Protagonist Therapeutics Inc

Previous wording

We are a biopharmaceutical company with peptide-based new chemical entities rusfertide and JNJ-2113 in advanced stages of development, both derived from our proprietary discovery technology platform. Our clinical programs fall into two broad categories of diseases: (i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory (“I&I”) diseases.

Current wording

We are a late-stage biopharmaceutical company with two peptide-based new chemical entities, rusfertide and JNJ-2113, in advanced Phase 3 stages of development, both of which are derived from our proprietary discovery technology platform. Our clinical programs fall into two broad categories of diseases: (i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory (“I&I”) diseases. We also have a number of pre-clinical stage oral drug discovery programs addressing validated targets, including IL-17, hepcidin mimetic and anti-obesity programs.

Previous wording

Rusfertide, our injectable hepcidin mimetic partnered with Takeda Pharmaceuticals USA, Inc. (“Takeda”), is in development for the treatment of polycythemia vera (“PV”). We have initiated VERIFY (ClinicalTrials.gov identifier NCT05210790), a global double-blind, placebo-controlled Phase 3 clinical trial of rusfertide in PV for approximately 250 patients. The trial evaluates the efficacy, symptom burden and safety of once-weekly, subcutaneously self-administered rusfertide in patients with uncontrolled hematocrit who are phlebotomy dependent despite standard of care treatment. The trial enrolled patients across North and South America, Europe, Asia and Australia. Enrollment for the VERIFY trial has been completed and we expect to announce top-line data for the trial’s 32-week primary efficacy endpoint in the first quarter of 2025, potentially leading to a New Drug Application (“NDA”) filing in the fourth quarter of 2025. By the end of 2024, we expect to receive the results of our ongoing two-year study evaluating the carcinogenicity potential of rusfertide when administered once weekly to rats.

Current wording

Rusfertide, our injectable hepcidin mimetic partnered with Takeda Pharmaceuticals USA, Inc. (“Takeda”), is in development for the treatment of polycythemia vera (“PV”). VERIFY (ClinicalTrials.gov identifier NCT05210790) is a global double-blind, placebo-controlled Phase 3 clinical trial of rusfertide in PV for approximately 250 patients. The trial evaluates the efficacy, symptom burden and safety of once-weekly, subcutaneously self-administered rusfertide in patients with uncontrolled hematocrit who are phlebotomy dependent despite standard of care treatment. The trial enrolled patients across North and South America, Europe, Asia and Australia. Enrollment for the VERIFY trial has been completed, and we expect to announce top-line data for the trial’s 32-week primary efficacy endpoint in the first quarter of 2025, potentially leading to a New Drug Application (“NDA”) filing in the fourth quarter of 2025. By the end of 2024, we expect to receive the results of our ongoing two-year study evaluating the carcinogenicity potential of rusfertide when administered once weekly to rats.

Previous wording

In January 2024, we entered into a worldwide license and collaboration agreement with Takeda for the development and commercialization of rusfertide (the “Takeda Collaboration Agreement”). Under the terms of the agreement, we earned a nonrefundable upfront payment of $300.0 million upon effectiveness of the agreement in March 2024, which we received in April 2024. We are eligible to receive additional worldwide development, regulatory and commercial milestone payments for rusfertide of up to $330 million, inclusive of the following potential upcoming milestones:

Current wording

In January 2024, we entered into a worldwide license and collaboration agreement with Takeda for the development and commercialization of rusfertide (the “Takeda Collaboration Agreement”). Under the terms of the agreement, we received a one-time, non-refundable upfront payment of $300.0 million in April 2024. We are eligible to receive additional worldwide development, regulatory and commercial milestone payments for rusfertide of up to $330 million, inclusive of the following potential upcoming milestones:

Previous wording

All of the trials in the ICONIC program will use the 200 mg q.d. immediate release formulation of JNJ-2113 from the previously completed FRONTIER 1 trial. JNJ initiated FRONTIER 1, a 255-patient Phase 2b clinical trial of JNJ-2113 in moderate-to-severe plaque psoriasis, which was completed in December 2022. FRONTIER 1 was a randomized, multicenter, double-blind, placebo-controlled trial that evaluated three once-daily dosages and two twice-daily dosages of JNJ-2113 taken orally. The primary endpoint of the trial was the proportion of patients achieving PASI-75 (75% improvement in skin lesions as measured by the PASI) at 16 weeks. In July 2023, we announced updated positive topline results from the trial, which were presented by JNJ at the World Congress of Dermatology in Singapore. JNJ-2113 achieved the trial’s primary and secondary efficacy endpoints. A statistically significant greater proportion of patients who received JNJ-2113 achieved PASI-75 as well as PASI-90 and PASI-100 (100% improvement in skin lesions as measured by the PASI) responses compared to placebo at week 16 in all five of the trial’s treatment groups. A clear dose response was observed across an eight-fold dose range. Treatment was well tolerated, with no meaningful difference in frequency of adverse events across treatment groups versus placebo. Other Phase 2 trials of JNJ-2113 include the SUMMIT trial for the treatment of moderate-to-severe plaque psoriasis and FRONTIER 2, a long-term extension study, both of which were completed by JNJ in 2023.

Current wording

All of the trials in the ICONIC program will use the 200 mg q.d. immediate release formulation of JNJ-2113 from the previously completed FRONTIER 1 trial. JNJ initiated FRONTIER 1, a 255-patient Phase 2b clinical trial of JNJ-2113 in moderate-to-severe plaque psoriasis, which was completed in December 2022. FRONTIER 1 was a randomized, multicenter, double-blind, placebo-controlled trial that evaluated three once-daily dosages and two twice-daily dosages of JNJ-2113 taken orally. The primary endpoint of the trial was the proportion of patients achieving PASI-75 (75% improvement in skin lesions as measured by the PASI) at 16 weeks. In July 2023, we announced updated positive topline results from the trial, which were presented by JNJ at the World Congress of Dermatology in Singapore. JNJ-2113 achieved the trial’s primary and secondary efficacy endpoints. A statistically significant greater proportion of patients who received JNJ-2113 achieved PASI-75 as well as PASI-90 and PASI-100 (100% improvement in skin lesions as measured by the PASI) responses compared to placebo at week 16 in all five of the trial’s treatment groups. A clear dose response was observed across an eight-fold dose range. Treatment was well tolerated, with no meaningful difference in frequency of adverse events across treatment groups versus placebo. Other

Previous wording

psoriasis, psoriatic arthritis and inflammatory bowel disease, with potential peak year sales projection of $5.0 billion plus. JNJ IL-23 monoclonal antibody drugs Stelara and Tremfya generated approximately $14.0 billion in revenues in 2023.

Current wording

At JNJ’s Enterprise Business Review in December 2023, JNJ highlighted JNJ-2113 as a potential first- and best-in class targeted oral IL-23 peptide antagonist with potential across multiple indications, including plaque psoriasis, psoriatic arthritis and inflammatory bowel disease, with potential peak year sales projection of $5.0 billion plus. JNJ IL-23 monoclonal antibody drugs Stelara and Tremfya generated approximately $14.0 billion in revenues in 2023.

Previous wording

In February 2024, the JNJ-2113 Phase 2b FRONTIER 1 trial results in adults living with moderate-to-severe plaque psoriasis were published in the New England Journal of Medicine. In March 2024, data presented at the American Academy of Dermatology 2024 Annual Meeting showed that, in Phase 2b FRONTIER 2, JNJ-2113 maintained high rates of skin clearance through 52 weeks in adults with moderate-to-severe plaque psoriasis.

Current wording

In February 2024, the JNJ-2113 Phase 2b FRONTIER 1 trial results in adults living with moderate-to-severe plaque psoriasis were published in the New England Journal of Medicine. In March 2024, data presented at the American Academy of Dermatology 2024 Annual Meeting showed that, in Phase 2b FRONTIER 2, JNJ-2113 maintained high rates of skin clearance through 52 weeks in adults with moderate-to-severe plaque psoriasis. In August 2024, positive pre-clinical and clinical pharmacokinetic, pharmacodynamic and safety data for JNJ-2113 was published in the journal Scientific Reports. Three company-sponsored poster presentations and one company-sponsored oral presentation were delivered at the 2024 European Academy of Dermatology and Venereology Congress in September 2024. Data from FRONTIER 1 and FRONTIER 2 continue to demonstrate that JNJ-2113 has promising efficacy and safety through one year of treatment in patients with moderate-to-severe plaque psoriasis.

Previous wording

On July 17, 2021, we entered into an Amended and Restated License and Collaboration Agreement with JNJ, which amended and restated the License and Collaboration Agreement, effective July 13, 2017, by and between the Company and JNJ, as amended by the first amendment, effective May 7, 2019 (together, the “JNJ License and Collaboration Agreement”). Under the JNJ License and Collaboration Agreement, we earned a $50.0 million milestone payment upon dosing of the third patient in the ICONIC-TOTAL Phase 3 trial in late October 2023, which we received in December 2023. We earned a $10.0 million milestone payment upon the dosing of the third patient in the ANTHEM Phase 2b trial in UC in December 2023, which we received in January 2024. To date, we have earned $172.5 million in nonrefundable payments from JNJ. We are eligiblefor up to approximately $795.0 million in future development and sales milestone payments, inclusive of the following potential upcoming milestones:

Current wording

On July 17, 2021, we entered into an Amended and Restated License and Collaboration Agreement with JNJ, which amended and restated the License and Collaboration Agreement, effective July 13, 2017, by and between the Company and JNJ, as amended by the first amendment, effective May 7, 2019 (together, the “JNJ License and Collaboration Agreement”). Under the JNJ License and Collaboration Agreement, we earned a $50.0 million milestone payment upon dosing of the third patient in the ICONIC-TOTAL Phase 3 trial in late October 2023, which we received in December 2023. We earned a $10.0 million milestone payment upon the dosing of the third patient in the ANTHEM Phase 2b trial in UC in December 2023, which we received in January 2024. To date, we have earned $172.5 million in non-refundable payments from JNJ. We are eligiblefor up to approximately $795.0 million in future development and sales milestone payments, inclusive of the following potential upcoming milestones:

Previous wording

In January 2024, we announced a new oral Interleukin-17 (“IL-17”) peptide antagonist program targeting three IL-17 dimers (IL-17 AA, AF and FF) which may offer potential treatment options for hidradenitis suppurativa, spondyloarthritis, plaque psoriasis and psoriatic arthritis. We expect to nominate a development candidate ready for Investigational New Drug (“IND”) enabling studies by the end of 2024. We recently announced an oral peptide-based program for obesity and expect progression towards a development candidate by mid-2025.

Current wording

In January 2024, we announced a new oral Interleukin-17 (“IL-17”) peptide antagonist program targeting three IL-17 dimers (IL-17 AA, AF and FF) which may offer potential treatment options for hidradenitis suppurativa, spondyloarthritis, plaque psoriasis and psoriatic arthritis. We expect to nominate a development candidate ready for Investigational New Drug (“IND”) enabling studies, or foreign equivalents, by the end of 2024.

Previous wording

We have a pre-clinical stage program to identify an orally active hepcidin mimetic or small molecule ferropotin blocker, which we believe to be complementary to the injectable rusfertide for offering the best treatment options for PV and other potential erythropoietic and iron imbalance disorders.

Current wording

We have a pre-clinical stage program to identify an orally active hepcidin mimetic or small molecule ferropotin blocker, which we believe to be complementary to the injectable rusfertide for offering the best treatment options for PV and other potential erythropoietic and iron imbalance disorders, and we expect progression towards a development candidate during the first half of 2025. We also have an oral peptide-based program for obesity and expect progression towards a development candidate during the first half of 2025.

Previous wording

We have incurred cumulative net losses from inception through June 30, 2024 of $439.0 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. We expect to continue to incur significant research and development expenses and other expenses related to our ongoing operations, product development, and pre-commercialization activities. As a result, we may incur losses in the future as we continue the development of, and seek regulatory approval for, our product candidates.

Current wording

We have incurred cumulative net losses from inception through September 30, 2024 of $472.2 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 research and development expenses and other expenses related to our ongoing operations, product development, pre-clinical discovery programs and pre-commercialization activities. As a result, we may incur losses in the future as we continue the development of, and seek regulatory approval for, our product candidates.

Previous wording

Whenever we determine that goods or services promised in a contract should be accounted for as a combined performance obligation over time, we determine the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using either the proportional performance method or on a straight-line basis if efforts will be expended evenly over time. Costs incurred or labor hours are typically used as the measure of performance. Management’s judgment is required in determining the level of effort required under an arrangement and the period over which we expect to complete our performance obligations. If we determine that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on our consolidated balance sheets.

Current wording

Whenever we determine that goods or services promised in a contract should be accounted for as a combined performance obligation over time, we determine the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using either the proportional performance method or on a straight-line basis if efforts will be expended evenly over time. Costs incurred or labor hours are typically used as the measure of performance. Management’s judgment is required in determining the level of effort required under an

Previous wording

There have been no other material changes to our critical accounting policies during the six months ended June 30, 2024, as compared to those disclosed in*“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates”* in our Annual Report for the year ended December 31, 2023 filed with the SEC on February 27, 2024.

Current wording

There have been no other material changes to our critical accounting policies during the nine months ended September 30, 2024, as compared to those disclosed in*“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates”* in our Annual Report for the year ended December 31, 2023 filed with the SEC on February 27, 2024.

Previous wording

We expect our research and development expenses to increase in the near term as compared to the prior year period as we continue to focus our resources on (i) progressing our rusfertide program into later stage clinical trials and preparing for commercialization and (ii) advancing our pre-clinical and drug discovery research programs, including our expected nomination of a development candidate from our discovery platform for IND-enabling studies by the end of 2024. The process of conducting research, identifying potential product candidates, conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval, and commencing pre-commercialization activities is costly and time intensive. We may never succeed in achieving marketing approval for our product candidates regardless of our costs and efforts. The probability of success of our product candidates may be affected by numerous factors, including pre-clinical data, clinical data, competition, manufacturing capability, our cost of goods to be sold, our ability to receive, and the timing of, regulatory approvals, market conditions, and our ability to successfully commercialize our products if they are approved for marketing. 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. Our research and development programs are subject to change from time to time as we evaluate our priorities and available resources.

Current wording

We expect our research and development expenses to increase in the near term as compared to the prior year period as we continue to focus our resources on (i) progressing our rusfertide program in later stage clinical trials and preparing for regulatory filings and commercialization and (ii) advancing our pre-clinical and drug discovery research programs, including our expected nomination of a development candidate from our discovery platform for IND-enabling studies, or foreign equivalents, by the end of 2024. The process of conducting research, identifying potential product candidates, conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval, and commencing pre-commercialization activities is costly and time intensive. We may never succeed in achieving marketing approval for our product candidates regardless of our costs and efforts. The probability of success of our product candidates may be affected by numerous factors, including pre-clinical data, clinical data, competition, manufacturing capability, our cost of goods to be sold, our ability to receive, and the timing of, regulatory approvals, market conditions, and our ability to successfully commercialize our products if they are approved for marketing. 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. Our research and development programs are subject to change from time to time as we evaluate our priorities and available resources.

Previous wording

License and collaboration revenue increased from $0 for the three months ended June 30, 2023 to $4.2 million for the three months ended June 30, 2024. Revenue for the three months ended June 30, 2024 included $4.2 million of the $300.0 million transaction price for the Takeda Collaboration Agreement allocated to development services provided by us during the period based on the cost-based input method. For the three months ended June 30, 2023, we did not recognize any license and collaboration revenue.

Current wording

License and collaboration revenue increased from $0 for the three months ended September 30, 2023 to $4.7 million for the three months ended September 30, 2024, and consisted of $4.7 million of the $300.0 million transaction price for the Takeda Collaboration Agreement allocated to development services provided by us during the period based on the cost-based input method. For the three months ended September 30, 2023, we did not recognize any license and collaboration revenue.

Previous wording

Research and development expenses increased $0.3 million, or 1%, from $33.2 million for the three months ended June 30, 2023 to $33.5 million for the three months ended June 30, 2024. The increase was primarily due to (i) an increase of $4.5 million in pre-clinical and drug discovery research program expense partially offset by (ii) a decrease of $4.0 million in rusfertide clinical and development expense due primarily to decreases in contract manufacturing expenses and (iii) a decrease of $0.2 million in expenses for the PN-943 program as further development work was de-prioritized in 2023. We expect to nominate a development candidate from our discovery platform ready for IND-enabling studies by the end of 2024.

Current wording

due to (i) an increase of $4.1 million in pre-clinical and drug discovery research program expense and ii) an increase of $1.4 million rusfertide clinical and development expense, partially offset by (iii) a decrease of $0.3 million in expenses for the PN-943 program as further development work was de-prioritized in 2023. We expect to nominate a development candidate from our discovery platform ready for IND-enabling studies, or foreign equivalents, by the end of 2024.

Previous wording

We had 97 and 81 full-time equivalent research and development employees as of June 30, 2024 and 2023, respectively. Research and development personnel-related expenses for the three months ended June 30, 2024 increased by $1.3 million as compared to the three months ended June 30, 2023, including increases of $1.0 million in personnel-related expenses and $0.3 million in stock-based compensation expense.

Current wording

We had 98 and 84 full-time equivalent research and development employees as of September 30, 2024 and 2023, respectively. Research and development personnel-related expenses for the three months ended September 30, 2024 increased by $3.0 million as compared to the three months ended September 30, 2023, including increases of $1.5 million in personnel-related expenses and $1.5 million in stock-based compensation expense.

Previous wording

General and administrative expenses increased $0.3 million, or 3%, from $9.1 million for the three months ended June 30, 2023 to $9.4 million for the three months ended June 30, 2024. This increase was primarily due to a $0.7 million increase in personnel-related expenses and a $0.3 million increase in stock-based compensation expense, partially offset by a $0.7 million decrease in market research, legal and other general expenses.

Current wording

General and administrative expenses increased $2.5 million, or 33%, from $7.7 million for the three months ended September 30, 2023 to $10.2 million for the three months ended September 30, 2024. This increase was primarily due to a $2.0 million increase in stock-based compensation expense and a $0.7 million increase in personnel-related expenses.

Previous wording

We had 28 and 25 full-time equivalent general and administrative employees as of June 30, 2024 and 2023, respectively.

Current wording

We had 28 and 27 full-time equivalent general and administrative employees as of September 30, 2024 and 2023, respectively.

Previous wording

Interest income increased $3.5 million, or 89%, from $3.9 million for the three months ended June 30, 2023 to $7.4 million for the three months ended June 30, 2024. This increase was due primarily to higher invested balances, including the $300.0 million upfront payment received under the Takeda Collaboration Agreement in April 2024.

Current wording

Interest income increased $3.4 million, or 81%, from $4.3 million for the three months ended September 30, 2023 to $7.7 million for the three months ended September 30, 2024. This increase was primarily due to higher invested balances, including the $300.0 million one-time, non-refundable upfront payment received under the Takeda Collaboration Agreement in April 2024.

Previous wording

Income tax benefit was $0.7 million and $0 for the three months ended June 30, 2024 and 2023, respectively. Income tax benefit for the three months ended June 30, 2024 was a result of our net loss position for the period. The effective tax rate was 2.16% and 0% for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Income tax benefit was $0.4 million and $0 for the three months ended September 30, 2024 and 2023, respectively. Income tax benefit for the three months ended September 30, 2024 was a result of our net loss position for the period. The effective tax rate was 1.25% and 0% for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

License and collaboration revenue increased from $0 for the six months ended June 30, 2023 to $259.1 million for the six months ended June 30, 2024. The Takeda Collaboration Agreement included a nonrefundable upfront payment of $300.0 million, of which we recognized $255.0 million during the three months ended March 31, 2024. The remaining $45.0 million was recorded as deferred revenue to be recognized over time as the Company satisfies its performance obligation to complete the ongoing Phase 3 VERIFY trial for rusfertide.

Current wording

License and collaboration revenue increased from $0 for the nine months ended September 30, 2023 to $263.8 million for the nine months ended September 30, 2024. The Takeda Collaboration Agreement included a one-time, non-refundable upfront payment of $300.0 million, of which we recognized $255.0 million during the three months ended March 31, 2024. The remaining $45.0 million was recorded as deferred revenue to be recognized over time as we satisfy our performance obligation to complete the ongoing Phase 3 VERIFY trial for rusfertide.

Previous wording

License and collaboration revenue for the six months ended June 30, 2024 of $259.1 million included $254.1 million of the $300.0 million upfront cash payment allocated to the delivery of the rusfertide license to Takeda upon effectiveness of the agreement in March 2024, and $5.0 million allocated to development services provided by us during the period based on the cost input method. For the six months ended June 30, 2023, we did not recognize any license and collaboration revenue.

Current wording

License and collaboration revenue for the nine months ended September 30, 2024 of $263.8 million included $254.1 million of the $300.0 million upfront cash payment allocated to the delivery of the rusfertide license to Takeda upon effectiveness of the Takeda Collaboration Agreement in March 2024, and $9.7 million allocated to development services provided by us during the period based on the cost input method. For the nine months ended September 30, 2023, we did not recognize any license and collaboration revenue.

Previous wording

Research and development expenses increased $6.7 million, or 11%, from $60.6 million for the six months ended June 30, 2023 to $67.3 million for the six months ended June 30, 2024. The increase was primarily due to (i) an increase of $8.8 million in pre-clinical and drug discovery research program expense partially offset by (ii) a decrease of $1.1 million in rusfertide clinical and development expense due primarily to decreases in contract manufacturing expenses and (iii) a decrease of $1.1 million in expenses for the PN-943 program as further development work was de-prioritized in 2023. We expect to nominate a development candidate from our discovery platform for IND-enabling studies by the end of 2024.

Current wording

Research and development expenses increased $12.0 million, or 13%, from $91.3 million for the nine months ended September 30, 2023 to $103.2 million for the nine months ended September 30, 2024. The increase was primarily due to (i) an increase of $12.9 million in pre-clinical and drug discovery research program expense partially offset by (ii) a decrease of $1.4 million in expenses for the PN-943 program as further development work was de-prioritized in 2023. We expect to nominate a development candidate from our discovery platform for IND-enabling studies, or foreign equivalents, by the end of 2024.

Previous wording

We had 97 and 81 full-time equivalent research and development employees as of June 30, 2024 and 2023, respectively. Research and development personnel-related expenses for the six months ended June 30, 2024 increased by $3.9 million as compared to the six months ended June 30, 2023, including increases of $2.9 million in personnel-related expenses and $1.0 million in stock-based compensation expense.

Current wording

We had 98 and 84 full-time equivalent research and development employees as of September 30, 2024 and 2023, respectively. Research and development personnel-related expenses for the nine months ended September 30, 2024 increased by $6.9 million as compared to the nine months ended September 30, 2023, including increases of $4.5 million in personnel-related expenses and $2.4 million in stock-based compensation expense.

Previous wording

General and administrative expenses increased $6.6 million, or 37%, from $17.8 million for the six months ended June 30, 2023 to $24.4 million for the six months ended June 30, 2024. This increase was primarily due to a $4.6 million increase in advisory and legal fees related to the Takeda Collaboration Agreement, a $1.6 million increase in personnel-related expenses and a $1.4 million increase in stock-based compensation expense, partially offset by a $1.0 million decrease in market research, consulting and outside services and other general expenses.

Current wording

General and administrative expenses increased $9.1 million, or 36%, from $25.4 million for the nine months ended September 30, 2023 to $34.5 million for the nine months ended September 30, 2024. This increase was primarily due to a $4.6 million increase in advisory and legal fees related to the Takeda Collaboration Agreement, a $3.3 million increase in stock-based compensation expense and a $2.0 million increase in personnel-related expenses, partially offset by a $0.9 million decrease in market research, consulting and outside services and other general expenses.

Previous wording

We had 28 and 25 full-time equivalent general and administrative employees as of June 30, 2024 and 2023, respectively.

Current wording

We had 28 and 27 full-time equivalent general and administrative employees as of September 30, 2024 and 2023, respectively.

Previous wording

Interest income increased $5.4 million, or 84%, from $6.4 million for the six months ended June 30, 2023 to $11.8 million for the six months ended June 30, 2024. This increase was due primarily to higher invested balances, including the $300.0 million upfront payment received under the Takeda Collaboration Agreement in April 2024.

Current wording

Interest income increased $8.8 million, or 83%, from $10.6 million for the nine months ended September 30, 2023 to $19.5 million for the nine months ended September 30, 2024. This increase was primarily due to higher invested balances, including the $300.0 million one-time, non-refundable upfront payment received under the Takeda Collaboration Agreement in April 2024.

Previous wording

Income tax expense was $2.7 million and $0 for the six months ended June 30, 2024 and 2023, respectively. Income tax expense for the six months ended June 30, 2024 was a result of taxable income from the recognition of revenue in connection with the Takeda Collaboration Agreement. The effective tax rate was 1.48% and 0% for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Income tax expense was $2.2 million and $0 for the nine months ended September 30, 2024 and 2023, respectively. Income tax expense for the nine months ended September 30, 2024 was a result of taxable income from the recognition of revenue in connection with the Takeda Collaboration Agreement. The effective tax rate was 1.53% and 0% for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

We had $595.4 million and $341.6 million in cash, cash equivalents and marketable securities at June 30, 2024 and December 31, 2023, respectively. Historically, we have funded our operations primarily from net proceeds from the sale of shares of our common stock and the receipt of payments under collaboration agreements.

Current wording

We had $583.3 million and $341.6 million in cash, cash equivalents and marketable securities as of September 30, 2024 and December 31, 2023, respectively. Historically, we have funded our operations primarily from net proceeds from the sale of shares of our common stock and the receipt of payments under collaboration agreements.

Previous wording

In August 2022, we entered into an Open Market Sale Agreement SM, pursuant to which we may offer and sell up to $100.0 million shares of our common stock from time to time in “at-the-market” offerings (the “2022 ATM Facility”). There were no sales of our common stock under the 2022 ATM Facility during the three and six months ended June 30, 2024. During the three months ended March 31, 2023, we sold 1,749,199 shares of our common stock under the 2022 ATM Facility for net proceeds of $24.3 million, after deducting issuance costs. There were no sales of our common stock under the 2022 ATM Facility during the three months ended June 30, 2023.

Current wording

In August 2022, we entered into an Open Market Sale Agreement SM, pursuant to which we may offer and sell up to $100.0 million shares of our common stock from time to time in “at-the-market” offerings (the “2022 ATM Facility”). There were no sales of our common stock under the 2022 ATM Facility during the three and nine months ended September 30, 2024. During the nine months ended September 30, 2023, we sold 1,749,199 shares of our common stock under the 2022 ATM Facility for net proceeds of $24.3 million, after deducting issuance costs. There were no sales of our common stock under the 2022 ATM Facility during the three months ended September 30, 2023.

Previous wording

In August 2023, prior to the expiration of the Warrants, we entered into certain agreements with the Investors and their affiliates under which we agreed to allow the Warrants to be exercised in exchange for pre-funded warrants representing the same number of Warrant Shares underlying the Warrants with an exercise price of $0.001 per share (the “Pre-Funded Warrants”). Subsequent to the execution of the agreements and prior to the expiration of the Warrants, all outstanding Warrants were exercised for gross proceeds of $34.4 million in exchange for 44,748 shares of our common stock and Pre-Funded Warrants to purchase 2,705,252 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Pre-Funded Warrants) with an exercise price of $0.001 per share. The Pre-Funded Warrants will expire upon the day they are exercised in full. The Pre-Funded Warrants are exercisable at any time prior to expiration except that the Pre-Funded Warrants cannot be exercised by the Investors if, after giving effect thereto, the Investors would

Current wording

In August 2023, prior to the expiration of the Warrants, we entered into certain agreements with the Investors and their affiliates under which we agreed to allow the Warrants to be exercised in exchange for pre-funded warrants representing the same number of Warrant Shares underlying the Warrants with an exercise price of $0.001 per share (the “Pre-Funded Warrants”). Subsequent to the execution of the agreements and prior to the expiration of the Warrants, all outstanding Warrants were exercised for gross proceeds of $34.4 million in exchange for 44,748 shares of our common stock and Pre-Funded Warrants to purchase 2,705,252 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as

Previous wording

beneficially own more than 9.99% of our common stock, subject to certain exceptions. The common stock and Pre-Funded Warrants were recorded as a credit to additional paid-in capital. In accordance with Accounting Standards Codification Topic 260,Earnings Per Share, outstanding Pre-Funded Warrants are included in the computation of basic net loss per share because the exercise price is negligible, and they are fully vested and exercisable after the original issuance date. During the three and six months ended June 30, 2024, Pre-Funded Warrants to purchase 84,992 shares were net exercised, resulting in the issuance of 84,989 shares of common stock. As of June 30, 2024, Pre-Funded Warrants to purchase 2,620,260 were outstanding.

Current wording

described in the Pre-Funded Warrants) with an exercise price of $0.001 per share. The Pre-Funded Warrants will expire upon the day they are exercised in full. The Pre-Funded Warrants are exercisable at any time prior to expiration except that the Pre-Funded Warrants cannot be exercised by the Investors if, after giving effect thereto, the Investors would beneficially own more than 9.99% of our common stock, subject to certain exceptions. The common stock and Pre-Funded Warrants were recorded as a credit to additional paid-in capital. In accordance with Accounting Standards Codification Topic 260,Earnings Per Share, outstanding Pre-Funded Warrants are included in the computation of basic net loss per share because the exercise price is negligible, and they are fully vested and exercisable after the original issuance date. No Pre-Funded warrants were exercised during the three months ended September 30, 2024. During the nine months ended September 30, 2024, Pre-Funded Warrants to purchase 84,992 shares were net exercised, resulting in the issuance of 84,989 shares of common stock. No Pre-Funded Warrants were exercised during the three and nine months ended September 2023. As of September 30, 2024, Pre-Funded Warrants to purchase 2,620,260 were outstanding.

Previous wording

In March 2024, we earned a $300.0 million upfront payment from Takeda upon the closing of the Takeda Collaboration Agreement, which we received in April 2024.

Current wording

In March 2024, we earned a $300.0 million one-time, non-refundable upfront payment from Takeda upon the closing of the Takeda Collaboration Agreement, which we received in April 2024.

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As of June 30, 2024, we had $595.4 million of cash, cash equivalents and marketable securities and an accumulated deficit of $439.0 million. Our capital expenditures were $0.3 million and $0.6 million for the six months ended June 30, 2024 and the year ended December 31, 2023, respectively. Our primary uses of cash are to fund our operating expenses, including our research and development expenditures and general and administrative costs. We expect that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operations for at

Current wording

As of September 30, 2024, we had $583.3 million in cash, cash equivalents and marketable securities and an accumulated deficit of $472.2 million. Our capital expenditures were $1.0 million and $0.6 million for the nine months ended September 30, 2024 and the year ended December 31, 2023, respectively. Our primary uses of cash are to fund our operating expenses, including our research and development expenditures and general and administrative costs. We expect that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next twelve months from the date of this Quarterly Report based on current operating plans and financial forecasts.

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Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. Further, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials, other research and development activities and pre-commercialization costs. If we do raise additional capital through public or private equity offerings or convertible debt securities, the ownership interest of our existing stockholders could be diluted, and the terms of these securities could include liquidation or other preferences that could adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we could be subject to covenants limiting or restricting our ability to take

Current wording

Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. Further, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials, other research and development activities and pre-commercialization costs. If we do raise additional capital through public or private equity offerings or convertible debt securities, the ownership interest of our existing stockholders could be diluted, and the terms of these securities could include liquidation or other preferences that could adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we could be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to fully estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs. For additional information, see Part II, Item 1A. “Risk Factors” – “Risks Related to our Financial Position and Capital Requirements.”

Previous wording

Cash provided by operating activities for the six months ended June 30, 2024 was $241.2 million and consisted primarily of our net income of $176.7 million, $18.3 million of stock-based compensation and a change of $47.7 million in net operating assets and liabilities. The change in net operating assets and liabilities was driven primarily by a change of $40.9 million in deferred revenue related to the Takeda Collaboration Agreement and a change of $10.0 million in receivable from collaboration partner related to a milestone payment under the Janssen License and Collaboration Agreement, which we received in January 2024. The $301.8 million increase in cash provided by operating activities during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to the receipt of a $300.0 million upfront payment which we earned upon the effectiveness of the Takeda Collaboration Agreement.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2024 was $213.3 million and consisted primarily of our net income of $143.5 million, $28.5 million of stock-based compensation and a change of $45.1 million in net operating assets and liabilities. The change in net operating assets and liabilities was driven primarily by a change of $36.2 million in deferred revenue related to the Takeda Collaboration Agreement and a change of $10.0 million in receivable from collaboration partner related to a milestone payment under the Janssen License and Collaboration Agreement. The $300.5 million increase in cash provided by operating activities during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily due to the receipt of a $300.0 million one-time, non-refundable upfront payment related to the Takeda Collaboration Agreement.

Previous wording

Cash used in investing activities for the six months ended June 30, 2024 was $82.0 million and consisted primarily of purchases of marketable securities of $240.6 million, partially offset by proceeds from maturities of marketable securities of $158.8 million. The $117.6 million increase in cash used in investing activities for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily related to the investment of a portion of the $300.0 million upfront payment we earned upon the effectiveness of the Takeda Collaboration Agreement.

Current wording

Cash used in investing activities for the nine months ended September 30, 2024 was $290.8 million and consisted primarily of purchases of marketable securities of $507.3 million, partially offset by proceeds from maturities of marketable securities of $217.6 million. The $312.8 million increase in cash used in investing activities for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily related to the investment of a portion of the proceeds related to the Takeda Collaboration Agreement.

Previous wording

Cash provided by financing activities for the six months ended June 30, 2024 was $9.8 million and consisted primarily of net cash proceeds of $10.4 million from the issuance of common stock upon exercises of stock options and purchases of stock under our employee stock purchase plan (“ESPP”), partially offset by $0.6 million in tax withholding payments related to net settlement of restricted stock units. The $124.9 million decrease in cash provided by financing activities for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to $107.9 million of proceeds received from a public offering of our common stock in April 2023 and a $24.3 million decrease in ATM sales of our common stock, partially offset by a $7.1 million increase in proceeds from the issuance of common stock upon exercise of options and purchases of common stock under the ESPP.

Current wording

Cash provided by financing activities for the nine months ended September 30, 2024 was $21.8 million and consisted of net cash proceeds of $22.4 million from the issuance of common stock upon exercises of stock options and purchases of stock under our employee stock purchase plan (“ESPP”), partially offset by $0.6 million in tax withholding payments related to net settlement of restricted stock units. The $148.1 million decrease in cash provided by financing activities for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily due to $107.9 million of proceeds received from a public offering of our common

Previous wording

Except as described above, during the six months ended June 30, 2024 there were no other material changes to our material cash requirements, including commitments for capital expenditures, described underManagement’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 27, 2024.

Current wording

Except as described above, during the nine months ended September 30, 2024 there were no other material changes to our material cash requirements, including commitments for capital expenditures, described underManagement’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 27, 2024.