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What changed in Nurix Therapeutics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Nurix Therapeutics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+771 added−744 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-09)

Top changes in Nurix Therapeutics, Inc.'s 2023 10-K

771 paragraphs added · 744 removed · 551 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

193 edited+62 added−96 removed316 unchanged
Biggest changeThe ACA, among other things, (i) proscribed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs and therapeutic biologics that are inhaled, infused, instilled, implanted or injected, (ii) increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, (iii) established annual nondeductible fees and taxes on manufacturers of certain branded prescription drugs and therapeutic biologics, apportioned among these entities according to their market share in certain government healthcare programs, (iv) established a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer what are now 70% point of-sale discounts off negotiated prices of applicable brand drugs and therapeutic biologics to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs and therapeutic biologics to be covered under Medicare Part D, (v) expanded eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 138% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability, (vi) expanded the entities eligible for discounts under the 340B Public Health program, (vii) required annual reporting of certain information regarding drug samples that manufacturers and distributors provide to licensed practitioners, (viii) created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research, and (ix) established a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. 46 Table of Content The ACA and certain of its provisions have been subject to judicial challenges as well as legislative and regulatory efforts to repeal or replace them or to alter their interpretation or implementation.
Biggest changeThe ACA, among other things, (i) proscribed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs and therapeutic biologics that are inhaled, infused, instilled, implanted or injected, (ii) increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, (iii) established annual nondeductible fees and taxes on manufacturers of certain branded prescription drugs and therapeutic biologics, apportioned among these entities according to their market share in certain government healthcare programs, (iv) expanded eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 138% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability, (v) expanded the entities eligible for discounts under the 340B Public Health program, (vi) required annual reporting of certain information regarding drug samples that manufacturers and distributors provide to licensed practitioners, (vii) created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research, along with funding for such research, and (viii) established a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
We have also demonstrated the ability of both NX-2127 and NX-5948 to degrade BTK in circulating B-cells of non-human primates and in B-cell lymphoma patients following once daily oral dosing in ongoing Phase 1 trials.
We have also demonstrated the ability of both NX-5948 and NX-2127 to degrade BTK in circulating B-cells of non-human primates and in B-cell lymphoma patients following once daily oral dosing in ongoing Phase 1 trials.
We have optimized NX-2127 and NX-5948 to be able to degrade both wild type BTK and the C481S variant of BTK that has been identified as the most common mutation in patients who have become resistant to ibrutinib therapy over time.
We have optimized NX-5948 and NX-2127 to be able to degrade both wild type BTK and the C481S variant of BTK that has been identified as the most common mutation in patients who have become resistant to ibrutinib therapy over time.
In August 2019 and September 2022, we entered into the First and Second Amendment, respectively, to the Gilead Agreement to clarify certain language of the Gilead Agreement.
In August 2019 and September 2022, we entered into the First Amendment and the Second Amendment, respectively, to the Gilead Agreement to clarify certain language of the Gilead Agreement.
We have selected these compounds not only on the basis that they could have potentially favorable efficacy and safety profiles, but also for their ease of synthesis and reasonable cost of their starting materials. In particular, our lead drug candidates are manufactured using reliable and reproducible synthetic processes from readily available starting materials.
We have selected these compounds not only on the basis that they could have potentially favorable efficacy and safety profiles, but also for their ease of synthesis and the reasonable cost of their starting materials. In particular, our lead drug candidates are manufactured using reliable and reproducible synthetic processes from readily available starting materials.
While several proposed reform measures will require Congress to pass legislation to become effective, Congress and the Biden administration have each indicated that it will continue to seek new legislative and/or administrative measures to address prescription drug and biological product costs, as discussed in greater detail in the section titled “Risk Factors.” At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures and, in some cases, to encourage importation from other countries and bulk purchasing.
While several proposed reform measures will require Congress to pass legislation to become effective, Congress and the Biden administration have each indicated that it will continue to seek new legislative and/or administrative measures to address prescription drug and biological product costs, as discussed in greater detail in the section titled “Risk Factors.” 44 At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures and, in some cases, to encourage importation from other countries and bulk purchasing.
Other potential consequences include, among other things: • Restrictions on the marketing or manufacturing of the product, including total or partial suspension of production, complete withdrawal of the product from the market or product recalls; • Fines, untitled or warning letters or holds on post-approval clinical trials; • Refusal of the FDA to approve pending NDAs, BLAs or supplements to approved NDAs or BLAs, or suspension or revocation of product license approvals; • Product seizure or detention, or refusal to permit the import or export of products; or • Injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: • Restrictions on the marketing or manufacturing of the product, including total or partial suspension of production, complete withdrawal of the product from the market or product recalls; • Fines, untitled or warning letters or holds on post-approval clinical trials; • Refusal of the FDA to approve pending NDAs, BLAs or supplements to approved NDAs or BLAs, or suspension or revocation of product license approvals; 35 • Product seizure or detention, or refusal to permit the import or export of products; or • Injunctions or the imposition of civil or criminal penalties.
Should any of these manufacturers become unavailable to us for any reason, we believe that there are a number of potential replacements, although we may incur some delay in identifying and qualifying such replacements. All of our drug candidates are organic compounds of low molecular weight, generally called small molecules, but which are larger than traditional small molecule therapeutics.
Should any of these manufacturers become unavailable to us for any reason, we believe that there are a number of potential replacements, although we may incur some delay in identifying and qualifying such replacements. 25 All of our drug candidates are organic compounds of low molecular weight, generally called small molecules, but which are larger than traditional small molecule therapeutics.
These fees are typically increased annually. Sponsors of applications for drugs granted Orphan Drug Designation are exempt from these user fees. The FDA has 60 days from its receipt of an NDA or BLA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.
These fees are typically increased annually. Sponsors of applications for drugs granted Orphan Drug Designation are exempt from these user fees. 30 The FDA has 60 days from its receipt of an NDA or BLA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.
In addition, since the effect is mediated through the binding of a small molecule drug rather than through functional inhibition, proteins lacking active sites are potentially targetable, greatly expanding the spectrum of both proteins and diseases amenable to small molecule therapeutic intervention. • Targeted Protein Elevation (Inhibiting E3 ligases) .
In addition, since the effect is mediated through the binding of a small molecule drug rather than through functional inhibition, proteins lacking active sites are potentially targetable, greatly expanding the spectrum of both proteins and diseases amenable to small molecule therapeutic intervention . 7 • Targeted Protein Elevation (Inhibiting E3 ligases).
To attract qualified applicants, we offer a total rewards package consisting of a base salary and cash target bonus, a comprehensive benefits package and equity compensation for all full-time employees. Bonus opportunity and equity compensation increase as a percentage of total compensation based on level of responsibility. Actual bonus payout is based on company and individual performance.
To attract qualified applicants, we offer a total rewards package consisting of a base salary and cash target bonus, a comprehensive benefits package and equity compensation for all full-time and part-time employees. Bonus opportunity and equity compensation increase as a percentage of total compensation based on level of responsibility. Actual bonus payout is based on company and individual performance.
By inhibiting the function of E3 ligases in targeted protein elevation (TPE), it is possible to rapidly increase specific protein levels to control biological pathways. Increasing the levels of distinct sets of proteins could be a powerful approach to blocking pathological processes and restoring normal physiology.
By inhibiting the function of E3 ligases in targeted protein elevation, it is possible to rapidly increase specific protein levels to control biological pathways. Increasing the levels of distinct sets of proteins could be a powerful approach to blocking pathological processes and restoring normal physiology.
Companies that breach these laws may incur substantial fines and imprisonment. In the EU, payments made to healthcare professionals must be publicly disclosed under applicable transparency provisions and agreements with healthcare professionals must be the subject of prior notification and approval by the healthcare professional’s employer.
Companies that breach these laws may incur substantial fines and imprisonment. In the EU and the UK, payments made to healthcare professionals must be publicly disclosed under applicable transparency provisions and agreements with healthcare professionals must be the subject of prior notification and approval by the healthcare professional’s employer.
In vitro studies demonstrated that NX-1607 treatment resulted in a dose-dependent increase in T cells activation in TCR stimulated primary human T cells in the presence and, to a lesser extent, in the absence of CD28 co-stimulation, a potential advantage in a suppressive tumor microenvironment.
In vitro studies demonstrated that NX-1607 treatment resulted in a dose-dependent increase in T cell activation in TCR stimulated primary human T cells in the presence and, to a lesser extent, in the absence of CD28 co-stimulation, a potential advantage in a suppressive tumor microenvironment.
Among others, this statute applies to arrangements between pharmaceutical and biological product manufacturers on the one hand and prescribers, purchasers and formulary managers on the other, including, for example, consulting/speaking arrangements, discount and rebate offers, grants, charitable contributions and patient support offerings.
Among others, this statute applies to arrangements between pharmaceutical and biological product manufacturers on the one hand and prescribers, pharmacies, purchasers and formulary managers on the other, including, for example, consulting/speaking arrangements, discount and rebate offers, grants, charitable contributions and patient support offerings.
Targeted protein degradation (TPD) harnesses the natural activity of ligases to remove specific proteins from the cell. Targeted protein degradation is accomplished by using bifunctional small molecules, which are composed of an E3 ligase binding element, or harness, linked to a target protein binding element.
Targeted protein degradation harnesses the natural activity of ligases to remove specific proteins from the cell. Targeted protein degradation is accomplished by using bifunctional small molecules, which are composed of an E3 ligase binding element, or harness, linked to a target protein binding element.
A number of noncovalent BTK inhibitors are currently being investigated in clinical trials as potential therapies for patients with relapsed and refractory disease, including Jaypirca, or pirtobrutinib, which was recently approved for use in MCL.
A number of noncovalent BTK inhibitors are currently being investigated in clinical trials as potential therapies for patients with relapsed and refractory disease, including Jaypirca, or pirtobrutinib, which was recently approved for use in CLL and MCL.
DELs allow access to a spectrum of binders across the protein surface, some of which inhibit protein function. • Rapid automated chemistry . Our state-of-the-art automated chemistry robotic suite allows for rapid synthesis of both binders and fully assembled degrader molecules.
DELs allow access to a spectrum of binders across the protein surface, some of which inhibit protein function. 21 • Rapid automated chemistry . Our state-of-the-art automated chemistry robotic suite allows for rapid synthesis of both binders and fully assembled degrader molecules.
We will provide any of the foregoing information without charge upon written request to our Corporate Secretary, Nurix Therapeutics, Inc., 1700 Owens Street, Suite 205, San Francisco, CA 94158. We use our Investor Relations website (http://ir.nurixtx.com) as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD promulgated by the SEC.
We will provide any of the foregoing information without charge upon written request to our Corporate Secretary, Nurix Therapeutics, Inc., 1700 Owens Street, Suite 205, San Francisco, California 94158. We use our Investor Relations website (http://ir.nurixtx.com) as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD promulgated by the SEC.
Without further treatment, all mice in the vehicle group (black line) died by day 60 as a result of disseminated tumor metastases in the lung, liver and brain. By contrast, animals treated with NX-1607 (blue line) administered as a daily oral dose starting at day 7 and continuing through day 46 demonstrated a highly significant prolongation of survival.
Without further treatment, all mice in the vehicle group (black line) died by day 60 as a result of disseminated tumor metastases in the lung, liver and brain. By contrast, animals treated with NX-1607 (blue line) administered as a daily oral dose starting at day seven and continuing through day 46 demonstrated a highly significant prolongation of survival.
Generic and hybrid products can refer to the complete dossier (i.e. the quality, pre-clinical and clinical data) of the reference medicinal product in their marketing authorization application, by demonstration of bioequivalence, usually through the submission of the appropriate bioavailability studies after the period of regulatory data protection (also called “data exclusivity”) has expired, namely eight years after the grant of the marketing authorization of the reference medicinal product.
Generic and hybrid products can refer to the complete dossier (i.e., the quality, preclinical and clinical data) of the reference medicinal product in their marketing authorization application, by demonstration of bioequivalence, usually through the submission of the appropriate bioavailability studies after the period of regulatory data protection (also called “data exclusivity”) has expired, namely eight years after the grant of the marketing authorization of the reference medicinal product.
Both the PDMA and state laws limit the distribution of prescription drug product samples and impose requirements to ensure accountability in distribution.
Both the PDMA and state laws limit the distribution of prescription drug and biological product samples and impose requirements to ensure accountability in distribution.
If a biosimilar of a reference biological product does not meet the conditions in the definition of generic medicinal products, owing to, in particular, differences relating to raw materials or differences in manufacturing processes of the biological medicinal product and the reference biological medicinal product, the results of appropriate pre-clinical studies or clinical trials relating to these conditions must be provided.
If a biosimilar of a reference biological product does not meet the conditions in the definition of generic medicinal products, owing to, in particular, differences relating to raw materials or differences in manufacturing processes of the biological medicinal product and the reference biological medicinal product, the results of appropriate preclinical studies or clinical trials relating to these conditions must be provided.
We have carefully selected and are advancing over 60 E3 ligases in our DELigase platform, expanding the universe of E3 ligases that can be modulated beyond cereblon and von Hippel-Lindau (VHL), the two predominantly used in the field of targeted protein degradation today.
We have carefully selected and are advancing over 90 E3 ligases in our DELigase platform, expanding the universe of E3 ligases that can be modulated beyond cereblon and von Hippel-Lindau (VHL), the two predominantly used in the field of targeted protein degradation today.
The differentiation of our protein modulation platform is in its breadth and versatility, enabling us to alter protein levels either upward or downward for both clinically validated targets, such as BTK, and for targets previously thought to be “undruggable”; that is, proteins that could not be addressed by conventional pharmacological means, such as CBL-B.
The differentiation of our protein modulation platform is in its breadth and versatility, enabling us to alter protein levels either upward or downward for both clinically validated targets, such as BTK, and for targets previously thought to be “undruggable;” that is, proteins that could not be addressed by conventional pharmacological means, such as CBL-B.
Solely for convenience, the trademarks and tradenames referred to in this Annual Report on Form 10-K appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to these trademarks and tradenames.
Solely for convenience, the trademarks and trade names referred to in this Annual Report on Form 10-K appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to these trademarks and trade names.
These reductions may also impact the ability of relevant agencies to timely review and approve research and development, manufacturing, and marketing activities which may delay our ability to develop, market and sell any products we may develop. 47 Table of Content Additionally, the cost of prescription pharmaceuticals and biological products has recently been the subject of considerable discussion in the United States.
These reductions may also impact the ability of relevant agencies to timely review and approve research and development, manufacturing, and marketing activities which may delay our ability to develop, market and sell any products we may develop. Additionally, the cost of prescription pharmaceuticals and biological products has recently been the subject of considerable discussion in the United States.
Our Programs Our targeted protein degradation portfolio includes two clinical stage drug candidates that catalyze potent degradation of BTK, a well validated target for B-cell malignancies. Our two BTK degrader drug candidates, NX-2127 and NX-5948, are oral drug candidates being evaluated for the treatment of relapsed or refractory B-cell malignancies including NHL and CLL.
Our Programs Our targeted protein degradation portfolio includes two clinical stage drug candidates that catalyze potent degradation of BTK, a well validated target for B-cell malignancies. Our two BTK degrader drug candidates, NX-5948 and NX-2127, are oral drug candidates being evaluated for the treatment of relapsed or refractory B-cell malignancies including CLL and non-Hodgkin’s lymphoma (NHL).
For those programs that we exercise our option to co-develop, co-promote and co-commercialize, we will be responsible for a portion of the U.S. development costs, and the parties will split U.S. profits and losses evenly, and we will be eligible to receive royalties on ex-U.S. net sales and reduced milestone payments on such optioned products. 27 Table of Content Upon signing the Sanofi Agreement, Sanofi paid us an upfront payment of $55.0 million.
For those programs that we exercise our option to co-develop, co-promote and co-commercialize, we will be responsible for a portion of the U.S. development costs, and the parties will split U.S. profits and losses evenly, and we will be eligible to receive royalties on ex-U.S. net sales and reduced milestone payments on such optioned products. 24 Upon signing the Sanofi Agreement, Sanofi paid us an upfront payment of $55.0 million.
Our Board’s Nominating and Corporate Governance Committee is responsible for developing and recommending to the Board any company program relating to corporate responsibility and sustainability, including environmental, social and governance matters. 49 Table of Content Corporate Information We were incorporated under the laws of the State of Delaware in August 2009 under the name Kura Therapeutics, Inc.
Our Board’s Nominating and Corporate Governance Committee is responsible for developing and recommending to the Board any company program relating to corporate responsibility and sustainability, including environmental, social and governance matters. Corporate Information We were incorporated under the laws of the State of Delaware in August 2009 under the name Kura Therapeutics, Inc.
We have received $316.0 million in non-dilutive funding to date from our collaborations to support our research and development activities and to create new targeted protein modulation drugs with our partners.
We have received $413.0 million in non-dilutive funding to date from our collaborations to support our research and development activities and to create new targeted protein modulation drugs with our partners.
DEL technology is well suited to finding new binders for targets thought to be undruggable, which include the vast majority of proteins encoded in the human genome including E3 ligases. 23 Table of Content DEL technology taps enormous chemical space to overcome “druggability” limits Our DEL collection comprises several billion compounds whereas typical screening collections contain less than a few million.
DEL technology is well suited to finding new binders for targets thought to be undruggable, which include the vast majority of proteins encoded in the human genome including E3 ligases. 19 DEL technology taps enormous chemical space to overcome “druggability” limits Our DEL collection comprises several billion compounds whereas typical screening collections contain less than a few million.
We have specifically designed NX-2127 as a dual degrader of BTK and the cereblon neosubstrates Aiolos and Ikaros, and we have designed NX-5948 to degrade BTK with limited or no degradation of cereblon neosubstrates for potential applications in indications where sparing immunomodulatory activity may be beneficial.
We have specifically designed NX-5948 to degrade BTK with limited or no degradation of cereblon neosubstrates, and we have designed NX-2127 as a dual degrader of BTK as well as the cereblon neosubstrates Aiolos and Ikaros, for potential applications in indications where adding immunomodulatory activity may be beneficial.
Studies in human T cells comparing NX-2127 to lenalidomide and pomalidomide have shown comparable Aiolos degradation and resultant T-cell activation, as shown in the figure below on the right.
Studies in human T cells comparing NX-2127 to lenalidomide and pomalidomide have shown comparable Aiolos degradation and resultant T-cell activation, as shown in the figure below.
We have also developed machine learning and high throughput methods for nanoscale hit resynthesis and affinity selection mass spectroscopy that allow a more comprehensive and industrialized process for finding the best chemical starting points for future pipeline programs. 24 Table of Content Leveraging the Nurix DEL Database for clear classification of enriched DEL ligands • Many screens, one protein target .
We have also developed machine learning and high throughput methods for nanoscale hit resynthesis and affinity selection mass spectroscopy that allow a more comprehensive and industrialized process for finding the best chemical starting points for future pipeline programs. 20 Leveraging the Nurix DEL Database for clear classification of enriched DEL ligands • Many screens, one protein target .
Our substantial expertise in E3 ligase biochemistry and biology has allowed us to identify and develop potent inhibitors of E3 ligases that play pivotal roles in T-cell signaling and immune cell function. 26 Table of Content Drug candidate identification and selection process We employ a series of processes and studies from target validation to preclinical development for selection of the appropriate candidate for further development.
Our substantial expertise in E3 ligase biochemistry and biology has allowed us to identify and develop potent inhibitors of E3 ligases that play pivotal roles in T-cell signaling and immune cell function. 22 Drug candidate identification and selection process We employ a series of processes and studies from target validation to preclinical development for selection of the appropriate candidate for further development.
This automation enables us to sample unprecedented chemical space and allows for faster design test cycles which accelerates drug discovery projects. 25 Table of Content • Harnessing our data generation pipelines with Machine Learning. Our investment in scalable science has created large data streams stemming from our DEL, automated chemistry, and high-throughput experimental platforms.
This automation enables us to sample unprecedented chemical space and allows for faster design test cycles which accelerates drug discovery projects. • Harnessing our data generation pipelines with Machine Learning. Our investment in scalable science has created large data streams stemming from our DEL, automated chemistry, and high-throughput experimental platforms.
The tumor growth inhibition with oral administration of NX-1607 recapitulates the genetic experiment in mice with a ligase-inactive version of CBL-B which also shows tumor growth inhibition as illustrated in the figure below on the right. 18 Table of Content The in vivo effects of orally administered NX-1607 were further evaluated as a single agent in several mouse models of cancer.
The tumor growth inhibition with oral administration of NX-1607 recapitulates the genetic experiment in mice with a ligase-inactive version of CBL-B which also shows tumor growth inhibition as illustrated in the figure below on the right. 17 The in vivo effects of orally administered NX-1607 were further evaluated as a single agent in several mouse models of cancer.
In addition, the distribution of prescription drug products is subject to the Prescription Drug Marketing Act (PDMA) which regulates the distribution of drugs and drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states.
In addition, the distribution of prescription drug and biological products is subject to the Prescription Drug Marketing Act (PDMA) which regulates the distribution of drugs, biological products and drug or biological product samples at the federal level, and sets minimum standards for the registration and regulation of drug and biological product distributors by the states.
However, most patients fail to respond or experience only transient responses. Pre-clinical development of CBL-B inhibitors We have developed a series of potent small molecule inhibitors of CBL-B activity that have demonstrated biochemical activity and effects in vitro on human immune cells as well as in mouse tumor models.
However, most patients fail to respond or experience only transient responses. 16 Preclinical development of CBL-B inhibitors We have developed a series of potent small molecule inhibitors of CBL-B activity that have demonstrated biochemical activity and effects in vitro on human immune cells as well as in mouse tumor models.
Effective January 1, 2024, manufacturers’ MDRP rebate liability will no longer be capped, potentially resulting in a manufacturer paying more in MDRP rebates than it receives on the sale of certain covered outpatient drugs.
Effective January 1, 2024, manufacturers’ MDRP rebate liability is no longer capped, potentially resulting in a manufacturer paying more in MDRP rebates than it receives on the sale of certain covered outpatient drugs.
The information contained on our website does not constitute, and shall not be deemed to constitute, a part of this Annual Report on Form 10-K, or any other report we file with, or furnish to, the SEC. Our references to the URLs for websites are intended to be inactive textual references only. 50 Table of Content
The information contained on our website does not constitute, and shall not be deemed to constitute, a part of this Annual Report on Form 10-K, or any other report we file with, or furnish to, the SEC. Our references to the URLs for websites are intended to be inactive textual references only. 46
CBL-B deficient animal models demonstrate enhanced signal dependent T-cell activation and robust T-cell dependent anti-tumor immunity. 16 Table of Content CBL-B is highly expressed in human CD4+ and CD8+ T cells, with expression tightly regulated by CD28 and CTLA-4 and other co-stimulatory and inhibitory signals.
CBL-B deficient animal models demonstrate enhanced signal dependent T-cell activation and robust T-cell dependent anti-tumor immunity. CBL-B is highly expressed in human CD4+ and CD8+ T cells, with expression tightly regulated by CD28 and CTLA-4 and other co-stimulatory and inhibitory signals.
One of the most exquisitely ordered cellular systems governing cellular proteins is the ubiquitin proteasome system (UPS). 7 Table of Content As depicted above, the UPS is responsible for regulating and maintaining normal protein levels in the cell.
One of the most exquisitely ordered cellular systems governing cellular proteins is the ubiquitin proteasome system (UPS). As depicted above, the UPS is responsible for regulating and maintaining normal protein levels in the cell.
These target levels of inhibition suggest a potential therapeutic range correlating BTK degradation to tumor growth inhibition. 12 Table of Content In addition to BTK degradation, we have also demonstrated the ability of NX-2127 to degrade both Aiolos (as shown in the figure below on the left) and Ikaros (not shown), proteins targeted by immunomodulatory drugs Revlimid (lenalidomide) and Pomalyst (pomalidomide).
These target levels of inhibition suggest a potential therapeutic range correlating BTK degradation to tumor growth inhibition. In addition to BTK degradation, we have also demonstrated the ability of NX-2127 to degrade both Aiolos (as shown in the figure below) and Ikaros (not shown), proteins targeted by immunomodulatory drugs Revlimid (lenalidomide) and Pomalyst (pomalidomide).
Under our Sanofi and Gilead collaborations, as of November 30, 2022, we have the opportunity to receive up to $4.8 billion in potential future fees and milestone payments, as well as royalties on future sales while retaining certain commercialization options. We currently retain worldwide development and commercialization rights to our BTK and CBL-B portfolios.
Under our Gilead, Sanofi and Pfizer collaborations, as of November 30, 2023, we have the opportunity to receive up to $8.1 billion in potential future fees and milestone payments, as well as royalties on future sales while retaining certain commercialization options. We currently retain worldwide development and commercialization rights to our BTK and CBL-B portfolios.
Both single agent NX-1607 (blue triangles) and single agent anti-PD-1 (red circles) reduced the number of lung metastases at day 28 compared with the vehicle group (black squares), but the combination of NX-1607 and anti-PD-1 (light blue diamonds) was superior to either single agent. 19 Table of Content Clinical development of NX-1607 We are studying the pharmacology, safety and clinical activity of single-agent NX-1607 in multiple solid tumor indications and lymphoma.
Both single agent NX-1607 (blue triangles) and single agent anti-PD-1 (red circles) reduced the number of lung metastases at day 28 compared with the vehicle group (black squares), but the combination of NX-1607 and anti-PD-1 (light blue diamonds) was superior to either single agent. 18 Clinical development of NX-1607 We are studying the pharmacology, safety and clinical activity of single-agent NX-1607 and the combination of NX-1607 with taxane chemotherapy in multiple solid tumor indications and lymphoma.
Recruitment, hiring, development, training, compensation and advancement at our company is based on qualifications, performance, skills and experience without regard to gender, race and ethnicity. As of November 30, 2022, approximately 52% of our full-time employees were self-reported as female. Of our vice president-level and above employees, approximately 45% were self-reported as female.
Recruitment, hiring, development, training, compensation and advancement at our company is based on qualifications, performance, skills and experience without regard to gender, race and ethnicity. As of November 30, 2023, approximately 52% of our full-time and part-time employees were self-reported as female. Of our vice president-level and above employees, approximately 42% were self-reported as female.
The Phase 1a portion is designed as a monotherapy dose escalation trial to investigate the safety and tolerability of NX‑2127 and to identify a maximum tolerated dose for further evaluation. The Phase 1b portion of the trial is designed as a monotherapy expansion trial in defined cohorts of up to 20 patients each.
The Phase 1a portion is designed as a monotherapy dose escalation trial to investigate the safety and tolerability of NX‑2127 and to identify a maximum tolerated dose for further evaluation. The Phase 1b portion of the trial is designed as a monotherapy expansion trial in defined cohorts.
Subject to earlier expiration in certain circumstances, the Sanofi Agreement expires on a licensed product-by-licensed product or profit-shared licensed product-by-profit-shared licensed product basis and country-by-country basis upon on the later of the expiration of (i) the last-to-expire patent with a valid claim covering the applicable licensed product in the applicable country, (ii) the expiration of any regulatory exclusivity for the applicable licensed product in the applicable country or (iii) ten years after the first commercial sale of the applicable licensed product in the applicable country covered by the Sanofi Agreement.
Subject to earlier expiration in certain circumstances, the Sanofi Agreement expires on a licensed product-by-licensed product or profit-shared licensed product-by-profit-shared licensed product basis and country-by-country basis upon on the later of (1) the expiration of the last-to-expire patent with a valid claim covering the applicable licensed product in the applicable country, (2) the expiration of any regulatory exclusivity for the applicable licensed product in the applicable country or (3) ten years after the first commercial sale of the applicable licensed product in the applicable country covered by the Sanofi Agreement.
We have carefully selected these E3 ligases for use in drug discovery across our four core areas of therapeutic expertise: oncology, immuno-oncology, adoptive cell therapy and immune disorders. We consider the unique biological function of each ligase and the therapeutic requirements of the disease state for inhibitor programs.
We have carefully selected these E3 ligases for use in drug discovery across our three core areas of therapeutic expertise: oncology, immuno-oncology and immune disorders. We consider the unique biological function of each ligase and the therapeutic requirements of the disease state for inhibitor programs.
The expected expirations for issued patents and patents that may issue from pending applications covering our clinical candidates are 2039-2042 for NX-2127 and NX-5948; 2040-2042 for NX-1607; and 2040 for DeTIL-0255. The term of individual patents depends upon the laws of the countries in which they are obtained.
The expected expirations for issued patents and patents that may issue from pending applications covering our clinical candidates are between the years 2039 and 2042 for NX-5948 and NX-2127; and between 2040 and 2043 for NX-1607. The term of individual patents depends upon the laws of the countries in which they are obtained.
In addition, many state laws govern the privacy and security of health information and other personal information in certain circumstances (such as the California Consumer Privacy Act of 2018 and the Virginia Consumer Data Protection Act, and similar forthcoming state privacy laws in Colorado, Connecticut and Utah), and these state laws may differ from each other in significant ways and may not have the same effect.
In addition, many state laws govern the privacy and security of health information and other personal information in certain circumstances (such as the California Consumer Privacy Act of 2018, the Virginia Consumer Data Protection Act, and similar state privacy laws in Colorado, Connecticut and Utah, along with health privacy focused laws such as the Washington My Health My Data Act), and these state laws may differ from each other in significant ways and may not have the same effect.
The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, in cash or in kind, to induce, or in return for, purchasing, leasing, ordering or arranging for, referring, or recommending the purchase, lease or order of any healthcare item or service that may be reimbursable, in whole or in part, under Medicare, Medicaid, or other federal health care program.
These laws include anti-kickback statutes, false claims statutes and other healthcare laws and regulations. 40 The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, in cash or in kind, to induce, or in return for, purchasing, leasing, ordering or arranging for, referring, or recommending the purchase, lease or order of any healthcare item or service that may be reimbursable, in whole or in part, under Medicare, Medicaid, or other federal health care program.
These changes include the Budget Control Act of 2011, which, among other things, led to aggregate reductions of Medicare payments to providers of up to 2% per fiscal year that started in 2013 and, due to subsequent statutory amendments, will remain in effect into 2031 unless additional Congressional action is taken, with the exception of a temporary suspension from May 1, 2020 through July 1, 2022 due to the COVID-19 pandemic.
These changes include the Budget Control Act of 2011, which, among other things, led to aggregate reductions of Medicare payments to providers of up to 2% per fiscal year that started in 2013 and, due to subsequent statutory amendments, will remain in effect through the first six months of the FY 2032 sequestration order unless additional Congressional action is taken, with the exception of a temporary suspension from May 1, 2020 through July 1, 2022 due to the COVID-19 pandemic.
We believe that our oral, small molecule CBL-B inhibitors have several potential immunotherapy applications through enhancing T-cell mediated anti-tumor activity by lowering the activation threshold of T cells in a suppressive tumor microenvironment where CBL-B plays a key role in the downregulation of T cells.
We believe that our oral, small molecule CBL-B inhibitor, NX-1607, has several potential immunotherapy applications through enhancing T-cell mediated anti-tumor activity by lowering the activation threshold of T cells in a suppressive tumor microenvironment where CBL-B plays a key role in the downregulation of T cells.
In aggregate, we have received $316.0 million in non-dilutive financing from our collaborators to date, and as of November 30, 2022, we are eligible to receive up to $4.8 billion in potential future fees and milestone payments, as well as royalties on future product sales.
In aggregate, we have received $413.0 million in non-dilutive financing from our collaborators to date, and as of November 30, 2023, we are eligible to receive up to $8.1 billion in potential future fees and milestone payments, as well as royalties on future product sales.
As illustrated in the diagram below, we are conducting a Phase 1a/1b dose-escalation and cohort expansion study of NX-1607 in patients with relapsed or refractory solid tumors and lymphoma.
As illustrated in the diagram below, we are conducting a Phase 1a/1b dose-escalation and cohort expansion study of NX-1607 in patients with relapsed or refractory solid tumors and lymphoma. We are currently enrolling patients in the Phase 1a dose escalation portion of the monotherapy trial.
If a Member State does not recognize the marketing authorization, the disputed points are eventually referred to the European Commission, whose decision is binding. 35 Table of Content Since the United Kingdom (UK) has left the EU, Great Britain is no longer covered by centralized marketing authorizations.
If a Member State does not recognize the marketing authorization, the disputed points are eventually referred to the European Commission, whose decision is binding. Since the UK has left the EU, Great Britain is no longer covered by centralized marketing authorizations.
Our integrated drug discovery and development system and core technical expertise Collaborations and License Agreements Sanofi Collaboration and License Agreement In December 2019, we entered into a strategic collaboration with Genzyme Corporation, a subsidiary of Sanofi, which became effective in January 2020 (as subsequently expanded and amended, the Sanofi Agreement), to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with challenging diseases in multiple therapeutic areas using our DELigase platform to identify small molecules designed to induce degradation of three specified initial drug targets.
Sanofi In December 2019, we entered into a strategic collaboration with Genzyme Corporation, a subsidiary of Sanofi, which became effective in January 2020 (as subsequently expanded and amended, the Sanofi Agreement), to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with challenging diseases in multiple therapeutic areas using our DELigase platform to identify small molecules designed to induce degradation of three specified initial drug targets.
In many cases, these drugs are administered in combination to enhance efficacy. Some of the currently approved drug therapies are branded and subject to patent protection, and others are available on a generic basis. Many of these approved drugs are well established therapies and are widely accepted by physicians, patients and third-party payors.
Some of the currently approved drug therapies are branded and subject to patent protection, and others are available on a generic basis. Many of these approved drugs are well established therapies and are widely accepted by physicians, patients and third-party payors.
Of our vice president-level and above employees, 24% were self-reported as ethnic or racial minorities in the United States, with 17% Asian, 3% Black or African American and 3% Hispanic or Latino. Employee development and training We focus on attracting, retaining and cultivating talented individuals.
Of our vice president-level and above employees, 25% were self-reported as ethnic or racial minorities in the United States, with 17% Asian and 8% Black or African American. 45 Employee development and training We focus on attracting, retaining and cultivating talented individuals.
We emphasize employee development and training by providing access to a wide range of online and instructor led development and continual learning programs. Employees are encouraged to attend scientific, clinical and technological meetings and conferences and have access to broad resources they need to be successful. Safety The safety and health of our employees is a top priority.
We emphasize employee development and training by providing access to a wide range of online and instructor led development and continual learning programs. Employees are encouraged to attend scientific, clinical and technological meetings and conferences and have access to broad resources they need to be successful.
Gilead Collaboration, Option and License Agreement In June 2019, we entered into a global strategic collaboration agreement with Gilead (as subsequently amended, the Gilead Agreement) to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with cancer and other challenging diseases using our DELigase platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.
Our integrated drug discovery and development system and core technical expertise Collaborations and License Agreements Gilead In June 2019, we entered into a global strategic collaboration agreement with Gilead (as subsequently amended, the Gilead Agreement) to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with cancer and other challenging diseases using our DELigase platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.
The key elements of our strategy are to: • Advance our lead programs through clinical development . We have four drug candidates in Phase 1 clinical development and anticipate the following advancements in 2023. • NX-2127. Enrollment is ongoing in our Phase 1a/1b clinical trial of NX-2127 in adults with relapsed or refractory B-cell malignancies.
The key elements of our strategy are to: • Advance our lead programs through clinical development . We have three drug candidates in Phase 1 clinical development and anticipate the following advancements in 2024. • NX-5948. Enrollment is ongoing in our Phase 1a/1b clinical trial of NX-5948 in adults with relapsed or refractory B-cell malignancies, including CLL.
We are currently enrolling Phase 1 trials for NX-2127 and NX-5948 in patients with relapsed or refractory B-cell malignancies. BTK’s role in B-cell malignancy BTK is a key component of the B-cell receptor signaling pathway and has been clinically validated as a target in the treatment of B-cell malignancies.
We are currently treating patients with relapsed or refractory B-cell malignancies in Phase 1 trials for NX-5948 and NX-2127. BTK’s role in B-cell malignancy BTK is a key component of the B-cell receptor signaling pathway and has been clinically validated as a target in the treatment of B-cell malignancies, most notably in CLL but also in NHL.
In a Phase 3 trial, the drug or biological product is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy or potency and purity, and safety, of the product for approval or licensure, to establish the overall risk benefit profile of the product, and to provide adequate information for the labeling of the product. 33 Table of Content In most cases the FDA requires at least two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy or potency of the drug.
In a Phase 3 trial, the drug or biological product is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy or potency and purity, and safety, of the product for approval or licensure, to establish the overall risk benefit profile of the product, and to provide adequate information for the labeling of the product.
In addition, as of November 30, 2022, approximately 55% of our full-time employees were self-reported as ethnic or racial minorities in the United States, with 40% Asian, 2% Black or African American, 7% Hispanic or Latino and 6% of other minority groups or two or more races.
In addition, as of November 30, 2023, approximately 57% of our full-time employees were self-reported as ethnic or racial minorities in the United States, with 42% Asian, 2% Black or African American, 8% Hispanic or Latino and 6% of other minority groups or two or more races.
Overview We are a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of small molecule and cell therapies based on the modulation of cellular protein levels as a novel treatment approach for cancer and other challenging diseases.
Overview We are a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of innovative small molecules and antibody therapies based on the modulation of cellular protein levels as a novel treatment approach for cancer, inflammatory conditions and other challenging diseases.
Our patent portfolio, including pending priority applications and Patent Cooperation Treaty (PCT) applications, is intended to cover, but is not limited to, our technology platforms, drug candidates and components thereof and their methods of use, and any other inventions that are commercially important to our business.
Our patent portfolio is intended to cover, but is not limited to, our technology platforms, drug candidates and components thereof and their methods of use, and any other inventions that are commercially important to our business.
On May 3, 2022, the European Commission published a proposal for a regulation on the European Health Data Space (EHDS), which aims to further enable exchange of electronic health data both for primary use (among national EU healthcare systems for patient care) and secondary use (among private companies and regulators to enable scientific research).
Commercially confidential information and protected personal data, however, may not be accessed. 32 On May 3, 2022, the European Commission published a proposal for a regulation on the European Health Data Space (EHDS), which aims to further enable exchange of electronic health data both for primary use (among national EU healthcare systems for patient care) and secondary use (among private companies and regulators to enable scientific research).
Human Capital As of November 30, 2022, we had 297 full-time employees, of which approximately 34% have earned an M.D. or a Ph.D. As of November 30, 2022, 260 of our full-time employees are engaged in research and development. From time to time, we retain independent contractors to support our organization.
Human Capital As of November 30, 2023, we had 284 full-time or part-time employees, of which approximately 40% have earned an M.D. or a Ph.D. As of November 30, 2023, 249 of our full-time or part-time employees are engaged in research and development. From time to time, we retain independent contractors to support our organization.
For drug targets that are subject to the collaboration, we are obligated to use commercially reasonable efforts to undertake a research program in accordance with a research plan agreed to by the parties and established on a target-by-target basis.
Over time, Gilead may elect to replace the initial drug targets with other drug targets. For drug targets that are subject to the collaboration, we are obligated to use commercially reasonable efforts to undertake a research program in accordance with a research plan agreed to by the parties and established on a target-by-target basis.
Importantly, our CBL-B inhibitors do not appear to activate T cells in the absence of TCR engagement. We are studying our lead oral CBL-B inhibitor, NX-1607, in a Phase 1a dose escalation trial in multiple solid tumors and lymphoma. Solid tumors represent the vast majority of human cancers.
Importantly, NX-1607 does not appear to activate T cells in the absence of TCR engagement. We are studying NX-1607 in a Phase 1a dose escalation trial in multiple solid tumors and lymphoma. Solid tumors represent the vast majority of human cancers.
Some Member States and the UK may require that health technology assessments (HTA) be completed to obtain reimbursement or pricing approval. The outcome of HTAs is decided on a national basis and some Member States may decide not to reimburse the use of medicines or may reduce the rate of reimbursement.
Some Member States and the UK may require that health technology assessments (HTA) be completed for the product to be recommended for funding under the NHS. The outcome of HTAs is decided on a national basis and some Member States may decide not to reimburse the use of medicines or may reduce the rate of reimbursement.
These existing and future programs may have the potential to address diseases with significant unmet need, including cancer and other challenging diseases. We have entered into several revenue generating collaborations with large biopharmaceutical companies to leverage our DELigase platform for drug discovery.
These existing and future programs may have the potential to address diseases with significant unmet need, including cancer, autoimmunity, inflammation, and other challenging diseases. We have entered into several revenue generating collaborations with large biopharmaceutical companies, including with Gilead, Sanofi and Seagen (now a part of Pfizer), to leverage our DELigase platform for drug discovery.
Based on the clinical data of both ibrutinib and the immunomodulatory drug in B-cell malignancies, we believe that this strategy of targeting both BTK and Aiolos/Ikaros in a single oral treatment may improve anti-tumor activity. We anticipate that the ability of NX-2127 to degrade both BTK and Aiolos/Ikaros will confer unique anti-tumor activity.
Based on the clinical data of both ibrutinib and the immunomodulatory drug in B-cell malignancies, we believe that this strategy of targeting both BTK and Aiolos/Ikaros in a single oral treatment may improve anti-tumor activity.
In addition, there has been discussion of whether Congress should reduce the 12-year reference product exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. As a result, the ultimate implementation of the BPCIA is subject to significant uncertainty.
In addition, there has been discussion of whether Congress should reduce the 12-year reference product exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation.
The mark “Nurix” is our registered trademark in Canada, France, Germany, Italy, Japan, Mexico, Spain, the United Kingdom and the United States. The marks “DELigase,” “DeTIL” and “NxACT” are our registered trademarks in the United States. The Nurix logo is our common law trademark.
The mark “Nurix” is our registered trademark in Canada, France, Germany, Italy, Japan, Mexico, Spain, the United Kingdom and the United States. The mark “DELigase” is our registered trademarks in the United States. The Nurix logo is our common law trademark.
Our wholly owned, clinical stage pipeline includes targeted protein degraders of Bruton’s tyrosine kinase (BTK), a B-cell signaling protein, and inhibitors of Casitas B-lineage lymphoma proto-oncogene B (CBL-B), an E3 ligase that regulates activation of multiple immune cell types including T cells and NK cells. Our partnered drug discovery pipeline consists of ten programs under collaboration agreements with Sanofi S.A.
Our wholly owned, clinical stage pipeline includes targeted protein degraders of Bruton’s tyrosine kinase (BTK), a B-cell signaling protein, and inhibitors of Casitas B-lineage lymphoma proto-oncogene B (CBL-B), an E3 ligase that regulates activation of multiple immune cell types including T cells and NK cells.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFor example: • others may be able to make products that are similar to any drug candidates we may develop or utilize similar technology but that are not covered by the claims of the patents that we own or license now or in the future, or may develop drug candidates for the diseases our drug candidates seek to treat that do not infringe on our intellectual property rights, but which perform better or are more successful than our drug candidates; • drug candidates utilizing issued patents and other intellectual property that we hold may prove to be ineffective for their intended treatment or we may not obtain regulatory approval for such drug candidates; • we, or our current or future license partners or collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or license now or in the future; • we, or our current or future license partners or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or licensed intellectual property rights; • it is possible that our pending owned patent applications or those that we may own or license in the future will not lead to issued patents; • issued patents that we may hold rights to in the future may be held invalid or unenforceable, including as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; and • we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
Biggest changeFor example: • others may be able to make products that are similar to any drug candidates we may develop or utilize similar technology but that are not covered by the claims of the patents that we own or license now or in the future, or may develop drug candidates for the diseases our drug candidates seek to treat that do not infringe on our intellectual property rights, but which perform better or are more successful than our drug candidates; • drug candidates utilizing issued patents and other intellectual property that we hold may prove to be ineffective for their intended treatment or we may not obtain regulatory approval for such drug candidates; • we, or our current or future license partners or collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or license now or in the future; • we, or our current or future license partners or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or licensed intellectual property rights; • it is possible that our pending owned patent applications or those that we may own or license in the future will not lead to issued patents; • we cannot predict the scope of protection of any patent issuing based on our patent applications, including whether the patent applications that we own will result in issued patents with claims directed to our drug candidates or uses thereof in the United States or in other foreign countries; • the claims of any current patents or patent issuing based on patent applications that we own may not provide protection against competitors or any competitive advantages or may be challenged by third parties; • issued patents that we may hold rights to in the future may be held invalid or unenforceable, including as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • there may be significant pressure on the U.S. government and international governmental bodies to limit the scope of patent protection both inside and outside the United States for disease treatments that prove successful, as a matter of public policy regarding worldwide health concerns; • countries other than the United States may have patent laws less favorable to patentees than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop and market competing drug candidates; • we may need to initiate litigation or administrative proceedings to enforce and/or defend our patent rights which will be costly whether we win or lose; • if we enforce and/or defend our patent rights, a court may not hold that our patents are valid, enforceable and infringed; • we may choose not to file a patent application in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent application covering such intellectual property; • we may fail to adequately protect and police our trademarks and trade secrets; and • the patents of others may have an adverse effect on our business, including if others obtain patents claiming subject matter similar to or improving subject matter that is covered by our patent applications.
There is a high failure rate for drug candidates proceeding through clinical trials. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving encouraging results in earlier studies and trials. Any such setbacks in our clinical development could materially harm our business, results of operations, financial condition and prospects.
There is a high failure rate for drug candidates proceeding through clinical trials. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving encouraging results in earlier studies and clinical trials. Any such setbacks in our clinical development could materially harm our business, results of operations, financial condition and prospects.
This patent may be alleged to cover one or more of our targeted protein degrader drug candidates, including our NX-2127 and NX-5948 drug candidates. While we believe that we have valid defenses against any assertion of such patent against us, such defenses may be unsuccessful.
This patent may be alleged to cover one or more of our targeted protein degrader drug candidates, including our NX-5948 and NX-2127 drug candidates. While we believe that we have valid defenses against any assertion of such patent against us, such defenses may be unsuccessful.
Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and other requirements imposed by governmental patent offices, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Obtaining and maintaining patent protection depends on compliance with various procedural, documentary, fee payment and other requirements imposed by governmental patent offices, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
The provision of benefits or advantages to induce or reward improper performance is governed by the national anti-bribery laws of EU Member States, and in respect of the UK, the Bribery Act 2010. Infringement of these laws may result in substantial fines and imprisonment.
The provision of benefits or advantages to induce or reward improper performance is governed by the national anti-bribery laws of EU Member States, and in respect of the UK, the UK Bribery Act 2010 (Bribery Act). Infringement of these laws may result in substantial fines and imprisonment.
In addition, such a breach may require notification to governmental agencies, the media or individuals pursuant to various federal and state data breach notification laws (and other similar non-U.S. laws), subject us to mandatory corrective action, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information.
In addition, such a breach may require notification to governmental agencies, the media or individuals pursuant to various federal and state data privacy and security laws (and other similar non-U.S. laws), subject us to mandatory corrective action, and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information.
Currently, we carry business interruption coverage to mitigate certain potential losses, but this insurance is limited in amount and may not be sufficient in type or amount to cover us against claims related to a cybersecurity breach and related business and system disruptions.
Currently, we carry business interruption coverage and cybersecurity insurance to mitigate certain potential losses, but this insurance is limited in amount and may not be sufficient in type or amount to cover us against claims related to a cybersecurity breach and related business and system disruptions.
If one or more of our drug candidates receives marketing approval and we, or others, discover that the drug is less effective than previously believed or causes undesirable side effects that were not previously identified, a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw their approval of the drug or seize the drug; • we, or any future collaborators, may be required to recall the drug, change the way the drug is administered or conduct additional clinical trials; • additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the particular drug; • we may be subject to fines, injunctions or the imposition of civil or criminal penalties; • regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication; • we, or any future collaborators, may be required to create a Medication Guide outlining the risks of the previously unidentified side effects for distribution to patients; • we, or any future collaborators, could be sued and held liable for harm caused to patients; • the drug may become less competitive in the marketplace; and • our reputation may suffer.
If one or more of our drug candidates receives marketing approval and we, or others, discover that the drug is less effective than previously believed or causes undesirable side effects that were not previously identified, a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw their approval of the drug or seize the drug; • we, or any future collaborators, may be required to recall the drug, change the way the drug is administered or conduct additional clinical trials; • additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the particular drug; • we may be subject to fines, injunctions or the imposition of civil or criminal penalties; • regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication; 79 • we, or any future collaborators, may be required to create a Medication Guide outlining the risks of the previously unidentified side effects for distribution to patients; • we, or any future collaborators, could be sued and held liable for harm caused to patients; • the drug may become less competitive in the marketplace; and • our reputation may suffer.
These provisions: • establish a classified board of directors so that not all members of our board are elected at one time; • permit only our board of directors to establish the number of directors and fill vacancies on our board; • provide that directors may be removed only “for cause” and only with the approval of two-thirds of our stockholders; • require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws, unless such amendments are approved by two-thirds of our board of directors, in which case stockholders can approve by a simple majority; • authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan; • eliminate the ability of our stockholders to call special meetings of stockholders; • prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; • prohibit cumulative voting; and • establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
These provisions: • establish a classified board of directors so that not all members of our board are elected at one time; • permit only our board of directors to establish the number of directors and fill vacancies on our board; • provide that directors may be removed only “for cause” and only with the approval of two-thirds of our stockholders; • require super-majority voting to amend some provisions in our restated certificate of incorporation and amended and restated bylaws, unless such amendments are approved by two-thirds of our board of directors, in which case stockholders can approve by a simple majority; • authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan; • eliminate the ability of our stockholders to call special meetings of stockholders; • prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; • prohibit cumulative voting; and • establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
For example, Sanofi and Gilead have the first right to enforce or defend certain intellectual property rights under the applicable collaboration arrangement with respect to particular licensed programs, and although we may have the right to assume the enforcement and defense of such intellectual property rights if the collaborator does not, our ability to do so may be compromised by their actions. • Disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or drug candidates or that result in costly litigation or arbitration that diverts management attention and resources. • We may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control.
For example, Gilead, Sanofi and Pfizer have the first right to enforce or defend certain intellectual property rights under the applicable collaboration arrangement with respect to particular licensed programs, and although we may have the right to assume the enforcement and defense of such intellectual property rights if the collaborator does not, our ability to do so may be compromised by their actions. • Disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or drug candidates or that result in costly litigation or arbitration that diverts management attention and resources. • We may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control.
Despite the implementation of security measures, our internal information technology systems and infrastructure, and those of our current and any future collaborators, contractors and consultants and other third parties on which we rely, are vulnerable to breach, breakdown or other damage or interruption from service interruptions, system malfunction, computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the Internet (including harmful attachments to emails, ransomware, denial-of-service attacks, social engineering, and other means to affect service reliability and threaten the confidentiality, integrity, and availability of information), persons inside our organization, or persons with access to systems inside our organization.
Despite the implementation of security measures, our internal information technology systems and infrastructure, and those of our current and any future CROs, collaborators, contractors and consultants and other third parties on which we rely, are vulnerable to breach, breakdown or other damage or interruption from service interruptions, system malfunction, computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the Internet (including harmful attachments to emails, ransomware, denial-of-service attacks, social engineering, and other means to affect service reliability and threaten the confidentiality, integrity, and availability of information), persons inside our organization, or persons with access to systems inside our organization.
However, even if a compound is considered to be a new active substance and the innovator is able to gain the period of regulatory data protection and marketing protection, provided that no other IP or regulatory exclusivities applied, another unrelated company could also apply for a marketing authorization and market another competing medicinal product for the same therapeutic indication if such company obtained its own marketing authorization based on a separate marketing authorization application based on a full self-standing scientific data package supporting the application.
However, even if a compound is considered to be a new active substance and the innovator is able to gain the period of regulatory data protection and marketing protection, provided that no other IP or regulatory exclusivities applied, another unrelated company could also apply for a marketing authorization and market another competing medicinal product for the same therapeutic indication if such company obtained its own marketing authorization based on a separate MAA based on a full self-standing scientific data package supporting the application.
We may experience numerous unforeseen events during, or as a result of, clinical trials, that could delay or prevent our ability to receive marketing approval or commercialize our drug candidates, including: • we may experience delays in reaching, or may fail to reach, a consensus with regulators on trial design; • the supply or quality of our drug candidates or other materials necessary to conduct clinical trials of our drug candidates may be insufficient or inadequate, including as a result of delays in the testing, validation, manufacturing and delivery of drug candidates to the clinical sites by us or by third parties with whom we have contracted to perform certain of those functions; • we may experience delays in reaching, or may fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; 55 Table of Content • regulators or institutional review boards (IRBs) may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may receive feedback from regulatory authorities that requires us to modify the design of our clinical trials; • we may face delays under human tissue act legislation and restrictions across various jurisdictions; • we may experience difficulty in designing clinical trials and in selecting endpoints for diseases that have not been well-studied and for which the natural history and course of the disease is poorly understood; • the selection of certain clinical endpoints may require prolonged periods of clinical observation or analysis of the resulting data; • the number of patients required for clinical trials of our drug candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate; • our drug candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs to suspend or terminate the trials; • we may have to suspend or terminate clinical trials of our drug candidates for various reasons, including a partial or full clinical hold based on a finding that our drug candidates have undesirable side effects or other unexpected characteristics, or that the participants are being exposed to unacceptable health risks; • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • regulators or IRBs may require that we or our investigators suspend or terminate clinical trials for various reasons, including noncompliance with regulatory requirements; • clinical trials of our drug candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the cost of clinical trials of our drug candidates may be greater than we anticipate; • the supply or quality of our drug candidates or other materials necessary to conduct clinical trials of our drug candidates may be insufficient or inadequate; • regulators may revise the requirements for approving our drug candidates, or such requirements may not be as we anticipate; • any future collaborators that conduct clinical trials may face any of the above issues and may also conduct clinical trials in ways they view as advantageous to them but that are suboptimal for us; and • disruptions caused by macroeconomic, political and market conditions, including supply chain disruptions, may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical trials.
We may experience numerous unforeseen events during, or as a result of, clinical trials, that could delay or prevent our ability to receive marketing approval or commercialize our drug candidates, including: • we may experience delays in reaching, or may fail to reach, a consensus with regulators on trial design; • the supply or quality of our drug candidates or other materials necessary to conduct clinical trials of our drug candidates may be insufficient or inadequate, including as a result of delays in the testing, validation, manufacturing and delivery of drug candidates to the clinical sites by us or by third parties with whom we have contracted to perform certain of those functions; • we may experience delays in reaching, or may fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites; 51 • regulators or institutional review boards (IRBs) may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may receive feedback from regulatory authorities that requires us to modify the design of our clinical trials; • we may face delays under human tissue act legislation and restrictions across various jurisdictions; • we may experience difficulty in designing clinical trials and in selecting endpoints for diseases that have not been well-studied and for which the natural history and course of the disease is poorly understood; • the selection of certain clinical endpoints may require prolonged periods of clinical observation or analysis of the resulting data; • the number of patients required for clinical trials of our drug candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate; • our drug candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs to suspend or terminate the trials; • we may have to suspend or terminate clinical trials of our drug candidates for various reasons, including a partial or full clinical hold based on a finding that our drug candidates have undesirable side effects or other unexpected characteristics, or that the participants are being exposed to unacceptable health risks; • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • regulators or IRBs may require that we or our investigators suspend or terminate clinical trials for various reasons, including noncompliance with regulatory requirements; • clinical trials of our drug candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the cost of clinical trials of our drug candidates may be greater than we anticipate; • the supply or quality of our drug candidates or other materials necessary to conduct clinical trials of our drug candidates may be insufficient or inadequate; • regulators may revise the requirements for approving our drug candidates, or such requirements may not be as we anticipate; • any future collaborators that conduct clinical trials may face any of the above issues and may also conduct clinical trials in ways they view as advantageous to them but that are suboptimal for us; and • disruptions caused by macroeconomic, political and market conditions, including supply chain disruptions, may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical trials.
For example, the CCPA, which came into effect on January 1, 2020, and was recently amended and expanded by the California Privacy Rights Act (CPRA) as of January 1, 2023, provides California residents expanded privacy rights, including the right to request correction, access, and deletion of their personal information, the right to opt out of certain personal information sharing, and the right to receive detailed information about how their personal information is processed, including by California residents’ employers.
For example, the CCPA, which came into effect on January 1, 2020, and was amended and expanded by the California Privacy Rights Act (CPRA) as of January 1, 2023, provides California residents expanded privacy rights, including the right to request correction, access, and deletion of their personal information, the right to opt out of certain personal information sharing, and the right to receive detailed information about how their personal information is processed, including by California residents’ employers.
Additionally, the CCPA requires companies that process personal information of California residents to make disclosures to consumers about their data collection, use and sharing practices, allow consumers to opt out of certain data sharing with third parties, complete certain audits and assessments when processing higher risk data and provide a private right of action for data breaches, as described above.
Additionally, the CCPA, as amended, requires companies that process personal information of California residents to make disclosures to consumers about their data collection, use and sharing practices, allow consumers to opt out of certain data sharing with third parties, complete certain audits and assessments when processing higher risk data and provide a private right of action for data breaches, as described above.
Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is expensive, time-consuming and difficult to prove and the outcome is unpredictable.
Furthermore, despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is expensive, time-consuming and difficult to prove and the outcome is unpredictable.
In June 2022, we issued and sold 2,000,000 shares of common stock under the Equity Distribution Agreement to Piper Sandler for net proceeds of approximately $19.3 million, after deducting offering commissions and expenses paid by us. As of November 30, 2022, we had $130.0 million of common stock remaining available for sale pursuant to the Equity Distribution Agreement.
In June 2022, we issued and sold 2,000,000 shares of common stock under the Equity Distribution Agreement to Piper Sandler for net proceeds of approximately $19.3 million, after deducting offering commissions and expenses paid by us. As of November 30, 2023, we had $130.0 million of common stock remaining available for sale pursuant to the Equity Distribution Agreement.
This reliance on CMOs, particularly where one CMO is the sole source of the drug substance or finished drug product, or ACT product, may increase the risk that we will not have sufficient quantities of our drug candidates or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.
This reliance on CMOs, particularly where one CMO is the sole source of the drug substance or finished drug product, may increase the risk that we will not have sufficient quantities of our drug candidates or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or those of our third-party vendors and other contractors and consultants, or inappropriate disclosure of confidential, personal or proprietary information, we could incur liability and reputational damage and the further development and commercialization of our drug candidates could be delayed.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or those of our third-party vendors, CROs and other contractors and consultants, or inappropriate disclosure of confidential, personal or proprietary information, we could incur liability and reputational damage and the further development and commercialization of our drug candidates could be delayed.
If we are unable to obtain regulatory and marketing approval for our drug candidates or experience significant delays in our efforts to do so, our business could be substantially harmed. Failure to obtain marketing approval in foreign jurisdictions would prevent our drug candidates from being marketed abroad and may limit our ability to generate revenue from product sales.
If we are unable to obtain regulatory and marketing approval for our drug candidates or experience significant delays in our efforts to do so, our business could be substantially harmed. 77 Failure to obtain marketing approval in foreign jurisdictions would prevent our drug candidates from being marketed abroad and may limit our ability to generate revenue from product sales.
If our drug candidates are approved, we expect that they will be priced at a significant premium over competitive generic products. If we do not achieve our projected development goals in the time frames we expect and announce, the commercialization of our products may be delayed and, as a result, our stock price may decline.
If our drug candidates are approved, we expect that they will be priced at a significant premium over competitive generic products. 56 If we do not achieve our projected development goals in the time frames we expect and announce, the commercialization of our products may be delayed and, as a result, our stock price may decline.
We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance.
We expect our financial condition and results of operations to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance.
Advancing our targeted protein degrader products creates significant challenges for us, including: • educating medical personnel regarding the potential efficacy and safety benefits, as well as the challenges, of incorporating our drug candidates, if approved, into treatment regimens; and • establishing the sales and marketing capabilities to gain market acceptance, if approved.
Advancing our targeted protein degrader drug candidates creates significant challenges for us, including: • educating medical personnel regarding the potential efficacy and safety benefits, as well as the challenges, of incorporating our drug candidates, if approved, into treatment regimens; and • establishing the sales and marketing capabilities to gain market acceptance, if approved.
Collaborations involving our research programs or any drug candidates we may develop, including our collaborations with Sanofi and Gilead, pose risks to us, including: • Collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations with us. • Collaborators may not pursue development and commercialization of any drug candidates we may develop or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition or business combination that diverts resources or creates competing priorities. • Sanofi and Gilead have broad option rights to select up to five targets each for exclusive targeted protein degrader development, so long as not excluded by us under the terms of each collaboration, and may select targets we are considering but have not taken sufficient action to exclude under each collaboration. • Collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a drug candidate, repeat or conduct new clinical trials or require a new formulation of a drug candidate for clinical testing. • Collaborators could develop independently, or develop with third parties, products that compete directly or indirectly with our products or drug candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours. • Collaborators with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products. • Collaborators may not properly obtain, maintain, enforce or defend our intellectual property or proprietary rights or may use our proprietary information in such a way that could jeopardize or invalidate our proprietary information or expose us to potential litigation.
Collaborations involving our research programs or any drug candidates we may develop, including our collaborations with Gilead, Sanofi and Pfizer, pose risks to us, including: • Collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations with us. • Collaborators may not pursue development and commercialization of any drug candidates we may develop or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition or business combination that diverts resources or creates competing priorities. • Gilead and Sanofi have broad option rights to select up to five targets each, and Pfizer has option rights to multiple targets, for exclusive targeted protein degrader development, so long as not excluded by us under the terms of each collaboration, and may select targets we are considering but have not taken sufficient action to exclude under each collaboration. • Collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a drug candidate, repeat or conduct new clinical trials or require a new formulation of a drug candidate for clinical testing. 57 • Collaborators could develop independently, or develop with third parties, products that compete directly or indirectly with our products or drug candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours. • Collaborators with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products. • Collaborators may not properly obtain, maintain, enforce or defend our intellectual property or proprietary rights or may use our proprietary information in such a way that could jeopardize or invalidate our proprietary information or expose us to potential litigation.
Subsequently, for those products that prove to be sufficiently beneficial, if any, we may seek approval potentially as a first-line therapy, but any drug candidates we develop, even if approved, may not be approved for first-line therapy, and, prior to any such approvals, we may have to conduct additional clinical trials.
Subsequently, for those drug candidates that prove to be sufficiently beneficial, if any, we may seek approval potentially as a first-line therapy, but any drug candidates we develop, even if approved, may not be approved for first-line therapy, and, prior to any such approvals, we may have to conduct additional clinical trials.
These milestones may include the commencement or completion of scientific studies and clinical trials and the submission of regulatory filings and may be associated with payments from third-party collaborators such as Sanofi or Gilead. From time to time, we may publicly announce the expected timing of some of these milestones.
These milestones may include the commencement or completion of scientific studies and clinical trials and the submission of regulatory filings and may be associated with payments from third-party collaborators such as Gilead, Sanofi or Pfizer. From time to time, we may publicly announce the expected timing of some of these milestones.
If we license rights to any drug candidates we or our collaborators may develop, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture. We may seek to establish additional collaborations.
If we license rights to any drug candidates we or our collaborators may develop, we may not be able to realize the benefit of such transactions if we are unable to successfully integrate them with our existing operations and company culture. 58 We may seek to establish additional collaborations.
It is also important to note that obtaining a marketing authorization is not sufficient to gain effective access to the market in the EU and in the UK; companies still need to agree to a reimbursement price for the products and in some jurisdictions, such as the UK and Germany, a further positive recommendation from health technology on cost-effectiveness is required for the products to be actually prescribed and reimbursed by the respective national health systems (see “—Governments outside of the United States tend to impose strict price controls, which may adversely affect our revenues from the sales of drugs,” below).
It is also important to note that obtaining a marketing authorization is not sufficient to gain effective access to the market in the EU and in the UK; companies still need to agree to a reimbursement price for the products and in some jurisdictions, such as the UK and Germany, a further positive recommendation from health technology on cost-effectiveness is required for the products to be actually prescribed and reimbursed by the respective national health systems (see “—Governments outside of the United States tend to impose strict price controls, which may adversely affect our revenues from the sales of drugs, if any” below).
If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third parties, our competitive position would be harmed. Intellectual property rights do not necessarily address all potential threats.
If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third parties, our competitive position would be harmed. 73 Intellectual property rights do not necessarily address all potential threats.
If such an event were to occur that causes interruptions in our operations, or those of our third-party vendors and other contractors and consultants, it could result in a material disruption or delay of our product development programs.
If such an event were to occur that causes interruptions in our operations, or those of our third-party vendors, CROs and other contractors and consultants, it could result in a material disruption or delay of our product development programs.
Our drug candidates could be delayed or fail to receive marketing approval for many reasons, including the following: • the FDA may disagree with our interpretation of data from preclinical studies or clinical trials; • the FDA may disagree with the design or implementation of our planned clinical trials; 76 Table of Content • data collected from clinical trials of our drug candidates may not be sufficient to support the submission of an NDA to the FDA or other submissions necessary to obtain marketing approval in the United States; • we may be unable to demonstrate to the satisfaction of the FDA that a drug candidate is safe and effective for its proposed indication; • the results of clinical trials may not meet the level of statistical significance required by the FDA for approval; • we may be unable to demonstrate that our drug candidates’ clinical and other benefits outweigh their safety risks; • the FDA may find deficiencies with or fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and • the approval policies or regulations of the FDA may significantly change in a manner rendering our clinical data insufficient for approval.
Our drug candidates could be delayed or fail to receive marketing approval for many reasons, including the following: • the FDA may disagree with our interpretation of data from preclinical studies or clinical trials; • the FDA may disagree with the design or implementation of our planned clinical trials; • data collected from clinical trials of our drug candidates may not be sufficient to support the submission of an NDA to the FDA or other submissions necessary to obtain marketing approval in the United States; • we may be unable to demonstrate to the satisfaction of the FDA that a drug candidate is safe and effective for its proposed indication; • the results of clinical trials may not meet the level of statistical significance required by the FDA for approval; • we may be unable to demonstrate that our drug candidates’ clinical and other benefits outweigh their safety risks; • the FDA may find deficiencies with or fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and • the approval policies or regulations of the FDA may significantly change in a manner rendering our clinical data insufficient for approval.
Drug candidates that have shown promising results in preclinical studies and early-stage clinical trials may still suffer significant setbacks in subsequent registration clinical trials. Additionally, the outcome of preclinical studies and early-stage clinical trials may not be predictive of the success of later-stage clinical trials.
Drug candidates that have shown promising results in preclinical studies and early-stage clinical trials may still suffer significant setbacks in subsequent larger registration clinical trials. Additionally, the outcome of preclinical studies and early-stage clinical trials may not be predictive of the success of later-stage clinical trials.
If any of our third-party manufacturers encounter such difficulties, our ability to provide supply of our current or future drug candidates for clinical trials, our ability to obtain marketing approval or our ability to provide supply of our drug candidates for patients, if approved, could be delayed or stopped.
If we or any of our third-party manufacturers encounter such difficulties, our ability to provide supply of our current or future drug candidates for clinical trials, our ability to obtain marketing approval or our ability to provide supply of our drug candidates for patients, if approved, could be delayed or stopped.
If we are not able to establish collaborations on commercially reasonable terms, we may have to alter our development and commercialization plans. We plan to continue to selectively pursue collaborations with leading biopharmaceutical companies with development and commercial expertise and capabilities.
If we are not able to establish collaborations on commercially reasonable terms, we may have to alter our development and commercialization plans. We plan to continue to selectively pursue collaborations with leading biopharmaceutical and biotechnology companies with development and commercial expertise and capabilities.
It is possible that if our practices are not consistent or viewed as not consistent with legal and regulatory requirements, including changes in laws, regulations and standards or new interpretations or applications of existing laws, regulations and standards, we may become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, loss of export privileges, or severe criminal or civil sanctions, all of which may have a material and adverse impact on our business, operating results, reputation, and financial condition.
It is possible that if our practices are not consistent or viewed as not consistent with legal and regulatory requirements, including changes in laws, regulations and standards or new interpretations or applications of existing laws, regulations and standards, we may become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, loss of export privileges, or severe criminal or civil sanctions, all of which may have a material and adverse impact on our business, results of operations, reputation, and financial condition.
Any unplanned event, such as earthquake, flood, fire, explosion, extreme weather condition, medical epidemic, power shortage, telecommunication failure or other natural or man-made accident or incident that result in our being unable to fully utilize our facilities, or the manufacturing facilities of our third-party contract manufacturers, may have a material and adverse effect on our ability to operate our business, particularly on a daily basis, and have significant negative consequences on our financial and operating conditions.
Any unplanned event, such as earthquake, flood, fire, explosion, extreme weather condition, medical epidemic, power shortage, telecommunication failure or other natural or man-made accident or incident that results in our being unable to fully utilize our facilities, or the manufacturing facilities of our third-party contract manufacturers, may have a material and adverse effect on our ability to operate our business, particularly on a daily basis, and have significant negative consequences on our financial and operating conditions.
We are subject to data privacy and protection laws and regulations that apply to the collection, transmission, storage and use of personal information, which among other things, impose certain requirements relating to the privacy, security and transmission of personal information.
We are subject to global privacy and data protection laws and regulations that apply to the collection, transmission, storage and use of personal information, which among other things, impose certain requirements relating to the privacy, security and transmission of personal information.
The success of our drug candidates will depend on several factors, including the following: • sufficiency of our financial and other resources; • successful completion of preclinical studies; 53 Table of Content • successful submission of INDs or Clinical Trial Applications and initiation of clinical trials; • successful patient enrollment in, and completion of, clinical trials; • receipt and related terms of marketing approvals from applicable regulatory authorities; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our drug candidates as well as obtaining relevant exclusivity extensions (due to the conduct of pediatric studies); • making arrangements with third-party manufacturers, or establishing manufacturing capabilities, for both clinical and commercial supplies of our drug candidates; • achieving desirable therapeutic properties for our drug candidates’ intended indications; • establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; • acceptance of our products, if and when approved, by patients, the medical community and third-party payors; • obtaining and maintaining third-party coverage and adequate reimbursement; • establishing a continued acceptable safety profile of the products and maintaining such a profile following approval; and • effectively competing with other therapies.
The success of our drug candidates will depend on several factors, including the following: • sufficiency of our financial and other resources; • successful completion of preclinical studies; 49 • successful submission of INDs or Clinical Trial Applications and initiation of clinical trials; • successful patient enrollment in, and completion of, clinical trials; • receipt and related terms of marketing approvals from applicable regulatory authorities; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our drug candidates as well as obtaining relevant exclusivity extensions (due to the conduct of pediatric studies); • making arrangements with third-party manufacturers, or establishing manufacturing capabilities, for both clinical and commercial supplies of our drug candidates; • achieving desirable therapeutic properties for our drug candidates’ intended indications; • establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; • acceptance of our products, if and when approved, by patients, the medical community and third-party payors; • obtaining and maintaining third-party coverage and adequate reimbursement; • establishing a continued acceptable safety profile of our drug candidates and maintaining such a profile following approval; and • effectively competing with other therapies.
Although we may receive potential future milestone payments under our collaborations with Sanofi and Gilead, we do not currently have any committed external source of funds.
Although we may receive potential future milestone payments under our collaborations with Gilead, Sanofi and Pfizer, we do not currently have any committed external source of funds.
There is also the federal Criminal False Claims Act, which is similar to the federal Civil False Claims Act and imposes criminal liability on those that make or present a false, fictitious or fraudulent claim to the federal government; • the federal Civil Monetary Penalties Law, which authorizes the imposition of substantial civil monetary penalties against an entity that engages in activities including, among others (1) knowingly presenting, or causing to be presented, a claim for services not provided as claimed or that is otherwise false or fraudulent in any way; (2) arranging for or contracting with an individual or entity that is excluded from participation in federal health care programs to provide items or services reimbursable by a federal health care program; (3) violations of the federal Anti-Kickback Statute; or (4) failing to report and return a known overpayment; • federal criminal statutes created by the Health Insurance Portability and Accountability Act (HIPAA), which impose criminal liability for, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program, including private insurance plans, or, in any matter involving a healthcare benefit program, for knowingly and willfully making materially false, fictitious or fraudulent statements in connection with the delivery of or payment for health care benefits; • HIPAA, as amended by HITECH, and its implementing regulations, which also imposes obligations, including mandatory contractual terms, on certain types of people and entities with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • the federal Food, Drug, and Cosmetic Act and Public Health Service Act which among other things, strictly regulates drug marketing, prohibits manufacturers from marketing such products for off-label use or misbranding or adulterating their products, and regulates the distribution of samples; • the federal and state laws that require pharmaceutical manufacturers to report certain calculated product pricing metrics to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of product coverage and reimbursement under federal healthcare programs • the federal Physician Payment Sunshine Act, which requires applicable manufacturers of covered drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, among others, to annually track and report payments and other transfers of value provided to U.S.-licensed physicians, teaching hospitals, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse-midwives as well as certain ownership and investment interests held in the manufacturer by physicians and their immediate families; • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, that may apply to our business practices, including sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; • state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and relevant compliance guidance promulgated by the federal government; • state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; 85 Table of Content • other state laws that prohibit various marketing-related activities, such as the provision of certain kinds of gifts or meals; require the reporting of certain pricing information, including information pertaining to and justifying price increases, or prohibit prescription drug price gouging; and certain state and local laws that require the registration of pharmaceutical sales representatives; and • state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
There is also the federal Criminal False Claims Act, which is similar to the federal Civil False Claims Act and imposes criminal liability on those that make or present a false, fictitious or fraudulent claim to the federal government; • the federal Civil Monetary Penalties Law, which authorizes the imposition of substantial civil monetary penalties against an entity that engages in activities including, among others (1) knowingly presenting, or causing to be presented, a claim for services not provided as claimed or that is otherwise false or fraudulent in any way; (2) arranging for or contracting with an individual or entity that is excluded from participation in federal health care programs to provide items or services reimbursable by a federal health care program; (3) violations of the federal Anti-Kickback Statute; or (4) failing to report and return a known overpayment; • federal criminal statutes created by the Health Insurance Portability and Accountability Act (HIPAA), which impose criminal liability for, among other things, knowingly and willfully executing or attempting to execute a scheme to defraud any healthcare benefit program, including private insurance plans, or, in any matter involving a healthcare benefit program, for knowingly and willfully making materially false, fictitious or fraudulent statements in connection with the delivery of or payment for health care benefits; • HIPAA, as amended by the Health Information Technology for Economic Clinical Health Act, and its implementing regulations, which also imposes obligations, including mandatory contractual terms, on certain types of people and entities with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • the federal Food, Drug, and Cosmetic Act and Public Health Service Act which among other things, strictly regulates drug marketing, prohibits manufacturers from marketing such products for off-label use or misbranding or adulterating their products, and regulates the distribution of samples; • the federal and state laws that require pharmaceutical manufacturers to report certain calculated product pricing metrics to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of product coverage and reimbursement under federal healthcare programs; • the federal Physician Payment Sunshine Act, which requires applicable manufacturers of covered drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, among others, to annually track and report payments and other transfers of value provided to U.S.-licensed physicians, teaching hospitals, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse-midwives, as well as certain ownership and investment interests held in the manufacturer by physicians and their immediate families; 84 • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, that may apply to our business practices, including sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; • state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and relevant compliance guidance promulgated by the federal government; • state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; • state and local laws that prohibit various marketing-related activities, such as the provision of certain kinds of gifts or meals; require the reporting of certain pricing information, including information pertaining to and justifying price increases, or prohibit prescription drug price gouging; impose payment caps on certain pharmaceutical products deemed by the state to be “high cost”; and require the registration of pharmaceutical sales representatives; and • state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we conduct our Phase 1 clinical trials of NX-2127, NX-1607, NX-5948 and DeTIL-0255, grow our pipeline of drug candidates, expand the breadth of our DELigase platform, continue research and development and initiate additional clinical trials of and potentially seek marketing approval for our lead programs and other drug candidates.
We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we conduct our Phase 1 clinical trials of NX-5948, NX-2127 and NX-1607, grow our pipeline of drug candidates, expand the breadth of our DELigase platform, continue research and development and initiate additional clinical trials of and potentially seek marketing approval for our lead programs and other drug candidates.
We anticipate that our operating expenses and capital expenditure requirements will increase substantially if and as we: • increase enrollment in and further development of our Phase 1 clinical trials of our drug candidates NX-2127, NX-1607, NX-5948 and DeTIL-0255; • submit investigational new drug applications (INDs) and initiate clinical trials of our other drug candidates; • enter advanced clinical development and scale up external manufacturing capabilities to supply clinical trials; • expand the capabilities of our DELigase platform and apply our DELigase platform to advance additional drug candidates into preclinical and clinical development; • conduct process development for manufacturing of our DeTIL cell therapy products; • seek marketing approvals for any drug candidates that successfully complete clinical trials; • prepare for negotiations with the pricing authorities and submission to the health technology appraisal (HTA) bodies; • ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize any products for which we may obtain marketing approval; • expand, maintain and protect our intellectual property portfolio; • hire additional clinical, regulatory, manufacturing, quality assurance and scientific personnel; and • add operational, financial and management information systems and personnel to support our research, product development and future commercialization efforts and support our operations as a public company.
We anticipate that our operating expenses and capital expenditure requirements will increase substantially if and as we: • increase enrollment in and further development of our Phase 1 clinical trials of our drug candidates NX-5948, NX-2127 and NX-1607; • submit investigational new drug applications (INDs) and initiate clinical trials of our other drug candidates; • enter advanced clinical development and scale up external manufacturing capabilities to supply clinical trials; • expand the capabilities of our DELigase platform and apply our DELigase platform to advance additional drug candidates into preclinical and clinical development; • conduct process development for manufacturing of our drug candidates; • seek marketing approvals for any drug candidates that successfully complete clinical trials; • prepare for negotiations with the pricing authorities and submission to the health technology appraisal (HTA) bodies; • ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize any drug candidates for which we may obtain marketing approval; • expand, maintain and protect our intellectual property portfolio; • hire additional clinical, regulatory, manufacturing, quality assurance and scientific personnel; and • add operational, financial and management information systems and personnel to support our research, product development and future commercialization efforts and support our operations as a public company.
There is a limited safety data set for the effects of NX-2127, NX-1607, NX-5948 and DeTIL‑0255 in animals and we only recently have begun to test the safety of our drug candidates in humans. There can be no assurance that our current drug candidates or any future drug candidate will not cause undesirable side effects.
There is a limited safety data set for the effects of NX-5948, NX-2127 and NX-1607 in animals and we only recently have begun to test the safety of our drug candidates in humans. There can be no assurance that our current drug candidates or any future drug candidate will not cause undesirable side effects.
Our third-party manufacturers may encounter difficulties in production, including contamination, equipment failure, improper installation or operation of equipment, vendor or operator error, inconsistency in yields, variability in product characteristics and difficulties in scaling the production process. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions.
We or any of our third-party manufacturers may encounter difficulties in production, including contamination, equipment failure, improper installation or operation of equipment, vendor or operator error, inconsistency in yields, variability in product characteristics and difficulties in scaling the production process. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions.
Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could prevent us from obtaining the orphan designation in the European Union (EU) and/or in the United Kingdom (UK) and result in our competitors establishing a strong market position before we are able to enter the market.
Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could prevent us from obtaining the orphan designation in the European Union (EU) and/or in the UK and result in our competitors establishing a strong market position before we are able to enter the market.
We rely on third-party contract research organizations (CROs) to conduct our Phase 1 clinical trial programs for NX-2127, NX-1607, NX-5948 and DeTIL-0255 and we will rely on third-party CROs to conduct any clinical trials for other drug candidates. Agreements with these CROs might terminate for a variety of reasons, including for such CRO’s failure to perform.
We rely on third-party contract research organizations (CROs) to conduct our Phase 1 clinical trial programs for NX-5948, NX-2127 and NX-1607 and we will rely on third-party CROs to conduct any clinical trials for other drug candidates. Agreements with these CROs might terminate for a variety of reasons, including for such CRO’s failure to perform.
Any failure to develop or maintain effective internal control over financial reporting or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods, which could cause the price of our common stock to decline.
Any failure to develop or maintain effective internal control over financial reporting or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods, which could cause the price of our common stock to decline.
If we are required to conduct additional clinical trials or other testing of our drug candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our drug candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may: • be delayed in obtaining marketing approval for our drug candidates; • not obtain marketing approval at all; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; • be subject to additional post-marketing testing requirements or changes in the way the product is administered; or • have the product removed from the market after obtaining marketing approval. 56 Table of Content Our product development costs also will increase if we experience delays in preclinical studies or clinical trials or in obtaining marketing approvals.
If we are required to conduct additional clinical trials or other testing of our drug candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our drug candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may: • be delayed in obtaining marketing approval for our drug candidates; • not obtain marketing approval at all; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; • be subject to additional post-marketing testing requirements or changes in the way the product is administered; or • have the product removed from the market after obtaining marketing approval. 52 Our product development costs also will increase if we experience delays in preclinical studies or clinical trials or in obtaining marketing approvals.
This means that some regulatory activities, such as batch testing and Qualified Person certification, conducted in Great Britain are no longer recognized in the EU; although the UK accepts the batch testing data carried out in many third countries with recognized equivalent high standards to avoid delays and supply disruption due to re-testing.
This means that some regulatory activities, such as batch testing and Qualified Person certification, conducted in the UK are no longer recognized in the EU; although the UK accepts the batch testing data carried out in many third countries with recognized equivalent high standards to avoid delays and supply disruption due to re-testing.
Patient enrollment is affected by other factors including: • the severity of the disease under investigation; • the size of the patient population and process for identifying patients; • the availability and efficacy of approved medications for the disease under investigation; • the eligibility criteria for the trial in question; • the perceived risks and benefits of the drug candidates under study; • the efforts to facilitate timely enrollment in clinical trials; • physicians’ attitudes and practices with respect to clinical trial enrollment; • the burden on patients due to inconvenient procedures; • the ability to monitor patients adequately during and after treatment; and • the proximity and availability of clinical trial sites for prospective patients. 58 Table of Content Our inability to enroll a sufficient number of patients for our current or planned clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether.
Patient enrollment is affected by other factors including: • the severity of the disease under investigation; • the size of the patient population and process for identifying patients; • the availability and efficacy of approved medications for the disease under investigation; • the eligibility criteria for the trial in question; • the perceived risks and benefits of the drug candidates under study; • the efforts to facilitate timely enrollment in clinical trials; • physicians’ attitudes and practices with respect to clinical trial enrollment; • the burden on patients due to inconvenient procedures; • the ability to monitor patients adequately during and after treatment; and • the proximity and availability of clinical trial sites for prospective patients. 54 Our inability to enroll a sufficient number of patients for our current or planned clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether.
Moreover, the FDA and other foreign regulators such as the EMA and the MHRA require compliance with standards, commonly referred to as GCPs, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected.
Moreover, the FDA and other foreign regulators such as the EMA and the MHRA require compliance with good clinical practice standards, commonly referred to as GCPs, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected.
Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs, may take into account comparative cost-effectiveness, in particular in European jurisdictions, and may be incorporated into existing payments for other services.
Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs, may take into account comparative cost-effectiveness, particularly in European jurisdictions, and may be incorporated into existing payments for other services.
Any business interruption could have a material and adverse effect on our business, financial condition, results of operations and prospects. Risks Related to Our Common Stock Our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.
Any business interruption could have a material and adverse effect on our business, financial condition, results of operations and prospects. 96 Risks Related to Our Common Stock Our quarterly results of operations may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.
Such challenges may result in loss of patent rights, exclusivity or freedom to operate, or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and drug candidates, or limit the duration of the patent protection of our technology and drug candidates.
Such challenges may result in loss of patent rights or exclusivity, or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and drug candidates, or limit the duration of the patent protection of our technology and drug candidates.
We rely on and expect to continue to rely on third-party contract manufacturing organizations (CMOs) for both drug substance and finished drug product, and ACT product.
We rely on and expect to continue to rely on third-party contract manufacturing organizations (CMOs) for both drug substance and finished drug product.
Wolff or other members of our senior leadership team could impede, delay or prevent the successful development of our product pipeline, completion of our current and planned clinical trials, commercialization of our products or in-licensing or acquisition of new assets, and could negatively impact our ability to successfully implement our business plan.
Hansen or other members of our senior leadership team could impede, delay or prevent the successful development of our product pipeline, completion of our current and planned clinical trials, commercialization of our products or in-licensing or acquisition of new assets, and could negatively impact our ability to successfully implement our business plan.
Sales of substantial numbers of such shares in the public market could adversely affect the market price of the common stock, causing our stock price to decline. There is no public market for our pre-funded warrants. There is no public trading market for our pre-funded warrants issued in July 2022, and we do not expect a market to develop.
Sales of substantial numbers of such shares in the public market could adversely affect the market price of the common stock, causing our stock price to decline. There is no public market for our pre-funded warrants. There is no public trading market for our pre-funded warrants issued, and we do not expect a market to develop.
If any of the following risks occur, our business, financial condition, operating results, and future prospects could be materially and adversely affected. In that event, the trading price of our common stock could decline, and you could lose part or all of your investment.
If any of the following risks occur, our business, financial condition, results of operations, and future prospects could be materially and adversely affected. In that event, the trading price of our common stock could decline, and you could lose part or all of your investment.
Our lead drug candidates, NX-2127, NX-1607, NX-5948 and DeTIL‑0255, are in the early stages of clinical development. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.
Our lead drug candidates, NX-5948, NX-2127 and NX-1607, are in the early stages of clinical development. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years.
Both NX-2127 and NX-5948 degrade BTK with mutations that confer resistance to currently marketed BTK inhibitors, and we believe that preliminary data from our ongoing Phase 1 trial of NX-2127 may provide evidence of clinical benefit to patients with such resistance mutations.
Both NX-5948 and NX-2127 degrade BTK with mutations that confer resistance to currently marketed BTK inhibitors, and we believe that preliminary data from our ongoing Phase 1 trials of NX-5948 and NX-2127 may provide evidence of clinical benefit to patients with such resistance mutations.
We maintain and process, and our third-party vendors, collaborators, contractors and consultants maintain and process on our behalf, a large quantity of sensitive information, including confidential business, personal and patient health information in connection with our preclinical studies and clinical trials and from our employees.
We maintain and process, and our third-party vendors, collaborators, contractors and consultants maintain and process on our behalf, a large quantity of proprietary and sensitive information, including confidential business information, personal and patient health information in connection with our preclinical studies and clinical trials and personal information of our employees.
Misconduct by these parties could include: • intentional, reckless or negligent conduct or disclosure to us of unauthorized activities that violate the regulations of the FDA or similar foreign regulatory authorities; 89 Table of Content • healthcare fraud and abuse in violation of U.S. and foreign laws and regulations; • violations of U.S. federal securities laws relating to trading in our common stock; and • failures to report financial information or data accurately.
Misconduct by these parties could include: • intentional, reckless or negligent conduct or disclosure to us of unauthorized activities that violate the regulations of the FDA or similar foreign regulatory authorities; • healthcare fraud and abuse in violation of U.S. and foreign laws and regulations; • violations of U.S. federal securities laws relating to trading in our common stock; and • failures to report financial information or data accurately.
In addition, we filed for and received an Innovation Passport designation for NX-1607 in the UK in February 2022. The Innovation Passport is the mandated entry point to the Innovative Licensing and Access Pathway (ILAP) in the UK to facilitate approval of and market access to an innovative medicine.
In addition, we filed for and received an Innovation Passport designation for NX-1607 in the United Kingdom (UK) in February 2022. The Innovation Passport is the mandated entry point to the Innovative Licensing and Access Pathway (ILAP) in the UK to facilitate approval of and market access to an innovative medicine.
To date, there have been several recent U.S. congressional inquiries and proposed and enacted state and federal legislation and regulation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient support programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.
To date, there have been several U.S. congressional inquiries and proposed and enacted state and federal legislation and regulations designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient support programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.
Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. 87 Table of Content Governments outside of the United States tend to impose strict price controls, which may adversely affect our revenues from the sales of drugs, if any.
Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. Governments outside of the United States tend to impose strict price controls, which may adversely affect our revenues from the sales of drugs, if any.
Alternatively, if a court were to find the choice of forum provision contained in our restated certificate of incorporation and/or restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our restated certificate of incorporation and/or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.
We will continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million as of the prior May 31 or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million as of the prior May 31.
We will continue to be a smaller reporting company so long as either (i) the market value of our stock held by non-affiliates is less than $250.0 million as of the prior May 31 or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million as of the prior May 31.
Periodic maintenance, renewal and annuity fees and various other government fees on any issued patent are due to be paid to the USPTO and patent offices in foreign countries in several stages over the lifetime of the patent.
Periodic maintenance, renewal and annuity fees and various other government fees on any issued patent and/or patent application are due to be paid to the USPTO and patent offices in foreign countries in several stages over the lifetime of the patent and/or patent application.
Our operations are subject to anti-corruption laws, including the Foreign Corrupt Practices Act (FCPA), the UK Bribery Act 2010 (Bribery Act) and other anticorruption laws that apply in countries where we do business and may do business in the future.
Our operations are subject to anti-corruption laws, including the Foreign Corrupt Practices Act (FCPA), the Bribery Act and other anticorruption laws that apply in countries where we do business and may do business in the future.
If we are unable to obtain these chemical or biological intermediates or NHPs in sufficient quantity and in a timely manner due to disruptions in the global supply chain caused by macroeconomic events and conditions, including the COVID-19 pandemic, the development, testing and clinical trials of that drug candidate may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.
If we are unable to obtain these chemical or biological intermediates or NHPs in sufficient quantity and in a timely manner due to disruptions in the global supply chain caused by macroeconomic events and conditions, the development, testing and clinical trials of that drug candidate may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.
For example, even if successful, the results of our initial clinical trials for NX-2127, NX-1607, NX-5948 and DeTIL-0255 may not be predictive of the results of further clinical trials of these drug candidates or any of our other drug candidates.
For example, even if successful, the results of our initial clinical trials for NX-5948, NX-2127 and NX-1607 may not be predictive of the results of further clinical trials of these drug candidates or any of our other drug candidates.
If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our common stock to fluctuate substantially.
If our quarterly results of operations fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Furthermore, any quarterly fluctuations in our results of operations may, in turn, cause the price of our common stock to fluctuate substantially.
Therefore, our ability to identify and enroll eligible patients for our NX-2127, NX-1607, NX-5948 and DeTIL-0255 clinical trials may be limited or may result in slower enrollment than we anticipate.
Therefore, our ability to identify and enroll eligible patients for our NX-5948, NX-2127 and NX-1607 clinical trials may be limited or may result in slower enrollment than we anticipate.
In the EU, pursuant to Regulation 1901/2006, and in the UK pursuant to the Human Medicines Regulations 2012 (as amended), marketing authorization applications must include pediatric data based on pediatric investigation plans agreed with the EMA if the MAA concerns (i) a new active substance, or (ii) a new indication, pharmacological form, or route of administration (where the product is protected by a supplementary protection certificate or a patent qualifying for a supplementary certificate).
In the EU, pursuant to Regulation 1901/2006, and in the UK pursuant to the Human Medicines Regulations 2012 (as amended), MAAs must include pediatric data based on pediatric investigation plans agreed with the EMA if the MAA concerns (i) a new active substance, or (ii) a new indication, pharmacological form, or route of administration (where the product is protected by a supplementary protection certificate or a patent qualifying for a supplementary certificate).
We seek to protect our trade secrets, proprietary technology and processes, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors and other third parties.
Trade secrets can be difficult to protect. We seek to protect our trade secrets, proprietary technology and processes, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors and other third parties.
We do not know whether any clinical trials we may conduct will demonstrate consistent or adequate safety and efficacy sufficient to obtain marketing approval to market our drug candidates.
We do not know whether any clinical trials we may conduct will demonstrate consistent or adequate safety and efficacy sufficient to obtain marketing approval for our drug candidates.
Our current and planned clinical trials for our drug candidates NX-2127, NX-1607, NX-5948 and DeTIL-0255 are and will be with patients who have received one or more prior treatments.
Our current and planned clinical trials for our drug candidates NX-5948, NX-2127 and NX-1607 are and will be with patients who have received one or more prior treatments.
Our inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.
Our inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products that we develop could have a material adverse effect on our results of operations, our ability to raise capital needed to commercialize products and our overall financial condition.
During these two years of marketing protection, no generic or biosimilar medicinal product that relies upon the reference medicinal product’s dossier may be placed on the EU market, but a generic or biosimilar marketing authorization application can be submitted to the competent regulatory authorities in the EU Member States during this time.
During these two years of marketing protection, no generic or biosimilar medicinal product that relies upon the reference medicinal product’s dossier may be placed on the EU market, but a generic or biosimilar MAA can be submitted to the competent regulatory authorities in the EU Member States during this time.
For example, each of Sanofi and Gilead can terminate its agreement with us in its entirety or with respect to a specific target for convenience upon written notice or in connection with a material breach of the agreement by us that remains uncured for a specified period of time. 62 Table of Content • Collaboration agreements may not lead to development or commercialization of drug candidates in the most efficient manner, or at all.
For example, each of Gilead, Sanofi and Pfizer can terminate its agreement with us in its entirety or with respect to a specific target for convenience upon written notice or in connection with a material breach of the agreement by us that remains uncured for a specified period of time. • Collaboration agreements may not lead to development or commercialization of drug candidates in the most efficient manner, or at all.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn March 2022, we entered into a new lease for a total of 46,434 square feet of office and laboratory space in The Woodlands, Texas that expires in February 2035. We believe that our existing facilities are suitable and adequate for our current requirements and operations.
Biggest changeWe believe that our existing facilities are suitable and adequate for our current requirements and operations.
The lease for 19,320 square feet of space expires in June 2024, and the lease for 57,902 square feet of space expires in April 2025. Additionally, we have a sublease for a total of 2,500 square feet of laboratory space in Pittsburgh, Pennsylvania that expires in May 2023.
The lease for 19,320 square feet of space expires in June 2024, and the lease for 57,902 square feet of space expires in April 2025. Additionally, we lease a total of 50,094 square feet of office and laboratory space in The Woodlands, Texas that expires in February 2035.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm and other factors. Item 4. Mine Safety Disclosures Not applicable. 104 Table of Content PART II
Biggest changeRegardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity and reputational harm and other factors. Item 4. Mine Safety Disclosures Not applicable. 103 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock Price Performance Graph As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide this information.
Biggest changeStock Price Performance Graph As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide this information. Use of Proceeds from Registered Securities None.
Securities Authorized for Issuance under Equity Compensation Plans Information regarding our equity compensation plans and the securities authorized for issuance thereunder is set forth in Part III, Item 12 of this Annual Report on Form 10-K. Unregistered Sales of Equity Securities None. Purchases of Equity Securities by Issuers and Affiliated Purchasers None. Item 6. [Reserved] 105 Table of Content
Securities Authorized for Issuance under Equity Compensation Plans Information regarding our equity compensation plans and the securities authorized for issuance thereunder is set forth in Part III, Item 12 of this Annual Report on Form 10-K. Unregistered Sales of Equity Securities None. Purchases of Equity Securities by Issuers and Affiliated Purchasers None. Item 6. [Reserved] 104
Holders of Record As of close of business on January 31, 2023, there were 16 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Holders of Record As of close of business on February 5, 2024, there were 16 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Removed
Use of Proceeds from Registered Securities On July 23, 2020, our registration statement on Form S-1, as amended (File No. 333-239651), was declared effective by the SEC in connection with the initial public offering (IPO) of our common stock.
Removed
There has been no material change in the planned use of proceeds from our IPO as described in the final prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act on July 24, 2020.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIn addition, we are eligible to receive tiered royalties from mid-single digit to low tens percentages on annual net sales from any commercial products directed to the optioned collaboration targets, subject to certain reductions and excluding sales in the United States of any products for which we exercise our option to co-develop and co-promote, for which we share profits and losses evenly.
Biggest changeWe also are eligible to receive mid-single digit to low tens percentage tiered royalties on annual net sales from any commercial products directed to the optioned collaboration targets, subject to certain reductions and excluding sales in the United States of any products for which we exercise our option to co-develop and co-promote, for which the parties share profits and losses evenly. 106 Subject to earlier expiration in certain circumstances, the Gilead Agreement expires on a licensed product-by-licensed product and country-by-country basis upon the later of (1) the expiration of the last to expire patent with a valid claim covering the applicable licensed product in the applicable country, (2) the expiration of any regulatory exclusivity for the applicable licensed product in the applicable country or (3) ten years after the first commercial sale of the applicable licensed product in the applicable country covered by the Gilead Agreement, provided that the term for any profit-shared licensed product in the United States will expire upon the expiration or termination of the applicable profit-share term as set forth in an applicable profit-share agreement to be negotiated upon our exercise of our option to co-develop and co-promote such licensed product.
In August 2019 and September 2022, we entered into the First and Second Amendment, respectively, to the Gilead Agreement to clarify certain language of the Gilead Agreement. These amendments had no impact on revenue recognition.
In August 2019 and September 2022, we entered into the First Amendment and the Second Amendment, respectively, to the Gilead Agreement to clarify certain language of the Gilead Agreement. These amendments had no impact on revenue recognition.
For those programs that we exercise our option to co-develop and co-promote, we and Gilead will split U.S. development costs as well as U.S. profits and losses evenly, and we will be eligible to receive royalties on ex-U.S. net sales and reduced milestone payments.
For those programs that we exercise our option to co-develop and co-promote, we and Gilead will split U.S. development costs as well as U.S. profits and losses evenly, and we will be eligible to receive royalties on net ex-U.S. sales and reduced milestone payments.
Actual results could differ significantly from those estimates. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.
Actual results could differ significantly from those estimates. We believe that the following discussion addresses our most critical accounting policies and estimates, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.
Investing activities Net cash provided by investing activities was $27.2 million for the year ended November 30, 2022 and consisted of the maturity of marketable securities of $278.8 million, offset by the purchase of marketable securities of $239.4 million and purchases of property and equipment of $12.2 million.
Net cash provided by investing activities was $27.2 million for the year ended November 30, 2022, and consisted of the maturity of marketable securities of $278.8 million, offset by the purchase of marketable securities of $239.4 million and purchases of property and equipment of $12.2 million.
Financing activities Net cash provided by financing activities was $117.2 million for the year ended November 30, 2022 and consisted primarily of net proceeds from the issuance of pre-funded warrants in the RDOs of $94.8 million and from the issuance of common stock in the June 2022 ATM Offering of $19.4 million.
Net cash provided by financing activities was $117.2 million for the year ended November 30, 2022, and consisted primarily of net proceeds from the issuance of pre-funded warrants in the RDOs of $94.8 million and from the issuance of common stock in the June 2022 ATM Offering of $19.4 million.
For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring proportional performance for purposes of recognizing revenue from non-refundable, upfront payments.
For research licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring proportional performance for purposes of recognizing revenue from non-refundable, upfront payments.
This may include expenses related to compliance with the rules and regulations of the Securities and Exchange Commission (SEC) and listing standards applicable to companies listed on a national securities exchange, additional insurance, investor relations activities and other administrative and professional services. We also expect our intellectual property expenses to increase as we expand our intellectual property portfolio.
This may include expenses related to compliance with the rules and regulations of the Securities and Exchange Commission and listing standards applicable to companies listed on a national securities exchange, additional insurance, investor relations activities and other administrative and professional services. We also expect our intellectual property expenses to increase as we expand our intellectual property portfolio.
We have funded our operations to date primarily from proceeds received under collaboration and license agreements with Sanofi, Gilead and Celgene Corporation and the issuance and sale of common stock and redeemable convertible preferred stock and of pre-funded warrants.
We have funded our operations to date primarily from proceeds received under collaboration and license agreements with Celgene Corporation, Gilead, Sanofi and Pfizer and the issuance and sale of common stock, redeemable convertible preferred stock and pre-funded warrants.
Collaboration and License Agreements Sanofi Collaboration and License Agreement In December 2019, we entered into a strategic collaboration with Genzyme Corporation, a subsidiary of Sanofi, which became effective in January 2020 (as subsequently expanded and amended, the Sanofi Agreement), to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with challenging diseases in multiple therapeutic areas using our DELigase platform to identify small molecules designed to induce degradation of three specified initial drug targets.
Sanofi In December 2019, we entered into a strategic collaboration with Genzyme Corporation, a subsidiary of Sanofi, which became effective in January 2020 (as subsequently expanded and amended, the Sanofi Agreement), to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with challenging diseases in multiple therapeutic areas using our DELigase platform to identify small molecules designed to induce degradation of three specified initial drug targets.
These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations. 108 Table of Content We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our drug candidates, which we expect will take a number of years, if ever.
These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations. 108 We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our drug candidates, which we expect will take a number of years, if ever.
Because of the numerous risks and uncertainties associated with the development and commercialization of our drug candidates and the extent to which we may enter into additional collaborations with third parties to participate in their development and commercialization, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated pre-clinical studies and clinical trials.
Because of the numerous risks and uncertainties associated with the development and commercialization of our drug candidates and the extent to which we may enter into additional collaborations with third parties to participate in their development and commercialization, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated preclinical studies and clinical trials.
We expect that our existing cash, cash equivalents and marketable securities are sufficient to meet our cash requirements and continue operating activities, including the clinical trials of our drug candidates NX‑2127, NX‑1607, NX‑5948 and DeTIL‑0255 and the expansion of our intellectual property portfolio and infrastructure, for at least the next 12 months.
We expect that our existing cash, cash equivalents and marketable securities are sufficient to meet our cash requirements and continue operating activities, including the clinical trials of our drug candidates NX-5948, NX-2127 and NX-1607 and the expansion of our intellectual property portfolio and infrastructure, for at least the next 12 months.
We enter into research and collaboration agreements under which we may obtain upfront payments, milestone payments, royalty payments and other fees.
We enter into collaboration agreements under which we may obtain upfront payments, milestone payments, royalty payments and other fees.
As of November 30, 2022, we are eligible to receive up to approximately $2.3 billion in total additional payments based on certain additional fees, payments and the successful completion of certain preclinical, clinical, development and sales milestones.
As of November 30, 2023, we are eligible to receive up to approximately $2.3 billion in total additional payments based on certain additional fees, payments and the successful completion of certain preclinical, clinical, development and sales milestones.
As of November 30, 2022, we had $130.0 million of common stock remaining available for sale under the Equity Distribution Agreement.
As of November 30, 2023, we had $130.0 million of common stock remaining available for sale under the Equity Distribution Agreement.
In July 2022, we entered into the Third Amendment to the Sanofi Agreement to further extend the substitution deadline on certain targets. The extensions of the substitution deadline had no impact on revenue recognition.
In December 2021, we entered into the Second Amendment to the Sanofi Agreement to extend the substitution deadline on certain targets. In July 2022, we entered into the Third Amendment to the Sanofi Agreement to further extend the substitution deadline on certain targets. The extensions of the substitution deadline had no impact on revenue recognition.
Funding Requirements As of November 30, 2022, our operations have primarily been funded through the net proceeds from equity offerings of $650.5 million and proceeds from collaborations of $312.5 million. We do not have any products approved for sale, and we have not generated any revenue from product sales.
Funding Requirements As of November 30, 2023, our operations have primarily been funded through the net proceeds from equity offerings of $650.5 million and proceeds from collaborations of $409.0 million. We do not have any products approved for sale, and we have not generated any revenue from product sales.
As of November 30, 2022, we had $373.0 million in cash, cash equivalents and marketable securities. We expect that our existing cash, cash equivalents and marketable securities are sufficient to fund our operations for at least the next 12 months. See the section titled “—Liquidity and Capital Resources” for more information.
As of November 30, 2023, we had $295.3 million in cash, cash equivalents and marketable securities. We expect that our existing cash, cash equivalents and marketable securities are sufficient to fund our operations for at least the next 12 months. See the section titled “—Liquidity and Capital Resources” for more information.
There was an increase in compensation and related personnel costs and in non-cash stock-based compensation expense of $25.8 million and $8.8 million, respectively, that were primarily attributable to higher headcount. The increase in non-cash stock-based compensation expense was also attributable to the issuance of restricted stock units (RSUs) and incentive stock options.
There was an increase in compensation and related personnel costs and in non-cash stock-based compensation expense that were primarily attributable to higher headcount and the issuance of restricted stock units (RSUs) and incentive stock options.
A holder of the pre-funded warrants may increase or decrease this percentage not in excess of 19.99% by providing us at least 61 days’ prior notice. As of November 30, 2022, all of the pre-funded warrants remained available for exercise.
A holder of the pre-funded warrants may increase or decrease this percentage not in excess of 19.99% by providing us at least 61 days’ prior notice. As of November 30, 2023, a total of 6,097,560 pre-funded warrants remained available for exercise.
Overview We are a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of small molecule and cell therapies based on the modulation of cellular protein levels as a novel treatment approach for cancer and other challenging diseases.
Overview We are a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of innovative small molecules and antibody therapies based on the modulation of cellular protein levels as a novel treatment approach for cancer, inflammatory conditions and other challenging diseases.
Under the most likely amount method, an entity considers the single most likely amount in a range of possible consideration amounts. If it is probable that a significant revenue reversal would not occur, the associated milestone amount is included in the transaction price.
We use the most likely amount method for research, development and regulatory milestone payments. Under the most likely amount method, an entity considers the single most likely amount in a range of possible consideration amounts. If it is probable that a significant revenue reversal would not occur, the associated milestone amount is included in the transaction price.
In March 2021, we completed a follow-on offering and issued 5,175,000 shares of our common stock (including the exercise by the underwriters of their option to purchase an additional 675,000 shares of common stock) at a price to the public of $31.00 per share for net proceeds of $150.2 million, after deducting underwriting discounts and commissions of $9.6 million and expenses of $0.6 million. 113 Table of Content In August 2021, we entered into an Equity Distribution Agreement with Piper Sandler & Co.
In March 2021, we completed a follow-on offering and issued 5,175,000 shares of our common stock (including the exercise by the underwriters of their option to purchase an additional 675,000 shares of common stock) at a price to the public of $31.00 per share for net proceeds of $150.2 million, after deducting underwriting discounts and commissions of $9.6 million and expenses of $0.6 million.
For drug targets that are subject to the collaboration, we are obligated to use commercially reasonable efforts to undertake a research program in accordance with a research plan agreed to by the parties and established on a target-by-target basis.
Over time, Gilead may elect to replace the initial drug targets with other drug targets. For drug targets that are subject to the collaboration, we are obligated to use commercially reasonable efforts to undertake a research program in accordance with a research plan agreed to by the parties and established on a target-by-target basis.
Targeted Protein Degradation Our portfolio of targeted protein degraders of BTK, a B‑cell signaling protein, comprises NX‑2127, an orally bioavailable BTK degrader for the treatment of relapsed or refractory B‑cell malignancies, and NX‑5948, an orally bioavailable BTK degrader for the treatment of relapsed or refractory B-cell malignancies and potentially autoimmune diseases.
Targeted Protein Degradation Our portfolio of targeted protein degraders of BTK, a B‑cell signaling protein, comprises NX‑5948, an orally bioavailable BTK degrader for the treatment of relapsed or refractory B-cell malignancies and potentially autoimmune diseases, and NX‑2127, an orally bioavailable BTK degrader that also degrades cereblon neosubstrates IKZF1 (Ikaros) and IKZF3 (Aiolos) for the treatment of relapsed or refractory B‑cell malignancies.
Our wholly owned, clinical stage pipeline includes targeted protein degraders of Bruton’s tyrosine kinase (BTK), a B-cell signaling protein, and inhibitors of Casitas B-lineage lymphoma proto-oncogene B (CBL-B), an E3 ligase that regulates activation of multiple immune cell types including T cells and NK cells. Our partnered drug discovery pipeline consists of ten programs under collaboration agreements with Sanofi S.A.
Our wholly owned, clinical stage pipeline includes targeted protein degraders of Bruton’s tyrosine kinase (BTK), a B-cell signaling protein, and inhibitors of Casitas B-lineage lymphoma proto-oncogene B (CBL-B), an E3 ligase that regulates activation of multiple immune cell types including T cells and NK cells.
NX-5948: We are currently enrolling patients in the Phase 1a portion of a Phase 1a/1b dose-escalation and cohort expansion study in patients with relapsed or refractory B-cell malignancies.
NX-5948: We are currently treating patients in a Phase 1a/1b dose-escalation and cohort expansion study in patients with relapsed or refractory B-cell malignancies. In January 2024, the U.S.
Upon signing the Gilead Agreement, Gilead paid us an upfront payment of $45.0 million, plus $3.0 million in additional fees. In addition, from the signing of the Gilead Agreement to November 30, 2022, we received payments of $34.5 million for research milestones and additional payments.
Upon signing the Gilead Agreement, Gilead paid us an upfront payment of $45.0 million, plus $3.0 million in additional fees. In addition, from the signing of the Gilead Agreement to November 30, 2023, we received payments of $47.0 million for research milestones and additional payments and $20.0 million for a license option exercise payment.
In the long term, our ability to support our working capital and capital expenditure requirements will depend on many factors, including the following: • the progress, costs and results of our ongoing Phase 1 clinical trials for our lead drug candidates NX-2127, NX-1607, NX‑5948 and DeTIL-0255, and any future clinical development of such drug candidates; • the scope, progress, costs and results of preclinical and clinical development for our other drug candidates and development programs; • the number and development requirements of other drug candidates that we pursue; • the scope of, and costs associated with, future advancements to our DELigase platform; • the success of our collaborations with Sanofi, Gilead and any other collaborations we may establish; • the costs, timing and outcome of regulatory review of our drug candidates; • the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our drug candidates for which we receive marketing approval; • the revenue, if any, received from commercial sales of our drug candidates for which we receive marketing approval; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and • our ability to establish additional collaboration arrangements with other biotechnology or pharmaceutical companies on favorable terms, if at all, for the development or commercialization of our drug candidates. 114 Table of Content If adequate funds are not available at favorable terms, we may be required to reduce operating expenses, delay or reduce the scope of our product development and commercial expansion programs, obtain funds through arrangements with others that may require us to relinquish rights to certain of our technologies or products that we would otherwise seek to develop or commercialize ourselves, or cease operations.
In the long term, our ability to support our working capital and capital expenditure requirements will depend on many factors, including the following: • the progress, costs and results of our ongoing Phase 1 clinical trials for our lead drug candidates NX-5948, NX-2127 and NX-1607, and any future clinical development of such drug candidates; 114 • the scope, progress, costs and results of preclinical and clinical development for our other drug candidates and development programs; • the number and development requirements of other drug candidates that we pursue; • the scope of, and costs associated with, future advancements to our DELigase platform; • the success of our collaborations with Gilead, Sanofi, Pfizer and any other collaborations we may establish; • the costs, timing and outcome of regulatory review of our drug candidates; • the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our drug candidates for which we receive marketing approval; • the revenue, if any, received from commercial sales of our drug candidates for which we receive marketing approval; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and • our ability to establish additional collaboration arrangements with other biotechnology or pharmaceutical companies on favorable terms, if at all, for the development or commercialization of our drug candidates.
In August 2022, we entered into the Fourth Amendment to the Sanofi Agreement to modify the research plan for a certain target, which had no impact on revenue recognition.
In August 2022 and November 2023, we entered into the Fourth Amendment and Fifth Amendment, respectively, to the Sanofi Agreement to modify the research plan for certain targets, which had no impact on revenue recognition.
During the years ended November 30, 2022 and 2021, we incurred net losses of $180.4 million and $117.2 million, respectively. As of November 30, 2022, we had an accumulated deficit of $401.3 million.
During the years ended November 30, 2023 and 2022, we incurred net losses of $143.9 million and $180.4 million, respectively. As of November 30, 2023, we had an accumulated deficit of $545.2 million.
Research and collaboration licenses : If a license is determined to be distinct from the other promises identified in the arrangement, we recognize revenue from upfront payments allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.
Exclusive license rights : If a license to our intellectual property is determined to be distinct from the other promises identified in the arrangement, we recognize revenue from nonrefundable, upfront payments allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license and the underlying intellectual property.
We agreed to pay Piper Sandler a commission of 3% of the gross sales price of any shares sold pursuant to the Equity Distribution Agreement.
We are not required to sell any shares at any time during the term of the Equity Distribution Agreement. We agreed to pay Piper Sandler a commission of 3% of the gross sales price of any shares sold pursuant to the Equity Distribution Agreement.
The collaboration excludes our current internal protein degradation programs for which we retain all rights, and also excludes our future internal programs, provided that we have distinguished future programs as excluded from the scope of the collaboration. Over time, Gilead may elect to replace the initial drug targets with other drug targets.
The collaboration excludes our current internal protein degradation programs for which we retain all rights, and also excludes our future internal programs, provided that we have distinguished future programs as excluded from the scope of the collaboration.
Forecasted total expenditures also include other direct costs related to product development, including third-party contract costs, and may also require management’s estimate of costs and market conditions that may impact costs.
The model is highly sensitive to changes in resources assigned over the research term. Forecasted total expenditures also include other direct costs related to product development, including third-party contract costs, and may also require management’s estimate of costs and market conditions that may impact costs.
As of November 30, 2022, we had $373.0 million in cash, cash equivalents and marketable securities.
As of November 30, 2023, we had $295.3 million in cash, cash equivalents and marketable securities.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans. Impact of Current Global Business, Political and Macroeconomic Conditions Uncertainty in the global business, political and macroeconomic environments present significant risks to our business.
Non-cash adjustments primarily consisted of stock-based compensation expenses of $15.8 million, amortization of operating lease right-of-use assets of $3.3 million and depreciation and amortization expenses of $2.8 million.
Non-cash adjustments primarily consisted of stock-based compensation expenses of $28.1 million, amortization of operating lease ROU assets of $5.5 million and depreciation and amortization expenses of $5.3 million.
See additional information in our financial statements contained in Part II, Item 8 of this Annual Report on Form 10-K.
Information About Segments We currently operate in a single business segment. See additional information in our financial statements contained in Part II, Item 8 of this Annual Report on Form 10-K. Item 7A.
As of November 30, 2022 and 2021, there was $46.2 million and $59.2 million, respectively, of deferred revenue related to payments received by us under the Sanofi Agreement. 107 Table of Content Gilead Collaboration, Option and License Agreement In June 2019, we entered into a global strategic collaboration agreement with Gilead (as subsequently amended, the Gilead Agreement) to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with cancer and other challenging diseases using our DELigase platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.
Collaborations and License Agreements Gilead In June 2019, we entered into a global strategic collaboration agreement with Gilead (as subsequently amended, the Gilead Agreement) to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with cancer and other challenging diseases using our DELigase platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.
Milestone payments : At the inception of each arrangement that includes research, development or regulatory milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price. We use the most likely amount method for research, development and regulatory milestone payments.
We evaluate the measure of proportional performance each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. 111 Milestone payments : At the inception of each arrangement that includes research, development or regulatory milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price.
(Piper Sandler) pursuant to which, from time to time, we may offer and sell through Piper Sandler up to $150.0 million of the common stock registered under the shelf registration statement pursuant to one or more “at the market” offerings. We are not required to sell any shares at any time during the term of the Equity Distribution Agreement.
In August 2021, we entered into an Equity Distribution Agreement with Piper Sandler & Co. (Piper Sandler) pursuant to which, from time to time, we may offer and sell through Piper Sandler up to $150.0 million of the common stock registered under our shelf registration statement on Form S-3 pursuant to one or more “at the market” offerings.
If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Our contractual obligations mostly consist of our operating lease obligations for our facilities in San Francisco, California and The Woodlands, Texas.
We recognized collaboration revenue from the Gilead Agreement of $23.7 million and $16.6 million during the years ended November 30, 2022 and 2021, respectively. As of November 30, 2022 and 2021, there was $27.4 million and $41.1 million of deferred revenue related to payments received by us under the Gilead Agreement.
We recognized collaboration revenue from the Sanofi Agreement of $25.4 million and $15.0 million during the years ended November 30, 2023 and 2022, respectively. As of November 30, 2023 and 2022, there was $24.9 million and $46.2 million, respectively, of deferred revenue related to payments received by us under the Sanofi Agreement.
As of November 30, 2022, we are eligible to receive up to approximately $2.5 billion in total payments based on certain additional fees, payments and the successful completion of certain research development, regulatory and sales milestones, as well as tiered royalties ranging from mid-single digit to low teen percentages on annual net sales of any commercial products that may result from the collaboration, subject to certain reductions and excluding sales in the United States of any products for which we exercise our option to co-develop and co-promote, for which we share profits and losses evenly.
As of November 30, 2023, we are eligible to receive up to approximately $2.5 billion in total additional payments based on certain additional fees, payments and the successful completion of certain research development, regulatory and sales milestones, as well as mid-single digit to low teen percentage tiered royalties on annual net sales of any commercial products that may result from the collaboration, subject to certain reductions and excluding sales in the United States of any products for which we exercise our option to co-develop and co-promote, for which the parties share profits and losses evenly. 107 Subject to earlier expiration in certain circumstances, the Sanofi Agreement expires on a licensed product-by-licensed product or profit-shared licensed product-by-profit-shared licensed product basis and country-by-country basis upon on the later of (1) the expiration of the last-to-expire patent with a valid claim covering the applicable licensed product in the applicable country, (2) the expiration of any regulatory exclusivity for the applicable licensed product in the applicable country or (3) ten years after the first commercial sale of the applicable licensed product in the applicable country covered by the Sanofi Agreement.
Revenue Recognition We recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.
Lease expense for operating leases is recognized on a straight-line basis over the lease term. We do not have any finance leases. Revenue Recognition We recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.
Cash flows Our cash flows for the years ended November 30, 2022 and 2021 are summarized as follows (in thousands): Year ended November 30, 2022 2021 Cash used in operating activities $ (159,807) $ (84,365) Cash (used in) provided by investing activities 27,198 (108,251) Cash provided by financing activities 117,192 153,882 Net decrease in cash, cash equivalents and restricted cash $ (15,417) $ (38,734) Operating activities Net cash used in operating activities was $159.8 million for the year ended November 30, 2022 and consisted of our net loss of $180.4 million and an increase in net assets of $19.0 million, offset by non-cash adjustments of $39.6 million.
Cash flows Our cash flows for the years ended November 30, 2023 and 2022 are summarized as follows (in thousands): Year ended November 30, 2023 2022 Cash used in operating activities $ (81,365) $ (159,807) Cash provided by investing activities 68,301 27,198 Cash provided by financing activities 3,217 117,192 Net decrease in cash, cash equivalents and restricted cash $ (9,847) $ (15,417) 115 Operating activities Net cash used in operating activities was $81.4 million for the year ended November 30, 2023, and consisted of our net loss of $143.9 million, offset by non-cash adjustments of $42.5 million and a decrease in net assets of $20.1 million.
Targeted Protein Elevation Our portfolio of inhibitors of CBL-B, an E3 ligase that regulates the activation of multiple immune cell types including T cells and NK cells, comprises NX-1607, an orally bioavailable CBL-B inhibitor for immuno-oncology indications and NX-0255, for ex vivo use to enhance adoptive T-cell therapy including our drug-enhanced tumor infiltrating lymphocyte (TIL) therapy, DeTIL-0255.
Targeted Protein Elevation Our targeted protein elevation program includes NX-1607, an orally bioavailable inhibitor of CBL-B, an E3 ligase that regulates the activation of multiple immune cell types including T cells and NK cells. NX-1607 is targeted for immuno-oncology indications.
NX‑2127: We are currently enrolling patients in a Phase 1 trial for patients with relapsed or refractory B-cell malignancies which comprises a Phase 1a dose-escalation study and a Phase 1b cohort expansion study.
NX‑2127: We are currently treating patients in a Phase 1a/1b dose-escalation and cohort expansion study of NX-2127 in patients with relapsed or refractory B-cell malignancies. We have initiated Phase 1b expansion cohorts for patients with relapsed CLL, diffuse large B-cell lymphoma (DLBCL) and mantle cell lymphoma (MCL).
Under the Sanofi Agreement, Sanofi has exclusive rights and is responsible for the clinical development, commercialization and manufacture of drug candidates resulting from the collaboration, while we retain the option to co-develop, co-promote and co-commercialize all drug candidates in the United States directed to up to two targets, subject to certain conditions and limitations.
Under the Sanofi Agreement, Sanofi has exclusive rights and is responsible for the clinical development, commercialization and manufacture of drug candidates resulting from the collaboration while we retain the option to co-develop, co-promote and co-commercialize all drug candidates in the United States directed to up to two targets, one of which must be selected from a list of targets designated at the execution of the Sanofi Agreement or any replacement of such targets, and one of which must be selected from targets identified by Sanofi as part of their January 2021 expansion.
Amounts allocated to any material right are recognized as revenue when or as the related future goods or services are transferred or when the option expires. 111 Table of Content For performance obligations satisfied over time, we recognize revenue using the cost-based input method and evaluate the measure of proportional performance each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
For performance obligations satisfied over time, we recognize revenue using the cost-based input method and evaluate the measure of proportional performance each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
The number of full-time employees may change based on the progress and timing of our product development, and may be influenced by resource allocation decisions on internal programs and overall constraint on resources. The model is highly sensitive to changes in resources assigned over the research term.
Forecasted total expenditures are driven primarily by the number of full-time employees, and the assumptions over the number of full-time employees require significant management judgement. The number of full-time employees may change based on the progress and timing of our product development, and may be influenced by resource allocation decisions on internal programs and overall constraint on resources.
In addition, from the signing of the Sanofi Agreement to November 30, 2022, we received payments of $3.0 million for research milestones.
In addition, from the signing of the Sanofi Agreement to November 30, 2023, we received payments of $7.0 million for research milestones. Additionally, we achieved two research milestones in November 2023 and received payments totaling $4.0 million in January 2024 as a result.
To measure the proportional performance, we are required to make our best estimates of forecasted expenditures and development timelines, which are subject to uncertainties associated with pharmaceutical product development. Forecasted total expenditures are driven primarily by the number of full-time employees, and the assumptions over the number of full-time employees require significant management judgement.
To measure the proportional performance, we are required to make our best estimates of forecasted expenditures and development timelines, which are subject to uncertainties, including the timing of replacement targets, if any, associated with pharmaceutical product development.
Net cash used in investing activities was $108.3 million for the year ended November 30, 2021 and consisted of the purchase of investments of $348.5 million and purchases of property and equipment of $5.7 million, offset by the maturity of investments of $238.9 million and the sale of investments of $7.0 million.
Investing activities Net cash provided by investing activities was $68.3 million for the year ended November 30, 2023, and consisted of the maturity of marketable securities of $323.0 million, offset by the purchase of marketable securities of $246.3 million and purchases of property and equipment of $8.4 million.
In January 2021, as part of the existing Sanofi Agreement, Sanofi paid us $22.0 million to exercise its option to expand the number of targets in the Sanofi Agreement from three to a total of five targets. Over time and subject to certain limitations, Sanofi may elect to replace the drug targets with other reserved targets.
In January 2021, as part of the existing Sanofi Agreement, Sanofi paid us $22.0 million to exercise its option to expand the number of targets in the Sanofi Agreement from three to a total of five targets. In January 2021, we entered into the First Amendment to the Sanofi Agreement to modify the research term on all targets.
Results of Operations Comparison of the years ended November 30, 2022 and 2021 Our results of operations for the years ended November 30, 2022 and 2021 are summarized as follows (in thousands): Year ended November 30, 2022 2021 Change Collaboration revenue $ 38,627 $ 29,750 $ 8,877 Operating expenses: Research and development 184,497 116,434 68,063 General and administrative 37,997 31,202 6,795 Total operating expenses 222,494 147,636 74,858 Loss from operations (183,867) (117,886) (65,981) Interest and other income, net 3,507 823 2,684 Loss before income taxes (180,360) (117,063) (63,297) Provision for income taxes — 131 (131) Net loss $ (180,360) $ (117,194) $ (63,166) Collaboration Revenue Our collaboration revenue for the years ended November 30, 2022 and 2021 is summarized as follows (in thousands): Year ended November 30, 2022 2021 Change Gilead $ 23,674 $ 16,578 $ 7,096 Sanofi 14,953 13,172 1,781 Total collaboration revenue $ 38,627 $ 29,750 $ 8,877 Our collaboration revenue increased by $8.9 million during the year ended November 30, 2022 compared to the year ended November 30, 2021 primarily due to increased effort resulting in a higher percentage of completion of performance obligations under our collaborations with Gilead and Sanofi in the current period.
Results of Operations Comparison of the years ended November 30, 2023 and 2022 Our results of operations for the years ended November 30, 2023 and 2022 are summarized as follows (in thousands): Year ended November 30, 2023 2022 Change Revenue: Collaboration revenue $ 56,987 $ 38,627 $ 18,360 License revenue 20,000 — 20,000 Total revenue 76,987 38,627 38,360 Operating expenses: Research and development 189,148 184,497 4,651 General and administrative 42,902 37,997 4,905 Total operating expenses 232,050 222,494 9,556 Loss from operations (155,063) (183,867) 28,804 Interest and other income, net 11,115 3,507 7,608 Net loss $ (143,948) $ (180,360) $ 36,412 112 Collaboration Revenue Our collaboration revenue for the years ended November 30, 2023 and 2022 is summarized as follows (in thousands): Year ended November 30, 2023 2022 Change Gilead $ 29,947 $ 23,674 $ 6,273 Sanofi 25,350 14,953 10,397 Pfizer 1,690 — 1,690 Total collaboration revenue $ 56,987 $ 38,627 $ 18,360 Our collaboration revenue increased by $18.4 million during the year ended November 30, 2023, compared to the year ended November 30, 2022, primarily due to increased effort resulting in a higher percentage of completion of performance obligations under our collaborations with Gilead and Sanofi in the current period.
In addition to receiving upfront payments, we may also be entitled to milestones and other contingent payments upon achieving predefined objectives. If a milestone is considered probable of being reached, and if it is probable that a significant revenue reversal would not occur, the associated milestone amount would also be included in the transaction price.
If a milestone is considered probable of being reached, and if it is probable that a significant revenue reversal would not occur, the associated milestone amount would also be included in the transaction price. 109 We expect that any collaboration revenue we generate from our current collaboration and license agreements, and from any future collaboration partners, will fluctuate in the future as a result of the timing and amount of upfront, milestones and other collaboration agreement payments and other factors.
We are also subject to risks and uncertainties as a result of macroeconomic events and conditions, including inflation, increasing interest rates, increasing financial market volatility and uncertainty, the impact of war or military conflict, including the war in Ukraine, and public health pandemics.
We are subject to continuing risks and uncertainties, including increasing financial market volatility and uncertainty, inflation, increasing interest rates, uncertainty with respect to the federal budget and debt ceiling and potential government shutdowns related thereto, instability in the global banking system, cybersecurity events, the impact of war or military conflict, including regional conflicts around the world, and public health pandemics.
Interest and Other Income, Net Our interest and other income, net increased by $2.7 million during the year ended November 30, 2022, compared to the year ended November 30, 2021, primarily attributable to higher interest rates earning higher interest income on our deposits, money market funds and marketable securities.
There was an increase in non-cash stock-based compensation expense primarily driven by the increased issuance of RSUs and incentive stock options and an increase in professional service costs related to the Pfizer Agreement, offset by a decrease in outside consulting costs. 113 Interest and Other Income, Net Our interest and other income, net increased by $7.6 million during the year ended November 30, 2023, compared to the year ended November 30, 2022, primarily attributable to higher interest rates earning higher interest income on our deposits, money market funds and marketable securities.
(Sanofi) and Gilead Sciences, Inc. (Gilead), within which we retain options for co-development and co-commercialization rights in the United States for up to four drug candidates.
We retain certain options for co-development, co-commercialization and profit sharing in the United States for multiple drug candidates, pursuant to these collaborations.
Interest and Other Income, Net Interest and other income, net primarily consists of interest earned on our cash, cash equivalents and marketable securities. We expect interest income to vary each reporting period depending on our average bank deposit, money market fund and marketable securities balances during the period and market interest rates.
We expect interest income to vary each reporting period depending on our average bank deposit, money market fund and marketable securities balances during the period and market interest rates. 110 Critical Accounting Policies and Estimates Our accounting policies are more fully described in Note 2 of the consolidated financial statements to this Annual Report on Form 10-K.
As of November 30, 2022, our material cash requirements include the following contractual and other obligations (in thousands): Payments due by period Less than 1 year 1 to 3 years 3 to 5 years More than 5 years Total Operating lease obligations $ 6,979 $ 11,753 $ 5,420 $ 22,556 $ 46,708 Total contractual obligations $ 6,979 $ 11,753 $ 5,420 $ 22,556 $ 46,708 In addition, in the normal course of business we enter into agreements with contract research organizations for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are generally cancelable upon written notice.
In addition, we enter into agreements in the normal course of business with contract research organizations for clinical trials and with vendors for preclinical studies and other services and products for operating purposes, which are generally cancelable upon written notice.
The decrease in net assets was offset by an increase in accounts receivable of $6.0 million related to a Gilead research milestone, an increase in prepaid expenses and other assets of $5.4 million primarily related to an increase in prepaid clinical costs and a decrease in operating lease liabilities of $5.1 million due to payments made on operating leases.
The decrease in net assets consisted of an increase in deferred revenue of $19.5 million mainly from the upfront payment received pursuant to the Pfizer Agreement, an increase in accrued expenses and other liabilities of $3.1 million primarily related to the accrual of annual incentive compensation, a decrease in prepaid expenses and other assets of $2.1 million primarily due to the recognition of expenses for prepaid services and an increase in accounts payable of $1.6 million from outstanding payments to vendors, offset by a decrease in operating lease liabilities of $6.3 million due to payments made on operating leases.
The substitutions increased the overall forecasted costs and extended the research term of those targets, which offset the increases in revenue due to increased effort and resulted in less revenue recognized in the current period. 112 Table of Content Research and Development Expenses Our research and development expenses for the years ended November 30, 2022 and 2021 are summarized as follows (in thousands): Year ended November 30, 2022 2021 Change Compensation and related personnel costs $ 65,336 $ 39,540 $ 25,796 Stock-based compensation 16,878 8,079 8,799 Supplies and contract research 47,814 37,676 10,138 Preclinical activities 5,912 2,757 3,155 Contract manufacturing 13,562 10,214 3,348 Clinical costs 13,887 6,236 7,651 Facility and other costs 21,108 11,932 9,176 Total research and development expenses $ 184,497 $ 116,434 $ 68,063 Our research and development expense increased by $68.1 million during the year ended November 30, 2022 compared to the year ended November 30, 2021.
Research and Development Expenses Our research and development expenses for the years ended November 30, 2023 and 2022 are summarized as follows (in thousands): Year ended November 30, 2023 2022 Change Compensation and related personnel costs $ 72,876 $ 65,336 $ 7,540 Stock-based compensation 18,709 16,878 1,831 Supplies and contract research 43,943 47,814 (3,871) Preclinical activities 1,652 5,912 (4,260) Contract manufacturing 7,770 13,562 (5,792) Clinical costs 17,500 13,887 3,613 Facility and other costs 26,698 21,108 5,590 Total research and development expenses $ 189,148 $ 184,497 $ 4,651 Our research and development expense increased by $4.7 million during the year ended November 30, 2023, compared to the year ended November 30, 2022.
Net cash provided by financing activities was $153.9 million for the year ended November 30, 2021 and consisted primarily of proceeds from the issuance of common stock from the follow-on offering in March 2021. Information About Segments We currently operate in a single business segment.
Financing activities Net cash provided by financing activities was $3.2 million for the year ended November 30, 2023, and consisted primarily of proceeds from the issuance of common stock under our Employee Stock Purchase Plan.
We retain the option to co-develop and co-promote, under a profit share structure, up to two drug candidates in the United States under certain conditions.
We retain the option to co-develop and co-promote, under a profit share structure, up to two drug candidates in the United States, provided that we may only exercise such option once per licensed product and Gilead retains the right to veto our option selection for any one drug candidate of its choice.
The increases were also due to additions to the transaction price from the achievement of research milestones totaling $10.0 million from our collaboration with Gilead and $3.0 million from our collaboration with Sanofi that resulted in higher revenue recognized in each period and impacted the cumulative catch up in revenue for activities satisfied in previous periods.
The increase was also due to higher achievement of research milestones that resulted in higher revenue recognized in each period and impacted the cumulative catch up in revenue for activities satisfied in previous periods. In addition, we recognized revenue of $1.7 million related to activities performed during the fourth fiscal quarter ended November 30, 2023 pursuant to the Pfizer Agreement.
Provision for Income Taxes Our provision for income taxes decreased by $0.1 million during the year ended November 30, 2022, compared to the year ended November 30, 2021. There was no provision for income taxes for the year ended November 30, 2022.
License Revenue Our license revenue was $20.0 million for the year ended November 30, 2023, and is related to the Gilead License Option Exercise. There was no license revenue for the year ended November 30, 2022.
There was also an increase in facility and other costs of $9.2 million primarily due to the expansion of leased premises and additional investments in information technology. General and Administrative Expenses Our general and administrative expenses increased by $6.8 million during the year ended November 30, 2022, compared to the year ended November 30, 2021.
General and Administrative Expenses Our general and administrative expenses increased by $4.9 million during the year ended November 30, 2023, compared to the year ended November 30, 2022.
Non-cash adjustments primarily consisted of stock-based compensation expenses of $28.1 million, amortization of operating lease right-of-use assets of $5.5 million and depreciation and amortization expenses of $5.3 million. 115 Table of Content Net cash used in operating activities was $84.4 million for the year ended November 30, 2021 and consisted of a decrease in net assets of $9.1 million and non-cash adjustments of $23.7 million, offset by our net loss of $117.2 million.
Net cash used in operating activities was $159.8 million for the year ended November 30, 2022, and consisted of our net loss of $180.4 million and an increase in net assets of $19.0 million, offset by non-cash adjustments of $39.6 million.
NX-1607: We are currently enrolling patients in the Phase 1a portion of a Phase 1a/1b dose-escalation and cohort expansion study in patients with solid tumors and lymphomas. NX-1607 was awarded an Innovative Passport from the UK Medicines and Healthcare products Regulatory Agency to accelerate time to market and facilitate patient access to novel drugs to treat serious and life-threatening diseases.
NX-1607 was awarded an Innovative Passport from the UK Medicines and Healthcare products Regulatory Agency to accelerate time to market and facilitate patient access to novel drugs to treat serious and life-threatening diseases. 105 Drug Discovery Pipeline In addition to our clinical stage drug candidates, we are extending our protein modulation portfolio, both on our own and with partners by developing new targeted protein degraders and ligase inhibitors for a number of targets for which we believe the protein modulation modality can be clinically advantageous over existing therapies.
We recognized collaboration revenue from the Sanofi Agreement of $15.0 million and $13.2 million during the years ended November 30, 2022 and 2021, respectively.
If Gilead does not exercise an option to license a drug candidate, then the Gilead Agreement will terminate at the end of the last to expire option period. We recognized collaboration revenue from the Gilead Agreement of $29.9 million and $23.7 million during the years ended November 30, 2023 and 2022, respectively.
Removed
We have initiated the first of several potential Phase 1b expansion cohorts for patients with relapsed chronic lymphocytic leukemia, and enrollment continues in the Phase 1a dose-escalation portion of the trial for patients with several types of non-Hodgkin lymphoma.
Added
Our partnered drug discovery pipeline consists of multiple programs under collaboration agreements with Gilead Sciences, Inc. (Gilead), Sanofi S.A. (Sanofi) and Seagen Inc. (now a part of Pfizer Inc. (Pfizer)), within which we retain certain options for co-development, co-commercialization and profit sharing in the United States for multiple drug candidates.
Removed
DeTIL-0255: We completed the safety run-in portion of a Phase 1 trial in patients with advanced gynecologic malignancies, which included three patients with advanced epithelial ovarian cancer who have been dosed with DeTIL-0255 and have cleared the initial safety evaluation.
Added
Food and Drug Administration (FDA) granted Fast Track designation for NX-5948 for the treatment of adult patients with relapsed or refractory chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL) after at least two lines of therapy, including a BTK inhibitor (BTKi) and a B-cell lymphoma 2 (BCL2) inhibitor.
Removed
The timing of the expansion of the DeTIL-0255 Phase 1 trial will be established following a determination regarding the potential inclusion of NX-1607 in future cohorts. 106 Table of Content Preclinical programs Beyond our clinical candidates, we are advancing additional wholly owned and partnered preclinical programs within our core therapeutic focus in cancer and selectively in non-oncology therapeutic areas.
Added
Enrollment of new patients in this clinical trial is paused pending resolution of a partial clinical hold, which followed our communication to the FDA of our intention to transition to an improved manufacturing process. Patients already enrolled who are receiving clinical benefit may continue treatment.

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