What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-25 compared with 2024-02-21 · 306 added, 220 removed, 721 unchanged (42% of the section changed)

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Loss

Consolidated Balance Sheets

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We have audited the accompanying consolidated balance sheets of Arcus Biosciences, Inc.

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

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Of the revenue recognized under the Gilead Agreements in 2024, $215 million related to amounts recognized as revenue when services are performed, based on the level of effort expended in a given period in relation to the total effort expected to be incurred to satisfy the applicable performance obligation.

Management periodically updates its estimates of the amount, and timing, of the total effort expected to be incurred to satisfy such performance obligations, with any changes in estimate potentially changing the amount of revenue previously recognized and/or the amount to be recognized in future periods.

Auditing the Company’s process for estimating the amount and timing of effort expected to be incurred to satisfy such performance obligations is complex, particularly with regard to the significant judgment applied by the Company when updating clinical trial assumptions, including the cost, timing and duration of such trials.

Changes to these assumptions can have a material effect on the amount and timing of revenue recognized.

Management periodically updates its estimates of the total effort expected to be incurred to satisfy such performance obligations, with any changes in estimate potentially changing the amount of revenue previously recognized and/or the amount to be recognized in future periods.

Auditing the Company’s process for estimating the total effort expected to be incurred to satisfy such performance obligations is complex due to the significant judgment applied by the Company in determining the total effort.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls addressing the risks of material misstatement relating to the Company’s process for estimating the cost, timing, and duration of the total effort expected to be incurred to satisfy the identified performance obligations pursuant to the Gilead Agreements.

For example, we tested management’s controls over the identification of changes in estimates and significant assumptions related to the cost, timing and duration of clinical trial activity and development.

Our audit procedures included, among others, obtaining and reading applicable board and committee meeting minutes, inquiring of research and development personnel, including program managers, obtaining third-party confirmations for a sample of clinical trial and development activity, and testing the completeness and accuracy of the data used by management.

We also performed a sensitivity analysis to evaluate the impact that changes in significant assumptions would have on the revenue recognized during 2023.

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls addressing the risks of material misstatement relating to the Company’s process for estimating the total effort expected to be incurred to satisfy the identified performance obligations pursuant to the Gilead Agreements.

Our audit procedures included, among others, obtaining and reading applicable board and committee meeting minutes, inquiring of research and development personnel, including program managers, and testing the completeness and accuracy of the data used by management to estimate the total effort expected to be incurred to satisfy the identified performance obligations pursuant to the Gilead Agreements.

/s/ Ernst & Young LLP

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Research and development

(Net of recoveries of $ 110 , $ 132 and $ 25 from a related party)

(Includes $ 39 , $ 110 and $ 132 of net recoveries from

a related party)

General and administrative

(Net of recoveries of $ — , $ 1 and $ — from a related party)

(Includes ($ 2 ), $ — and $ 1 of net recoveries from

(payments to) a related party)

Impairment of long-lived assets (see Note 14, Leases) 20 — —

Total operating expenses 588 457 392

Income (loss) from operations ( 340 ) ( 280 ) 54

Loss from operations ( 330 ) ( 340 ) ( 280 )

Non-operating income (expense):

Interest and other income, net 52 41 16

Effective interest on liability for sale of future royalties ( 2 ) ( 2 ) —

Interest expense ( 4 ) ( 2 ) ( 2 )

Total non-operating income, net 48 39 14

Income (loss) before income taxes ( 301 ) ( 266 ) 55

Loss before income taxes ( 282 ) ( 301 ) ( 266 )

Income tax expense ( 1 ) ( 6 ) ( 1 )

Net income (loss) $ ( 307 ) $ ( 267 ) $ 53

Net income (loss) per share:

Basic $ ( 4.15 ) $ ( 3.71 ) $ 0.76

Diluted $ ( 4.15 ) $ ( 3.71 ) $ 0.71

Shares used to compute net income (loss) per share:

Basic 74.0 72.0 69.3

Diluted 74.0 72.0 74.0

Net loss $ ( 283 ) $ ( 307 ) $ ( 267 )

Net loss per share:

Basic and diluted $ ( 3.14 ) $ ( 4.15 ) $ ( 3.71 )

Shares used to compute net loss per share:

Basic and diluted 90.1 74.0 72.0

See accompanying notes.

ARCUS BIOSCIENCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In millions)

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2024 2023 2022

Net income (loss) $ ( 307 ) $ ( 267 ) $ 53

Net loss $ ( 283 ) $ ( 307 ) $ ( 267 )

Other comprehensive income (loss) — 7 ( 6 )

Comprehensive income (loss) $ ( 300 ) $ ( 273 ) $ 52

Comprehensive loss $ ( 283 ) $ ( 300 ) $ ( 273 )

See accompanying notes.

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Deferred revenue, noncurrent ($ 234 and $ 291 to a related party)

Long-term debt 48 —

Other noncurrent liabilities 157 142

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Accumulated deficit ( 1,132 ) ( 849 )

Accumulated other comprehensive loss — ( 7 )

Total stockholders’ equity 485 462

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paid-in capital Accumulated deficit Accumulated

comprehensive loss Total

comprehensive income (loss) Total

stockholders’ equity

Balance at December 31, 2021 70.8 $ 1,118 $ ( 275 ) $ ( 1 ) $ 842

Issuance of common stock (see Note 3, Related party - Gilead Sciences, Inc.

and Note 14, Stockholders' Equity) 5.7 220 — — 220

Issuance of common stock in connection with our equity award programs 2.1 23 — — 23

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Other comprehensive loss — — — ( 6 ) ( 6 )

Net income — — 53 — 53

Net loss — — ( 267 ) — ( 267 )

Balance at December 31, 2022 72.9 1,206 ( 542 ) ( 7 ) 657

Issuance of common stock (see Note 3, Related party - Gilead Sciences, Inc.

and Note 15, Stockholders' Equity) 1.2 25 — — 25

Issuance of common stock in connection with our equity award programs 1.4 7 — — 7

Stock-based compensation — 73 — — 73

Other comprehensive loss — — — ( 6 ) ( 6 )

Other comprehensive income — — — 7 7

Net loss — — ( 307 ) — ( 307 )

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Stock-based compensation — 76 — — 76

Other comprehensive gain — — — 7 7

Net loss — — ( 283 ) — ( 283 )

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Cash flow from operating activities

Net income (loss) $ ( 307 ) $ ( 267 ) $ 53

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

Net loss $ ( 283 ) $ ( 307 ) $ ( 267 )

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

Stock-based compensation expense 76 73 65

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Noncash lease expense 7 8 8

Amortization of premiums (discounts) on marketable securities ( 19 ) — 5

Impairment on right-of use assets 20 — —

Amortization of discounts on marketable securities ( 25 ) ( 19 ) —

Other items, net 3 2 3

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Receivable from collaboration partners ($ 14 , $ 19 and $ 704 from a related party)

15 704 ( 17 )

Other assets ($ 6 , ($ 4 ) and ($ 2 ) from a related party)

( 14 ) 2 ( 3 )

Accounts payable 3 ( 1 ) 8

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Purchases of property and equipment ( 6 ) ( 24 ) ( 6 )

Purchases of in-process research and development — ( 6 ) —

Collaboration reimbursements of in-process research and development from a related party — 3 —

Other items, net — — ( 3 )

Net cash provided by (used in) investing activities ( 84 ) 194 ( 413 )

Cash flow from financing activities

Proceeds from issuance of common stock ($ 20 , $ — and $ 220 from a related party)

Proceeds from issuance of common stock ($ 228 , $ 20 and $ — from a related party), net

Proceeds from debt issuances, net 47 — —

Proceeds from issuance of common stock pursuant to equity award plans 9 8 23

Payments of employee taxes related to net settlement of equity awards ( 7 ) — —

Proceeds from sale of future royalties — — 10

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Income taxes paid $ — $ 5 $ 3

Interest paid $ 1 $ — $ —

Non-cash investing and financing activities:

Unpaid portion of property and equipment purchases included in Accounts payable and Other current liabilities $ — $ 2 $ 3

Unpaid portion of other assets included in accrued research and development $ — $ — $ 1

Vesting of early exercised stock options and restricted stock $ — $ — $ 1

See accompanying notes.

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We operate and manage our business as one reportable and operating segment, which is the business of developing and commercializing highly differentiated therapies that have a meaningful impact on patients.

See Note 18, Segments of business, for more information.

Liquidity and Capital Resources

As of December 31, 2023, we had cash, cash equivalents and marketable securities of $ 866 million.

In January 2024, we received $ 320 million from Gilead for shares purchased pursuant to the Third Stock Purchase Agreement Amendment (see Note 3.

Related party - Gilead Sciences, Inc.).

We believe our cash, cash equivalents and marketable securities will be sufficient to fund our planned operations for a period of at least twelve months following the date of filing of this Annual Report.

As of December 31, 2024, we had cash, cash equivalents and marketable securities of $ 992 million, which we believe will be sufficient to fund our planned operations for a period of at least twelve months following the date of filing of this Annual Report.

See Note 19, Subsequent events, for additional information on stock issuances that occurred in February 2025.

Summary of significant accounting policies

Basis of Presentation

The Consolidated Financial Statements, which include the accounts of Arcus as well as its wholly owned subsidiary, have been prepared in accordance with U.S.

The Consolidated Financial Statements, which include the accounts of Arcus as well as its wholly owned subsidiaries, have been prepared in accordance with U.S.

GAAP and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.

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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.

We currently do not have product sales and our revenues are derived from arrangements for the development of our investigational products.

We currently do not have product sales and our revenues are derived from research, collaboration and license arrangements with strategic partners.

Such arrangements may require us to deliver various rights, services and/or goods, including intellectual property rights/licenses, R&D services, manufacturing services and/or commercialization services.

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Acquired in-process R&D projects with no alternative future use are recorded in R&D expense upon acquisition.

Net payment or reimbursement of R&D costs is recognized when the obligations are incurred or as we become entitled to the cost recovery.

Net payment or reimbursement of R&D costs is recognized when the obligations are incurred and as we become entitled to the cost recovery.

See Note 4, License and collaboration agreements, for more information.

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human resources;

legal and other administrative activities which consist primarily of personnel costs;

legal and other administrative activities which consist primarily of salaries, benefits and other staff-related costs;

facilities and overhead costs;

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Right-of-use assets are adjusted for prepaid lease payments, lease incentives and initial direct costs incurred.

Operating lease expense for the minimum lease payments is recognized on a straight-line basis over the lease term.

Operating lease expense for the minimum lease payments is recognized on a straight-line basis over the lease term and includes both lease and non-lease components due to our election account for these components as a single lease component.

When our operating leases do not provide an implicit interest rate, we generally utilize our incremental borrowing rate, based on the information available at the commencement date to determine the lease liability.

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Recent Accounting Pronouncements

There have been no new accounting pronouncements issued or adopted during the year ended December 31, 2023 with a significant impact to our financial statements.

Adopted in the Current Period

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 — Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosures.

This ASU expands segment disclosure requirements, primarily through enhanced disclosure requirements for significant segment expenses.

The ASU does not change how a public entity identifies its operating segments, aggregates them or applies the quantitative thresholds to determine its reportable segments.

The additional disclosure requirements apply to all public entities that are required to report segment information, including those with only one reportable segment.

Early adoption is permitted, and the standard requires retrospective application to all prior period presented.

There was no impact on our reportable segments identified and additional required disclosures have been included in Note 18.

Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03 — Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) — Disaggregation of Income Statement Expenses.

This ASU requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses.

We plan to adopt this guidance beginning with our 2027 Annual Report to be filed in early 2028 and all quarterly and Annual Reports thereafter.

We expect the adoption of this standard to result in increased disclosures in our Notes to Consolidated Financial Statements.

Related party - Gilead Sciences, Inc.

In 2020, we and Gilead entered into an Option, License and Collaboration Agreement (the "Gilead Collaboration Agreement"), Common Stock Purchase Agreement (the "Stock Purchase Agreement"), and Investor Rights Agreement (the "Investor Rights Agreement").

In 2021, we amended the Gilead Collaboration Agreement (the "First Gilead Collaboration Agreement Amendment") and the Stock Purchase Agreement (the "First Stock Purchase Agreement Amendment").

In 2022, we amended the Investor Rights Agreement (the "First Investor Rights Agreement Amendment").

In 2023, we further expanded our collaboration (the "Second Gilead Collaboration Agreement Amendment") and further amended the Stock Purchase Agreement (the "Second Stock Purchase Agreement Amendment").

On January 29, 2024, we further amended the Gilead Collaboration Agreement (the "Third Gilead Collaboration Agreement Amendment"), amended and restated our stock purchase agreements (the "Third Stock Purchase Agreement Amendment") and amended and restated our investor rights agreement (the "Second Investor Rights Agreement Amendment").

In 2020, we and Gilead entered into the Gilead Collaboration Agreement, the Stock Purchase Agreement, and the Investor Rights Agreement.

The Gilead Collaboration Agreement was amended in 2021, in 2023, in the first quarter 2024 and in the second quarter 2024 (the "Fourth Gilead Collaboration Agreement Amendment").

The Stock Purchase Agreement was amended in 2021, in 2023, and was amended and restated in the first quarter 2024.

The Investor Rights Agreement was amended in 2022 and was amended and restated in the first quarter 2024.

We refer to these agreements collectively as the Gilead Agreements.

Stock Purchase Agreement and Investor Rights Agreement

In 2020, under the Stock Purchase Agreement, Gilead purchased 6.0 million shares of our common stock for total gross proceeds of $ 200 million, of which $ 91 million was allocated to the revenue related performance obligations created by the Gilead Collaboration Agreement (See Note 5, Revenues for more information).

Stock Purchase and Investor Rights Agreements

In 2020, under the Stock Purchase Agreement, Gilead purchased 6.0 million shares of our common stock for total gross proceeds of $ 200 million, of which $ 91 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 as deferred revenue, see Note 5, Revenues, for more information.

In 2021, under the First Stock Purchase Agreement Amendment, Gilead purchased 5.7 million shares of our common stock for total gross proceeds of $ 220 million.

In 2023, under the Second Stock Purchase Agreement Amendment, Gilead purchased 1.0 million shares of our common stock for total gross proceeds of $ 20 million.

On January 29, 2024, under the Third Stock Purchase Agreement Amendment, Gilead purchased 15.2 million shares of our common stock for total gross proceeds of $ 320 million.

Gilead has the right, at its option until July 2025, to purchase up to a maximum of 35 % of the Company’s then-outstanding voting common stock, at a purchase price equal to the greater of a 20 % premium to market (based on a trailing five-day average closing price at option exercise) or the $ 33.54 initial purchase price.

In 2024, under the Third Stock Purchase Agreement Amendment, Gilead purchased 15.2 million shares of our common stock for total gross proceeds of $ 320 million, of which $ 87 million was determined to be a premium on the purchase of common stock and allocated to the performance obligations created by the Third Gilead Collaboration Agreement Amendment as deferred revenue, see Note 5, Revenues, for more information.

Gilead has the right under the Stock Purchase Agreement and the related amendments to purchase, at its option until July 2025, up to a maximum of 35 % of the Company’s then-outstanding voting common stock, at a purchase price equal to the greater of a 20 % premium to market (based on a trailing five-day average closing price at option exercise) or the $ 33.54 initial purchase price.

Based on the value of our common stock at each contract closing, the right to purchase additional shares had no value.

Under the Investor Rights Agreement entered into in 2020, Gilead has the right, which they have exercised, to designate two members of our board of directors.

This agreement also included a three-year standstill and a two-year lockup, provided Gilead with registration rights commencing at the end of the lockup period and provides Gilead with pro rata participation rights in certain future financings.

In October 2022, we registered shares purchased by Gilead under the Stock Purchase Agreement and the First Stock Purchase Agreement Amendment and entered into the First Investor Rights Agreement Amendment, primarily to extend the two-year lockup period to three-years which expired on July 13, 2023.

On January 29, 2024, under the Second Investor Rights Agreement Amendment, and in connection with the Third Stock Purchase Agreement Amendment, Gilead received the right, which they have exercised, to designate a third individual to be appointed to our board.

As of December 31, 2023, Gilead held approximately 19.6 % of our outstanding common stock arising from purchases in our May 2020 public offering and purchases under the Stock Purchase Agreement and the First and Second Stock Purchase Agreement Amendments.

As of January 31, 2024, after including shares purchased by Gilead under the Third Stock Purchase Agreement Amendment, Gilead held approximately 33.1 % of our outstanding common stock.

Under the Investor Rights Agreement entered into in 2020 and subsequent amendments, Gilead has:

the right to designate three members of our board of directors;

registration rights for shares that it purchases;

and pro rata participation rights in certain future financings.

Gilead has exercised its rights to appoint all three board members and we have registered all shares purchased to date.

As of December 31, 2024, Gilead held approximately 32.6 % of our outstanding common stock arising from purchases in our 2020 public offering and purchases under the Stock Purchase Agreement and the related amendments.

See Note 19, Subsequent events, for additional information regarding our February 2025 common stock offering.

Collaboration Agreements

In 2020, we entered into the Gilead Collaboration Agreement, which gave Gilead an exclusive license to develop and commercialize zimberelimab (the anti PD-1 program) in certain markets and time-limited options to acquire exclusive licenses to develop and commercialize any of our then-current and future clinical programs arising during the 10 -year collaboration term, contingent upon $ 100 million option continuation payments payable on each of the second, fourth, sixth and eighth anniversaries of the agreement.

Upon closing of the transaction in July 2020, Gilead made an upfront payment of $ 175 million.

Upon closing of the transaction in 2020, Gilead made an upfront payment of $ 175 million.

In 2021, we entered into the First Gilead Collaboration Agreement Amendment pursuant to which Gilead exercised its option to three programs—providing Gilead with exclusive licenses to develop and commercialize domvanalimab and AB308 (collectively, the anti-TIGIT program), etrumadenant (the adenosine receptor antagonist program) and quemliclustat (the CD73 program), in certain markets—for a total payment of $ 725 million that was received in 2022.

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and (ii) removed the $ 100 million option continuation payment that was otherwise due on the second anniversary of the Gilead Collaboration Agreement.

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 our delivery to Gilead of the requisite data package.

Gilead may exercise its option to any program at any time prior to expiration of the option and will pay Arcus an option fee of $ 150 million per program.

With respect to domvanalimab, we are also eligible to receive up to $ 500 million in potential U.S.

regulatory approval milestones.

Gilead may exercise its option to any program at any time prior to expiration of the option and will pay Arcus an option fee of $ 150 million per program.

For each program that Gilead opts in to, both companies will co-develop and equally share global development costs, subject to certain opt-out rights that we have, caps on our spending and related subsequent adjustments, and certain other exceptions.

For each program, provided we have not exercised our opt-out rights, we have the option to co-promote in the United States with equal sharing of related profits and losses.

For each program, provided we have not exercised our opt-out rights, we have the option to co-promote in the U.S.

with equal sharing of related profits and losses.

Gilead has the right to exclusively commercialize outside of the U.S., subject to the rights of our existing partners in any territories and will pay us tiered royalties as a percentage of revenues ranging from the high teens to the low twenties.

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With respect to these two research programs, Gilead has the right to exercise its option, on a program-by-program basis, either (i) upon our 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.

These research programs were not determined to be performance obligations at contract inception, due to the very early stages of the programs.

In May 2023, we entered into the Second Gilead Collaboration Agreement Amendment pursuant to which we expanded our collaboration to provide Gilead with options to license up to four jointly selected research-stage programs that target inflammatory diseases for which we will lead discovery and early development activities.

In 2023, we entered into the Second Gilead Collaboration Agreement Amendment pursuant to which we expanded our collaboration to provide Gilead with options to license up to four jointly selected research-stage programs that target inflammatory diseases for which we will lead discovery and early development activities.

We will receive an upfront payment of $ 17.5 million for each initiated program and Gilead will have an option to license each program at two separate, prespecified time points.

For the first two research programs, Gilead has the right to exercise its option, on a program-by-program basis, either (i) upon our completion of certain IND-enabling activities for an option payment of $ 45 million or (ii) following the achievement of a clinical development milestone for an option payment of $ 150 million.

For the first two research programs, Gilead has the right, on a program-by-program basis, either (i) to exercise its option upon our completion of certain IND-enabling activities for an option payment of $ 45 million or (ii) to extend its option and exercise it following the achievement of a clinical development milestone for an option payment of $ 150 million.

If Gilead exercises its option at the earlier time point for the first two programs, we would be eligible to receive up to $ 375 million in regulatory and commercial milestone payments as well as tiered royalties for each optioned program.

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for that program.

We received a total upfront payment of $ 35 million for an initial two research programs in June 2023.

For the other two research programs, Gilead’s options expire unless the programs are selected prior to the first anniversary of the Second Gilead Collaboration Agreement Amendment.

On January 29, 2024, we entered into the Third Gilead Collaboration Agreement Amendment.

The Third Gilead Collaboration Agreement Amendment, among other things, (i) requires Gilead to pay the $ 100 million option continuation payment due on the fourth anniversary of the Gilead Collaboration Agreement, (ii) provides that we will operationalize and fund a Phase 3 study we plan to initiate to evaluate quemliclustat in pancreatic cancer, (iii) provides that we will solely fund our share of PACIFIC-8, subject to Gilead’s right to reinstate PACIFIC-8 as part of the parties’ joint development activities for the TIGIT Program in the first quarter of 2026, and (iv) provides that we will fund certain other activities.

We received a total upfront payment of $ 35 million for an initial two research programs in 2023.

Gilead's options to the other two research programs, expire unless the programs are selected prior to May 2025, as amended under the Fourth Gilead Collaboration Agreement Amendment.

In the first quarter 2024, we entered into the Third Gilead Collaboration Agreement Amendment.

The Third Gilead Collaboration Agreement Amendment, among other things, (i) requires Gilead to pay the $ 100 million option continuation payment due on the fourth anniversary of the Gilead Collaboration Agreement, which was received in the third quarter 2024 (ii) provides that we will operationalize and fund the Phase 3 PRISM-1 study evaluating quemliclustat in pancreatic cancer subject to Gilead's right to reinstate the study as part of the parties' joint development activities upon regulatory approval, (iii) provides that we will solely fund our share of PACIFIC-8, subject to Gilead’s right to reinstate PACIFIC-8 as part of the parties’ joint development activities for the TIGIT Program in the first quarter of 2026, and (iv) provides that we will fund certain other activities.

All other terms of the existing collaboration agreements, remain unchanged.

We are evaluating the impact of this amendment under the accounting rules for contract modifications as a change in scope or price of the original contract.

Once we determine that a contract has been modified, the modification may be required to be treated as separate, standalone contract, or combined with the original contract.

In addition, some modifications are accounted for on a prospective basis and others on a cumulative catch-up basis.

As of December 31, 2024, Gilead has licenses to domvanalimab, AB308, etrumadenant, quemliclustat and zimberelimab.

In February 2025, Gilead's time-limited exclusive option rights to our HIF-2α program (including casdatifan) expired.

For the years ended December 31, 2024, 2023 and 2022;

we recognized revenue under the Gilead Agreements of $ 243 million, $ 112 million and $ 107 million, respectively and net reimbursements from Gilead recognized as reductions in R&D expense of $ 39 million, $ 110 million and $ 132 million, respectively.

For the year ended December 31, 2022, we recognized reimbursements from Gilead as reductions in G&A expense of $ 1 million.

For a more detailed discussion on revenues recognized under the Gilead Agreements, see Note 5, Revenues.

For the years ended December 31, 2024 and 2022, respectively, we recognized net payments to Gilead in G&A expense of $ 2 million and net reimbursements from Gilead as reductions in G&A expense of $ 1 million.

At December 31, 2024 and 2023, we had a net receivable of $ 6 million and $ 20 million, respectively, recorded in Receivable from collaboration partners on our Consolidated Balance Sheets.

At December 31, 2023, we had $ 6 million recorded in Other noncurrent assets on our Consolidated Balance Sheets.

For a more detailed discussion on revenues recognized under the Gilead Agreements, see Note 5, Revenues, for more information.

License and collaborations

We enter into licensing agreements, strategic collaborations and other similar arrangements with third parties for the development and commercialization of certain investigational products.

These arrangements may be collaborative and involve two or more parties who are active participants in the operating activities of the collaboration and are exposed to significant risks and rewards depending on the commercial success of the activities.

These arrangements may include:

These arrangements:

may be collaborative and involve two or more parties who are active participants in the operating activities of the collaboration and are exposed to significant risks and rewards depending on the commercial success of the activities;

are performed with no guarantee of either technological or commercial success;

and are each unique in nature.

Such arrangements may include:

non-refundable upfront payments;

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and cost-sharing arrangements.

See Note 2, Summary of significant accounting policies, for additional discussion of revenues recognized under these types of arrangements.

See Note 2, Summary of significant accounting policies, for additional discussion of how revenues are recognized under these types of arrangements.

Operating expenses for costs incurred pursuant to these arrangements are reported in their respective expense line items in the Consolidated Statements of Operations, net of any payments due to or reimbursements due from our collaboration partners, with such reimbursements being recognized at the time the party becomes obligated to pay.

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Gilead Collaboration

See Note 3, Related party - Gilead Sciences, Inc.

See Note 3, Related party - Gilead Sciences, Inc., for more information.

Taiho Collaboration

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(ii) zimberelimab (the anti PD-1 program);

and (iii) domvanalimab and AB308 (collectively, the anti-TIGIT program).

During 2022, Taiho opted to participate in two global Phase 3 trials of domvanalimab and zimberelimab combinations, STAR-121 and STAR-221, and became obligated to make certain milestone payments contingent upon successfully satisfying the related clinical milestones.

During the year ended December 31, 2023, the clinical milestones for domvanalimab and zimberelimab for the STAR-221 study were met and Taiho became obligated to pay us $ 28 million and in early 2024 the clinical milestones for domvanalimab and zimberelimab for the STAR-121 study were met and Taiho became obligated to pay us $ 26 million.

For each of the years ended December 31, 2023, 2022 and 2021, we recognized revenue of $ 5 million, $ 5 million and $ 22 million, respectively, under this agreement.

For a more detailed discussion on revenues see Note 5, Revenues.

For the year ended December 31, 2023, we recognized net reimbursements from Taiho as a reduction in R&D expense of $ 8 million.

(iii) domvanalimab and AB308 (the anti-TIGIT program);

and (iv) quemliclustat (the CD73 program), for which Taiho exercised its option and made an option payment of $ 15 million in the third quarter 2024.

During 2022, Taiho opted to participate in two global Phase 3 trials of domvanalimab and zimberelimab combinations, STAR-121 and STAR-221, and became obligated to reimburse us for their portion of the global study costs, and to make milestone payments contingent upon successfully satisfying the related clinical milestones.

In the first quarter 2024, the clinical milestones for domvanalimab and zimberelimab for the STAR-121 study were met and Taiho became obligated to pay us $ 26 million, of which $ 16 million was received in the first quarter 2024.

The remaining $ 10 million was received in January 2025.

Due to the nature of this arrangement, these clinical milestones were determined to be advance cost sharing payments for a portion of the global study R&D costs under the collaboration and are deferred and recognized as a reduction in R&D expense as the related global studies are performed, calculated as an estimated percentage of completion based on the estimated total effort for the programs.

In October 2024, Taiho opted to participate in the global Phase 3 trial of quemliclustat, PRISM-1, and became obligated to reimburse us for their portion of the global study costs and in February 2025, Taiho dosed their first patient in Japan for PRISM-1, and became obligated to make milestone payments totaling $ 19 million.

For the years ended December 31, 2024, 2023 and 2022, we recognized revenue of $ 15 million, $ 5 million and $ 5 million, respectively.

For the years ended December 31, 2024 and 2023 we recognized net reimbursements from Taiho of $ 28 million and $ 8 million, respectively, recognized as a reduction in R&D expense under this arrangement.

At December 31, 2024 and 2023, we had $ 14 million and $ 18 million, respectively, related to this arrangement recorded in Receivable from collaboration partners on our Consolidated Balance Sheets.

At December 31, 2024, we had liabilities of

$ 36 million related to certain advance cost sharing payments under this arrangement recorded in Other liabilities, allocated between current and noncurrent based on the expected timing of future recognition.

AstraZeneca Collaboration

In 2020, we entered into a collaboration with AstraZeneca to evaluate domvanalimab, our investigational anti-TIGIT antibody, in combination with AstraZeneca’s durvalumab in a registrational Phase 3 clinical trial in patients with unresectable Stage 3 NSCLC, known as the PACIFIC-8 trial.

The terms of the agreement were amended in January 2024.

The terms of this agreement were amended in the first quarter 2024.

Under the collaboration, as amended, each company will retain existing rights to their respective molecules and any future commercial economics.

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The portion of the costs that we consider to be unavoidable are accrued as incurred and milestones that are deemed probable of occurring are accrued in advance of the achievement of the milestone.

For the years ended December 31, 2023, 2022 and 2021 under this arrangement we recognized as R&D expense $ 6 million, $ 4 million, and $ 1 million respectively, before expected recoveries from our cost-sharing agreement with Gilead.

At December 31, 2023 and 2022, we have recognized liabilities of $ 11 million and $ 5 million, respectively, related to our obligation to AstraZeneca which is recorded in Other noncurrent liabilities.

As of December 31, 2023, the PACIFIC-8 trial formed part of the Arcus and Gilead joint development program for domvanalimab and our portion of the trial costs were shared with Gilead.

At December 31, 2023 and 2022, we have recognized receivables due from Gilead for these shared costs of $ 6 million and $ 2 million, respectively, which is recorded in Other noncurrent assets.

On January 29, 2024, under the Third Gilead Collaboration Agreement Amendment, we agreed to solely fund our share of PACIFIC-8, subject to Gilead’s right to reinstate PACIFIC-8 as part of the parties’ joint development activities for the TIGIT Program in the first quarter of 2026.

On the date of this amendment, we will incur $ 6 million of R&D costs reflecting our additional share of incurred costs to date.

Prior to January 2024, the PACIFIC-8 trial formed part of the Arcus and Gilead joint development program for domvanalimab and our portion of the trial costs were shared with Gilead.

At December 31, 2023, we had recognized amounts due from Gilead for these shared costs of $ 6 million, recorded in Other noncurrent assets on our Consolidated Balance Sheet.

Under the Third Gilead Collaboration Agreement Amendment, we agreed to solely fund our share of PACIFIC-8, subject to Gilead’s right to reinstate PACIFIC-8 as part of the parties’ joint development activities for the TIGIT Program in the first quarter of 2026.

For the year ended December 31, 2024, we incurred $ 6 million of R&D expense reflecting our additional share of incurred costs to date.

In October 2024, we entered into a clinical collaboration with AstraZeneca to evaluate casdatifan, our investigational HIF-2α inhibitor, in combination with volrustomig, AstraZeneca’s investigational PD-1/CTLA-4 bispecific antibody, in IO-naive patients with ccRCC.

AstraZeneca will operationalize the study.

Under the collaboration, 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 their respective investigational product to support the phase 1b trial.

For the years ended December 31, 2024, 2023, and 2022, we recognized as R&D expense $ 14 million, $ 6 million, and $ 4 million, respectively, under this arrangement.

At December 31, 2024, we have recognized a total liability of $ 26 million related to our obligation to AstraZeneca, recorded in Other current liabilities and Other noncurrent liabilities on our Consolidated Balance Sheets based on the expected timing of payment.

At December 31, 2023, we have recognized a liability of $ 11 million, which is recorded in Other noncurrent liabilities on our Consolidated Balance Sheets.

WuXi Biologics License – anti-PD-1

In 2017, we entered into an agreement with WuXi Biologics which, as amended, provides us with exclusive rights to (i) develop, use and manufacture products that include an anti-PD-1 antibody, including zimberelimab, worldwide and (ii) commercialize any such products worldwide, except in Greater China.

Under the agreement, as of December 31, 2023 we may incur (i) regulatory milestone payments of up to $ 50 million for zimberelimab, and commercialization milestone payments of up to $ 375 million, (ii) tiered royalties that range from the high single-digits to low teens on net sales of the licensed products and (iii) fees related to any sublicenses.

During the year ended December 31, 2021, we incurred milestones of $ 10 million related to this agreement which were recorded as R&D expense.

Under this agreement, as of December 31, 2024 we may incur (i) regulatory milestone payments of up to $ 50 million for zimberelimab, and commercialization milestone payments of up to $ 375 million, (ii) tiered royalties that range from the high single-digits to low teens on net sales of the licensed products and (iii) fees related to any sublicenses.

For the years ended December 31, 2024, 2023, and 2022, we did not have any milestones or royalties due under this arrangement.

WuXi Biologics License – anti-CD39

In 2020, we entered into an agreement with WuXi Biologics, under which we obtained the exclusive worldwide license to develop and commercialize anti-CD39 antibodies discovered under the agreement.

In 2020, we entered into an agreement with WuXi Biologics, under which we obtained the exclusive worldwide license to develop and commercialize anti-CD39 antibodies discovered under this arrangement.

As of December 31, 2024 we may incur additional clinical and regulatory milestone payments of up to $ 14 million and royalty payments in the low single digits on net sales of the licensed products under this agreement.

During the years ended December 31, 2023 and 2022, we incurred development milestones of $ 1 million and $ 2 million, respectively, related to this agreement, which were recognized as R&D expense.

For the years ended December 31, 2023 and 2022, we incurred development milestones of $ 1 million and $ 2 million, respectively, related to this agreement, which were recognized as R&D expense.

Abmuno License

In 2016, we entered into an agreement with Abmuno, under which we obtained the exclusive worldwide license to develop, use, manufacture, and commercialize products that include an anti-TIGIT antibody, including domvanalimab.

Under the agreement, as of December 31, 2023 we may incur additional clinical, regulatory and commercialization milestone payments of up to $ 88 million.

During the years ended 2022 and 2021, we incurred development milestone expenses of $ 5 million and $ 5 million, respectively, related to this agreement, which were recorded as R&D expense.

Exelixis Collaboratio n

In 2023, we entered into a clinical trial collaboration with Exelixis for STELLAR-009, a Phase 1b/2 trial to evaluate casdatifan, our investigational inhibitor of the transcription factor HIF-2⍺, in combination with Exelixis’s zanzalintinib, a next-generation tyrosine kinase inhibitor, in patients with ccRCC.

Under the collaboration, each company will retain existing rights to their respective molecules and any future commercial economics.

Exelixis will conduct the STELLAR-009 trial, and each company will supply their respective investigational product to support the trial.

We will reimburse Exelixis for a portion of the trial costs.

Patient enrollment for STELLAR-009 opened at the end of 2023.

For the year ended December 31, 2023, we recognized R&D expense of $ 3 million under this arrangement.

Under this agreement, as of December 31, 2024 we may incur additional clinical, regulatory and commercialization milestone payments of up to $ 88 million.

For the year ended December 31, 2022, we incurred development milestones of $ 5 million related to this agreement, which were recorded as R&D expense.

The following table summarizes our revenues by collaboration, category of revenue, and the method of recognition (in millions):

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Gilead Collaboration

License to domvanalimab * $ — $ — $ 329

License and R&D services * $ 207 $ 75 $ 74

Access rights * 33 33 31

Taiho Collaboration

License to domvanalimab * — — 15

R&D services * 8 4 —

Access rights * 28 33 33

Taiho Collaboration

License revenue * 15 — —

Other * — 5 5

Total revenues $ 258 $ 117 $ 112

Revenues from Gilead accounted for 96 % of Total revenues for both years ended December 31, 2023 and 2022, and 94 % of Total revenues for the year ended December 31, 2021.

Total revenues from collaborations $ 207 $ 80 $ 74

Total revenues from a customer $ 51 $ 37 $ 38

Revenues from Gilead accounted for 94 %, 96 % and 96 % of Total revenues for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table summarizes the revenue recognized as a result of changes in the deferred revenue balance (in millions):

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Revenue recognized from amounts in deferred revenue at the beginning of the period $ 243 $ 108 $ 112

We had $ 398 million and $ 452 million of deferred revenue remaining on our Consolidated Balance Sheets at December 31, 2023 and December 31, 2022, respectively, allocated between current and noncurrent based on the expected timing of future recognition.

We had $ 319 million and $ 398 million of deferred revenue remaining on our Consolidated Balance Sheets at December 31, 2024 and 2023, respectively, allocated between current and noncurrent based on the expected timing of future recognition.

Revenue from the Gilead Collaboration

In 2021, we determined that the First Gilead Collaboration Agreement Amendment represented a contract modification and at the amendment closing date of December 21, 2021, we allocated the transaction price to the new and remaining performance obligations (see Note 3, Related party - Gilead Sciences, Inc., for more information).

The following table summarizes the transaction price and the allocation of the transaction price to the performance obligations (in millions):

In January 2024, we entered into the Third Gilead Collaboration Agreement Amendment, which we determined was a change in scope and price of the original contract and we accounted for this contract modification as both a modification of the existing contract and the creation of a new contract.

Under the applicable accounting rules for such contract modifications, we did not adjust the accounting for completed performance obligations that were distinct from the modified goods or services.

However, we adjusted revenue previously recognized to reflect the effect of the contract modification due to the updated estimated transaction price allocated to the partially satisfied performance obligations and the updated measure of progress as of the modification date.

Accordingly, we allocated the transaction price to the remaining performance obligations (both from the existing contract and the modification) and recognized a cumulative catch-up to revenue of $ 107 million based on the updated transaction price and measure of progress for the partially satisfied performance obligations.

This cumulative catch-up reduced net loss per share, basic and diluted, in the year ended December 31, 2024 by $ 1.19 , see Note 3, Related party - Gilead Sciences, Inc., for more information.

The following table summarizes the transaction price (in millions):

Transaction price Amount

Deferred revenues as of December 21, 2021 $ 165

Option payment for Domvanalimab 275

Option payment for Etrumadenant 250

Option payment for Quemliclustat 200

Premium from Third Stock Purchase Agreement Amendment $ 87

Option continuation payment received in the third quarter of 2024 100

Deferred revenue as of January 2024 335

Total transaction price $ 522

Our assessment of the updated transaction price for the Third Gilead Collaboration Agreement Amendment included an analysis of amounts we expected to receive, which at contract amendment consisted of:

$ 100 million option continuation payment that Gilead committed to and paid in the third quarter of 2024 for continued access to our pipeline;

$ 87 million allocated from the premium from the Third Stock Purchase agreement;

and $ 335 million deferred revenue remaining from the First Gilead Collaboration Agreement Amendment effective December 2021.

We determined the entire $ 522 million to be the allocable transaction price as of the amendment closing date, due to the history of timely payments by Gilead.

The following table summarizes the allocation of the transaction price to the performance obligations (in millions):

Allocation to performance obligations Distinct Combined Amount

Domvanalimab - License * $ 329

Domvanalimab - R&D services * 34

Etrumadenant - License and R&D services * $ 210

Quemliclustat - License and R&D services * 168

Zimberelimab - R&D and commercial services * 11

Domvanalimab - R&D services * 33

Access rights * 57

Option continuation periods * 20

Rights to certain studies * 34

Total allocated transaction price $ 522

Our assessment of the transaction price for the First Gilead Collaboration Agreement Amendment included an analysis of amounts we expected to receive, which at contract inception consisted of the upfront cash payment of $ 725 million, as well as amounts totaling $ 165 million deferred from the original Gilead transaction.

This excludes the $ 100 million option continuation payment that was eliminated in the amendment.

We determined the entire $ 890 million to be the allocable transaction price as of the amendment closing date, due to the history of timely payments by Gilead including the receipt of $ 725 million in January 2022.

We accounted for each performance obligation as follows:

Domvanalimab – License

Under the Gilead Collaboration Agreement, Gilead obtained an option to the exclusive rights to our anti-TIGIT program, including domvanalimab and AB308, in exchange for an option payment of $ 275 million, if exercised.

Prior to the closing of the First Gilead Collaboration Agreement Amendment, we had $ 37 million of deferred revenue on our Consolidated Balance Sheet related to this performance obligation.

Effective December 2021, under the First Gilead Collaboration Agreement Amendment, Gilead exercised the option and obtained an exclusive license to domvanalimab.

We determined that this license was distinct based on an evaluation of the delivery of the license, noting that the program was in the later stages of development and it met the criteria for being distinct from the R&D services required under the First Gilead Collaboration Agreement Amendment.

Specifically, the domvanalimab program was in a Phase 3 clinical trial at the time that Gilead acquired the license and the Company concluded that:

(i) the R&D services for such later-stage, Phase 3 IP, primarily involved validating the drug’s efficacy, and (ii) the ongoing R&D services do not significantly modify or customize the drug compound such that the IP is not significantly different at the end of the arrangement as a result of the services.

We determined the standalone selling price of this license using a discounted cash flow method.

We recognized as revenue the full $ 329 million of the allocated transaction price in the year ended December 31, 2021.

Domvanalimab – R&D Services

Under the First Gilead Collaboration Agreement Amendment, we determined that we retain a separate performance obligation to perform further R&D services for Gilead related to domvanalimab.

The standalone selling price of this obligation was determined using an expected cost-plus margin approach.

We 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 total effort for the program.

We recognized $ 5 million in both years ended December 31, 2023 and 2022 within License and development services revenue in our Consolidated Statements of Operations.

No revenue was recognized in 2021 as the R&D services had not yet commenced.

At December 31, 2023 we had $ 25 million of deferred revenue remaining on our Consolidated Balance Sheet related to this performance obligation.

Etrumadenant – License and R&D Services

Under the Gilead Collaboration Agreement, Gilead obtained an option to the exclusive rights to our adenosine receptor program, etrumadenant, in exchange for an option payment of $ 250 million, if exercised.

Prior to the closing of the First Gilead Collaboration Agreement Amendment, we had $ 127 million of deferred revenue on our Consolidated Balance Sheet related to this performance obligation.

Effective December 2021, under the First Gilead Collaboration Agreement Amendment, Gilead exercised the option and obtained an exclusive license to etrumadenant and we were also obligated to perform further R&D services for Gilead related to etrumadenant.

We determined that the license and R&D services were combined based on an evaluation of the delivery of the license, due to the early stage of the technology and the specialized nature of our know-how.

We determined that the license and R&D services were combined at the inception of the agreement based on an evaluation of the delivery of the license, due to the early stage of the technology and the specialized nature of our know-how.

We determined the standalone selling price of the license using a discounted cash flow method and the R&D services using an expected cost-plus margin approach.

We 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 total effort for the program.

We recognized $ 52 million and $ 34 million in the years ended December 31, 2023 and 2022, respectively, within License and development service revenue in our Consolidated Statements of Operations.

No revenue was recognized in 2021 as the R&D services had not yet commenced.

At December 31, 2023 we had $ 133 million of deferred revenue remaining on our Consolidated Balance Sheet related to this performance obligation.

Prior to the closing of the Third Gilead Collaboration Agreement Amendment, we had $ 129 million of deferred revenue on our Consolidated Balance Sheet related to this performance obligation.

Effective January 2024, under the Third Gilead Collaboration Agreement Amendment, this performance obligation was partially satisfied and there were no changes to the scope of the related R&D service obligation as a result of the amendment.

We allocated the updated transaction price to this performance obligation based on the standalone selling price and adjusted revenue based on an updated measure of progress, which resulted in a cumulative catch-up of revenue of $ 14 million.

We recognized $ 47 million, $ 52 million, and $ 34 million in the years ended December 31, 2024, 2023 and 2022, respectively, within License and development services revenue in our Consolidated Statements of Operations.

At December 31, 2024 and 2023, we had $ 166 million and $ 133 million, respectively, of deferred revenue remaining on our Consolidated Balance Sheet related to this performance obligation.

Quemliclustat – License and R&D Services

Under the Gilead Collaboration Agreement, Gilead obtained an option to the exclusive rights to the Company's CD73 program, quemliclustat, in exchange for an option payment of $ 200 million, if exercised.

Prior to the closing of the First Gilead Collaboration Agreement Amendment, we had no deferred revenue on our Consolidated Balance Sheet related to this performance obligation.

Under the Gilead Collaboration Agreement, Gilead obtained an option to the exclusive rights to our CD73 program, quemliclustat, in exchange for an option payment of $ 200 million, if exercised.

Effective December 2021, under the First Gilead Collaboration Agreement Amendment, Gilead exercised the option and obtained an exclusive license to quemliclustat and we were also obligated to perform further R&D services for Gilead related to quemliclustat.

We determined the standalone selling price of the license using a discounted cash flow method and the R&D services using an expected cost-plus margin approach.

We recognized $ 17 million and $ 26 million in the years ended December 31, 2023 and 2022, respectively, within License and development service revenue in our Consolidated Statements of Operations.

No revenue was recognized in 2021 as the R&D services had not yet commenced.

At December 31, 2023 we had $ 132 million of deferred revenue remaining on our Consolidated Balance Sheet related to this performance obligation.

Prior to the closing of the Third Gilead Collaboration Agreement Amendment, we had $ 130 million of deferred revenue on our Consolidated Balance Sheet related to this performance obligation.

Effective January 2024, under the Third Gilead Collaboration Agreement Amendment, this performance obligation was partially satisfied and there was a reduction to the scope of the related R&D service obligation as a result of the amendment.

Specifically, the amendment provides that we will independently initiate, operationalize and fund a Phase 3 study to evaluate quemliclustat in pancreatic cancer, which reduces our estimated obligation to perform further R&D services for Gilead related to quemliclustat under the collaboration.

We allocated the updated transaction price to this performance obligation based on the standalone selling price and adjusted revenue based on an updated measure of progress which resulted in cumulative catch-up of revenue of $ 88 million.

We recognized $ 147 million, $ 17 million, and $ 26 million in the years ended December 31, 2024, 2023 and 2022, respectively, within License and development service revenue in our Consolidated Statements of Operations.

At December 31, 2024 and 2023, we had $ 23 million and $ 132 million, respectively, of deferred revenue remaining on our Consolidated Balance Sheet related to this performance obligation.

Domvanalimab – R&D Services

Under the First Gilead Collaboration Agreement Amendment, we determined that we retain a separate performance obligation to perform further R&D services for Gilead related to domvanalimab.

The standalone selling price of this obligation was determined using an expected cost-plus margin approach.

Prior to the closing of the Third Gilead Collaboration Agreement Amendment, we had $ 25 million of deferred revenue on our Consolidated Balance Sheet related to this performance obligation.

Effective January 2024, under the Third Gilead Collaboration Agreement Amendment, this performance obligation was partially satisfied and there were no significant changes to the scope of this obligation as a result of the amendment.

We recognized $ 13 million, $ 5 million, and $ 5 million in the years ended December 31, 2024, 2023, and 2022, respectively, within License and development services revenue in our Consolidated Statements of Operations.

At December 31, 2024 and 2023, we had $ 21 million and $ 25 million, respectively, of deferred revenue remaining on our Consolidated Balance Sheet related to this performance obligation.

Zimberelimab – R&D and Commercialization Services

Under the First Gilead Collaboration Agreement Amendment, we determined that we retained separate performance obligations to perform further R&D and commercialization services for Gilead related to zimberelimab, as a monotherapy and in combination with other agents.

Prior to the closing of the First Gilead Collaboration Agreement Amendment, we had $ 10 million of deferred revenue on our Consolidated Balance Sheet, related to these performance obligations.

The standalone selling price of these obligations were determined using an expected cost-plus margin approach.

We recognize the amounts allocated to these services as the performance obligations are satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program.

We recognized $ 1 million, $ 9 million, and $ 1 million for R&D and commercialization services in the years ended December 31, 2023, 2022, and 2021, respectively, within License and development service revenue in our Consolidated Statements of Operations.

We recognized $ 1 million and $ 9 million for R&D and commercialization services in the years ended December 31, 2023 and 2022, respectively, within License and development service revenue in our Consolidated Statements of Operations.

At December 31, 2023, the performance obligation was fully satisfied and all revenue has been recognized.

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Under the First Gilead Collaboration Agreement Amendment, Gilead has exclusive access to our current programs as well as the future programs for a period of ten years , contingent upon option continuation payments totaling $ 300 million, consisting of a $ 100 million payment on each of the fourth, sixth, and eighth anniversaries of the Gilead Collaboration Agreement.

Prior to the closing of the First Gilead Collaboration Agreement Amendment, we had $ 92 million of deferred revenue on our Consolidated Balance Sheet related to this performance obligation from the Gilead Collaboration Agreement.

The standalone selling price of this ongoing R&D pipeline access was determined using an expected cost-plus margin approach.

We use a time-elapsed input method to measure progress toward satisfying this obligation, which is the method we believe most faithfully depicts the Company’s performance in transferring the promised services during the time period in which Gilead has access to our R&D pipeline.

Accordingly, the revenue allocated to this performance obligation is being recognized using this input method over the minimum four-year period.

We determined that as of the closing date of December 21, 2021, Gilead is not obligated to pay the remaining $ 300 million due over the remainder of the term and excluded these payments from the transaction price.

Prior to the closing of the Third Gilead Collaboration Agreement Amendment, we had $ 51 million of deferred revenue on our Consolidated Balance Sheet related to these performance obligations.

Effective January 2024, under the Third Gilead Collaboration Agreement Amendment, Gilead agreed to pay the $ 100 million option continuation payment due on the fourth anniversary of the Gilead Collaboration Agreement, which occurred and was received in the third quarter of 2024, and we included this payment in the transaction price.

By exercising this right Gilead’s exclusive access to our current programs as well as any future programs is extended to 2026.

We determined that as of the closing date in January 2024, Gilead is not obligated to make the remaining contingent payments totaling $ 200 million due on the sixth and eighth anniversaries of the Gilead Collaboration Agreement and accordingly, we have excluded these payments from the transaction price.

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 our R&D pipeline.

Related party - Gilead Sciences, Inc., for a description of the amendment that occurred on January 29, 2024, which requires Gilead to pay the $ 100 million option continuation payment due on the fourth anniversary of the Gilead Collaboration Agreement.

We recognized as revenue $ 33 million associated with this performance obligation in both years ended December 31, 2023 and 2022, and $ 31 million in the year ended December 31, 2021 within Other collaboration revenue in our Consolidated Statements of Operations.

At December 31, 2023, we had $ 54 million of deferred revenue on our Consolidated Balance Sheet related to this performance obligation.

The standalone selling price of the ongoing R&D pipeline access and the option continuation material rights were determined using an expected cost-plus margin approach, with the option continuation material rights probability-adjusted for the likelihood of exercise.

We use a time-elapsed input method to measure progress toward satisfying the access rights performance obligation, which is the method we believe most faithfully depicts the Company's performance in transferring the promised services during the time period in which Gilead has access to our R&D pipeline.

Accordingly, the revenue allocated to the initial four-year access rights performance obligation is being recognized using this input method over the remaining period through July 2024, and for the access rights continuation, over the two-year period commencing July 2024.

For the remaining access rights option continuation periods commencing on the sixth, and eighth, anniversaries of the agreement, if Gilead elects to exercise their option, we will recognize the revenue allocated to that option together with the $ 100 million continuation payment over the new minimum access period or immediately if the option lapses.

We recognized $ 28 million, $ 33 million, and $ 33 million in the years ended December 31, 2024, 2023, and 2022, respectively, within Other collaboration revenue in our Consolidated Statements of Operations.

At December 31, 2024 and 2023, we had $ 52 million and $ 54 million, respectively, of deferred revenue on our Consolidated Balance Sheet related to these performance obligations.

Rights to Certain Studies

Effective January 2024, under the Third Gilead Collaboration Agreement Amendment, we will solely fund certain studies, but Gilead retains exclusive rights to reinstate into the collaboration each study at specified time-points for a payment.

We have determined that these are material rights and we estimated the standalone selling price of these performance obligations using a discounted cash flow method probability-adjusted for the likelihood of exercise.

We will recognize the amount allocated to each right if and when the related study is reinstated into the parties' co-development plans or if the option lapses.

At December 31, 2024, we had $ 34 million of deferred revenue remaining on our Consolidated Balance Sheet related to these performance obligations.

Inflammation Programs - R&D Services

In June 2023, we received a total upfront payment of $ 35 million for an initial two jointly selected research-stage programs.

In addition to the amendments noted above, in May 2023, we entered into the Second Gilead Collaboration Agreement Amendment pursuant to which we expanded our collaboration to provide Gilead with options to license up to four jointly selected research-stage programs that target inflammatory diseases for which we will lead discovery and early development activities, see Note 3, Related party - Gilead Sciences, Inc., for more information.

In 2023, we received a total upfront payment of $ 35 million for an initial two jointly selected research-stage programs.

We determined that the Second Gilead Collaboration Agreement Amendment represented a separate contract and, at the amendment closing date, we allocated the transaction price of $ 35 million to the performance obligations created as of the date of this amendment.

The following table summarizes the allocation of the transaction price to the distinct performance obligations (in millions):

The following table summarizes the allocation of the transaction price to the performance obligations (in millions):

Allocation to performance obligations Distinct Amount

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We determined that we have separate performance obligations to perform R&D services for Gilead related to discovery and early development activities for each research program for which they have made an upfront payment.

The standalone selling price of these obligations was determined using an expected cost-plus margin approach.

The standalone selling prices of these obligations were determined using an expected cost-plus margin approach.

The options to acquire additional licenses or services did not result in additional performance obligations because they did not provide a material right at contract inception, primarily due to the very early stages of the programs.

We recognized revenue of $ 4 million for the year ended December 31, 2023, respectively, within Other collaboration revenue in our Consolidated Statements of Operations.

At December 31, 2023, we had $ 31 million of deferred revenue remaining on our Consolidated Balance Sheet related to these performance obligations.

We recognized revenue of $ 8 million and $ 4 million for the years ended December 31, 2024 and 2023, respectively, within Other collaboration revenue in our Consolidated Statements of Operations.

At December 31, 2024 and 2023, we had $ 23 million and $ 31 million, respectively, of deferred revenue remaining on our Consolidated Balance Sheet related to these performance obligations.

Revenue from the Taiho Collaboration

Domvanalimab and Zimberelimab - R&D Services

In 2023, under the Taiho collaboration, certain clinical milestones for domvanalimab and zimberelimab were met through the STAR-221 study and Taiho became obligated to pay us $ 28 million, of which $ 14 million was paid the in the fourth quarter 2023 and the remaining $ 14 million is recorded in Receivable from collaboration partners at December 31, 2023 on our Consolidated Balance Sheet.

We determined that we have a performance obligation to perform R&D services for Taiho related to the global development activities for the STAR-221 study in support of the Taiho Territory.

We allocated the $ 28 million to this single performance obligation and recognize the amounts allocated to this service as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the programs.

We recognized revenue of $ 5 million for the year ended December 31, 2023 within License and development service revenue in our Consolidated Statements of Operations.

At December 31, 2023, we had $ 23 million of deferred revenue remaining on our Consolidated Balance Sheet related to this performance obligation, allocated between current and noncurrent based on the expected timing of future recognition.

In early 2024, the clinical milestones for domvanalimab and zimberelimab for the STAR-121 study were met and Taiho became obligated to pay us $ 26 million.

We have not recognized any revenue for this milestone for the year ended December 31, 2023.

Income (loss) before income taxes included the following (in millions):

Quemliclustat - License

In July 2024, Taiho exercised its option under the agreement we entered into in 2017 and obtained an exclusive license for quemliclustat (the CD73 program) for the Taiho Territory for an option payment of $ 15 million which was received in the third quarter 2024.

We determined that this license was the only performance obligation and we recognized upon delivery the full $ 15 million of revenue in the year ended December 31, 2024 within License and development services revenue in our Consolidated Statements of Operations.

Capitalized Costs to Obtain Contracts

We incurred $ 8 million of costs in the first quarter 2024 to obtain the Third Gilead Collaboration Agreement Amendment, Third Stock Purchase Agreement Amendment and the Second Investor Rights Agreement Amendment, which consisted of consultant fees that were payable upon the successful completion of the agreements.

We determined that $ 5 million of these costs were related to the Third Stock Purchase Agreement Amendment which were recognized as offering costs in additional paid-in capital.

The remaining costs were combined with $ 3 million in capitalized costs that remained from the initial Gilead Collaboration Agreement and subsequent amendments, and the total was allocated to the various remaining performance obligations, to be recognized as the underlying performance obligations are satisfied and revenue is recognized.

For the years ended December 31, 2024, 2023, and 2022, we recognized $ 3 million, $ 1 million, and $ 4 million, respectively, of expense in G&A expense.

At each of December 31, 2024 and 2023, we had $ 3 million in capitalized costs to obtain the contracts, allocated between Prepaid expenses and other current assets and Other noncurrent assets in our Consolidated Balance Sheets based on the expected timing of future recognition.

Loss before income taxes included the following (in millions):

Year Ended December 31,

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Foreign 1 — 1

Income (loss) before income tax $ ( 301 ) $ ( 266 ) $ 55

Loss before income taxes $ ( 282 ) $ ( 301 ) $ ( 266 )

The provision for income taxes included the following (in millions):

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Accordingly, a full valuation allowance has been established and no deferred tax asset is shown in the accompanying Consolidated Balance Sheets.

The valuation allowance increased by approximately $ 83 million for the year ended December 31, 2023 and increased by approximately $ 67 million for the year ended December 31, 2022.

The United States enacted the Tax Cuts and Jobs Act in December 2017, which requires companies to capitalize all of their R&D costs for U.S.

The valuation allowance increased by approximately $ 83 million for the years ended December 31, 2024 and 2023.

enacted the Tax Cuts and Jobs Act in December 2017, which requires companies to capitalize all of their R&D costs for U.S.

tax purposes, including software development costs, incurred in tax years beginning after December 21,2021.

Beginning in 2022, for tax purposes we began capitalizing and amortizing R&D costs over a five-year period for domestic research and a fifteen-year period for international research rather than expensing these costs immediately.

At December 31, 2023, we have federal research tax credits of approximately $ 24 million that begin to expire in 2039.

At December 31, 2024, we have federal net operating losses of $ 13 million that have no expiration date and research tax credits of approximately $ 41 million that begin to expire in 2041.

We also have state NOLs of approximately $ 34 million that begin to expire in 2035, and state research tax credits of approximately $ 20 million that have no expiration date, and foreign research tax credits of approximately $ 3 million that have no expiration date.

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We have not been audited by the Internal Revenue Service, any state or foreign tax authority.

We are subject to taxation in the United States and in Australia.

We are subject to taxation in the U.S.

and in Australia.

Due to net operating loss and research credit carryforwards, all of our tax years, from 2015 to 2024, remain open to U.S.

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Uncertain Tax Positions

We follow the provisions of FASB Accounting Standards Codification ("ASC 740-10"), Accounting for Uncertainty in Income Taxes .

ASC 740-10 prescribes a comprehensive model for the recognition, measurement,

presentation and disclosure in financial statements of uncertain tax positions that have been taken or are expected to be taken on a tax return.

We follow the provisions of FASB Accounting Standards Codification 740-10, Accounting for Uncertainty in Income Taxes , which prescribe a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of uncertain tax positions that have been taken or are expected to be taken on a tax return.

No liability related to uncertain tax positions is recorded in the Consolidated Financial Statements.

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We do not anticipate material changes to our uncertain tax positions through the next 12 months.

Net income (loss) per share

The computation of basic net income (loss) per share is based on the weighted-average number of our common shares outstanding during the period.

The computation of diluted net income (loss) per share is based on the weighted-average number of our common shares and dilutive potential common shares, which primarily include shares that may be issued under our stock option, restricted stock award, and Employee Stock Purchase Plans ("ESPP") (collectively, "dilutive securities") as determined under the treasury stock method.

The following table sets forth the computation of basic and diluted net income (loss) per share (in millions, except per share data):

Net loss per share

The computation of basic net loss per share is based on the weighted-average number of our common shares outstanding during the period.

The computation of diluted net loss per share is based on the weighted-average number of our common shares and dilutive potential common shares, which primarily include shares that may be issued under our stock option, RSU, and Employee Stock Purchase Plans ("ESPP") (collectively, "dilutive securities") as determined under the treasury stock method.

The following table sets forth the computation of basic and diluted net loss per share (in millions, except per share data):

Year Ended December 31,

2024 2023 2022

Net income (loss) (Numerator):

Net income (loss) $ ( 307 ) $ ( 267 ) $ 53

Net loss (Numerator):

Net loss $ ( 283 ) $ ( 307 ) $ ( 267 )

Weighted-average shares (Denominator):

Outstanding 74.0 72.0 70.3

Subject to vesting — — ( 1.0 )

Weighted-average shares for basic EPS 74.0 72.0 69.3

Effect of dilutive securities — — 4.7

Weighted-average shares for diluted EPS 74.0 72.0 74.0

Net income (loss) per share

Basic $ ( 4.15 ) $ ( 3.71 ) $ 0.76

Diluted $ ( 4.15 ) $ ( 3.71 ) $ 0.71

The following table summarizes potentially dilutive securities excluded from the computation of diluted net income (loss) per share calculations because they would have been antidilutive (in millions):

Weighted-average shares for basic and diluted EPS 90.1 74.0 72.0

Net loss per share

Basic and diluted $ ( 3.14 ) $ ( 4.15 ) $ ( 3.71 )

The following table summarizes potentially dilutive securities excluded from the computation of diluted net loss per share calculations because they would have been antidilutive (in millions):

At December 31,

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2020 Stock Plan

In January 2020, we adopted the 2020 Inducement Plan (the "2020 Stock Plan") for the award of stock options and other equity-based awards as an inducement to eligible individuals to enter into employment with us.

In 2020, we adopted the 2020 Inducement Plan (the "2020 Stock Plan") for the award of stock options and other equity-based awards as an inducement to eligible individuals to enter into employment with us.

As of December 31, 2024, there were 2.6 million shares available for grant under this plan.

2015 Stock Plan and 2018 Equity Incentive Plan

In 2015, we adopted the 2015 Stock Plan, which in March 2018, we replaced with the 2018 Equity Incentive Plan (the "2018 Equity Incentive Plan").

In 2015, we adopted the 2015 Stock Plan, which we replaced in 2018 with the 2018 Equity Incentive Plan (the "2018 Equity Incentive Plan").

Any outstanding awards under the 2015 Stock Plan that subsequently expire, lapse unexercised or are forfeited to us are added to the shares reserved for issuance under the 2018 Equity Incentive Plan.

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Employee Stock Purchase Plan

In March 2018, we adopted the 2018 Employee Stock Purchase Plan (the "2018 ESPP").

In 2018, we adopted the 2018 Employee Stock Purchase Plan (the "2018 ESPP").

The 2018 ESPP provides eligible employees with the opportunity to purchase shares of common stock through payroll deductions at a price equal to 85 % of the lower of the fair market value per share on the first trading day of the applicable 24-month offering period or on the applicable purchase date.

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The following table summarizes information regarding our RSUs for the year ended December 31, 2024:

Total Restricted Stock Units

(in millions) Weighted

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4.3 % - 5.4 %

1.6 % - 4.7 %

Expected term (in years) 0.5 - 2

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Property and equipment

Property and equipment, net was all located in the United States and consisted of the following (in millions):

Property and equipment, net was all located in the U.S.

and consisted of the following (in millions):

(in years) As of December 31,

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Accrued personnel expenses 31 26

Income taxes payable

Current portion of lease liabilities 12 11

Total other current liabilities $ 123 $ 76

Long-term deb t

The following table summarizes our borrowings (in millions):

As of December 31,

Long-term debt, non-current (Contractual maturity 2029) $ 50 $ —

Unamortized discounts and issuance costs ( 2 ) —

Total long-term debt $ 48 $ —

On August 27, 2024, we and Hercules entered into a loan and security agreement (the "Hercules Agreement"), under which Hercules agreed to lend us up to $ 250 million in term loans in various tranches subject to minimum draw requirements for each tranche.

Under the terms of this agreement, $ 50 million was drawn at closing and an additional $ 100 million is committed and fully available at our sole option in minimum increments of $ 25 million.

A second tranche of $ 100 million will be available subject to future approval by Hercules.

The Hercules Agreement has an initial maturity date of September 1, 2029 which is extendable by 12 months, at our discretion subject to the achievement of certain regulatory milestones related to our product candidates.

Repayment of the principal amount will be in 13 monthly installments commencing September 1, 2028, if not extended.

The term loans have an interest only period for the first 48 months from the agreement date and bear interest at a rate equal to the greater of (i) 10.45 % or (ii) the prime rate plus 1.95 %.

We may prepay all or any portion of the outstanding term loans at any time, subject to a prepayment fee of:

(i) 3.00 % of the principal amount prepaid if the prepayment occurs prior to the first anniversary of the funding date;

(ii) 2.00 % of the principal amount prepaid if the prepayment occurs on or after the first anniversary of the funding date and prior to the second anniversary of the funding date;

or (iii) 1.00 % of the principal amount prepaid thereafter.

The agreement also has an upfront facility fee of $ 1 million and an end of term charge of 7.75 % of the total amount borrowed.

The Hercules Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to incur liens, incur indebtedness, make investments, pay dividends, merge or consolidate, dispose of assets, and enter into transactions with affiliates, subject to customary exceptions.

We are also required to maintain a minimum cash balance of 50 % of the funded amount if our market capitalization were to fall below a certain threshold which will be reduced in the event of certain regulatory approvals of our product candidates.

We do not have covenant requirements associated with this agreement until October 1, 2026.

The Hercules Agreement is secured by a first priority security interest in substantially all of our assets, excluding intellectual property.

The Hercules Agreement also contains customary events of default terms, including payment defaults, breaches of covenants, bankruptcy and insolvency events, cross-defaults to other indebtedness, material adverse events, and the occurrence of a change of control.

Upon the occurrence of an event of default, Hercules may declare all outstanding obligations under the Hercules Agreement to be immediately due and payable and exercise any or all of its rights and remedies, including foreclosure on the collateral securing the term loans.

The aggregate future minimum payments including principal payments and the end of term charge, due under the Hercules Agreement, are as follows (in millions):

Maturity Date Amount

Total payments $ 54

During the year ended December 31, 2024, we recognized $ 2 million of interest expense at an effective interest rate of 13.39 %, including amortization of the debt discount and issuance costs.

As of December 31, 2024, we had borrowed $ 50 million under the Hercules Agreement and had $ 200 million of additional borrowing capacity, of which $ 100 million is subject to additional approval by Hercules.

We lease our corporate headquarters, which includes approximately 151,000 square feet of executive offices, R&D, and business operations, in Hayward, California.

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and require monthly lease payments that are subject to annual increases throughout the lease term.

Our sublease of approximately 31,000 square feet of our Brisbane office to another company commenced in October 2023.

This sublease included a tenant improvement allowance to be paid by us of $ 9 million, of which approximately $ 1 million was outstanding at December 31, 2023.

Under the terms of the agreement, we will receive sublease payments of approximately $ 3 million per year, beginning in 2024.

For the year ended December 31, 2023, we recorded gross sublease income of $ 1 million.

Income from the sublease is recognized on a straight-line basis as reduction of rent expense within G&A.

We subleased approximately 31,000 square feet of our Brisbane office to a third-party which commenced in October 2023.

This sublease included a tenant improvement allowance to be paid by us of $ 9 million, which was fully paid at December 31, 2024.

This sublease is non-cancelable and extends through 2028, with the sublessee having options to extend the lease term.

We have also subleased approximately 19,000 square feet of our Brisbane office to a third-party which commenced in December 2024.

This sublease is non-cancelable and extends through 2031.

We will receive payments from our subleases of approximately $ 3 million per year through 2028, which is then reduced to approximately $ 1 million per year through 2031.

Income from our subleases is recognized on a straight-line basis as reduction of rent expense within G&A.

For the year ended December 31, 2024, we recorded gross sublease income totaling $ 3 million.

Operating leases

At December 31, 2024 and 2023, our lease portfolio had a weighted average remaining term of 7 years and 8 years, respectively, and a weighted average discount rate of 5.2 % for both periods.

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Other noncurrent liabilities - noncurrent operating lease liabilities $ 99 $ 110

In the first quarter of 2024, we evaluated our plans for a portion of our office space that we expected to sublease, and identified indicators of impairment to certain right-of-use assets associated with the leased space where the asset value was determined to be non-recoverable based upon a discounted cash flow analysis, resulting in an impairment charge of $ 20 million for the year ended December 31, 2024.

For the years ended December 31, 2024, 2023 and 2022, we incurred lease expense of $ 17 million, $ 18 million, and $ 18 million, respectively.

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Total present value of lease liabilities $ 111

As of December 31, 2023, we have provided deposits for letters of credit totaling $ 3 million to secure our obligations under our leases, which are included in Other noncurrent assets on the Consolidated Balance Sheet.

As of December 31, 2024, we have provided deposits for letters of credit totaling $ 3 million to secure our obligations under our leases, which are included in Other noncurrent assets on the Consolidated Balance Sheets.

Stockholders’ equity

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Gilead Stock Purchase Agreement

In 2021, under the First Stock Purchase Agreement, Gilead purchased 5.7 million shares of our common stock at a price of $ 39.00 per share for total gross proceeds of $ 220 million.

In 2023, under the Second Stock Purchase Agreement, Gilead purchased 1.0 million shares of our common stock at the closing day purchase price of $ 19.26 per share for total gross proceeds of $ 20 million.

On January 29, 2024, under the Third Stock Purchase Agreement Amendment, Gilead purchased 15.2 million shares of our common stock at a price of $ 21.00 per share for total gross proceeds of $ 320 million.

In 2024, under the Third Stock Purchase Agreement Amendment, Gilead purchased 15.2 million shares of our common stock at a price of $ 21.00 per share for total gross proceeds of $ 320 million.

Of the $ 320 million equity investment, $ 87 million was determined to be a premium on the purchase of common stock and allocated to the performance obligations created by the Third Gilead Collaboration Agreement Amendment, see Note 5, Revenues, for more information.

Net proceeds from Gilead's equity investment were $ 228 million after allocating the premium and deducting direct offering expenses of $ 5 million.

At-the-Market Facility

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There was no preferred stock outstanding as of December 31, 2024 and 2023.

See Note 19, Subsequent events, for additional information on stock issuances that occurred in February 2025.

Fair value measurements

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In return, we are obligated to perform R&D activities in the BVF Program;

make contingent payments upon the achievement of certain clinical and regulatory milestones of up to $ 73 million or $ 160 million depending on whether the BVP Program is solely developed by us or with Gilead if they opt-in under the Gilead Collaboration Agreement;

make contingent payments upon the achievement of certain clinical and regulatory milestones of up to $ 73 million or $ 160 million depending on whether the BVF Program is solely developed by us or with Gilead if they opt-in under the Gilead Collaboration Agreement;

and pay mid- to high-single digit royalties on any net product sales generated by the BVF Program.

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Beginning balance $ 19 $ 17

Cash received — 10

Interest accretion 2 2

Ending balance $ 21 $ 19

Long-term debt

As of December 31, 2024, the estimated fair value of our long-term debt approximated the carrying amount.

The fair value of the long-term debt was estimated for disclosure purposes only and was determined based on other inputs that are observable, and thus categorized as Level 2 in the fair value hierarchy.

Long-term debt

We are obligated to make principal loan payments and an end of term charge under the loan and security agreement with Hercules.

See Note 13, Long-term debt, for more information.

Standby letters of credit

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We believe the fair value of the indemnification rights and agreements is minimal and accordingly, we have not recorded any liabilities as of December 31, 2024 and 2023.

Segments of business

Our chief operating decision maker ("CODM") is the Chief Executive Officer, who decides how to allocate resources and assesses segment performance based on net loss reported on the Consolidated Income Statements.

The table below is a summary of the segment net loss, including significant segment expenses (in millions):

2024 Year Ended

2023 Year Ended

Total revenues $ 258 $ 117 $ 112

Late-stage development programs (1)

Early-stage development and preclinical programs (2)

Compensation and personnel costs 250 223 189

Depreciation and amortization 10 8 6

Impairment of long-lived assets 20 — —

Interest income, net ( 48 ) ( 39 ) ( 13 )

Income tax expense 1 6 1

Other segment items (3)

Partnership reimbursements ( 165 ) ( 162 ) ( 162 )

Segment net loss and Consolidated net loss $ ( 283 ) $ ( 307 ) $ ( 267 )

(1) R&D expenses incurred related to a Phase 3 clinical program intended to result in registration of a new product.

This includes all unallocated program-level expense not directly attributable to a specific clinical trial once a molecule enters into one or more Phase 3 clinical trials.

(2) R&D expenses incurred for activities ranging from early-stage R&D and preclinical to Phase 2 clinical trials.

This includes all unallocated program-level expense not directly attributable to a specific clinical trial unless the related program has entered into one or more Phase 3 clinical trials.

(3) Other segment items includes non-allocated program costs and other G&A costs.

Total segment assets at December 31, 2024, 2023 and 2022 were $ 1.2 billion, $ 1.1 billion, and $ 1.3 billion, respectively.

Subsequent events

In February 2025, we announced that Gilead's time-limited exclusive option rights to our HIF-2α program (including casdatifan) have expired.

As a result, Gilead has no future rights to casdatifan and we retain full global development and commercial rights, subject to Taiho’s option right for the Taiho Territory.

In February 2025, we sold through an underwritten offering, 13.6 million shares of our common stock at price of $ 11.00 per share, for total gross proceeds of approximately $ 150 million, before deducting underwriting discounts, commissions and offering expenses.

Gilead acquired 1.4 million shares of our common stock through this offering and held approximately 29.7 % of our common stock as of February 19, 2025.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data