Nuvation Bio Inc.

Previous wording

We are a late clinical-stage, global biopharmaceutical company tackling some of the greatest unmet needs in oncology by developing differentiated and novel product candidates. We were founded in 2018 by our chief executive officer, David Hung, M.D., who founded Medivation, Inc. and led its successful development of oncology drugs Xtandi® and talazoparib (now marketed as Talzenna®), leading to its $14.3 billion sale to Pfizer Inc. (“Pfizer”) in 2016. We leverage our team’s extensive expertise in medicinal chemistry, preclinical development, drug development, business development, manufacturing, and commercialization to pursue oncology targets validated by strong clinical or preclinical data and develop novel small molecules that improve the activity and overcome the liabilities of currently marketed drugs.

Current wording

We are a global oncology company focused on tackling some of the toughest challenges in cancer treatment by developing therapies that create a profound, positive impact on patients’ lives. We were founded in 2018 by our chief executive officer, David Hung, M.D., who founded Medivation, Inc. and led its successful development of oncology drugs Xtandi® and talazoparib (now marketed as Talzenna®), leading to its $14.3 billion sale to Pfizer Inc. (“Pfizer”) in 2016. We leverage our team’s extensive expertise in medicinal chemistry, preclinical development, drug development, business development, manufacturing, and commercialization to pursue oncology targets validated by strong clinical or preclinical data and develop novel small molecules that improve the activity and overcome the liabilities of currently marketed drugs.

Previous wording

As a result of our April 2024 acquisition of AnHeart Therapeutics Ltd. ("AnHeart"), our most advanced clinical-stage product candidate, taletrectinib, is an oral, potent, central nervous system-active, selective, next-generation ROS1 inhibitor specifically designed for the treatment of patients with ROS1-positive non-small cell lung cancer ("NSCLC"). Taletrectinib is being evaluated in patients with advanced ROS1-positive NSCLC in two Phase 2 single-arm pivotal studies: TRUST-I in China, and TRUST-II, a global study. Taletrectinib has been granted Orphan Drug Designation by the U.S. Food and Drug Administration (“FDA”) for the treatment of patients with ROS1-positive NSCLC and other NSCLC indications, and Breakthrough Therapy Designations by both the U.S. FDA and China’s National Medical Products Administration ("NMPA") for the treatment of patients with locally advanced or metastatic ROS1-positive NSCLC. Based on pooled results of the TRUST-I and TRUST-II clinical studies, the Company submitted a New Drug Application (“NDA”) for taletrectinib to the U.S. FDA in October 2024 for the treatment of patients with advanced ROS1-positive NSCLC. Based on results of the TRUST-I clinical study, China’s NMPA has accepted and granted Priority Review Designations to New Drug Applications for taletrectinib for the treatment of adult patients with locally advanced or metastatic ROS1-positive NSCLC who either have or have not previously been treated with ROS1 TKIs. Worldwide development and commercial rights to taletrectinib have been in-licensed from Daiichi Sankyo. Commercial rights to taletrectinib have been out-licensed in China and Japan.

Current wording

Our most advanced product candidate, taletrectinib, is an oral, potent, central nervous system-active, selective, next-generation c-ros oncogene 1 (“ROS1”) inhibitor specifically designed for the treatment of patients with ROS1-positive (“ROS1+”) non-small cell lung cancer ("NSCLC"). Taletrectinib is being evaluated for the treatment of patients with advanced ROS1+ NSCLC in two Phase 2 single-arm pivotal studies: TRUST-I in China, and TRUST-II, a global study. Taletrectinib has been granted Orphan Drug Designation by the U.S. Food and Drug Administration (“FDA”) for the treatment of patients with ROS1+ NSCLC and other NSCLC indications, and Breakthrough Therapy Designations by both the U.S. FDA and China’s National Medical Products Administration ("NMPA") for the treatment of patients with locally advanced or metastatic ROS1+ NSCLC. Based on pooled results of the TRUST-I and TRUST-II studies, we submitted a New Drug Application (“NDA”) for taletrectinib to the U.S. FDA in October 2024 for the treatment of patients with advanced ROS1+ NSCLC (line agnostic, full approval). On December 22, 2024, the FDA accepted the NDA for Priority Review and assigned a Prescription Drug User Fee Act (“PDUFA”) target action date of June 23, 2025. In China, taletrectinib has been approved for the treatment of adult patients with locally advanced or metastatic ROS1+ NSCLC who either have or have not previously been treated with ROS1 TKIs, and is being commercialized in China by our partner Innovent Biologics (Suzhou) Co. Ltd. (“Innovent”). In March 2025, our commercialization partner in Japan, Nippon Kayaku Co., Ltd., completed submission of a Marketing Authorization Application (“MAA”) for taletrectinib for advanced ROS1+ NSCLC to Japan’s Pharmaceuticals and Medical Devices Agency (“PMDA”).

Previous wording

Safusidenib is a novel, oral, potent, brain penetrant, targeted inhibitor of mutant isocitrate dehydrogenase 1 ("mIDH1"). Safusidenib is being evaluated in a Phase 2 study in patients with diffuse IDH1-mutant glioma.

Current wording

Safusidenib is a novel, oral, potent, brain penetrant, targeted inhibitor of mutant isocitrate dehydrogenase 1 ("mIDH1"). Safusidenib is being evaluated in a Phase 2 study in patients with diffuse IDH1-mutant glioma. We expect to provide an update on the pivotal study design for the safusidenib program in the second half of 2025.

Previous wording

NUV-1511 is our first clinical-stage drug-drug conjugate ("DDC"), which fuses a targeting agent to a widely used chemotherapy agent. NUV-1511 is being evaluated in a Phase 1/2 study in patients with advanced solid tumors who previously received and progressed on or after treatment with Enhertu® and/or Trodelvy® per approved U.S. FDA labeling, human epidermal growth factor receptor 2-negative ("HER2-") metastatic breast cancer, metastatic castration-resistant prostate cancer (“mCRPC”), advanced pancreatic cancer, and platinum-resistant ovarian cancer ("PROC").

Current wording

NUV-1511 is our first clinical-stage drug-drug conjugate ("DDC"), which fuses a targeting agent to a widely used chemotherapy agent. NUV-1511 is being evaluated in a Phase 1/2 study in patients with advanced solid tumors who previously received and progressed on or after treatment with Enhertu® and/or Trodelvy® per approved U.S. FDA labeling, human epidermal growth factor receptor 2-negative ("HER2-") metastatic breast cancer, metastatic castration-resistant prostate cancer (“mCRPC”), advanced pancreatic cancer, and platinum-resistant ovarian cancer ("PROC"). We expect to provide an update from the Phase 1/2 dose escalation study of NUV-1511 in the second half of 2025.

Previous wording

In September 2024, we announced pooled data from the pivotal Phase 2 TRUST-I and TRUST-II studies of taletrectinib in patients with advanced ROS1-positive NSCLC, which was presented at the European Society of Medical Oncology Congress 2024.

Current wording

In April 2025, pooled data from our pivotal Phase 2 TRUST-I and TRUST-II studies of taletrectinib was published in the Journal of Clinical Oncology (Perol, et al., 2024).

Previous wording

Since our inception in 2018, we have focused substantially all of our resources on conducting research and development activities, including drug discovery, preclinical studies, clinical trials, establishing and maintaining our intellectual property portfolio, developing our manufacturing network and managing the manufacture of clinical and research material, hiring personnel, raising capital and providing general and administrative support for these operations. The Company's revenue related to its out-licensing collaborative agreements consist of upfront license fees and research and development services revenue from its collaboration agreements. We have funded our operations to date primarily from the issuance and sale of our common and preferred stock, including through the Merger and a Private Investment in Public Equity ("PIPE") financing in connection with the Merger.

Current wording

Since our inception in 2018, we have focused substantially all of our resources on conducting research and development activities, including drug discovery, preclinical studies, clinical trials, establishing and maintaining our intellectual property portfolio, developing our manufacturing network and managing the manufacture of clinical and research material, hiring personnel, raising capital and providing general and administrative support for these operations. Our revenue related to its out-licensing collaborative agreements consists of product revenue, upfront license fees, royalty revenue and research and development services revenue from its collaboration agreements. We have funded our operations to date primarily from the issuance and sale of our common and preferred stock, including through the Merger and a Private Investment in Public Equity ("PIPE") financing in connection with the Merger.

Previous wording

We have incurred net losses in each year since inception. As of September 30, 2024, we had an accumulated deficit of $861.3 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant expenses and increasing operating losses over at least the next several years. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

Current wording

We have incurred net losses in each year since inception. As of March 31, 2025, we had an accumulated deficit of $964.0 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations as well as a charge related to the acquisition of an in-process research and development asset. We expect to continue to incur significant expenses and increasing operating losses over at least the next several years. We expect our expenses will increase substantially in connection with our ongoing activities, as we:

Previous wording

The Company enters into collaborative arrangements for the research and development, and commercialization of drug products and drug candidates. To date, these collaborative arrangements have included out-licenses of and options to out-license in-licensed compound to other parties and in-licenses of compound from other parties. These arrangements may include non-refundable upfront payments, contingent obligations for potential development, regulatory and commercial performance milestone payments, cost reimbursement arrangements and royalty payments.

Current wording

We enter into collaborative arrangements for the research and development, and commercialization of drug products and drug candidates. To date, these collaborative arrangements have included out-licensing of and options to out-license in-licensed compounds to other parties. These arrangements may include non-refundable upfront payments, contingent obligations for potential development, regulatory and commercial performance milestone payments, cost reimbursement arrangements and royalty payments. Our revenue related to its out-licensing collaborative agreements consists of product revenue, upfront license fees, royalty revenue and research and development services revenue from its collaboration agreements.

Previous wording

The Company receives payments from its customers based on billing terms established in the contract. Up-front payments and fees are recorded as contract liabilities (e.g., deferred revenue) upon receipt or when due until the Company performs its obligations under the arrangement. In the event of an early termination of a collaboration agreement, any contract liabilities would be recognized in the period in which all our obligations under the agreement have been fulfilled.

Current wording

We receive payments from our customers based on billing terms established in the contract. Up-front payments and fees are recorded as contract liabilities (e.g., deferred revenue) upon receipt or when due until we perform our obligations under the arrangement. In the event of an early termination of a collaboration agreement, any contract liabilities would be recognized in the period in which all our obligations under the agreement have been fulfilled.

Previous wording

We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates, as our product candidates advance into later stages of development, and as we begin to conduct clinical trials. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.

Current wording

We expect our research and development expenses to increase for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates, as our product candidates advance into later stages of development, and as we begin to conduct clinical trials. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.

Previous wording

General and administrative expenses consist of personnel-related costs, facilities costs, depreciation and amortization expenses and professional services expenses, including legal, human resources, audit and accounting services. Personnel-related costs consist of salaries, benefits and stock-based compensation. Facilities costs consist of rent and maintenance of facilities. We expect our general and administrative expenses to increase for the foreseeable future due to anticipated increases in headcount to advance our product candidates and as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC, NYSE, additional insurance expenses, investor relations activities and other administrative and professional services.

Current wording

Selling, general and administrative expenses consist of personnel-related costs, facilities costs, depreciation and amortization expenses and professional services expenses, including legal, human resources, audit and accounting services. Personnel-related costs consist of salaries, benefits and stock-based compensation. Facilities costs consist of rent and maintenance of facilities. We anticipate increased expenses related to compliance with the rules and regulations of the SEC, NYSE, insurance premiums, investor relations activities and other administrative and professional services.

Previous wording

Other income (expense) consists of change in fair value of warrant liabilities, interest earned on our cash equivalents and investments, advisory expense related to our investments and realized gains and losses on marketable securities.

Current wording

Other income (expense) consists of change in fair value of warrant liabilities, interest earned on our cash equivalents and investments, interest expense, advisory expense related to our investments and realized gains and losses on marketable securities.

Previous wording

Results of Operations for The Three and Nine Months Ended September 30, 2024 and 2023

Current wording

Results of Operations for The Three Months Ended March 31, 2025 and 2024

Previous wording

The Company's revenue related to its out-licensing collaborative agreements consist of upfront license fees and research and development services revenue from its collaboration agreements.

Current wording

Our revenue related to its out-licensing collaborative agreements consist of product revenue, upfront license fees, royalty revenue and research and development services revenue from its collaboration agreements.

Previous wording

The following table summarizes total revenue recognized for the three and nine months ended September 30, 2024:

Current wording

The following table summarizes total revenue recognized for the three months ended March 31, 2025:

Previous wording

There was no revenue in 2023 since the acquisition of AnHeart completed in the second quarter of 2024.

Current wording

There was no revenue for the three months ended March 31, 2024 since the acquisition of AnHeart completed in the second quarter of 2024.

Previous wording

Research and development expenses increased by $9.2 million for the three months ended September 30, 2024 compared to 2023. The increase was primarily due to a $6.7 million increase in personnel-related costs driven by the acquisition of AnHeart, stock-based compensation and other benefits, $2.4 million increase in third-party costs related to research services and drug manufacturing as a result of clinical trial expense for taletrectinib and $0.1 million increase in amortization of assembled workforce.

Current wording

Research and development expenses increased by $11.8 million for the three months ended March 31, 2025 compared to 2024. The increase was primarily due to a $6.2 million increase in personnel-related costs driven by the acquisition of AnHeart as well as stock-based compensation and other benefits and $0.2 million increase in amortization of assembled workforce and $5.4 million increase in third-party costs related to clinical trial expense for taletrectinib.

Previous wording

General and administrative expenses increased by $11.8 million for the three months ended September 30, 2024, compared to 2023. The increase was due to a $5.3 million increase in personnel-related costs as a result of the acquisition of AnHeart, $4.2 million increase in sales and marketing expense, $1.8 million increase in professional fees, $0.7 million increase in legal fees, $0.4 million increase in occupancy expense offset by $0.4 million increase in foreign currency impact and $0.2 million decrease in insurance expense.

Current wording

Selling, general and administrative expenses increased by $28.0 million for the three months ended March 31, 2025, compared to 2024. The increase was due to a $10.7 million increase in personnel-related costs as a result of the acquisition of AnHeart, $12.2 million increase in sales and marketing expenses, $1.4 million increase in professional fees, $0.5 million increase in occupancy expenses, $1.1 million increase in legal fees, $0.2 million increase in foreign currency impact and $2.0 million increase in other expenses as a result of the integration of AnHeart offset by $0.1 million decrease in taxes.

Previous wording

Other income (expense), net increased by $0.2 million for the three months ended September 30, 2024 compared to 2023 primarily related to interest income from investments increase of $0.2 million in 2024 primarily because of higher treasury yield in 2024 compared to 2023 and a $0.1 million increase in the change of fair value of warrant compared to prior year offset by $0.1 increase in interest expense.

Current wording

Other income (expense), net increased by $0.4 million for the three months ended March 31, 2025 compared to 2024 primarily related to a $1.5 million increase in other income due to government subsidy income, a $0.7 million increase in the change in fair value of warrant liability, a $0.1 million decrease in investment advisory fees offset by decrease in interest income from investments of $1.8 million primarily due to lower treasury yield and a $0.1 million increase in interest expense.

Previous wording

From inception through September 30, 2024, our operations have been financed primarily by the sale and issuance of Series A preferred stock and Common Stock. As of September 30, 2024, we had $549.1 million in cash, cash equivalents and marketable securities and an accumulated deficit of $861.3 million.

Current wording

From inception through March 31, 2025, our operations have been financed primarily by the sale and issuance of Series A preferred stock and Common Stock, including through the Merger and the PIPE Investment. As of March 31, 2025, we had $461.7 million in cash, cash equivalents and marketable securities and an accumulated deficit of $964.0 million.

Previous wording

We expect to incur substantial expenses in the foreseeable future for the development and potential commercialization of our product candidates and ongoing internal research and development programs. At this time, we cannot reasonably estimate the nature, timing or aggregate amount of costs for our development, potential commercialization, and internal research and development programs. However, in order to complete our current and future preclinical studies and clinical trials, and to complete the process of obtaining regulatory approval for our product candidates, as well as to build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our product candidates, if approved, we will require substantial additional funding in the future.

Current wording

We expect to incur substantial expenses in the foreseeable future for the development and potential commercialization of our product candidates and ongoing internal research and development programs. At this time, we cannot reasonably estimate the nature, timing or aggregate amount of costs for our development, potential commercialization, and internal research and development programs. However, in order to complete our current and future preclinical studies and clinical trials, and to complete the process of obtaining regulatory approval for our product candidates, as well as to build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our product candidates, if approved, we may require substantial additional funding in the future.

Previous wording

In 2024, cash used in operating activities of $84.1 million was attributable to a net loss of $518.5 million, a net change of $5.7 million in our net operating assets and liabilities offset by non-cash charges of $440.1 million. The change in operating assets and liabilities was primarily due to a $1.9 million decrease in contract liabilities, $7.3 million increase in prepaid expenses and other current assets, $0.5 million decrease in accrued expenses, $0.4 million increase in interest receivable on marketable securities and $0.1 million increase in accounts receivable offset by $4.4 million increase in accounts payable and $0.1 million decrease in other non-current assets. The non-cash charges consisted primarily of $425.1 million of acquired in-process research and development, stock-based compensation of $22.1 million, $0.4 million of depreciation and amortization and $0.2 million of net loss on disposal of property and equipment offset by amortization of premium on marketable securities of $7.4 million, changes in fair value of warrant liability of $0.2 million and $0.1 million of non cash lease expense.

Current wording

In 2025, cash used in operating activities of $42.6 million was attributable to a net loss of $53.2 million offset by a net change of $2.7 million in our net operating assets and liabilities and non-cash charges of $7.9 million. The change in operating assets and liabilities was primarily due to a $12.3 million decrease in accounts receivable, $4.2 million increase in accounts payable, and $0.1 million decrease in other non-current assets offset by $8.9 million decrease in accrued expenses, $2.3 million decrease in contract liabilities, $1.2 million increase in prepaid expenses and other current assets and $1.5 million increase in interest receivable on marketable securities. The non-cash charges consisted primarily of stock-based compensation of $7.9 million, changes in fair value of warrant liability of $0.8 million, $0.3 million of depreciation and amortization, $0.2 million of lease expense and $0.2 million of foreign currency transaction gain offset by amortization of premium on marketable securities of $1.5 million.

Previous wording

In 2023, cash used in operating activities of $53.0 million was attributable to a net loss of $62.0 million offset by a net change of $2.0 million in our net operating assets and liabilities and non-cash charges of $7.0 million. The change in operating assets and liabilities was primarily due to a $2.0 million increase in accrued expenses, $0.9 million decrease in prepaid expenses and $0.2 million increase in accounts payable, offset by $0.5 million increase in interest receivable on marketable securities and $0.6 million increase in other non-current assets. The non-cash charges consisted primarily of stock-based compensation of $15.8 million, realized loss on marketable securities of $0.2 million, and depreciation and amortization of $0.1 million offset by changes in fair value of warrant liability of $0.3 million and amortization of premium on marketable securities of $8.8 million.

Current wording

In 2024, cash used in operating activities of $15.7 million was attributable to a net loss of $14.8 million, a net change of $4.6 million in our net operating assets and liabilities offset by non-cash charges of $3.7 million. The change in operating assets and liabilities was primarily due to a $5.3 million increase in prepaid expenses and other current assets, $0.6 million increase in interest receivable on marketable securities, $0.5 million increase in other non-current assets offset by $1.5 increase in accrued expenses and $0.3 million increase in accounts payable. The non-cash charges consisted primarily of stock-based compensation of $5.0 million and changes in fair value of warrant liability of $1.5 million offset by amortization of premium on marketable securities of $2.8 million.

Previous wording

In 2024, cash provided by investing activities of $70.9 million was related to the $366.2 million of proceeds from the sale of marketable securities, $19.9 cash acquired from the acquisition of AnHeart, offset by purchase of marketable securities of $307.6 million, $7.4 million of transaction costs related to the acquisition of AnHeart and purchase of property and equipment of $0.2 million.

Current wording

In 2025, cash provided by investing activities of $54.2 million was related to the $115.0 million of proceeds from the sale of marketable securities offset by purchase of marketable securities of $60.7 million and $0.1 million purchase of property and equipment.

Previous wording

In 2023, cash used for investing activities of $24.2 million was related to the purchase of marketable securities of $554.6 million offset by $530.4 million of proceeds from the sale of marketable securities.

Current wording

In 2024, cash provided by investing activities of $7.5 million was related to the purchase of marketable securities of $128.5 million offset by $136.0 million of proceeds from the sale of marketable securities.

Previous wording

In 2023, cash provided by financing activities of $0.5 million was related to the $0.4 million of proceeds from exercise of options and $0.1 million of proceeds from issuance of Common Stock under the Employee Stock Purchase Plan.

Current wording

In 2025, cash provided by financing activities of $0.6 million was related to the $1.1 million proceeds from exercise of options offset by $0.5 million of debt repayments.

Previous wording

In 2024, cash provided by financing activities of $1.2 million was related to the $3.6 million proceeds from exercise of options and $0.1 million of proceeds from issuance of Common Stock under the Employee Stock Purchase Plan and $7.0 million of proceeds from borrowings offset by $9.5 million of debt repayments.

Current wording

In 2024, cash provided by financing activities of $21 thousand was related to the proceeds from exercise of options.

Previous wording

Our management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an on-going basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable in 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. Actual results may differ from these estimates under different assumptions and conditions. While our significant accounting policies are described in the notes to our consolidated financial statements, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.

Current wording

Our management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an on-going basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable in 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. Actual results may differ from these estimates under different assumptions and conditions.

Previous wording

The Company applies ASC Topic 606, "Revenue from Contracts with Customers" ("ASC 606") to account for its revenue transactions. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the five-step model. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. The Company recognizes as revenue the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied. Accounts receivable represent amounts invoiced and revenues recognized prior to invoicing when the Company has satisfied its performance obligation and has the unconditional right to payment.

Current wording

We apply ASC Topic 606, "Revenue from Contracts with Customers" ("ASC 606") to account for our revenue transactions. Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs the five-step model. We only apply the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, we review the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. We recognize as revenue the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied. Accounts receivable represent amounts invoiced and revenues recognized prior to invoicing when we have satisfied our performance obligation and have the unconditional right to payment.

Previous wording

In November 2018, the FASB issued Topic 808, "Collaborative Arrangements" ("ASC 808"): Clarifying the Interaction between ASC 808 and ASC 606. This update clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer and precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. The Company adopted this standard for all periods presented. The Company enters into collaborative arrangements for the research and development, manufacture and/or commercialization of drug products and drug candidates. The Company assessed and determined that none of the collaboration agreements entered into during the periods presented were within the scope of ASC 808, as all of the agreements did not involve active participation by both parties in a joint research activity, and therefore did not qualify as collaborative arrangements under ASC 808. The Company has determined that all the elements of the above collaborations are reflective of a vendor-customer relationship and therefore within the scope of ASC 606. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the five-step model under ASC 606 noted above. The Company recognizes revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. The Company's collaborative arrangements may contain more than one unit of account, or performance obligation, including grants of licenses to intellectual property rights, agreements to provide research and development services and other deliverables. The collaborative arrangements do not include a right of return for any deliverable. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. In developing the stand-alone selling price for a performance obligation, the Company considers competitor pricing for a similar or identical product, market awareness of and perception of the product, expected product life and current market trends. In general, the consideration allocated to each performance obligation is recognized when the respective obligation is satisfied either by delivering a good or providing a service, limited to the consideration that is not constrained. Non-refundable payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as contract liabilities.

Current wording

In November 2018, the FASB issued Topic 808, "Collaborative Arrangements" ("ASC 808"): Clarifying the Interaction between ASC 808 and ASC 606. This update clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer and precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. We adopted this standard for all periods presented. We enter into collaborative arrangements for the research and development, manufacture and/or commercialization of drug products and drug candidates. We assessed and determined that none of the collaboration agreements entered into during the periods presented were within the scope of ASC 808, as all of the agreements did not involve active participation by both parties in a joint research activity, and therefore did not qualify as collaborative arrangements under ASC 808. We have determined that all the elements of the above collaborations are reflective of a vendor-customer relationship and therefore within the scope of ASC 606. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, we perform the five-step model under ASC 606 noted above. We recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. Our collaborative arrangements may contain more than one unit of account, or performance obligation, including grants of licenses to intellectual property rights, agreements to provide research and development services and other deliverables. The collaborative arrangements do not include a right of return for any deliverable. As part of the accounting for these arrangements, we must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. In developing the stand-alone selling price for a performance obligation, we consider competitor pricing for a similar or identical product, market awareness of and perception of the product, expected product life and current market trends. In general, the consideration allocated to each performance obligation is recognized when the respective obligation is satisfied either by delivering a good or providing a service, limited to the consideration that is not constrained. Non-refundable payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as contract liabilities.

Previous wording

If a license to the Company's intellectual property is determined to be distinct from the other promises or performance obligations identified in the contract, the Company recognizes revenue from the portion of the transaction price allocated to the license at a point in time, when the license is transferred to the customer and the customer is able to benefit from the license.

Current wording

If a license to our intellectual property is determined to be distinct from the other promises or performance obligations identified in the contract, we recognize revenue from the portion of the transaction price allocated to the license at a point in time, when the license is transferred to the customer and the customer is able to benefit from the license.

Previous wording

A customer's right to choose, at its discretion, to make a payment for additional goods or services is generally considered an option. If the Company is not presently obligated to provide and does not have a right to consideration for delivering additional goods or services, the item is considered an option. The Company evaluates the customer options for material rights, such as the ability to acquire additional goods or services for free or a discount. Optional future services that reflect their standalone selling prices do not provide the customer with a material right and, therefore, are not considered performance obligations and are accounted for as separate contracts. The optional future services do not include a material right to be accounted for as performance obligations.

Current wording

A customer's right to choose, at its discretion, to make a payment for additional goods or services is generally considered an option. If we are not presently obligated to provide and does not have a right to consideration for delivering additional goods or services, the item is considered an option. We evaluate the customer options for material rights, such as the ability to acquire additional goods or services for free or a discount. Optional future services that reflect their standalone selling prices do not provide the customer with a material right and, therefore, are not considered performance obligations and are accounted for as separate contracts. The optional future services do not include a material right to be accounted for as performance obligations.

Previous wording

The Company's collaboration agreements include development and regulatory milestones. The Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company's control or the licensee's control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. At the end of each reporting period, the Company re-evaluates the probability of achievement of such milestones and any related constraint, and if necessary, adjusts the estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment.

Current wording

Our collaboration agreements include development and regulatory milestones. We evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. We evaluate factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control or the licensee's control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. At the end of each reporting period, we re-evaluate the probability of achievement of such milestones and any related constraint, and if necessary, adjusts the estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment.

Previous wording

For sales-based royalties, including milestone payments based on the level of sales, the Company determines whether the sole or predominant item to which the royalties relate is a license. When the license is the sole or predominant item to which the sales-based royalty relates, the Company recognizes revenue at the later of: (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any sales-based royalty revenue resulting from the Company's collaboration agreements.

Current wording

For sales-based royalties, including milestone payments based on the level of sales, we determine whether the sole or predominant item to which the royalties relate is a license. When the license is the sole or predominant item to which the sales-based royalty relates, we recognize revenue at the later of: (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). For the three months ended March 31, 2025, the Company has recognized $0.2 million sales-based royalty revenue resulting from the Company's collaboration agreements.

Previous wording

The Company receives payments from its customers based on billing terms established in the contract. Up-front payments and fees are recorded as contract liabilities (e.g., deferred revenue) upon receipt or when due until the Company performs its obligations under the arrangement.

Current wording

We receive payments from our customers based on billing terms established in the contract. Up-front payments and fees are recorded as contract liabilities (e.g., deferred revenue) upon receipt or when due until we perform our obligations under the arrangement.

Previous wording

In the event of an early termination of a collaboration agreement, any contract liabilities would be recognized in the period in which all our obligations under the agreement have been fulfilled. For a complete discussion of accounting for revenue, see the section titled "Collaboration and License Agreements" in Note 5 to our consolidated financial statements for the three months ended September 30, 2024 appearing elsewhere in this report.

Current wording

In the event of an early termination of a collaboration agreement, any contract liabilities would be recognized in the period in which all our obligations under the agreement have been fulfilled. For a complete discussion of accounting for revenue, see the section titled "Collaboration and License Agreements" in Note 5 to our consolidated financial statements appearing elsewhere in this report.

Previous wording

Acquired In-process Research and Development Expenses

Current wording

Our consolidated financial statements include the operations of acquired businesses after the completion of the acquisitions. We account for acquired businesses using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date and that the fair value of acquired in-process research and development be recorded on the balance sheet. Transaction costs are expensed as incurred. Any excess of the consideration transferred over the assigned values of the net assets acquired is recorded as goodwill. When we acquire net assets that do not constitute a business, as defined in accounting principles generally accepted in the United States of America (“GAAP”), no goodwill is recognized and acquired in-process research and development is expensed in acquired in-process research and development expenses. Contingent consideration in a business combination is included as part of the acquisition cost and is recognized at fair value as of the acquisition date. Fair value is generally estimated by using a probability-weighted discounted cash flow approach. Any liability resulting from contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved.

Previous wording

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their fair value on the date of issuance and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of Consideration, Public, and Forward Purchase Warrants was determined using the closing price of the publicly traded warrants on the NYSE market. The fair value of the Private Warrants was estimated using the Black-Scholes option pricing formula. See the section titled "Fair Value Measurements and Marketable Securities Available-for-Sale" in Note 4 to our consolidated financial statements for the three months ended September 30, 2024 appearing elsewhere in this report.

Current wording

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their fair value on the date of issuance and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of Consideration, Public, and Forward Purchase Warrants was determined using the closing price of the publicly traded warrants on the NYSE market. The fair value of the Private Placement Warrants was estimated using a Black-Scholes option pricing model (see Note 3).