ARVINAS, INC. (ARVN) FY 2022 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis is meant to provide material information relevant to an assessment of the financial condition and results of operations of our company, including an evaluation of the amount and certainty of cash flows from operations and from outside sources, so as to allow investors to better view our company from management's perspective. You should read the following discussion and analysis of financial condition and results of operations together with our consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth in the section titled “Risk Factors” and elsewhere in this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in or implied by these forward-looking statements.

Overview

Our Business

We are a clinical-stage biotechnology company dedicated to improving the lives of patients suffering from debilitating and life-threatening diseases through the discovery, development and commercialization of therapies that degrade disease-causing proteins. We use our PROTAC Discovery Engine, our proprietary technology platform to engineer proteolysis targeting chimeras, or PROTAC targeted protein degraders, that are designed to harness the body’s own natural protein disposal system to selectively and efficiently degrade and remove disease-causing proteins. We believe that our targeted protein degradation approach is a therapeutic modality that may provide distinct advantages over existing modalities, including traditional small molecule therapies and gene-based medicines. We have a robust preclinical pipeline of PROTAC protein degraders targeting a broad range of intracellular disease targets, including those representing proteins that currently cannot be addressed by existing small molecule therapies, commonly referred to as “undruggable” targets. We

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are using our PROTAC Discovery Engine to build an extensive pipeline of protein degradation product candidates to target diseases in areas of unmet need, including oncology (including immuno-oncology), neuroscience and other therapeutic areas. We have three investigational clinical stage programs: ARV-471, a novel PROTAC estrogen receptor, or ER, protein degrader for the treatment of patients with locally advanced or metastatic ER positive / human epidermal growth factor receptor 2, or HER2, negative, or ER+/HER2-, breast cancer and bavdegalutamide (ARV-110) and ARV-766, each an oral PROTAC protein degrader that targets the androgen receptor protein, or AR, for the treatment of men with metastatic castration-resistant prostate cancer, or mCRPC.

ARV-471

ARV-471 is an investigational orally bioavailable PROTAC protein degrader designed to target and degrade the ER for the treatment of patients with locally advanced or metastatic ER+/HER2- breast cancer. We are co-developing ARV-471 with Pfizer, Inc., or Pfizer, pursuant to a collaboration agreement that we and Pfizer entered into in July 2021. We granted Pfizer worldwide co-exclusive rights to develop and commercialize ARV-471.

In preclinical studies, ARV-471 demonstrated near-complete ER degradation in tumor cells, induced robust tumor shrinkage when dosed as a single agent in multiple ER-driven xenograft models, and showed superior anti-tumor activity when compared to a standard of care agent, fulvestrant, both as a single agent and in combination with a cyclin-dependent kinase, or CDK, 4/6 inhibitor. In 2019, we initiated a Phase 1 clinical trial of ARV-471 designed to assess the safety, tolerability and pharmacokinetics of ARV-471, which also included measures of anti-tumor activity as secondary endpoints and in the fourth quarter of 2020, we initiated a Phase 1b cohort expansion of ARV-471 in combination with the CDK4/6 inhibitor Ibrance® (palbociclib). In 2021, we initiated VERITAC, the Phase 2 single agent expansion cohort of the ARV-471 clinical trial.

In the third quarter of 2022, we initiated TACTIVE-E, a Phase 1b clinical trial with ARV-471 in combination with everolimus in patients with metastatic breast cancer. Also in the third quarter of 2022, we initiated with Pfizer a Phase 1b trial of ARV-471 as a monotherapy in Japanese patients.

In the fourth quarter of 2022, we presented initial data from VERITAC at the San Antonio Breast Cancer Symposium and we initiated, with Pfizer, the VERITAC-2 Phase 3 trial with ARV-471 as a monotherapy as a second-line and later treatment in patients with ER+/HER2- metastatic breast cancer. Also in the fourth quarter of 2022, we initiated the first of two arms in the ongoing Phase 1b umbrella trial of ARV-471, with ARV-471 in combination with each of the CDK4/6 inhibitors abemaciclib and ribociclib (TACTIVE-U). We initiated the second of two arms in the first quarter of 2023. In addition, in the fourth quarter of 2022, we initiated a Phase 2 clinical trial with ARV-471 as a monotherapy in patients with early breast cancer in the neoadjuvant setting (TACTIVE-N).

In the first quarter of 2023, we and Pfizer requested a meeting with the U.S. Food and Drug Administration, or the FDA, to review the proposed update to the trial protocol for the VERITAC-3 first-line, metastatic ER+ / HER2- breast cancer Phase 3 trial of ARV-471 in combination with IBRANCE® (palbociclib) to determine the optimal dose of palbociclib as part of the trial design. Following correspondence and alignment with the FDA, we and Pfizer determined an approach to the planned Phase 3 trial to enable trial initiation in the second half of 2023, which includes a Phase 3 lead-in to evaluate the optimal dose of palbociclib (100 mg or 75 mg) in combination with 200 mg ARV-471. This approach follows the recent analysis of data from the ongoing Phase 1b combination study of ARV-471 with palbociclib, in which an increase in palbociclib exposure was observed relative to historical palbociclib pharmacokinetic data.

In the first half of 2023, we expect, with Pfizer, to provide an update with preliminary data from the Phase 1b combination trial with palbociclib (Part C of the Phase 1/2 trial) and in the second half of 2023, we expect, with Pfizer, to submit and present data from the Phase 1b combination trial of ARV-471 with palbociclib at a medical congress and. Also in the second half of 2023, we expect, with Pfizer, to initiate a Phase 3 trial with ARV-471 in combination with palbociclib as a first-line treatment in patients with ER+ / HER2- locally advance or metastatic breast cancer. and initiate additional arms of the TACTIVE-U, Phase 1b combination trial with other targeted therapies, during 2023.

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Bavdegalutamide (ARV-110)

Bavdegalutamide (ARV-110) is an investigational orally bioavailable PROTAC protein degrader designed to target and degrade the AR for the treatment of men with mCRPC.

In preclinical studies, bavdegalutamide demonstrated activity of AR mutation or overexpression, both common mechanisms of resistance to currently available AR-targeted therapies. In 2019, we initiated a Phase 1/2 clinical trial of bavdegalutamide designed to assess the safety, tolerability and pharmacokinetics of bavdegalutamide and which trial also included measures of anti-tumor activity as secondary endpoints, including reduction in prostate specific antigen, or PSA, a well-recognized biomarker of prostate cancer progression. In 2019, we also received Fast Track designation for bavdegalutamide for mCRPC. In 2020, we initiated ARDENT, the Phase 2 single agent expansion portion of the bavdegalutamide clinical trial. In 2021, we initiated a Phase 1b clinical trial of bavdegalutamide in combination with abiraterone for the treatment of men with mCRPC.

In the first quarter of 2022, we announced completed Phase 1 and interim ARDENT data for bavdegalutamide at the 2022 American Society of Clinical Oncology Genitourinary (ASCO GU) Cancers Symposium.

We expect to initiate a global Phase 3 trial with a confirmed dose for bavdegalutamide for the treatment of men with mCRPC with AR T878/H875 tumor mutations in the second half of 2023. Also in the second half of 2023, we expect to complete enrollment in the Phase 1b clinical trial with bavdegalutamide in combination with abiraterone.

ARV-766

ARV-766 is an investigational orally bioavailable PROTAC protein degrader designed to target AR with a different profile than bavdegalutamide, as a potential treatment for men with mCRPC.

In preclinical studies, ARV-766 degraded all tested resistance-driving point mutations of AR, including L702H, a mutation associated with treatment with abiraterone and other AR-pathway therapies. In 2021, we initiated a Phase 1/2 clinical trial for ARV-766 designed to assess the safety, tolerability and pharmacokinetics of ARV-766, which trial also includes measures of anti-tumor activity as secondary endpoints, including reduction in PSA. In the second half of 2022, we initiated a Phase 2 expansion trial of ARV-766 for the treatment of men with mCRPC.

We expect to share data from the Phase 1 dose escalation trial of ARV-766 for the treatment of men with metastatic castration-resistant prostate cancer in the second quarter of 2023.

We anticipate initiating a Phase 1b or Phase 2 dose escalation trial for either of bavdegalutamide or ARV-766 in patients with AR-dependent tumors who have not previously received novel hormonal agents, or NHA, such as enzalutamide or abiraterone, and who may benefit from bavdegalutamide or ARV-766 therapy, in the second half of 2023.

We are further diversifying our pipeline by developing new PROTAC targeted protein degraders against targets for which we believe protein degradation offers advantages to existing therapeutic modalities, including PROTAC degraders that are designed to reach targets in deep brain regions and are capable of being delivered through multiple routes of administration, including oral delivery. We have engineered PROTAC targeted protein degraders that, in preclinical studies, have successfully achieved blood-brain barrier penetration, a key step in developing drugs with the potential to treat neurodegenerative diseases. We believe there are many other indications for which our PROTAC technology may be advantageous.

By year-end 2023, we expect to submit an investigational new drug, or IND, application or clinical trial application, or CTA, for our PROTAC degrader designed to target each of the BCL6 protein, a protein mutated in patients with different forms of Non-Hodgkins Lymphoma, or NHL, including Diffuse Large B-Cell Lymphoma, or DLBCL, and the LRRK2 protein, a protein kinase that has been genetically linked to some forms of Parkinson's Disease, or PD. We also expect to progress at least two additional PROTAC protein degrader programs in IND-enabling or CTA-enabling studies by year-end 2023.

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Our Operations

We commenced operations in 2013. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, conducting discovery and research activities, filing patent applications, identifying potential product candidates, undertaking preclinical studies and clinical trials and establishing arrangements with third parties for the manufacture of initial quantities of our product candidates. To date, we have not generated any revenue from product sales and have financed our operations primarily through sales of our equity interests, proceeds from our collaborations, grant funding and debt financing. Since inception through December 31, 2022, we raised approximately $1.3 billion in gross proceeds from the sale of equity instruments and the exercise of stock options, and had received an aggregate of $780.5 million in payments primarily from collaboration partners.

We are a clinical-stage company. ARV-471, bavdegalutamide (ARV-110) and ARV-766 are each in Phase 1/2 clinical trials and ARV-471 is in a Phase 3 clinical trial, and our other drug discovery activities are at the research and preclinical development stages. Our ability to generate revenue from product sales sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates. Since inception, we have incurred significant operating losses and expect to incur increasing operating losses for at least the next several years due to costs associated with our ongoing and anticipated clinical activities for ARV-471, bavdegalutamide and ARV-766, development activities associated with our other product candidates, research activities in oncology, neurological and other disease areas to expand our pipeline, hiring additional personnel in research, clinical trials, quality and other functional areas, increased expenses incurred with CMOs to supply us with product for our preclinical and clinical studies and CROs for the synthesis of compounds in our preclinical development activities, as well as other associated costs including the management of our intellectual property portfolio.

We do not expect to generate revenue from sales of any product for many years, if ever. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research or product development programs or any future commercialization efforts, or to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

Financial Operations Overview

Revenue

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future. Our revenues to date have been generated through research collaboration and license agreements. Revenue is recognized ratably over our expected performance period under each agreement. We expect that any revenue for the next several years will be derived primarily from our current collaboration agreements and any additional collaborations that we may enter into in the future. To date, we have not received any sales-based milestone payments or royalties under any of the collaboration agreements.

Genentech License Agreement

In September 2015, we entered into an Option and License Agreement with Genentech, Inc. and F. Hoffmann-La Roche Ltd, collectively referred to as Genentech, focused on PROTAC targeted protein degrader discovery and research for target proteins, or Targets, based on our proprietary platform technology, other than excluded Targets as described below. This collaboration was expanded in November 2017 through an Amended and Restated Option, License and Collaboration Agreement, which we refer to as the Restated Genentech Agreement.

Under the Restated Genentech Agreement, Genentech has the right to designate up to ten Targets for further discovery and research utilizing our PROTAC platform technology. Genentech may designate as a Target any protein to which a PROTAC targeted protein degrader, by design, binds to achieve its mechanism of action, subject to certain exclusions. Genentech also has the right to remove a Target from the collaboration and substitute a different Target that is not an excluded Target at any time prior to us commencing research on such Target or in certain circumstances following commencement of research by us.

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At the time we entered into the original agreement with Genentech, we received an upfront payment of $11.0 million, and, at the time we entered into the Restated Genentech Agreement, we received an additional $34.5 million in upfront and expansion target payments. We are eligible to receive up to an aggregate of $27.5 million in additional expansion target payments if Genentech exercises its options for all remaining Targets. We are also eligible to receive payments aggregating up to $44.0 million per Target upon the achievement of specified development milestones; payments aggregating up to $52.5 million per Target (assuming approval of two indications) subject to the achievement of specified regulatory milestones; and payments aggregating up to $60.0 million per PROTAC targeted protein degrader directed against the applicable Target, subject to the achievement of specified sales milestones. These milestone payments are subject to reduction if we do not have a valid patent claim covering the licensed PROTAC targeted protein degrader at the time the milestone is achieved. We are also eligible to receive, on net sales of licensed PROTAC targeted protein degraders, mid-single digit royalties, which may be subject to reductions.

Pfizer Research Collaboration Agreement

In December 2017, we entered into a Research Collaboration and License Agreement with Pfizer, setting forth our collaboration to identify or optimize PROTAC targeted protein degraders that mediate for degradation of Targets, using our proprietary platform technology that are identified in the agreement or subsequently selected by Pfizer, subject to certain exclusions. We refer to this agreement as the Pfizer Research Collaboration Agreement.

Under the Pfizer Research Collaboration Agreement, Pfizer has designated a number of initial Targets. For each identified Target, we and Pfizer will conduct a separate research program pursuant to a research plan. Pfizer may make substitutions for any of the initial Target candidates, subject to the stage of research for such Target.

In the year ended December 31, 2018, we received an upfront, non-refundable payment and certain additional payments totaling $28.0 million in exchange for use of the technology license and to fund Pfizer-related research, as defined within the Pfizer Research Collaboration Agreement. We are eligible to receive up to an additional $37.5 million in non-refundable option payments if Pfizer exercises its options for all targets under the Pfizer Research Collaboration Agreement. We are also entitled to receive up to $225.0 million in development milestone payments and up to $550.0 million in sales-based milestone payments for all designated targets under the Pfizer Research Collaboration Agreement, as well as mid- to high-single digit tiered royalties, which may be subject to reductions, on net sales of PROTAC targeted protein degrader-related products. In 2021 and 2020, we received payments totaling $1.2 million and $4.4 million, respectively. Pfizer selected additional targets and initiated additional services totaling $1.0 million and $3.5 million in December 2022 and 2021, respectively, which were included in accounts receivable as of December 31, 2022 and 2021.

Bayer Collaboration Agreement

In June 2019, we entered into a Collaboration and License Agreement, or the Bayer Collaboration Agreement, with Bayer AG, or, together with its controlled affiliates, Bayer, setting forth our collaboration to identify or optimize PROTAC targeted protein degraders that mediate for degradation of Targets, using our proprietary platform technology, that are selected by Bayer, subject to certain exclusions and limitations. The Bayer Collaboration Agreement became effective in July 2019.

Under the Bayer Collaboration Agreement, we and Bayer conduct a research program pursuant to separate research plans mutually agreed to by us and Bayer and tailored to each Target selected by Bayer. Bayer may make substitutions for any such initial Target candidates, subject to certain conditions and based on the stage of research for such Target. During the term of the Bayer Collaboration Agreement, we are not permitted, either directly or indirectly, to design, identify, discover or develop any small molecule pharmacologically-active agent whose primary mechanism of action is, by design, directed to the inhibition or degradation of any Target selected or reserved by Bayer, or grant any license, covenant not to sue or other right to any third party in the field of human disease under the licensed intellectual property for the conduct of such activities.

Under the terms of the Bayer Collaboration Agreement, we received an aggregate upfront, non-refundable payment of $17.5 million. Bayer is committed to fund a total of $12.0 million in research funding

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payments through 2023, of which $10.5 million was received from inception through December 31, 2022, subject to potential increases if our costs for research activities exceed the research funding payments allocated to a Target and certain conditions are met. We are also eligible to receive up to $197.5 million in development milestone payments and up to $490.0 million in sales-based milestone payments for all designated Targets. In addition, we are eligible to receive, on net sales of PROTAC targeted protein degrader-related products, mid-single digit to low-double digit tiered royalties, which may be subject to reductions.

Pfizer ARV-471 Collaboration Agreement

In July 2021, we entered into the ARV-471 Collaboration Agreement with Pfizer, pursuant to which we granted Pfizer worldwide co-exclusive rights to develop and commercialize products containing our proprietary compound ARV-471, or the Licensed Products.

Under the ARV-471 Collaboration Agreement, we received an upfront, non-refundable payment of $650 million. In addition, we are eligible to receive up to an additional $1.4 billion in contingent payments based on specified regulatory and sales-based milestones for the Licensed Products. Of the total contingent payments, $400 million in regulatory milestones are related to marketing approvals and $1.0 billion are related to sales-based milestones.

We and Pfizer share equally (50/50) all development costs (including costs for conducting any clinical trials) for the Licensed Products, subject to certain exceptions. Except for certain regions described below, we will also share equally (50/50) all profits and losses in commercialization and medical affairs activities for the Licensed Products in all other countries, subject to certain exceptions.

We will be the marketing authorization holder and, subject to marketing approval, book sales in the United States, while Pfizer will hold marketing authorizations outside the United States. We will determine with Pfizer which, if any, regions within the world will be solely commercialized by one party, and in such region the parties will adjust their share of all profits and losses for the Licensed Products based on the role each party will be performing.

Unless earlier terminated in accordance with its terms, the ARV-471 Collaboration Agreement will expire on a Licensed Product-by-Licensed Product and country-by-country basis when such Licensed Products are no longer commercialized or developed for commercialization in such country. Pfizer may terminate the ARV-471 Collaboration Agreement for convenience in its entirety or on a region-by-region basis subject to certain notice periods. Either party may terminate the ARV-471 Collaboration Agreement for the other party’s uncured material breach or insolvency. Subject to applicable terms of the ARV-471 Collaboration Agreement, including certain payments to Pfizer upon termination for our uncured material breach, effective upon termination of the ARV-471 Collaboration Agreement, we are entitled to retain specified licenses to be able to continue to exploit the Licensed Products.

Subject to specified exceptions, we and Pfizer have each agreed not to directly or indirectly research, develop, or commercialize any competing products outside of the ARV-471 Collaboration Agreement anywhere in the world during the term of the ARV-471 Collaboration Agreement.

Operating Expenses

Our operating expenses since inception have consisted solely of research and development costs and general and administrative costs.

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, and include:

•salaries, benefits and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions;

•expenses incurred under agreements with third parties, including CROs and other third parties that conduct research and preclinical activities on our behalf as well as third parties that manufacture our product candidates for use in our preclinical studies and clinical trials;

•costs of outside consultants, including their fees, stock-based compensation and related travel expenses;

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•the costs of laboratory supplies and developing preclinical studies and clinical trial materials;

•facility-related expenses, which include direct depreciation costs of equipment and allocated expenses for rent and maintenance of facilities and other operating costs; and

•third-party licensing fees.

We expense research and development costs as incurred.

We typically use our employee and infrastructure resources across our development programs, and as such, do not track all of our internal research and development expenses on a program-by-program basis. The following table summarizes our research and development expenses for our AR program, which includes bavdegalutamide and ARV-766, ER program, which includes ARV-471, and all other platform and exploratory research and development costs:

Research and development activities are central to our business model. We expect that our research and development expenses will continue to increase substantially for the foreseeable future as we continue to conduct our ongoing clinical trials for ARV-471, bavdegalutamide and ARV-766, including our Phase 3 clinical trial for ARV-471, and continue to discover and develop additional product candidates. Research and development expenses related to ARV-471 are shared equally with Pfizer from July 22, 2021, the effective date of the ARV-471 Collaboration Agreement. The ER program development costs in the table above reflect the cost sharing with Pfizer.

We cannot determine with certainty the duration and costs of future clinical trials of ARV-471, bavdegalutamide and ARV-766 or any other product candidate we may develop or if, when, or to what extent we will generate revenue from the commercialization and sale of any product candidate for which we obtain marketing approval. We may never succeed in obtaining marketing approval for any product candidate. The successful development and commercialization of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with developing drugs, including the uncertainty of:

•successful completion of preclinical studies and clinical trials;

•receipt and related terms of marketing approvals from applicable regulatory authorities;

•obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;

•making arrangements with third-party manufacturers, or establishing manufacturing capabilities, for both clinical and commercial supplies of our product candidates;

•establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others;

•acceptance of our products, if and when approved, by patients, the medical community and third-party payors;

•obtaining and maintaining third-party coverage and adequate reimbursement;

•maintaining a continued acceptable safety profile of the products following approval; and

•effectively competing with other therapies.

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conduct

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clinical trials beyond those that we anticipate will be required for the completion of clinical development of a product candidate, or if we experience significant delays in our clinical trials due to patient enrollment or other reasons, we would be required to expend significant additional financial resources and time on the completion of clinical development.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation for personnel in our executive, finance, business development and administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters; professional fees for accounting, auditing, tax and consulting services; insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.

We expect that our general and administrative expenses will increase in the future as we increase our personnel headcount to support increased research and development activities relating to our product candidates. We also expect to incur increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and Securities and Exchange Commission requirements; director and officer insurance costs; and investor and public relations costs.

Interest Income (Expense)

Interest income consists of interest earned on our cash, cash equivalents, restricted cash and marketable securities. Interest income increased in 2022 as compared to 2021 primarily due to a full year of an increased marketable securities balance resulting from funds received in July 2021 under the ARV-471 Collaboration Agreement and in September 2021 under the Pfizer Stock Purchase Agreement. Interest expense consists primarily of interest paid or accrued on our outstanding debt with the State of Connecticut.

Income Taxes

Since our inception in 2013, we have not recorded any U.S. federal or state income tax benefits for the net losses we have incurred in any year or for our federal or state earned research and development tax credits, due to our uncertainty of realizing a benefit from those items. During the year ended December 31, 2022, we fully utilized our previously held federal net operating loss and federal credit carryforwards due to taxable income resulting from revenue recognition for tax purposes from our ARV-471 Collaboration Agreement and the mandatory capitalization of qualified research and development expenses incurred on or after January 1, 2022 under the Tax Cuts and Jobs Act. We continue to carry state net operating losses and credit carryforwards. The revenue recognition and capitalization of research expenses are timing differences for tax purposes and deferred tax assets were established. We have provided a valuation allowance against the full amount of the deferred tax assets since, in the opinion of management, based upon our earnings history, it is more likely than not that the benefits will not be realized.

As of December 31, 2022, Arvinas, Inc. had four wholly owned subsidiaries organized as C-corporations: Arvinas Operations, Inc., Arvinas Androgen Receptor, Inc., Arvinas Estrogen Receptor, Inc., and Arvinas Winchester, Inc. Prior to December 31, 2018, these subsidiaries were separate filers for federal tax purposes. Net operating loss carryforwards are generated from the C-corporation subsidiaries’ filings. We have provided a valuation allowance against the full amount of the deferred tax assets since, in the opinion of management, based upon our earnings history, it is more likely than not that the benefits will not be realized.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors

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that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

We recognize revenue under Accounting Standards Codification, or ASC, 606, Revenue from Contracts with Customers. Our revenue is generated through research collaboration and license agreements with pharmaceutical partners. The terms of these agreements contain multiple goods and services which may include (i) licenses, (ii) research and development activities and (iii) participation in joint research and development steering committees. The terms of these agreements may include non-refundable, upfront license or option fees, payments for research and development activities, payments upon the achievement of certain milestones and royalty payments based on product sales derived from the collaboration. Under ASC 606, we evaluate whether the license agreement, research and development services and participation in research and development steering committees represent separate or combined performance obligations. We have determined that these services within our existing contracts represent combined single performance obligations.

The research collaboration and license agreements typically include contingent milestone payments related to specified preclinical and clinical development milestones and regulatory milestones. These milestone payments represent variable consideration that are not initially recognized within the transaction price as they are fully constrained under the guidance in ASC 606. We continually assess the probability of significant reversals for any amounts that become likely to be realized prior to recognizing the variable consideration associated with these payments within the transaction price.

Revenue is recognized ratably over our expected performance period under each respective arrangement. We make our best estimate of the period over which we expect to fulfill our performance obligations, which includes access to technology through the license agreement and research activities. Given the uncertainties of these collaboration arrangements, significant judgement is required to determine the duration of the performance period.

For the years ended December 31, 2022, 2021 and 2020, the transaction price allocated to the combined performance obligations identified under the individual research collaboration and license agreements was recognized as revenue on either a straight-line basis over the estimated performance period under the arrangement or over the estimated performance period based on our best estimate of costs to be incurred. Straight-line basis was considered the best measure of progress for certain agreements in which control of the combined obligation transfers to the customers, due to the contract containing license rights to technology, research and development services, and joint committee participation, which in totality are expected to occur ratably over the performance period.

Our contracts may also call for certain sales-based milestone and royalty payments upon successful commercialization of a target. In accordance with ASC 606-10-55-65, we recognize revenues from sales-based milestone and royalty payments at the later of (i) the occurrence of the subsequent sale, or (ii) the performance obligation to which some or all of the sales-based milestone or royalty payments has been allocated has been satisfied (or partially satisfied). We anticipate recognizing these milestone and royalty payments if and when subsequent sales are generated by customers from the use of the technology. To date, no revenue from these sales-based milestone and royalty payments has been recognized for any periods.

Amounts received prior to satisfying the above revenue recognition criteria are recorded as contract liabilities in our accompanying consolidated balance sheets.

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Research and Development Contract Costs and Accruals

As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of these estimates with the service providers and make adjustments, if necessary. Examples of estimated accrued research and development expenses include fees paid to:

•vendors in connection with clinical development activities; and

•CROs and investigative sites in connection with pre-clinical, non-clinical, and human clinical trials

We base the expense recorded related to external research and development on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CMOs and CROs that supply, conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment streams. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of prepaid expenses accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

New Accounting Pronouncements

For information on new accounting standards, see Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

Results of Operations

Comparison of Years Ended December 31, 2022 and 2021

Revenue

Revenues for the year ended December 31, 2022 totaled $131.4 million, compared with $53.6 million for the year ended December 31, 2021. The increase of $77.8 million was primarily due to $72.5 million of

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revenue from the ARV-471 Collaboration Agreement entered into during the third quarter of 2021 and $3.7 million of previously constrained deferred revenue related to our Oerth Bio joint venture.

Research and Development Expenses

Research and development expenses for the year ended December 31, 2022 totaled $315.0 million, compared with $180.4 million for the year ended December 31, 2021. The increase of $134.6 million was primarily due to investments in our platform and exploratory programs of $77.7 million and increases in expenses related to our AR and ER programs of $15.7 million and $41.2 million, respectively. The increase in spending over all of our programs was primarily due to increased personnel and personnel costs utilized across all of our programs of $42.3 million, which includes $11.2 million related to stock compensation expense. Clinical trial costs and related drug manufacturing costs increased by $37.0 million as we continued to expand our AR and ER programs into additional clinical trials. ER program costs include a year over year cost sharing increase of $16.0 million in accordance with our ARV-471 Collaboration Agreement with Pfizer. Direct expenses related to our platform and exploratory targets increased by $28.7 million as we expanded the number of protein targets in the exploratory and lead optimization phases as well as more investments in our platform discovery efforts.

General and Administrative Expenses

General and administrative expenses totaled $79.6 million for the year ended December 31, 2022, compared with $61.6 million for the year ended December 31, 2021. The increase of $18.0 million was primarily due to an increase of personnel related costs of $15.0 million, which includes $7.2 million related to stock compensation expense, and professional fees of $5.6 million.

Other Income

Other income totaled $12.2 million for the year ended December 31, 2022, compared with $4.3 million for the year ended December 31, 2021. The increase of $7.9 million was primarily due to higher interest income of $10.2 million from marketable securities as compared to the prior year period on a higher average investment balance, partially offset by lower refundable research and development credits from the State of Connecticut of $1.0 million, as we are no longer eligible to receive a cash refund for research and development credits in the State of Connecticut, $0.3 million of higher year-over-year realized losses and forgiveness of debt of $1.0 million in 2021 equal to 50% of the then outstanding loan balance, related to the State of Connecticut loan upon our satisfaction of certain jobs criteria.

Income Tax Expense

Income tax expense totaled $20.9 million for the year ended December 31, 2022, compared with zero for the year ended December 31, 2021, primarily due to current income taxes resulting from revenue recognition for tax purposes from our ARV-471 Collaboration Agreement and the mandatory capitalization of research and development expenses incurred on or after January 1, 2022. Under the Tax Cuts and Jobs Act of 2017, qualified research expenses incurred after 2021 are no longer immediately deductible for tax purposes and instead must be capitalized and amortized for tax purposes. As a result of these items, we expect to fully utilize our federal net operating loss and credit carryforwards in the current year, resulting in current income tax expense for the period.

Loss from Equity Method Investment

Loss from equity method investment totaled $10.6 million for the year ended December 31, 2022, compared with $6.9 million for the year ended December 31, 2021. The increase of $3.7 million was due to increased operating losses incurred by Oerth Bio.

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Results of Operations — Years Ended December 31, 2021 and 2020

Discussion and analysis of the results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020 is included under the heading "Comparison of Years Ended December 31, 2021 and 2020" in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our 2021 Annual Report on Form 10-K as filed with the SEC on February 28, 2022 and incorporated by reference into this Annual Report on Form 10-K.

Liquidity and Capital Resources

Sources of Liquidity

We do not currently have any approved products and have never generated any revenue from product sales. To date, we have financed our operations primarily through the sale of equity interests and through payments from collaboration partners, grant funding and loans from the State of Connecticut. Since inception through December 31, 2022, we had received an aggregate of $780.5 million in payments from collaboration partners, grant funding and forgivable and partially forgivable loans from the State of Connecticut and raised approximately $1.3 billion in gross proceeds from the sale of equity interests and the exercise of stock options, including:

•October 2018: completion of our IPO, in which we issued and sold 7,700,482 shares of common stock for aggregate gross proceeds of $123.2 million, before fees and expenses;

•July 2019: sale of 1,346,313 shares of common stock to Bayer AG for aggregate gross proceeds of $32.5 million;

•November 2019: completion of a follow-on offering in which we issued and sold 5,227,273 shares of common stock for aggregate gross proceeds of $115.0 million, before fees and expenses;

•September - December 2020: sale of 2,593,637 shares of common stock in an “at-the-market offering” for aggregate gross proceeds of $65.6 million, before fees and expenses;

•December 2020: completion of a follow-on offering in which we issued and sold 6,571,428 shares of common stock for aggregate gross proceeds of $460.0 million, before fees and expenses; and

•September 2021: issuance of 3,457,815 share of common stock to Pfizer for aggregate gross proceeds of $350.0 million.

In May 2021, we entered into a lease, which was amended in August 2022, for approximately 160,000 square feet of laboratory and office space to be occupied in 2024. In connection with the signing of the lease, as amended, and at our election to increase the landlord’s contribution to the tenant’s improvement allowance, we issued a letter of credit for $5.5 million, collateralized by a certificate of deposit in the same amount. Once occupied, the base rent will range from $7.7 million to $8.8 million annually over a ten-year lease term.

In July 2021, we entered into the ARV-471 Collaboration Agreement with Pfizer, pursuant to which we granted Pfizer worldwide co-exclusive rights to develop and commercialize products containing our proprietary compound ARV-471. Under the ARV-471 Collaboration Agreement, Pfizer made an upfront, nonrefundable payment of $650.0 million.

In August 2021, we entered into an Equity Distribution Agreement with Piper Sandler & Company and Cantor Fitzgerald & Co., as agents, pursuant to which we may offer and sell from time to time, through the agents, up to $300.0 million of the common stock registered under the universal shelf registration statement pursuant to one or more “at-the-market" offerings. During the years ended December 31, 2022 and 2021, no shares were issued under this agreement.

Cash Flows

Our cash, cash equivalents, restricted cash and marketable securities totaled $1.2 billion and $1.5 billion as of December 31, 2022 and 2021, respectively. We had an outstanding loan balance of $1.0 million as of December 31, 2022 and 2021.

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The following table summarizes our sources and uses of cash for the period presented:

Operating Activities

Net cash used in operating activities for the year ended December 31, 2022 totaled $273.5 million, primarily due to our net loss of $282.5 million and a decrease in deferred revenue of $116.8 million, driven largely by the ARV-471 Collaboration Agreement with Pfizer, partially offset by non-cash charges of $91.6 million and a decrease in accounts receivable of $14.0 million, related to payments pursuant to the ARV-471 Collaboration Agreement. Non-cash charges were primarily stock compensation expense of $75.5 million, depreciation and amortization of $6.3 million and net accretion of bond discounts/premiums of $5.7 million.

Net cash provided by operating activities for the year ended December 31, 2021 totaled $559.4 million, primarily due to an increase in deferred revenue of $695.5 million driven largely by the ARV-471 Collaboration Agreement with Pfizer, a net increase in accrued expenses and accounts payable of $27.9 million, and non-cash charges of $72.1 million, partially offset by our net loss of $191.0 million, an increase in accounts receivable of $14.0 million related primarily to the ARV-471 Collaboration Agreement, prepaid expenses related in part to clinical trials and drug manufacturing contracts of $13.6 million, and the payment to obtain a contract of $12.9 million related to the ARV-471 Collaboration Agreement. Non-cash charges were primarily stock compensation expense of $57.1 million, net accretion of bond discounts/premiums of $9.4 million and depreciation and amortization of $4.8 million.

Net cash used in operating activities for the year ended December 31, 2020 totaled $89.7 million, resulting from our net loss of $119.3 million and a decrease in deferred revenue of $13.3 million, partially offset by non-cash expenses of $35.6 million and an increase in accounts payable and accrued expenses of $12.8 million. Non-cash expenses included $30.2 million of stock compensation expense. The decrease in deferred revenue is primarily due to $21.8 million of revenue recognized, partially offset by $8.5 million in payments received and an accounts receivable from collaboration partners.

Investing Activities

Net cash provided by investing activities for the year ended December 31, 2022 totaled $242.8 million, attributable to maturities and sales of marketable securities in excess of purchases of $249.6 million, partially offset by purchases of property and equipment of $6.8 million.

Net cash used in investing activities for the year ended December 31, 2021 totaled $1.3 billion, attributable to purchases of marketable securities in excess of the maturities of marketable securities of $1.3 billion due in part to funds received as part of the ARV-471 Collaboration Agreement and purchases of property and equipment of $4.7 million, partially offset by sales of marketable securities of $7.2 million.

Net cash provided by investing activities for the year ended December 31, 2020 totaled $164.3 million, attributable to the net maturities and sales of marketable securities in excess of purchases of $170.7 million, offset by the purchases of property and equipment of $6.4 million.

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Financing Activities

Net cash provided by financing activities for the year ended December 31, 2022 totaled $4.7 million, attributable to proceeds from the exercise of stock options.

Net cash provided by financing activities for the year ended December 31, 2021 totaled $278.6 million, attributable to the proceeds from the issuance of shares of our common stock to Pfizer of $260.0 million (after allocation of a portion of the proceeds to deferred revenue), net of expenses, and proceeds from the exercise of stock options of $18.6 million.

Net cash provided by financing activities for the year ended December 31, 2020 totaled $504.6 million, primarily attributable to the proceeds from sales of our common stock from our public offering and at-the-market offering of $496.3 million, net of combined underwriter discounts from the public offering and offering costs of $29.3 million and the proceeds from the exercise of stock options of $8.3 million.

Funding Requirements

Since our inception, we have incurred significant operating losses. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future as we advance the preclinical and clinical development of our product candidates.

Specifically, we anticipate that our expenses will increase substantially if, and as we:

•continue a Phase 1/2 clinical trial of our product candidate ARV-471, a Phase 1b clinical trial of ARV-471 in combination with palbociclib, Phase 1b cohort expansion in combination with a standard of care agent, and a Phase 3 trial with ARV-471 as a second-line treatment, and initiate a Phase 3 trial of ARV-471 in combination with palbociclib, each in patients with locally advanced or metastatic ER+ / HER2- breast cancer;

•continue a Phase 1/2 clinical trial of our product candidate bavdegalutamide (ARV-110) and a Phase 1b clinical trial of bavdegalutamide in combination with abiraterone for the treatment of men with metastatic castration-resistant prostate cancer, or mCRPC, and initiate one or more additional Phase 1b cohort expansions of bavdegalutamide in combination with standard of care agents and a Phase 3 clinical trial, in men with mCRPC;

•continue a Phase 1/2 clinical trial of our product candidate ARV-766 in men with mCRPC;

•apply our PROTAC Discovery Engine to advance additional product candidates into preclinical and clinical development;

•expand the capabilities of our PROTAC Discovery Engine;

•seek marketing approvals for any product candidates that successfully complete clinical trials;

•ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize any products for which we may obtain marketing approval;

•expand, maintain and protect our intellectual property portfolio;

•hire additional development, including clinical and regulatory, and scientific personnel; and

•add operational, financial and management information systems and personnel to support our research, product development and future commercialization efforts and support our operations as a public company.

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We had cash, cash equivalents, restricted cash and marketable securities of approximately $1.2 billion as of December 31, 2022. We believe that our cash, cash equivalents, restricted cash and marketable securities as of December 31, 2022 will enable us to fund our planned operating expenses and capital expenditure requirements into 2026. We have based this estimate on assumptions that may prove to be wrong and we could use our capital resources sooner than we currently expect. Our future capital requirements will depend on many factors, including:

•the progress, costs and results of our ongoing clinical trials for ARV-471, bavdegalutamide (ARV-110), and ARV-766 and any future clinical development of ARV-471, bavdegalutamide, (ARV-110) and ARV-766;

•the scope, progress, costs and results of preclinical and clinical development for our other product candidates and development programs;

•the number of, and development requirements for, other product candidates that we pursue, including our other oncology and neurodegenerative research programs;

•the success of our collaborations with Pfizer, Inc., or Pfizer; Genentech, Inc. and F. Hoffman LaRoche Ltd., collectively referred to as Genentech; and Bayer AG, or Bayer;

•the costs, timing and outcome of regulatory review of our product candidates;

•the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;

•the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

•the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and

•our ability to establish additional collaboration arrangements with other biotechnology or pharmaceutical companies on favorable terms, if at all, for the development or commercialization of our product candidates.

As a result of these anticipated expenditures, we will need to obtain substantial additional financing in connection with our continuing operations. Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. Although we may receive potential future payments under our collaborations with Pfizer, Genentech and Bayer, we do not currently have any committed external source of funds. Adequate additional funds may not be available to us on acceptable terms, or at all. If we are unable to raise capital when needed or on attractive terms, we may be required to delay, limit, reduce or terminate our research, product development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

Borrowings

In January 2014, we entered into an Assistance Agreement with the State of Connecticut, or the 2014 Assistance Agreement, under which we borrowed $2.5 million. Borrowings under the 2014 Assistance Agreement were forgivable if we maintained a minimum number of full-time jobs in the State of Connecticut for

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a minimum period at a minimum annual salary. Effective in March 2016, the full principal amount under the 2014 Assistance Agreement had been forgiven. While borrowings under the 2014 Assistance Agreement have been forgiven, we remain subject to an ongoing covenant to be located in the State of Connecticut through January 2024. Upon violation of this covenant, we would be required to repay the full original funding amount of $2.5 million plus liquidated damages of 7.50%.

In June 2018, we entered into an additional Assistance Agreement with the State of Connecticut, or the 2018 Assistance Agreement, to provide funding for the expansion and renovation of laboratory and office space. We borrowed $2.0 million under the 2018 Assistance Agreement in September 2018, of which $1.0 million was forgiven upon meeting certain employment conditions. Borrowings under the agreement bear an interest rate of 3.25% per annum, with interest only payments required for the first 60 months, and mature in September 2028. The 2018 Assistance Agreement requires that we be located in the State of Connecticut through September 2028 with a default penalty of repayment of the full original funding amount of $2.0 million plus liquidated damages of 7.5% of the total amount of funding received. As of December 31, 2022, $1.0 million remains outstanding under the 2018 Assistance Agreement.