificates of deposit.
The Company limits its credit risk associated with cash equivalents, short-term and long-term investments by placing them with banks and institutions it believes are credit worthy and in highly rated investments.
2 unchanged sentences
The Company determines whether an arrangement is or contains a lease at contract inception.
−Removed: Operating leases and related tenant improvement allowances receivable are included in operating lease right-of-use assets, prepaid expenses and other current assets, and operating lease liabilities, noncurrent in our condensed consolidated balance sheets at September 30, 2021 and December 31, 2020.
+Added: Operating leases and related tenant improvement allowances receivable are included in operating lease right-of-use assets, prepaid expenses and other current assets, and operating lease liabilities, noncurrent in our condensed consolidated balance sheets at March 31, 2022 and December 31, 2021.
Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.
5 unchanged sentences
For short-term leases, lease payments are recognized as operating expenses on a straight-line basis over the lease term.
+Added: The following table summarizes supplemental cashflow disclosures related to the Company's operating leases (in thousands):
+Added: Year Ended March 31,
+Added: Cash paid for amounts included in measurement of lease liabilities
Fair Value Measurements
1 unchanged sentence
The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value and expands disclosures regarding fair value measurements.
−Removed: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market
−Removed: participants at the reporting date.
+Added: Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.
The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value.
3 unchanged sentences
The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period.
−Removed: There were no transfers within the hierarchy as of September 30, 2021 and December 31, 2020.
−Removed: The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
−Removed: September 30, 2021
+Added: There were no transfers within the hierarchy as of March 31, 2022 or December 31, 2021.
+Added: The following tables set forth the Company’s financial instruments (excluding restricted cash) that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
+Added: March 31, 2022
(Quoted Prices in
8 unchanged sentences
Corporate securities and commercial paper
+Added: Certificates of deposit
Total assets measured at fair value
9 unchanged sentences
treasury securities
−Removed: government agency obligations
Corporate securities and commercial paper
1 unchanged sentence
Classified as (with contractual maturities):
−Removed: September 30, 2021
+Added: March 31, 2022
December 31, 2021
3 unchanged sentences
Total cash, cash equivalents and investments in marketable securities
−Removed: Investments in marketable securities are classified as available-for-sale.
−Removed: At September 30, 2021 and December 31, 2020, the balance in the Company’s accumulated other comprehensive income related to the Company’s available-for-sale marketable securities.
−Removed: There were no realized gains or losses recognized on the sale or maturity of available-for-sale marketable securities as of September 30, 2021 and December 31, 2020, and as a result, the Company did no t reclassify any amounts out of accumulated other comprehensive income for the periods then ended.
+Added: All the Company's investments in marketable securities are classified as available-for-sale.
+Added: At March 31, 2022 and December 31, 2021, the balance in the Company’s accumulated other comprehensive income (loss) related to the Company’s available-for-sale marketable securities.
+Added: There were no realized gains or losses recognized on the sale or maturity of available-for-sale marketable securities as of March 31, 2022 and December 31, 2021, and as a result, the Company did no t reclassify any amounts out of accumulated other comprehensive income for the periods then ended.
The Company has not recognized any allowances for credit losses given the nature of its receivables and investment portfolio and the immaterial amount of unrealized losses on available for sale securities.
No credit related losses have been recognized for any of the periods presented.
−Removed: The fair value and amortized cost of investments in marketable securities by major security type as of September 30, 2021 and December 31, 2020 are presented in the tables that follow (in thousands):
−Removed: As of September 30, 2021:
+Added: The fair value and amortized cost of investments in marketable securities by major security type as of March 31, 2022 and December 31, 2021 are presented in the tables that follow (in thousands):
+Added: As of March 31, 2022:
Money market funds
1 unchanged sentence
Corporate securities and commercial paper
+Added: Certificates of deposit
As of December 31, 2021:
1 unchanged sentence
treasury securities
−Removed: government agency obligations
Corporate securities and commercial paper
+Added: As of March 31, 2022, the fair value of the liability for sale of future royalties recorded on the balance sheet in other long-term liabilities is based on the Company's current estimates of future contingent milestones and royalties expected to be paid to BVF Partners L.P.
+Added: (BVF) over the term of the parties' funding agreement (the BVF Agreement).
+Added: These estimates are considered Level 3 fair value inputs.
+Added: See Note 5 for further discussion of the liability and related estimates .
Other Accrued Liabilities
−Removed: Other a ccrued liabilities consisted of the following (in thousands):
−Removed: As of September 30, 2021
+Added: Other accrued liabilities consisted of the following (in thousands):
+Added: As of March 31, 2022
As of December 31, 2021
1 unchanged sentence
Professional fees
−Removed: Equity Investment in PACT Pharma
−Removed: The Company owns approximately 3.6 million shares of common stock, 1.0 million shares of Series A preferred stock, and warrants to purchase additional stock of PACT Pharma, Inc.
−Removed: (PACT Pharma), a privately-held clinical-stage biopharmaceutical company focused on pioneering individualized, non-viral precision genome engineered, tumor-specific T cell therapies for the treatment of patients with solid tumors.
−Removed: This interest in PACT Pharma is accounted for as an equity method investment, and as a result the Company records its share of PACT Pharma’s operating results in interest and other income, net, in its condensed consolidated statements of operations and comprehensive loss.
−Removed: The investment balance was zero at September 30, 2021 and December 31, 2020 and the Company is not required to record losses beyond the carrying amount of the investment as it has no obligation to provide further cash financing to PACT Pharma.
−Removed: The investment had an immaterial impact on the condensed consolidated statements of operations and comprehensive loss, as well as the statement of cash flows, for each of the three and nine months ended September 30, 2021 and 2020.
−Removed: At September 30, 2021 and December 31, 2020, the Company determined the fair value of the warrants to be insignificant to the condensed consolidated financial statements.
−Removed: In April 2021, the Company amended the non-cancelable operating lease for its corporate headquarters, which includes approximately 136,293 square feet of executive offices and research and development and business operations, in an office park in Hayward, California.
−Removed: The amended lease added 14,460 square feet of additional space in a new lease expected to commence in 2022 , and extended the term of the existing leases through at least December 31, 2031 .
−Removed: Once the lease of additional space commences, the
−Removed: Company’s leased space in Hayward will total 150,753 square feet.
−Removed: Any extension periods defined under previous amendments were cancelled under the lease amendment and replaced by two options to extend the lease term for the entire 150,753 square feet then under lease in the Hayward premises for a period of eight years each.
−Removed: The Company also leases space in Brisbane, California under a non-cancelable operating lease that is expected to commence in the fourth quarter of 2021 and extend through December 31, 2031 .
−Removed: At September 30, 2021 the Company’s lease portfolio had a weighted average remaining term of 10.3 years.
−Removed: T he leases require monthly lease payments that are subject to annual increases throughout the lease term.
−Removed: The optional extension periods have not been considered in the determination of the right-of-use assets or lease liabilities associated with this lease as the Company did not consider it reasonably certain it would exercise the option.
−Removed: The weighted average discount rate for the Company’s lease portfolio at September 30, 2021 was 5.2 % .
−Removed: Lease expense is included in operating expenses in the condensed consolidated statements o f operations and comprehensive loss.
−Removed: For the three and nine months ended September 30, 2021, the Company incurred lease expense of $ 1.5 million and $ 4.1 million, respectively, in relation to its operating leases.
−Removed: For the same periods in the prior year, the Company incurred lease expense of $ 0.7 million and $ 1.8 million, respectively.
−Removed: Lease costs include variable rent expense, which consists primarily of the Company’s proportionate share of operating expenses, property taxes, and insurance and is classified as lease expense due to the Company’s election to not separate lease and non-lease components.
−Removed: Short-term lease costs were zero and $ 0.3 mil lion for the three and nine months ended September 30, 2021, respectively.
−Removed: The Company incurred zero and $ 0.1 million in short-term lease costs for the same periods in the prior year.
−Removed: At September 30, 2021, the Company’s operating lease right-of-use asset totaled $ 35.6 million, and the operating lease liability totaled $ 51.7 million.
−Removed: The difference between the amount of the right-of-use asset and the lease liabilities relates to the incentives the Company received upon signing the original leases and its most recent amendment, of which approximately $ 10.8 million is expected to be received within one year of September 30, 2021 and is recorded in prepaid expenses and other current assets, net of the $ 2.8 million short-term portion of the operating lease liability.
−Removed: The long term portion of the lease liability was $ 48.9 million at September 30, 2021 and is reported on the balance sheet as operating lease liability, noncurrent.
−Removed: As of September 30, 2021, the Company’s future minimum lease payments were as follows (in thousands):
−Removed: Year Ending December 31,
−Removed: 2021 (from October to December)
−Removed: Total undiscounted future minimum lease payments
−Removed: Imputed interest
−Removed: Tenant improvement allowance receivable
−Removed: Total operating lease liabilities
−Removed: Tenant improvement allowance expected to be received in
−Removed: less than one year, net of current portion of lease liability
−Removed: (included in prepaid expenses and other current assets)
−Removed: Operating lease liabilities, noncurrent
−Removed: Total undiscounted future minimum lease payments do not include approxi mately $ 90.3 million and $ 5.3 million, respectively, related to the Company’s Brisbane lease and its additional space in Hayward, neither of which have yet commenced.
−Removed: The Brisbane lease is expected to commence during the fourth quarter of 2021 and the additional Hayward lease is expected to commence in 2022 , both with terms through at least December 31, 2031 .
−Removed: The Company has provided deposits for letters of credit totaling $ 3.0 million to secure its obligations under its leases, which have been classified as restricted cash on the Company’s condensed consolidated balance sheet as of September 30, 2021.
+Added: Income taxes payable
+Added: Liability for Sale of Future Royalties
+Added: In October 2021, the Company and BVF entered into the BVF Agreement, under which BVF will fund the discovery and development of compounds for the treatment of inflammatory diseases (the Program) by providing the Company with $ 15 million in three non-refundable payments.
+Added: Consistent with the terms of the Gilead Collaboration Agreement, Gilead has an option to the Program.
+Added: The Company received $ 5 million from BVF in the fourth quarter of 2021 and an additional $ 5 million in the first quarter of 2022.
+Added: The Company expects to receive the third $ 5 million payment in 2022.
+Added: In return, the Company is obligated to perform research and development activities in the Program, to make contingent payments upon the achievement of certain clinical and regulatory milestones of up to $ 72.5 million or $ 160.0 million depending on whether the program is solely developed by Arcus or as part of the collaboration with Gilead.
+Added: The Company also must pay mid- to high-single digit royalties based on net sales of products generated by the Program.
+Added: The agreement also provides BVF with the option to provide an additional $ 10 million in funding for the Program in exchange for an increase in the royalty rate.
+Added: The Company accounts for the BVF Agreement as a liability primarily because it has significant continuing involvement in generating the cash flows due to BVF.
+Added: If the Program achieves certain development and regulatory milestones and commercial sales, the Company will recognize the portion of milestone payments and royalties paid to BVF as a decrease to the accumulated liability with a corresponding reduction in cash.
+Added: The carrying amount of the liability for sale of future royalties is based on management's estimate of the future contingent milestones and royalties to be paid to BVF over the life of the arrangement as discounted using an imputed rate of interest.
+Added: The excess of future estimated contingent milestone and royalty payments over the $ 15 million of allocated proceeds is recognized as non-cash interest expense using the effective interest method, which is reported in the condensed consolidated statements of operations as non-operating expense.
+Added: The balance associated with the liability was $ 10.7 million at March 31, 2022 and is reported on the consolidated balance sheets in other long-term liabilities.
+Added: The imputed effective rate of interest on the unamortized portion of the liability was approximately 20.6 % as of March 31, 2022.
+Added: The Company periodically reassess the amount and timing of expected payments.
+Added: To the extent such payments are greater or less than the Company's initial estimates or the timing of such payments is materially different than those estimates, the Company will adjust the liability and the effective interest rate using a retrospective method, catch-up method, or prospective method, subject to an accounting policy election applied on a consistent basis.
+Added: As of March 31, 2022, there have been no changes to the estimated effective interest rate.
+Added: There are a number of factors that could materially affect the amount and timing of contingent milestone and royalty payments, most of which are not within the Company's control.
+Added: The liability is recognized using significant unobservable inputs.
+Added: These inputs are derived using internal management estimates, based in part on external data when available, and reflect management’s judgements and forecasts.
+Added: The significant unobservable inputs include the forecasted revenues, the probability and timing of clinical and regulatory milestones, the expected term of the royalty stream, and the royalty rate as well as the overall probability of success.
+Added: These estimates are considered Level 3 fair value inputs.
+Added: A significant change in unobservable inputs could result in a material increase or decrease to the effective interest rate of the liability.
+Added: Changes to the liability for sale of future royalties were as follows for the three months ended March 31, 2022 (in thousands):
+Added: Beginning balance, January 1
+Added: Cash received from BVF
+Added: Interest accretion
+Added: Ending balance, March 31
+Added: The Company incurred $ 0.4 million in non-cash interest expense for the three months ended March 31, 2022.
License and Collaboration Agreements
−Removed: The following table summarizes the revenues for the three and nine months ended September 30, 2021 and 2020 received as a result of the Company’s collaboration agreements with Gilead Sciences, Inc.
−Removed: (Gilead) and Taiho Pharmaceutical Co., Ltd.
−Removed: Three Months Ended September 30,
−Removed: Nine Months Ended September 30,
−Removed: License revenue
−Removed: Collaboration revenue
−Removed: Total revenues
−Removed: The following table summarizes details of revenues for the three and nine months ended September 30, 2021 and 2020 by collaboration and by category of revenue:
−Removed: Three Months Ended September 30,
−Removed: Nine Months Ended September 30,
+Added: The following table summarizes the revenues recognized from the Company’s collaboration agreements with Gilead and Taiho Pharmaceutical Co., Ltd.
+Added: (Taiho) (in thousands):
+Added: Three Months Ended March 31,
+Added: Other collaboration revenue
+Added: License and development services revenue
+Added: Total collaboration and license revenues
+Added: The following table summarizes revenues by collaboration, category of revenue, and the method of recognition (in thousands):
+Added: Three Months Ended March 31,
Revenues recognized:
Point in time
−Removed: Gilead license to zimberelimab
Gilead access rights related to the
Company's research and development pipeline
−Removed: Taiho collaboration agreement
−Removed: Total revenues
+Added: License and development services for all Gilead programs
+Added: Taiho access rights
+Added: Total collaboration and license revenues
The Company recognized the following revenue as a result of changes in the deferred revenue balance during the period below (in thousands):
−Removed: Three Months Ended September 30,
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Revenue recognized in the period from:
Amounts included in deferred revenue at the beginning of the period
−Removed: Performance obligations satisfied in previous period
+Added: Performance obligations satisfied in a previous period
Gilead Sciences, Inc.
−Removed: On May 27, 2020, the Company entered into an Option, License and Collaboration Agreement (Gilead Collaboration Agreement), Common Stock Purchase Agreement (the Stock Purchase Agreement), and Investor Rights Agreement, (collectively, the Gilead Agreements), each with Gilead Sciences, Inc.
−Removed: The transaction closed on July 13, 2020 following expiration of the antitrust waiting period.
−Removed: Upon closing, Gilead made an upfront payment of $ 175 million pursuant to the Gilead Collaboration Agreement, and made an equity investment of approximately $ 200 million in the Company by purchasing 5,963,029 shares of Arcus common stock at a per share price of $ 33.54 pursuant to the Stock Purchase Agreement.
−Removed: Pursuant to the Investor Rights Agreement, the Company appointed two Gilead designees to the Company’s Board of Directors.
−Removed: See Note 12 for further discussion of the agreements with Gilead.
−Removed: Pursuant to the terms of the Gilead Collaboration Agreement, Gilead has an exclusive license to develop and commercialize zimberelimab in certain markets and obtained exclusive options to acquire an exclusive license to develop and commercialize all of the Company’s current and future clinical programs during the 10-year collaboration term, contingent upon Gilead’s access rights payments of up to $ 400 million and, for those programs that enter clinical development prior to the end of the collaboration term, for up to an additional three years thereafter.
−Removed: Gilead's option, on a program-by-program basis, will expire after a proscribed period, following the achievement of a development milestone in such program and the Company's delivery to Gilead of the requisite data package.
−Removed: If Gilead exercises its option in a timely manner, after obtaining any applicable anti-trust approvals, Gilead shall pay the Company an option fee that ranges from $ 200 million to $ 275 million per program for the Company’s clinical programs in existence at the date of the agreement, and $ 150 million per program for all other programs that enter clinical development thereafter should Gilead elect to exercise its options.
−Removed: Gilead may exercise its option to any program at any time prior to expiration of the option.
−Removed: The Company may incur consulting fees to a third party if Gilead exercises its option to certain programs on or before December 31, 2022, ranging from $ 2.0 million to $ 4.5 million for those programs.
−Removed: Upon closing of Gilead’s exercise of its option to a program, the two companies will co-develop and equally share global development costs for the joint development program, subject to certain opt-out rights of the Company, and expense caps on the Company’s spending and related subsequent adjustments.
−Removed: For each optioned program, provided the Company has not exercised its opt-out rights, the Company has an option to co-promote in the United States with equal sharing of related profits and losses.
−Removed: Gilead has the right to exclusively commercialize any optioned programs outside of the U.S., subject to the rights of the Company’s existing partners to any territories, and Gilead will pay to the Company tiered royalties as a percentage of revenues ranging from the high teens to the low twenties.
−Removed: Pursuant to the Stock Purchase Agreement and the Investor Rights Agreement, Gilead has the right, at its option, to purchase additional shares from the Company, up to a maximum of 35 % of the Company’s then-outstanding voting common stock, from time to time over a five-year period from closing of the initial transaction, at a purchase price equal to the greater of a 20 % premium to market (based on a trailing five-day average closing price) at the time Gilead exercises such option, and the $ 33.54 initial purchase price.
−Removed: Based on the value of the Company’s common stock at the contract closing, the right to purchase additional shares had no value.
−Removed: In January 2021, the Company and Gilead entered into an Amended and Restated Common Stock Purchase Agreement, which amended and restated in its entirety the Common Stock Purchase Agreement, pursuant to which Gilead purchased 5,650,000 shares of the Company’s common stock at a purchase price of $ 39.00 per share for total gross proceeds of $ 220.4 million.
−Removed: All other terms of the original Stock Purchase Agreement remain unchanged.
+Added: In May 2020, the Company entered into the Gilead Collaboration Agreement, Common Stock Purchase Agreement (the Stock Purchase Agreement), and Investor Rights Agreement, (collectively, the Gilead Agreements), each with Gilead.
+Added: Upon closing in July 2020, Gilead made an upfront payment of $ 175 million pursuant to the Gilead Collaboration Agreement and made an equity investment of approximately $ 200 million in the Company by purchasing 5,963,029 shares of Arcus common stock at a per share price of $ 33.54 pursuant to the Stock Purchase Agreement.
+Added: In November 2021, the Company and Gilead entered into an amendment to the Gilead Collaboration Agreement (the Amended Gilead Collaboration Agreement), under which Gilead exercised its options to three programs for a total option payment of $ 725 million that was received in January 2022.
+Added: In connection with Gilead’s exercise of its options to the three programs, the parties agreed to (i) slightly reduce the royalties for these programs, such that Gilead will pay the Company tiered royalties as a percentage of revenues ranging from the mid-teens to the low twenties and (ii) remove the $ 100 million option continuation payment that was otherwise due on the second anniversary of the Gilead Collaboration Agreement.
+Added: As of March 31, 2022, Gilead had obtained licenses to the following investigational products:
+Added: zimberelimab (in 2020), domvanalimab, AB308, etrumadenant, and quemliclustat (the latter four in 2021).
+Added: Pursuant to the terms of the Gilead Collaboration Agreement, as amended, Gilead obtained exclusive licenses to zimberelimab, domvanalimab, AB308, etrumadenant, and quemliclustat, and time-limited exclusive options to all of the Company’s current and future clinical programs during the 10 -year collaboration term and, for those programs that enter clinical development prior to the end of the collaboration term, for up to an additional three years thereafter.
+Added: Gilead's option rights to future programs are contingent upon Gilead’s payments of up to $ 300 million in option continuation payments, consisting of a $ 100 million payment due at Gilead's option on each of the fourth, sixth, and eighth anniversaries of the agreement.
+Added: Gilead's option, on a program-by-program basis, will expire after a prescribed period, following the achievement of a clinical development milestone in such program and the Company's delivery to Gilead of the requisite data package.
+Added: Gilead may exercise its option to any program at any time prior to expiration of the option, and will pay the Company an option fee of $ 150 million per program.
+Added: Gilead has exercised its option to all of the clinical programs in existence at the date of the 2020 agreement, and the Company may not exercise its opt-out rights for any of these programs.
+Added: With respect to domvanalimab, the Company is also eligible to receive up to $ 500 million in potential U.S.
+Added: regulatory approval milestones.
+Added: Gilead was also granted option rights to two research programs for which the Company will lead discovery and early development activities.
+Added: With respect to these two research programs, Gilead has the right to exercise its option, on a program-by-program basis, either (i) upon the Company's completion of certain IND-enabling activities for an option payment of $ 60 million or (ii) following the achievement of a clinical development milestone for an option payment of $ 150 million.
+Added: These research programs were not determined to be performance obligations at contract inception, due to the very early stages of the programs and the amounts of the option payments.
+Added: The Company’s assessment of the transaction price upon the signing of the Amended Gilead Collaboration Agreement included an analysis of amounts it expected to receive, which at contract inception consisted of the upfront cash payment of $ 725 million committed upon contract closing following expiration of the antitrust waiting period in December 2021, as well as amounts totaling $ 165.1 million deferred from the original Gilead transaction, which excludes the $ 100 million option continuation payment that would otherwise have been due on the second anniversary of the Gilead Collaboration Agreement.
+Added: The Company considers the entire $ 890.1 million to be the allocable transaction price as of the amendment closing date, due to the Company's history of timely payments from Gilead and receipt of the full $ 725 million in January 2022 per the terms of the amendment.
+Added: The Company determined that the Amended Gilead Collaboration Agreement represented a contract modification under the application of ASC 606.
+Added: At the amendment closing date, the Company allocated the transaction price to the new and remaining performance obligations identified as follows:
+Added: Allocation of transaction price
+Added: Deferred revenues as of 12/21/2021
+Added: Option payment for Domvanalimab
+Added: Option payment for Etrumadenant
+Added: Option payment for Quemliclustat
+Added: Total transaction price allocated to performance obligations
+Added: Allocation to performance obligations
+Added: Domvanalimab license
+Added: Etrumadenant license and R&D activities
+Added: Quemliclustat license and R&D activities
+Added: Domvanalimab R&D activities
+Added: Zimberelimab R&D and commercial services
+Added: Access rights related to the Company's research
+Added: and development pipeline
+Added: Material rights to option continuation periods
+Added: Upon closing of Gilead’s exercise of its option to a program, the two companies will co-develop and equally share global development costs for the joint development program, subject to opt-out rights of the Company applicable to certain programs, and expense caps on the Company’s spending and related subsequent adjustments.
+Added: For each optioned program, provided the Company has not exercised its opt-out rights (if applicable), the Company has an option to co-promote in the United States with equal sharing of related profits and losses.
+Added: Gilead has the right to exclusively commercialize any optioned programs outside of the U.S., subject to the rights of the Company’s existing partners to any territories, and Gilead will pay to the Company tiered royalties as a percentage of revenues ranging from (i) the mid-teens to the low twenties for the three 2021 optioned programs, (ii) high single digits to low double digits for research programs if Gilead exercises its option rights at the IND stage, and (iii) the high teens to the low twenties for all other programs.
+Added: The Company had $ 542.9 million and $ 559.2 million of deferred revenue remaining on its consolidated balance sheets related to this performance obligation at March 31, 2022 and December 31, 2021, respectively, allocated between current and noncurrent based on the expected timing of future recognition.
+Added: Stock Purchase Agreement and Investor Rights Agreement
+Added: Pursuant to the Stock Purchase Agreement, Gilead has the right, at its option, to purchase additional shares from the Company, up to a maximum of 35 % of the Company’s then-outstanding voting common stock, from time to time over five years from closing of the initial transaction, at a purchase price equal to the greater of a 20 % premium to market (based on a trailing five-day average closing price) at the time Gilead exercises such option, and the $ 33.54 initial purchase price.
The Investor Rights Agreement also includes a three-year standstill and a two-year lockup and provides Gilead with registration rights commencing at the end of the lockup period, pro rata participation rights in certain future financings and the right to designate two individuals to be appointed to the Company’s Board of Directors.
−Removed: The Company’s assessment of the transaction price included an analysis of amounts it expected to receive, which at contract inception consisted of the upfront cash payment of $ 175.0 million due upon contract closing in July 2020, the $ 100.0 million payment related to the research and development access rights due in 2022, and the $ 90.6 million premium resulting from Gilead’s purchase of common stock.
−Removed: All payments to date have been made by Gilead as they became due and payable.
−Removed: Given this successful collection history, the Company considers the entire $ 365.6 million outlined above to be the initial transaction price.
−Removed: The Company evaluated the Gilead Agreements under ASC 606 and determined that the performance obligations at the contract inception consisted of the following:
+Added: In the year ended December 31, 2020, Gilead made an equity investment of approximately $ 200 million in the Company by purchasing 5,963,029 shares of the Company's common stock at a per share price of $ 33.54 pursuant to the Stock Purchase Agreement.
+Added: Of the $ 200 million equity investment, approximately $ 90.6 million was determined to be a premium on the purchase of common stock and allocated to the performance obligations created by the Gilead Collaboration Agreement.
+Added: Gilead made an additional equity investment in the Company of approximately $ 56.7 million, net of offering costs, by purchasing 2,200,000 shares of its common stock at a per share price of $ 27.50 in the May 2020 public offering.
+Added: In January 2021, the Company and Gilead entered into an Amended and Restated Common Stock Purchase Agreement, which amended and restated in its entirety the Common Stock Purchase Agreement, pursuant to which Gilead purchased from the Company 5,650,000 shares of its common stock at a purchase price of $ 39.00 per share, for a total of $ 220.3 million, net of offering costs.
+Added: All other terms of the original Common Stock Purchase Agreement, including Gilead's option to purchase additional shares from the Company, up to a maximum ownership of 35 % of its then-outstanding common stock, remain unchanged.
+Added: Pursuant to the Investor Rights Agreement, the Company appointed Gilead's two designees to the Company’s Board of Directors.
+Added: Based on the value of the Company’s common stock at the contract closing, the right to purchase additional shares had no value.
+Added: See Note 11 for further discussion of the agreements with Gilead.
+Added: The Company evaluated the agreements with Gilead under ASC 808 and ASC 606 and determined that the licenses to zimberelimab and domvanalimab, and access rights related to the Company's research and development pipeline, were within the scope of ASC 606 because Gilead meets the definition of a customer with respect to those performance obligations.
+Added: The Company accounted for each performance obligation as follows:
Zimberelimab license
−Removed: Effective on closing, Gilead obtained an exclusive license to zimberelimab.
+Added: Effective on the July 2020 closing of the Gilead Collaboration Agreement, Gilead obtained an exclusive license to zimberelimab.
The standalone selling price of this license was determined using a discounted cash flow method.
−Removed: The Company recognized the full revenues associated with this performance obligation on the date the transaction closed.
−Removed: Etrumadenant option
−Removed: Gilead has the right to exercise an option for exclusive rights to etrumadenant, the Company’s adenosine receptor program, in exchange for an option payment of $ 250.0 million, that expires after a proscribed period following the Company’s achievement of certain development milestones.
−Removed: The Company calculated the standalone selling price of this program using a discounted cash flow method and concluded that it exceeded the price of the option, creating a material right and a distinct performance obligation.
−Removed: If the option is exercised, the performance obligations associated with the option will be identified and the Company will determine the accounting for the option’s transaction price.
−Removed: If the exercise occurs on or before December 31, 2022, the Company will also incur $ 4.5 million in consulting fees to a third party.
−Removed: If the option is allowed to lapse, the Company will recognize any deferred revenue allocated to the option at the time of the lapse.
−Removed: At September 30, 2021, the Company had $ 127.0 million of deferred revenue on its condensed consolidated balance sheets related to this performance obligation.
−Removed: The Company has evaluated the program’s status as of the balance sheet date and believes that some or all of the revenue associated with the opt-in will be recognized within the minimum four-year term of the Gilead Collaboration Agreement.
−Removed: Domvanalimab option
−Removed: Gilead has the right to exercise an option for exclusive rights to domvanalimab, the Company’s anti-TIGIT monoclonal antibody, in exchange for an option payment of $ 275.0 million, that expires after a proscribed period following the Company’s achievement of certain development milestones.
−Removed: In addition to the option payment, the Company has the right to receive clinical and regulatory milestones totaling up to $ 500 million.
−Removed: The Company calculated the standalone selling price of this program using a discounted cash flow method and concluded that it exceeded the price of the option, creating a material right and a distinct performance obligation.
−Removed: If the option is exercised, the performance obligations associated with the option will be identified and the Company will determine the accounting for the option’s transaction price.
−Removed: If the exercise occurs on or before December 31, 2022, the Company will also incur $ 4.5 million in consulting fees to a third party.
−Removed: If the option is allowed to lapse, the Company will recognize any deferred revenue allocated to the option at the time of the lapse.
−Removed: At September 30, 2021, the Company had $ 36.7 million of deferred revenue on its condensed consolidated balance sheets related to this performance obligation.
−Removed: The Company has evaluated the program’s status and believes that revenue associated with the opt-in will be recognized within one year .
−Removed: As of September 30, 2021, Gilead's option rights remained outstanding and no clinical or regulatory milestones had been achieved under this agreement.
−Removed: Access rights related to the Company’s research and development pipeline
−Removed: Gilead receives exclusive access to the Company’s current programs as well as the future programs for a period of ten years , contingent upon Gilead’s payment of $ 400 million, with the first payment of $ 100 million in 2022 , and an additional $ 100 million payment due at Gilead’s option on each of the fourth, sixth, and eighth anniversaries of the agreement.
+Added: The Company recognized the full amount associated with this distinct performance obligation in license revenue on the date the transaction closed.
+Added: Domvanalimab option and license
+Added: Gilead obtained the right in the Gilead Collaboration Agreement to exercise an option for exclusive rights to the Company’s anti-TIGIT monoclonal antibody program, including domvanalimab and AB308, in exchange for an option payment of $ 275 million.
+Added: Prior to the closing of the Amended Gilead Collaboration Agreement, the Company had $ 36.7 million of deferred revenue on its consolidated balance sheets related to this performance obligation.
+Added: Effective on the December 2021 closing of the Amended Gilead Collaboration Agreement, Gilead obtained an exclusive license to domvanalimab.
+Added: The standalone selling price of this license was determined using a discounted cash flow method.
+Added: The Company further evaluated the delivery of the license, noting that the program was in later stages of development and it met the criteria for being distinct from the research and development services required under the Gilead Collaboration Agreement (as amended).
+Added: As the license had been made available in the fourth quarter of 2021, the Company recognized the full $ 328.8 million of transaction price allocated to this performance obligation as license revenue in December 2021.
+Added: Etrumadenant option, license and R&D activities
+Added: Gilead obtained the right in the Gilead Collaboration Agreement to exercise an option for exclusive rights to the Company’s adenosine receptor program, etrumadenant, in exchange for an option payment of $ 250 million.
+Added: Prior to the closing of the Amended Gilead Collaboration Agreement, the Company had $ 127.0 million of deferred revenue on its consolidated balance sheets related to this performance obligation.
+Added: Effective on the December 2021 closing of the Amended Gilead Collaboration Agreement, Gilead obtained an exclusive license to etrumadenant.
+Added: The standalone selling price of this license was determined using a discounted cash flow method.
+Added: The Company further evaluated the delivery of the license, noting that it was combined with the research and development services required under the agreements due to the early stage of the technology and the specialized nature of the Company's know-how.
+Added: The Company determined that it retains obligations to perform further development services for Gilead related to etrumadenant.
+Added: The standalone selling price of this obligation was determined using an expected cost-plus margin approach.
+Added: The Company will recognize the amounts allocated to the combined license and services as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated full-time employee expense for the program.
+Added: Due to the combined nature of the performance obligation, the Company determined that the revenue from the license would be recognized at the same rate and using the same input-driven methodology as the revenue from the research and development services.
+Added: The Company determined that its performance of the R&D activities commenced January 1, 2022 and accordingly the Company recognized $ 5.0 million in license and development services revenue associated with these obligations for the three months ended March 31, 2022.
+Added: At March 31, 2022, the Company had $ 213.8 million of deferred revenue remaining on its consolidated balance sheets related to this performance obligation, allocated between current and noncurrent based on the expected timing of future recognition.
+Added: Quemliclustat option, license and R&D activities
+Added: Gilead obtained the right in the Gilead Collaboration Agreement to exercise an option for exclusive rights to the Company's CD73 program, quemliclustat, in exchange for an option payment of $ 200 million.
+Added: Prior to the closing of the Amended Gilead Collaboration Agreement, the Company had no deferred revenue on its consolidated balance sheets related to this performance obligation.
+Added: The Company determined that it retains obligations to perform further development services for Gilead related to quemliclustat.
+Added: The standalone selling price of this obligation was determined using an expected cost-plus margin approach.
+Added: The Company will recognize the amounts allocated to these services as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated full-time employee expense for the program.
+Added: Effective on the December 2021 closing of the Amended Gilead Collaboration Agreement, Gilead obtained an exclusive license to quemliclustat.
+Added: The standalone selling price of this license was determined using a discounted cash flow method.
+Added: The Company further evaluated the delivery of the license, noting that it was combined with the research and development services required under the agreements due to the expertise and the know-how developed by the Company.
+Added: Due to the combined nature of the performance obligation, the Company determined that the revenue from the license would be recognized at the same rate and using the same input-driven methodology as the revenue from the research and development services.
+Added: The Company determined that its performance of the R&D activities commenced January 1, 2022 and accordingly the Company recognized $ 1.8 million in license and development services revenue associated with these obligations for the three months ended March 31, 2022.
+Added: At March 31, 2022, the Company had $ 173.8 million of deferred revenue remaining on its consolidated balance sheets related to this performance obligation, allocated between current and noncurrent based on the expected timing of future recognition.
+Added: R&D activities for domvanalimab
+Added: The Company determined that it retains separate obligations to perform further development services for Gilead related to domvanalimab.
+Added: The standalone selling price of this obligation was determined using an expected cost-plus margin approach.
+Added: The Company will recognize the amounts allocated to these services as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated full-time employee expense for the program.
+Added: The Company determined that its performance of the R&D activities commenced as of January 1, 2022 and accordingly the Company recognized $ 0.9 million in license and development services revenue associated with these obligations in the three months ended March 31, 2022.
+Added: At March 31, 2022, the Company had $ 33.6 million of deferred revenue remaining on its consolidated balance sheets related to this performance obligation, allocated between current and noncurrent based on the expected timing of future recognition.
+Added: R&D and commercialization activities for zimberelimab monotherapy
+Added: The Company determined that it retains an obligation to perform further development and commercialization services for Gilead related to zimberelimab monotherapy.
+Added: Prior to the closing of the Amended Gilead Collaboration Agreement, the Company had $ 9.7 million deferred revenue on its consolidated balance sheets, related to the two performance obligations.
+Added: The standalone selling price of this obligation was determined using an expected cost-plus margin approach.
+Added: The Company will recognize the amounts allocated to these services as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated full-time employee expense for the program.
+Added: The Company determined that its performance of the R&D activities had commenced in 2021 and accordingly the Company recognized $ 0.3 million in license and development services revenue associated with these obligations in the three months ended March 31, 2022.
+Added: At March 31, 2022, the Company had $ 9.8 million of deferred revenue remaining on its consolidated balance sheets related to this performance obligation, allocated between current and noncurrent based on the expected timing of future recognition.
+Added: Access rights related to the Company’s research and development pipeline and material rights to option continuation periods
+Added: Gilead receives exclusive access to the Company’s current programs as well as the future programs for a period of ten years , contingent upon Gilead’s payment of $ 300 million, consisting of three $ 100 million option continuation payments due at Gilead’s option on each of the fourth, sixth, and eighth anniversaries of the agreement.
The standalone selling price of this ongoing research and development pipeline access was determined using an expected cost-plus margin approach.
−Removed: The Company evaluated its rights and obligations in the Gilead Collaboration Agreement and determined that Gilead is contractually obligated to make the $ 100 million payment due in 2022 resulting in a minimum term of four years for this performance obligation.
−Removed: As a result, the amount was included in the transaction price.
The Company uses a time-elapsed input method to measure progress toward satisfying this obligation, which is the method the Company believes most faithfully depicts the Company’s performance in transferring the promised services during the time period in which Gilead has access to the Company’s research and development pipeline.
Accordingly, the revenue allocated to the performance obligation is being recognized using this input method over the minimum four-year period.
−Removed: The Company further determined that Gilead is not obligated to pay the remaining $ 300 million due over the remainder of the term.
−Removed: Failure to pay the non-obligatory payments will result in Gilead’s loss of certain rights to access and obtain licenses to the programs arising from the Company’s research and development pipeline.
−Removed: At September 30, 2021, the Company had $ 98.6 million of deferred revenue on its consolidated balance sheets related to this performance obligation, classified between current and noncurrent based on the amortization of the revenue.
−Removed: Development and commercialization services for zimberelimab monotherapy
−Removed: In conjunction with the license, the Company determined there existed a separate obligation to perform further development and commercialization services for Gilead related to zimberelimab monotherapy.
−Removed: The standalone selling price of this obligation was determined using an expected cost-plus margin approach.
−Removed: This obligation includes a 50/50 share of the costs associated with all future development and commercialization of zimberelimab as a monotherapy.
−Removed: The portion of the transaction price allocated to this performance obligation has been allocated in accordance with the total costs forecast for the development and commercialization of zimberelimab as a monotherapy.
−Removed: The Company will recognize the amounts allocated to these services as the performance obligation is satisfied.
−Removed: Any additional payments received from or payments made to Gilead for the 50/50 cost share will be recognized as a reduction or an increase to R&D expense, respectively.
−Removed: At September 30, 2021, the Company had $ 9.7 million of contract liabilities on its consolidated balance sheets related to this performance obligation.
−Removed: The Company has evaluated the program’s status and believes that revenue associated with these services will be recognized over the full term of the contract.
−Removed: As of September 30, 2021, no revenue had been recognized from this performance obligation.
−Removed: Gilead was also granted option rights to programs not yet in development.
−Removed: These programs were not determined to be performance obligations at contract inception, as there are no identified programs, revenues, or costs to compare against the option price.
−Removed: Prepaid expenses
−Removed: The Company incurred $ 7.3 million in expenses to obtain the contract, which consisted of consultant and legal fees that were directly connected to the successful completion of the Gilead Agreements.
−Removed: The Company determined that $ 1.9 million of these expenses were related to the Stock Purchase Agreement and recorded them as offering costs.
−Removed: The Company allocated the remaining expenses between the various performance obligations, to be recognized when the underlying revenue is recognized.
−Removed: The portion allocated to the delivery of zimberelimab was recognized immediately, and the portion allocated to the remaining performance obligations will be recognized with timing consistent with the associated performance obligation.
−Removed: During the three and nine months ended September 30, 2021, the Company recognize d $ 0.1 million and $ 0.3 million, respectively, in expense from the amortization of these assets.
−Removed: At September 30, 2021, the Company had $ 3.9 million in prepaid expenses from costs to obtain the Gilead Agreements, of which $ 1.0 million was recorded in prepaid expenses and other current assets and $ 2.9 million was recorded in other long-term assets.
+Added: The Company determined that Gilead is not obligated to pay the remaining $ 300 million due over the remainder of the term.
+Added: Failure to pay the non-obligatory option continuation payments will result in Gilead’s loss of certain rights to access and obtain licenses to the programs arising from the Company’s research and development pipeline.
+Added: Prior to the closing of the Amended Gilead Collaboration Agreement, the Company had $ 91.7 million deferred revenue on its consolidated balance sheets related to this performance obligation.
+Added: The Company recognized $ 8.3 million and $ 7.7 million in other collaboration revenues associated with these obligations in the three months ended March 31, 2022 and 2021, respectively.
+Added: At March 31, 2022, the Company had $ 111.9 million of deferred revenue on its consolidated balance sheets related to this performance obligation, classified between current and noncurrent based on the amortization of the revenue.
+Added: Cost-sharing reimbursements
+Added: The Company's research and development obligations under the Gilead Collaboration Agreement includes a 50/50 share of the joint development costs associated with optioned programs.
+Added: Payments received from Gilead for their share of costs incurred will be recognized as a reduction of R&D expense or G&A expense depending on the type of expense reimbursed.
+Added: Payments made to Gilead for the Company's share of costs incurred will be recognized as an increase to those expenses depending on the type of cost reimbursed.
+Added: The Company recognized reductions of operating expenses totaling $ 30.4 million and $ 4.9 million during the three months ended March 31, 2022 and 2021, respectively, as a result of this cost-sharing provision.
+Added: Capitalized costs to obtain contract
+Added: The Company incurred $ 7.3 million in costs to obtain the contract in 2020, which consisted of consultant and legal fees that were directly connected to the successful completion of the Gilead Agreements.
+Added: The Company determined that $ 1.9 million of these expenses were related to the Stock Purchase Agreement which were recognized as offering costs.
+Added: The Company allocated the remaining costs between the various performance obligations, to be recognized when the underlying revenue is recognized.
+Added: The Company incurred an additional $ 4.5 million in fees to a third party as part of entering into the Amended Gilead Collaboration Agreement in 2021.
+Added: These fees were combined with the $ 3.8 million of capitalized fees that remained from the original agreement at the date of closing, and the total $ 8.3 million was allocated among the performance obligations identified under the Amended Gilead Collaboration Agreement and deferred or recognized accordingly.
+Added: The Company recognized $ 0.1 million in expense related to these capitalized costs during each of the three months ended March 31, 2022 and 2021, respectively.
+Added: As of March 31, 2022, the Company had $ 4.8 million in capitalized costs to obtain the contract, of which $ 0.8 million was recorded in prepaid expenses and other current assets and $ 4.0 million was recorded in other long-term assets.
Taiho Pharmaceutical Co., Ltd
−Removed: In September 2017, the Company and Taiho entered into an option and license agreement (the Taiho Agreement) to collaborate on the potential development and commercialization of certain investigational products from the Company’s portfolio in Japan and certain other territories in Asia (excluding China) (the Taiho Territory).
−Removed: The Taiho Agreement provides Taiho with exclusive options, over a five-year period ending September 2022 (the Option Period), to obtain an exclusive development and commercialization license to clinical stage investigational products from the Company’s programs (each, an Arcus Program).
−Removed: In consideration for the exclusive options and other rights contained in the Taiho Agreement, Taiho agreed to make non-refundable, non-creditable cash payments to the Company totaling $ 35.0 million, of which the Company received $ 25.0 million during 2017.
−Removed: An additional $ 5.0 million was received in 2018 and the remaining $ 5.0 million was received in 2019.
+Added: In September 2017, the Company and Taiho entered into an option and license agreement (the Taiho Agreement) under which Taiho obtained exclusive options to Arcus programs arising over a five-year period ending September 2022 (the Option Period).
+Added: If Taiho timely exercises its option, Taiho obtains exclusive development and commercialization rights to investigational products from such Arcus Program for Japan and certain other territories in Asia (excluding China) (the Taiho Territory).
+Added: In consideration for the exclusive options and other rights contained in the Taiho Agreement, Taiho paid non-refundable, non-creditable cash payments to the Company totaling $ 35.0 million.
For each option that Taiho elects to exercise, it will be obligated to make an option exercise payment of between $ 3.0 million to $ 15.0 million, depending on the development stage of the applicable Arcus Program for which the option is exercised.
+Added: Upon exercise Taiho is solely responsible for continued development and commercialization in the Taiho Territory.
In addition, the Taiho Agreement provides that the Company is eligible to receive additional clinical and regulatory milestones totaling up to $ 130.0 million per Arcus Program, and it will be eligible to receive contingent payments of up to $ 145.0 million per Arcus Program associated with the achievement of specified levels of Taiho net sales in the Taiho Territory.
3 unchanged sentences
and (b) expiration of the last-to-expire valid claim of the Company’s patents covering the manufacture, use or sale or exploitation of such licensed product in such country (the Royalty Term).
−Removed: The Company determined that the identified performance obligations, which include the combined performance obligation of the research and development services and the obligation to participate on the joint steering committee, are satisfied over time.
+Added: The Company determined that the identified performance obligations for the Taiho Agreement, which include the combined performance obligation of the research and development services and the obligation to participate on the joint steering committee, are satisfied over time.
The Company uses a time-elapsed input method to measure progress toward satisfying its performance obligation, which is the method the Company believes most faithfully depicts the Company’s performance in transferring the promised services during the time period in which Taiho has access to the Company’s research and development activities.
−Removed: Accordingly, the transaction price of $ 35.0 million is being recognized using this input method over the estimated performance period of five years .
−Removed: Based on the nature of the clinical and regulatory milestones, such as the regulatory approvals which are not within the Company’s control, the Company will not consider achievement of such milestones to be probable until the uncertainty associated with the milestones has been resolved.
−Removed: When it is probable that a significant reversal of revenue will not occur, the milestone payment will be added to the transaction price, which will then be allocated to each performance obligation, on a relative standalone selling price basis, for which the Company recognizes revenue.
−Removed: As of September 30, 202 1, no clinical or regulatory milestones had been achieved under the Taiho Agreement.
−Removed: The Company also considers the contingent payments due from Taiho upon the achievement of specified sales volumes to be similar to royalty payments.
−Removed: The Company considers the license to be the predominant item to which the royalties relate.
−Removed: The Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
−Removed: As of September 30, 2021, no sales milestone or royalty revenue has been recognized.
−Removed: The Taiho Agreement shall remain in effect until expiry of all Royalty Terms for the licensed products, in each case subject to certain exceptions.
+Added: Accordingly, the transaction price of $ 35.0 million is being recognized in other collaboration revenues using this input method over the estimated performance period of five years .
+Added: From the inception of the Taiho Agreement through March 31, 2022, Taiho has exercised its option to the Company's adenosine receptor antagonist program (including etrumadenant), its anti-PD-1 program (including zimberelimab), and its anti-TIGIT program (including domvanalimab and AB308) for option payments totaling $ 26.0 million.
+Added: The Taiho Agreement will remain in effect until the expiry of all royalty terms for the licensed products.
+Added: As of March 31, 2022, no clinical or regulatory milestones had been achieved under the Taiho Agreement.
+Added: As of March 31, 2022, no sales milestone or royalty revenue has been recognized.
+Added: In November 2021, Taiho exercised its option under the Taiho Agreement to the Company's anti-TIGIT program, including domvanalimab and AB308, in exchange for a $ 15.0 million option exercise fee.
+Added: In November 2019, Taiho exercised its option to the Company's anti-PD-1 antibody program, including zimberelimab, for a fee of $ 8.0 million.
+Added: For each of these exercises, the Company identified one performance obligation comprised of the delivery of the license, which was recognized by the Company as license revenue during the years ended December 31, 2021 and 2019, respectively.
+Added: Upon the option exercises, Taiho gained sole responsibility for the development and commercialization of the licensed products within the Taiho Territory.
+Added: As of March 31, 2022 and December 31, 2021, the Company recorded deferred revenue, current of $ 3.3 million and $ 5.0 million, respectively, on its consolidated balance sheet.
WuXi Biologics License Agreements
The Company entered into a license agreement (the WuXi PD-1 Agreement) with WuXi Biologics in August 2017, as subsequently amended, in which it obtained an exclusive license to develop, use, manufacture, and commercialize products including an anti-PD-1 antibody worldwide except for Greater China.
−Removed: From the inception of the WuXi PD-1 Agreement through September 30, 2021, the Company has made upfront and milestone payments of $ 41.0 million and incurred sub-license fees of $ 11.3 million.
−Removed: These payments were recorded as research and development expense, as the products had not reached technological feasibility and did not have an alternative future use.
+Added: From the inception of the WuXi PD-1 Agreement through March 31, 2022, the Company has made upfront and milestone payments of $ 41.0 million and incurred sub-license fees of $ 11.3 million.
+Added: These milestone payments and sub-license fees were recorded as research and development expense, as the products had not reached technological feasibility and did not have alternative future use.
+Added: During the three months ended March 31, 2022 and 2021, the Company made milestone payments of zero and $ 10 million, respectively, and incurred no sub-license fees under the WuXi PD-1 Agreement.
The WuXi PD-1 Agreement also provides for clinical and regulatory milestone payments, commercialization milestone payments of up to $ 375.0 million and tiered royalty payments to be made to WuXi Biologics that range from the high single-digits to low teens of net sales by the Company of licensed products.
−Removed: The Company incurred zero and $ 10.0 m illion, respectively, in development milestone expense under the WuXi PD-1 Agreement during the three and nine months ended September 30, 2021.
In December 2020, the Company entered into a separate license agreement (the WuXi CD39 Agreement) with WuXi Biologics to develop anti-CD39 antibodies.
Under the agreement, the Company was granted exclusive worldwide rights to anti-CD39 antibodies discovered under the collaboration and will be responsible for the further development and commercialization of those antibodies.
−Removed: From the inception of the WuXi CD-39 Agreement through September 30, 2021, the Company has paid $ 0.5 million in upfront payments which was recorded in research and development expense, as the products are still in research stage.
The WuXi CD39 Agreement provides for clinical and regulatory milestone payments totaling $ 16.5 million, and royalty payments in the low single digits of net sales by the Company of licensed products.
−Removed: The Company incurred no development milestone expense under the WuXi CD-39 Agreement during the three and nine months ended September 30, 2021.
+Added: From the inception of the WuXi CD39 Agreement through March 31, 2022, the Company has paid a $ 1.5 million development milestone and $ 0.5 million in upfront payments, both of which were recorded in research and development expense, as the products are still in research stage.
+Added: The Company incurred $ 1.5 million in development milestone expense under the WuXi CD39 Agreement during the three months ended March 31, 2022 and none in the same period in 2021.
Abmuno License Agreement
−Removed: In December 2016, the Company entered into a license agreement (the Abmuno Agreement) with Abmuno Therapeutics LLC (Abmuno) in which it obtained a worldwide exclusive license to develop, use, manufacture, and commercialize products that include an anti-TIGIT antibody, including domvanalimab (formerly referred to as AB154).
−Removed: Under the Abmuno Agreement, the Company has made upfront and milestone payments totaling $ 14.6 m illion as of September 30, 2021.
−Removed: The Abmuno Agreement also provides for additional clinical, regulatory and commercialization milestone remaining payments of up to $ 93.0 million as of September 30, 2021.
−Removed: The Company incurred zero and $ 5.0 million in development milestone expense under the Abmuno Agreement during the three and nine months ended September 30, 2021.
−Removed: The Company incurr ed $ 3.0 million in development milestone expense under the Abmuno Agreement during the three and nine months ended September 30, 2020.
−Removed: Strata Collaboration Agreement
−Removed: On April 30, 2019, the Company and Strata Oncology, Inc.
−Removed: (Strata) entered into a Co-Development and Collaboration Agreement (the Strata Agreement) to pursue a clinical development collaboration utilizing Strata’s precision drug development platform and proprietary biomarkers to evaluate zimberelimab, the Company’s clinical-stage anti-PD-1 antibody, in patients in a tumor-agnostic fashion.
−Removed: Under the terms of the Strata Agreement, the parties share a portion of development costs for the clinical collaboration.
−Removed: From the inception of the Agreement through September 30, 2021, the Company has made a milestone payment of $ 2.5 million and has incurred expenses of $ 4.5 million, of which $ 0.9 million had b een reimbursed by Strata as development cost sharing.
−Removed: Net expenses related to this co-development agreement were recorded within research and development expenses.
−Removed: As further consideration in connection with the Strata Agreement, the Company issued to Strata 1,257,651 restricted shares of its common stock in April 2019 with an initial measured fair value of $ 15.0 million, which were subject to vesting based upon the achievement of specified regulatory milestones within certain timelines.
−Removed: In September 2021, the Company and Strata agreed to cancel the full amount of the restricted shares upon final determination that the biomarker indications were unlikely to be successful given the evolution of the competitive landscape.
−Removed: For the three and nine months ended September 30, 2021, the Company incurred expenses p ursuant to the Strata Agreement of $ 0.7 million and $ 1.8 million, respectively.
−Removed: Of these expenses, $ 0.1 million and $ 0.3 mi llion, respectively, were reimbursed by Strata.
−Removed: For the three and nine months ended September 30, 2020, the Company incurred expenses pursuant to the Strata Agreement of $ 0.3 million and $ 1.2 million, respectively.
−Removed: Of these expenses, $ 0.1 and $ 0.2 million, respectively, were reimbursed by Strata.
+Added: In December 2016, the Company entered into a license agreement (the Abmuno Agreement) with Abmuno Therapeutics LLC (Abmuno) in which it obtained a worldwide exclusive license to develop, use, manufacture, and commercialize products that include an anti-TIGIT antibody, including domvanalimab.
+Added: Under the Abmuno Agreement, the Company has made upfront and milestone payments totaling $ 14.6 million as of March 31, 2022.
+Added: The Abmuno Agreement also provides for additional clinical, regulatory and commercialization milestone remaining payments of up to $ 93.0 million as of March 31, 2022.
+Added: The Company incurred zero and $ 5.0 million development milestone expense for the three months ended March 31, 2022 and 2021, respectively.
AstraZeneca Agreement
−Removed: On October 29, 2020 the Company announced a collaboration with AstraZeneca to evaluate domvanalimab, the Company’s investigational anti-TIGIT antibody, in combination with AstraZeneca’s Imfinzi (durvalumab) in a registrational Phase 3 clinical trial in patients with unresectable Stage III non-small cell lung cancer (NSCLC).
+Added: In October 2020 the Company announced a collaboration with AstraZeneca to evaluate domvanalimab, the Company’s investigational anti-TIGIT antibody, in combination with AstraZeneca’s Imfinzi (durvalumab) in a registrational Phase 3 clinical trial in patients with unresectable Stage III non-small cell lung cancer (NSCLC), which study the parties refer to as PACIFIC-8.
Under the terms of the agreement, each company will retain existing rights to their respective molecules and any future commercial economics.
AstraZeneca will conduct the trial, and each company will supply its respective anti-cancer agent to support the trial.
−Removed: Under the terms of the agreement and subject to the parties’
−Removed: approval of a final budget for the clinical trial, the Company may be obligated to reimburse AstraZeneca for a portion of the costs incurred.
−Removed: Consistent with the terms of the Gilead Collaboration Agreement, Gilead maintains an option to co-develop and co-commercialize domvanalimab.
−Removed: If Gilead exercises its option to domvanalimab, the trial from this AstraZeneca collaboration is expected to form part of the Arcus and Gilead joint development program and Arcus’s portion of the trial costs would be shared with Gilead.
−Removed: For the three and nine months ended September 30, 2021, the Company incurred $ 0.3 million and $ 0.6 million, respectively, of expenses pursuant to the AstraZeneca Agreement.
−Removed: Expenses from this co-development agreement are recorded within research and development expenses.
+Added: Under the terms of the agreement, the Company will reimburse AstraZeneca for its share of the trial costs upon achievement of certain milestones.
+Added: If the agreement is terminated early, in certain circumstances, the Company is obligated to reimburse AstraZeneca for a portion of the trial costs incurred.
+Added: This portion of the clinical trial costs that is considered unavoidable is accrued as research and development expenses in advance of the achievement of milestones.
+Added: From the inception of the agreement through March 31, 2022, the Company has incurred gross expense of $ 2.3 million which is recorded on the condensed consolidated balance sheet in other long-term liabilities.
+Added: This PACIFIC-8 trial forms part of the Arcus and Gilead joint development program for domvanalimab and Arcus’s portion of the trial costs will be shared with Gilead.
+Added: At March 31, 2022 the Company had recognized a receivable of $ 1.1 million from Gilead related to the reimbursement of these costs, which is recorded on the condensed consolidated balance sheet in other noncurrent assets.
+Added: For the three months ended March 31, 2022 and 2021, the Company incurred expenses pursuant to the AstraZeneca Agreement of $ 1.2 million and zero , respectively, before expected recoveries from its cost-sharing agreement with Gilead.
Genentech Collaboration Agreement
3 unchanged sentences
second and third line metastatic colorectal cancer and first line metastatic pancreatic cancer.
−Removed: The Company and Genentech each supply their respective investigational products for use in the collaboration studies and share a portion of the development costs under specific terms as set forth in the agreement.
−Removed: For each of the three and nine months ended September 30, 2021 and 2020, the Company recorded immaterial n et expenses related to this co-development agreement within research and development expenses.
−Removed: Stockholders’
−Removed: In June 2020, pursuant to a shelf registration statement on Form S-3 that was filed in May 2020, the Company issued 12,650,000 shares of its common stock at $ 27.50 per share in an underwritten public offering (the May 2020 Public Offering).
−Removed: The total number of shares sold consisted of 11,000,000 base shares and an additional 1,650,000 shares sold pursuant to the underwriters’
−Removed: option exercise.
−Removed: Net proceeds from the May 2020 Public Offering were approximately $ 326.2 million after deducting underwriting discounts, commissions and other offering expenses.
−Removed: In July 2020, the Company closed the Gilead Collaboration Agreement, Common Stock Purchase Agreement, and the Investor Rights Agreement, each signed with Gilead in May 2020.
−Removed: The transaction closed on July 13, 2020 following expiration of the antitrust waiting period.
−Removed: Upon closing, Gilead made an equity investment of approximately $ 200 million in the Company by purchasing 5,963,029 shares of Arcus common stock at a per share price of $ 33.54 pursuant to the Stock Purchase Agreement.
−Removed: Of the $ 200 million equity investment, approximately $ 90.6 million was determined to be a premium on the purchase of common stock and allocated to the performance obligations created by the Gilead Collaboration Agreement.
−Removed: See Note 7 in this Form 10-Q for further discussion of the agreements with Gilead.
−Removed: Net proceeds from Gilead’s equity investment were approximately $ 107.5 million after allocating the premium and deducting direct offering expenses of $ 1.9 million.
−Removed: In February 2021, the Company closed the Amended and Restated Common Stock Purchase Agreement with Gilead, pursuant to which Gilead made an equity investment of approximately $ 220.4 million in the Company by purchasing 5,650,000 shares of the Company’s common stock at a per share price of $ 39.00 .
+Added: From the inception of the agreement through March 31, 2022, the Company has incurred expense of $ 1.8 million which was recorded in research and development expense.
+Added: The Company and Genentech will each supply their respective investigational products for use in the collaboration studies and will share a portion of the development costs under specific terms as set forth in the agreement.
+Added: The Company incurred expense under the collaboration of $ 0.3 million for each of the three months ended March 31, 2022 and 2021.
Stock-Based Compensation
1 unchanged sentence
Total stock-based compensation expense was recognized in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):
−Removed: Three Months Ended September 30,
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Research and development
1 unchanged sentence
Total stock-based compensation
−Removed: Net Income (Loss) per Share
−Removed: Basic net income (loss) per share is calculated based on the weighted-average number of shares of the Company’s common stock during the period.
−Removed: Diluted net income (loss) per share is calculated based on the weighted-average number of shares of the Company’s common stock and other dilutive securities outstanding during the period.
+Added: The provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into consideration in the relevant period.
+Added: Each quarter, the Company updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, the Company records a cumulative adjustment to the provision.
+Added: The Company’s provision for income taxes was $ 1.0 million and zero for the three months ended March 31, 2022 and 2021 with an effective tax rate of - 1.4 % and 0 %, respectively.
+Added: The effective tax rate differs from the U.S.
+Added: statutory tax rate primarily due to the valuation allowances on the Company’s deferred tax assets and state income taxes.
+Added: The income tax provision includes the effects of the mandatory capitalization and amortization of research and development expenses starting in 2022, as required by the 2017 Tax Cuts and Jobs Act.
+Added: As of March 31, 2022 and December 31, 2021, the Company has provided a valuation allowance against U.S.
+Added: federal and state deferred tax assets.
+Added: Management continues to evaluate the realizability of deferred tax assets and the related valuation allowance.
+Added: If management's assessment of the deferred tax assets or the corresponding valuation allowance were to change, the Company would record the related adjustment to income during the period in which management makes the determination.
+Added: The Company recognizes interest and penalties associated with uncertain tax benefits as part of the income tax provision.
+Added: To date, the Company has not recognized any interest and penalties in its condensed consolidated statements of operations, nor has it accrued for or made payments for interest and penalties.
+Added: The Company is subject to taxation in the U.S.
+Added: and various foreign jurisdictions.
+Added: The tax years subsequent to 2015 remain open and subject to examination by federal, state, and foreign taxing authorities in which the Company is subject to tax.
+Added: Net Loss per Share
+Added: Basic net loss per share is calculated based on the weighted-average number of shares of the Company’s common stock during the period.
+Added: Diluted net loss per share is calculated based on the weighted-average number of shares of the Company’s common stock and other dilutive securities outstanding during the period.
Potentially dilutive securities are excluded from the calculation if their inclusion would have been antidilutive.
−Removed: The potentially dilutive shares of the Company's common stock resulting from the assumed exercise of outstanding stock options and equivalents were determined under the treasury stock method.
The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data):
−Removed: Three Months Ended September 30,
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Weighted-average common shares outstanding
weighted-average common shares subject to vesting
−Removed: Weighted-average common shares used to compute basic net income (loss) per share
−Removed: Dilutive effect of stock options
−Removed: Dilutive effect of ESPP
−Removed: Weighted-average common shares used to compute diluted net income (loss) per share
−Removed: Net income (loss) per share:
−Removed: Net income (loss) per share:
+Added: Weighted-average common shares used to compute basic and diluted
+Added: net loss per share
+Added: Net loss per share:
+Added: basic and diluted
The following outstanding potentially dilutive securities were excluded from the computation of diluted net loss per share because including them would have been antidilutive:
−Removed: Three Months Ended September 30,
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Common stock options issued and outstanding
−Removed: Unvested restricted stock units
+Added: Restricted stock units issued
Employee Stock Purchase Plan shares
2 unchanged sentences
part of collaboration agreement
−Removed: The Company also excluded the effect of Gilead’s right to purchase additional shares of the Company’s common stock from its calculation as these rights had no intrinsic value at September 30, 2021.
+Added: The Company also excluded the effect of Gilead’s right to purchase additional shares of the Company’s common stock from its calculation as these rights had no intrinsic value at March 31, 2022.
Standby Letters of Credit
1 unchanged sentence
The letters of credit are secured by $ 3.0 million in deposits classified as restricted cash on the Company’s condensed consolidated balance sheets.
−Removed: At September 30, 2021 the standby letters of credit were not drawn down.
+Added: At March 31, 2022 the standby letters of credit were not drawn down.
Related parties
−Removed: Relationship and transactions with Gilead Sciences, Inc.
−Removed: As of September 30, 2021, Gilead held approximate ly 19.7 % o f the Company’s outstanding common stock.
−Removed: These holdings resulted from Gilead’s participation in the May 2020 Public Offering as well as purchases of stock under the stock purchase agreements.
+Added: Relationship and transactions with Gilead
+Added: As of March 31, 2022, Gilead held approximately 19.3 % o f the Company’s outstanding common stock.
+Added: These holdings resulted from a combination of Gilead’s participation in the May 2020 public offering as well as purchases of stock under the stock purchase agreement.
In the May 2020 public offering, Gilead purchased 2,200,000 shares of common stock for an amount of $ 56.7 million, net of offering costs.
−Removed: Under the stock purchase agreements, Gilead purchased 5,963,029 and 5,650,000 shares in July 2020 and February 2021, respectively, for a total investment of $ 327.8 million, net of offering costs and amounts allocated to the performance obligations created by the Gilead Collaboration Agreement.
−Removed: Gilead has the right, at its option, to purchase up to a maximum of 35 % of the Company’s then-outstanding voting common stock, from time to time over a five-year period from the closing of the initial transaction in July 2020.
−Removed: Gilead also has the right under the Investor Rights Agreement to designate two individuals to be appointed to the Company’s Board of Directors.
−Removed: Pursuant to the Investor Rights Agreement, the Company appointed the Gilead designees, Merdad Parsey, M.D., Ph.D.
−Removed: and Michael Quigley, Ph.D., to its Board of Directors, in July 2020 and January 2021, respectively.
−Removed: In August 2021, in connection with his departure from Gilead, Dr.
−Removed: Quigley resigned from the Company’s Board of Directors.
−Removed: In his place and pursuant to the Investor Rights Agreement, the Company appointed Linda Higgins, Ph.D., Senior Vice President of Research, External Innovation at Gilead, to its board.
+Added: Under the stock purchase agreement (as amended and restated), Gilead purchased 5,963,029 and 5,650,000 shares in July 2020 and February 2021, respectively, for a total investment of $ 327.8 million, net of offering costs and amounts allocated to the performance obligations created by the Gilead Collaboration Agreement.
+Added: Gilead has the right, at its option, to purchase up to a maximum of 35 % of the Company’s then-outstanding voting common stock, from time to time over five years from the closing of the initial transaction.
+Added: Pursuant to the Investor Rights Agreement, the Company appointed Gilead's two designees to the Company’s Board of Directors.
See Note 6 for further discussion of the agreements with Gilead.
−Removed: At September 30, 2021, the Company had a $ 0.6 million cost sharing receivable recorded on the condensed consolidated balance sheets under receivable from collaboration partners, to be invoiced the following quarter.
−Removed: The Company also had $ 162.2 million in deferred revenue at September 30, 2021, of which $ 94.7 million represented the long-term portion of revenue allocated to performance obligations not expected to be completed within one year of the balance sheet date, which was recorded in deferred revenue, noncurrent on the condensed consolidated balance sheets.
−Removed: The Company also had $ 9.7 mil lion in contract liabilities for future development and commercialization services for zimberelimab as a monotherapy which Gilead prepaid, all of which was recorded in other long-term liabilities on the consolidated balance sheets.
−Removed: For the three and nine months ended September 30, 2021, the C ompany recognized $ 7.7 million and $ 23.1 million, respectively, in revenue under the Gilead Collaboration Agreement.
−Removed: For each of these periods, the Company also recognized reductions of $ 0.8 million and $ 6.9 million, respectively, in research and development expense, including $ 4.0 million of cost sharing reimbursement related to milestone expense, under the cost-sharing provision s of the agreement.
−Removed: The Company received a $ 175 million upfront payment from Gilead in connection with the Gilead Collaboration Agreement in July 2020 and identified $ 100 million in unconstrained consideration to be received in 2022.
+Added: At March 31, 2022, the Company had a $ 29.3 million cost sharing receivable recorded on the condensed consolidated balance sheets under receivable from collaboration partners, to be invoiced the following quarter.
+Added: The Company had a $ 1.1 million long-term cost-share receivable recorded in other long-term assets on the balance sheet, to be invoiced upon the achievement of milestones under the
+Added: AstraZeneca agreement in future years.
+Added: The Company also had $ 86.0 million in deferred revenue, current and $ 456.9 million in deferred revenue, noncurrent recorded on its condensed consolidated balance sheets at March 31, 2022.
+Added: For the three months ended March 31, 2022 and 2021, the Company recognized $ 16.3 million and $ 7.7 million, respectively, in revenue under the Gilead Collaboration Agreement.
+Added: For each of these periods, the Company also recognized net reductions in operating expenses totaling $ 30.4 million and $ 4.9 million, respectively.
+Added: The Company received a $ 175 million upfront payment from Gilead upon closing of the Gilead Collaboration Agreement in July 2020.
In addition, in July 2020 the Company received $ 200 million from Gilead in connection with the Stock Purchase Agreement, of which approximately $ 109.4 million represented the fair value of stock purchased at the transaction closing date with the remaining premium of $ 90.6 million allocated to the transaction price.
In February 2021, the Company received $ 220.4 million from Gilead in connection with the purchase by Gilead of 5,650,000 shares of the Company’s common stock at a per share price of $ 39.00 pursuant to the amended and restated Stock Purchase Agreement.
−Removed: Subsequent event
−Removed: BVF Agreement
−Removed: In the fourth quarter of 2021, the Company and BVF Partners L.P.
−Removed: (BVF) entered into an agreement (the BVF Agreement) under which BVF will pay up to $ 15 million to the Company for the discovery and development of compounds for the treatment of inflammatory diseases (the Program).
−Removed: The Company received $ 5 million from BVF in the fourth quarter of 2021.
−Removed: In return, the Company is obligated to make milestone payments upon the achievement of certain clinical and regulatory milestones and will pay royalties based on net sales of products generated by the Program.
−Removed: The agreement also provides BVF with the option to provide an additional $ 10 million in funding for the Program in exchange for an increase in the royalty rate.
−Removed: Consistent with the terms of the Gilead Collaboration Agreement, Gilead has an option to the Program.
+Added: In January 2022, the Company received $ 725 million in option exercise payments from Gilead.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
8 unchanged sentences
We are a clinical-stage biopharmaceutical company focused on creating best-in-class cancer therapies.
−Removed: Our initial focus has been on well-characterized biological pathways with significant scientific data supporting their importance.
−Removed: We have built a robust and highly efficient drug discovery capability to create highly differentiated small molecules, which we have the ability to develop in combinations with our monoclonal antibodies through rationally designed, indication-specific clinical trial designs.
−Removed: Our vision is to create, develop and commercialize highly differentiated combination cancer therapies.
−Removed: In 2020, we entered into an Option, License and Collaboration Agreement (Gilead Collaboration Agreement) with Gilead Sciences, Inc.
−Removed: (Gilead), whereby Gilead obtained rights to zimberelimab and a time-limited exclusive option to all of our current and future programs during the 10-year collaboration term.
−Removed: For each program to which Gilead exercises their option, the parties will co-develop globally and co-commercialize in the U.S., subject to certain exceptions, and Gilead will have the right to commercialize the program outside of the United States, subject to the rights of our existing partners to certain territories.
−Removed: In connection with the Gilead Collaboration Agreement, we also entered into a Common Stock Purchase Agreement (as amended and restated in January 2021), pursuant to which Gilead purchased an aggregate of 11,613,029 shares of our common stock for aggregate gross proceeds of $420.4 million and has the right, at its option from time to time over a five-year period, to purchase up to a maximum ownership of 35% of our then-outstanding voting common stock, and an Investor Rights Agreement that provides for a three-year standstill, two-year lockup and the right to designate two individuals to be appointed to our Board of Directors.
+Added: Using our robust and highly efficient drug discovery capability, we have now advanced six investigational products into clinical development, with our most advanced molecule, an anti-TIGIT antibody, now in two Phase 3 registrational studies, with others in planning.
+Added: Our deep portfolio of novel small molecules and enabling antibodies allows us to create highly differentiated combination therapies, which we are developing to treat multiple large tumor types including lung, colorectal, prostate and pancreatic cancers.
+Added: We expect our clinical-stage portfolio to continue to expand and to include molecules targeting both immuno-oncology and cancer cell-intrinsic pathways.
+Added: Our vision is to create, develop and commercialize highly differentiated combination cancer therapies that have a meaningful impact on patients.
+Added: In May 2020, we entered into an Option, License and Collaboration Agreement (Gilead Collaboration Agreement) with Gilead Sciences, Inc.
+Added: (Gilead), whereby Gilead obtained an exclusive license to zimberelimab and time-limited exclusive options to all of our then-current and future programs during the 10-year collaboration term.
+Added: In December 2021, Gilead obtained rights to an additional four of our investigational products:
+Added: domvanalimab, etrumadenant, quemliclustat and AB308, for which we subsequently received a total of $725 million in option exercise payments.
+Added: For each program to which Gilead exercised or exercises its option, the parties will co-develop globally and co-commercialize the program in the U.S., subject to certain exceptions, and Gilead will have the right to commercialize the program outside of the United States, subject to the rights of our existing partners in certain territories.
In 2017, we entered into an Option and License Agreement (Taiho Agreement) with Taiho Pharmaceutical Co., Ltd.
−Removed: (Taiho) pursuant to which Taiho has a time-limited option to exclusively license the development and commercialization rights to each of our programs for Japan and certain other territories in Asia (excluding China).
−Removed: To date, Taiho has exercised their option rights to our adenosine receptor antagonist program (including etrumadenant) and our anti-PD-1 program (including zimberelimab).
+Added: (Taiho) pursuant to which Taiho has time-limited options to exclusively license the development and commercialization rights to each of our programs for Japan and certain other territories in Asia (excluding China).
+Added: Taiho has exercised its option rights to our adenosine receptor antagonist program (including etrumadenant), our anti-PD-1 program (including zimberelimab), and, in December 2021, they exercised their option right to our anti-TIGIT program (including domvanalimab and AB308).
+Added: In connection with our entry into the Gilead Collaboration Agreement in 2020, we also entered into a Common Stock Purchase Agreement pursuant to which Gilead has the right, at its option from time to time over five years from closing of the initial transaction, to purchase up to a maximum ownership of 35% of our then-outstanding voting common stock, and an Investor Rights Agreement that provides for a three-year standstill, two-year lockup and the right to designate two individuals to be appointed to our Board of Directors.
+Added: Gilead currently owns approximately 19.3% of our outstanding common stock.
We currently have six investigational products in clinical development:
−Removed: Domvanalimab (formerly referred to as AB154), our anti-TIGIT monoclonal antibody, is being evaluated in combination with zimberelimab with or without etrumadenant vs.
−Removed: zimberelimab monotherapy in ARC-7, our randomized Phase 2 trial in first-line metastatic PD-L1 ≥
−Removed: 50% non-small cell lung cancer.
−Removed: In February 2021, we initiated ARC-10, our first registrational trial evaluating domvanalimab in combination with zimberelimab and zimberelimab monotherapy vs.
+Added: Domvanalimab (previously referred to as AB154), our Fc-silent anti-TIGIT monoclonal antibody, is being evaluated in combination with zimberelimab with or without etrumadenant vs.
+Added: zimberelimab monotherapy in ARC-7, our randomized, 150-patient Phase 2 trial in first-line metastatic PD-L1≥50% non-small cell lung cancer (NSCLC).
+Added: In 2021, we initiated ARC-10, our first registrational trial evaluating domvanalimab in combination with zimberelimab and zimberelimab monotherapy vs.
chemotherapy in this same setting.
−Removed: Etrumadenant (formerly referred to as AB928), our small molecule dual A 2a /A 2b adenosine receptor antagonist, is being evaluated by us in several randomized or Phase 2 trials across major tumor types, including in our ARC-4, ARC-6, ARC-7, and ARC-9 studies, as well as in two randomized Phase 1b/2 trials being conducted by Genentech (the Morpheus trials).
−Removed: Quemliclustat (formerly referred to as AB680), our small-molecule CD73 inhibitor, is being evaluated in a Phase 1/1b study for the treatment of first-line metastatic pancreatic cancer (ARC-8) as well as late-line metastatic prostate cancer (ARC-6).
−Removed: Zimberelimab (formerly referred to as AB122), our anti-PD-1 monoclonal antibody, is the cornerstone of our combination strategy.
−Removed: We are currently evaluating zimberelimab, either alone or in combination with other agents across several tumor types, including non-small cell lung cancer in ARC-7, our Phase 2 trial, and ARC-10, our recently initiated registrational trial which is designed to support the approval of zimberelimab.
−Removed: AB308, our Fc-enabled anti-TIGIT monoclonal antibody, is being evaluated in a Phase 1/1b study.
−Removed: The dose escalation portion was designed to expeditiously establish the safety, pharmacokinetics and pharmacodynamics of AB308 in combination with zimberelimab.
−Removed: The dose expansion portion is evaluating AB308 in combination with zimberelimab in multiple tumor types, including hematological malignancies.
+Added: Furthermore, in January 2022, AstraZeneca initiated PACIFIC-8, a registrational study, which is evaluating domvanalimab plus durvalumab after chemoradiation therapy in Stage 3 NSCLC.
+Added: We and Gilead are planning to initiate additional Phase 3 studies for domvanalimab in 2022 based on our interim analyses for ARC-7, which demonstrated encouraging clinical activity for both domvanalimab combination arms.
+Added: AB308, our Fc-enabled anti-TIGIT monoclonal antibody, is being evaluated in a Phase 1/1b study (ARC-12).
+Added: In 2021, we completed the dose escalation portion of the study and are now enrolling five expansion cohorts which are designed to generate data to support the future development of AB308 and further development planning for both domvanalimab and AB308.
+Added: Etrumadenant (previously referred to as AB928), our small molecule dual A2a/A2b adenosine receptor antagonist, is being evaluated in several randomized or Phase 2 trials across major tumor types, including in our ARC-6, ARC-7, and ARC-9 studies.
+Added: We expect to initiate additional clinical studies of etrumadenant in 2022.
+Added: Quemliclustat (previously referred to as AB680), our small-molecule CD73 inhibitor, is being evaluated in a Phase 1/1b study for the treatment of first-line metastatic pancreatic cancer (ARC-8) as well as late-line metastatic prostate cancer (ARC-6) and metastatic colorectal cancer (ARC-9).
+Added: We expect to initiate additional clinical studies of quemliclustat in 2022.
+Added: Zimberelimab (previously referred to as AB122), our anti-PD-1 monoclonal antibody, is the cornerstone of our combination strategy.
+Added: We are currently evaluating zimberelimab, either alone or in combination with other agents across several tumor types, including non-small cell lung cancer in ARC-7, our Phase 2 trial, and ARC-10, our registrational trial which is designed to support the approval of zimberelimab.
AB521, our HIF-2α
−Removed: inhibitor, is being evaluated in a healthy volunteer study to expeditiously characterize the pharmacokinetic and safety profile of AB521 and to identify the starting dose for a Phase 1/1b study in oncology indications.
+Added: inhibitor, is being evaluated in a healthy volunteer study (ARC-14) to expeditiously characterize the pharmacokinetic and safety profile of AB521 and to identify the starting dose for a Phase 1 study in oncology indications.
+Added: We plan to evaluate AB521 in renal cell carcinoma as well as in other tumor types, and in combination with other molecules, including those targeting the CD73-adenosine axis.
COVID-19 Pandemic
−Removed: The degree to which COVID-19 impacts our business operations, research and development programs and financial condition remains highly uncertain and will depend on future developments, including the ultimate duration and/or severity of the pandemic, the impact of any resurgences and new variants that emerge, actions by government authorities to contain the spread of the virus, the availability, adoption and effectiveness of any vaccines, and when and to what extent normal economic and operating conditions can resume.
+Added: The degree to which COVID-19 impacts our business operations, research and development programs and financial condition remains highly uncertain and will depend on future developments, including the ultimate duration and/or severity of the pandemic, the impact of any resurgences and new variants that emerge, actions by government authorities to contain the spread of the virus, the availability, adoption and effectiveness of vaccines and boosters, and when and to what extent normal economic and operating conditions can resume.
Our management continues to actively monitor this health crisis and its effects on our operations, key vendors and workforce.
1 unchanged sentence
and internationally in geographic regions that are impacted by COVID-19 to varying degrees.
−Removed: While we have seen relatively robust enrollment in most of our ongoing Arcus-sponsored studies, disruptions caused by the COVID-19 pandemic may impact our ability to initiate, enroll, conduct or complete our ongoing or planned clinical trials.
−Removed: The American Cancer Society has also reported that the pandemic has led to declines in screening, diagnosis and treatment for cancer patients, which will impact the enrollment of patients in clinical trials targeting early stage cancers and retention of patients overall in our trials.
+Added: While we have seen relatively robust enrollment in most of our ongoing Arcus-sponsored studies, disruptions caused by the COVID-19 pandemic will continue to impact our ability to initiate, supply, enroll, conduct or complete our ongoing or planned clinical trials.
+Added: For example, in the first half of 2020, the pandemic led to a decline in screening, diagnosis and treatment for cancer patients.
+Added: While cancer screening rates have rebounded, resurgences due to new variants may cause patients to delay screening and treatment for fear of exposure to COVID-19, thereby adversely impacting the enrollment of patients in clinical trials targeting early-stage cancers and retention of patients overall in our trials.
+Added: At times, investigative sites have needed to divert resources away from our studies in order to respond to the ongoing health crisis, hindering their ability to conduct study assessments and report data.
Patient safety remains our paramount concern and we continue to collaborate with our existing and with new investigational sites to implement measures to minimize disruptions to patients and ensure continued access to treatment, in accordance with health authority guidance.
1 unchanged sentence
With respect to manufacturing and supply, our third-party contract manufacturers continue to operate at or near normal levels.
−Removed: At this time and subject to further COVID-19 implications, we believe we have manufactured sufficient drug supply for our ongoing clinical studies and we do not anticipate any disruptions to our ability to manufacture our investigational products.
−Removed: Global shipping has been severely challenged by the evolving pandemic, which has led to delays in our receipt of materials and supplies used in our clinical and laboratory operations.
−Removed: We actively manage our supply chain needs to minimize the impact of any disruptions to our clinical and laboratory operations.
−Removed: Our discovery programs were impacted by reduced operating capacity in our laboratories;
−Removed: however, our laboratory operations are operating at or near normal levels following the availability of vaccines and our mandatory vaccine policy.
−Removed: Our office-based employees continue to work remotely;
−Removed: however, we are beginning to resume periodic in-person meetings.
−Removed: The safety, health and well-being of our employees remains a primary concern, and we may restrict our business activities or modify our employee work arrangements in order to reduce the risk of exposure to COVID-19 among our employees.
+Added: However, global shipping has been severely challenged by the evolving pandemic, leading to delays in our receipt of materials and supplies, including standard-of-care drugs used in the conduct of our clinical trials.
+Added: We actively manage the inventory for each of our investigational products and our overall supply chain needs in order to prevent or minimize the impact of any disruptions to our clinical programs.
+Added: Due to the availability of vaccines and our mandatory vaccine policy, our laboratory operations are operating at or near normal levels and we began returning office-based employees to our offices on a hybrid schedule.
+Added: The safety, health and well-being of our employees remains a primary concern, and we may restrict our business activities or modify our employee work arrangements in response to new developments in the COVID-19 pandemic in order to reduce the risk of exposure among our employees.
The COVID-19 pandemic continues to evolve and future developments, which are unpredictable, may result in a material, negative impact to our operations and financial condition.
1 unchanged sentence
Collaboration and License Revenue
−Removed: Our collaboration and license revenue consists of revenue recognized from the upfront and periodic payments received from Taiho and Gilead, for research and development services performed by us to develop our investigational products under the terms of our collaboration agreements, and from any option exercise payments.
+Added: Our collaboration and license revenue consists of revenue recognized from the nonrefundable upfront payments received from Gilead and Taiho, for licenses or research and development services performed by us to develop our investigational products under the terms of our collaboration agreements, and from any option exercise payments.
Operating Expenses
3 unchanged sentences
Shared facility expenses are allocated to functional groups proportionally based on usage.
−Removed: Under certain collaboration agreements we agree to share research and development expenses with our partners or to reimburse our partners for qualified expenses.
+Added: Under certain collaboration agreements we agree to share research and development expenses with our partners.
+Added: Such cost sharing arrangements may result in receiving reimbursement from our partners or require that we reimburse our partners for qualified expenses.
We expense both internal and external research and development costs as they are incurred.
We record advance payments for services that will be used or rendered for future research and development activities as prepaid expenses and recognize them as an expense as the related services are performed.
+Added: We recognize reimbursement for shared costs incurred by us and reimbursed by our partners as a reduction in research and development expense.
We do not allocate our costs by investigational product, as a significant amount of research and development expenses include internal costs, such as payroll and other personnel expenses, and certain external costs that are not recorded at the investigational product level.
In particular, with respect to internal costs, several of our departments support multiple research and development programs, and we do not allocate those costs by investigational product.
−Removed: We expect our research and development expenses to increase substantially during the next few years due to our Gilead collaboration and as we seek to complete existing clinical trials and advance our programs into later-stage clinical trials, pursue regulatory approval
−Removed: for our investigational products, and advance other programs into the clinic.
−Removed: Later-stage clinical trials typically include a larger number of subjects, are of a longer duration and include more geographic regions.
+Added: In December 2021, Gilead obtained rights to four of our investigational products:
+Added: domvanalimab, etrumadenant, quemliclustat and AB308, for which we subsequently received a total of $725 million in option exercise payments.
+Added: We expect our research and development expenses to increase substantially during the next few years as we pursue joint development programs with Gilead for our five optioned molecules and advance these programs towards regulatory approval.
+Added: We also expect to advance new programs into the clinic.
+Added: All of this will require significant growth in our development capabilities and infrastructure.
+Added: In addition, our joint development programs with Gilead for the optioned molecules are anticipated to include a significant number of later-stage clinical trials, which typically include a larger number of subjects, are of a longer duration and include more geographic regions.
As we advance our clinical-stage programs and prepare to seek regulatory approval, we will also need to conduct certain validation activities with respect to our manufacturing processes for the investigational products in each program.
−Removed: Moreover, in order to maximize the potential of our collaboration with Gilead, we believe it will be important to grow our discovery capabilities and pipeline.
As a result, we expect our preclinical, clinical, and contract manufacturing expenses to increase significantly relative to what we have incurred to date.
−Removed: The level of our future research and development investment will depend on a number of factors and uncertainties, including clinical outcomes from our ongoing clinical trials, whether our collaborators opt into any of our programs, the amount of opt-in and milestone payments we receive from our collaborators, and the breadth of any joint development program agreed to with Gilead for programs they opt into.
−Removed: In addition, under our license agreements with WuXi Biologics and Abmuno, and our co-development and collaboration agreement with AstraZeneca, we may be required to pay additional clinical and regulatory milestone payments based on the development progress of our investigational products.
+Added: The level of our future research and development investment will depend on a number of factors and uncertainties, including the breadth of the joint development program agreed to with Gilead for the optioned programs, the outcome of our efforts, and the amount of cost reimbursements or milestone payments we receive from our collaborators.
+Added: In addition, under our license agreements with WuXi Biologics and Abmuno, and our co-development, collaboration, and research and development arrangements with AstraZeneca, BVF and Strata, we may be required to pay additional clinical and regulatory milestone payments based on the development progress of our investigational products.
+Added: We may also be required to pay royalties to these parties in the event of a successful product launch and our receipt of commercial revenues.
Therefore, we are unable to predict the timing or the final cost to complete our clinical programs or validation of our manufacturing and supply processes and delays may occur due to numerous factors.
5 unchanged sentences
Our general and administrative expenses also include professional fees for legal, consulting, and accounting services, rent and other facilities costs, fixed asset depreciation, and other general operating expenses not otherwise classified as research and development expenses.
−Removed: We anticipate that our general and administrative expenses will increase substantially during the next few years as we support our growing research and development activities, including staff expansion, additional occupancy costs, and other costs associated with increased infrastructure needs.
−Removed: Other Non-Operating Income, net
−Removed: Other non-operating income, net consists primarily of interest earned on our investments in fixed-income marketable securities as well as activity related to our equity method investment in PACT Pharma, Inc (PACT Pharma).
−Removed: To date, gains have consisted of gains on dilution of our investment in PACT Pharma, typically occurring upon PACT Pharma’s new issuances of equity securities.
−Removed: Losses associated with the investment consist of our share of PACT Pharma’s net losses.
−Removed: Critical Accounting Policies, Significant Judgments and Use of Estimates
+Added: We anticipate that our general and administrative expenses will increase substantially during the next few years as we support our growing research and development activities, including due to staff expansion, additional occupancy costs, and other costs associated with increased infrastructure needs.
+Added: Non-Operating Income, net
+Added: Non-operating income, net consists primarily of interest earned on our investments in fixed-income marketable securities and non-cash interest expense incurred under the effective interest method on our liability for sale of future royalties to BVF.
+Added: Critical Accounting Judgments and Estimates
Our condensed consolidated financial statements have been prepared in accordance with U.S.
−Removed: generally accepted accounting principles (U.S.
−Removed: The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenue and expenses incurred during the reporting periods.
+Added: generally accepted accounting principles (GAAP).
+Added: The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported revenue and expenses incurred during the reporting periods.
Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or conditions.
−Removed: We believe that the accounting policies relating to revenue recognition, clinical trial accruals and stock-based compensation reflect the more significant estimates and assumptions used in the preparation of our condensed consolidated financial statements.
−Removed: There have been no significant changes to our critical accounting policies and estimates in the nine months ended September 30, 2021, compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 25, 2021.
−Removed: For a description of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K.
+Added: We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s significant judgments and estimates.
+Added: While our significant accounting policies are described in the notes to our consolidated financial statements, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.
+Added: Revenue Recognition
+Added: At the inception of an arrangement, we evaluate if a counterparty to a contract is a customer, if the arrangement is within the scope of revenue from contracts with customers guidance, and the term of the contract.
+Added: We recognize revenue when our customer obtains control of promised goods or services in a contract for an amount that reflects the consideration we expect to receive in exchange for those goods or services.
+Added: For contracts with customers, we perform the following five steps:
+Added: (i) identify the contract(s) with a customer;
+Added: (ii) identify the performance obligations in the contract;
+Added: (iii) determine the transaction price;
+Added: (iv) allocate the transaction price to the performance obligations in the contract;
+Added: and (v) recognize revenue when (or as) we satisfy each performance obligation.
+Added: We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer.
+Added: As part of the accounting for contracts with customers, we must develop assumptions that require judgment to determine the standalone selling price of each performance obligation identified in the contract.
+Added: We then allocate the total transaction price to each performance obligation based on their estimated standalone selling prices.
+Added: We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
+Added: The estimation of the standalone selling price may include such estimates as forecasted revenues or costs, development timelines, discount rates, and probabilities of technical and regulatory success.
+Added: We evaluate each performance obligation to determine if it can be satisfied at a point in time or over time, and we measure the services delivered to the customer, which we periodically review based on the progress of the related program.
+Added: The effect of any change made to an estimated input component and, therefore revenue or expense recognized, would be recorded as a change in estimate.
+Added: In addition, variable consideration (e.g.
+Added: milestone payments) must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.
+Added: Revenue related to certain performance obligations over time could be materially impacted as a result of changes in the estimated total research effort required to satisfy those obligations.
+Added: If we were to increase total estimated effort required to satisfy the license and R&D activities performance obligations related to the agreement with Gilead by 10%, it would result in cumulative catch up adjustments that decrease revenue recognition by $0.7 million in the current quarter.
+Added: Alternatively, if we were to decrease total estimated effort required to satisfy those performance obligations by 10%, it would result in cumulative catch up adjustments that increase revenue recognition by $0.9 million in the current quarter.
Results of Operations
−Removed: Three Months Ended September 30, 2021 and 2020
−Removed: The following table summarizes our results of operations for the three months ended September 30, 2021 and 2020 (in thousands):
−Removed: Three Months Ended September 30,
−Removed: License revenue
−Removed: Collaboration revenue
−Removed: Total revenues
−Removed: Operating expenses:
−Removed: Research and development
−Removed: General and administrative
−Removed: Total operating expenses
−Removed: Income (loss) from operations
−Removed: Non-operating income, net
−Removed: Net income (loss)
−Removed: * Not meaningful
−Removed: Collaboration and License Revenue
−Removed: Collaboration and license revenue decreased $55.0 million, from $64.5 million for the three months ended September 30, 2020 to $9.5 million for the three months ended September 30, 2021.
−Removed: In the three months ended September 30, 2021, we recognized $7.7 million in collaboration revenues related to Gilead’s ongoing rights to access our intellectual property in accordance with the Gilead Collaboration Agreement, as well as $1.8 million under the Taiho Agreement.
−Removed: In the three months ended September 30, 2020, we recognized $55.1 million in revenue for the license to zimberelimab and $7.7 million in collaboration revenues in accordance with the Gilead Collaboration Agreement, as well as $1.8 million under the Taiho Agreement.
−Removed: Research and Development Expenses
−Removed: Research and development expenses increased $19.5 million, or 38%, from $51.8 million for the three months ended September 30, 2020 to $71.3 million for the three months ended September 30, 2021.
−Removed: The increase in research and development expenses was driven by costs incurred to support our expanded clinical and development activities.
−Removed: Our growing headcount and our 2021 stock awards drove a $12.9 million increase in employee compensation costs, including approximately $4.9 million of increased non-cash stock-based compensation.
−Removed: Clinical costs for our ongoing studies increased $12.7 million as a result of the increased number of programs and clinical trials compared to the same quarter in the prior year.
−Removed: We incurred an additional $2.9 million increase in office facilities and technology expense, $2.2 million increase in clinical consulting costs, and $1.0 million increase in lab supplies and equipment as we expanded our development efforts.
−Removed: There was also a net $1.7 million increase in research and development expense due to a decrease in reimbursement from collaboration partners for shared expenses.
−Removed: In the current quarter we recognized reimbursement of approximately $0.8 million from Gilead for certain applicable costs of developing zimberelimab in accordance with the Gilead Collaboration Agreement, compared to approximately $2.5 million from our collaboration partners in the same quarter in the prior year.
−Removed: The overall increase in research and development expense is partially offset by a decrease of $13.1 million in milestone expense incurred and a $1.3 million decrease in expense from manufacturing and development.
−Removed: We did not incur milestone expense in the three months ended September 30, 2021, compared to $13.1 million in the same quarter in the prior year.
−Removed: General and Administrative Expenses
−Removed: General and administrative expenses increased $5.1 million, or 46%, from $11.2 million for the three months ended September 30, 2020 to $16.3 million for the three months ended September 30, 2021.
−Removed: The increase in general and administrative expenses was driven by the increased complexity of supporting our expanding clinical pipeline and partnership obligations, as well as costs associated with being a public company.
−Removed: Our growing headcount as well as our 2021 stock awards drove a $5.7 million increase in employee compensation costs, including approximately $3.7 million in increased non-cash stock-based compensation.
−Removed: The overall increase in general and administrative expense is partially offset by a $1.0 million decrease in outside legal, accounting, and other consulting expenses due to costs related to our transaction with Gilead and other corporate development activities incurred in 2020.
−Removed: Non-Operating Income, Net
−Removed: Non-operating income, net decreased $0.1 million or 40%, from $0.3 million for the three months ended September 30, 2020 to $0.2 million for the three months ended September 30, 2021.
−Removed: The decrease was primarily due to lower interest income resulting from lower investment yields on our portfolio of marketable fixed-income securities during the quarter ended September 30, 2021 as compared to the same period in the prior year.
−Removed: Nine Months Ended September 30, 2021 and 2020
−Removed: The following table summarizes our results of operations for the nine months ended September 30, 2021 and 2020 (in thousands):
−Removed: Nine Months Ended September 30,
−Removed: License revenue
−Removed: Collaboration revenue
−Removed: Total revenues
+Added: Three Months Ended March 31, 2022 and 2021
+Added: The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021 (in thousands):
+Added: Three Months Ended March 31,
+Added: Other collaboration revenue
+Added: License and development service revenue
+Added: Total collaboration and license revenues
Operating expenses:
4 unchanged sentences
Non-operating income, net
+Added: Loss before income taxes
+Added: Income tax expense
* Not meaningful
Collaboration and License Revenue
−Removed: Collaboration and license revenue decreased $39.6 million, from $68.0 million for the nine months ended September 30, 2020 to $28.4 million for the nine months ended September 30, 2021.
−Removed: In the nine months ended September 30, 2021, we recognized $23.1 million in collaboration revenues related to Gilead’s ongoing rights to access our intellectual property in accordance with the Gilead Collaboration Agreement, as well as $5.3 million under the Taiho Agreement.
−Removed: In the nine months ended September 30, 2020, we recognized $55.1 million in revenue for the license to zimberelimab and $7.7 million in collaboration revenues in accordance with the Gilead Collaboration Agreement, as well as $5.3 million under the Taiho Agreement
+Added: Collaboration and license revenue increased $8.5 million, from $9.5 million for the three months ended March 31, 2021 to $18.0 million for the three months ended March 31, 2022.
+Added: In the three months ended March 31, 2022, we recognized $8.3 million in other collaboration revenues related to Gilead’s ongoing rights to access our intellectual property in accordance with the Gilead Collaboration Agreement, $7.9 million in license and development service revenues for all programs optioned by Gilead, recognized based on estimates of each performance obligation's percentage of completion at the period end, as well as $1.8 million of other collaboration revenues under the Taiho Agreement.
+Added: In the three months ended March 31, 2021, we recognized $7.7 million in collaboration revenues in accordance with the Gilead Collaboration Agreement, as well as $1.8 million under the Taiho Agreement.
+Added: See Note 6 to our condensed consolidated financial statements in Part I, Item 1 for further discussion of the amount and timing of revenues recognized from our collaboration agreements.
Research and Development Expenses
−Removed: Research and development expenses increased $95.8 million, or 87%, from $110.6 million for the nine months ended September 30, 2020 to $206.4 million for the nine months ended September 30, 2021.
−Removed: The increase in research and development expenses was driven by costs incurred to support our expanded clinical and development activities.
+Added: Research and development expenses decreased $5.2 million, or 8% from $66.4 million for the three months ended March 31, 2021 to $61.2 million for the three months ended March 31, 2022.
+Added: The increase in costs incurred to support our expanded clinical and development activities was offset by increased cost-sharing reimbursements from Gilead for its optioned programs.
+Added: Cost-sharing reimbursements increased to $30.3 million from $4.9 million in the same quarter in the prior year.
+Added: There was also a $13.5 million decrease in scientific licenses expense.
+Added: In the three months ended March 31, 2022 we paid a $1.5 million milestone fee, compared to $15.0 million in milestones in the same quarter in the prior year.
+Added: Clinical costs for our ongoing studies increased $12.1 million as a result of the increased number of programs and clinical trials compared to the same quarter in the prior year.
Our growing headcount and our 2022 stock awards drove a $10.2 million increase in employee compensation costs, including approximately $2.3 million of increased non-cash stock-based compensation.
−Removed: Clinical costs for our ongoing studies and manufacturing costs increased $34.6 million and $17.5 million, respectively, as a result of the increased number of programs and clinical trials compared to the same period in the prior year.
−Removed: We incurred an additional $5.4 million increase in office facilities and technology expense, $4.4 million increase in lab supplies and equipment, and $4.3 million increase in consulting services as we expanded our development efforts.
−Removed: The overall increase in research and development expense is partially offset by a $3.0 million decrease in development milestone expenses incurred.
−Removed: In the nine months ended September 30, 2021, the Company incurred a $10.0 million milestone payment due to WuXi Biologics pertaining to zimberelimab and $5.0 million incurred for a milestone payment due to Abmuno pertaining to domvanalimab.
−Removed: In the same period in the prior year, we incurred $10.1 million sublicense fee and a $5.0 million development milestone payment, both to WuXi, as well as a $3.0 million development milestone payment to Abmuno.
−Removed: There was also a net $4.0 million decrease in research and development expense due to an increase in reimbursement from collaboration partners for shared expenses.
−Removed: In the nine months ended September 30, 2021, we recognized reimbursement of approximately $6.9 million from Gilead for certain applicable costs of developing zimberelimab, including $4.0 million of cost sharing reimbursement related to milestone expense incurred, in accordance with the Gilead Collaboration Agreement.
−Removed: Reimbursement from our collaboration partners was approximately $2.9 million in the same period in the prior year.
+Added: We incurred an additional $6.0 million increase in preclinical and manufacturing costs, $2.3 million increase in consulting costs, and $2.2 million increase in office facilities and technology expense.
General and Administrative Expenses
−Removed: General and administrative expenses increased $19.4 million, or 65%, from $29.6 million for the nine months ended September 30, 2020 to $49.0 million for the nine months ended September 30, 2021.
−Removed: The increase in general and administrative expenses was primarily driven by the increased complexity of supporting our expanding clinical pipeline and partnership obligations, as well as
−Removed: costs associated with being a public company.
−Removed: Our growing headcount and our 2021 stock awards drove an $18.7 million increase in employee compensation costs, including approximately $12.9 million in increased non-cash stock-based compensation.
−Removed: We also incurred an approximately $1.5 million increase in office facilities expense due to our expanding headcount and office space.
−Removed: Recruiting expense and taxes increased in connection with our growth, as well as costs associated with ongoing compliance with public company requirements.
−Removed: The overall increase in general and administrative expense is partially offset by a decrease of $2.2 million in outside legal and other consulting expenses compared to the same quarter in the prior year, due to significant costs incurred in 2020 related to our transaction with Gilead and other corporate development activities.
+Added: General and administrative expenses increased $8.2 million, or 52%, from $15.8 million for the three months ended March 31, 2021 to $24.0 million for the three months ended March 31, 2022.
+Added: The increase in general and administrative expenses was driven by the increased complexity of supporting our expanding clinical pipeline and partnership obligations.
+Added: We incurred an approximately $3.5 million increase in office facilities expense due to our expanding headcount and office space.
+Added: Our growing headcount as well as our 2022 stock awards drove a $3.2 million increase in employee compensation costs, including approximately $1.4 million in increased non-cash stock-based compensation.
+Added: We also incurred an increase of $1.1 million in consulting expenses incurred in corporate development activities.
Non-Operating Income, Net
−Removed: Non-operating income, net decreased $0.7 million or 61%, from $1.2 million for the nine months ended September 30, 2020 to $0.5 million for the nine months ended September 30, 2021.
−Removed: The decrease was primarily due to lower interest income resulting from lower investment yields on our portfolio of marketable fixed-income securities during the nine months ended September 30, 2021 as compared to the same period in the prior year.
+Added: Non-operating income, net was unchanged, at $0.2 million for each of the three months ended March 31, 2021 and 2022.
+Added: Increases in interest income from our portfolio of investments in marketable fixed-income securities compared to the same quarter in the prior year were offset by increases in non-cash interest expense incurred on our liability for sale of future royalties to BVF.
+Added: Income Tax Expense
+Added: Income tax expense was $1.0 million for the three months ended March 31, 2022, compared to none in the same period the prior year.
+Added: The increase in income tax expense was due to the completion of a U.S.
+Added: state nexus study for the 2021 tax year.
Liquidity and Capital Resources
−Removed: To date, we have financed our operations primarily through net proceeds of approximately $677.1 million from equity offerings and proceeds of approximately $641.4 million from our collaboration and stock purchase agreements, including $220.4 million gross proceeds raised in February 2021 from the sale to Gilead of 5,650,000 shares of our common stock.
−Removed: As of September 30, 2021, we had $743.4 million of cash, cash equivalents, and investments in marketable securities, compared to $735.1 million as of December 31, 2020.
+Added: Sources of Liquidity
+Added: To date, we have financed our operations primarily through net proceeds of approximately $677.1 million from equity offerings and proceeds of approximately $1,381.4 million from our collaboration and stock purchase agreements, including the receipt of $725 million in option exercise payments from Gilead in January 2022.
+Added: We also receive cost-sharing reimbursements from Gilead for certain shared expenses incurred on optioned programs.
+Added: For the three months ended March 31, 2022 and 2021, we recognized reductions of operating expense due to reimbursements of $30.4 million and $4.9 million, respectively, for shared expenses incurred on optioned programs.
+Added: We expect future reimbursements to be higher than historical amounts due to Gilead's opt-in on three additional programs in 2021.
+Added: As of March 31, 2022, we had $1,342.4 million of cash, cash equivalents, and investments in marketable securities, compared to $681.3 million as of December 31, 2021.
+Added: The increase in cash from the prior year end is primarily due to the receipt of $725 million in option exercise payments from Gilead in January 2022.
Our cash and investments are held in a variety of interest-bearing instruments, including money market funds, U.S.
−Removed: government treasury obligations, U.S.
−Removed: government agency securities, and investments in corporate securities.
−Removed: Based on our existing business plan, we believe that our existing cash, cash equivalents, and investments will be sufficient to fund our planned level of operations at least through 2023.
−Removed: We may require additional capital to complete the development and any commercialization of our investigational products.
−Removed: Our future capital requirements will depend on many factors, including:
−Removed: the scope, rate of progress and costs of clinical trials for our investigational products as well as drug discovery, preclinical development activities, and laboratory testing;
−Removed: the number and scope of clinical programs we decide to pursue;
−Removed: the scope and costs of manufacturing development and commercial manufacturing activities;
−Removed: the timing and amount of expense related to our current and future clinical programs, subject to the rights of our existing partners, and the costs associated with our share of the global development plan for such programs;
−Removed: the timing and amount of milestone payments we receive under the Taiho Agreement and Gilead Collaboration Agreement, and option fees under the Gilead Collaboration Agreement;
−Removed: the extent to which we acquire or in-license other investigational products and technologies;
−Removed: the cost, timing and outcome of regulatory review of our investigational products;
−Removed: the cost and timing of establishing sales and marketing capabilities, if any of our investigational products receive marketing approval;
−Removed: the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
−Removed: our ability to establish and maintain collaborations on favorable terms, if at all;
−Removed: our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our investigational products;
−Removed: the costs associated with being a public company;
−Removed: the cost associated with commercializing our investigational products, if they receive marketing approval.
−Removed: If we raise additional funds by issuing equity securities, our stockholders may experience dilution.
−Removed: Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.
−Removed: Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.
−Removed: If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate
−Removed: some or all of our development programs and clinical trials.
−Removed: We may also be required to sell or license to others rights to our investigational products in certain territories or indications that we would prefer to develop and commercialize ourselves.
+Added: government treasury obligations, investments in corporate securities and certificates of deposit.
+Added: Based on our existing business plan, we believe that our existing cash, cash equivalents, and investments will be sufficient to fund our planned level of operations into 2026.
+Added: Our cash flow and financing requirements are determined by analyses of operating and capital spending budgets.
+Added: It is challenging to predict the nature, timing and estimated long-range costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our investigational products.
+Added: This is made more challenging by events outside of our control, such as the recent COVID-19 pandemic.
+Added: Accordingly, our operating plan may change, including as a result of factors currently unknown to us, and we may need to seek additional funds sooner than planned.
+Added: Such financing may result in dilution to stockholders, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect our business.
+Added: In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
See “Risk Factors”
−Removed: for additional risks associated with our substantial capital requirements.
+Added: below for additional risks associated with our substantial capital requirements.
Summary Condensed Consolidated Statement of Cash Flows
The following table sets forth the primary sources and uses of cash, cash equivalents and restricted cash for each of the periods presented below (in thousands):
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Net cash (used in) provided by:
3 unchanged sentences
Net increase in cash, cash equivalents and restricted cash
−Removed: Cash Used in Operating Activities
−Removed: Net cash used in operating activities was $194.1 million for the nine months ended September 30, 2021, as compared to $161.1 million provided by operating activities for the same period in the prior year.
−Removed: The change in cash flow from operating activities is primarily due to the $155.5 million increase in our net loss to $226.5 million.
−Removed: The change in our net loss is primarily a result of our expanded clinical development activities and general and administrative costs incurred to support our operations, partially offset by the $55.1 million payment received in the prior year from Gilead for the license to zimberelimab.
−Removed: The overall increase in cash used is partially offset by year-over-year changes in non-cash items, including $26.8 million increased expense from stock-based compensation, and changes in our asset and liability balances due to the timing of payments to or from our vendors and collaborators.
+Added: Cash Provided by Operating Activities
+Added: Net cash provided by operating activities was $654.0 million for the three months ended March 31, 2022, as compared to $66.3 million used in operating activities for the same period in the prior year.
+Added: The change in cash flow from operating activities is primarily due to the receipt of $725 million in January 2022 from Gilead for their exercised options to three programs.
+Added: This was partially offset by our net loss of $68.0 million.
+Added: The increase in expenses incurred for development activities is partially offset by $30.4 million in reimbursements from Gilead as well as year-over-year changes in non-cash items, including an increase of $3.8 million in non-cash stock-based compensation, and changes in our asset and liability balances due to the timing of payments to or from our vendors and collaborators.
Cash Used in Investing Activities
−Removed: Cash used in investing activities was $22.8 million for the nine months ended September 30, 2021 compared to $434.1 million used in investing activities for the same period in the prior year.
−Removed: The change in cash flow from investing activities was primarily due to higher maturities of our investments in fixed-income marketable securities, partially offset by an increase in purchases of property and equipment as we invested in our expansion of office and laboratory facilities.
+Added: Cash used in investing activities was $268.1 million for the three months ended March 31, 2022 compared to $62.8 million provided by investing activities for the same period in the prior year.
+Added: The change in cash flow from investing activities was primarily due to higher net purchases of short-term and long-term securities as we invested a portion of the $725 million received from Gilead in January 2022 in fixed income marketable securities.
Cash Provided by Financing Activities
−Removed: Cash provided by financing activities was $225.7 million for the nine months ended September 30, 2021 compared to $437.0 million in the same period in the prior year.
−Removed: In February 2021 we received $220.4 million from Gilead pursuant to the terms of the Amended and Restated Stock Purchase Agreement.
−Removed: In 2020, we received $326.2 million, net of direct offering costs, from our May 2020 public offering, as well as $107.5 million, net of direct offering costs, from the Gilead Stock Purchase Agreement.
+Added: Cash provided by financing activities was $14.9 million for the three months ended March 31, 2022 compared to $222.1 million in the same period in the prior year.
+Added: The decrease in cash flow from financing activities was primarily due to the $220.4 million received from Gilead in February 2021 pursuant to the terms of the Amended and Restated Stock Purchase Agreement which did not recur in the three months ended March 31, 2022.
+Added: The overall decrease is partially offset by increased funds received for issuance of common stock pursuant to equity award plans and $5.0 million received under the BVF agreement.
Contractual Obligations and Commitments
−Removed: In April 2021, we entered into a lease amendment for our existing operating leases in Hayward, California, that, among other things, extends the terms of those leases.
−Removed: The lease amendment includes approximately $43 million in additional undiscounted future minimum lease payments throughout the expected term and provides additional tenant improvement allowances totaling $5.8 million with options to increase the allowance by $10.9 million.
−Removed: Other than the additional contractual obligations under the lease amendment, there have been no material changes to our contractual obligations outside the ordinary course of business during the nine months ended September 30, 2021, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.
+Added: There have been no material changes to our contractual obligations outside the ordinary course of business during the three months ended March 31, 2022, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
Off-Balance Sheet Arrangements
5 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.