Relay Therapeutics, Inc. (RLAY)

CIK: 0001812364. SIC: 2836 Biological Products, (No Diagnostic Substances). Latest 10-K as of: 2026-02-26.

SIC breadcrumb: Manufacturing > Chemicals And Allied Products > SIC 2836 Biological Products, (No Diagnostic Substances)

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1812364. Latest filing source: 0001193125-26-076739.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001812364.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-05. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001812364.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-206454.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-05. Report date: 2026-03-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. As a result of many factors, including those factors set forth in the "Risk Factors" section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical-stage, small molecule precision medicine company developing potentially life-changing therapies for patients living with cancer and genetic disease. Our Dynamo® platform integrates an array of leading-edge computational and experimental approaches designed to drug protein targets that have previously been intractable or inadequately addressed.

We have deployed our technology platform to build a pipeline of product candidates to address targets in precision medicine where there is clear evidence linking target proteins to disease and where molecular diagnostics can unambiguously identify relevant patients for treatment. We believe this approach will increase the likelihood of successfully translating a specific pharmacological mechanism into clinical benefit.

We are advancing a pipeline of medicine candidates to address targets in precision oncology and genetic disease, including zovegalisib (RLY-2608), our lead product candidate discussed below.

Zovegalisib (RLY-2608). Zovegalisib is the first known allosteric, pan-mutant and isoform-selective phosphoinostide 3 kinase alpha, or PI3Kα, inhibitor in clinical development. It is the lead program in our efforts to discover and develop mutant selective inhibitors of PI3Kα.

•
Breast Cancer and Solid Tumors

•
ReDiscover Trial. In December 2021, we dosed the first patient in a first-in-human clinical trial for zovegalisib, or the ReDiscover Trial. Since then, we have predominantly focused on evaluating zovegalisib in combination with fulvestrant for patients with HR+, HER2–, PI3Kα-mutated, locally advanced or metastatic breast cancer. We are also advancing triplet combination arms with zovegalisib, fulvestrant and cyclin dependent kinase 4/6, or CDK 4/6, inhibitors, or atirmociclib, the investigative selective-CDK4 inhibitor from Pfizer Inc., or Pfizer. In the second quarter of 2025, we initiated a global Phase 3 registrational study, or the ReDiscover-2 Trial, which is designed to evaluate the safety and efficacy of zovegalisib plus fulvestrant in PI3Kα-mutated, HR+/HER2- advanced breast cancer patients previously treated with a CDK4/6 inhibitor. The comparator arm in the ReDiscover-2 Trial is capivasertib plus fulvestrant. In February 2026, we announced that the FDA granted Breakthrough Therapy designation to zovegalisib in combination with fulvestrant for the treatment of adults with PIK3CA mutant HR+/HER2- locally advanced or metastatic breast cancer following recurrence or progression on or after treatment with a CDK4/6 inhibitor.

o
Clinical Data. In June 2025, we announced updated interim clinical data for the zovegalisib plus fulvestrant arm of the ReDiscover Trial from patients receiving the 600mg twice daily, or BID, fasted dose and in December 2025, we announced an efficacy subset analysis of interim clinical data for zovegalisib at the same dose. In March 2026, we announced interim clinical data from the ReDiscover Trial of zovegalisib in combination with fulvestrant at the 400mg BID fed dose, which is the recommended Phase 3 dose in the ReDiscover-2 Trial. In April 2026, we announced interim clinical data for the zovegalisib plus atirmociclib triplet combination. We believe that while the clinical data from the ReDiscover Trial disclosed to date are preliminary, the data suggest differentiated interim efficacy signals in the specified patient population and support selective target engagement across doses and mutation types with an encouraging interim safety and tolerability profile.

•
Vascular Anomalies

o
ReInspire Trial. In the first quarter of 2025, we initiated the global Phase 1/2 clinical trial for zovegalisib in patients with PIK3CA-related overgrowth spectrum, or PROS, and vascular anomalies driven by PIK3CA mutations, or the ReInspire Trial. Enrollment is continuing in this clinical trial.

In addition to the programs mentioned above, we have initiated a clinical trial studying RLY-8161, our NRAS-selective inhibitor, in patients with NRAS-mutant melanoma and other NRAS-mutant solid tumors. In our research pipeline, we are advancing our non-inhibitory chaperone for Fabry disease, as well as early-stage discovery programs across both precision oncology and genetic diseases.

We were incorporated in May 2015. We have devoted substantially all of our resources to developing our product candidates, developing our innovative computational and experimental approaches on protein motion, building our intellectual property portfolio, business planning, raising capital, and providing general and administrative support for these operations. To date, we have principally financed our

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operations through private placements of preferred stock and common stock, convertible debt, and proceeds from public offerings of our common stock.

In December 2024, we and Elevar Therapeutics, Inc., or Elevar, entered into an exclusive global licensing agreement, or the Elevar Agreement, pursuant to which Elevar was granted global development and commercialization rights for lirafugratinib. Under the terms of the Elevar Agreement, we received $5.0 million upon execution, $3.4 million upon transfer of active pharmaceutical ingredient and other materials, and $10.0 million in milestone payments as of March 31, 2026. We are eligible to receive up to $485.0 million in regulatory and commercial milestone payments, as well as tiered royalties.

In September 2024, we completed a public offering, or the September 2024 Offering, of 32,857,143 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 4,285,714 shares, at an offering price of $7.00 per share. We received proceeds of $218.2 million, which was net of $11.8 million in underwriting discounts and other offering expenses.

In August 2024, we entered into a sales agreement, or the 2024 Sales Agreement, with TD Securities (USA) LLC, or TD Securities, pursuant to which we may offer and sell shares of our common stock having aggregate gross proceeds of up to $250.0 million from time to time in “at-the-market” offerings through TD Securities, as our sales agent. As of March 31, 2026, we have sold 14,141,569 shares of common stock under the 2024 Sales Agreement, from which we received $140.4 million in gross proceeds. In connection therewith, we paid $3.3 million in commissions to TD Securities, yielding $137.1 million in net proceeds. In April 2026, we sold an additional 1,865,000 shares of common stock under the 2024 Sales Agreement, from which we received an additional $22.6 million in gross proceeds and paid an additional $0.5 million in commissions to TD Securities, yielding an additional $22.1 million in net proceeds.

Inflation generally affects us by increasing our employee-related costs and clinical trial expenses, as well as other operating expenses. Our financial condition and results of operations may also be impacted by other factors we may not be able to control, such as public health crises, global supply chain disruptions, uncertain global economic conditions, global trade disputes or political instability as further discussed in the section "Risk Factors" in this Quarterly Report on Form 10-Q. We do not believe that such factors had a material adverse impact on our results of operations during the three months ended March 31, 2026 and 2025.

Since our inception, we have incurred significant operating losses on an aggregate basis. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our current or future product candidates. Our net losses were $73.3 million and $77.1 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026 we had an accumulated deficit of $2.1 billion. These losses have resulted primarily from costs incurred in connection with research and development activities, licensing and patent investment, and general and administrative costs associated with our operations. We expect to continue to incur significant expenses, including the costs of operating as a public company, and generate significant operating losses for at least the next several years.

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

•
conduct our current and future clinical trials of our lead product candidate;

•
conduct additional preclinical research and development of our early-stage programs;

•
initiate and continue research and preclinical and clinical development of our other product candidates;

•
seek to identify additional product candidates;

•
pursue marketing approvals for any of our product candidates that successfully complete clinical trials, if any;

•
establish a sales, marketing, and distribution infrastructure to commercialize any products for which we may obtain marketing approval;

•
require the manufacture of larger quantities of our product candidates for clinical development and potentially commercialization;

•
obtain, maintain, expand, and protect our intellectual property portfolio;

•
acquire or in-license other drugs and technologies;

•
hire and retain additional clinical, regulatory, quality, and scientific personnel;

•
build out new facilities or expand existing facilities to support our ongoing development activity; and

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

12

In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.

As a result, we will need additional financing to support our continuing operations. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed, on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back, or discontinue the development or commercialization of one or more of our product candidates.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and may be forced to reduce or terminate our operations.

We believe our cash, cash equivalents, and investments of $642.1 million as of March 31, 2026 will enable

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-02-26. Report date: 2025-12-31.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. This discussion and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. As a result of many factors, including those factors set forth in the "Risk Factors" section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical-stage, small molecule precision medicine company developing potentially life-changing therapies for patients living with cancer and genetic disease. Our Dynamo® platform integrates an array of leading-edge computational and experimental approaches designed to drug protein targets that have previously been intractable or inadequately addressed.

We have deployed our technology platform to build a pipeline of product candidates to address targets in precision medicine where there is clear evidence linking target proteins to disease and where molecular diagnostics can unambiguously identify relevant patients for treatment. We believe this approach will increase the likelihood of successfully translating a specific pharmacological mechanism into clinical benefit.

We are advancing a pipeline of medicine candidates to address targets in precision oncology and genetic disease, including zovegalisib (RLY-2608), our lead product candidate discussed below.

Zovegalisib (RLY-2608). Zovegalisib is the first known allosteric, pan-mutant and isoform-selective phosphoinostide 3 kinase alpha, or PI3Kα, inhibitor in clinical development. It is the lead program in our efforts to discover and develop mutant selective inhibitors of PI3Kα.

•
Breast Cancer and Solid Tumors

•
ReDiscover Trial. In December 2021, we dosed the first patient in a first-in-human clinical trial for zovegalisib, or the ReDiscover Trial. Since then, we have predominantly focused on evaluating zovegalisib in combination with fulvestrant for patients with HR+, HER2–, PI3Kα-mutated, locally advanced or metastatic breast cancer. We are also advancing triplet combination arms with zovegalisib, fulvestrant and cyclin dependent kinase 4/6, or CDK 4/6, inhibitors, or atirmociclib, the investigative selective-CDK4 inhibitor from Pfizer Inc., or Pfizer. In the second quarter of 2025, we initiated a global Phase 3 registrational study, or the ReDiscover-2 Trial, which is designed to evaluate the safety and efficacy of zovegalisib plus fulvestrant in PI3Kα-mutated, HR+/HER2- advanced breast cancer patients previously treated with a CDK4/6 inhibitor. The comparator arm in the ReDiscover-2 Trial is capivasertib plus fulvestrant. In February 2026, we announced that the FDA granted Breakthrough Therapy designation to zovegalisib in combination with fulvestrant for the treatment of adults with PIK3CA mutant HR+/HER2- locally advanced or metastatic breast cancer following recurrence or progression on or after treatment with a CDK4/6 inhibitor.

o
Clinical Data. In June 2025, we announced updated interim clinical data for the zovegalisib plus fulvestrant arm of the ReDiscover Trial with a data cut-off date of March 26, 2025, and in December 2025, we announced an efficacy subset analysis of interim clinical data for zovegalisib at the San Antonio Breast Cancer Symposium 2025 with a data cut-off date of October 15, 2025. We believe that while the clinical data from the ReDiscover Trial disclosed to date are preliminary, the data suggest differentiated interim efficacy signals in the specified patient population and support selective target engagement across doses and mutation types with an encouraging interim safety and tolerability profile.

•
Vascular Anomalies

o
ReInspire Trial. In the first quarter of 2025, we initiated the global Phase 1/2 clinical trial for zovegalisib in patients with PIK3CA-related overgrowth spectrum, or PROS, and vascular anomalies driven by PIK3CA mutations, or the ReInspire Trial. Enrollment is continuing in this clinical trial.

In addition to the programs mentioned above, we are progressing our NRAS-selective inhibitor, RLY-8161, to address NRAS-mutated solid tumors as well as our non-inhibitory chaperone for Fabry disease. We are also advancing early-stage discovery programs across both precision oncology and genetic diseases.

We were incorporated in May 2015. We have devoted substantially all of our resources to developing our product candidates, developing our innovative computational and experimental approaches on protein motion, building our intellectual property portfolio, business planning, raising capital, and providing general and administrative support for these operations. To date, we have principally financed our operations through private placements of preferred stock and common stock, convertible debt, and proceeds from public offerings of our common stock.

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In December 2024, we and Elevar Therapeutics, Inc., or Elevar, entered into an exclusive global licensing agreement, or the Elevar Agreement, pursuant to which Elevar was granted global development and commercialization rights for lirafugratinib. Under the terms of the Elevar Agreement, we received $5.0 million upon execution, $3.4 million upon transfer of active pharmaceutical ingredient and other materials, and $7.0 million in milestone payments as of December 31, 2025. We are eligible to receive up to $488.0 million in regulatory and commercial milestone payments, as well as tiered royalties.

In September 2024, we completed a public offering, or the September 2024 Offering, of 32,857,143 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 4,285,714 shares, at an offering price of $7.00 per share. We received proceeds of $218.2 million, which was net of $11.8 million in underwriting discounts and other offering expenses.

In August 2024, we entered into a sales agreement, or the 2024 Sales Agreement, with TD Securities (USA) LLC, or TD Securities, pursuant to which we may offer and sell shares of our common stock having aggregate gross proceeds of up to $250.0 million from time to time in “at-the-market” offerings through TD Securities, as our sales agent. As of December 31, 2025, we have not sold any shares under the 2024 Sales Agreement.

In January 2024, we entered into a securities purchase agreement with Nextech Crossover I SCP for the private placement of 2,500,000 shares of common stock at $12.00 per share, or the Private Placement. We received $29.8 million in proceeds from the Private Placement, which were net of $0.2 million in offering expenses.

In December 2020, we entered into a global collaboration and license agreement with Genentech, Inc., a member of the Roche Group, or Genentech, for the development and commercialization of RLY-1971 (now referred to as migoprotafib, or GDC-1971), or the Genentech Agreement. Under the terms of the Genentech Agreement, we received $75.0 million in an upfront payment in 2021, as well as $45.0 million in milestone payments. Genentech elected to terminate the Genentech Agreement without cause, effective as of January 7, 2025, or the Termination Date. As of the Termination Date, we are no longer entitled to receive any further milestones or other payments due after the Termination Date. The parties also ceased to have any development or commercialization obligations as of the Termination Date and the licenses that we granted to Genentech pursuant to the Genentech Agreement ceased to be in effect as of the Termination Date. We will not continue development of migoprotafib.

Inflation generally affects us by increasing our employee-related costs and clinical trial expenses, as well as other operating expenses. Our financial condition and results of operations may also be impacted by other factors we may not be able to control, such as public health crises, global supply chain disruptions, uncertain global economic conditions, global trade disputes or political instability as further discussed in the section "Risk Factors" in this Annual Report on Form 10-K. We do not believe that such factors had a material adverse impact on our results of operations during the years ended December 31, 2025, 2024, and 2023.

Since our inception, we have incurred significant operating losses on an aggregate basis. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our current or future product candidates. Our net losses were $276.5 million, $337.7 million, and $342.0 million for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, we had an accumulated deficit of $2.0 billion. These losses have resulted primarily from costs incurred in connection with research and development activities, licensing and patent investment, and general and administrative costs associated with our operations. We expect to continue to incur significant expenses, including the costs of operating as a public company, and generate significant operating losses for at least the next several years.

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

•
conduct our current and future clinical trials of our lead product candidate;

•
conduct additional preclinical research and development of our early-stage programs;

•
initiate and continue research and preclinical and clinical development of our other product candidates;

•
seek to identify additional product candidates;

•
pursue marketing approvals for any of our product candidates that successfully complete clinical trials, if any;

•
establish a sales, marketing, and distribution infrastructure to commercialize any products for which we may obtain marketing approval;

•
require the manufacture of larger quantities of our product candidates for clinical development and potentially commercialization;

•
obtain, maintain, expand, and protect our intellectual property portfolio;

•
acquire or in-license other drugs and technologies;

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•
hire and retain additional clinical, regulatory, quality, and scientific personnel;

•
build out new facilities or expand existing facilities to support our ongoing development activity; and

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

In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.

As a result, we will need additional financing to support our continuing operations. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed, on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back, or discontinue the development or commercialization of one or more of our product candidates.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and may be forced to reduce or terminate our operations.

We believe our cash, cash equivalents, and investments of $554.5 million as of December 31, 2025 will enable us to fund our operating expenses and capital expenditure requirements into 2029. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. We will need to raise additional capital in the future to continue developing the drugs in our pipeline and to commercialize any approved drug. We may seek to obtain additional financing in the future through the issuance of our common stock, through other equity or debt financings, or through collaborations or partnerships with other companies. We may not be able to raise additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could compromise our ability to execute on our business plan.

Components of our Results of Operations

Revenue

To date, our revenue primarily consists of amounts related to the Genentech Agreement and Elevar Agreement.

Operating Expenses

Research and Development Expenses

Research and Development Expenses include:

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salaries, benefits, and other employee costs, including stock compensation expense, for personnel engaged in research and development functions;

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

•
expenses incurred under agreements with contract research organizations, or CROs, contract manufacturing organizations, or CMOs, and other vendors that conduct our clinical trials and preclinical activities;

•
costs of acquiring, developing, and manufacturing clinical trial materials, and lab supplies;

•
costs related to compliance with regulatory requirements;

•
impairment of any intangible assets capitalized upon the acquisition of in-process research and development assets; and

•
facility costs, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies.

We do not allocate certain internal costs, facilities, or overhead costs to specific development programs.

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We expense research and development costs as the services are performed or the goods are received. We recognize costs for certain development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data, such as patient enrollment, clinical site activations, or other information provided to us by our vendors and our clinical investigative sites. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid expenses or accrued research and development expenses.

Our lead product candidate is in clinical development. We also have earlier stage programs across both precision oncology and genetic diseases. Costs incurred for these programs include costs incurred to support our discovery research and translational science efforts up to the initiation of first-in-human clinical development. Platform research and other research and development activities include costs that are not specifically allocated to active product candidates, including facilities costs, depreciation expense, and other costs. Employee expenses include salary, wages, stock compensation, and other costs related to our personnel, which are not allocated to specific programs or activities.

We cannot determine with certainty the duration and costs of future clinical trials and future development costs, if, when, or to what extent we will generate revenue from the commercialization and sale of any of our product candidates for which we obtain marketing approval or our other research and development costs. We may never succeed in obtaining marketing approval for any of our product candidates.

The duration, costs, and timing of clinical trials and development of our product candidates will depend on a variety of factors, including:

•
the scope, rate of progress, expense, and results of our preclinical development activities, any future clinical trials of our lead product candidate, or other product candidates and other research and development activities that we may conduct;

•
uncertainties in clinical trial design and patient enrollment or drop out or discontinuation rates;

•
establishing an appropriate safety and efficacy profile with IND-enabling studies;

•
the initiation and completion of future clinical trial results;

•
the timing, receipt, and terms of any approvals from applicable regulatory authorities including the FDA and non-U.S. regulators;

•
significant and changing government regulation and regulatory guidance;

•
potential additional studies requested by regulatory agencies;

•
establishing clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that we or our third-party manufacturers are able to make product successfully;

•
the impact of any business interruptions to our operations, including the timing and enrollment of patients in our planned clinical trials, or to those of our manufacturers, suppliers, or other vendors resulting from any public health crisis or ongoing geopolitical conflicts and related global economic sanctions;

•
the expense of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights; and

•
maintaining a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect to continue to incur significant research and development expenses for the foreseeable future as we continue to conduct clinical trials of our lead product candidate, initiate clinical trials for our other product candidates, as well as identify and develop additional product candidates.

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 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 trial delays 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.

Change in Fair Value of Contingent Consideration Liability

Change in Fair Value of Contingent Consideration Liability consists of fluctuations in the estimated fair value of Contingent Milestone Payments, as well as changes in the recorded amounts of Contingent Earnout Payments, under the Merger Agreement with ZebiAI.

82

General and Administrative Expenses

General and Administrative Expenses primarily consist of salaries and other employee costs, including stock compensation, for personnel in our executive, finance, corporate, and business development and administrative functions. General and Administrative Expenses also include legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax, and consulting services; other expenses associated with operating as a public company, including compliance with exchange listing and Securities and Exchange Commission, or SEC, requirements, director and officer insurance costs, and investor and public relations costs; travel expenses; and facility-related expenses, which include depreciation costs and allocated expenses for rent and maintenance of facilities.

We expect to continue to incur significant general and administrative expenses in the future and as we continue our research and development activities, as well as other activities related to the potential commercialization of our product candidates.

Other Income, Net

Other Income, Net primarily consists of interest income related to interest earned on our cash, cash equivalents, and investments.

Income Taxes

Since our inception in 2015, 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 earned research and development tax credits, due to our uncertainty of realizing a benefit from such items.

As of December 31, 2025, we had federal net operating loss carryforwards of $923.9 million, of which $43.1 million begin to expire in 2035 and $880.8 million do not expire.

As of December 31, 2025, we had state net operating loss carryforwards of $625.6 million, which begin to expire in 2035.

As of December 31, 2025, we had federal research and development tax credit carryforwards of $55.9 million, which begin to expire in 2035.

As of December 31, 2025, we had state research and development tax credit carryforwards of $29.9 million, which begin to expire in 2030.

As of December 31, 2025, we had federal orphan drug tax credit carryforwards of $17.0 million, which begin to expire in 2042.

Results of Operations

Comparison of years ended December 31, 2025 and 2024

The following table summarizes our results of operations for the years ended December 31, 2025 and 2024.

Year Ended December 31,

Change

2025

2024

(in thousands)

License and other revenue

$

15,355

$

10,007

$

5,348

Operating expenses:

Research and development expenses

$

261,383

$

319,089

$

(57,706

)

Change in fair value of contingent consideration liability

—

(13,206

)

13,206

General and administrative expenses

56,710

76,592

(19,882

)

Total operating expenses

318,093

382,475

(64,382

)

Loss from operations

(302,738

)

(372,468

)

69,730

Other income, net

26,259

34,760

(8,501

)

Net loss

$

(276,479

)

$

(337,708

)

$

61,229

License and Other Revenue

During the year ended December 31, 2025, we recognized $15.4 million of license and other revenue from the Elevar Agreement, specifically in connection with the completion of each of our performance obligations thereunder in 2025, as well as receipt of certain milestone payments.

During the year ended December 31, 2024, we recognized $10.0 million of license and other revenue from the Genentech Agreement, specifically in connection with a milestone achieved thereunder in 2024.

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Research and Development Expenses

The following summarizes our research and development expenses for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Change

2025

2024

(in thousands)

External costs for programs in clinical trials

$

104,268

$

92,096

$

12,172

External costs for platform technologies and preclinical programs

38,526

76,392

(37,866

)

Employee related expenses

95,581

123,601

(28,020

)

Other expenses

23,008

27,000

(3,992

)

Total research and development expenses

$

261,383

$

319,089

$

(57,706

)

Research and development expenses were $261.4 million for the year ended December 31, 2025 compared to $319.1 million for the year ended December 31, 2024. The decrease of $57.7 million was primarily due to the series of strategic choices to streamline the research organization throughout 2024 and 2025, as well as decreases in costs incurred on continued development of lirafugratinib after execution of the Elevar Agreement in December 2024, offset by increases in costs related to the ReDiscover-2 Trial and ReInspire Trial.

Change in Fair Value of Contingent Consideration Liability

Change in fair value of our contingent consideration liability under the Merger Agreement with ZebiAI was $0 for the year ended December 31, 2025 compared to a decrease of $13.2 million for the year ended December 31, 2024. During the year ended December 31, 2024, the Contingent Milestone Payments and Contingent Earnout Payments were both reduced to $0. During the year ended December 31, 2025, there were no further changes to such amounts.

General and Administrative Expenses

General and administrative expenses were $56.7 million for the year ended December 31, 2025 compared to $76.6 million for the year ended December 31, 2024. The decrease of $19.9 million was primarily due to a decrease in stock compensation expense, as well as other employee costs, partially offset by costs to obtain the Elevar Agreement, which were expensed commensurate with the timing of revenue recognized during the year ended December 31, 2025.

Other Income, Net

Other income, net, was $26.3 million for the year ended December 31, 2025 compared to $34.8 million for the year ended December 31, 2024. The decrease of $8.5 million was primarily a result of changes in the amounts invested between periods, as well as fluctuations in interest rates.

Comparison of years ended December 31, 2024 and 2023

The following table summarizes our results of operations for the years ended December 31, 2024 and 2023:

Year Ended December 31,

Change

2024

2023

(in thousands)

License and other revenue

$

10,007

$

25,546

$

(15,539

)

Operating expenses:

Research and development expenses

$

319,089

$

330,018

$

(10,929

)

Change in fair value of contingent consideration liability

(13,206

)

(6,422

)

(6,784

)

General and administrative expenses

76,592

74,950

1,642

Total operating expenses

382,475

398,546

(16,071

)

Loss from operations

(372,468

)

(373,000

)

532

Other income, net

34,760

31,027

3,733

Net loss

$

(337,708

)

$

(341,973

)

$

4,265

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License and Other Revenue

During the year ended December 31, 2024, we recognized $10.0 million of license and other revenue from the Genentech Agreement, specifically in connection with a milestone achieved thereunder in 2024.

During the year ended December 31, 2023, we recognized $25.5 million of license and other revenue from the Genentech Agreement, specifically in connection with milestones achieved thereunder in prior years. Although the milestones were achieved in prior years, the variable consideration was previously constrained until 2023.

Research and Development Expenses

The following summarizes our research and development expenses for the years ended December 31, 2024 and 2023:

Year Ended December 31,

Change

2024

2023

(in thousands)

External costs for programs in clinical trials

$

92,096

$

101,055

$

(8,959

)

External costs for platform technologies and preclinical programs

76,392

76,471

(79

)

Employee related expenses

123,601

125,471

(1,870

)

Other expenses

27,000

27,021

(21

)

Total research and development expenses

$

319,089

$

330,018

$

(10,929

)

Research and development expenses were $319.1 million for the year ended December 31, 2024 compared to $330.0 million for the year ended December 31, 2023. The decrease of $10.9 million was primarily due to the impact of prioritization of certain programs in our pipeline, as previously disclosed in 2023 and 2024.

Change in Fair Value of Contingent Consideration Liability

The change in fair value of our contingent consideration liability for Contingent Milestone Payments under the Merger Agreement with ZebiAI was a decrease of $13.2 million for the year ended December 31, 2024 compared to a decrease of $6.4 million for the year ended December 31, 2023. During the year ended December 31, 2024, the Contingent Milestone Payments and Contingent Earnout Payments were both reduced to $0.

General and Administrative Expenses

General and administrative expenses were $76.6 million for the year ended December 31, 2024 compared to $75.0 million for the year ended December 31, 2023. The increase of $1.6 million was primarily due to an increase in stock compensation expense, partially offset by decreases in other employee compensation costs and certain other general and administrative expenses.

Other Income, Net

Other income, net, was $34.8 million for the year ended December 31, 2024 compared to $31.0 million for the year ended December 31, 2023. The increase of $3.7 million was primarily a result of changes in interest rates.

Liquidity and Capital Resources

As of December 31, 2025, we had cash, cash equivalents, and investments of $554.5 million.

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses. We have not yet commercialized any products and we do not expect to generate revenue from sales of any product candidates for several years, if ever. To date, we have principally financed our operations through private placements of preferred stock and common stock, convertible debt, and proceeds from public offerings of our common stock.

In December 2024, we entered into the Elevar Agreement, pursuant to which Elevar was granted global development and commercialization rights for lirafugratinib. As of December 31, 2025, we had received $5.0 million in upfront consideration, $3.4 million in conjunction with transfer of active pharmaceutical ingredient and other materials, and $7.0 million in milestone payments pursuant to the Elevar Agreement.

In September 2024, we completed the September 2024 Offering of 32,857,143 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 4,285,714 shares, at an offering price of $7.00 per share. We received proceeds of $218.2 million, which was net of $11.8 million in underwriting discounts and other offering expenses.

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In August 2024, we filed a universal shelf registration statement on Form S-3ASR with the SEC, or the 2024 Shelf, to register for sale an amount of our common stock, preferred stock, debt securities, warrants and/or units in one or more offerings, which became effective upon filing with the SEC (File No. 333-281308). The 2024 Shelf replaced our prior universal shelf registration statement filed with the SEC in August 2021 (File No. 333-258768), which would have expired in August 2024.

In August 2021, we entered into the 2021 Sales Agreement with Cowen, pursuant to which we could offer and sell shares of our common stock having aggregate gross proceeds of up to $300.0 million from time to time in "at-the-market" offerings through Cowen, as our sales agent. In August 2024, the 2021 Sales Agreement was terminated by mutual agreement between us and Cowen. Through termination of the 2021 Sales Agreement, we sold 4,915,669 shares of common stock under the 2021 Sales Agreement, from which we received $48.2 million in proceeds, which were net of $1.2 million in commissions paid to Cowen and other offering expenses.

In August 2024, we also entered into the 2024 Sales Agreement with TD Securities, pursuant to which we may offer and sell shares of our common stock having aggregate gross proceeds of up to $250.0 million from time to time in “at-the-market” offerings through TD Securities, as our sales agent. As of December 31, 2025, we have not sold any shares under the 2024 Sales Agreement.

In January 2024, we entered into a securities purchase agreement with Nextech Crossover I SCP for the Private Placement. We received $29.8 million in proceeds from the Private Placement, which were net of $0.2 million in offering expenses.

Through the Termination Date, we received $120.0 million in upfront and milestone payments from Genentech pursuant to the Genentech Agreement.

Cash Flows

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

Year Ended December 31,

2025

2024

2023

(in thousands)

Cash used in operating activities

$

(235,455

)

$

(249,107

)

$

(300,316

)

Cash provided by (used in) investing activities

192,799

(41,083

)

257,634

Cash provided by financing activities

1,604

270,153

34,753

Net decrease in cash, cash equivalents, and restricted cash

$

(41,052

)

$

(20,037

)

$

(7,929

)

Operating Activities

During the year ended December 31, 2025, we used $235.5 million of cash on operating activities, primarily resulting from our net loss of $276.5 million and cash used to fund changes in our operating assets and liabilities of $23.3 million, offset by non-cash charges of $64.3 million.

During the year ended December 31, 2024, we used $249.1 million of cash on operating activities, primarily resulting from our net loss of $337.7 million, offset by non-cash charges of $74.0 million and cash provided by changes in our operating assets and liabilities of $14.6 million.

During the year ended December 31, 2023, we used $300.3 million of cash on operating activities, primarily resulting from our net loss of $342.0 million and cash used to fund changes in our operating assets and liabilities of $32.5 million, offset by non-cash charges of $74.1 million.

Investing Activities

During the year ended December 31, 2025, net cash provided by investing activities was $192.8 million, consisting of $193.2 million proceeds from net maturities of investments, offset by $0.4 million for the acquisition of property and equipment.

During the year ended December 31, 2024, net cash used in investing activities was $41.1 million, consisting of $39.1 million in net purchases of investments and $2.0 million for the acquisition of property and equipment.

During the year ended December 31, 2023, net cash provided by investing activities was $257.6 million, consisting of $261.8 million in proceeds from net maturities of investments, offset by $4.1 million for the acquisition of property and equipment.

86

Financing Activities

During the year ended December 31, 2025, net cash provided by financing activities was $1.6 million, consisting of $1.6 million in proceeds from the exercise of stock options and purchases under our 2020 Employee Stock Purchase Plan, or ESPP.

During the year ended December 31, 2024, net cash provided by financing activities was $270.2 million, consisting of $265.9 million in net proceeds from the Private Placement, at-the-market offerings, and the September 2024 Offering, as well as $4.3 million in proceeds from the exercise of stock options and purchases under our ESPP.

During the year ended December 31, 2023, net cash provided by financing activities was $34.8 million, primarily consisting of $30.3 million in net proceeds from at-the-market offerings, as well as $4.5 million in proceeds from stock option exercises and purchases under our ESPP.

Funding Requirements

We expect to continue to incur significant expenses in connection with our ongoing clinical development activities related to our product candidates and the ongoing preclinical development activities of our other programs. In addition, we continue to incur additional costs associated with operating as a public company.

As of December 31, 2025, we had cash, cash equivalents, and investments of $554.5 million. We believe that our existing cash, cash equivalents, and investments will enable us to fund our operating expenses and capital expenditure requirements into 2029. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with the development of our product candidates, as well as our preclinical programs, and because the extent to which we may enter into collaborations with third parties for the development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future capital requirements will depend on many factors, including:

•
the impact of any business interruptions to our operations, including the timing and enrollment of patients in our planned clinical trials, or to those of our manufacturers, suppliers, or other vendors, resulting from public health epidemics or outbreaks of infectious disease or ongoing geopolitical conflicts and related global economic sanctions;

•
the scope, progress, results, and costs of our current and future clinical trials of our lead product candidate and additional preclinical research of our other programs;

•
the scope, progress, results, and costs of drug discovery, preclinical research, and clinical trials for our other product candidates;

•
the number of future product candidates that we pursue and their development requirements;

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

•
our ability to establish and maintain licenses or collaborations on favorable terms, if at all;

•
the success of any existing or future licenses or collaborations that we may enter into with third parties;

•
the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates;

•
the achievement of milestones or occurrence of other developments that trigger payments under any existing or future license or collaboration agreements, if any;

•
the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under any existing or future license or collaboration agreements, if any;

•
the costs and timing of future commercialization activities, including drug sales, marketing, manufacturing, and distribution, for any of our product candidates for which we receive marketing approval, to the extent that such sales, marketing, manufacturing, and distribution are not the responsibility of any licensee or collaborator that we may have at such time;

•
the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;

87

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

•
our headcount growth and associated costs if and as we expand our business operations and our research and development activities; and

•
the costs of operating as a public company.

Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a time-consuming, expensive, and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval for any product candidates or generate revenue from the sale of any product candidate for which we may obtain marketing approval. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of drugs that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.

Adequate additional funds may not be available to us on acceptable terms, or at all. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be diluted, and the terms of these securities may include liquidation or other preferences and anti-dilution protections that could adversely affect your rights as a common stockholder. Additional debt or preferred equity financing, if available, may involve agreements that include restrictive covenants that may limit our ability to take specific actions, such as incurring debt, making capital expenditures, or declaring dividends, which could adversely impact our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute your ownership interest.

If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technology, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or collaborations, strategic alliances or licensing arrangements with third parties when needed, we may be required to delay, limit, reduce, and/or terminate our 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.

Contractual Obligations and Commitments

Intellectual Property License

On June 15, 2020, we entered into an Amended and Restated Collaboration and License Agreement, or DESRES Agreement, with D. E. Shaw Research, LLC, or D. E. Shaw Research, extending the term and otherwise modifying the terms of the Collaboration and License Agreement originally entered into on August 17, 2016. Pursuant to the DESRES Agreement, the parties jointly conducted research efforts with the goal of identifying and developing product candidates. The initial research term under the DESRES Agreement ended on August 16, 2025, with the DESRES Agreement continuing thereafter on a target-by-target basis until all payment obligations have expired. We paid an annual collaboration fee of up to $9.9 million to D.E. Shaw Research until the end of the initial research term. Additionally, on a product-by-product basis, we have agreed to pay D. E. Shaw Research milestone payments upon the achievement of certain development and regulatory milestone events for products we develop under the DESRES Agreement that are directed to a Category 1 Target or any target that was a Category 1 Target. Such payments for achievement of development and regulatory milestones total up to $7.3 million in the aggregate for each of the first three products we develop and up to $6.3 million in the aggregate for each product we develop after the first three. In addition, we are obligated to pay D. E. Shaw Research royalty payments, as defined in the DESRES Agreement. We assessed the milestone and royalty events under the DESRES Agreement as of December 31, 2025 and 2024, concluding certain milestone payments were triggered as of December 31, 2025 and subsequently paid in January 2026 and no such payments were due as of December 31, 2024.

399 Binney Street

In December 2017, we executed an operating lease agreement for 44,336 square feet of office and laboratory space at 399 Binney Street, Cambridge, Massachusetts, which was increased to 44,807 square feet in January 2018. Pursuant to the terms of the operating lease agreement, as amended in November 2019 and September 2020, the operating lease was previously scheduled to expire on April 30, 2029. On June 3, 2025, we executed another amendment to the operating lease, as amended, pursuant to which termination was accelerated to July 3, 2025. We continued to be responsible for rent and other obligations under the operating lease, as amended, through July 3, 2025, at which point such obligations ceased and the operating lease was terminated.

60 Hampshire Street

In May 2021, we executed an operating lease agreement for 41,474 square feet of office and laboratory space at 60 Hampshire Street, Cambridge, Massachusetts 02139. We gained control of the space in July 2022 and the lease expires in June 2032. There are no renewal options. We provided a letter of credit in connection with the agreement in the amount of $1.2 million with a financial institution, which expires commensurate with the lease in June 2032.

88

Building 300 at One Kendall Square

In June 2025, we executed an operating leases agreement for 12,190 square feet of office space in Building 300 at One Kendall Square, Cambridge, Massachusetts 02139. We gained control of the space in July 2025 and the lease expires in February 2030. There are no renewal options. We provided a letter of credit in connection with the agreement in the amount $0.1 million with a financial institution, which expires commensurate with the lease in February 2030.

Other Significant Arrangements

We enter into contracts in the normal course of business with CROs and CMOs for clinical trials, preclinical research studies, and testing, manufacturing, and other services and products for operating purposes.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs, expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events, and various other factors 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 included 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 account for revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, or ASC 606. In connection therewith, we recognize revenue when customers obtain control of promised goods or services in an amount that reflects the consideration we expect to receive in exchange for such goods or services.

Once a contract is determined to be within the scope of ASC 606, we assess the goods or services promised within the contract and determine those that are performance obligations at contract inception. We then determine the transaction price and allocate it to the performance obligations. As part of the accounting for such arrangements, we must use judgment to determine: (a) the number of performance obligations; (b) the transaction price, including the determination of whether milestones or other variable consideration should be included in the transaction price; and (c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of the transaction price.

We utilize key assumptions and judgments in (a) determining the stand-alone selling price for each performance obligation, which may include discounted cash flow models, evaluation of comparable transactions, and pricing considered in negotiating the transaction and estimated costs, and (b) determining how the transaction price is allocated amongst the performance obligations. We also use judgment to determine whether milestones or other variable consideration should be included in the transaction price. As part of management's evaluation of the transaction price, we consider numerous factors, including whether the achievement of the milestones is outside of our control, contingent upon the efforts of others, or subject to scientific risks of success. If we conclude it is probable that a significant revenue reversal would not occur, the associated milestone payment is included in the transaction price. Milestone payments that are not within our control, such as regulatory approvals, are generally not considered probable until those milestones are achieved. We re-evaluate the transaction price, including estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur. For revenue-based royalties, including milestone payments based on the level of sales, we will include royalties in the transaction price at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty is allocated has been satisfied (or partially satisfied).

Once the performance obligations are identified, the transaction price is allocated to each performance obligation based on the relative stand-alone selling price. We then recognize revenue for the amount of the transaction price allocated to the respective performance obligation when (or as) it is satisfied, either at a point in time or over time. If the performance obligation is satisfied over time, we recognize revenue based on the use of either an output or input method.

Prepaid and Accrued Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate prepaid and accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services performed on our behalf, and estimating the level of service performed and costs incurred for such services in comparison to

89

invoices and payments. 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 advanced payments. We make estimates of our prepaid and accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time.

Examples of estimated prepaid and accrued research and development expenses include fees paid to:

•
CROs in connection with performing research activities on our behalf and conducting preclinical studies and clinical trials on our behalf;

•
investigative sites or other service providers in connection with clinical trials;

•
vendors in connection with preclinical and clinical development activities; and

•
vendors related to product manufacturing and development and distribution of preclinical and clinical supplies.

We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CROs that conduct and manage preclinical studies and clinical trials on our behalf. The financial terms of such agreements are subject to negotiation and vary from contract to contract, which may result in uneven payment flows. 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. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing fees, we estimate the time period over which services will be performed, enrollment of patients, number of sites activated, 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 our estimate, we adjust the prepaid expense or accrued expense 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 us reporting amounts that are too high or too low in any particular period. To date, we have not made any material adjustments to our prior estimates.

Recently Issued and Adopted Accounting Pronouncements

A description of recently issued accounting pronouncements that we have adopted is disclosed in Note 2, Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. None of these pronouncements had a material impact on our financial position or results of operations.