10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

   ☒          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the quarterly period ended June 30, 2023

 or

   ☐               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 Commission File Number: 001-35921

______________________________________________________

Mirati Therapeutics, Inc.

(Exact Name of Registrant as Specified in Its Charter)

______________________________________________________

Delaware			46-2693615
(State of Incorporation)			(I.R.S. Employer Identification No.)
3545 Cray Court,	San Diego,	California	92121
(Address of Principal Executive Offices)			(Zip Code)

(858) 332-3410

(Registrant’s Telephone Number, Including Area Code)

______________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	MRTX	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

As of August 1, 2023, there were 58,604,347 total shares of common stock outstanding.

MIRATI THERAPEUTICS, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		1
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2023 and 2022	2
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	35
PART II. OTHER INFORMATION		36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 6.	Exhibits	67
SIGNATURES		68

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

MIRATI THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	June 30,		December 31,
	2023		2022
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	129,866	$	235,260
Short-term investments	649,568		848,577
Accounts receivable, net	10,523		865
Inventory	8,644		3,020
Other current assets	20,316		21,239
Total current assets	818,917		1,108,961
Property and equipment, net	16,867		17,540
Intangible asset, net	14,397		14,914
Long-term investment	4,565		3,465
Right-of-use asset	35,431		36,122
Other long-term assets	24,866		21,645
Total assets	$	915,043	$	1,202,647
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	32,507	$	38,861
Accrued liabilities	107,483		120,587
Total current liabilities	139,990		159,448
Lease liability	42,722		43,661
Other liabilities	3,380		3,022
Total liabilities	186,092		206,131
Commitments and contingencies (see Note 11)
Shareholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued and outstanding at both June 30, 2023 and December 31, 2022	—		—
Common stock, $0.001 par value; 100,000,000 authorized; 58,339,232 and 57,854,559 issued and outstanding at June 30, 2023 and December 31, 2022, respectively	58		58
Additional paid-in capital	3,544,996		3,453,066
Accumulated other comprehensive loss	(1,715)		(3,719)
Accumulated deficit	(2,814,388)		(2,452,889)
Total shareholders' equity	728,951		996,516
Total liabilities and shareholders' equity	$	915,043	$	1,202,647

See accompanying notes

1

MIRATI THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited, in thousands, except share and per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue
Product revenue, net	$	13,365	$	—	$	19,656	$	—
License and collaboration revenues	325		5,362		1,201		6,071
Total revenue	13,690		5,362		20,857		6,071
Operating expenses
Cost of product revenue	1,025		—		1,583		—
Cost of product revenue - intangible asset amortization	258		—		517		—
Research and development	124,187		128,339		250,870		259,315
Selling, general and administrative	75,490		54,228		148,980		108,179
Total operating expenses	200,960		182,567		401,950		367,494
Loss from operations	(187,270)		(177,205)		(381,093)		(361,423)
Other income (expense), net	10,357		760		19,594		(3,408)
Net loss	$	(176,913)	$	(176,445)	$	(361,499)	$	(364,831)
Unrealized gain (loss) on available-for-sale investments	26		(909)		2,069		(5,711)
Foreign currency translation adjustment	(34)		—		(65)		—
Comprehensive loss	$	(176,921)	$	(177,354)	$	(359,495)	$	(370,542)
Net loss per share, basic and diluted	$	(3.04)	$	(3.18)	$	(6.22)	$	(6.57)
Weighted average common shares outstanding, basic and diluted	58,232,084		55,552,438		58,131,954		55,510,649

See accompanying notes

2

MIRATI THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited, in thousands, except share data)

Three Months Ended June 30, 2023
	Common Stock			Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Total shareholders’ equity
	Shares	Amount
Balance at March 31, 2023	58,148,416	$	58	$	3,501,754	$	(1,707)	$	(2,637,475)	$	862,630
Net loss	—	—		—		—		(176,913)		(176,913)
Share-based compensation expense	—	—		39,399		—		—		39,399
Issuance of common stock from ESPP	105,352	—		3,328		—		—		3,328
Issuance of common stock under equity incentive plans	85,464	—		515		—		—		515
Unrealized gain on investments	—	—		—		26		—		26
Foreign currency translation adjustment	—	—		—		(34)		—		(34)
Balance at June 30, 2023	58,339,232	$	58	$	3,544,996	$	(1,715)	$	(2,814,388)	$	728,951

Three Months Ended June 30, 2022
	Common Stock			Additional paid-in capital		Accumulated other comprehensive income		Accumulated deficit		Total shareholders’ equity
	Shares	Amount
Balance at March 31, 2022	55,511,476	$	56	$	3,145,368	$	4,266	$	(1,900,408)	$	1,249,282
Net loss	—	—		—		—		(176,445)		(176,445)
Share-based compensation expense	—	—		38,684		—		—		38,684
Issuance of common stock from employee stock purchase plan	29,891	—		995		—		—		995
Issuance of common stock under equity incentive plans	51,264	—		397		—		—		397
Unrealized loss on investments	—	—		—		(909)		—		(909)
Balance at June 30, 2022	55,592,631	$	56	$	3,185,444	$	3,357	$	(2,076,853)	$	1,112,004

See accompanying notes

3

MIRATI THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited, in thousands, except share data)

Six Months Ended June 30, 2023
	Common Stock			Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Total shareholders’ equity
	Shares	Amount
Balance at December 31, 2022	57,854,559	$	58	$	3,453,066	$	(3,719)	$	(2,452,889)	$	996,516
Net loss	—	—		—		—		(361,499)		(361,499)
Share-based compensation expense	—	—		86,360		—		—		86,360
Issuance of common stock from ESPP	105,352	—		3,328		—		—		3,328
Issuance of common stock under equity incentive plans	379,321	—		2,242		—		—		2,242
Unrealized gain on investments	—	—		—		2,069		—		2,069
Foreign currency translation adjustment	—	—		—		(65)		—		(65)
Balance at June 30, 2023	58,339,232	$	58	$	3,544,996	$	(1,715)	$	(2,814,388)	$	728,951

Six Months Ended June 30, 2022
	Common Stock			Additional paid-in capital		Accumulated other comprehensive income		Accumulated deficit		Total shareholders' equity
	Shares	Amount
Balance at December 31, 2021	55,356,904	$	55	$	3,099,937	$	9,068	$	(1,712,022)	$	1,397,038
Net loss	—	—		—		—		(364,831)		(364,831)
Share-based compensation expense	—	—		81,589		—		—		81,589
Issuance of common stock from employee stock purchase plan	29,891	—		995		—		—		995
Issuance of common stock under equity incentive plans	205,836	1		2,923		—		—		2,924
Unrealized loss on investments	—	—		—		(5,711)		—		(5,711)
Balance at June 30, 2022	55,592,631	$	56	$	3,185,444	$	3,357	$	(2,076,853)	$	1,112,004

See accompanying notes

4

MIRATI THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Six Months Ended June 30,
	2023		2022
Operating activities:
Net loss	$	(361,499)	$	(364,831)
Non-cash adjustments reconciling net loss to operating cash flows
Change in fair value on long-term investment	(1,100)		5,583
Depreciation and amortization expense	2,182		1,322
Amortization of premium and accretion of discounts on investments	(10,597)		1,457
Share-based compensation expense	86,360		81,589
Loss on disposal of property and equipment	—		295
Changes in operating assets and liabilities:
Accounts receivable, net	(9,658)		—
Inventory	(5,624)		—
Other current assets	923		(4,955)
Other long-term assets	(3,221)		(1,194)
Right-of-use asset	691		857
Lease liability	(822)		2,905
Accounts payable, accrued liabilities and other liabilities	(19,217)		(26,989)
Cash flows used in operating activities	(321,582)		(303,961)
Investing activities:
Purchases of short-term investments	(363,756)		(341,472)
Sales and maturities of short-term investments	575,430		496,834
Purchases of property and equipment	(991)		(2,801)
Cash flows provided by investing activities	210,683		152,561
Financing activities:
Proceeds from issuance of common stock under equity incentive plans	2,242		2,924
Proceeds from issuance of common stock from employee stock purchase plan	3,328		995
Cash flows provided by financing activities	5,570		3,919
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(65)		—
Decrease in cash, cash equivalents and restricted cash	(105,394)		(147,481)
Cash, cash equivalents and restricted cash, beginning of period	235,880		413,703
Cash, cash equivalents and restricted cash, end of period	$	130,486	$	266,222
Reconciliation of cash, cash equivalents and restricted cash, end of period:
Cash and cash equivalents	$	129,866	$	265,602
Restricted cash included in other long-term assets	620		620
Total cash, cash equivalents and restricted cash	$	130,486	$	266,222
Supplemental disclosures of non-cash investing activities:
Accrued capital expenditures	$	—	$	154

See accompanying notes

5

MIRATI THERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.    Description of Business

Mirati Therapeutics, Inc. (“Mirati” or the “Company”) is a commercial-stage oncology company focused on the discovery, design and delivery of breakthrough therapies that address areas of high unmet need, including lung cancer, and advancing product candidates targeting the genetic and immunological drivers of cancer. The Company was incorporated under the laws of the State of Delaware on April 29, 2013 as Mirati Therapeutics, Inc. and is located in San Diego, California. The Company has a wholly-owned subsidiary, Mirati Therapeutics B.V. (“Mirati B.V.”), which was formed on August 3, 2021 in Amsterdam, Netherlands, and Mirati Therapeutics (Suisse) GmbH (“Mirati Suisse”), which was formed on May 24, 2022 in Zug, Switzerland, is a wholly-owned subsidiary of Mirati B.V. The Company’s former wholly-owned subsidiary in Canada, MethylGene, Inc., was formed on May 8, 2013 and was formally dissolved in the fourth quarter of 2022.

The Company operates as one business segment, primarily in the United States. The Company’s common stock has been listed on the Nasdaq Global Select Market since June 5, 2018, and was previously listed on the Nasdaq Capital Market since July 15, 2013, under the ticker symbol “MRTX.”

2.    Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted.

In the opinion of management, the information reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for the full year. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Use of Estimates

The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Reported amounts and footnote disclosures reflect the overall economic conditions that are most likely to occur and anticipated measures management intends to take. Actual results could differ materially from those estimates. Estimates and assumptions are reviewed quarterly. Any revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Cash, Cash Equivalents and Short-term Investments

Cash and cash equivalents consist of cash and highly liquid securities with original maturities at the date of acquisition of ninety days or less. Investments with an original maturity of more than ninety days are considered short-term investments and have been classified by management as available-for-sale. These investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current consolidated balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary. Such investments are carried at fair value, and the unrealized gains and losses are reported as a component of accumulated other comprehensive loss in shareholders’ equity until realized. Realized gains and losses from the sale of available-for-sale securities, if any, are determined on a specific identification basis.    

6

Concentration of Credit Risk

The Company invests its excess cash in accordance with its investment policy. The Company’s investments are comprised primarily of commercial paper and debt instruments of financial institutions, corporations, U.S. government-sponsored agencies and the U.S. Treasury. The Company mitigates credit risk by maintaining a diversified portfolio and limiting the amount of investment exposure as to institution, maturity and investment type. Financial instruments that potentially subject the Company to significant credit risk consist principally of cash equivalents and short-term investments.

Accounts Receivable, net

Accounts receivable, net consists of trade receivables which are amounts due from customers related to product sales. The Company records trade receivables net of chargebacks, invoice discounts, distribution service fees and any allowances for doubtful accounts for potential credit losses. An allowance for doubtful accounts is determined based on the financial condition and creditworthiness of customers and the Company considers economic factors and events or trends expected to affect future collections experience. Any allowance would reduce the net receivables to the amount that is expected to be collected. The payment history of the Company’s customers will be considered in future assessments of collectability as these patterns are established over a longer period. As of June 30, 2023 and December 31, 2022, the Company determined an allowance for doubtful accounts was not required.

Inventory

The Company began capitalizing inventory for KRAZATI, which received approval by the U.S. Food and Drug Administration (“FDA”) and launched commercially in the U.S. in December 2022. KRAZATI (adagrasib) is approved for the treatment of adult patients with KRAS G12C-mutated non-small cell lung cancer (“NSCLC”) who have received at least one prior systemic therapy. Prior to regulatory approval, all direct and indirect manufacturing costs were charged to research and development expense in the period incurred.

Inventory is comprised of raw materials, work-in-process and finished goods, and includes costs related to third-party contract manufacturing, packaging, freight-in and overhead. Inventory is stated at the lower of cost or net realizable value with cost based on the first-in-first-out method. The Company performs an assessment of recoverability of capitalized inventory during each reporting period based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life, and writes down any excess, obsolete or unsaleable inventory to its estimated realizable value in the period which the impairment is first identified. Such write downs, should they occur, are charged to cost of product revenue in the condensed consolidated statements of operations and comprehensive loss. As of June 30, 2023 and December 31, 2022, the Company did not identify any impaired inventory.

Revenue Recognition

The Company recognizes revenue in accordance with the guidance of Revenue From Contracts With Customers, Accounting Standards Codification (“ASC”) Topic 606 (“Topic 606”). Under Topic 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements the Company determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Product revenue, net

The Company’s product revenue consists of sales of KRAZATI. The Company sells KRAZATI principally to specialty pharmacies and specialty distributors, which are referred to as the Company’s customers. These customers subsequently resell the product to healthcare providers and patients. Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer.

7

The Company records revenues from product sales at the net sales price, or transaction price, which includes estimates of variable consideration for which reserves are established primarily from chargebacks, government and commercial rebates, incentives, product returns, trade discounts and other allowances that are offered in contracts between the Company and its customers, healthcare providers and other third-party payors relating to the sales of its product. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of trade receivables, if the amount is deductible by the customer from payments to the Company, which is included within accounts receivable, net on the condensed consolidated balance sheets, or a current liability, if the amount is payable by the Company to a customer or third-party, which is included within accrued liabilities on the condensed consolidated balance sheets. The Company estimates the amount of variable consideration to include in the transaction price using the expected value method. These estimates take into consideration relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data, forecasted customer buying and payment patterns, and the Company’s historical experience that will develop over time as KRAZATI is the Company’s first commercial product. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of its contracts. The amount of variable consideration may be constrained and is included in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenues and earnings in the period such variances become known.

From time to time, the Company may sell KRAZATI to other commercial customers conducting clinical trials. These sales are recorded as part of product revenue, net and reflected at the transaction price, which includes estimates of variable consideration for trade allowances as discussed below.

The following are the components of variable consideration related to product revenue:

Chargebacks. Chargebacks relate to contracts with various third-party payors, including governmental healthcare programs, managed care providers, group purchasing organizations and other organizations, that generally purchase the product from a specialty distributor at a discounted price. The specialty distributor, in turn, charges back to the Company the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by its contracted customer. The allowance for chargebacks is based on actual chargebacks received and an estimate of sales by the specialty distributor to its contracted customers. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and a reduction of trade receivables.

Government rebates. The Company is subject to discount obligations under Medicare, Medicaid, and other governmental healthcare programs in the U.S. The Company’s estimates of rebates are based on the government-mandated discounts, which are statutorily-defined and applicable to these government funded programs. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and the accrual of an estimated liability. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom it will owe an additional liability under the Medicare Part D program.

Commercial rebates. The Company contracts with various private payor organizations and group purchasing organizations for the payment of rebates with respect to the utilization of its product. The Company’s estimates for the expected utilization of rebates are based on customer and payor data received from the specialty pharmacies and specialty distributors and historical utilization rates that will develop over time as KRAZATI is the Company’s first commercial product. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and the accrual of an estimated liability.

Incentives. The Company offers incentives such as co-payment assistance to commercially insured patients in the U.S. who meet certain eligibility requirements. The Company may provide financial assistance to participating patients with prescription drug co-payments required by the patients’ insurance provider, up to a specified dollar amount. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and the accrual of an estimated liability.

Product returns. Generally, the Company’s customers have the right to return product for a limited time before and after its expiration date. Since the Company does not have its own returns experience, it estimates returns based on available industry data for comparable products in the market as well as other information, such as visibility into the inventory remaining in the distribution channel and expiration date. As the Company distributes its product and establishes historical sales over a longer period of time, the Company will be able to place more reliance on historical purchasing, demand and return patterns of

8

its customers when evaluating its reserves for product returns. The estimate for product returns is recorded as an accrued liability and a reduction of revenue in the period the related product sales are recognized.

Trade allowances. The Company may provide invoice discounts on product sales to its customers for prompt payment based on contractual terms. These discounts are recorded as a reduction of revenue in the period the related product revenue is recognized. Trade receivables are recorded net of the allowance for these discounts. The Company also pays fees to its distributors for their services. The Company has determined such services are not distinct from the Company’s sale of product to its customers and therefore records these payments as a reduction of revenue and a reduction of trade receivables in the period the related product revenue is recognized. To the extent the services received are distinct from the Company’s sale of product to its customers, these payments will be recorded within selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive loss.

License and collaboration revenues

The Company’s license and collaboration revenues have been generated primarily through collaborative research, development, manufacture and commercialization agreements. The terms of these agreements generally include the license of intellectual property and associated know-how and the provision of other goods and services. Payments to the Company under these arrangements typically include one or more of the following: non-refundable, up-front license fees; manufacturing supply services; milestone payments; and royalties on future product sales.

License of Intellectual Property. If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes 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 progress for purposes of recognizing revenue associated with the bundled performance obligation.

Manufacturing Supply Services. The Company’s obligation under the agreements may include the initial supply of material for clinical development. If determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to this performance obligation when the collaborative partner obtains control of the goods. If determined not to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the combined performance obligation as the related performance obligations are satisfied.

Milestone Payments. At the inception of each arrangement that includes milestone payments based upon the achievement of specified clinical development, regulatory and/or sales milestones, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price. If it is probable that a significant revenue reversal would not occur, the associated milestone amount is included in the transaction price. Milestone payments that are dependent on factors outside of the Company’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. These payments are fully constrained and therefore are not included in the transaction price. At the end of each reporting period, the Company re-evaluates the probability of achievement of each milestone and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect the reported amount of license and collaboration revenues in the period of adjustment.

Royalties. For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Intangible Asset, Net

The Company’s finite-lived intangible asset resulted from the capitalization of a milestone payment due under a license and collaboration agreement in connection with the first commercial sale of KRAZATI in the U.S. in December 2022. The intangible asset will be amortized on a straight-line basis over its remaining useful life, which is estimated to be the remaining patent life of KRAZATI. Amortization expense is recorded as cost of product revenue - intangible asset amortization in the condensed consolidated statements of operations and comprehensive loss.

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Cost of Product Revenue

Cost of product revenue includes direct and indirect costs related to the manufacturing and distribution of KRAZATI, including materials, third-party contract manufacturing costs, packaging services, freight-in, overhead, royalties payable on net sales of KRAZATI and inventory reserves. All product costs incurred prior to FDA approval of KRAZATI in December 2022 were charged to research and development expense.

Leases

The Company determines if an arrangement is a lease at inception. Lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. For operating leases with an initial term greater than 12 months, the Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of lease payments over the lease term at the commencement date. Operating lease right-of-use assets are comprised of the lease liability plus any lease payments made and excludes lease incentives. Lease terms include options to renew or terminate the lease when the Company is reasonably certain that the renewal option will be exercised or when it is reasonably certain that the termination option will not be exercised. For the Company’s operating leases, if the interest rate used to determine the present value of future lease payments is not readily determinable, the Company estimates its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected the practical expedient to not separate lease and non-lease components.

Net Loss per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for common share equivalents as they are anti-dilutive. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents outstanding for the period, as well as certain shares that are contingently issuable. Common share equivalents outstanding, determined using the treasury stock method, are comprised of shares that may be issued under the Company’s stock option and warrant agreements, as well as restricted stock units and performance stock units.

The following table presents the weighted-average number of common share equivalents, calculated using the treasury stock method, as well as certain shares that are contingently issuable, not included in the calculation of diluted net loss per share due to the anti-dilutive effect of the securities:

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Common stock options	593,009	1,010,399	645,774	1,297,818
Common stock warrants	7,605,626	7,605,691	7,605,634	7,605,719
Unvested restricted stock units and performance stock units	3,365,759	1,164,045	3,255,723	1,115,727
Total	11,564,394	9,780,135	11,507,131	10,019,264

Recently Issued and Recently Adopted Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. The Company has evaluated recently issued accounting pronouncements and does not believe any will have a material impact on the Company’s condensed consolidated financial statements or related financial statement disclosures.

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3.    Investments

The following tables summarize the Company’s short-term investments (in thousands):

		As of June 30, 2023
	Maturity	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	2 years or less	$	12,866	$	—	$	(47)	$	12,819
Commercial paper	1 year or less	400,771		13		(631)		400,153
U.S. Agency bonds	2 years or less	176,624		63		(787)		175,900
U.S. Treasury bills	2 years or less	60,914		—		(218)		60,696
		$	651,175	$	76	$	(1,683)	$	649,568

		As of December 31, 2022
	Maturity	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	2 years or less	$	95,195	$	—	$	(662)	$	94,533
Commercial paper	1 year or less	443,489		65		(811)		442,743
U.S. Agency bonds	2 years or less	90,351		22		(434)		89,939
U.S. Treasury bills	2 years or less	223,216		8		(1,862)		221,362
		$	852,251	$	95	$	(3,769)	$	848,577

The Company has classified all of its short-term investments as available-for-sale as the sale of such securities may be required prior to maturity to implement management strategies, and therefore, they are carried at fair value. As of June 30, 2023 and December 31, 2022, the unrealized losses for available-for-sale investments were non-credit related, and the Company does not intend to sell the investments before recovery of their amortized cost basis, which may be at the time of maturity. As of June 30, 2023 and December 31, 2022, no allowance for credit losses was recorded. During the three and six months ended June 30, 2023 and 2022, the Company did not recognize any impairment losses related to investments.

The long-term investment balance of $4.6 million and $3.5 million as of June 30, 2023 and December 31, 2022, respectively, is comprised of 588,235 shares of ORIC Pharmaceuticals, Inc. (“ORIC”) common stock which were acquired in 2020. As of June 30, 2023 and December 31, 2022, the investment is carried at fair value based on the closing price of ORIC’s common stock on the last trading day of the reporting period. The Company recorded gains of $1.2 million and $1.1 million for the three and six months ended June 30, 2023, respectively, and losses of $0.5 million and $5.6 million for the three and six months ended June 30, 2022, respectively, within other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The Company currently does not intend to sell ORIC shares within 12 months from June 30, 2023. See Note 4 for additional information related to the investment in ORIC.

4.    Fair Value Measurements

The Company has certain financial assets and liabilities recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance prioritizes the inputs used in measuring fair value into the following hierarchy:

•Level 1- Quoted prices (unadjusted) in active markets for identical assets or liabilities;

•Level 2- Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and

•Level 3- Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

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The following tables summarize the assets measured at fair value on a recurring basis (in thousands):

	June 30, 2023
	Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
Cash	$	19,244	$	19,244	$	—	$	—
Money market funds	110,622		110,622		—		—
Total cash and cash equivalents	129,866		129,866		—		—
Short-term investments:
U.S. Treasury bills	60,696		60,696		—		—
Corporate debt securities	12,819		—		12,819		—
Commercial paper	400,153		—		400,153		—
U.S. Agency bonds	175,900		—		175,900		—
Total short-term investments	649,568		60,696		588,872		—
Long-term investment:
ORIC Pharmaceuticals, Inc.	4,565		4,565		—		—
Total	$	783,999	$	195,127	$	588,872	$	—

	December 31, 2022
	Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
Cash	$	53,033	$	53,033	$	—	$	—
Money market funds	174,262		174,262		—		—
U.S. Agency bonds	7,965		—		7,965		—
Total cash and cash equivalents	235,260		227,295		7,965		—
Short-term investments:
U.S. Treasury bills	221,362		221,362		—		—
Corporate debt securities	94,533		—		94,533		—
Commercial paper	442,743		—		442,743		—
U.S. Agency bonds	89,939		—		89,939		—
Total short-term investments	848,577		221,362		627,215		—
Long-term investment:
ORIC Pharmaceuticals, Inc.	3,465		3,465		—		—
Total	$	1,087,302	$	452,122	$	635,180	$	—

The Company’s investments in Level 1 assets are valued based on publicly available quoted market prices for identical securities as of June 30, 2023 and December 31, 2022. The Company determines the fair value of Level 2 related securities with the aid of valuations provided by third parties using proprietary valuation models and analytical tools. These valuation models and analytical tools use market pricing or prices for similar instruments that are both objective and publicly available, including matrix pricing or reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids and/or offers.

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The Company’s long-term investment in ORIC was considered a Level 3 fair value measurement during an eighteen-month lock-up period which required an adjustment for a discount for lack of marketability. During the lock-up period, the fair value measurement utilized a combination of the Asian Protective Put Option and Finnerty Put Option fair value techniques to determine the discount for lack of marketability. During the three months ended March 31, 2022, the eighteen-month lock-up period expired, and because ORIC common stock is quoted in an active market, it met the criteria of a Level 1 investment. During the three months ended March 31, 2022, the Company transferred the investment in ORIC from a Level 3 fair value measurement to a Level 1 fair value measurement. See Note 9 for further details on the license agreement with ORIC.

The following table represents the change in estimated fair value of and transfer activity for the Company’s Level 3 investment (in thousands):

Balance as of December 31, 2021	$	8,218
Change in fair value at lock-up expiration	(3,100)
Transfer from Level 3 to Level 1 at lock-up expiration	(5,118)
Balance as of March 31, 2022	$	—

Other than the investment in ORIC described above, there were no transfers between fair value measurement levels during the three and six months ended June 30, 2023 and 2022.

5.    Inventory

Inventory consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Raw materials	$	69	$	—
Work-in-process	8,034		2,994
Finished goods	541		26
Total inventory	$	8,644	$	3,020

The Company’s capitalized inventory consists of costs incurred subsequent to FDA approval of KRAZATI in December 2022. There were no inventory write downs during the three and six months ended June 30, 2023.

6.    Other Current Assets and Other Long-Term Assets

Other current assets and other long-term assets consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Other current assets:
Prepaid expenses	$	15,141	$	15,207
Deposits and other receivables	3,527		3,162
Interest receivables	1,648		2,870
Total other current assets	$	20,316	$	21,239
Other long-term assets:
Deposits and prepaid expenses	$	24,246	$	21,025
Restricted cash	620		620
Total other long-term assets	$	24,866	$	21,645

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7.    Intangible asset, net

Intangible asset, net consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Gross carrying value	$	15,000	$	15,000
Less: Accumulated amortization	(603)		(86)
Intangible asset, net	$	14,397	$	14,914

The Company has a finite-lived intangible asset, resulting from the capitalization of a milestone payment under the license and collaboration agreement with Array BioPharma, Inc. (“Array,” acquired by Pfizer Inc. (“Pfizer”) in July 2019), in connection with the Company’s first commercial sale of KRAZATI in the U.S. in December 2022 (see Note 9). The Company began amortizing the intangible asset in December 2022 over a 14.5-year period based on KRAZATI’s expected patent life, which is considered to be KRAZATI’s useful life. The Company incurred amortization expense of $0.3 million and $0.5 million for the three and six months ended June 30, 2023, respectively, which was included in cost of product revenue - intangible asset amortization in the condensed consolidated statements of operations and comprehensive loss. No amortization expense was recorded for the three and six months ended June 30, 2022.

As of June 30, 2023, the estimated future amortization expense associated with the Company’s intangible asset is as follows (in thousands):

Remainder of 2023	$	516
2024	1,034
2025	1,034
2026	1,034
2027	1,034
Thereafter	9,745
Total	$	14,397

8.    Accrued Liabilities and Other Liabilities

Accrued liabilities and other liabilities consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Accrued liabilities:
Accrued clinical expense	$	41,584	$	37,604
Accrued manufacturing expense	6,114		6,605
Accrued development expense	4,629		20,107
Accrued compensation and benefits	34,932		40,208
Accrued commercial expense	4,547		3,941
Accrued royalty expense	869		—
Accrued adjustments to product revenue	1,922		152
Lease liability (current)	7,961		7,844
Other accrued expenses	4,925		4,126
Total accrued liabilities	$	107,483	$	120,587
Other liabilities	$	3,380	$	3,022

Other liabilities as of June 30, 2023 and December 31, 2022 consisted primarily of clinical trial-related liabilities.

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9.    Revenue

Product revenue, net

The Company’s product revenue is related to U.S. sales of KRAZATI. Revenue is reduced at the time of recognition for the Company’s best estimate of chargebacks, government and commercial rebates, incentives, returns, trade discounts and other allowances to which customers are entitled. These reductions are currently attributed to various commercial arrangements.

During the three and six months ended June 30, 2023, $1.7 million of product revenue, net relates to sales of KRAZATI to a third-party commercial customer for its clinical trials. This revenue is recognized net of the Company’s best estimate of trade allowances.

As of June 30, 2023 and December 31, 2022, the Company’s accounts receivable balances of $10.5 million and $0.9 million, respectively, on the condensed consolidated balance sheets consisted of KRAZATI product sales receivable, net of chargebacks, discounts and allowances of $0.8 million and $0.1 million, respectively.

As of June 30, 2023 and December 31, 2022, the Company’s government and commercial rebates, program incentives and provision for product returns totaled $1.9 million and $0.2 million, respectively, and are included in accrued liabilities on the condensed consolidated balance sheets.

License and Collaboration Agreements

BeiGene Agreement

Terms of Agreement

On January 7, 2018, the Company and BeiGene Ltd. (“BeiGene”) entered into a Collaboration and License Agreement (the “BeiGene Agreement”), pursuant to which the Company and BeiGene agreed to collaboratively develop sitravatinib in Asia (excluding Japan and certain other countries), Australia and New Zealand (collectively, the “BeiGene Licensed Territory”). Under the BeiGene Agreement, the Company granted BeiGene an exclusive license to develop, manufacture and commercialize sitravatinib in the BeiGene Licensed Territory, with the Company retaining exclusive rights for the development, manufacture and commercialization of sitravatinib outside the BeiGene Licensed Territory.

As consideration for the rights granted to BeiGene under the BeiGene Agreement, BeiGene paid the Company a non-refundable, non-creditable up-front fee of $10.0 million. BeiGene is also required to make milestone payments to the Company of up to an aggregate of $123.0 million upon the first achievement of specified clinical, regulatory and sales milestones. The BeiGene Agreement additionally provides that BeiGene is obligated to pay the Company royalties at tiered percentage rates ranging from mid-single digits to twenty percent on annual net sales of licensed products in the BeiGene Licensed Territory, subject to reduction under specified circumstances. The BeiGene Agreement also provides that the Company will supply BeiGene with sitravatinib for use in BeiGene’s development activities in the BeiGene Licensed Territory.

The BeiGene Agreement will terminate upon the expiration of the last royalty term for the licensed products, which is the latest of (i) the date of expiration of the last valid patent claim related to the licensed products under the BeiGene Agreement, (ii) ten years after the first commercial sale of a licensed product and (iii) the expiration of any regulatory exclusivity as to a licensed product. BeiGene may terminate the BeiGene Agreement at any time by providing 60 days prior written notice to the Company. Either party may terminate the BeiGene Agreement upon a material breach by the other party that remains uncured following 60 days after the date of written notice of such breach or upon certain bankruptcy events. In addition, the Company may terminate the BeiGene Agreement upon written notice to BeiGene under specified circumstances if BeiGene challenges the licensed patent rights.

Revenue Recognition

The Company evaluated the BeiGene Agreement under Topic 606. At the time it entered into the BeiGene Agreement, the Company determined the transaction price was equal to the up-front fee of $10.0 million. The transaction price was allocated to the performance obligations on the basis of the relative stand-alone selling price estimated for each performance obligation. In estimating the stand-alone selling price for each performance obligation, the Company developed assumptions that require judgment and included forecasted revenues, expected development timelines, discount rates, probabilities of technical and regulatory success and costs for manufacturing clinical supplies. As such, of the up-front fee, the Company allocated $9.5 million to the license of the Company’s intellectual property, bundled with the associated know-how, and the

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remaining $0.5 million to the initial obligation to supply sitravatinib for clinical development in the BeiGene Licensed Territory.

Licenses of Intellectual Property.   The license to the Company’s intellectual property, bundled with the associated know-how, represents a distinct performance obligation and the Company recognized the full revenue amount of $9.5 million related to this performance obligation as license and collaboration revenues in 2018.

Manufacturing Supply Services.  The Company’s initial obligation to supply sitravatinib for clinical development in the BeiGene Licensed Territory represents a distinct performance obligation, and the $0.5 million initial supply obligation was fully recognized as license and collaboration revenues as of December 31, 2020. Although the initial performance obligation was satisfied, BeiGene may request additional sitravatinib in the future for clinical development in the BeiGene Licensed Territory. No revenue related to this performance obligation was recognized for the three and six months ended June 30, 2023 or 2022.

Milestone Payments. The Company is entitled to development milestones under the BeiGene Agreement and certain regulatory milestone payments which are paid upon receipt of regulatory approvals within the BeiGene Licensed Territory. No milestone payments were earned during the three and six months ended June 30, 2023 or 2022. The Company evaluated whether the remaining milestones are considered probable of being reached and determined that their achievement is highly dependent on factors outside of the Company’s control. Therefore, these payments have been fully constrained and are not included in the transaction price. At the end of each subsequent reporting period, the Company will re-evaluate the probability of achievement of each milestone and any related constraint, and if necessary, adjust its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect the reported amount of license and collaboration revenues in the period of adjustment.

Royalties.  As the license is deemed to be the predominant item to which sales-based royalties relate, the Company will recognize revenue when the related sales occur. No royalty revenue was recognized during the three and six months ended June 30, 2023 or 2022.

Pfizer Agreement

In October 2014, the Company entered into a drug discovery collaboration and option agreement with Array BioPharma, Inc. (“Array,” acquired by Pfizer Inc. (“Pfizer”) in July 2019) whereby Array provided services to facilitate the discovery, optimization and development of small molecule compounds that bind and specifically inhibit KRAS G12C. In June 2017, the two parties entered into a second, separate discovery collaboration and option agreement whereby Array provided services to facilitate the discovery, optimization and development of small molecule compounds that bind and specifically inhibit KRAS G12D. Both agreements established an option mechanism which enabled the Company to elect an exclusive worldwide license under the technology for the development and commercialization of certain products based on these compounds.

Under these agreements, following the joint discovery periods, which have since concluded, the Company exercised its options to retain exclusive worldwide licenses to develop, manufacture and commercialize inhibitors of KRAS G12C and KRAS G12D, including, but not limited to, adagrasib and MRTX1133. Under each agreement, Pfizer is entitled to potential development milestone payments of up to $9.3 million from the Company, and tiered sales milestone payments of up to $337.0 million based upon worldwide net sales, and tiered royalties in the high single digits to mid-teens on worldwide net sales of products arising from the collaborations. Under the agreements, the Company has incurred an aggregate of $10.5 million in development milestone payments and a $15.0 million commercial milestone payment relating to the first sale of KRAZATI in the U.S. from inception through June 30, 2023. The $15.0 million milestone payment relating to the first commercial sale of KRAZATI in the U.S. was capitalized as an intangible asset as of December 31, 2022 (see Note 7).

During the three and six months ended June 30, 2023, the Company incurred zero and $1.0 million, respectively, in development milestone payments, for initiation of the first Phase 1 trial for MRTX1133 which was recorded as a research and development expense in the condensed consolidated statement of operations and comprehensive loss. During the three and six months ended June 30, 2023, the Company also incurred $0.9 million and $1.4 million, respectively, of royalties on net sales of KRAZATI which were recorded as cost of product revenue in the condensed consolidated statement of operations and comprehensive loss. No expenses were incurred under these agreements with Pfizer during the three and six months ended June 30, 2022.

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The royalty term for each agreement is payable on a country-by-country and product-by-product basis, and separately will terminate at the later of (i) the date of expiration of the last valid patent claim within the collaboration patent rights or the Pfizer background technology covering such product in the country in which such product is sold at the time of such sale, or (ii) ten years after the first commercial sale of such product in such country. The Company may terminate each agreement at any time by providing 60 days prior written notice to Pfizer. Either party may terminate each agreement upon a material breach by the other party that remains uncured following 60 days after the date of written notice of such breach or upon certain bankruptcy events.

ORIC Pharmaceuticals Agreement

Terms of Agreement

On August 3, 2020, the Company entered into a license agreement with ORIC Pharmaceuticals, Inc. (“ORIC”) pursuant to which the Company granted to ORIC an exclusive, worldwide license to develop and commercialize the Company’s allosteric polycomb repressive complex 2 (“PRC2”) inhibitors for all indications (the “ORIC Agreement”). In accordance with the terms of the ORIC Agreement, in exchange for such license, ORIC issued 588,235 shares of its common stock (the “Shares”) to the Company on August 3, 2020. The Shares were issued under a stock issuance agreement entered into between ORIC and the Company, dated August 3, 2020. During the eighteen-month period following the date of the stock issuance agreement, the Company was subject to certain transfer restrictions. ORIC is not obligated to pay the Company milestone payments or royalty payments under the ORIC Agreement.

Unless terminated earlier, the ORIC Agreement will continue in effect on a country-by-country and licensed product-by-licensed product basis until the later of (a) the expiration of the last valid claim of a licensed patent covering such licensed product in such country or (b) ten years after the first commercial sale of such licensed product in such country. Following the expiration of the ORIC Agreement, ORIC will retain its licenses under the intellectual property the Company licensed to ORIC on a royalty-free basis. The Company and ORIC may each terminate the ORIC Agreement if the other party materially breaches the terms of such agreement, subject to specified notice and cure provisions, or enters into bankruptcy or insolvency proceedings. The Company may terminate the agreement if ORIC challenges any of the patent rights licensed to ORIC by the Company or if ORIC discontinues development of licensed products for a specified period of time. ORIC also has the right to terminate the ORIC Agreement without cause by providing prior written notice to the Company.

Revenue Recognition

The Company accounted for the ORIC Agreement under Topic 606 and identified the granting of an exclusive, worldwide license to develop and commercialize the Company’s allosteric PRC2 inhibitors for all indications as a distinct performance obligation since ORIC can benefit from the license on its own by developing and commercializing the underlying product using its own resources.

In determining the transaction price, the Company received the Shares as non-cash consideration. The Company allocated the entire transaction price to the distinct performance obligation described above, and the license and related know-how was transferred to ORIC during the third quarter of 2020. Therefore, the Company recognized the entire transaction price of $11.4 million during 2020 and classified the amount as license and collaboration revenues in its condensed consolidated statements of operations and comprehensive loss.

The Shares are carried at fair value and are recorded on the condensed consolidated balance sheet as a long-term investment. Any change in fair value is recorded within other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

Zai Agreement

Terms of Agreement

On May 28, 2021, the Company and Zai Lab Ltd. (“Zai”) entered into a Collaboration and License Agreement (the “Zai Agreement”), pursuant to which the Company and Zai agreed to collaboratively develop adagrasib in China, Hong Kong, Macau and Taiwan (collectively, the “Zai Licensed Territory”). Under the Zai Agreement, the Company granted Zai the rights to research, develop, manufacture and exclusively commercialize adagrasib in all indications in the Zai Licensed Territory, with the Company retaining exclusive rights for the development, manufacture and commercialization of adagrasib outside the Zai Licensed Territory and certain co-commercialization, manufacture, and development rights in the Zai Licensed Territory. Zai is

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obligated to participate in selected global, registration-enabling clinical trials and enroll patients in the Zai Licensed Territory at Zai’s expense.

As consideration for the rights granted to Zai under the Zai Agreement, Zai agreed to pay the Company a non-refundable, non-creditable up-front fee of $65.0 million. Under the Zai Agreement, the Company is entitled to potential development and regulatory-based milestone payments of up to $93.0 million, and tiered sales milestone payments of up to $180.0 million based on net sales in the Zai Licensed Territory. The Zai Agreement additionally provides that Zai is obligated to pay to the Company royalties at tiered percentage rates ranging from the high-teens to the low-twenties on annual net sales of licensed products in the Zai Licensed Territory, subject to reduction under specified circumstances. The Zai Agreement also provides that the Company will supply Zai with adagrasib for use in Zai’s development activities in the Zai Licensed Territory at Zai's expense.

The Zai Agreement will terminate on a licensed product-by-licensed product basis and on a region-by-region basis in the Zai Licensed Territory, upon the later to occur of (i) the date of expiration of the last valid claim covering such licensed product in such region, (ii) the date that is ten years after the date of the first commercial sale in such region and (iii) the expiration date of any regulatory exclusivity for such licensed product in such region, or for a co-commercialized product on the date the parties agree to terminate such co-commercialization, or in its entirety upon the expiration of all payment obligations under the Zai Agreement. Zai may terminate the Zai Agreement at any time by providing 12 months’ notice to the Company. Either party may terminate the Zai Agreement upon a material breach by the other party that remains uncured or upon certain bankruptcy events. In addition, the Company may terminate the Zai Agreement if Zai challenges the licensed patent rights.

Revenue Recognition

The Company evaluated the Zai Agreement under Topic 606. The Company determined that two performance obligations existed: (1) the license to intellectual property, bundled with the associated know-how and (2) the Company's initial obligation to supply adagrasib for clinical development in the Zai Licensed Territory. At the time it entered into the Zai Agreement, the Company determined the transaction price was equal to $66.6 million, which includes the up-front fee and other incidental amounts. In estimating the stand-alone selling price for each performance obligation, the Company developed assumptions that require judgment and included forecasted revenues, expected development timelines, discount rates, probabilities of technical and regulatory success, forecasted costs for manufacturing clinical supplies and cost savings related to Zai's participation in selected trials. The Company allocated the full transaction price to the license to the Company’s intellectual property, bundled with the associated know-how. The Company concluded the variable payments related to the Company’s initial obligation to supply adagrasib for clinical development in the Zai Licensed Territory relate specifically to the Company’s efforts to satisfy this performance obligation and the obligation to provide the initial clinical supply approximates the stand-alone selling price. Payments under the Zai Agreement are subject to foreign tax withholdings.

Licenses of Intellectual Property.   The license to the Company’s intellectual property, bundled with the associated know-how, represents a distinct performance obligation. The license and associated know-how was transferred to Zai during the third quarter of 2021 and, therefore during 2021, the Company recognized the full revenue amount of $66.6 million as license and collaboration revenues and $3.3 million as income tax expense in its condensed consolidated statements of operations and comprehensive loss.

Manufacturing Supply Services.  The Company’s initial obligation to supply adagrasib for clinical development in the Zai Licensed Territory represents a distinct performance obligation. As such, the Company will recognize revenue when Zai obtains control of the goods. The Company recognized $0.3 million and $1.2 million of revenue related to this performance obligation for the three and six months ended June 30, 2023, respectively. The Company recognized $0.4 million and $1.1 million of revenue related to this performance obligation for the three and six months ended June 30, 2022, respectively. The Company may also become responsible for manufacturing adagrasib for commercial supply and will receive reimbursement that approximates stand-alone selling prices.

Milestone Payments. The Company is entitled to development milestone payments and certain regulatory and sales milestone payments which are paid upon achievement of the development milestones, upon receipt of regulatory approvals and annual net sales thresholds within the Zai Licensed Territory under the Zai Agreement. No milestone payments were earned during the three and six months ended June 30, 2023. The Company earned a $5.0 million milestone payment related to the initiation of the first pivotal clinical trial of adagrasib for the first indication in China during the three and six months ended June 30, 2022. The Company evaluated whether or not the milestones are considered probable of being reached and determined that their

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achievement is highly dependent on factors outside of the Company’s control. These payments have been fully constrained and therefore are not included in the transaction price. At the end of each subsequent reporting period, the Company will re-evaluate the probability of achievement of each milestone and any related constraint and, if necessary, adjust its estimate of the overall transaction price. Any such adjustments will be recorded on a cumulative catch-up basis, which would affect the reported amount of license and collaboration revenues in the period of adjustment.

Royalties.  As the license is deemed to be the predominant item to which sales-based royalties relate, the Company will recognize revenue when the related sales occur. No royalty revenue was recognized during the three and six months ended June 30, 2023 or 2022.

10.    Shareholders’ Equity

At the Market Facility

On July 2, 2020, the Company entered into a sales agreement pursuant to which the Company may, from time to time, sell shares of the Company’s common stock, par value $0.001 per share, having an aggregate offering price of up to $200.0 million. On July 2, 2021, the Company entered into an amended and restated sales agreement pursuant to which the Company may, from time to time, sell shares of the Company’s common stock, par value $0.001 per share, having an aggregate offering price of up to $500.0 million. During the three and six months ended June 30, 2023 and 2022, no shares of common stock were issued and sold under this sales agreement. As of June 30, 2023, the Company has issued and sold an aggregate of 1,880,097 shares of common stock pursuant to this sales agreement generating net proceeds of $155.0 million.

Share-based Compensation

Total share-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development expense	$	18,399	$	22,807	$	43,038	$	49,067
Selling, general and administrative expense	21,000		15,877		43,322		32,522
	$	39,399	$	38,684	$	86,360	$	81,589

Issuances Under Equity Incentive Plans

During the three and six months ended June 30, 2023, 85,464 and 379,321 shares of common stock were issued under the Company’s equity incentive plans, generating net proceeds of $0.5 million and $2.2 million, respectively. During the three and six months ended June 30, 2022, 51,264 and 205,836 shares of common stock were issued under the Company’s equity incentive plans, generating net proceeds of $0.4 million and $2.9 million, respectively.

Issuances Under Employee Stock Purchase Plan

On May 11, 2023, an amendment to the Company’s 2013 Employee Stock Purchase Plan (“ESPP”) was approved by the Company’s shareholders, to increase the aggregate number of shares of common stock reserved for issuance under the ESPP by 750,000 shares. During the three and six months ended June 30, 2023, 105,352 shares of common stock were issued under the Company’s ESPP, generating net proceeds of $3.3 million. During the three and six months ended June 30, 2022, 29,891 shares of common stock were issued under the Company’s ESPP, generating net proceeds of $1.0 million.

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Warrants

As of June 30, 2023, the following warrants for common stock were issued and outstanding:

Issue Date	Expiration Date	Exercise Price		Number of Warrants Outstanding
January 11, 2017	None	$	0.001	3,578,036
November 20, 2017	None	$	0.001	3,669,360
June 11, 2018	None	$	0.001	358,415
				7,605,811

No warrants were exercised during the three and six months ended June 30, 2023 or 2022.

11.    Commitments and Contingencies

On June 30, 2020, the Company entered into an amended and restated lease agreement (the “Amended and Restated Lease”) for office and laboratory space located in San Diego, California, for the Company’s current corporate headquarters, which supercedes the original lease agreement dated August 22, 2019. The Amended and Restated Lease has a lease term of 12 years (“Lease Term”), unless terminated earlier. The Lease Term has an initial abatement period, and the initial base rent payable will be approximately $0.6 million per month following the abatement period, which amount will increase by 3% per year over the Lease Term. The Company also received incentives from the landlord for tenant improvements. During 2020, the underlying asset was available for use by the Company to construct tenant improvements and therefore, the Lease Term was considered to have commenced.

The Amended and Restated Lease is considered to be an operating lease, and the Company used a discount rate of 12% to calculate the value of its lease payments over the Lease Term. As of June 30, 2023, the condensed consolidated balance sheet includes an operating right-of-use asset of $35.4 million and a total operating lease liability of $50.7 million, of which $8.0 million is a current lease liability and included in accrued liabilities, and $42.7 million is included in non-current lease liability. As of December 31, 2022, the condensed consolidated balance sheet includes an operating right-of-use asset of $36.1 million and a total operating lease liability of $51.5 million, of which $7.8 million is a current lease liability and included in accrued liabilities, and $43.7 million is included in non-current lease liability. For the three and six months ended June 30, 2023, the Company recorded operating lease expense of $2.0 million and $3.9 million, respectively. For the three and six months ended June 30, 2022, the Company recorded operating lease expense of $1.9 million and $3.8 million, respectively.

As of June 30, 2023, the approximate future minimum lease payments under the Amended and Restated Lease are as follows (in thousands):

	Operating Lease
Remainder of 2023	$	3,951
2024	8,080
2025	8,322
2026	8,572
2027	8,829
Thereafter	50,857
Total operating lease payments(†)	88,611
Less: Amount representing interest	(37,928)
Total lease liability	$	50,683

____________________

†The Company has an early termination right in 2028 in which the total contractual obligation would be reduced by $41.1 million.

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Legal Proceedings

The Company is subject to asserting or defending various claims, complaints and legal actions that arise from time to time in the normal course of business, including commercial insurance, product liability, intellectual property and employment related matters, and none of which the Company deems material.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes included in this Quarterly Report on Form 1O-Q and the audited financial statements and notes thereto as of and for the year ended December 31, 2022 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K filed by us with the Securities and Exchange Commission (“SEC”).

This Quarterly Report on Form 10-Q may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such forward-looking statements, which represent our intent, belief, or current expectations, involve risks and uncertainties. We use words such as “may,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “predict,” “potential,” “believe,” “should” and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements may include, but are not limited to, statements concerning projections about our accounting and finances, plans and objectives for the future, future operating and economic performance and other statements regarding future performance. Although we believe the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risk and we can give no assurances that our expectations will prove to be correct. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. As a result of many factors, including without limitation those set forth under “Risk Factors” under Item 1A of Part II below, and elsewhere in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements. We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes.

References in the following discussion to “we,” “our,” “us,” or “Mirati” refer to Mirati Therapeutics, Inc. and its subsidiaries. 

Overview

Mirati Therapeutics, Inc. is a commercial-stage oncology company developing novel therapeutics to address the genetic and immunological promoters of cancer.

We have multiple KRAS inhibitor programs. KRAZATI is our first commercial product. KRAZATI was approved by the FDA in December 2022 and we commenced commercial sales in the U.S. at that time. KRAZATI is an oral targeted treatment option for adult patients with KRAS G12C-mutated locally advanced or metastatic NSCLC, as determined by an FDA-approved test, who have received at least one prior systemic therapy. Adagrasib (KRAZATI®) is in clinical development as a monotherapy and in combination with other agents. MRTX1133 is an investigational, selective, specific and potent KRAS G12D inhibitor. In January 2023, the FDA cleared our investigational new drug application (“IND”) for MRTX1133 for clinical evaluation.

Sitravatinib is an investigational spectrum-selective kinase inhibitor designed to potently inhibit receptor tyrosine kinases (“RTK”s) and enhance immune responses through the inhibition of immunosuppressive signaling. On May 24, 2023, we announced that the SAPPHIRE study did not meet its primary endpoint of overall survival at the final analysis. We do not currently have plans to pursue further clinical development of sitravatinib.

MRTX1719 is an investigational synthetic lethal PRMT5 inhibitor designed to specifically target the PRMT5/methylthioadensoine (MTA) complex and is in clinical development.

MRTX0902 is a potent, selective SOS1 inhibitor, designed to improve anti-tumor efficacy in combination with targeted mitogen-activated protein kinase (MAPK)-pathway inhibitors, and is in clinical development.

The Company also has additional discovery programs of potentially first-in-class and best-in-class product candidates specifically designed to address mutations and tumors where few treatment options exist. We approach all of our programs with a singular focus: to translate our deep understanding of the molecular drivers of cancer into better therapies and better outcomes for patients.

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KRAS Inhibitor Programs

The RAS family of genes is the most commonly mutated oncogene and mutations in this gene family occur in up to approximately 25% of all human cancers. Among the RAS family members, mutations most frequently occur in KRAS (approximately 85% of all RAS family mutations). Tumors characterized by KRAS mutations are commonly associated with poor prognosis and resistance to therapy. Nonclinical studies have demonstrated that cancer cells exhibiting KRAS mutations are highly dependent on KRAS function for cell growth and survival. Our KRAS inhibitor programs are focused on the discovery and development of small molecule compounds that target various forms of KRAS, including KRAS G12C, KRAS G12D and other forms of spectrum-selective KRAS inhibitors. We are pursuing development of our KRAS G12C and KRAS G12D inhibitor programs in both single agent and rational combination approaches.

KRAZATI, a selective KRAS G12C inhibitor

KRAZATI is a commercially available, selective, specific, potent and orally available KRAS G12C inhibitor, designed to directly inhibit KRAS G12C mutations. Adagrasib also continues to be in clinical development varying from Phase 1 through Phase 3. KRAS G12C mutations are present in approximately 14% of NSCLC adenocarcinoma patients, 3-4% of colorectal cancer (“CRC”) patients, 2% of pancreatic cancer patients, as well as smaller percentages of several other difficult-to-treat cancers.

Approval of KRAZATI

On December 12, 2022, we received accelerated approval by the FDA for KRAZATI, a targeted treatment option for adult patients with KRAS G12C-mutated locally advanced or metastatic NSCLC, as determined by an FDA-approved test, who have received at least one prior systemic therapy. In connection with the accelerated approval, we are required to complete KRYSTAL-12 and other post-marketing commitments. The NDA was reviewed by the FDA for Accelerated Approval (Subpart H), which allows for the approval of drugs that treat serious conditions, and that fill an unmet medical need based on a surrogate endpoint. In addition, this application was reviewed under the FDA Real-Time Oncology Review pilot program, which aims to explore a more efficient review process that ensures safe and effective treatments are made available to patients as early as possible, and achieved Breakthrough Therapy Designation for patients with NSCLC who harbor the KRAS G12C mutation following prior systemic therapy, and Breakthrough Therapy Designation for patients with advanced CRC whose cancer has progressed following prior treatment with chemotherapy and an anti-VEGF therapy. In April 2022, we submitted a Marketing Authorization Application (“MAA”) to the European Medicines Agency (“EMA”) for adagrasib for the treatment of patients with NSCLC harboring the KRAS G12C mutation who have received at least one prior systemic therapy. On July 21 2023, we announced that the Committee for Medicinal Products for Human Use (“CHMP”) of the EMA adopted a negative opinion on the application for conditional marketing authorisation for KRAZATI, for the treatment of KRAS G12C-mutated advanced non-small cell lung cancer. The evaluation of the full MAA is not impacted and will be considered by the CHMP following the data from KRYSTAL-12, a Phase 3 clinical study of adagrasib versus docetaxel in second line NSCLC patients. On July 27, 2023, we submitted a request for re-examination to the CHMP. The Company also has an Expanded Access Program for KRAZATI for the treatment of eligible patients with KRAS G12C-mutated cancers regardless of tumor type in Europe.

KRYSTAL-1 Trial

We received FDA clearance of our IND for adagrasib in November 2018, and, in January 2019, we initiated the dose escalation phase of KRYSTAL-1, a Phase 1/2 multiple expansion cohort clinical trial evaluating adagrasib in patients with advanced solid tumors that harbor KRAS G12C mutations both in monotherapy and in combination with other anticancer therapies. Following single agent dose escalation, the KRYSTAL-1 trial was expanded into multiple cohorts in which adagrasib is being evaluated both in monotherapy and in combination with other compounds in patients with NSCLC, CRC and those with other tumors that carry the KRAS G12C mutation.

The KRYSTAL-1 trial is evaluating the combination of adagrasib and a PD-1 inhibitor (pembrolizumab) in patients with NSCLC, the combination of adagrasib and a pan-EGFR inhibitor (afatinib) in patients with advanced NSCLC, and the combination of adagrasib and an anti-EGFR antibody (cetuximab) in patients with CRC.

On December 21, 2022, adagrasib received Breakthrough Therapy Designation from the FDA for patients with advanced CRC harboring a KRAS G12C mutation, whose cancer has progressed following prior treatment with chemotherapy and an anti-VEGF therapy. We expect to move forward with an application for Accelerated Approval in third-line or later KRAS G12C-mutated advanced CRC and expect to submit a supplemental NDA by the end of 2023.

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On September 7, 2022, we presented results from KRYSTAL-1, a multi-cohort Phase 1/2 study, evaluating adagrasib with or without cetuximab in patients with advanced CRC harboring a KRAS G12C mutation.

•In this analysis, 44 patients received adagrasib monotherapy (600mg twice daily (“BID”)) and 32 patients received the combination of adagrasib (600mg BID) with full dose cetuximab, with a follow up of 20.1 months and 17.5 months, respectively.

•Of the evaluable patients in the adagrasib monotherapy cohort (n=43), the investigator assessed confirmed objective response rate (“ORR”) was 19% (8/43) and the disease control rate (“DCR”) was 86% (37/43). The median duration of response was 4.3 months (95% CI, 2.3–8.3) and median progression-free survival (“PFS”) was 5.6 months (95% CI, 4.1–8.3).

•Of the evaluable patients in the adagrasib plus cetuximab combination cohort (n=28), the investigator assessed confirmed ORR was 46% (13/28) and the DCR was 100% (28/28). The median duration of response (“DOR”) was 7.6 months (95% CI 5.7–NE) and median PFS was 6.9 months (95% CI, 5.4–8.1).

•In the overall subset of patients with KRAS G12C-mutated CRC evaluated in this study, adagrasib was found to be well-tolerated as a monotherapy and in combination with cetuximab. The majority of observed treatment-related adverse events (“TRAEs”) were grade 1–2 (59%); no grade 5 TRAEs were observed.

On May 26, 2022, we presented results from the registration-enabling Phase 2 cohort of KRYSTAL-1 study, evaluating adagrasib at 600mg BID in patients with NSCLC harboring the KRAS G12C mutation who have received at least one prior systemic therapy.

•As of October 15, 2021, 116 patients were enrolled and treated in the study. Of the patients enrolled, 98% had prior treatment with a PD-1/L1 inhibitor following or in combination with chemotherapy. Median follow up was 12.9 months.

•Of the patients evaluable for response (n=112), initial results showed that the ORR by Blinded Independent Central Review (“BICR”) was 43%, the DCR was 80%, the median DOR was 8.5 months (95% confidence interval [CI]: 6.2 – 13.8), and the median PFS was 6.5 months (95% CI: 4.7 – 8.4).

•With a January 15, 2022 data cutoff, the median overall survival (“OS”) was 12.6 months (95% CI: 9.2 – 19.2).

•The safety profile of adagrasib in this study was consistent with prior reports and no new safety signals were observed. The most frequent TRAEs included gastrointestinal events and fatigue. The majority of TRAEs were Grade 1–2 (53%) with Grade 3–4 TRAEs observed in 43% of patients. Two Grade 5 TRAEs were observed. TRAEs led to discontinuation of therapy in only 7% of patients.

In addition to these results, we reported findings from a pooled analysis in a total of 132 NSCLC patients from the KRYSTAL-1 study, including the registrational Phase 2 and Phase 1/1b cohorts evaluating adagrasib at a dose of 600mg BID.

•As of October 15, 2021, results from this pooled analysis showed an ORR of 44% and a DCR of 81% based on BICR. The median DOR was 12.5 months and the median PFS was 6.9 months.

•With a January 15, 2022 data cutoff and a median duration of follow-up of 15.9 months, the median OS was 14.1 months.

•The safety and tolerability observed in this pooled analysis was consistent with what was reported with the Phase 2 cohort of KRYSTAL-1 noted above.

On June 6, 2022, we announced results of a prospective analysis from the Phase 1b cohort of the KRYSTAL-1 study evaluating intracranial (IC) responses of adagrasib in patients with KRAS G12C-mutated NSCLC with active and untreated central nervous system (CNS) metastases. With a median follow up of 6.6 months, 25 patients with active, untreated CNS metastases were enrolled in the study and treated with adagrasib 600mg BID, as of data cutoff date of December 2021. Of the radiographically evaluable patients (n=19), results showed an IC ORR of 32% by modified response assessment in neuro-oncology-brain metastases (modified RANO-BM) by BICR. Three patients achieved a complete response and three patients

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achieved a partial response. The IC disease control rate was 84%, and concordance of disease control between systemic and IC responses was 88%.

On June 6, 2022, we also provided updated results from the Phase 1b cohort of the KRYSTAL-1 trial evaluating the combination of adagrasib and a PD-1 inhibitor (pembrolizumab) in eight patients with KRAS G12C-mutated first-line NSCLC. The Phase 1b data showed adagrasib 400mg BID plus pembrolizumab had a manageable tolerability profile with no TRAEs leading to dose discontinuation. Of the seven patients evaluable for a response as of January 15, 2022, four had a confirmed RECIST-defined partial response and one additional patient, who is still on study, experienced 49% tumor regression in the first scan, which allowed for tumor resection prior to achieving a RECIST-defined confirmed response. The DCR was 100%, with all seven patients exhibiting tumor regression ranging from 37% to 81%. With a median duration of treatment of 12.9 months, four of the seven patients remained on treatment, as of the data cutoff date, and neither the median DOR nor median PFS had been reached.

On October 9, 2021, we presented preliminary results from a cohort of the KRYSTAL-1 clinical trial evaluating adagrasib at 600mg BID as monotherapy for patients with pancreatic ductal adenocarcinoma harboring a KRAS G12C mutation arm (n=12). Of the evaluable patients (n=10), preliminary results showed an investigator assessed ORR of 50%, including an unconfirmed PR, and a DCR of 100%.

Preliminary efficacy data was assessed as of August 30, 2020 in six patients with advanced solid tumors, other than NSCLC and CRC, treated with adagrasib as a monotherapy at 600mg BID dose from a Phase 1/1b cohort. One patient each with pancreatic, ovarian, endometrial and cholangiocarcinoma tumors were treated and had a confirmed PR to therapy. Two appendiceal cancer patients had stable disease and all six eligible patients remained on treatment.

KRYSTAL-7

In December 2020, we initiated KRYSTAL-7, the Phase 2 clinical trial includes the evaluation of the combination of adagrasib at 400mg BID with a PD-1 inhibitor (pembrolizumab) in patients with first-line NSCLC stratified by <1% Tumor Proportion Score (“TPS”) score and ≥1% TPS score. The study was fully enrolled in July 2023.

On December 7, 2022, we presented preliminary results from the KRYSTAL-7 Phase 2 trial and KRYSTAL-1 Phase 1b cohort evaluating adagrasib (400mg twice daily) concurrently combined with pembrolizumab in patients for the treatment of first-line NSCLC harboring a KRAS G12C mutation across all PD-L1 subgroups.

•Adagrasib in combination with pembrolizumab demonstrated favorable tolerability and promising preliminary efficacy in patients with first-line advanced/metastatic NSCLC harboring a KRAS G12C mutation.

•The KRYSTAL-7 and KRYSTAL-1 trials represented the largest dataset to date evaluating a KRAS G12C inhibitor in combination with a PD-1/L1 checkpoint inhibitor as a first-line treatment for patients with NSCLC harboring a KRAS G12C mutation.

•75 patients were enrolled and evaluable for safety with a median follow-up of 3.5 months (duration of treatment: two months). TRAEs were Grade 1-2 (39%), Grade 3 (40%) and Grade 4 (4%); there were no Grade 5 TRAEs observed. TRAEs led to discontinuation of both adagrasib and pembrolizumab in two patients and only pembrolizumab in two patients; there were no patients who discontinued only adagrasib due to a TRAE.

•Increases in alanine transaminase (“ALT”)/aspartate transaminase (“AST”) were consistent with either agent as a monotherapy with Grade 3 TRAEs being highest grade and total incidence of Grade 3 liver function test (“LFT”) increases of 9%. Median time from onset to an increase in ALT and AST was 26 and 37 days, respectively, and only one patient experienced new onset treatment-related ALT/AST increase after 3 months.

•Of patients who were clinically evaluable and received at least one on-study scan (n=53), adagrasib and pembrolizumab demonstrated promising preliminary clinical activity across all PD-L1 subgroups with an ORR of 49%.

•In a subset of response-evaluable patients enrolled at least six months prior to the data cutoff date, six of 26 clinical responses occurred at second on-study scan or later, and the ORR was 56%.

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•Seven evaluable patients enrolled in the KRYSTAL-1 Phase 1b cohort (with a median follow-up of 19.3 months) reported an ORR of 57% and a DCR of 100%. The four patients who responded maintained response for over nine months while two continued to receive treatment and remain in response beyond 18 months.

•Safety in the KRYSTAL-1 Phase 1b cohort was consistent with what has been observed in KRYSTAL-7 and demonstrated a manageable safety profile with no Grade 4-5 TRAEs.

On August 8, 2023, we presented updated preliminary results from the KRYSTAL-7 Phase 2 trial and KRYSTAL-1 Phase 1b cohort evaluating adagrasib (400mg twice daily) concurrently combined with pembrolizumab in patients for the treatment of first-line NSCLC harboring a KRAS G12C mutation across all PD-L1 subgroups as of the data cutoff date of February 28, 2023.

•147 patients were enrolled and evaluable for safety with a median follow-up of 6.4 months. TRAEs were Grade 1 (12%), Grade-2 (18%), Grade 3 (52%) and Grade 4 (9%); there were no Grade 5 TRAEs observed. TRAEs led to discontinuation of either adagrasib or pembrolizumab in 18% of patients and both adagrasib and pembrolizumab in 4% of patients.

•The combination demonstrated low rates of clinically meaningful liver TRAEs. Liver-related TRAEs lead to discontinuation in just 2 patients. Median time from onset to an increase in ALT and AST was 32 and 42 days, respectively, and only 4 patients experienced new onset treatment-related ALT/AST increase after 3 months.

•In patients with TPS scores of ≥50% (n=56), adagrasib plus pembrolizumab demonstrated promising preliminary clinical activity with an ORR in the full analysis set of 63%. Of patients who were clinically evaluable and received at least one on-study scan (n=49), adagrasib plus pembrolizumab demonstrated an ORR of 71%.

•As of the data cutoff date, neither the median DOR nor median PFS had been reached.

•We expect to move forward with the advancement of the adagrasib plus pembrolizumab regimen into a pivotal Phase 3 study in patients with TPS scores ≥50% by the end of 2023.

•In patients with TPS scores of <50%, these updated data showed clinical activity, but suggest that the adagrasib plus pembrolizumab regimen will not be sufficient to displace the existing standard of care (KEYNOTE-189 regimen of carboplatin, pemetrexed and pembrolizumab) for these patients.

KRYSTAL-17

In the second quarter of 2023, we initiated a cohort in KRYSTAL-17, a Phase 2 clinical trial, evaluating adagrasib in combination with pembrolizumab and chemotherapy in patients with advanced first line NSCLC with TPS < 50%. Safety and preliminary efficacy data from this study will inform further development plans in patients with TPS < 50%.

KRYSTAL-10, KRYSTAL-12 and KRYSTAL-21

In the first quarter of 2021, we initiated two registration-enabling Phase 3 clinical trials. KRYSTAL-10 is evaluating the combination of adagrasib and an anti-EGFR antibody (cetuximab) randomized against chemotherapy in patients with second-line CRC. KRYSTAL-12 is evaluating adagrasib as a monotherapy randomized against docetaxel in patients with second-line NSCLC. In the second quarter of 2023, we initiated KRYSTAL-21, a phase 2 clinical trial evaluating adagrasib as a monotherapy under two dosing regimens. The study will evaluate the efficacy of two dosing regimens of adagrasib (600 mg BID without regard to food versus 400 mg BID with food) in NSCLC patients with KRAS G12C mutation and who have received prior treatment with a platinum-based regimen and immune checkpoint inhibitor therapy.

Adagrasib Development in Collaboration with Zai Lab Ltd. (“Zai”)

In May 2021, we entered into a Collaboration and License Agreement with Zai (the “Zai Agreement”). Under the Zai Agreement, we granted Zai the right to research, develop, manufacture and exclusively commercialize adagrasib in all indications in China, Macau, Hong Kong and Taiwan (collectively, the “Zai Licensed Territory”), with Mirati retaining exclusive rights for the development, manufacture and commercialization of adagrasib outside the Zai Territory and certain co-commercialization, manufacture, and development rights in the Zai Licensed Territory. In June 2022, Zai initiated the first pivotal clinical trial of adagrasib for the first indication in China. In July 2022, Zai initiated the first pivotal clinical trial of adagrasib for the second indication in China.

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Adagrasib Development in Collaboration with Others

In 2020, we initiated KRYSTAL-2, a Phase 1/2 clinical trial evaluating the combination of adagrasib and a SHP-2 inhibitor (TNO-155) in patients with advanced NSCLC and advanced CRC. In 2021, we initiated KRYSTAL-14, a Phase 1/2 clinical trial evaluating the combination of adagrasib and a SOS1 inhibitor (BI 1701963) in patients with advanced NSCLC, and we initiated KRYSTAL-16, a Phase 1/1b clinical trial evaluating the combination of adagrasib and a CDK4/6 inhibitor (palbociclib) in patients with advanced solid tumors with KRAS G12C mutation. The KRYSTAL-2, KRYSTAL-14 and KRYSTAL-16 clinical trials are no longer enrolling patients. In October 2022, we entered into a clinical collaboration with Aadi Bioscience to evaluate the combination of adagrasib with nab-sirolimus, a small molecule mTOR inhibitor complexed with human albumin, in patients with KRAS G12C-mutant NSCLC and other solid tumors. In November 2022, we entered into a clinical collaboration with Incyte to evaluate the combination of adagrasib with INCB99280, a small molecule PD-L1 inhibitor, in patients with KRAS G12C-mutated solid tumors.

MRTX1133, a selective KRAS G12D inhibitor

MRTX1133, our lead KRAS G12D compound, is an investigational, selective, specific and potent inhibitor of KRAS G12D. On January 19, 2023, the FDA cleared the IND application of an oral formulation of MRTX1133 for clinical evaluation. We initiated a Phase 1 clinical trial evaluating MRTX1133 in patients with advanced solid tumor malignancy harboring a G12D mutation in the first quarter of 2023. KRAS G12D mutations have been detected in over 25 different types of cancer, including pancreatic, colon, lung and endometrial adenocarcinoma. The prevalence of cancers harboring KRAS G12D mutations exceeds the prevalence of KRAS G12C positive cancers by greater than two-fold and is an area of significant unmet medical need.

On October 25, 2020 we announced initial preclinical in vivo data from MRTX1133. Based on preclinical analyses, MRTX1133 has a projected human half-life of greater than 50 hours and exhibits a low propensity for drug interactions or off-target pharmacology. MRTX1133 demonstrated tumor regression in multiple in vivo tumor models, including pancreatic and colorectal cancers. MRTX1133 has a low predicted target plasma concentration based on its potency and high unbound fraction.

Sitravatinib

Sitravatinib is a spectrum-selective kinase inhibitor designed to potently inhibit receptor tyrosine kinases (“RTK”s), including TAM family receptors (TYRO3, Axl, Mer), split family receptors (VEGFR2, KIT) and RET. In April 2022, we completed enrollment in SAPPHIRE, a Phase 3 clinical trial in second-line non-squamous NSCLC patients whose tumors have progressed on prior therapy with platinum-chemotherapy in combination with a checkpoint inhibitor or third-line non-squamous NSCLC patients who have received chemotherapy followed by a checkpoint inhibitor. SAPPHIRE compared the combination of sitravatinib plus nivolumab randomized to docetaxel. On May 24, 2023, we announced that the SAPPHIRE study did not meet its primary endpoint of overall survival at the final analysis. We do not currently have plans to pursue further clinical development of sitravatinib.

Sitravatinib Development in Collaboration with BeiGene

In January 2018, we entered into a Collaboration and License Agreement with BeiGene (the “BeiGene Agreement”). Under the BeiGene Agreement, we granted BeiGene an exclusive license to develop, manufacture and commercialize sitravatinib in Asia (excluding Japan and certain other countries), Australia and New Zealand (the “BeiGene Licensed Territory”), and we retained exclusive rights for the development, manufacturing and commercialization of sitravatinib outside the BeiGene Licensed Territory.

In November 2018, we dosed the first patient under the BeiGene Agreement to assess the safety and tolerability, pharmacokinetics and preliminary anti-tumor activity of sitravatinib in combination with BeiGene’s investigational anti-PD-1 antibody, tislelizumab, in patients with advanced solid tumors. BeiGene’s clinical trials will evaluate the combination of sitravatinib and tislelizumab in patients with solid tumors including NSCLC, renal cell carcinoma, hepatocellular cancer, gastric cancer and ovarian cancer.

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MRTX1719, a synthetic lethal MTA cooperative PRMT5 inhibitor

MRTX1719, our lead synthetic lethal MTA cooperative PRMT5 inhibitor is an investigational, selective, potent and orally available inhibitor targeting the PRMT5/MTA complex in methylthioadenosine phosphorylase (MTAP)-deleted cancers and is in Phase 1/2 clinical development. The MTAP deletion is present in approximately 10% of all cancers and is the most frequently observed gene deletion event (MTAP/CDKN2A) across several cancer types. Cancers with an MTAP deletion, such as pancreatic, lung, and bladder cancers, are associated with a poor prognosis, representing a significant unmet medical need.

In preclinical studies, MRTX1719 has demonstrated a greater than 70-fold selectivity for MTAP-deleted cells relative to normal cells and demonstrated near complete and sustained inhibition of PRMT5 in tumor xenografts resulting in significant tumor growth inhibition or tumor regression in MTAP-deleted tumor models. The ability to target the PRMT5/MTA complex provides an opportunity to selectively target tumor cells harboring the MTAP gene deletion which exhibit an abnormally high level of MTA (methylthioadenosine) compared with normal cells. This is anticipated to provide an increased therapeutic index relative to first generation PRMT5 inhibitors that do not specifically target the PRMT5/MTA complex. In the first quarter of 2022, we initiated a Phase 1/2 multiple expansion cohort trial to evaluate MRTX1719 in patients with advanced, unresectable or metastatic solid tumor malignancy with homozygous deletion of the MTAP gene. In August 2022, the FDA granted Fast Track Designation to MRTX1719. In April 2023, MRTX1719 had been granted Orphan Drug Designation by the FDA for the treatment of mesothelioma.

On August 8, 2023, we presented preliminary results from a Phase 1/2 multiple expansion cohort trial to evaluate MRTX1719 in patients with advanced, unresectable or metastatic solid tumor malignancy with homozygous deletion of the MTAP gene.

• As of a June 13, 2023 data cut, 33 patients were evaluable for safety across 6 dose levels. 21 patients were evaluable for clinical response, including 18 patients at therapeutic dose levels, defined as doses ≥ 100 mg once daily (“QD”).

•Preliminary pharmacokinetic results were favorable and demonstrated roughly dose proportional increases in exposure among patients receiving therapeutic doses.

•All 3 tumor biopsies evaluated showed that SDMA was completely extinguished following treatment at a dose of 200 mg QD.

•Early signs of clinical activity have been achieved with 6 partial responses, including 5 confirmed responses and 1 unconfirmed response, out of the 18 patients evaluable for response at therapeutic dose levels. Responses were observed across multiple dose levels and tumor types including non-small cell lung cancer, mesothelioma, biliary tract tumors, melanoma, and malignant peripheral nerve sheathe tumor. The unconfirmed response was observed shortly after data cutoff date.

•MRTX1719 demonstrated a manageable safety profile. The most frequently reported treatment related adverse events were nausea, vomiting and fatigue and the vast majority were Grade 1 or 2. Grade 3 treatment related adverse events were observed in only 5/33 patients (15.2%). Dose-limiting bone marrow toxicities, which were associated with non-selective PRMT5 inhibitors, were not observed at any dose level.

MRTX0902, a selective SOS1 inhibitor

MRTX0902 is a potent, selective SOS1 inhibitor, designed to improve anti-tumor efficacy in combination with targeted RAS/mitogen-activated protein kinase (“MAPK”)-pathway and/or receptor tyrosine kinase (“RTK”) inhibitors. MRTX0902 disrupts the KRAS-SOS1 interaction and shifts the equilibrium of KRAS from an active to inactive state. The SOS protein is a guanine nucleotide exchange factor (“GEF”) that facilitates the ability of KRAS to turnover from its GDP-loaded “off” state to its GTP-loaded “on” state, a critical step to enable productive KRAS effector binding and activation of downstream signaling. MRTX0902 has the potential to limit cancer growth arising from a variety of mutations (e.g. KRAS or EGFR) that result in activation of the KRAS pathway. MRTX0902 exhibits favorable potency, selectivity and oral exposure characteristics and shows improved anti-tumor efficacy in combination with inhibitors of KRAS, MEK, and EGFR in pre-clinical models. We filed an IND with the FDA for MRTX0902 and received Notice to Proceed authorization from FDA in August 2022. In the fourth quarter of 2022, we initiated a Phase 1/2 multiple expansion cohort trial with MRTX0902. In December 2022, the FDA granted Fast Track Designation to MRTX0902. In July 2023, we initiated a cohort within the Phase 1/2 trail evaluating the combination of MRTX0902 plus adagrasib.

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Critical Accounting Policies and Significant Judgments and Estimates

Our discussion and analysis of financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures. On an ongoing basis, our actual results may differ significantly from our estimates.

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2022.

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Results of Operations

Comparison of the Three and Six Months Ended June 30, 2023 and 2022

The following table summarizes the significant items within our results of operations for the three and six months ended June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Increase (Decrease)		Six Months Ended June 30,				Increase (Decrease)
	2023		2022				2023		2022
Product revenue, net	$	13,365	$	—	$	13,365	$	19,656	$	—	$	19,656
License and collaboration revenues	325		5,362		(5,037)		1,201		6,071		(4,870)
Cost of product revenue	1,025		—		1,025		1,583		—		1,583
Cost of product revenue - intangible asset amortization	258		—		258		517		—		517
Research and development expenses	124,187		128,339		(4,152)		250,870		259,315		(8,445)
Selling, general and administrative expenses	75,490		54,228		21,262		148,980		108,179		40,801
Other income (expense), net	10,357		760		9,597		19,594		(3,408)		23,002

Product revenue, net

Product revenue, net relates to sales of KRAZATI, which received approval by the FDA and launched commercially in the U.S. in December 2022. Product revenue, net for the three and six months ended June 30, 2023 was $13.4 million and $19.7 million, respectively. During the three and six months ended June 30, 2023, $1.7 million of product revenue, net relates to sales of KRAZATI to a third-party commercial customer for its clinical trials. There was no product revenue for the three and six months ended June 30, 2022.

License and collaboration revenues

License and collaboration revenues relate to the Zai Agreement under which Zai was granted an exclusive license to develop, manufacture and commercialize adagrasib in the Zai Licensed Territory, and the BeiGene Agreement under which BeiGene was granted an exclusive license to develop, manufacture and commercialize sitravatinib in the BeiGene Licensed Territory.

The Company earned $0.3 million and $1.2 million of license and collaboration revenue during the three and six months ended June 30, 2023, respectively, related to clinical supply revenue under the Zai Agreement.

The Company earned $5.4 million and $6.1 million of license and collaboration revenue during the three and six months ended June 30, 2022, respectively, which consisted of a $5.0 million milestone payment related to the initiation of the first pivotal clinical trial of adagrasib for the first indication in China and $0.4 million and $1.1 million, respectively, related to clinical supply revenue under the Zai Agreement.

Cost of product revenue

Cost of product revenue for the three and six months ended June 30, 2023 was $1.0 million and $1.6 million, respectively, and consisted of product manufacturing and distribution costs for KRAZATI and royalties incurred on net sales of KRAZATI owed to our collaborative partner. Product sold during the three and six months ended June 30, 2023 generally consisted of drug product that was previously charged to research and development expense prior to FDA approval of KRAZATI, which favorably impacted our cost of product revenue for the three and six months ended June 30, 2023. Had the previously expensed inventory been capitalized and recognized when sold, our total cost of product revenue with these manufacturing costs included for the three and six months ended June 30, 2023 would have increased by approximately $1.9 million and $2.9 million, respectively. We will continue to have a lower cost of product revenue that excludes the cost of active pharmaceutical ingredient that was produced prior to FDA approval, which we expect to be the case for the near-term, and we do not expect our cost of product revenue for KRAZATI to increase significantly as a percentage of product revenue, net in future periods as we continue to produce inventory for future sales. As KRAZATI was approved in December 2022, there was no cost of product revenue for the three and six months ended June 30, 2022.

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Cost of product revenue - intangible asset amortization

Cost of product revenue - intangible asset amortization for the three and six months ended June 30, 2023 was $0.3 million and $0.5 million, respectively, and represents the amortization expense attributable to our finite-lived intangible asset, which resulted from the capitalization of a milestone payment due under a license and collaboration agreement relating to the first commercial sale of KRAZATI in the U.S. There was no cost of product revenue - intangible asset amortization for the three and six months ended June 30, 2022.

Research and development expenses

Research and development expenses consist primarily of:

•salaries and related expenses for personnel, including share-based compensation;

•fees paid to external service providers such as Clinical Research Organizations (“CROs”) and contract manufacturing organizations related to clinical trials, including contractual obligations for clinical development, clinical sites, manufacturing and scale-up, formulation of clinical drug supplies and manufacturing costs of commercial inventory prior to the approval of KRAZATI;

•fees paid to contract service providers related to drug discovery efforts including chemistry and biology services;

•license fees paid in connection with our early discovery efforts; and

•costs for allocated facilities and depreciation of equipment.

We record research and development expenses as incurred.

Our research and development efforts during the three and six months ended June 30, 2023 and 2022 were focused on our clinical development programs and our preclinical programs. The following table summarizes our research and development expenses (in thousands):

	Three Months Ended June 30,				Increase (Decrease)		Six Months Ended June 30,				Increase (Decrease)
	2023		2022				2023		2022
Third-party research and development expenses:
Clinical development programs:
Adagrasib	$	47,775	$	43,735	$	4,040	$	90,536	$	88,726	$	1,810
MRTX1719	2,428		1,921		507		4,217		3,647		570
MRTX0902	1,432		—		1,432		2,098		—		2,098
MRTX1133	3,729		—		3,729		6,644		—		6,644
Sitravatinib*	9,358		15,598		(6,240)		21,049		31,834		(10,785)
Pre-clinical development programs	5,253		9,031		(3,778)		10,462		17,055		(6,593)
Total third-party research and development expenses	69,975		70,285		(310)		135,006		141,262		(6,256)
Salaries and other employee related expense	27,216		24,470		2,746		55,417		48,778		6,639
Share-based compensation expense	18,399		22,807		(4,408)		43,038		49,067		(6,029)
Other research and development costs	8,597		10,777		(2,180)		17,409		20,208		(2,799)
Research and development expense	$	124,187	$	128,339	$	(4,152)	$	250,870	$	259,315	$	(8,445)

*On May 24, 2023, we announced that the SAPPHIRE study did not meet its primary endpoint of overall survival at the final analysis. We do not currently have plans to pursue further clinical development of sitravatinib.

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Research and development expenses for the three and six months ended June 30, 2023 were $124.2 million and $250.9 million, respectively, compared to $128.3 million and $259.3 million for the same periods in 2022, respectively.

The decrease of $4.2 million and $8.4 million for the three and six months ended June 30, 2023 compared to the same periods in 2022, respectively, primarily related to a decrease in third-party research and development costs, driven by a decrease in sitravatinib clinical development costs as we completed enrollment in our SAPPHIRE Phase 3 clinical trial in the second quarter of 2022, and a decrease in share-based compensation due to a decrease in the fair value of equity grants awarded during the period. This decrease was partially offset by increases in our earlier stage clinical development programs such as MRTX1133 which began a Phase 1 clinical trial in the first quarter of 2023, and an increase in salaries and other employee related expense to support the advancement of our portfolio.

At this time, due to the risks inherent in the clinical development process and product development programs, we are unable to estimate with any certainty the costs we will incur in the continued development of our clinical programs and early discovery programs. The process of conducting clinical trials necessary to obtain regulatory approval and manufacturing scale-up to support expanded development and potential future commercialization is costly and time consuming. Any failure by us or delay in completing clinical trials, manufacturing scale up or in obtaining regulatory approvals could lead to increased research and development expense and, in turn, have a material adverse effect on our results of operations. We expect that our research and development expenses may increase if we are successful in advancing our clinical programs or our other preclinical programs into more advanced stages of clinical development.

Selling, general and administrative expenses

Selling, general and administrative expenses consist of salaries and related benefits, including share-based compensation, related to our executive, commercial and support functions. Other selling, general and administrative expenses include commercial and marketing-related activities, professional fees, rent and utilities and insurance.

Selling, general and administrative expenses for the three and six months ended June 30, 2023 were $75.5 million and $149.0 million compared to $54.2 million and $108.2 million for the same periods in 2022, respectively. The increase of $21.3 million and $40.8 million for the three and six months ended June 30, 2023 compared to the same periods in 2022, respectively, was primarily due to an increase in headcount-related costs, including share-based compensation and salaries, and commercial-related costs to support the marketing and sales of KRAZATI.

Other Income (Expense), Net

Other income for the three months ended June 30, 2023 was $10.4 million, compared to $0.8 million for the same period in 2022. The increase of $9.6 million was primarily due to an increase of $7.5 million in interest income and a favorable impact of $1.7 million from the change in fair value of the long-term investment in ORIC Pharmaceuticals, Inc., which was acquired in 2020 in connection with the ORIC Agreement.

Other income (expense) for the six months ended June 30, 2023 was income of $19.6 million, compared to expense of $3.4 million for the same period in 2022. The increase of $23.0 million was primarily due to an increase of $16.0 million in interest income and a favorable impact of $6.7 million from the change in the fair value of the long-term investment in ORIC.

Liquidity and Capital Resources

We regularly evaluate our liquidity and capital resources, including our access to external capital, to ensure we can adequately meet our principal cash requirements, which include funding research and development programs, including discovery research, preclinical and clinical development activities, commercial operating costs and commitments.

Sources of Liquidity

To date, we have funded our operations primarily through the sale of our common stock, pre-funded warrants to purchase our common stock, and, through up-front payments, research funding and milestone payments under collaborative arrangements. Upon the approval of KRAZATI, we also began funding our operations through the sale of KRAZATI.

As of June 30, 2023, we had $779.4 million of cash, cash equivalents and short-term investments compared to $1.1 billion as of December 31, 2022.

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In 2022, we received net proceeds of $155.0 million from the issuance and sale of 1,880,097 shares of our common stock under our At the Market Facility (the “Sales Agreement”). Pursuant to the Sales Agreement, we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $500.0 million. As of June 30, 2023, approximately $345.0 million remained available for issuance under the Sales Agreement.

Based on our current and anticipated level of operations, we believe that our cash, cash equivalents and short-term investments will provide us with sufficient liquidity to finance our cash requirements for at least one year from the date this Quarterly Report on Form 10-Q is filed with the SEC.

Since inception, we have primarily devoted our resources to funding research and development programs, including discovery research, preclinical and clinical development activities and the commercial launch of KRAZATI. To date, we have generated minimal product revenue. We will likely need to raise additional capital to fund future operations. The amount and timing of future funding requirements will depend on many factors, including the timing and results of our ongoing development efforts, the potential expansion of our current development programs, potential new development programs and related selling, general and administrative support. We anticipate that we will seek to fund our operations through public or private equity or debt financings or other sources, such as potential collaboration agreements. We cannot make assurances that anticipated additional financing will be available to us on favorable terms, or at all. Although we have previously been successful in obtaining financing through our equity securities offerings, there can be no assurance that we will be able to do so in the future. As a result of adverse geopolitical and macroeconomic developments, such as the ongoing military conflict between Ukraine and Russia and related sanctions, actual and anticipated changes in interest rates, economic inflation and the responses by central banking authorities to control such inflation, the global credit and financial markets have experienced volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that deterioration in credit and financial markets and confidence in economic conditions will not occur. If equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.

Uses of Liquidity

We utilize our capital to fund research and development activities as well as commercialization activities associated with our approved drug. We invest a significant amount of capital in preclinical and clinical development costs, including the cost of manufacturing our product candidates and commercially available drug.

It can take a significant amount of time and capital resources to successfully complete all stages of research and development and commercialization of a product candidate. The length of time and funding required cannot be accurately estimated as it varies substantially according to the type, complexity, novelty and intended use of a product candidate. The funding necessary to execute product development and commercialization is uncertain and we are unable to accurately predict when or if we will be able to achieve or maintain profitability. The funding necessary to execute our business strategies is subject to numerous uncertainties and we may be required to make substantial expenditures if unforeseen difficulties arise in certain areas of our business. In particular, our future capital requirements will depend on many factors, including:

•the success of our commercialization efforts and market acceptance of KRAZATI (approved by the FDA and launched commercially in the U.S. in December 2022) and other drug product candidates;

•the timing and outcome of regulatory review of KRAZATI and other drug product candidates;

•continued progress in our research and development and clinical development programs;

•the cost of manufacturing clinical supply for our clinical trials and commercial manufacturing; and

•addition and retention of key research, development and commercial personnel.

Contractual Obligations

Our principal commitments as of June 30, 2023 include both short and long-term future obligations.

Operating Lease

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We have a non-cancelable operating lease agreement where we are contractually obligated for certain lease payment amounts. For more information regarding our operating lease obligations, refer to Note 11 in our accompanying condensed consolidated financial statements.

Pfizer Agreement

The license and collaboration agreement with Array BioPharma, Inc. (“Array,” acquired by Pfizer Inc. (“Pfizer”)) includes potential future development and sales milestone payments and royalties arising from the collaboration. For more information, refer to Note 9 in our accompanying condensed consolidated financial statements.

Other

We enter into contracts in the normal course of business with clinical sites for the conduct of clinical trials, CROs for clinical research studies, professional consultants for expert advice and other vendors for clinical and commercial manufacturing or other services. These contracts generally provide for termination on notice, and therefore are cancelable contracts.

Historical Cash Flows

Cash Flows for the Six Months Ended June 30, 2023 and 2022

The following table provides a summary of the net cash flow activity for each of the periods set forth below (in thousands):

	Six Months Ended June 30,
	2023		2022
Net cash used in operating activities	$	(321,582)	$	(303,961)
Net cash provided by investing activities	210,683		152,561
Net cash provided by financing activities	5,570		3,919
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(65)		—
Decrease in cash, cash equivalents and restricted cash	$	(105,394)	$	(147,481)

Net cash used in operating activities

Net cash used in operating activities for the six months ended June 30, 2023 was $321.6 million, compared to net cash used of $304.0 million for the same period in 2022, an increase of $17.6 million. Cash used in operating activities during 2023 primarily related to our net loss of $361.5 million, adjusted for non-cash items such as non-cash share-based compensation expense of $86.4 million and net cash outflows from a change in our operating assets and liabilities of $36.9 million. Cash used in operating activities during 2022 primarily related to our net loss of $364.8 million, adjusted for non-cash share-based compensation expense of $81.6 million and net cash outflows from a change in our operating assets and liabilities of $29.4 million.

Net cash provided by investing activities

Net cash provided by investing activities for the six months ended June 30, 2023 and 2022 were inflows of $210.7 million and $152.6 million, respectively, and reflect the sales and maturities of short-term investments, offset by purchases of short-term investments and property and equipment.

Net cash provided by financing activities

Net cash provided by financing activities for the six months ended June 30, 2023 and 2022 was $5.6 million and $3.9 million, respectively, and consisted of net proceeds received from the exercise of common stock options and stock issuances under the employee stock purchase plan.

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ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Some of our short-term investments have market risk in that a change in prevailing interest rates may cause the fair value of the principal amount of the investment to fluctuate. Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments. We invest our excess cash primarily in commercial paper and debt instruments of financial institutions, corporations, U.S. government-sponsored agencies and the U.S. Treasury. We mitigate credit risk by maintaining a well-diversified portfolio and limiting the amount of investment exposure as to institution, maturity and investment type. We invest our excess cash in accordance with our investment policy.

Because of the short-term maturities of our cash equivalents and short-term investments, we do not believe that an increase in market rates would have any significant impact on the realized value of our investments. If a 10% change in interest rates were to have occurred on June 30, 2023, this change would not have had a material effect on the fair value of our investment portfolio as of that date.

ITEM 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) and Rule 15d-15(b) of the Exchange Act, our management, including our principal executive officer and our principal financial officer, conducted an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)). Based on that evaluation, management has concluded that as of June 30, 2023, the Company’s disclosure controls and procedures were effective at the reasonable assurance level and we believe the condensed consolidated financial statements included in this Form 10-Q for the three and six months ended June 30, 2023 present, in all material respects, our financial position, results of operations, comprehensive loss and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles.

Changes in Internal Control over Financial Reporting

As required by Rule 13a-15(d) and Rule 15d-15(d) of the Exchange Act, our management, including our principal executive officer and our principal financial officer, conducted an evaluation of the internal control over financial reporting to determine whether any changes occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, our principal executive officer and principal financial officer concluded that there were no changes in our internal controls over financial reporting during the period covered by this Quarterly Report on Form 10-Q that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings

Information pertaining to legal proceedings is described in Note 11 to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report and is incorporated herein by reference.

ITEM 1A. Risk Factors

Investing in our common stock involves a high degree of risk. You should carefully consider the following information about the risks described below, together with the other information contained in this Quarterly Report and in our other public filings in evaluating our business, before deciding to invest in our common stock. The risk factors set forth below with an asterisk (*) next to the title contain changes to the description of the risk factors associated with our business previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. Additional risks and uncertainties that we are unaware of may also become important factors that affect us. If any of the following risks actually occurs, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our common stock would likely decline and you could lose all or part of your investment.

Summary of Risk Factors

•Risks Related to our Business and Industry

◦Our prospects are highly dependent on the successful commercialization of KRAZATI, which received marketing approval in December 2022 from the U.S. Food and Drug Administration (“FDA”), for the treatment of adult patients with previously treated KRAS G12C-mutated non-small cell lung cancer (“NSCLC”) who have received prior systemic therapy. To the extent KRAZATI is not commercially successful, our business, financial condition and results of operations would be materially adversely affected and the price of our common stock would likely decline.

◦Other than KRAZATI, our research and development programs and product candidates are in development. As a result, we are unable to predict if or when we will successfully develop or commercialize our other product candidates.

◦Our product candidates, as well as KRAZATI, are subject to extensive regulation, which can be costly and time consuming, cause delays, or prevent approval of such product candidates for commercialization.

◦Prior to KRAZATI, we have not, as an organization, launched or commercialized a product. If we are unable to effectively commercialize KRAZATI, we may not be able to generate meaningful product revenues.

◦KRAZATI may not gain acceptance among physicians, patients, and the medical community, thereby limiting our potential to generate revenues.

◦If we fail to obtain coverage and adequate reimbursement for KRAZATI or other future products, our revenue-generating ability will be diminished and there is no assurance that the anticipated market for our products will be sustained.

◦If our competitors develop and market products that are more effective than KRAZATI or our other product candidates, they may reduce or eliminate our commercial opportunity.

◦We rely upon third-party contractors and service providers for the execution of some aspects of our development programs. Failure of these collaborators to provide services of a suitable quality and within acceptable timeframes may cause the delay or failure of our development programs.

◦Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved product label, including KRAZATI's, or result in significant negative consequences following marketing approval, if any.

◦We are subject to competition for our skilled personnel and may experience challenges in identifying and retaining key personnel that could impair our ability to conduct our operations effectively.

•Risks Related to our Financial Position and Capital Requirements

◦We will require additional financing and may be unable to raise sufficient capital, which could lead us to delay, reduce or abandon development programs.

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•Risks Related to our Intellectual Property

◦We may not obtain adequate protection for our product and product candidates through patents and other intellectual property rights and as such, our competitive advantage in the marketplace may be compromised.

Risks Related to Our Business and Industry

Our near-term revenues are highly dependent on the successful commercialization of KRAZATI, which received marketing approval in December 2022 from the FDA for the treatment of adult patients with KRAS G12C-mutated NSCLC who have received at least one prior systemic therapy. To the extent KRAZATI is not commercially successful, our business, financial condition and results of operations would be materially adversely affected and the price of our common stock would likely decline.

KRAZATI is our only drug that has been approved for sale and it has only been approved for the treatment of adult patients with KRAS G12C-mutated NSCLC who have received at least one prior systemic therapy in the United States. We are focusing a significant portion of our activities and resources on KRAZATI, and we believe our near-term revenues are highly dependent on, and a meaningful portion of the value of our company relates to, our ability to successfully commercialize KRAZATI in the United States.

Successful commercialization of KRAZATI is subject to many risks. Prior to KRAZATI, we have not, as an organization, launched or commercialized a product, and there is no guarantee that we will be able to do so successfully with KRAZATI for this indication. There are numerous examples of unsuccessful product launches and failures to meet high expectations of market potential, including by pharmaceutical companies with more experience and resources than we have. The commercial success of KRAZATI depends on the extent to which patients and physicians accept and adopt KRAZATI as a treatment for patients with KRAS G12C-mutated NSCLC who have received at least one prior systemic therapy, and we do not know whether our or others’ estimates in this regard will be accurate. For example, if the patient population suffering from KRAS G12C-mutated NSCLC who have received prior systemic therapy is smaller than we estimate or if physicians are unwilling to prescribe or patients are unwilling to take KRAZATI for any reason, the commercial potential of KRAZATI will be limited. It is too soon to tell how physicians, patients and payors will respond to the pricing of KRAZATI. Physicians may not prescribe KRAZATI and patients may be unwilling to use KRAZATI if coverage is not provided or reimbursement is inadequate to cover a significant portion of the cost. Additionally, any negative development for KRAZATI in accelerated approval requirements, or in clinical development in additional indications, or in regulatory processes in other jurisdictions, may adversely impact the commercial results and potential of KRAZATI. Thus, significant uncertainty remains regarding the commercial potential of KRAZATI.

If the launch or commercialization of KRAZATI is unsuccessful or perceived as disappointing, our stock price could decline significantly and the long-term success of the product and our company could be harmed.

If we do not obtain regulatory approval of adagrasib for other indications in the United States, or for any indications in foreign jurisdictions, we will not be able to market adagrasib for other indications or in other jurisdictions, which will negatively impact the potential of our commercial revenues.*

The research, testing, manufacturing, labeling, approval, sale, import, export, marketing, and distribution of pharmaceutical product candidates are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries, whose regulations differ from country to country. We will be required to comply with different regulations and policies of the jurisdictions where we seek approval for our product candidates, and we have not yet identified all of the requirements that we will need to satisfy to submit adagrasib for approval for other indications or in other jurisdictions. For example, we are pursuing an expansion strategy to bring adagrasib to countries within the European Economic Area (“EEA”) and the United Kingdom (“UK”). In particular, in April 2022, we submitted a Marketing Authorization Application (“MAA”), to the European Medicines Agency (“EMA”), for adagrasib for the treatment of adult patients with NSCLC harboring the KRAS G12C mutation who have received at least one prior systemic therapy. On July 21, 2023, we announced that the Committee for Medicinal Products for Human Use (“CHMP”) of the EMA adopted a negative opinion on the application for conditional marketing authorisation for KRAZATI, for the treatment of KRAS G12C-mutated advanced non-small cell lung cancer. The evaluation of the full MAA is not impacted and will be considered by the CHMP following the data from KRYSTAL-12, a Phase 3 clinical study of adagrasib versus docetaxel in second line NSCLC patients. On July 27, 2023 we submitted a request for re-examination to the CHMP. If we do not receive marketing approval for adagrasib for any other indication or from any regulatory agency other than the FDA, we will not be able to commercialize adagrasib for any other indication in the United States or for any indication in any other jurisdiction. Even if we do receive additional regulatory approvals, we may not be successful in commercializing those opportunities.

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Even though the FDA has granted approval of KRAZATI for the treatment of adult patients with KRAS G12C-mutated NSCLC who have received at least one prior systemic therapy, the terms of the approval may limit its commercial potential. Additionally, KRAZATI is still subject to substantial, ongoing regulatory requirements.

Even though the FDA has granted approval of KRAZATI, the scope and terms of the approval may limit our ability to commercialize KRAZATI and, therefore, our ability to generate substantial sales revenues. The FDA has approved KRAZATI only for the treatment of adult patients with KRAS G12C-mutated NSCLC who have received at least one prior systemic therapy.

Additionally, in connection with the FDA grant of accelerated approval, we are required to complete KRYSTAL-12 and other post-marketing commitments. If we fail to comply with accelerated approval requirements, or if the final results of KRYSTAL-12 and the other post-marketing commitments, or any other ongoing clinical studies of adagrasib, are negative, the FDA could decide to withdraw approval, add warnings or narrow the approved indication in the product label.

The manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for KRAZATI will also continue to be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current good manufacturing processes, good clinical practices, ICH regulations and good laboratory practices, which are regulations and guidelines enforced by the FDA for all of our nonclinical and clinical development and for any clinical trials that we conduct post-approval.

Discovery of any issues post-approval, including any safety concerns, such as unexpected side effects or drug-drug interaction problems, adverse events of unanticipated severity or frequency, or concerns over misuse or abuse of the product, problems with the facility where the product is manufactured, packaged or distributed, or failure to comply with regulatory requirements, may result in, among other things, restrictions on KRAZATI or on us, including:

•withdrawal of approval, addition of warnings or narrowing of the approved indication in the product label;

•requirement of a Risk Evaluation and Mitigation Strategy to mitigate the risk of off-label use in populations where the FDA may believe that the potential risks of use may outweigh its benefits;

•voluntary or mandatory recalls;

•warning letters;

•suspension of any ongoing clinical studies;

•refusal by the FDA or other regulatory authorities to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of product approvals;

•restrictions on operations, including restrictions on the marketing or manufacturing of the product or the imposition of costly new manufacturing requirements; or

•seizure or detention, or refusal to permit the import or export of products.

If any of these actions were to occur, we may have to discontinue the commercialization of KRAZATI, limit our sales and marketing efforts, conduct further post-approval studies, and/or discontinue or change any other ongoing clinical studies, which in turn could result in significant expense and delay or limit our ability to generate sales revenues.

KRAZATI has only been studied in a limited number of patients. Following commercial launch, KRAZATI will be available to a much larger number of patients, and we do not know whether the results of KRAZATI’s use in such larger number of patients will be consistent with the results from our clinical studies.

KRAZATI has been administered only to a limited number of patients in clinical studies. While the FDA granted accelerated approval of KRAZATI based on the data included in the NDA, including data from KRYSTAL-1 study, we do not know whether the results when a large number of patients are exposed to KRAZATI, including results related to safety and efficacy, will be consistent with the results from earlier clinical studies of KRAZATI that served as the basis for the approval of KRAZATI. New data relating to KRAZATI, including from adverse event reports, KRYSTAL-12 and our post-marketing commitments in the United States, and from other ongoing clinical studies, may result in changes to the product label and may

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adversely affect sales, or result in withdrawal of KRAZATI from the market. The FDA and regulatory authorities in other jurisdictions may also consider the new data in reviewing KRAZATI’s marketing applications for additional indications and/or in other jurisdictions, or impose post-approval requirements. If any of these actions were to occur, it could result in significant expense and delay or limit our ability to generate sales revenues.

Prior to KRAZATI, we have not, as an organization, launched or commercialized a product. If we are unable to effectively commercialize KRAZATI, we may not be able to generate meaningful product revenues.

We need to maintain and further develop our sales force, as we will be competing with other pharmaceutical and biotechnology companies to retain marketing and sales personnel. In the event we are unable to effectively maintain our commercial team, including our U.S. sales force, our ability to effectively commercialize KRAZATI will be limited, and we may not be able to generate meaningful product revenues.

KRAZATI may not gain widespread acceptance among physicians, patients, and the medical community, thereby limiting our potential to generate revenues.

The degree of market acceptance of any approved product candidate by physicians, healthcare professionals and third-party payors, and our profitability and growth will depend on a number of factors, including:

•the ability to provide acceptable evidence of safety and efficacy;

•the scope of the approved indication(s) for the product;

•the inclusion of any warnings or contraindications in the product label;

•the relative convenience and ease of administration;

•the prevalence and severity of any adverse side effects;

•the availability of alternative treatments;

•pricing and cost effectiveness, which may be subject to regulatory control;

•effectiveness of our or our collaborators’ sales and marketing strategy; and

•our ability to obtain sufficient third-party insurance coverage or adequate reimbursement levels.

With respect to KRAZATI specifically, successful commercialization will depend on whether and to what extent physicians and pharmacies, over whom we have no control, determine to utilize KRAZATI at the price that we have selected. KRAZATI would be made available to treat patients with KRAS G12C-mutated NSCLC who have received at least one prior systemic therapy. Because of this, it is particularly difficult to estimate KRAZATI’s market potential and how physicians, payors and patients will respond to the pricing of KRAZATI. Industry sources and analysts have a divergence of estimates for the near- and long-term market potential of KRAZATI, and a variety of assumptions directly impact the estimates for KRAZATI’s market potential, including assumptions regarding the prevalence of adult patients with KRAS G12C-mutated NSCLC who have received at least one prior systemic therapy, the rate of diagnosis of KRAS G12C-mutated NSCLC, the rate of physician and oncologist adoption of KRAZATI, the potential impact of payor restrictions regarding KRAZATI, and patient adherence and compliance rates. Small differences in these assumptions can lead to widely divergent estimates of the market potential of KRAZATI.

If we are unable to achieve and maintain adequate levels of third-party payor coverage and reimbursement for KRAZATI or any other product candidates, if approved, on reasonable pricing terms, their commercial success may be severely hindered.*

Successful sales of any approved product candidates, including KRAZATI, depend on the availability of adequate coverage and reimbursement from third-party payors. Patients who are prescribed medicine for the treatment of their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their prescription drugs. Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become

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available. Even if we obtain coverage for KRAZATI, or other products we may market, the resulting reimbursement payment rates might not be adequate or may require co-payments that patients find unacceptably high. Patients may not use KRAZATI if coverage is not provided or reimbursement is inadequate to cover a significant portion of the cost of those products.

Payors may require documented proof that patients meet certain eligibility criteria in order to be reimbursed for KRAZATI. Payors may even require that pre-approval, or prior-authorization, be obtained from the payor for reimbursement of KRAZATI. Patients are unlikely to use KRAZATI and our other product candidates, if approved, unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.

In addition, the market for KRAZATI and any of our other product candidates may depend significantly on access to third-party payors’ medical policies, drug formularies, or lists of medications for which third-party payors provide coverage and reimbursement. The industry competition to be included in such formularies often leads to downward pricing pressures on pharmaceutical companies, and we will be required to offer discounted rates to state Medicaid programs to ensure Medicaid coverage of our drugs. Also, third-party payors may refuse to include a particular branded drug in their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or other alternative is available, even if not approved for the indication for which KRAZATI is approved.

Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. The current environment is putting pressure on companies to price products below what they may feel is appropriate. Selling KRAZATI at less than an optimized price could impact our revenues and overall success as a company. In addition, in the United States, no uniform policy of coverage and reimbursement for drug products exists among third-party payors. Therefore, coverage and reimbursement for KRAZATI may differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of KRAZATI to each payor separately, with no assurance that coverage will be obtained. Further, coverage policies and third‑party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more drug products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. If we are unable to obtain and maintain coverage of, and adequate payment levels for, KRAZATI or any other products we may market to third-party payors, physicians may limit how much or under what circumstances they will prescribe or administer them, and patients may decline to purchase them. This in turn could affect our ability to successfully commercialize KRAZATI, or any other products we may market, and thereby adversely impact our profitability, results of operations, financial condition and future success.

Our research and development programs and product candidates are in development. As a result, we are unable to predict if or when we will successfully develop or commercialize our other product candidates.*

Our clinical-stage product candidates as well as our other pipeline assets will require significant further investment and regulatory approvals prior to commercialization. MRTX1719 is in a Phase 1 clinical trial, MRTX0902 is in Phase 1/2 clinical trial, and MRTX1133 has recently been cleared by the FDA to initiate a Phase 1 clinical trial. In April 2022, we submitted an MAA to the EMA for adagrasib for the treatment of patients with NSCLC harboring the KRAS G12C mutation who have received at least one prior systemic therapy. On July 21, 2023, we announced that the CHMP adopted a negative opinion on the application for conditional marketing authorisation for KRAZATI, for the treatment of KRAS G12C-mutated advanced non-small cell lung cancer. The evaluation of the full MAA is not impacted and will be considered by the CHMP following the data from KRYSTAL-12, a Phase 3 clinical study of adagrasib versus docetaxel in second line NSCLC patients. On July 27, 2023, we submitted a request for re-examination to the CHMP. Each of our product candidates will require the selection of suitable patients for our clinical trials and additional clinical development, management of clinical, preclinical and manufacturing activities, obtaining regulatory approval, obtaining manufacturing supply, continued build out of a commercial organization, substantial investment and significant marketing efforts before we generate any revenues from product sales. We are not permitted to market or promote any of our product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval for any of our product candidates. The treatment of cancer is a rapidly evolving field and will continue to evolve. By such time, if ever, as we may receive necessary regulatory approvals for our product candidates, the standard of care for the treatment of cancers may have evolved such that it would be necessary to modify our plans for full approval and commercial acceptance of our products may be limited by a change in the standard of care. In addition, some of our product development programs contemplate the development of companion diagnostics. Companion diagnostics are subject to regulation as medical devices and we or our collaborators may be required to obtain marketing approval for accompanying companion diagnostics before we may commercialize our product candidates.

Even if we obtain the required financing or establish a collaboration to enable us to conduct late-stage clinical development of our product candidates and pipeline assets, we cannot be certain that such clinical development would be

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successful, or that we will obtain regulatory approval or be able to successfully commercialize any of our product candidates and generate revenue. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and the clinical trial process may fail to demonstrate that our product candidates are safe and effective for their proposed uses. Any such failure could cause us to abandon further development of any one or more of our product candidates and may delay development of other product candidates. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. For example, in May 2023 we announced that sitravatinib failed to meet the primary endpoint of overall survival in the Phase 3 SAPPHIRE trial, despite having encouraging OS results in a prior Phase 2 trial. Any delay in, or termination of, our clinical trials will delay and possibly preclude the submission of any NDAs with the FDA and, ultimately, our ability to commercialize our product candidates and generate product revenue.

Other than our NDA for KRAZATI, we have not previously submitted an NDA to the FDA, and other than our MAA under review by the EMA for KRAZATI, we have not submitted MAAs or similar drug approval filings to comparable foreign authorities, for any product candidate, and we cannot be certain that any of our product candidates will receive regulatory approval. Further, our product candidates may not receive regulatory approval even if they are successful in clinical trials. If we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations. Even if we successfully obtain regulatory approvals to market one or more of our product candidates, our revenues will be dependent, in part, upon our current collaborators’ and future collaborators’ ability to obtain regulatory approval for the companion diagnostics to be used with our product candidates, if required, and upon the size of the markets in the territories for which we gain regulatory approval and have commercial rights. If the markets for patient subsets that we are targeting are not as significant as we estimate, we may not generate significant revenues from sales of such products, if approved.

Further, even if any product candidate we develop was to receive marketing approval or be commercialized for use in combination with other existing therapies, we would continue to bear the risks that the FDA or similar foreign regulatory authorities could revoke approval of the therapy used in combination with our product candidate or that safety, efficacy, manufacturing or supply issues could arise with these existing therapies.

Our product candidates, as well as KRAZATI, are subject to extensive regulation, which can be costly and time consuming, cause delays, or prevent approval of such product candidates for commercialization.

The clinical development of product candidates is subject to extensive regulation by the FDA in the United States and by comparable regulatory authorities in foreign markets. Product development is a very lengthy and expensive process, and its outcome is inherently uncertain. The product development timeline can vary significantly based upon the product candidate’s novelty and complexity, and the applicable regulatory authority. For example, we are pursuing an expansion strategy to bring KRAZATI to countries within the EEA and the UK. The regulatory approval in other countries may include all the risks associated with FDA approval as well as additional, presently unanticipated, risks. Regulations are subject to change and regulatory agencies have significant discretion in the approval process.

Numerous statutes and regulations govern human testing and the manufacture and sale of human therapeutic products in the United States, Europe and other countries and regions where we intend to market our products. Such legislation and regulation bears upon, among other things, the approval of trial protocols and human testing, the approval of manufacturing facilities, safety of the product candidates, testing procedures and controlled research, review and approval of manufacturing, preclinical and clinical data prior to marketing approval including adherence to good manufacturing practices (“GMP”) during production and storage as well as regulation of marketing activities including advertising and labeling.

In order to obtain regulatory approval, including an NDA or marketing authorization application, for the commercial sale of any of our product candidates in the United States, EEA and other foreign market, we must demonstrate through preclinical studies and clinical trials, as well as extensive information regarding chemistry, manufacturing and controls (“CMC”), that the potential product is safe and effective for use in humans for each target indication. The failure to adequately demonstrate the safety and efficacy of a product under development could delay or prevent regulatory approval of our product candidates. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others.

No assurance can be given that current regulations relating to regulatory approval will not change or become more stringent in the United States or foreign markets. Regulatory agencies may also require that additional trials be run in order to provide additional information regarding the safety or efficacy of any drug candidates for which we seek regulatory approval or require additional administrative review periods, including obtaining reimbursement and pricing approval in select markets. Moreover, any regulatory approval of a drug which is eventually obtained may entail limitations on the indicated uses for which that drug may be marketed. Furthermore, product approvals may be withdrawn or limited in some way if problems occur

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following initial marketing or if compliance with regulatory standards is not maintained. Regulatory agencies could become more risk averse to any side effects or set higher standards of safety and efficacy prior to reviewing or approving a product. This could result in a product not being approved. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

We may not be successful in establishing development and commercialization collaborations, which could adversely affect, and potentially prohibit, our ability to develop our product candidates.

Developing pharmaceutical products, conducting clinical trials, obtaining regulatory approval, establishing manufacturing capabilities and marketing approved products is expensive, and therefore we may seek to enter into additional collaborations with companies that have more resources and experience in order to continue to develop and commercialize our product candidates. We also may be required due to financial or scientific constraints to enter into additional collaboration agreements to research and/or to develop and commercialize our product candidates. The establishment and realization of such collaborations may not be possible or may be problematic. There can be no assurance that we will be able to establish such additional collaborations on favorable terms, if at all, or that our current or future collaborative arrangements will be successful or maintained for any specific product candidate or indication. If we are unable to reach successful agreements with suitable collaboration partners for the ongoing development and commercialization of our product candidates, we may face increased costs, we may be forced to limit the scope and number of our product candidates we can commercially develop or the territories in which we commercialize such product candidates, and we may be unable to commercialize products or programs for which a suitable collaboration partner cannot be found. If we fail to achieve successful collaborations, our operating results and financial condition will be materially and adversely affected.

In addition, the terms of any collaboration agreements may place restrictions on our activities with respect to other products, including by limiting our ability to grant licenses or develop products with other third parties, or in different indications, diseases or geographical locations, or may place additional obligations on us with respect to development or commercialization of our product candidates. If we fail to comply with or breach any provision of a collaboration agreement, a collaborator may have the right to terminate, in whole or in part, such agreement or to seek damages.

Some of our collaboration agreements, including the BeiGene Agreement and Zai Agreement, are complex and involve sharing or division of ownership of certain data, know-how and intellectual property rights among the various parties. Accordingly, our collaborators could interpret certain provisions differently than we or our other collaborators, which could lead to unexpected or inadvertent disputes with collaborators. In addition, these agreements might make additional collaborations, partnering or mergers and acquisitions difficult.

There is no assurance that a collaborator who is acquired by a third party would not attempt to change certain contract provisions that could negatively affect our collaboration. The acquiring company may also not accept the terms or assignment of our contracts and may seek to terminate the agreements. Any one of our collaborators could breach covenants, restrictions and/or sub-license agreement provisions leading us into disputes and potential breaches of our agreements with other partners.

We have no experience in clinical or commercial manufacturing and depend on others for the production of our product candidates at suitable levels of quality and quantity. Any problems or delays in the manufacture of our products would have a negative impact on our ability to successfully execute our development and commercialization strategies.

We do not currently have nor do we plan to acquire the infrastructure or capability internally to manufacture our commercial products for sale nor our clinical drug supplies for use in the conduct of our clinical trials, and we lack the resources and the capability to manufacture any of our commercial products and product candidates on a clinical or commercial scale. We rely on collaborators and/or third parties for development, scale-up, formulation, optimization, management of clinical trial and commercial scale manufacturing and commercialization. There are no assurances we can scale-up, formulate or manufacture any product candidate in sufficient quantities with acceptable specifications for the conduct of our clinical trials or for the regulatory agencies to grant approval of such product candidate. We have no commercial manufacturing experience. To be successful, our products must be properly formulated, scalable, stable and safely manufactured in clinical trial and commercial quantities in compliance with GMP and other regulatory requirements and at acceptable costs. Should any of our suppliers or our collaborators be unable to supply or be delayed in supplying us with sufficient supplies, no assurance can be given that we will be able to find alternative means of supply in a short period of time. Should such parties’ operations suffer a material adverse effect, the manufacturing of our products would also be adversely affected. Furthermore, key raw materials could become scarce or unavailable. There may be a limited number of third parties who can manufacture our products. We may not be able to meet specifications previously established for commercial products or product candidates during scale-up and manufacturing.

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Our reliance on third parties to manufacture our commercial products and product candidates will expose us and our partners to risks including the following, any of which could delay or prevent the commercialization of our products, result in higher costs, or deprive us of potential product revenue:

•Contract manufacturers can encounter difficulties in achieving the scale-up, optimization, formulation, or volume production of a compound as well as maintaining quality control with appropriate quality assurance. They may also experience shortages of qualified personnel. Contract manufacturers are required to undergo a satisfactory GMP inspection prior to regulatory approval and are obliged to operate in accordance with FDA, International Council for Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (“ICH”), European and other nationally mandated GMP regulations and/or guidelines governing manufacturing processes, stability testing, record keeping and quality standards. A failure of these contract manufacturers to follow GMP and to document their adherence to such practices or failure of an inspection by a regulatory agency may lead to significant delays in the availability of our product candidate materials for clinical study, leading to delays in our trials.

•For each of our current commercial products and product candidates we will initially rely on a limited number of contract manufacturers. Changing these or identifying future manufacturers may be difficult. Changing manufacturers requires re-validation of the manufacturing processes and procedures in accordance with FDA, ICH, European and other mandated GMP regulations and/or guidelines. Such re-validation may be costly and time-consuming. It may be difficult or impossible for us to quickly find replacement manufacturers on acceptable terms.

•Our contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to produce, store and distribute our products successfully.

A variety of risks associated with operating our business internationally could adversely affect our business.

In addition to our operations in the United States, we have operations in the Netherlands and Switzerland, and are considering pursuing further European expansion to support the planned commercialization of our product candidates in the EEA and UK. We face risks associated with our international operations, including possible unfavorable political, tax and labor conditions, which could harm our business. We are subject to numerous risks associated with international business activities, including:

•difficulties in staffing and managing foreign operations;

•foreign government taxes, regulations and permit requirements;

•U.S. and foreign government tariffs, trade restrictions, price and exchange controls and other regulatory requirements;

•anti-corruption laws, including the Foreign Corrupt Practices Act (“FCPA”);

•economic weakness, including inflation, natural disasters, war, events of terrorism or political instability in particular foreign countries;

•fluctuations in currency exchange rates, which could result in increased operating expenses and reduced revenues, and other obligations related to doing business in another country;

•compliance with tax, employment, immigration and labor laws, regulations and restrictions for employees living or traveling abroad;

•workforce uncertainty in countries where labor unrest is more common than in the United States;

•production shortages resulting from any events affecting raw material supply or manufacturing capabilities aboard; and

•changes in diplomatic and trade relationships.

Our business activities outside of the United States are subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other countries in which we operate. The FCPA and similar anti-corruption laws generally prohibit offering, promising, giving or authorizing others to give anything of value, either directly or indirectly, to non-U.S. government officials in order to improperly influence any act or decision, secure any other improper advantage or obtain or retain business.

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The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the company and to devise and maintain an adequate system of internal accounting controls. As described above, our business is heavily regulated and therefore involves significant interaction with public officials, including officials of non-U.S. governments. Additionally, in many other countries, the health care providers who prescribe pharmaceuticals are employed by their government, and the purchasers of pharmaceuticals are government entities; therefore, any dealings with these prescribers and purchasers may be subject to regulation under the FCPA. Recently the Securities and Exchange Commission (“SEC”) and the U.S. Department of Justice have increased their FCPA enforcement activities with respect to pharmaceutical companies. In addition, under the Dodd–Frank Wall Street Reform and Consumer Protection Act, private individuals who report to the SEC original information that leads to successful enforcement actions may be eligible for a monetary award. We are engaged in ongoing efforts that are designed to ensure our compliance with these laws, including due diligence, training, policies, procedures and internal controls. However, there is no certainty that all employees and third-party business partners (including our distributors, wholesalers, agents, contractors and other partners) will comply with anti-bribery laws. In particular, we do not control the actions of manufacturers and other third-party agents, although we may be liable for their actions. Violation of these laws may result in civil or criminal sanctions, which could include monetary fines, criminal penalties and disgorgement of past profits, which could have a material adverse impact on our business and financial condition.

We are or may become subject to tax audits in the Netherlands, Switzerland or other countries into which we expand our operations, and such jurisdictions may assess additional income tax against us. The final determination of tax audits could be materially different from our recorded income tax provisions and accruals. The ultimate results of an audit could have a material adverse effect on our operating results or cash flows in the period or periods for which that determination is made and could result in increases to our overall tax expense in subsequent periods.

These and other risks associated with our international operations may materially adversely affect our business, financial condition and results of operations.

We rely upon third-party contractors and service providers for the execution of some aspects of our development programs. Failure of these collaborators to provide services of a suitable quality and within acceptable timeframes may cause the delay or failure of our development programs.*

We outsource certain functions, tests and services to CROs, medical institutions and collaborators and outsource manufacturing to collaborators and/or contract manufacturers, and we rely on third parties for quality assurance, clinical monitoring, clinical data management and regulatory expertise. In particular, we rely on CROs to run our clinical trials on our behalf and contract manufacturers to manufacture our product candidates. There is no assurance that such individuals or organizations will be able to provide the functions, tests, drug supply or services as agreed upon or to acceptable quality standards, and we could suffer significant delays in the development of our products or processes.

In some cases, there may be only one or few providers of such services, including manufacturing services. In addition, the cost of such services could increase significantly over time. We rely on third parties as mentioned above to enroll qualified patients and conduct, supervise and monitor our clinical trials. Our reliance on these third parties and collaborators for clinical development activities reduces our control over these activities, but does not relieve us of our regulatory responsibilities, including ensuring that our clinical trials are conducted in accordance with good clinical practices (“GCP”) regulations and the investigational plan and protocols contained in the regulatory agency applications. In addition, these third parties may not complete activities on schedule or may not manufacture compounds under GMP conditions. Preclinical studies may not be performed or completed in accordance with good laboratory practices, regulatory requirements or our trial design. If we or our CROs fail to comply with GCP regulations, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, the EMA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving any marketing applications. If these third parties or collaborators do not successfully carry out their contractual duties or meet expected deadlines, obtaining regulatory approval for manufacturing and commercialization of our product candidates may be delayed or prevented. We rely substantially on third-party data managers for our clinical trial data. There is no assurance that these third parties will not make errors in the design, management or retention of our data or data systems. There is no assurance that these third parties will pass FDA or regulatory audits, which could delay or prohibit regulatory approval.

Our CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other product development activities, which could harm our competitive position. If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms. Further, switching or adding additional CROs involves additional cost and requires management time and attention. In addition, there is a natural transition period when a new CRO commences work. As a result, delays may occur, which could materially impact our ability to meet our desired clinical development timelines.

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Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

If our competitors develop and market products that are more effective than KRAZATI or our other product candidates, they may reduce or eliminate our commercial opportunity.*

We are aware of other companies who currently have competing commercial or clinical-stage direct KRAS G12C inhibitor programs including Amgen, Inc., F. Hoffman-LaRoche Ltd., Eli Lilly and Company, Merck & Co., Inc., Novartis AG, Boehringer Ingelheim International GmbH, and Revolution Medicines, Inc.

There are several immune checkpoint inhibitors currently approved for use as single agents to treat multiple tumor types, including NSCLC. To augment the efficacy of these agents, combination studies are being conducted with a variety of potentially synergistic mechanisms, including inhibitors of CTLA-4, LAG3, TIM-3, TIGIT and CSF-1R, among others. Most of these combination studies are being conducted in patients who are naïve to immune checkpoint inhibitor therapy. Additionally, there are numerous other potential competitors with kinase inhibitors that are being evaluated in combination with checkpoint inhibitors in NSCLC patients who had previously failed checkpoint inhibitor therapy in earlier lines of treatment.

We are aware of other companies who currently have competing clinical-stage MTA-cooperative PRMT5 inhibitor programs including Tango Therapeutics, Inc., BeiGene, and Amgen, Inc.

In addition to companies that have inhibitors addressing our targets of interest, our competition also includes hundreds of private and publicly traded companies that operate in the area of oncology but have therapeutics with different mechanisms of action. The oncology market in general is highly competitive with over 1,000 molecules currently in clinical development. Other important competitors, in addition to those mentioned above, are small and large biotechnology companies, specialty and regional pharmaceutical companies and multinational pharmaceutical companies, including but not limited to AbbVie Inc., AstraZeneca plc, Bristol-Myers Squibb Company, Gilead Sciences, Inc., GlaxoSmithKline plc, Johnson & Johnson, Pfizer Inc., Sanofi S.A. and Takeda Pharmaceutical Co.

Developments by others may render our products or technologies non-competitive or we may not be able to keep pace with technological developments. Our competitors may have developed or may be developing technologies which may be the basis for competitive products. Some of these products may prove to be more effective and less costly than the products developed or being developed by us. Our competitors may obtain regulatory approval for their products more rapidly than we do which may change the standard of care in the indications we are targeting, rendering our technology or products non-competitive. For example, with the recent approval of immunotherapy agents for the treatment of NSCLC and other cancers, the standard of care for the treatment of cancer is evolving and will continue to evolve which could require us to change the design and timelines for our registration trials and may limit the commercial acceptance of our products in the future. Others may develop treatments or cures superior to any therapy we are developing or will develop. Moreover, alternate, less toxic forms of medical treatment may be developed which may be competitive with our products.

Many of the organizations which could be considered to be our competitors have substantially more financial and technical resources, more extensive discovery research, preclinical research and development capabilities and greater manufacturing, marketing, distribution, production and human resources than we do. Many of our current or potential competitors have more experience than we do in research, preclinical testing and clinical trials, drug commercialization, manufacturing and marketing, and in obtaining domestic and foreign regulatory approvals. In addition, failure, unacceptable toxicity, lack of sales or disappointing sales or other issues regarding competitors’ products or processes could have a material adverse effect on our product candidates, including our clinical candidates or our lead compounds. Established pharmaceutical companies may invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make our product candidates less competitive. In addition, any new product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and brand recognition and to be commercially successful. For example, the use of KRAZATI for the treatment of adult patients with KRAS G12C-mutated NSCLC who have received at least one prior systemic therapy will compete with LUMAKRAS® (Amgen Inc.), which was approved for the same indication in May 2021. Accordingly, our competitors may succeed in obtaining patent protection, receiving FDA, EMA, or other regulatory approval or discovering, developing and commercializing medicines before we do, which would have a material adverse impact on our business.

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Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved product label, including KRAZATI’s, or result in significant negative consequences following marketing approval.

Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. Results of our trials could reveal a high and unacceptable severity and prevalence of side effects. In such an event, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications. Treatment-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial, or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.

Additionally, for KRAZATI or any of our other product candidates that receives marketing approval, if we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including:

•regulatory authorities may withdraw approvals of such product;

•regulatory authorities may require additional warnings on the product label;

•we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;

•we could be sued and held liable for harm caused to patients; and

•our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of KRAZATI or any of our other product candidates, if approved, and could significantly harm our business, results of operations and prospects.

We are subject to competition for our skilled personnel and may experience challenges in identifying and retaining key personnel that could impair our ability to conduct our operations effectively.

Our future success depends on our ability to retain our executive officers and to attract, retain and motivate qualified personnel. If we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy. Although we have not experienced problems attracting and retaining highly qualified personnel in the recent past, our industry has experienced a high rate of turnover of management personnel in recent years. Our ability to compete in the highly competitive biotechnology and pharmaceuticals industries depends upon our ability to attract and retain highly qualified managerial, scientific, medical and commercial personnel. We are highly dependent on our management, scientific, medical and commercial personnel, whose services are critical to the success of our product candidates, development, commercialization and regulatory strategies, as well as the management of our financial operations. We are not aware of any present intention of any of these personnel to leave our company. In order to induce valuable employees to continue their employment with us, we have provided equity awards that vest over time. The value to employees of equity awards that vest over time is significantly affected by movements in our stock price that are beyond our control, and may at any time be insufficient to counteract more lucrative offers from other companies.

Despite our efforts to retain valuable employees, members of our management, scientific, development and commercial teams may terminate their employment with us at any time, with or without notice. The loss of the services of any of our executive officers or other key employees and our inability to find suitable replacements could harm our business, financial condition and prospects. Our success also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level and senior managers as well as junior, mid-level and senior scientific, medical and commercial personnel.

We will continue to experience growth in the number of our employees and the scope of our operations. This growth will place a significant strain on our management, operations and financial resources and we may have difficulty managing this future potential growth. No assurance can be provided that we will be able to attract new employees to assist in our growth. Many of the other pharmaceutical companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do. We also may employ consultants or part-time and contract employees. There can be no assurance that these individuals are retainable. While we have been able to attract and

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retain skilled and experienced personnel and consultants in the past, no assurance can be given that we will be able to do so in the future.

We may in the future attempt to obtain FDA approval of product candidates through the use of the accelerated approval pathway, including additional indications for adagrasib. If we are unable to obtain such approval, we may be required to await the completion of planned or ongoing clinical trials or conduct additional clinical trials, which could increase the expense of obtaining, and delay the receipt of, necessary approval. Even if we receive accelerated approval from the FDA, if our confirmatory trials do not verify clinical benefit, or if we do not comply with rigorous post-marketing requirements, the FDA may seek to withdraw accelerated approval.

We may in the future seek accelerated approval for our product candidates. Under the accelerated approval program, the FDA may grant accelerated approval to a product candidate designed to treat a serious or life-threatening condition that provides meaningful therapeutic benefit over available therapies upon a determination that the product candidate has an effect on a surrogate endpoint or intermediate clinical endpoint that is reasonably likely to predict clinical benefit. The FDA considers a clinical benefit to be a positive therapeutic effect that is clinically meaningful in the context of a given disease, such as irreversible morbidity or mortality. For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. An intermediate clinical endpoint is a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit. The accelerated approval pathway may be used in cases in which the advantage of a new drug over available therapy may not be a direct therapeutic advantage, but is a clinically important improvement from a patient and public health perspective. If granted, accelerated approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s clinical benefit. If such post-approval studies fail to confirm the drug’s clinical benefit, the FDA may withdraw its approval of the drug. For example, the FDA’s accelerated approval of KRAZATI for the treatment of previously-treated KRAS G12C-mutated NSCLC requires that we complete KRYSTAL-12 and other post-marketing commitments. In addition to conditions concerning completion of confirmatory clinical evidence, accelerated approvals are subject to pre-submission review by the FDA of any promotional materials.

Prior to seeking accelerated approval for any of our product candidates, we intend to seek feedback from the FDA and will otherwise evaluate our ability to seek and receive accelerated approval. There can be no assurance that after our evaluation of the feedback and other factors we will decide to pursue or submit an NDA for accelerated approval. If we decide to submit an application for accelerated approval for our product candidates, there can be no assurance that such submission or application will be accepted or that review or approval will be granted on a timely basis, or at all. A failure to obtain accelerated approval would result in a longer time period to commercialization of such product candidate, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.

If we or third parties are unable to successfully develop companion diagnostics for our product candidates, or experience significant delays in doing so, we may not achieve marketing approval or realize the full commercial potential of such product candidates.

A key part of our development strategy for our product candidates is to identify subsets of patients with specific types of tumors that express specific genetic markers. Identification of these patients will require the use and development of companion diagnostics. The FDA generally will either require approval or clearance of the diagnostic at the same time the FDA approves the therapeutic product, or as a post-marketing commitment at the time of the therapeutic product’s approval. We do not have experience or capabilities in developing or commercializing diagnostics and plan to rely in large part on third parties to perform these functions.

Companion diagnostics are subject to regulation by the FDA and comparable foreign regulatory authorities as medical devices and will likely require separate regulatory approval prior to commercialization. If we or third parties are unable to successfully develop companion diagnostics for our product candidates, or experience delays in doing so:

•the development of these product candidates may be delayed because it may be difficult to identify patients for enrollment in our clinical trials in a timely manner;

•these product candidates may not receive marketing approval if their safe and effective use depends on a companion diagnostic; and

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•we may not realize the full commercial potential of these product candidates that receive marketing approval if, among other reasons, we are unable to appropriately identify patients or types of tumors with the specific genetic alterations targeted by these product candidates.

Even if our product candidates and any associated companion diagnostics are approved for marketing, the need for companion diagnostics may slow or limit adoption of our product candidates. Although we believe genetic testing is becoming more prevalent in the diagnosis and treatment of cancer, our product candidates may be perceived negatively compared to alternative treatments that do not require the use of companion diagnostics, either due to the additional cost of the companion diagnostic or the need to complete additional procedures to identify genetic markers prior to administering our product candidates.

If any of these events were to occur, our business and growth prospects would be harmed, possibly materially.

Interim, topline and preliminary data from our clinical trials may change as more patient data become available, and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose preliminary, interim or topline data from our preclinical studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change as patient enrollment and treatment continues and more patient data become available. Adverse differences between previous preliminary or interim data and future interim or final data could significantly harm our business prospects. We may also announce topline data following the completion of a preclinical study or clinical trial, which may be subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the interim, topline or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Preliminary, interim or topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the data we previously published. As a result, preliminary, interim and topline data should be viewed with caution until the final data are available.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine to be material or otherwise appropriate information to include in our disclosure.

The timelines of our clinical trials may be impacted by numerous factors and any delays may adversely affect our ability to execute our current business strategy.

Clinical testing is expensive, difficult to design and implement, can take many years to complete, and is uncertain as to outcome. We may experience delays in clinical trials at any stage of development and testing of our product candidates. Our planned clinical trials may not begin on time, have an effective design, enroll a sufficient number of patients or be completed on schedule, if at all.

Events which may result in a delay or unsuccessful completion of clinical trials include:

•inability to raise funding necessary to initiate or continue a trial;

•delays in obtaining regulatory approval to commence a trial;

•delays in reaching agreement with the FDA or other regulatory authorities on final trial design;

•imposition of a clinical hold following an inspection of our clinical trial operations or trial sites by the FDA or other regulatory authorities;

•delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites;

•delays in obtaining required institutional review board approval at each site;

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•delays in having patients complete participation in a trial or return for post-treatment follow-up;

•delays caused by patients dropping out of a trial due to side effects or otherwise;

•clinical sites dropping out of a trial to the detriment of enrollment;

•time required to add new clinical sites; and

•delays by our contract manufacturers to produce and deliver a sufficient supply of clinical trial materials.

Furthermore, enrollment may depend on the availability of suitable companion diagnostics to identify genetic markers we are targeting and the capability and willingness of clinical sites to conduct genetic screening of potential patients.

If initiation or completion of any of our clinical trials for our product candidates are delayed for any of the above reasons or for other reasons, our development costs may increase, our approval process could be delayed, any periods after commercial launch and before expiration of patent protection may be reduced and our competitors may have more time to bring products to market before we do. Any of these events could impair the commercial potential of our product candidates and could have a material adverse effect on our business.

If we experience delays or difficulties in the enrollment of patients in clinical trials, those clinical trials could take longer than expected to complete and our receipt of necessary regulatory approvals could be delayed or prevented.*

We may not be able to initiate or complete clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials. In particular, because we are focused on patients with specific genetic alterations in some of our trials, our pool of suitable patients may be smaller and more selective and our ability to enroll a sufficient number of suitable patients may be limited or take longer than anticipated. In addition, some of our competitors have ongoing clinical trials for product candidates that treat the same indications, or target the same genetic alterations as our product candidates. Therefore, patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates.

Patient enrollment for any of our clinical trials may also be affected by other factors, including without limitation:

•the severity of the disease under investigation;

•the frequency of the genetic alteration we are seeking to target in the applicable trial, and the ability to effectively identify such alteration;

•the willingness of clinical sites and principal investigators to subject candidate patients to genetic screening;

•the eligibility criteria for the study in question;

•the perceived risks and benefits of the product candidate under study;

•the availability, effectiveness and safety of other treatment options;

•the patient referral practices of physicians;

•the ability to monitor patients adequately during and after treatment; and

•the proximity and availability of a sufficient number of clinical trial sites that are willing to comply with the requirements of our clinical protocols.

For example, due to the targeted indications and patient populations we intend to focus on for development of our product candidates, the number of study sites and patient populations available to us may be limited, and therefore enrollment of suitable patients to participate in clinical trials for these product candidates may take longer than would be the case if we were pursuing broader indications or patient populations.

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We are and continue to be subject to stringent government regulations concerning the clinical testing of our products. We will also continue to be subject to government regulation of any product that receives regulatory approval, including KRAZATI.

Numerous statutes and regulations govern human testing and the manufacture and sale of human therapeutic products in the United States, EEA, UK and other countries where we intend to market our products. Such legislation and regulation bears upon, among other things, the approval of trial protocols and human testing, the approval of manufacturing facilities, testing procedures, CMC and controlled research, the review and approval of manufacturing, preclinical and clinical data prior to marketing approval, including adherence to GMP during production and storage, and marketing activities, including advertising and labeling.

Clinical trials may be delayed or suspended at any time by us or by the FDA or other similar regulatory authorities if it is determined at any time that patients may be or are being exposed to unacceptable health risks, including the risk of death, or if compounds are not manufactured under acceptable GMP conditions or with acceptable quality. Current regulations relating to regulatory approval may change or become more stringent. The agencies may also require additional trials be run in order to provide additional information regarding the safety, efficacy or equivalency of any product candidate for which we seek regulatory approval.

Moreover, any regulatory approval of a drug which is eventually obtained may entail limitations on the indicated uses for which that drug may be marketed or on the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with GMPs and GCPs for any clinical trials that we conduct post-approval. For example, the FDA’s accelerated approval of KRAZATI for the treatment of previously-treated KRAS G12C-mutated NSCLC requires that we complete KRYSTAL-12 and other post-marketing commitments. In addition, if the FDA or a comparable foreign regulatory authority approves any of our other product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. For example, prescription drugs may be promoted only for the approved indications in accordance with the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. However, physicians may, in their independent medical judgment, prescribe legally available products for off-label uses. The FDA does not regulate the behavior of physicians in their choice of treatments, but the FDA does restrict manufacturer’s communications on the subject of off-label use of their products. Furthermore, product approvals may be withdrawn or limited in some way if problems occur following initial marketing or if compliance with regulatory standards is not maintained. Similar restrictions are imposed in foreign markets. Regulatory agencies could become more risk averse to any side effects or set higher standards of safety and efficacy prior to reviewing or approving a product. This could result in a product not being approved.

If we, or any future marketing collaborators or contract manufacturers, fail to comply with applicable regulatory requirements, we may be subject to sanctions including fines, product recalls or seizures and related publicity requirements, injunctions, total or partial suspension of production, civil penalties, suspension or withdrawals of previously granted regulatory approvals, warning or untitled letters, refusal to approve pending applications for marketing approval of new products or of supplements to approved applications, import or export bans or restrictions, and criminal prosecution and penalties. Any of these penalties could delay or prevent the promotion, marketing or sale of our products and product candidates.

The FDA’s policies, and policies of comparable foreign regulatory authorities, may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or to adopt new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business, prospects and ability to achieve or sustain profitability.

Breakthrough therapy designation by the FDA, even if granted for any of our product candidates, may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that our product candidates will receive marketing approval.

We may seek breakthrough therapy designation for future product candidates. A breakthrough therapy is defined as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug or biologic may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For product candidates that have been designated as breakthrough therapies,

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sponsors may obtain more frequent interaction with and communication with the FDA to help identify the most efficient path for clinical development.

The receipt of a breakthrough therapy designation for a product candidate may not result in a faster development process, review or approval and does not change the approval standards or assure ultimate approval by the FDA. In addition, the FDA may later decide that the product no longer meets the conditions for qualification. As such, there can be no assurance that even if we do receive breakthrough therapy designation, that such designation will have a material impact on our development program.

The failure to (i) maintain the BeiGene Agreement or the failure of BeiGene to perform its obligations under the BeiGene Agreement and/or (ii) maintain the Zai Agreement or the failure of Zai to perform its obligations under the Zai Agreement, could, in each case, negatively impact our business.*

Pursuant to the terms of the BeiGene Agreement, we granted to BeiGene an exclusive license to develop, manufacture and commercialize sitravatinib in the BeiGene Licensed Territory. Consequently, our ability to generate any revenues from sitravatinib in the BeiGene Licensed Territory depends on our ability to maintain our collaboration with BeiGene. We have limited control over the amount and timing of resources that BeiGene will dedicate to these efforts and the failure of sitravatinib to meet the overall survival primary endpoint in the Phase 3 SAPPHIRE trial may negatively impact BeiGene’s willingness to continue to dedicate resources to the development of sitravatinib in the BeiGene Licensed Territory.

Pursuant to the terms of the Zai Agreement, we granted Zai the right to research, develop, manufacture and exclusively commercialize adagrasib in the Zai Licensed Territory. Consequently, our ability to generate any revenues from adagrasib in the Zai Licensed Territory depends on our ability to maintain our collaboration with Zai. We have limited control over the amount and timing of resources that Zai will dedicate to these efforts.

We are subject to a number of other risks associated with our dependence on the BeiGene Agreement with respect to sitravatinib in the BeiGene Licensed Territory and the Zai Agreement with respect to adagrasib in the Zai Licensed Territory, including:

•BeiGene or Zai may not comply with applicable regulatory guidelines with respect to developing, manufacturing or commercializing sitravatinib or adagrasib, respectively, which could adversely impact sales or future development of sitravatinib in or outside of the BeiGene Licensed Territory or adagrasib in or outside of the Zai Licensed Territory, respectively;

•There may be disputes between us and BeiGene or Zai, including disagreements regarding the BeiGene Agreement or the Zai Agreement, respectively; and

•BeiGene or Zai may not properly defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property rights or expose us to potential litigation.

Each of the BeiGene Agreement and Zai Agreement are also subject to early termination, including through BeiGene’s and Zai’s (as applicable) right to terminate without cause upon advance notice to us. If the agreement is terminated early, we may not be able to find another collaborator for the further development and commercialization of (i) with respect to BeiGene, sitravatinib in the BeiGene Licensed Territory and/or (ii) with respect to Zai, adagrasib in the Zai Licensed Territory, in each case on acceptable terms, or at all, and we may be unable to pursue continued development and commercialization of sitravatinib in the BeiGene Licensed Territory and/or adagrasib in the Zai Licensed Territory on our own.

If we fail to obtain coverage and adequate reimbursement for KRAZATI or other future products, our revenue-generating ability will be diminished and there is no assurance that the anticipated market for our products will be sustained.*

Our and our collaborators’ ability to commercialize KRAZATI and our other product candidates, once approved, successfully will depend, in part, on the extent to which coverage and adequate reimbursement for such products and related treatments will be available from governmental health payor programs at the federal and state levels, including Medicare and Medicaid, private health insurers, managed care plans and other organizations. No assurance can be given that third-party payor coverage and adequate reimbursement will be available that will allow us to maintain price levels sufficient for the realization of an appropriate return on our investment in product development.

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Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and private health insurers, managed care plans and other organizations is critical to new product acceptance. There is no uniform coverage and reimbursement policy among third-party payors in the United States; however, private third-party payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates. Additionally, coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available. Even if we obtain coverage for our product candidates, the resulting reimbursement payment rates might not be adequate or may require co-payments that patients find unacceptably high. Patients are unlikely to use our product candidates unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our product candidates.

Additionally, we or our collaborators may develop companion diagnostic tests for use with our product candidates. We or our collaborators will be required to obtain coverage and reimbursement for these tests separate and apart from the coverage and reimbursement we seek for KRAZATI and our other product candidates, once approved. While we have not yet developed any companion diagnostic test for use with our product candidates, if we do, there is significant uncertainty regarding our ability to obtain coverage and adequate reimbursement for the same reasons applicable to our product candidates.

In the United States and in many other countries, pricing and/or profitability of some or all prescription pharmaceuticals and biopharmaceuticals are subject to varying degrees of government control. In the United States, there has recently been increased government enforcement and government and payor scrutiny relating to drug pricing and price increases. For example, there have been several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. At the Federal level, in July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs. In response to President Biden’s executive order, on September 9, 2021, the U.S. Department of Health and Human Services (“HHS”) released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue to advance these principles. In addition, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law, which among other things, (i) allows HHS to negotiate the price of certain drugs and biologics covered under Medicare, and subjects drug manufacturers to civil monetary penalties and a potential excise tax by offering a price that is not equal to or less than the negotiated “maximum fair price” under the law, and (ii) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. The IRA permits HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these programs are implemented. These provisions will take effect progressively starting in 2023, although the Medicare drug price negotiation program is currently subject to legal challenges. It is currently unclear how the IRA will be effectuated but is likely to have a significant impact on the pharmaceutical industry. Further, in response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the Centers for Medicare & Medicaid Services (“CMS”) Innovation Center which will be evaluated on their ability to lower the cost of drugs, promote accessibility, and improve quality of care. It is unclear whether the models will be utilized in any health reform measures in the future.

At the state level, legislatures have increasingly passed legislation and implemented 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, designed to encourage importation from other countries and bulk purchasing. These changes may adversely impact the prices we or our future collaborators may charge for KRAZATI or our other products candidates, if commercialized.

Outside of the United States, the successful commercialization of our products will depend largely on obtaining and maintaining government coverage, because in many countries, patients are unlikely to use prescription drugs that are not covered by their government healthcare programs. Negotiating coverage and reimbursement with governmental authorities can delay commercialization by 12 months or more. Coverage and reimbursement policies may adversely affect our ability to sell our products on a profitable basis. In many international markets, governments control the prices of prescription pharmaceuticals, including through the implementation of reference pricing, price cuts, rebates, revenue-related taxes and profit control, and we expect prices of prescription pharmaceuticals to decline over the life of the product or as volumes increase.

Healthcare reform and controls on healthcare spending may limit the price we charge for any products and the amounts thereof that we can sell. In particular, in the United States, the federal government and private insurers have changed, and have considered ways to change, the manner in which healthcare services are provided. In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, “ACA”) became law in the United States. With respect to pharmaceutical products, the ACA, among other things, expanded and increased industry

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rebates for drugs covered by Medicaid and made changes to the coverage requirements under Medicare Part D, Medicare’s prescription drug benefits program. Some of the provisions of the ACA have yet to be fully implemented, and there have been executive, judicial and Congressional challenges to certain aspects of the ACA. For example, on June 17, 2021 the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Further, prior to the U.S. Supreme Court ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. The IRA also extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025 and eliminates the “donut hole” under the Medicare Part D program beginning in 2025, by significantly lowering the beneficiary maximum out-of-pocket cost and through a newly established manufacturer discount program. It is possible that the ACA and other health reform measures will be subject to judicial or Congressional challenges in the future. It is unclear how any such challenges or additional health reform measures of the Biden administration will impact the ACA, other health reform measures, and our business.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. These changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect on April 1, 2013 and, as amended by subsequent legislation including the Bipartisan Budget Act of 2018 and the Consolidated Appropriations Act of 2023, will stay in effect until 2032, unless additional Congressional action is taken. On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our customers and accordingly, our financial operations.

We anticipate that the ACA, the IRA, and any additional healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the reimbursement we may receive for KRAZATI and any other approved product. Moreover, payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives.

In addition, levels of reimbursement may be impacted by other current and future legislation, regulation or reimbursement policies of third-party payors in a manner that may harm the demand and reimbursement available for our products, including for companion diagnostics for our products, which in turn, could harm our future product pricing and sales. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.

Our relationships with customers and third-party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.*

As an early commercial-stage company, even though we will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights will be applicable to our business. Our arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act, which may constrain the business or financial arrangements and relationships through which we may sell, market and distribute KRAZATI and any future drugs for which we obtain marketing approval. In addition, we may be subject to transparency laws and patient privacy regulation by U.S. federal and

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state governments and by governments in foreign jurisdictions in which we conduct our business. The laws that may affect our ability to operate include:

•the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order, lease, furnishing, prescribing or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs, such as Medicare and Medicaid. The term “remuneration” has been broadly interpreted to include anything of value. The ACA, among other things, amended the intent requirement of the federal Anti‑Kickback Statute such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate, in order to commit a violation;

•federal civil and criminal false claims laws, including the federal False Claims Act which can be enforced by private individuals on behalf of the government through civil whistleblower or qui tam actions, and civil monetary penalty laws prohibit individuals or entities from knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. Entities can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers, promoting a product off‑label, or for providing medically unnecessary services or items. In addition, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act;

•the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which imposes criminal and civil liability for knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of, or payment for, healthcare benefits, items or services;

•HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and their respective implementing regulations, which impose obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as individuals and entities that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, known as business associates, as well as their covered subcontractors, with respect to safeguarding the privacy, security and transmission of individually identifiable health information. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in U.S. federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions;

•the federal Open Payments program, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services information related to “payments or other transfers of value” made to physicians, which is defined to include doctors, dentists, optometrists, podiatrists and chiropractors, other health care professionals (such as physician assistants and nurse practitioners), and teaching hospitals and ownership and investment interests held by physicians and their immediate family members; and

•analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures, or drug pricing; state and local laws that require the registration of pharmaceutical sales representatives; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

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Because of the breadth of these laws and the narrowness of available statutory exceptions and regulatory safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of such laws. To the extent that any of our product candidates is ultimately sold in countries other than the United States, we may be subject to similar laws and regulations in those countries. If we or our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including significant civil, criminal and administrative penalties, damages, fines, imprisonment, disgorgement, additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, exclusion from participation in government healthcare programs, and the curtailment or restructuring of our operations, any of which could have a material adverse effect on our business. If any of the physicians or other healthcare providers or entities with whom we expect to do business, including any of our collaborators, is found not to be in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusion from participation in government healthcare programs, which could also materially affect our business.

We are subject to stringent and changing obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; and other adverse business impacts.

In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, "processing") personal data and other sensitive data, including proprietary and confidential business data, trade secrets, intellectual property, data we collect about trial participants in connection with clinical trials, and sensitive third-party data. Our data processing activities also subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contracts, and other obligations that govern the processing of personal data by us and on our behalf.

In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws and consumer protection laws. The California Consumer Privacy Act of 2018 (“CCPA”) imposes obligations on businesses to which it applies. These obligations include, without limitation, providing specific disclosures in privacy notices, affording California residents certain rights related to their personal data, and requiring businesses subject to the CCPA to implement certain measures to effectuate California residents’ personal data rights. The CCPA allows for statutory fines for noncompliance (up to $7,500 per violation). Although the CCPA exempts some data processed in the context of clinical trials, the CCPA increases compliance costs and potential liability with respect to other personal data we maintain about California residents. In addition, the California Privacy Rights Act of 2020 (“CPRA”), effective January 1, 2023, expands the CCPA. For example, the CPRA establishes a new California Privacy Protection Agency to implement and enforce the CCPA (as amended) and provides a new right for individuals to correct their personal information. Other states have enacted data privacy laws and similar laws are being considered in several other states, as well as at the federal and local levels. For example, Virginia passed its Consumer Data Protection Act, Colorado passed the Colorado Privacy Act, and Utah passed the Utah Consumer Privacy Act, all of which differ from the CPRA and become effective in 2023. While these states, like the CCPA, also exempt some data processed in the context of clinical trials, these developments further complicate compliance efforts, and increase legal risk and compliance costs for us and the third parties upon whom we rely.

Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security. For example, the European Union’s General Data Protection Regulation (“EU GDPR”) and the UK’s GDPR (“UK GDPR”) impose strict requirements for processing the personal data of individuals located, respectively, within the EEA and the UK. For example, under the EU GDPR, government regulators may impose temporary or definitive bans on data processing, as well as fines up to 20 million euros or 4% of the annual global revenue, whichever is greater. Further, individuals, classes of data subjects or consumer protection organizations may initiate litigation related to our processing of their personal data.

Certain jurisdictions have enacted data localization laws and cross-border personal data transfer laws. For example, absent appropriate safeguards or other circumstances, the EU GDPR generally restricts the transfer of personal data to countries outside of the EEA, such as the United States, which the European Commission does not consider to provide an adequate level of personal data protection. The European Commission released a set of “Standard Contractual Clauses” that are designed to be a valid mechanism by which entities can transfer personal data out of the EEA to jurisdictions that the European Commission has not found to provide an adequate level of protection. Currently, these Standard Contractual clauses are a valid mechanism to transfer personal data outside of the EEA. The Standard Contractual Clauses, however, require parties that rely upon that legal mechanism to comply with additional obligations such as conducting transfer impact assessments to determine whether additional security measures are necessary to protect the at-issue personal data. Moreover, due to potential legal challenges, there exists some uncertainty regarding whether the Standard Contractual Clauses will remain a valid mechanism for personal

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data transfers out of the EEA. In addition, laws in Switzerland and the UK similarly restrict personal data transfers outside of those jurisdictions to countries such as the United States that do not provide an adequate level of personal data protection. In addition to European restrictions on cross-border personal data transfers, other jurisdictions have enacted or are considering similar cross-border personal data transfer laws and local personal data residency laws, any of which could increase the cost and complexity of doing business. If we cannot implement a valid compliance mechanism for cross-border personal data transfers, we may face increased exposure to regulatory actions, substantial fines and injunctions against processing or transferring personal data from Europe or elsewhere. Inability to import personal data to the United States may significantly and negatively impact our business operations, including by limiting our ability to conduct clinical trial activities in Europe and elsewhere (some European regulators have ordered certain companies to suspend or permanently cease certain data transfers out of Europe for allegedly violating the GDPR’s cross-border data transfer limitations); limiting our ability to collaborate with parties subject to European and other data protection laws; or requiring us to increase our personal data processing capabilities in Europe and/or elsewhere at significant expense.

We are also bound by contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful. For example, certain privacy laws, such as the GDPR and the CCPA, require our customers to impose specific contractual restrictions related to privacy and security on their service providers.

We publish privacy policies, marketing materials and other statements, such as compliance with certain certifications or self-regulatory principles, regarding data privacy and security. If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators or other adverse consequences.

Our obligations related to data privacy and security are quickly changing in an increasingly stringent fashion. These obligations may be subject to differing applications and interpretations, which may be inconsistent among jurisdictions or in conflict. Preparing for and complying with these obligations requires us to devote significant resources (including, without limitation, financial and time-related resources). These obligations may necessitate changes to our information technologies, systems, and practices and those of any third parties that process personal data on our behalf. In addition, these obligations may even require us to change our business model. Although we endeavor to comply with all applicable data privacy and security obligations, we may at times fail (or be perceived to have failed) to do so. Moreover, despite our efforts, our personnel or third-parties upon whom we rely may fail to comply with such obligations, which impacts our compliance posture.

If we fail, or are perceived to have failed, to address or comply with data privacy and security obligations, we could face significant consequences. These consequences may include, but are not limited to, government enforcement actions (e.g., investigations, fines, penalties, audits and inspections, among others); litigation (including class-related claims); additional reporting requirements and/or oversight; bans on processing personal data; and orders to destroy or not use personal data. Any of these events could have a material adverse effect on our reputation, business or financial condition, including, but not limited to: loss of customers; interruptions or stoppages in our business operations (including clinical trials); inability to process personal data or operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or revision or restructuring of our operations.

Changes in funding for the FDA, the SEC and other government agencies, or shutdowns, travel restrictions or furloughs, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal functions on which the operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, travel restrictions, ability to hire and retain key personnel and accept payment of user fees, and statutory, regulatory, and policy changes. Average review times at the FDA have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including most recently beginning on December 22, 2018, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

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We may become subject to the risk of product liability claims.*

We face an inherent risk of product liability as a result of the clinical testing of our product candidates and will face an even greater risk as we commercialize KRAZATI and if we commercialize any future products. Human therapeutic products involve the risk of product liability claims and associated adverse publicity. Currently, the principal risks we face relate to patients in our clinical trials, who may suffer unintended consequences. Claims might be made by patients, healthcare providers, pharmaceutical companies or others. For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties. Claims could also be asserted under state consumer protection laws. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of KRAZATI or any of our product candidates, if approved. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

•decreased demand for our product candidates;

•injury to our reputation;

•withdrawal of clinical trial participants;

•initiation of investigations by regulators;

•costs to defend the related litigation;

•a diversion of management’s time and our resources;

•substantial monetary awards to trial participants or patients;

•product recalls, withdrawals or labeling, marketing or promotional restrictions;

•loss of revenue from product sales; and

•the inability to commercialize KRAZATI or any of our other product candidates, if approved.

We may not have or be able to obtain or maintain sufficient and affordable insurance coverage, and without sufficient coverage any claim brought against us could have a materially adverse effect on our business, financial condition or results of operations. We run clinical trials through investigators that could be negligent through no fault of our own and which could affect patients, cause potential liability claims against us and result in delayed or stopped clinical trials. We are required in many cases by contractual obligations to indemnify collaborators, partners, third-party contractors, clinical investigators and institutions. These indemnifications could result in a material impact due to product liability claims against us and/or these groups. We currently carry $10 million in product liability insurance, which we believe is appropriate for our marketed products and clinical trials. Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

Our business involves the controlled use of hazardous materials and as such we are subject to environmental and occupational safety laws. Continued compliance with these laws may incur substantial costs and failure to maintain compliance could result in liability for damages that may exceed our resources.

Our preclinical research, manufacturing and development processes involve the controlled use of hazardous and radioactive materials. We are subject to federal, local and foreign laws and regulations governing the use, manufacture, storage, handling and disposal of such materials and certain waste products. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. The risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, we

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could be held liable for any damages that result, and any such liability could exceed our resources. We may not be adequately insured against this type of liability. We may be required to incur significant costs to comply with environmental laws and regulations in the future, and our operations, business or assets may be materially adversely affected by current or future environmental laws or regulations.

We may have to dedicate resources to the settlement of litigation.

Securities legislation in the United States, Canada and other countries makes it relatively easy for shareholders to sue. This could lead to frivolous lawsuits that could take substantial time, money, resources and attention or force us to settle such claims rather than seek adequate judicial remedy or dismissal of such claims.

If we are required to defend patent infringement actions brought by third parties, or if we sue to protect our own patent rights or otherwise to protect our proprietary information and to prevent its disclosure, or if we are involved in other litigation, whether as a plaintiff or defendant, we may be required to pay substantial litigation costs and managerial attention may be diverted from business operations even if the outcome is in our favor. If we are required to defend our patents or trademarks against infringement by third parties, we may be required to pay substantial litigation costs and managerial attention and financial resources may be diverted from our research and development operations even if the outcome is in our favor.

If our information technology systems or data is or were compromised, we could experience adverse impacts resulting from such compromise, including, but not limited to interruptions to our operations such as our clinical trials, claims that we breached our data protection obligations, and harm to our reputation.*

In the ordinary course of our business, we may collect, store, use, transmit, disclose or otherwise process proprietary, confidential, and sensitive data, including personal data (such as health-related data and clinical trial related data), intellectual property and trade secrets. We are dependent upon our own or third-party information technology systems, infrastructure and data to operate our business.

Cyberattacks, malicious internet-based activity, and online and offline fraud are prevalent and continue to increase. These threats are becoming increasingly difficult to detect. These threats come from a variety of sources. In addition to traditional computer “hackers,” threat actors, personnel misconduct or error (such as theft or misuse), sophisticated nation-state and nation-state supported actors now engage in attacks. We may be subject to a variety of evolving threats, including, but not limited to, social engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), ransomware attacks, supply-chain attacks, software bugs, server malfunction, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures and other similar threats. Ransomware attacks, including those perpetrated by organized criminal threat actors, nation-states, and nation-state supported actors, are becoming increasingly prevalent and severe and can lead to significant interruptions in our operations, loss of data and income, reputational harm and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting payments. Similarly, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems (including our products/operational activities) or the third-party information technology systems that support us and our operational activities.

Any of the previously identified or similar threats could cause a security incident. A security incident could result in unauthorized, unlawful or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to, data. A security incident could disrupt our (and third parties upon whom we rely) ability to provide our products. Any system failure, accident or security breach that causes interruptions in our own, in collaborators’ or in third-party service vendors’ operations could result in a material disruption of our drug discovery and development programs or theft of our intellectual property. We may expend significant resources or modify our business activities (including our clinical trial activities) in an effort to protect against security incidents.

Certain data privacy and security obligations may require us to implement and maintain specific security measures, industry-standard or reasonable security measures to protect our information technology systems and data.

We devote considerable internal and external resources to implementing security measures to protect our systems and customers, but these security measures cannot provide absolute security. We may be unable to detect vulnerabilities in our information technology systems (including our products) because such threats and techniques change frequently, are often sophisticated in nature, and may not be detected until after a security incident has occurred. Despite our efforts to identify and

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remediate vulnerabilities, if any, in our information technology systems (including our products), our efforts may not be successful. Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities.

Potential breaches of our security measures and the accidental loss, inadvertent disclosure, or unapproved dissemination of proprietary information, intellectual property, or sensitive or confidential data about us, our employees, or our customers (including the potential loss or disclosure of such information or data as a result of employee error or other employee actions or inactions, hacking, fraud, social engineering, or other forms of deception) could expose us, our customers, or the individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation, or otherwise materially adversely affect our business, results of operations, and financial condition. Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents. Such disclosures are costly, and the disclosures or the failure to comply with such requirements, could lead to adverse impacts. Additionally, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.

In addition, the cost and operational consequences of implementing further data protection measures could be significant and theft of our intellectual property or proprietary business information could require substantial expenditures to remedy. Further, we cannot be certain that (a) our liability insurance will be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related breaches; (b) such coverage will cover any indemnification claims against us relating to any incident, will continue to be available to us on economically reasonable terms, or at all; or (c) any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our reputation, business, financial condition and results of operations.

In addition, we rely upon third-party contractors and service providers for the hosting, support and/or maintenance of some aspects of our computer hardware, computer software and telecommunications systems. Failure of those contractors and service providers to provide systems and services of a suitable quality and within acceptable timeframes may cause the delay or failure of our development programs, or loss of confidential or proprietary information. To the extent that any disruption or security breach results in a loss or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we may incur liability, our drug discovery and development programs may be adversely affected and the further development of our product candidates may be delayed. Furthermore, such disruptions or security breaches could harm our reputation, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, require us to verify the correctness of database contents and otherwise subject us to litigation or other liability under laws and regulations that protect personal data, any of which could disrupt our business and/or result in increased costs.

Risks Related to Our Financial Position and Capital Requirements

We will require additional financing and may be unable to raise sufficient capital, which could lead us to delay, reduce or abandon development programs or commercialization.*

Our operations have consumed substantial amounts of cash since inception. Our research and development expenses were $124.2 million and $128.3 million for the three months ended June 30, 2023 and 2022, respectively, and $250.9 million and $259.3 million for the six months ended June 30, 2023 and 2022, respectively. Our net losses for the three months ended June 30, 2023 and 2022 were $176.9 million and $176.4 million, respectively, and $361.5 million and $364.8 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, we had an accumulated deficit of $2.8 billion. We may require substantial additional capital to pursue additional clinical development for our lead clinical programs, including conducting late-stage clinical trials, manufacturing clinical supplies and developing other assets in our pipeline, and to commercialize any of our current product candidates. If the FDA or any foreign regulatory agency, such as the EMA requires that we perform studies or trials in addition to those that we currently anticipate with respect to the development of our product candidates, or repeat studies or trials, or if our clinical trials are otherwise delayed or disrupted, our expenses would further increase beyond what we currently expect. We may not be able to adequately finance our development programs, which could limit our ability to move our programs forward in a timely and satisfactory manner or require us to abandon the programs, any of which would harm our business, financial condition and results of operations. Because successful development of our product candidates is uncertain, we are unable to accurately estimate the actual funds we will require to complete research and development, and commercialize any of our other product candidates.

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If, at any point, we are unable to obtain funding from equity offerings or debt financings on a timely basis, we may be required to (1) seek additional collaborators for one or more of our product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available; (2) relinquish or license on unfavorable terms our rights to technologies or product candidates that we otherwise would seek to develop or commercialize ourselves; or (3) significantly curtail one or more of our research or development programs or cease operations altogether.

We may not generate meaningful revenue from sales of products, including KRAZATI. If any of our other product candidates fail in clinical trials or do not gain regulatory approval, or if any of our product candidates, if approved, fail to achieve market acceptance, we may never become profitable. We anticipate incurring significant costs associated with commercializing KRAZATI and any other product candidates that are approved in the future. Therefore, even if we are able to generate revenue from the sale of KRAZATI or any other approved products, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our ability to generate future revenue from product sales depends heavily on our success in:

•launching and commercializing KRAZATI in the United States for the treatment of adult patients with KRAS G12C-mutated NSCLC who have received at least one prior systemic therapy;

•completing KRYSTAL-12 and other post-marketing commitments, which is a requirement of our accelerated approval for KRAZATI;

•completing development and clinical trial programs for our other product candidates;

•maintaining existing collaboration and licensing agreements and entering into additional ones;

•seeking and obtaining marketing approvals for any product candidates that successfully complete clinical trials;

•establishing and maintaining supply and manufacturing relationships with third parties;

•successfully commercializing any other product candidates for which marketing approval is obtained; and

•successfully establishing a sales force and marketing and distribution infrastructure.

We are an early commercial-stage company with one approved product and minimal product revenue. Consequently, we expect that our financial and operating results will vary significantly from period to period.

We are an early commercial-stage company that has incurred losses since its inception and expect to continue to incur substantial losses in the foreseeable future. Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of uncertainty.

Our actual financial condition and operating results have varied significantly in the past and are expected to continue to fluctuate significantly from quarter-to-quarter or year-to-year due to a variety of factors, many of which are beyond our control. Factors relating to our business that may contribute to these fluctuations include:

•the cost associated with launching and commercializing KRAZATI in the United States for the treatment of adult patients with KRAS G12C-mutated NSCLC who have received at least one prior systemic therapy;

•the status and cost of KRYSTAL-12 and other post-marketing commitments, completion of which is a requirement of our accelerated approval for KRAZATI;

•the cost associated with establishing, and the success of, our commercial team and U.S. sales force;

•the success of our clinical trials through all phases of clinical development;

•delays in the commencement, enrollment and timing of clinical trials;

•delays due to force majeure;

•our ability to secure and maintain collaborations, licensing or other arrangements for the future development and/or commercialization of our product candidates, as well as the terms of those arrangements;

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•our ability to obtain, as well as the timeliness of obtaining, additional funding to develop our product candidates;

•the results of clinical trials or marketing applications for product candidates that may compete with our product candidates;

•competition from existing products or new products that may receive marketing approval;

•potential side effects of our product candidates that could delay or prevent approval or cause an approved drug to be taken off the market;

•any delays in regulatory review and approval of our clinical development plans or product candidates;

•our ability to identify and develop additional product candidates;

•the ability of patients or healthcare providers to obtain coverage or sufficient reimbursement for our products;

•our ability, and the ability of third parties such as CROs to adhere to clinical study and other regulatory requirements;

•the ability of third-party manufacturers to manufacture our product candidates and key ingredients needed to conduct clinical trials and, if approved, successfully commercialize our products;

•the costs to us, and our ability as well as the ability of any third-party collaborators, to obtain, maintain and protect our intellectual property rights;

•costs related to, and outcomes of, potential intellectual property litigation;

•our ability to adequately support future growth;

•our ability to attract and retain key personnel to manage our business effectively; and

•our ability to build our finance infrastructure and, to the extent required, improve our accounting systems and controls.

Accordingly, the likelihood of our success must be evaluated in light of many potential challenges and variables associated with an early commercial-stage company, many of which are outside of our control, and past operating or financial results should not be relied on as an indication of future results. Fluctuations in our operating and financial results could cause our share price to decline. It is possible that in some future periods, our operating results will be above or below the expectations of securities analysts or investors, which could also cause our share price to decline.

Raising additional funds through debt or equity financing will be dilutive and raising funds through licensing agreements may be dilutive, restrict operations or relinquish proprietary rights.

To the extent that additional capital is raised through the sale of equity, term or convertible debt securities, or structured royalties, the issuance of those securities could result in substantial dilution for our current shareholders and the terms may include liquidation or other preferences that adversely affect the rights of our current shareholders. Existing shareholders may not agree with our financing plans or the terms of such financings. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the U.S. and worldwide resulting from the pandemic and recent bank failures. If the disruption persists and deepens, we could experience an inability to access additional capital, which could in the future negatively affect our capacity to fund research and development programs, including discovery research, preclinical and clinical development activities. Moreover, the incurrence of debt financing could result in a substantial portion of our operating cash flow being dedicated to the payment of principal and interest on such indebtedness and could impose restrictions on our operations. In addition, if we raise additional funds through future collaboration and licensing arrangements, it may be necessary to relinquish potentially valuable rights to our products or proprietary technologies, or to grant licenses on terms that are not favorable to us. Additional funding may not be available to us on acceptable terms, or at all. Such negative conditions could impact the rate at which we can successfully commercialize KRAZATI or any other drugs we develop.

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Our ability to use our U.S. net operating loss carryforwards and certain other tax attributes may be limited.

Our U.S. federal net operating loss (“NOL”), carryforwards generated in tax years beginning before January 1, 2018, are only permitted to be carried forward for 20 years under applicable U.S. tax law. Under current law, our federal NOLs generated in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to federal tax laws. In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change U.S. tax attributes (such as research tax credits) to offset its post-change income or taxes may be limited.

As a result, our NOL carryforwards generated in tax years beginning before January 1, 2018 may expire prior to being used. In addition, we believe that we have in the past undergone, and in the future it is possible we may undergo, additional ownership changes that could limit our ability to use all of our pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset our post-change income or taxes. Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes. In addition, at the state level, there may be periods during which the use of NOLs or other tax attributes is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. As a result, we may be unable to use all or a material portion of our NOLs and other tax attributes, which could adversely affect our future cash flows.

Risks Related to Our Intellectual Property

We may not obtain adequate protection for our product and product candidates through patents and other intellectual property rights and as such, our competitive advantage in the marketplace may be compromised.

Our success depends to a significant degree upon our ability to develop, secure and maintain intellectual property rights to our proprietary products, to operate without infringing on the proprietary rights of others or having third parties circumvent the rights that we own or license. We have filed and are actively pursuing patent applications in the United States, Japan, Europe and other major markets via the Patent Cooperation Treaty or directly in countries of interest. However, we may not receive issued patents on any of our pending patent applications in these countries and we may not be able to obtain, maintain or enforce our patents and other intellectual property rights which could impact our ability to compete effectively. We cannot be certain that the U.S. Patent and Trademark Office, courts in the United States or the patent offices and courts in foreign countries will consider the claims in our patents and applications covering any of our products in development as patentable. In addition, the scope of any of our issued patents may not be sufficiently broad to provide us with a competitive advantage. Furthermore, other parties may successfully challenge, invalidate or circumvent our issued patents or patents licensed to us so that our patent rights do not create an effective competitive barrier. Our method-of-use patents protect the use of a product only for the specified method. This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products off-label. Although off-label prescriptions may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent, including through legal action. Further, if the patent applications we own or license with respect to our programs, product, product candidates and/or companion diagnostic fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for our product or product candidates, it could dissuade companies from collaborating with us to develop product candidates, and threaten our ability to commercialize future products.

We may file applications for trademark registrations in connection with our product candidates in various jurisdictions, including the United States. No assurance can be given that any of our trademark applications will be registered in the United States or elsewhere, or that the use of any registered or unregistered trademarks will confer a competitive advantage in the marketplace. Furthermore, even if we are successful in our trademark registrations, the FDA and regulatory authorities in other countries have their own process for drug nomenclature and their own views concerning appropriate proprietary names. The loss, abandonment, or cancellation of any of our trademarks or trademark applications could negatively affect the success of the product or product candidates to which they relate.

Moreover, some of our know-how and technology which is not patented or not patentable may constitute trade secrets. Therefore, we require our consultants, advisors and collaborators to enter into confidentiality agreements and our employees to enter into invention and non-disclosure agreements. However, no assurance can be given that such agreements will provide for a meaningful protection of our trade secrets, know-how or other proprietary information in the event of any unauthorized use or

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disclosure of information. Furthermore, we cannot provide assurance that any of our employees, consultants, contract personnel or collaborators, either accidentally or through willful misconduct, will not cause serious negative impact to our programs and/or our strategy. All of our employees have signed confidentiality agreements, but there can be no assurance that they will not inadvertently or through their misconduct give trade secrets away.

Third-party patents or intellectual property infringement claims may result in a reduction in the scope of our patent protection and competitive exclusivity with respect to our product or product candidates. Patent litigation, including defense against third-party intellectual property claims, may result in us incurring substantial costs.

Our patents may be challenged by third parties from time to time, and we will have to defend our intellectual property rights. If we are involved in an intellectual property dispute, we may need to litigate to defend our rights or assert them against others. Disputes can involve arbitration, litigation or proceedings declared by the U.S. Patent and Trademark Office or the International Trade Commission or foreign patent authorities. These disputes can result in the successful invalidation of our patents or reduction in scope so that our patent rights do not create an effective competitive barrier. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.

It is possible that third parties will circumvent our patents by means of alternate designs or processes or file applications or be granted patents that would block or hamper our efforts. Further, a third party may claim that our products or technology infringe its patents or other intellectual property rights, as such we may have to discontinue or alter our products and processes, pay license fees or cease certain activities. We may not be able to obtain a license to needed intellectual property on favorable terms, if at all. There are many patents issued or applied for in the biotechnology industry, and we may not be aware of patents or patent applications held by others that relate to our business. This is especially true since patent applications in the United States and elsewhere are filed confidentially for the first 18 months. Moreover, the validity and breadth of biotechnology patents involve complex legal and factual questions for which important legal issues remain.

Maintaining our patents and applications requires timely payment of fees and other associated costs in the countries of filing, and we could inadvertently abandon a patent or patent application (or trademark or trademark application) due to non-payment of fees, or as a result of a failure to comply with filing deadlines or other requirements of the prosecution process, resulting in the loss of protection of certain intellectual property rights in a certain country. Alternatively, we, our collaborators or our patent counsel may take action resulting in a patent or patent application becoming abandoned which may not be able to be reinstated, or if reinstated, may suffer negative patent term adjustments. Any of these outcomes could hurt our ability to gain full patent protection for our products. Registered trademarks and/or applications for trademark registrations in the United States that belong to us are subject to similar risks as described above for patents and patent applications.

Third parties may seek to obtain approval of a generic version of approved products, including KRAZATI. Defense against entry of a generic product may result in us incurring substantial costs and ultimate failure to prevail against approval of a generic product could result in a substantial loss of market share and profits.

Even if we are successful in obtaining regulatory approval to sell any of our product candidates, other than KRAZATI, in one or more countries, we cannot be certain that our patents and other intellectual property rights will ultimately prevent approval during the patent term of generic products developed and commercialized by third parties. A generic manufacturer may seek approval of a generic version of any of our products in the United States by filing an Abbreviated New Drug Application with the FDA, asserting that our patents are invalid and/or unenforceable to maintain market exclusivity for KRAZATI or any of our other products, if approved. We cannot predict if, or when, one or more generic manufacturers may attempt to seek regulatory approval for a generic version of KRAZATI or any of our other products, if approved. There is no assurance that we will ultimately be successful in a court of law to prevent entry of a generic version of any of our products during the applicable patent term and we may incur substantial costs defending our patents and intellectual property rights. An inability to stop a generic manufacturer from selling a generic version of our products could result in a substantial loss of market share and profits or even preclude the ability to continue to commercialize KRAZATI or any of our other products, if approved.

Risks Related to Our Shares of Common Stock

Our principal shareholders control the majority of our shares, and their actions may significantly influence matters submitted to our shareholders for approval and our share price.*

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Based on the information available to us as of June 30, 2023, our shareholders and their affiliates who owned more than 5% of our outstanding common stock collectively owned 46% of our outstanding common stock. Boxer Capital, LLC (“Boxer Capital”) and its affiliates collectively own 9% of our outstanding common stock. In addition, in conjunction with certain financing transactions, we granted Boxer Capital the right to nominate a member of our Board of Directors and the right to appoint an observer on our Board of Directors. In addition, we granted Baker Brothers Advisors, LLC (“Baker Brothers”) the right to appoint an observer on our Board of Directors. Collectively Baker Brothers and Boxer Capital may have significant influence over matters submitted to our shareholders for approval, including the election and removal of directors and the approval of any merger, consolidation, or sale of all or substantially all of our assets. Furthermore, if Boxer Capital, Baker Brothers, or any other of our major shareholders determine to exit from the industry or from their holdings in us, for whatever reason, the impact on our share price could be detrimental over a prolonged period of time.

Our bylaws, as amended (our “Bylaws”) provide that the Court of Chancery of the State of Delaware is the exclusive forum for certain disputes between us and our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our Bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to our company or our shareholders, (iii) any action asserting a claim against our company arising pursuant to any provision of the Delaware General Corporation Law or our amended and restated certificate of incorporation or Bylaws, or (iv) any action asserting a claim against our company governed by the internal affairs doctrine. This choice of forum provision does not apply to suits brought to enforce a duty or liability created by the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any other claim for which the federal courts have exclusive jurisdiction.

This choice of forum provision may limit a shareholder’s ability to bring certain claims in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or shareholders, which may discourage lawsuits with respect to such claims, although our shareholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. If a court were to find this choice of forum provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, would be our shareholders’ only source of gain.

We have never declared or paid any cash dividends on our common shares, and we currently expect that earnings, if any, and cash flow will primarily be retained and used in our operations, including servicing any debt obligations we may have now or in the future. Accordingly, although we do not anticipate paying any dividends in the foreseeable future, we may not be able to generate sufficient cash flow in order to allow us to pay future dividends on, or make any distributions with respect to, our common stock. As a result, capital appreciation, if any, of our common stock would be our shareholders’ sole source of gain on their investment in our common stock for the foreseeable future.

General Risks

As a public company in the United States, we incur significant legal and financial compliance costs and we are subject to the Sarbanes-Oxley Act. We can provide no assurance that we will, at all times, in the future be able to report that our internal controls over financial reporting are effective.

Companies that file reports with the SEC, including us, are subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires management to establish and maintain a system of internal control over financial reporting, and annual reports on Form 10-K filed under the Exchange Act must contain a report from management assessing the effectiveness of a company’s internal control over financial reporting. Ensuring that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis remains a costly and time-consuming effort that needs to be re-evaluated frequently. Failure on our part to have effective internal financial and accounting controls would cause our financial reporting to be unreliable, could have a material adverse effect on our business, operating results, and financial condition, and could cause our stock price to decline as a result.

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If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements. Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the SEC, The Nasdaq Global Select Market or other regulatory authorities.

Furthermore, shareholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, any new regulations or disclosure obligations may increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

Our share price is volatile and may be influenced by numerous factors that are beyond our control.*

A low share price and low market valuation may make it difficult to raise sufficient additional cash due to the significant dilution to current shareholders. Market prices for shares of biotechnology and biopharmaceutical companies such as ours are often volatile. Factors such as clinical and regulatory developments regarding our products or processes, developments regarding potential or future third-party collaborators, announcements of technological innovations, new commercial products, patents, the development of proprietary rights by us or by others or any litigation relating to these rights, regulatory actions, general conditions in the biotechnology and pharmaceutical industries, failure to meet analysts’ expectations, publications, financial results or public concern over the safety of biopharmaceutical and biotechnological products, economic conditions in the United States and other countries, including the recent bank failures, terrorism and other factors could have a significant effect on the share price for our shares of common stock. Any setback or delay in the clinical development of our programs could result in a significant decrease in our share price. In recent years the stock of other biotechnology and biopharmaceutical companies has experienced extreme price fluctuations that have been unrelated to the operating performance of the affected companies. There can be no assurance that the market price of our shares of common stock will not experience significant fluctuations in the future, including fluctuations that are unrelated to our performance. These fluctuations may result due to macroeconomic and world events, national or local events, general perception of the biotechnology industry or to a lack of liquidity. In addition, other biotechnology companies’ or our competitors’ programs could have positive or negative results that impact their stock prices and their results or experience stock price fluctuations that could have a positive or negative impact on our stock price, regardless of whether such impact is direct or not.

shareholders may not agree with our business, scientific, clinical and financial strategy, including additional dilutive financings, and may decide to sell their shares or vote against such proposals. Such actions could materially impact our stock price. In addition, portfolio managers of funds or large investors can change or change their view on us and decide to sell our shares. These actions could have a material impact on our stock price. In order to complete a financing, or for other business reasons, we may elect to consolidate our shares of common stock. Investors may not agree with these actions and may sell our shares. We may have little or no ability to impact or alter such decisions.

Changes in tax laws or regulations that are applied adversely to us or our future potential customers may have a material adverse effect on our business, cash flow, financial condition or results of operations.

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance. Effective January 1, 2022, legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act, eliminated the option to deduct research and development expenses for tax purposes in the year incurred and requires taxpayers to capitalize and subsequently amortize such expenses over five years for research activities conducted in the United States and over 15 years for research activities conducted outside the United States. Unless the United States Department of the Treasury issues regulations that narrow the application of this provision to a smaller subset of our research and development expenses or the provision is deferred, modified, or repealed by Congress, we expect a material decrease in our cash flows from operations and an offsetting similarly sized increase in our net deferred tax assets over these amortization periods. The actual impact of this provision will depend on multiple factors, including the amount of research and development expenses we will incur and whether we conduct our research and development activities inside or outside the United States. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. For example, the Tax Cuts and Jobs Act, the Coronavirus Aid, Relief, and Economic Security Act and the IRA enacted many significant changes to the U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities with respect to such legislation may affect us, and certain aspects of such legislation could be repealed or modified in future legislation. Furthermore, it is uncertain if and to what extent various states will conform to

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federal tax laws. Future tax reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense.

Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our shareholders and could cause our stock price to fall.

We expect that significant additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, our shareholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. These sales may also result in material dilution to our existing shareholders, and new investors could gain rights superior to our existing shareholders.

Pursuant to our 2022 Equity Incentive Plan (successor to the 2013 Equity Incentive Plan) and our 2013 Employee Stock Purchase Plan (the “ESPP”), our management is authorized to grant stock options, restricted stock units and other equity-based awards to our employees, directors and consultants, and to sell our common stock to our employees, respectively. Pursuant to the inducement plan, the Board of Directors is authorized to grant stock options, restricted stock units and other equity-based awards to new employees who satisfy the standards for inducement grants in accordance with the Nasdaq Stock Market LLC listing rules. Any increase in the number of shares outstanding as a result of the exercise of outstanding options, the vesting or settlement of outstanding stock awards, or the purchase of shares pursuant to the ESPP will cause our shareholders to experience additional dilution, which could cause our stock price to fall.

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ITEM 6. Exhibits

Exhibit number	Description of document
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Mirati Therapeutics, Inc.’s Registration Statement on Form 10-12B (No. 001-35921), filed with the Securities and Exchange Commission on May 10, 2013).
3.2	Bylaws (incorporated by reference to Mirati Therapeutics, Inc.’s Registration Statement on Form 10-12B (No. 001-35921), filed with the Securities and Exchange Commission on May 10, 2013).
3.3	Amendment to Bylaws (incorporated by reference to Mirati Therapeutics, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 16, 2016).
4.1	Form of Common Stock Certificate (incorporated by reference to Mirati Therapeutics, Inc.’s Amended Registration Statement on Form 10-12B/A (No. 001-35921), filed with the Securities and Exchange Commission on June 14, 2013).
4.2	Form of Warrant to Purchase Common Stock (incorporated by reference to Mirati Therapeutics, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 6, 2017).
4.3	Form of Warrant to Purchase Common Stock (incorporated by reference to Mirati Therapeutics, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 16, 2017).
4.4	Form of Warrant to Purchase Common Stock (incorporated by reference to Mirati Therapeutics, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 7, 2018).
10.1	2013 Employee Stock Purchase Plan, as amended (incorporated by reference to Mirati Therapeutics, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 12, 2023).
10.2	Non-Employee Director Compensation Policy, Amended and Restated June 22, 2023.
10.3	Employment Agreement, dated April 12, 2023, by and between the Registrant and John B. Moriarty, Jr.
31.1	Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
31.2	Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
32.1	Certifications Pursuant to U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002.
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		MIRATI THERAPEUTICS, INC.
August 8, 2023	by:	/s/ Charles M. Baum
		Charles M. Baum
		Interim Chief Executive Officer
		(Principal Executive Officer)
August 8, 2023	by:	/s/ Laurie D. Stelzer
		Laurie D. Stelzer
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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EX-10.2

Exhibit 10.2

MIRATI THERAPEUTICS, INC.NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

AMENDED AND RESTATED: June 22, 2023 (“Effective Date”)

Each member of the Board of Directors (the “Board”) who is not also serving as an employee of Mirati Therapeutics, Inc. (“Mirati” or the “Company”) or any of its subsidiaries (each such member, an “Eligible Director”) will receive the compensation described in this Amended and Restated Non-Employee Director Compensation Policy (the “Director Compensation Policy”) for his or her Board service.

The Director Compensation Policy may be amended at any time in the sole discretion of the Board or the Compensation Committee of the Board.

Annual Cash Compensation

The annual cash compensation amount set forth below is payable in equal quarterly installments, payable in arrears on the last day of each fiscal quarter in which the service occurred. If an Eligible Director joins the Board or a committee of the Board (“Committee”) at a time other than effective as of the first day of a fiscal quarter, each annual retainer set forth below will be pro-rated based on days served in the applicable fiscal year, with the pro-rated amount paid for the first fiscal quarter in which the Eligible Director provides the service, and regular full quarterly payments thereafter. All annual cash retainer fees are vested upon payment.

1. Annual Board Service Retainer:

a. Eligible Directors other than the Chair: $45,000

b. Chair: $80,000

2. Annual Committee Chair Service Retainer:

a. Chair of the Audit Committee: $20,000

b. Chair of the Compensation Committee: $15,000

c. Chair of the Nominating & Corporate Governance Committee: $10,000

d. Chair of the Research and Development Committee: $15,000

3. Annual Committee Member Service Retainer:

a. Member of the Audit Committee: $10,000

b. Member of the Compensation Committee: $7,500

c. Member of the Nominating & Corporate Governance Committee: $5,000

d. Member of the Research and Development Committee: $7,500

Equity Compensation

The equity compensation set forth below will be granted under the Mirati Therapeutics, Inc. 2022 Equity Incentive Plan (the “Plan”), and will be documented on the applicable form of equity award agreement most recently approved for use by the Board (or a duly authorized committee thereof) for Eligible Directors. All stock options granted under the Director Compensation Policy will be nonstatutory stock options, with an exercise price per share equal to 100% of the Fair Market Value (as defined in the Plan) of the underlying Company Common Stock (the “Common Stock”) on the date of grant, and a term of ten years from the date of grant (subject to earlier termination in connection with a termination of service as provided in the Plan).

1. Initial Grant: On the date of the Eligible Director’s initial election to the Board (or, if such date is not a market trading day, the first market trading day thereafter), the Eligible Director automatically will be granted, without further action by the Board or Compensation Committee of the Board, (i) a stock option to purchase shares of Common Stock (the “Initial Option Grant”) and (ii) a restricted stock unit award covering shares of Common Stock (the “Initial RSU Grant”), whereby the Initial Option Grant and Initial RSU Grant shall together have an aggregate target fair value of $633,000, calculated in accordance with Financial Accounting Standards Board, Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“FASB ASC Topic 718”). The aforementioned values will result in the Eligible Directors receiving an equity award comprised of 12,784 stock options and 7,555 restricted stock units. The Initial Option Grant will vest in a series of thirty-six (36) substantially equal monthly installments after the date of grant, such that the Initial Option Grant will be fully vested on the third anniversary of the date of grant, subject to the Eligible Director’s Continuous Service (as defined in the Plan) on each applicable vesting date. The Initial RSU Grant will vest in a series of three (3) substantially equal annual installments after the date of grant, such that the Initial RSU Grant will be fully vested on the third anniversary of the date of grant, subject to the Eligible Director’s Continuous Service (as defined in the Plan) on each applicable vesting date. In addition, in the event of a Change in Control or a Corporate Transaction (each, as defined in the Plan), any unvested portion of the Initial Option Grant and Initial RSU Grant will fully vest and become exercisable as of immediately prior to the effective time of such Change in Control or Corporate Transaction, subject to the Eligible Director’s Continuous Service (as defined in the Plan) on the effective date of such transaction.

2. Annual Grant:

a. Each fiscal year, on the earlier to occur of (i) the grant date of annual equity awards to the Company’s executive officers or (ii) the date of the Mirati annual stockholder meeting, each Eligible Director, other than the Chair, automatically, and without further action by the Board or Compensation Committee of the Board, will be granted (a) a stock option to purchase shares of Common Stock (the “DirectorAnnual Option Grant”) and (b) a restricted stock unit award covering shares of Common Stock (the “Director Annual RSU Grant”), whereby the Director Annual Option Grant and Director Annual RSU Grant shall together have an aggregate target fair value of $400,000, calculated in accordance with FASB ASC Topic 718. The aforementioned values resulted in the Eligible Directors receiving an equity award comprised of 7,520 stock options and 4,444 restricted stock units for the fiscal year commencing January 1, 2023. The Director Annual Option Grant will vest in twelve (12) substantially equal monthly installments after the date of grant, such that the Director Annual Option Grant will be fully vested on the first anniversary of the date of grant, subject to the Eligible Director’s Continuous Service (as defined in the Plan) on each applicable vesting date. The Director Annual RSU Grant will vest in full on the first anniversary of the date of grant, subject to the Eligible Director’s Continuous Service (as defined in the Plan) on such vesting date. In addition, in the event of a Change in Control or a Corporate Transaction (each, as defined in the Plan), any unvested portion of the Director Annual Option Grant and Director Annual RSU Grant will fully vest and become exercisable as of immediately prior to the effective time of such Change in Control or Corporate Transaction, subject to the Eligible Director’s Continuous Service (as defined in the Plan) on the effective date of such transaction.

b. Each fiscal year, on the earlier to occur of (i) the grant date of annual equity awards to the Company’s executive officers or (ii) the date of the Mirati annual stockholder meeting, the Chair automatically, and without further action by the Board or Compensation Committee of the Board, will be granted (a) a stock option to purchase shares of Common Stock (the “ChairAnnual Option Grant”) and (b) a restricted stock unit award covering shares of Common Stock (the “Chair Annual RSU Grant”), whereby the Chair Annual Option Grant and Chair Annual RSU Grant shall together have an aggregate target fair value of $570,000, calculated in accordance with FASB ASC Topic 718. The aforementioned values resulted in the Chair receiving an equity award comprised of 10,716 stock options and 6,333 restricted stock units for the fiscal year commencing January 1, 2023. The Chair Annual Option Grant will vest in twelve (12) substantially equal monthly installments after the date of grant, such that the Chair Annual Option Grant will be fully vested on the first anniversary of the date of grant, subject to the Chair’s Continuous Service (as defined in the Plan) on each applicable vesting date. The Chair Annual RSU Grant will vest in full on the first anniversary of the date of grant, subject to the Eligible Director’s Continuous Service (as defined in the Plan) on such vesting date. In addition, in the

event of a Change in Control or a Corporate Transaction (each, as defined in the Plan), any unvested portion of the Chair Annual Option Grant and Chair Annual RSU Grant will fully vest and become exercisable as of immediately prior to the effective time of such Change in Control or Corporate Transaction, subject to the Chair’s Continuous Service (as defined in the Plan) on the effective date of such transaction.

Expenses

The Company will reimburse Eligible Directors for ordinary, necessary and reasonable out-of-pocket travel expenses to cover in-person attendance at and participation in Board and/or Committee meetings; provided, that Eligible Directors timely submit to the Company appropriate documentation substantiating such expenses in accordance with the Company’s travel and expense policy, as in effect from time to time.

Philosophy

The Director Compensation Policy is designed to attract and retain experienced, talented individuals to serve on the Board. The Board anticipates that the Board, or a duly authorized committee thereof, will generally review Eligible Director compensation on an annual basis. The Director Compensation Policy, as amended from time to time, may take into account the time commitment expected of Eligible Directors, best practices and market rates in director compensation, the economic position of Mirati, broader economic conditions, historical compensation structure, the advice of the compensation consultant that the Compensation Committee or the Board may retain from time to time, and the potential dilutive effect of equity awards on our stockholders.

Under the Director Compensation Policy, Eligible Directors receive cash compensation in the form of retainers to recognize their level of responsibility as well as the necessary time commitment involved in serving in a leadership role and/or on Committees. Eligible Directors also receive equity compensation because we believe that stock ownership provides an incentive to act in ways that maximize long-term stockholder value. Further, we believe that stock-based awards are essential to attracting and retaining talented Board members. When stock options are granted, these stock options will have an exercise price at least equal to the Fair Market Value of Common Stock on the date of grant, so that stock options provide a return only if the Fair Market Value appreciates over the period in which the stock option vests and remains exercisable. We believe that the vesting acceleration provided in the case of a Change in Control or other Corporate Transaction is consistent with market practices and is critical to attracting and retaining high quality directors. 

EX-10.3

April 12, 2023

John Moriarty

208 Benson Circle

Mill Valley, CA 94941

Re:     Offer of Employment

Dear John:

Mirati Therapeutics, Inc. (the “Company” or “Mirati”) is pleased to offer you at-will employment in the position of EVP, Chief Legal Officer & Corporate Secretary (“Chief Legal Officer”) on the terms and conditions set forth in this letter agreement (the “Agreement”). Certain capitalized terms used in this Agreement have the meanings set forth in Mirati Therapeutics, Inc. Executive Severance Plan, attached hereto as Exhibit A.

1.Employment by the Company. Your employment with the Company shall begin on May 1, 2023, or such date as otherwise agreed to by you and the Company (such actual date your employment begins (the “Start Date”)). This is an exempt position, and during your employment with the Company, you will devote substantially all of your business time and attention to the business of the Company, except for approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies. You shall perform such duties consistent with the position of Chief Legal Officer, as set forth in your position description, or as required by the Company’s Chief Executive Officer (the “CEO”), to whom you will report. Your primary work location shall be your home office located in Mill Valley, California. The Company reserves the right to reasonably require you to perform your duties at places other than your primary office location from time to time, and to require reasonable business travel with reimbursement in a manner consistent with the Company’s travel reimbursement policies.

2.At-Will Employment. Your employment relationship is at-will. Either you or the Company may terminate the employment relationship at any time, with or without Cause or advance notice. Upon termination of your employment for any reason, you shall resign from all positions and terminate any relationships as an employee, advisor, officer or director with the Company and any of its affiliates, each effective on the date of termination.

3.Compensation.

3.1Base Salary. For services to be rendered hereunder, you shall receive a base salary at the rate of five hundred and twenty thousand dollars (USD $520,000) per year, subject to standard payroll deductions and withholdings and payable in accordance with the Company’s regular payroll schedule (the “Base Salary”).

3.2Annual Bonus. You shall be eligible to participate in the Company’s incentive plan applicable to senior executives at a level such that you will have the potential to earn a cash bonus, at target, of forty-five percent (45%) of your annual Base Salary during such year (the “Annual Bonus”). The amount of such Annual Bonus shall be determined by the Company’s Board of Directors (the “Board”) in its sole discretion, based upon the achievement of you and/or the Company of management objectives to be reasonably established by the Board in consultation with you. These management objectives shall consist of both financial and scientific goals and shall be specified in writing by the Board, and a copy shall be given to you prior to the commencement of the applicable year. You acknowledge there is no assurance that the terms of the incentive plan will remain unchanged or will in any future year provide the same benefits as it has in past years (or any benefits or payments at all) and that the Company may, at its discretion, revise the terms of the incentive plan in advance for any upcoming fiscal year as it applies to you provided always that you will be entitled to participate in any incentive plan made available to senior executives of the Company. Any Annual Bonus amounts shall be subject to standard payroll deductions and withholdings. Except as otherwise provided in Section 9, you must continue to be employed through the date the Annual Bonus is paid in order to earn such bonus for any particular year. Your Annual Bonus target for 2023 will not be prorated.

3.3Equity. Subject to Board approval, as soon as administratively practicable following your Start Date, you will be granted stock options ("Options") and restricted stock unit awards ("RSUs") under the Company's Inducement Plan, as amended from time to time, and any successor plan thereto ("Inducement Plan"). The Options and RSUs will be granted to you as an inducement material to you entering into employment with the Company pursuant to the “inducement grant” exception provided under Nasdaq listing rules, and the Company represents that all Options will be registered on an effective S-8 or other registration statement prior to the date on which they become vested. The Options and RSUs will be granted as soon as practicable following the Start Date and the public disclosure of all Company material, non-public information, as determined by the Company. Your Options and RSUs will have the following terms:

(a)Options. Options will be issued to you for the purchase of 83,525 shares of our common stock in accordance with the Inducement Plan. The Options will have an exercise price equal to 100% of the fair market value of the Company's common stock on the applicable date of grant. The Options will vest over a four-year period following your grant date, with 25% of the Options vesting on the first anniversary of your initial grant date, and the remainder vesting in 36 equal monthly installments on each monthly anniversary thereafter, in each case subject to your continued services with the Company through the applicable vesting dates. The Options will be subject to the terms of the Inducement Plan, the Plan and the option agreement between you and the Company.

(b)     RSUs. You will be awarded 49,363 RSUs in accordance with accounting standards on the applicable date of grant. The RSUs will vest over a four-year period following your initial grant date, with 25% of the RSUs vesting on each anniversary of your grant date, in each case subject to your continued services with the Company through the applicable vesting

2.

dates. The RSUs will be subject to the terms of the Inducement Plan, Plan and the restricted stock unit agreement between you and the Company.

4.Expenses. You will be eligible for reimbursement of all reasonable, necessary and documented out-of-pocket business, entertainment, and travel expenses incurred by you in connection with the performance of your duties hereunder, in accordance with the Company's expense reimbursement policies and procedures.

5.Paid Time Off; Paid Sick Leave; Holidays. You will initially be eligible to accrue up to four (4) weeks (or 20 days) of vacation during each calendar year (January 1 - December 31), subject to applicable maximum accrual caps, in accordance with the Company’s paid time off policies as in effect from time to time. You will be granted ten (10) days (or 80 hours) of paid sick leave at the commencement of employment, and thereafter, on January 1st of each calendar year. You will also be eligible for certain paid holidays pursuant to Company policy. The Company reserves the right to cancel or change its policies regarding paid time off, paid sick leave and/or holidays from time to time without amendment of this Agreement.

6.Company Policies; Standard Company Benefits. The employment relationship between the parties shall be governed by the general employment policies and practices of the Company, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control. In accordance with Company practice and subject to the terms and conditions of the applicable Company benefit plan documents, you will be eligible to participate in the generally applicable employee benefit programs provided by the Company to its U.S. based employees from time to time (such as life insurance, health insurance, dental insurance, 401(k), employee stock purchase plan, etc.) in accordance with their terms. The Company reserves the right to cancel or change the benefit plans or programs it offers to its employees at any time.

7.Proprietary Information Obligations. As a condition of employment, you shall execute and abide by the Company’s Employee Proprietary Information and Invention Assignment Agreement (the “PIIA”). By signing this letter you are representing that you have full authority to accept this position and perform the duties of the position without conflict with any other obligations and that you are not involved in any situation that might create, or appear to create, a conflict of interest with respect to your loyalty or duties to the Company. You specifically warrant that you are not subject to an employment agreement or restrictive covenant preventing full performance of your duties to the Company. You agree not to bring to the Company or use in the performance of your responsibilities at the Company any materials or documents of a former employer that are not generally available to the public, unless you have obtained express written authorization from the former employer for their possession and use. You also agree to honor your obligations to former employers and any other third parties (if any) during your employment with the Company.

3.

8.Outside Activities During Employment. Except with the prior written consent of the CEO, you will not during the term of your employment with the Company undertake or engage in any other employment, occupation or business enterprise.

9.Termination; Severance Benefits. You will be eligible to participate in the Mirati Therapeutics, Inc. Executive Severance Plan, a copy of which is set forth in Exhibit A.

10.Arbitration of All Disputes.

10.1Agreement to Arbitrate. To ensure the timely and economical resolution of disputes that may arise between you and the Company, both you and the Company mutually agree that pursuant to the Federal Arbitration Act, 9 U.S.C. §1-16 (the “FAA”), and to the fullest extent permitted by applicable law, you and the Company will submit solely to final, binding and confidential arbitration any and all disputes, claims, or causes of action arising from or relating to: (i) the negotiation, execution, interpretation, performance, breach or enforcement of this Agreement; or (ii) your employment with the Company (including but not limited to all statutory claims); or (iii) the termination of your employment with the Company (including but not limited to all statutory claims). BY AGREEING TO THIS ARBITRATION PROCEDURE, BOTH YOU AND THE COMPANY WAIVE THE RIGHT TO RESOLVE ANY SUCH DISPUTES THROUGH A TRIAL BY JURY OR JUDGE OR THROUGH AN ADMINISTRATIVE PROCEEDING.

10.2Arbitrator Authority. The arbitrator shall have the sole and exclusive authority to determine whether a dispute, claim or cause of action is subject to arbitration under this Section and to determine any procedural questions which grow out of such disputes, claims or causes of action and bear on their final disposition.

10.3Individual Capacity Only. All claims, disputes, or causes of action under this Section, whether by you or the Company, must be brought solely in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative proceeding, nor joined or consolidated with the claims of any other person or entity. The arbitrator may not consolidate the claims of more than one person or entity, and may not preside over any form of representative or class proceeding. To the extent that the preceding sentences in this Section are found to violate applicable law or are otherwise found unenforceable, any claim(s) alleged or brought on behalf of a class shall proceed in a court of law rather than by arbitration.

10.4Arbitration Process. Any arbitration proceeding under this Section shall be presided over by a single arbitrator and conducted by JAMS, Inc. (“JAMS”) in San Diego, California, or as otherwise agreed to by you and the Company, under the then applicable JAMS rules for the resolution of employment disputes (available upon request and also currently available at http://www.jamsadr.com/rules-employment-arbitration/). You and the Company both have the right to be represented by legal counsel at any arbitration proceeding, at each party’s own expense. The arbitrator shall: (i) have the authority to compel adequate discovery

4.

for the resolution of the dispute; (ii) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award; and (iii) be authorized to award any or all remedies that you or the Company would be entitled to seek in a court of law. The Company shall pay all JAMS arbitration fees in excess of the amount of court fees that would be required of you if the dispute were decided in a court of law.

10.5Excluded Claims. This Section shall not apply to any action or claim that cannot be subject to mandatory arbitration as a matter of law, including, without limitation, sexual assault disputes and sexual harassment disputes as defined in the FAA, claims brought pursuant to the California Private Attorneys General Act of 2004, as amended, the California Fair Employment and Housing Act, as amended, and the California Labor Code, as amended, to the extent such claims are not permitted by applicable law to be submitted to mandatory arbitration and such applicable law is not preempted by the FAA or otherwise invalid (collectively, the “Excluded Claims”). In the event you intend to bring multiple claims, including one of the Excluded Claims listed above, the Excluded Claims may be filed with a court, while any other claims will remain subject to mandatory arbitration.

10.6Injunctive Relief and Final Orders. Nothing in this Section is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Any final award in any arbitration proceeding hereunder may be entered as a judgment in the federal and state courts of any competent jurisdiction and enforced accordingly.

11.Indemnification and D&O Coverage. To the fullest extent permissible under applicable law, you shall be entitled to indemnification (including immediate advancement of all legal fees with respect to any claim for indemnification) and director and officers’ insurance coverage, to the extent made available to other directors and senior executives, in accordance with the certificate of incorporation and the bylaws and all other applicable policies and procedures of Company for expenses incurred or damages paid or payable by you with respect to a claim against you based on actions or inactions by you in your capacity as a senior executive or director of Company. In addition, you will be covered by the Company’s indemnification coverage on terms no less favorable to you than the indemnification plans applicable to other executive officers and directors of the Company.

12.General Provisions. This Agreement, together with the PIIA constitutes the entire agreement between you and the Company with regard to this subject matter and is the complete, final, and exclusive embodiment of the parties’ agreement with regard to this subject matter. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations. Modifications or amendments to this Agreement, other than those changes expressly reserved to the Company’s discretion in this letter, must be made in a written agreement signed by you and the Company’s Chief Executive Officer. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or

5.

unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the parties. Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement. This Agreement is intended to bind and inure to the benefit of and be enforceable by you and the Company, and their respective successors, assigns, heirs, executors and administrators. The Company may freely assign this Agreement, without your prior written consent. You may not assign any of your duties hereunder and you may not assign any of your rights hereunder without the written consent of the Company. This Agreement shall become effective as of the Start Date and shall terminate upon your termination of employment with the Company. The obligations as forth under Section 7 (Proprietary Information Obligations), Section 9 (Termination; Severance Benefits), Section 10 (Arbitration of All Disputes); Section 11 (Indemnification and D&O Coverage) and Section 12 (General Provisions) will survive the termination of this Agreement. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of California.

This offer is conditioned on, and subject to, satisfactory proof of your identity and right to work in the United States, and your satisfactory completion of a background check and other applicable pre-employment screenings.

[Signature page to follow]

6.

We look forward to having you join us. If you have any questions about this Agreement, please do not hesitate to call me.

If you accept employment with the Company on the terms above, please sign below and sign and complete the PIIA and return all documents by April 15, 2023. Our offer will terminate after such date.

Best regards,

Mirati Therapeutics, Inc.

/s/ David Meek    

David Meek

Chief Executive Officer

Accepted and agreed:

/s/ John Moriarty        

John Moriarty

Date: April 13, 2023    

7.

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Charles M. Baum, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Mirati Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2023	/s/ Charles M. Baum
	Charles M. Baum
	Interim Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Laurie D. Stelzer, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Mirati Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting, and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2023	/s/ Laurie D. Stelzer
	Laurie D. Stelzer
	Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

In connection with the Quarterly Report on Form 10-Q of Mirati Therapeutics, Inc. (the “Company”) for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles M. Baum, the Interim Chief Executive Officer, and I, Laurie D. Stelzer, the Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 8, 2023

/s/ Charles M. Baum	/s/ Laurie D. Stelzer
Charles M. Baum	Laurie D. Stelzer
Interim Chief Executive Officer (Principal Executive Officer)	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2023	Aug. 01, 2023
Cover [Abstract]
Entity Central Index Key	0001576263
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-35921
Entity Registrant Name	Mirati Therapeutics, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-2693615
Entity Address, Address Line One	3545 Cray Court,
Entity Address, City or Town	San Diego,
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92121
City Area Code	858
Local Phone Number	332-3410
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	MRTX
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		58,604,347

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current assets
Cash and cash equivalents	$ 129,866	$ 235,260
Short-term investments	649,568	848,577
Accounts receivable, net	10,523	865
Inventory	8,644	3,020
Other current assets	20,316	21,239
Total current assets	818,917	1,108,961
Property and equipment, net	16,867	17,540
Intangible asset, net	14,397	14,914
Long-term investment	4,565	3,465
Right-of-use asset	35,431	36,122
Other long-term assets	24,866	21,645
Total assets	915,043	1,202,647
Current liabilities
Accounts payable	32,507	38,861
Accrued liabilities	107,483	120,587
Total current liabilities	139,990	159,448
Lease liability	42,722	43,661
Other liabilities	3,380	3,022
Total liabilities	186,092	206,131
Commitments and contingencies (see Note 11)
Shareholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued and outstanding at both June 30, 2023 and December 31, 2022	0	0
Common stock, $0.001 par value; 100,000,000 authorized; 58,339,232 and 57,854,559 issued and outstanding at June 30, 2023 and December 31, 2022, respectively	58	58
Additional paid-in capital	3,544,996	3,453,066
Accumulated other comprehensive loss	(1,715)	(3,719)
Accumulated deficit	(2,814,388)	(2,452,889)
Total shareholders' equity	728,951	996,516
Total liabilities and shareholders' equity	$ 915,043	$ 1,202,647

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value (USD per share)	$ 0.001	$ 0.001
Preferred stock authorized (shares)	10,000,000	10,000,000
Preferred stock issued (shares)	0	0
Preferred stock outstanding (shares)	0	0
Common stock, par value (USD per share)	$ 0.001	$ 0.001
Common stock authorized (shares)	100,000,000	100,000,000
Common stock issued (shares)	58,339,232	57,854,559
Common stock outstanding (shares)	58,339,232	57,854,559

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Total revenue	$ 13,690	$ 5,362	$ 20,857	$ 6,071
Revenue
Total revenue	13,690	5,362	20,857	6,071
Operating expenses
Cost of product revenue	1,025	0	1,583	0
Cost of product revenue - intangible asset amortization	258	0	517	0
Research and development	124,187	128,339	250,870	259,315
Selling, general and administrative	75,490	54,228	148,980	108,179
Total operating expenses	200,960	182,567	401,950	367,494
Loss from operations	(187,270)	(177,205)	(381,093)	(361,423)
Other income (expense), net	10,357	760	19,594	(3,408)
Net loss	(176,913)	(176,445)	(361,499)	(364,831)
Foreign currency translation adjustment	(34)	0	(65)	0
Unrealized gain (loss) on available-for-sale investments	26	(909)	2,069	(5,711)
Comprehensive loss	$ (176,921)	$ (177,354)	$ (359,495)	$ (370,542)
Basic net loss per share (USD per share)	$ (3.04)	$ (3.18)	$ (6.22)	$ (6.57)
Diluted net loss per share (USD per share)	$ (3.04)	$ (3.18)	$ (6.22)	$ (6.57)
Weighted average common shares outstanding, basic (shares)	58,232,084	55,552,438	58,131,954	55,510,649
Weighted average common shares outstanding, diluted (shares)	58,232,084	55,552,438	58,131,954	55,510,649
Product Revenue
Total revenue	$ 13,365	$ 0	$ 19,656	$ 0
Revenue
Total revenue	13,365	0	19,656	0
License and Collaboration Revenue
Total revenue	325	5,362	1,201	6,071
Revenue
Total revenue	$ 325	$ 5,362	$ 1,201	$ 6,071

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional paid-in capital	Accumulated other comprehensive loss	Accumulated deficit
Balance at beginning of period (shares) at Dec. 31, 2021		55,356,904
Balance at beginning of period at Dec. 31, 2021	$ 1,397,038	$ 55	$ 3,099,937	$ 9,068	$ (1,712,022)
Increase (Decrease) in Stockholders' Equity
Net loss	(364,831)				(364,831)
Issuance of common stock from ESPP (shares)		29,891
Issuance of common stock from employee stock purchase plan	995		995
Share-based compensation expense	81,589		81,589
Issuance of common stock under equity incentive plans (shares)		205,836
Issuance of common stock under equity incentive plans	2,924	$ 1	2,923
Unrealized gain (loss) on investments	(5,711)			(5,711)
Foreign currency translation adjustment	0
Balance at end of period (shares) at Jun. 30, 2022		55,592,631
Balance at end of period at Jun. 30, 2022	1,112,004	$ 56	3,185,444	3,357	(2,076,853)
Balance at beginning of period (shares) at Mar. 31, 2022		55,511,476
Balance at beginning of period at Mar. 31, 2022	1,249,282	$ 56	3,145,368	4,266	(1,900,408)
Increase (Decrease) in Stockholders' Equity
Net loss	(176,445)				(176,445)
Issuance of common stock from ESPP (shares)		29,891
Issuance of common stock from employee stock purchase plan	995		995
Share-based compensation expense	38,684		38,684
Issuance of common stock under equity incentive plans (shares)		51,264
Issuance of common stock under equity incentive plans	397	$ 0	397
Unrealized gain (loss) on investments	(909)			(909)
Foreign currency translation adjustment	0
Balance at end of period (shares) at Jun. 30, 2022		55,592,631
Balance at end of period at Jun. 30, 2022	$ 1,112,004	$ 56	3,185,444	3,357	(2,076,853)
Balance at beginning of period (shares) at Dec. 31, 2022	57,854,559	57,854,559
Balance at beginning of period at Dec. 31, 2022	$ 996,516	$ 58	3,453,066	(3,719)	(2,452,889)
Increase (Decrease) in Stockholders' Equity
Net loss	(361,499)				(361,499)
Issuance of common stock from ESPP (shares)		105,352
Issuance of common stock from employee stock purchase plan	3,328		3,328
Share-based compensation expense	86,360		86,360
Issuance of common stock under equity incentive plans (shares)		379,321
Issuance of common stock under equity incentive plans	2,242	$ 0	2,242
Unrealized gain (loss) on investments	2,069			2,069
Foreign currency translation adjustment	$ (65)			(65)
Balance at end of period (shares) at Jun. 30, 2023	58,339,232	58,339,232
Balance at end of period at Jun. 30, 2023	$ 728,951	$ 58	3,544,996	(1,715)	(2,814,388)
Balance at beginning of period (shares) at Mar. 31, 2023		58,148,416
Balance at beginning of period at Mar. 31, 2023	862,630	$ 58	3,501,754	(1,707)	(2,637,475)
Increase (Decrease) in Stockholders' Equity
Net loss	(176,913)				(176,913)
Issuance of common stock from ESPP (shares)		105,352
Issuance of common stock from employee stock purchase plan	3,328		3,328
Share-based compensation expense	39,399		39,399
Issuance of common stock under equity incentive plans (shares)		85,464
Issuance of common stock under equity incentive plans	515		515
Unrealized gain (loss) on investments	26			26
Foreign currency translation adjustment	$ (34)			(34)
Balance at end of period (shares) at Jun. 30, 2023	58,339,232	58,339,232
Balance at end of period at Jun. 30, 2023	$ 728,951	$ 58	$ 3,544,996	$ (1,715)	$ (2,814,388)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Operating activities:
Net loss	$ (361,499)	$ (364,831)
Non-cash adjustments reconciling net loss to operating cash flows
Change in fair value on long-term investment	(1,100)	5,583
Depreciation and amortization expense	2,182	1,322
Amortization of premium and accretion of discounts on investments	(10,597)	1,457
Share-based compensation expense	86,360	81,589
Loss on disposal of property and equipment	0	(295)
Changes in operating assets and liabilities:
Accounts receivable, net	(9,658)	0
Inventory	(5,624)	0
Other current assets	923	(4,955)
Other long-term assets	(3,221)	(1,194)
Right-of-use asset	691	857
Lease liability	(822)	2,905
Accounts payable, accrued liabilities and other liabilities	(19,217)	(26,989)
Cash flows used in operating activities	(321,582)	(303,961)
Investing activities:
Purchases of short-term investments	(363,756)	(341,472)
Sales and maturities of short-term investments	575,430	496,834
Purchases of property and equipment	(991)	(2,801)
Cash flows provided by investing activities	210,683	152,561
Financing activities:
Proceeds from issuance of common stock under equity incentive plans	2,242	2,924
Proceeds from issuance of common stock from employee stock purchase plan	3,328	995
Cash flows provided by financing activities	5,570	3,919
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(65)	0
Decrease in cash, cash equivalents and restricted cash	(105,394)	(147,481)
Cash, cash equivalents and restricted cash, beginning of period	235,880	413,703
Cash, cash equivalents and restricted cash, end of period	130,486	266,222
Reconciliation of cash, cash equivalents and restricted cash, end of period:
Cash and cash equivalents	129,866	265,602
Restricted cash included in other long-term assets	620	620
Total cash, cash equivalents and restricted cash	130,486	266,222
Supplemental disclosures of non-cash investing activities:
Accrued capital expenditures	$ 0	$ 154

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Description of Business

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

Mirati Therapeutics, Inc. (“Mirati” or the “Company”) is a commercial-stage oncology company focused on the discovery, design and delivery of breakthrough therapies that address areas of high unmet need, including lung cancer, and advancing product candidates targeting the genetic and immunological drivers of cancer. The Company was incorporated under the laws of the State of Delaware on April 29, 2013 as Mirati Therapeutics, Inc. and is located in San Diego, California. The Company has a wholly-owned subsidiary, Mirati Therapeutics B.V. (“Mirati B.V.”), which was formed on August 3, 2021 in Amsterdam, Netherlands, and Mirati Therapeutics (Suisse) GmbH (“Mirati Suisse”), which was formed on May 24, 2022 in Zug, Switzerland, is a wholly-owned subsidiary of Mirati B.V. The Company’s former wholly-owned subsidiary in Canada, MethylGene, Inc., was formed on May 8, 2013 and was formally dissolved in the fourth quarter of 2022.

The Company operates as one business segment, primarily in the United States. The Company’s common stock has been listed on the Nasdaq Global Select Market since June 5, 2018, and was previously listed on the Nasdaq Capital Market since July 15, 2013, under the ticker symbol “MRTX.”

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted.

In the opinion of management, the information reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for the full year. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Use of Estimates

The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Reported amounts and footnote disclosures reflect the overall economic conditions that are most likely to occur and anticipated measures management intends to take. Actual results could differ materially from those estimates. Estimates and assumptions are reviewed quarterly. Any revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Cash, Cash Equivalents and Short-term Investments

Cash and cash equivalents consist of cash and highly liquid securities with original maturities at the date of acquisition of ninety days or less. Investments with an original maturity of more than ninety days are considered short-term investments and have been classified by management as available-for-sale. These investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current consolidated balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary. Such investments are carried at fair value, and the unrealized gains and losses are reported as a component of accumulated other comprehensive loss in shareholders’ equity until realized. Realized gains and losses from the sale of available-for-sale securities, if any, are determined on a specific identification basis.    

Concentration of Credit Risk

The Company invests its excess cash in accordance with its investment policy. The Company’s investments are comprised primarily of commercial paper and debt instruments of financial institutions, corporations, U.S. government-sponsored agencies and the U.S. Treasury. The Company mitigates credit risk by maintaining a diversified portfolio and limiting the amount of investment exposure as to institution, maturity and investment type. Financial instruments that potentially subject the Company to significant credit risk consist principally of cash equivalents and short-term investments.

Accounts Receivable, net

Accounts receivable, net consists of trade receivables which are amounts due from customers related to product sales. The Company records trade receivables net of chargebacks, invoice discounts, distribution service fees and any allowances for doubtful accounts for potential credit losses. An allowance for doubtful accounts is determined based on the financial condition and creditworthiness of customers and the Company considers economic factors and events or trends expected to affect future collections experience. Any allowance would reduce the net receivables to the amount that is expected to be collected. The payment history of the Company’s customers will be considered in future assessments of collectability as these patterns are established over a longer period. As of June 30, 2023 and December 31, 2022, the Company determined an allowance for doubtful accounts was not required.

Inventory

The Company began capitalizing inventory for KRAZATI, which received approval by the U.S. Food and Drug Administration (“FDA”) and launched commercially in the U.S. in December 2022. KRAZATI (adagrasib) is approved for the treatment of adult patients with KRAS G12C-mutated non-small cell lung cancer (“NSCLC”) who have received at least one prior systemic therapy. Prior to regulatory approval, all direct and indirect manufacturing costs were charged to research and development expense in the period incurred.

Inventory is comprised of raw materials, work-in-process and finished goods, and includes costs related to third-party contract manufacturing, packaging, freight-in and overhead. Inventory is stated at the lower of cost or net realizable value with cost based on the first-in-first-out method. The Company performs an assessment of recoverability of capitalized inventory during each reporting period based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life, and writes down any excess, obsolete or unsaleable inventory to its estimated realizable value in the period which the impairment is first identified. Such write downs, should they occur, are charged to cost of product revenue in the condensed consolidated statements of operations and comprehensive loss. As of June 30, 2023 and December 31, 2022, the Company did not identify any impaired inventory.

Revenue Recognition

The Company recognizes revenue in accordance with the guidance of Revenue From Contracts With Customers, Accounting Standards Codification (“ASC”) Topic 606 (“Topic 606”). Under Topic 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements the Company determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Product revenue, net

The Company’s product revenue consists of sales of KRAZATI. The Company sells KRAZATI principally to specialty pharmacies and specialty distributors, which are referred to as the Company’s customers. These customers subsequently resell the product to healthcare providers and patients. Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer.

The Company records revenues from product sales at the net sales price, or transaction price, which includes estimates of variable consideration for which reserves are established primarily from chargebacks, government and commercial rebates, incentives, product returns, trade discounts and other allowances that are offered in contracts between the Company and its customers, healthcare providers and other third-party payors relating to the sales of its product. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of trade receivables, if the amount is deductible by the customer from payments to the Company, which is included within accounts receivable, net on the condensed consolidated balance sheets, or a current liability, if the amount is payable by the Company to a customer or third-party, which is included within accrued liabilities on the condensed consolidated balance sheets. The Company estimates the amount of variable consideration to include in the transaction price using the expected value method. These estimates take into consideration relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data, forecasted customer buying and payment patterns, and the Company’s historical experience that will develop over time as KRAZATI is the Company’s first commercial product. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of its contracts. The amount of variable consideration may be constrained and is included in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenues and earnings in the period such variances become known.

From time to time, the Company may sell KRAZATI to other commercial customers conducting clinical trials. These sales are recorded as part of product revenue, net and reflected at the transaction price, which includes estimates of variable consideration for trade allowances as discussed below.

The following are the components of variable consideration related to product revenue:

Chargebacks. Chargebacks relate to contracts with various third-party payors, including governmental healthcare programs, managed care providers, group purchasing organizations and other organizations, that generally purchase the product from a specialty distributor at a discounted price. The specialty distributor, in turn, charges back to the Company the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by its contracted customer. The allowance for chargebacks is based on actual chargebacks received and an estimate of sales by the specialty distributor to its contracted customers. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and a reduction of trade receivables.

Government rebates. The Company is subject to discount obligations under Medicare, Medicaid, and other governmental healthcare programs in the U.S. The Company’s estimates of rebates are based on the government-mandated discounts, which are statutorily-defined and applicable to these government funded programs. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and the accrual of an estimated liability. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom it will owe an additional liability under the Medicare Part D program.

Commercial rebates. The Company contracts with various private payor organizations and group purchasing organizations for the payment of rebates with respect to the utilization of its product. The Company’s estimates for the expected utilization of rebates are based on customer and payor data received from the specialty pharmacies and specialty distributors and historical utilization rates that will develop over time as KRAZATI is the Company’s first commercial product. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and the accrual of an estimated liability.

Incentives. The Company offers incentives such as co-payment assistance to commercially insured patients in the U.S. who meet certain eligibility requirements. The Company may provide financial assistance to participating patients with prescription drug co-payments required by the patients’ insurance provider, up to a specified dollar amount. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and the accrual of an estimated liability.

Product returns. Generally, the Company’s customers have the right to return product for a limited time before and after its expiration date. Since the Company does not have its own returns experience, it estimates returns based on available industry data for comparable products in the market as well as other information, such as visibility into the inventory remaining in the distribution channel and expiration date. As the Company distributes its product and establishes historical sales over a longer period of time, the Company will be able to place more reliance on historical purchasing, demand and return patterns of

its customers when evaluating its reserves for product returns. The estimate for product returns is recorded as an accrued liability and a reduction of revenue in the period the related product sales are recognized.

Trade allowances. The Company may provide invoice discounts on product sales to its customers for prompt payment based on contractual terms. These discounts are recorded as a reduction of revenue in the period the related product revenue is recognized. Trade receivables are recorded net of the allowance for these discounts. The Company also pays fees to its distributors for their services. The Company has determined such services are not distinct from the Company’s sale of product to its customers and therefore records these payments as a reduction of revenue and a reduction of trade receivables in the period the related product revenue is recognized. To the extent the services received are distinct from the Company’s sale of product to its customers, these payments will be recorded within selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive loss.

License and collaboration revenues

The Company’s license and collaboration revenues have been generated primarily through collaborative research, development, manufacture and commercialization agreements. The terms of these agreements generally include the license of intellectual property and associated know-how and the provision of other goods and services. Payments to the Company under these arrangements typically include one or more of the following: non-refundable, up-front license fees; manufacturing supply services; milestone payments; and royalties on future product sales.

License of Intellectual Property. If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes 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 progress for purposes of recognizing revenue associated with the bundled performance obligation.

Manufacturing Supply Services. The Company’s obligation under the agreements may include the initial supply of material for clinical development. If determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to this performance obligation when the collaborative partner obtains control of the goods. If determined not to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the combined performance obligation as the related performance obligations are satisfied.

Milestone Payments. At the inception of each arrangement that includes milestone payments based upon the achievement of specified clinical development, regulatory and/or sales milestones, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price. If it is probable that a significant revenue reversal would not occur, the associated milestone amount is included in the transaction price. Milestone payments that are dependent on factors outside of the Company’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. These payments are fully constrained and therefore are not included in the transaction price. At the end of each reporting period, the Company re-evaluates the probability of achievement of each milestone and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect the reported amount of license and collaboration revenues in the period of adjustment.

Royalties. For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Intangible Asset, Net

The Company’s finite-lived intangible asset resulted from the capitalization of a milestone payment due under a license and collaboration agreement in connection with the first commercial sale of KRAZATI in the U.S. in December 2022. The intangible asset will be amortized on a straight-line basis over its remaining useful life, which is estimated to be the remaining patent life of KRAZATI. Amortization expense is recorded as cost of product revenue - intangible asset amortization in the condensed consolidated statements of operations and comprehensive loss.

Cost of Product Revenue

Cost of product revenue includes direct and indirect costs related to the manufacturing and distribution of KRAZATI, including materials, third-party contract manufacturing costs, packaging services, freight-in, overhead, royalties payable on net sales of KRAZATI and inventory reserves. All product costs incurred prior to FDA approval of KRAZATI in December 2022 were charged to research and development expense.

Leases

The Company determines if an arrangement is a lease at inception. Lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. For operating leases with an initial term greater than 12 months, the Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of lease payments over the lease term at the commencement date. Operating lease right-of-use assets are comprised of the lease liability plus any lease payments made and excludes lease incentives. Lease terms include options to renew or terminate the lease when the Company is reasonably certain that the renewal option will be exercised or when it is reasonably certain that the termination option will not be exercised. For the Company’s operating leases, if the interest rate used to determine the present value of future lease payments is not readily determinable, the Company estimates its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected the practical expedient to not separate lease and non-lease components.

Net Loss per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for common share equivalents as they are anti-dilutive. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents outstanding for the period, as well as certain shares that are contingently issuable. Common share equivalents outstanding, determined using the treasury stock method, are comprised of shares that may be issued under the Company’s stock option and warrant agreements, as well as restricted stock units and performance stock units.

The following table presents the weighted-average number of common share equivalents, calculated using the treasury stock method, as well as certain shares that are contingently issuable, not included in the calculation of diluted net loss per share due to the anti-dilutive effect of the securities:

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Common stock options	593,009	1,010,399	645,774	1,297,818
Common stock warrants	7,605,626	7,605,691	7,605,634	7,605,719
Unvested restricted stock units and performance stock units	3,365,759	1,164,045	3,255,723	1,115,727
Total	11,564,394	9,780,135	11,507,131	10,019,264

Recently Issued and Recently Adopted Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. The Company has evaluated recently issued accounting pronouncements and does not believe any will have a material impact on the Company’s condensed consolidated financial statements or related financial statement disclosures.

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Investments

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investments

The following tables summarize the Company’s short-term investments (in thousands):

		As of June 30, 2023
	Maturity	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	2 years or less	$	12,866	$	—	$	(47)	$	12,819
Commercial paper	1 year or less	400,771		13		(631)		400,153
U.S. Agency bonds	2 years or less	176,624		63		(787)		175,900
U.S. Treasury bills	2 years or less	60,914		—		(218)		60,696
		$	651,175	$	76	$	(1,683)	$	649,568

		As of December 31, 2022
	Maturity	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	2 years or less	$	95,195	$	—	$	(662)	$	94,533
Commercial paper	1 year or less	443,489		65		(811)		442,743
U.S. Agency bonds	2 years or less	90,351		22		(434)		89,939
U.S. Treasury bills	2 years or less	223,216		8		(1,862)		221,362
		$	852,251	$	95	$	(3,769)	$	848,577

The Company has classified all of its short-term investments as available-for-sale as the sale of such securities may be required prior to maturity to implement management strategies, and therefore, they are carried at fair value. As of June 30, 2023 and December 31, 2022, the unrealized losses for available-for-sale investments were non-credit related, and the Company does not intend to sell the investments before recovery of their amortized cost basis, which may be at the time of maturity. As of June 30, 2023 and December 31, 2022, no allowance for credit losses was recorded. During the three and six months ended June 30, 2023 and 2022, the Company did not recognize any impairment losses related to investments.

The long-term investment balance of $4.6 million and $3.5 million as of June 30, 2023 and December 31, 2022, respectively, is comprised of 588,235 shares of ORIC Pharmaceuticals, Inc. (“ORIC”) common stock which were acquired in 2020. As of June 30, 2023 and December 31, 2022, the investment is carried at fair value based on the closing price of ORIC’s common stock on the last trading day of the reporting period. The Company recorded gains of $1.2 million and $1.1 million for the three and six months ended June 30, 2023, respectively, and losses of $0.5 million and $5.6 million for the three and six months ended June 30, 2022, respectively, within other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The Company currently does not intend to sell ORIC shares within 12 months from June 30, 2023. See Note 4 for additional information related to the investment in ORIC.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

The Company has certain financial assets and liabilities recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance prioritizes the inputs used in measuring fair value into the following hierarchy:

•Level 1- Quoted prices (unadjusted) in active markets for identical assets or liabilities;

•Level 2- Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and

•Level 3- Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

The following tables summarize the assets measured at fair value on a recurring basis (in thousands):

	June 30, 2023
	Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
Cash	$	19,244	$	19,244	$	—	$	—
Money market funds	110,622		110,622		—		—
Total cash and cash equivalents	129,866		129,866		—		—
Short-term investments:
U.S. Treasury bills	60,696		60,696		—		—
Corporate debt securities	12,819		—		12,819		—
Commercial paper	400,153		—		400,153		—
U.S. Agency bonds	175,900		—		175,900		—
Total short-term investments	649,568		60,696		588,872		—
Long-term investment:
ORIC Pharmaceuticals, Inc.	4,565		4,565		—		—
Total	$	783,999	$	195,127	$	588,872	$	—

	December 31, 2022
	Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
Cash	$	53,033	$	53,033	$	—	$	—
Money market funds	174,262		174,262		—		—
U.S. Agency bonds	7,965		—		7,965		—
Total cash and cash equivalents	235,260		227,295		7,965		—
Short-term investments:
U.S. Treasury bills	221,362		221,362		—		—
Corporate debt securities	94,533		—		94,533		—
Commercial paper	442,743		—		442,743		—
U.S. Agency bonds	89,939		—		89,939		—
Total short-term investments	848,577		221,362		627,215		—
Long-term investment:
ORIC Pharmaceuticals, Inc.	3,465		3,465		—		—
Total	$	1,087,302	$	452,122	$	635,180	$	—

The Company’s investments in Level 1 assets are valued based on publicly available quoted market prices for identical securities as of June 30, 2023 and December 31, 2022. The Company determines the fair value of Level 2 related securities with the aid of valuations provided by third parties using proprietary valuation models and analytical tools. These valuation models and analytical tools use market pricing or prices for similar instruments that are both objective and publicly available, including matrix pricing or reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids and/or offers.

The Company’s long-term investment in ORIC was considered a Level 3 fair value measurement during an eighteen-month lock-up period which required an adjustment for a discount for lack of marketability. During the lock-up period, the fair value measurement utilized a combination of the Asian Protective Put Option and Finnerty Put Option fair value techniques to determine the discount for lack of marketability. During the three months ended March 31, 2022, the eighteen-month lock-up period expired, and because ORIC common stock is quoted in an active market, it met the criteria of a Level 1 investment. During the three months ended March 31, 2022, the Company transferred the investment in ORIC from a Level 3 fair value measurement to a Level 1 fair value measurement. See Note 9 for further details on the license agreement with ORIC.

The following table represents the change in estimated fair value of and transfer activity for the Company’s Level 3 investment (in thousands):

Balance as of December 31, 2021	$	8,218
Change in fair value at lock-up expiration	(3,100)
Transfer from Level 3 to Level 1 at lock-up expiration	(5,118)
Balance as of March 31, 2022	$	—

Other than the investment in ORIC described above, there were no transfers between fair value measurement levels during the three and six months ended June 30, 2023 and 2022.

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Inventory

6 Months Ended

Jun. 30, 2023

Inventory Disclosure [Abstract]

Inventory

Inventory

Inventory consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Raw materials	$	69	$	—
Work-in-process	8,034		2,994
Finished goods	541		26
Total inventory	$	8,644	$	3,020

The Company’s capitalized inventory consists of costs incurred subsequent to FDA approval of KRAZATI in December 2022. There were no inventory write downs during the three and six months ended June 30, 2023.

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Other Current Assets and Other Long-Term Assets

6 Months Ended

Jun. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Current Assets and Other Long-Term Assets

Other current assets and other long-term assets consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Other current assets:
Prepaid expenses	$	15,141	$	15,207
Deposits and other receivables	3,527		3,162
Interest receivables	1,648		2,870
Total other current assets	$	20,316	$	21,239
Other long-term assets:
Deposits and prepaid expenses	$	24,246	$	21,025
Restricted cash	620		620
Total other long-term assets	$	24,866	$	21,645

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Accrued Liabilities and Other Liabilities

6 Months Ended

Jun. 30, 2023

Payables and Accruals [Abstract]

Accrued Liabilities and Other Liabilities

Accrued liabilities and other liabilities consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Accrued liabilities:
Accrued clinical expense	$	41,584	$	37,604
Accrued manufacturing expense	6,114		6,605
Accrued development expense	4,629		20,107
Accrued compensation and benefits	34,932		40,208
Accrued commercial expense	4,547		3,941
Accrued royalty expense	869		—
Accrued adjustments to product revenue	1,922		152
Lease liability (current)	7,961		7,844
Other accrued expenses	4,925		4,126
Total accrued liabilities	$	107,483	$	120,587
Other liabilities	$	3,380	$	3,022

Other liabilities as of June 30, 2023 and December 31, 2022 consisted primarily of clinical trial-related liabilities.

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Revenue

6 Months Ended

Jun. 30, 2023

Research and Development [Abstract]

Revenue

Revenue

Product revenue, net

The Company’s product revenue is related to U.S. sales of KRAZATI. Revenue is reduced at the time of recognition for the Company’s best estimate of chargebacks, government and commercial rebates, incentives, returns, trade discounts and other allowances to which customers are entitled. These reductions are currently attributed to various commercial arrangements.

During the three and six months ended June 30, 2023, $1.7 million of product revenue, net relates to sales of KRAZATI to a third-party commercial customer for its clinical trials. This revenue is recognized net of the Company’s best estimate of trade allowances.

As of June 30, 2023 and December 31, 2022, the Company’s accounts receivable balances of $10.5 million and $0.9 million, respectively, on the condensed consolidated balance sheets consisted of KRAZATI product sales receivable, net of chargebacks, discounts and allowances of $0.8 million and $0.1 million, respectively.

As of June 30, 2023 and December 31, 2022, the Company’s government and commercial rebates, program incentives and provision for product returns totaled $1.9 million and $0.2 million, respectively, and are included in accrued liabilities on the condensed consolidated balance sheets.

BeiGene Agreement

Terms of Agreement

On January 7, 2018, the Company and BeiGene Ltd. (“BeiGene”) entered into a Collaboration and License Agreement (the “BeiGene Agreement”), pursuant to which the Company and BeiGene agreed to collaboratively develop sitravatinib in Asia (excluding Japan and certain other countries), Australia and New Zealand (collectively, the “BeiGene Licensed Territory”). Under the BeiGene Agreement, the Company granted BeiGene an exclusive license to develop, manufacture and commercialize sitravatinib in the BeiGene Licensed Territory, with the Company retaining exclusive rights for the development, manufacture and commercialization of sitravatinib outside the BeiGene Licensed Territory.

As consideration for the rights granted to BeiGene under the BeiGene Agreement, BeiGene paid the Company a non-refundable, non-creditable up-front fee of $10.0 million. BeiGene is also required to make milestone payments to the Company of up to an aggregate of $123.0 million upon the first achievement of specified clinical, regulatory and sales milestones. The BeiGene Agreement additionally provides that BeiGene is obligated to pay the Company royalties at tiered percentage rates ranging from mid-single digits to twenty percent on annual net sales of licensed products in the BeiGene Licensed Territory, subject to reduction under specified circumstances. The BeiGene Agreement also provides that the Company will supply BeiGene with sitravatinib for use in BeiGene’s development activities in the BeiGene Licensed Territory.

The BeiGene Agreement will terminate upon the expiration of the last royalty term for the licensed products, which is the latest of (i) the date of expiration of the last valid patent claim related to the licensed products under the BeiGene Agreement, (ii) ten years after the first commercial sale of a licensed product and (iii) the expiration of any regulatory exclusivity as to a licensed product. BeiGene may terminate the BeiGene Agreement at any time by providing 60 days prior written notice to the Company. Either party may terminate the BeiGene Agreement upon a material breach by the other party that remains uncured following 60 days after the date of written notice of such breach or upon certain bankruptcy events. In addition, the Company may terminate the BeiGene Agreement upon written notice to BeiGene under specified circumstances if BeiGene challenges the licensed patent rights.

Revenue Recognition

The Company evaluated the BeiGene Agreement under Topic 606. At the time it entered into the BeiGene Agreement, the Company determined the transaction price was equal to the up-front fee of $10.0 million. The transaction price was allocated to the performance obligations on the basis of the relative stand-alone selling price estimated for each performance obligation. In estimating the stand-alone selling price for each performance obligation, the Company developed assumptions that require judgment and included forecasted revenues, expected development timelines, discount rates, probabilities of technical and regulatory success and costs for manufacturing clinical supplies. As such, of the up-front fee, the Company allocated $9.5 million to the license of the Company’s intellectual property, bundled with the associated know-how, and the

remaining $0.5 million to the initial obligation to supply sitravatinib for clinical development in the BeiGene Licensed Territory.

Licenses of Intellectual Property.   The license to the Company’s intellectual property, bundled with the associated know-how, represents a distinct performance obligation and the Company recognized the full revenue amount of $9.5 million related to this performance obligation as license and collaboration revenues in 2018.

Milestone Payments. The Company is entitled to development milestones under the BeiGene Agreement and certain regulatory milestone payments which are paid upon receipt of regulatory approvals within the BeiGene Licensed Territory. No milestone payments were earned during the three and six months ended June 30, 2023 or 2022. The Company evaluated whether the remaining milestones are considered probable of being reached and determined that their achievement is highly dependent on factors outside of the Company’s control. Therefore, these payments have been fully constrained and are not included in the transaction price. At the end of each subsequent reporting period, the Company will re-evaluate the probability of achievement of each milestone and any related constraint, and if necessary, adjust its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect the reported amount of license and collaboration revenues in the period of adjustment.

Royalties.  As the license is deemed to be the predominant item to which sales-based royalties relate, the Company will recognize revenue when the related sales occur. No royalty revenue was recognized during the three and six months ended June 30, 2023 or 2022.

Pfizer Agreement

In October 2014, the Company entered into a drug discovery collaboration and option agreement with Array BioPharma, Inc. (“Array,” acquired by Pfizer Inc. (“Pfizer”) in July 2019) whereby Array provided services to facilitate the discovery, optimization and development of small molecule compounds that bind and specifically inhibit KRAS G12C. In June 2017, the two parties entered into a second, separate discovery collaboration and option agreement whereby Array provided services to facilitate the discovery, optimization and development of small molecule compounds that bind and specifically inhibit KRAS G12D. Both agreements established an option mechanism which enabled the Company to elect an exclusive worldwide license under the technology for the development and commercialization of certain products based on these compounds.

Under these agreements, following the joint discovery periods, which have since concluded, the Company exercised its options to retain exclusive worldwide licenses to develop, manufacture and commercialize inhibitors of KRAS G12C and KRAS G12D, including, but not limited to, adagrasib and MRTX1133. Under each agreement, Pfizer is entitled to potential development milestone payments of up to $9.3 million from the Company, and tiered sales milestone payments of up to $337.0 million based upon worldwide net sales, and tiered royalties in the high single digits to mid-teens on worldwide net sales of products arising from the collaborations. Under the agreements, the Company has incurred an aggregate of $10.5 million in development milestone payments and a $15.0 million commercial milestone payment relating to the first sale of KRAZATI in the U.S. from inception through June 30, 2023. The $15.0 million milestone payment relating to the first commercial sale of KRAZATI in the U.S. was capitalized as an intangible asset as of December 31, 2022 (see Note 7).

$1.0 million, respectively, in development milestone payments, for initiation of the first Phase 1 trial for MRTX1133 which was recorded as a research and development expense in the condensed consolidated statement of operations and comprehensive loss. During the three and six months ended June 30, 2023, the Company also incurred $0.9 million and $1.4 million, respectively, of royalties on net sales of KRAZATI which were recorded as cost of product revenue in the condensed consolidated statement of operations and comprehensive loss. No expenses were incurred under these agreements with Pfizer during the three and six months ended June 30, 2022. The royalty term for each agreement is payable on a country-by-country and product-by-product basis, and separately will terminate at the later of (i) the date of expiration of the last valid patent claim within the collaboration patent rights or the Pfizer background technology covering such product in the country in which such product is sold at the time of such sale, or (ii) ten years after the first commercial sale of such product in such country. The Company may terminate each agreement at any time by providing 60 days prior written notice to Pfizer. Either party may terminate each agreement upon a material breach by the other party that remains uncured following 60 days after the date of written notice of such breach or upon certain bankruptcy events.

ORIC Pharmaceuticals Agreement

Terms of Agreement

On August 3, 2020, the Company entered into a license agreement with ORIC Pharmaceuticals, Inc. (“ORIC”) pursuant to which the Company granted to ORIC an exclusive, worldwide license to develop and commercialize the Company’s allosteric polycomb repressive complex 2 (“PRC2”) inhibitors for all indications (the “ORIC Agreement”). In accordance with the terms of the ORIC Agreement, in exchange for such license, ORIC issued 588,235 shares of its common stock (the “Shares”) to the Company on August 3, 2020. The Shares were issued under a stock issuance agreement entered into between ORIC and the Company, dated August 3, 2020. During the eighteen-month period following the date of the stock issuance agreement, the Company was subject to certain transfer restrictions. ORIC is not obligated to pay the Company milestone payments or royalty payments under the ORIC Agreement.

Unless terminated earlier, the ORIC Agreement will continue in effect on a country-by-country and licensed product-by-licensed product basis until the later of (a) the expiration of the last valid claim of a licensed patent covering such licensed product in such country or (b) ten years after the first commercial sale of such licensed product in such country. Following the expiration of the ORIC Agreement, ORIC will retain its licenses under the intellectual property the Company licensed to ORIC on a royalty-free basis. The Company and ORIC may each terminate the ORIC Agreement if the other party materially breaches the terms of such agreement, subject to specified notice and cure provisions, or enters into bankruptcy or insolvency proceedings. The Company may terminate the agreement if ORIC challenges any of the patent rights licensed to ORIC by the Company or if ORIC discontinues development of licensed products for a specified period of time. ORIC also has the right to terminate the ORIC Agreement without cause by providing prior written notice to the Company.

Revenue Recognition

The Company accounted for the ORIC Agreement under Topic 606 and identified the granting of an exclusive, worldwide license to develop and commercialize the Company’s allosteric PRC2 inhibitors for all indications as a distinct performance obligation since ORIC can benefit from the license on its own by developing and commercializing the underlying product using its own resources.

In determining the transaction price, the Company received the Shares as non-cash consideration. The Company allocated the entire transaction price to the distinct performance obligation described above, and the license and related know-how was transferred to ORIC during the third quarter of 2020. Therefore, the Company recognized the entire transaction price of $11.4 million during 2020 and classified the amount as license and collaboration revenues in its condensed consolidated statements of operations and comprehensive loss.

The Shares are carried at fair value and are recorded on the condensed consolidated balance sheet as a long-term investment. Any change in fair value is recorded within other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

Zai Agreement

Terms of Agreement

On May 28, 2021, the Company and Zai Lab Ltd. (“Zai”) entered into a Collaboration and License Agreement (the “Zai Agreement”), pursuant to which the Company and Zai agreed to collaboratively develop adagrasib in China, Hong Kong, Macau and Taiwan (collectively, the “Zai Licensed Territory”). Under the Zai Agreement, the Company granted Zai the rights to research, develop, manufacture and exclusively commercialize adagrasib in all indications in the Zai Licensed Territory, with the Company retaining exclusive rights for the development, manufacture and commercialization of adagrasib outside the Zai Licensed Territory and certain co-commercialization, manufacture, and development rights in the Zai Licensed Territory. Zai is

obligated to participate in selected global, registration-enabling clinical trials and enroll patients in the Zai Licensed Territory at Zai’s expense.

As consideration for the rights granted to Zai under the Zai Agreement, Zai agreed to pay the Company a non-refundable, non-creditable up-front fee of $65.0 million. Under the Zai Agreement, the Company is entitled to potential development and regulatory-based milestone payments of up to $93.0 million, and tiered sales milestone payments of up to $180.0 million based on net sales in the Zai Licensed Territory. The Zai Agreement additionally provides that Zai is obligated to pay to the Company royalties at tiered percentage rates ranging from the high-teens to the low-twenties on annual net sales of licensed products in the Zai Licensed Territory, subject to reduction under specified circumstances. The Zai Agreement also provides that the Company will supply Zai with adagrasib for use in Zai’s development activities in the Zai Licensed Territory at Zai's expense.

The Zai Agreement will terminate on a licensed product-by-licensed product basis and on a region-by-region basis in the Zai Licensed Territory, upon the later to occur of (i) the date of expiration of the last valid claim covering such licensed product in such region, (ii) the date that is ten years after the date of the first commercial sale in such region and (iii) the expiration date of any regulatory exclusivity for such licensed product in such region, or for a co-commercialized product on the date the parties agree to terminate such co-commercialization, or in its entirety upon the expiration of all payment obligations under the Zai Agreement. Zai may terminate the Zai Agreement at any time by providing 12 months’ notice to the Company. Either party may terminate the Zai Agreement upon a material breach by the other party that remains uncured or upon certain bankruptcy events. In addition, the Company may terminate the Zai Agreement if Zai challenges the licensed patent rights.

Revenue Recognition

The Company evaluated the Zai Agreement under Topic 606. The Company determined that two performance obligations existed: (1) the license to intellectual property, bundled with the associated know-how and (2) the Company's initial obligation to supply adagrasib for clinical development in the Zai Licensed Territory. At the time it entered into the Zai Agreement, the Company determined the transaction price was equal to $66.6 million, which includes the up-front fee and other incidental amounts. In estimating the stand-alone selling price for each performance obligation, the Company developed assumptions that require judgment and included forecasted revenues, expected development timelines, discount rates, probabilities of technical and regulatory success, forecasted costs for manufacturing clinical supplies and cost savings related to Zai's participation in selected trials. The Company allocated the full transaction price to the license to the Company’s intellectual property, bundled with the associated know-how. The Company concluded the variable payments related to the Company’s initial obligation to supply adagrasib for clinical development in the Zai Licensed Territory relate specifically to the Company’s efforts to satisfy this performance obligation and the obligation to provide the initial clinical supply approximates the stand-alone selling price. Payments under the Zai Agreement are subject to foreign tax withholdings.

Licenses of Intellectual Property.   The license to the Company’s intellectual property, bundled with the associated know-how, represents a distinct performance obligation. The license and associated know-how was transferred to Zai during the third quarter of 2021 and, therefore during 2021, the Company recognized the full revenue amount of $66.6 million as license and collaboration revenues and $3.3 million as income tax expense in its condensed consolidated statements of operations and comprehensive loss.

Manufacturing Supply Services.  The Company’s initial obligation to supply adagrasib for clinical development in the Zai Licensed Territory represents a distinct performance obligation. As such, the Company will recognize revenue when Zai obtains control of the goods. The Company recognized $0.3 million and $1.2 million of revenue related to this performance obligation for the three and six months ended June 30, 2023, respectively. The Company recognized $0.4 million and $1.1 million of revenue related to this performance obligation for the three and six months ended June 30, 2022, respectively. The Company may also become responsible for manufacturing adagrasib for commercial supply and will receive reimbursement that approximates stand-alone selling prices.

Milestone Payments. The Company is entitled to development milestone payments and certain regulatory and sales milestone payments which are paid upon achievement of the development milestones, upon receipt of regulatory approvals and annual net sales thresholds within the Zai Licensed Territory under the Zai Agreement. No milestone payments were earned during the three and six months ended June 30, 2023. The Company earned a $5.0 million milestone payment related to the initiation of the first pivotal clinical trial of adagrasib for the first indication in China during the three and six months ended June 30, 2022. The Company evaluated whether or not the milestones are considered probable of being reached and determined that their

achievement is highly dependent on factors outside of the Company’s control. These payments have been fully constrained and therefore are not included in the transaction price. At the end of each subsequent reporting period, the Company will re-evaluate the probability of achievement of each milestone and any related constraint and, if necessary, adjust its estimate of the overall transaction price. Any such adjustments will be recorded on a cumulative catch-up basis, which would affect the reported amount of license and collaboration revenues in the period of adjustment.

Royalties.  As the license is deemed to be the predominant item to which sales-based royalties relate, the Company will recognize revenue when the related sales occur. No royalty revenue was recognized during the three and six months ended June 30, 2023 or 2022.

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Intangible Assets, Net

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure

Intangible asset, net

Intangible asset, net consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Gross carrying value	$	15,000	$	15,000
Less: Accumulated amortization	(603)		(86)
Intangible asset, net	$	14,397	$	14,914

The Company has a finite-lived intangible asset, resulting from the capitalization of a milestone payment under the license and collaboration agreement with Array BioPharma, Inc. (“Array,” acquired by Pfizer Inc. (“Pfizer”) in July 2019), in connection with the Company’s first commercial sale of KRAZATI in the U.S. in December 2022 (see Note 9). The Company began amortizing the intangible asset in December 2022 over a 14.5-year period based on KRAZATI’s expected patent life, which is considered to be KRAZATI’s useful life. The Company incurred amortization expense of $0.3 million and $0.5 million for the three and six months ended June 30, 2023, respectively, which was included in cost of product revenue - intangible asset amortization in the condensed consolidated statements of operations and comprehensive loss. No amortization expense was recorded for the three and six months ended June 30, 2022.

As of June 30, 2023, the estimated future amortization expense associated with the Company’s intangible asset is as follows (in thousands):

Remainder of 2023	$	516
2024	1,034
2025	1,034
2026	1,034
2027	1,034
Thereafter	9,745
Total	$	14,397

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Warrants

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Warrants

At the Market Facility

On July 2, 2020, the Company entered into a sales agreement pursuant to which the Company may, from time to time, sell shares of the Company’s common stock, par value $0.001 per share, having an aggregate offering price of up to $200.0 million. On July 2, 2021, the Company entered into an amended and restated sales agreement pursuant to which the Company may, from time to time, sell shares of the Company’s common stock, par value $0.001 per share, having an aggregate offering price of up to $500.0 million. During the three and six months ended June 30, 2023 and 2022, no shares of common stock were issued and sold under this sales agreement. As of June 30, 2023, the Company has issued and sold an aggregate of 1,880,097 shares of common stock pursuant to this sales agreement generating net proceeds of $155.0 million.

Share-based Compensation

Total share-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development expense	$	18,399	$	22,807	$	43,038	$	49,067
Selling, general and administrative expense	21,000		15,877		43,322		32,522
	$	39,399	$	38,684	$	86,360	$	81,589

During the three and six months ended June 30, 2023, 85,464 and 379,321 shares of common stock were issued under the Company’s equity incentive plans, generating net proceeds of $0.5 million and $2.2 million, respectively. During the three and six months ended June 30, 2022, 51,264 and 205,836 shares of common stock were issued under the Company’s equity incentive plans, generating net proceeds of $0.4 million and $2.9 million, respectively.

Issuances Under Employee Stock Purchase Plan

On May 11, 2023, an amendment to the Company’s 2013 Employee Stock Purchase Plan (“ESPP”) was approved by the Company’s shareholders, to increase the aggregate number of shares of common stock reserved for issuance under the ESPP by 750,000 shares. During the three and six months ended June 30, 2023, 105,352 shares of common stock were issued under the Company’s ESPP, generating net proceeds of $3.3 million. During the three and six months ended June 30, 2022, 29,891 shares of common stock were issued under the Company’s ESPP, generating net proceeds of $1.0 million.

Warrants

As of June 30, 2023, the following warrants for common stock were issued and outstanding:

Issue Date	Expiration Date	Exercise Price		Number of Warrants Outstanding
January 11, 2017	None	$	0.001	3,578,036
November 20, 2017	None	$	0.001	3,669,360
June 11, 2018	None	$	0.001	358,415
				7,605,811

No warrants were exercised during the three and six months ended June 30, 2023 or 2022.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and ContingenciesOn June 30, 2020, the Company entered into an amended and restated lease agreement (the “Amended and Restated Lease”) for office and laboratory space located in San Diego, California, for the Company’s current corporate headquarters, which supercedes the original lease agreement dated August 22, 2019. The Amended and Restated Lease has a lease term of 12 years (“Lease Term”), unless terminated earlier. The Lease Term has an initial abatement period, and the initial base rent payable will be approximately $0.6 million per month following the abatement period, which amount will increase by 3% per year over the Lease Term. The Company also received incentives from the landlord for tenant improvements. During 2020, the underlying asset was available for use by the Company to construct tenant improvements and therefore, the Lease Term was considered to have commenced. The Amended and Restated Lease is considered to be an operating lease, and the Company used a discount rate of 12% to calculate the value of its lease payments over the Lease Term. As of June 30, 2023, the condensed consolidated balance sheet includes an operating right-of-use asset of $35.4 million and a total operating lease liability of $50.7 million, of which $8.0 million is a current lease liability and included in accrued liabilities, and $42.7 million is included in non-current lease liability. As of December 31, 2022, the condensed consolidated balance sheet includes an operating right-of-use asset of $36.1 million and a total operating lease liability of $51.5 million, of which $7.8 million is a current lease liability and included in accrued liabilities, and $43.7 million is included in non-current lease liability. For the three and six months ended June 30, 2023, the Company recorded operating lease expense of $2.0 million and $3.9 million, respectively. For the three and six months ended June 30, 2022, the Company recorded operating lease expense of $1.9 million and $3.8 million, respectively.

As of June 30, 2023, the approximate future minimum lease payments under the Amended and Restated Lease are as follows (in thousands):

	Operating Lease
Remainder of 2023	$	3,951
2024	8,080
2025	8,322
2026	8,572
2027	8,829
Thereafter	50,857
Total operating lease payments(†)	88,611
Less: Amount representing interest	(37,928)
Total lease liability	$	50,683

____________________

†The Company has an early termination right in 2028 in which the total contractual obligation would be reduced by $41.1 million.

Legal ProceedingsThe Company is subject to asserting or defending various claims, complaints and legal actions that arise from time to time in the normal course of business, including commercial insurance, product liability, intellectual property and employment related matters, and none of which the Company deems material.

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Shareholders' Equity

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Shareholders' Equity

At the Market Facility

On July 2, 2020, the Company entered into a sales agreement pursuant to which the Company may, from time to time, sell shares of the Company’s common stock, par value $0.001 per share, having an aggregate offering price of up to $200.0 million. On July 2, 2021, the Company entered into an amended and restated sales agreement pursuant to which the Company may, from time to time, sell shares of the Company’s common stock, par value $0.001 per share, having an aggregate offering price of up to $500.0 million. During the three and six months ended June 30, 2023 and 2022, no shares of common stock were issued and sold under this sales agreement. As of June 30, 2023, the Company has issued and sold an aggregate of 1,880,097 shares of common stock pursuant to this sales agreement generating net proceeds of $155.0 million.

Share-based Compensation

Total share-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development expense	$	18,399	$	22,807	$	43,038	$	49,067
Selling, general and administrative expense	21,000		15,877		43,322		32,522
	$	39,399	$	38,684	$	86,360	$	81,589

During the three and six months ended June 30, 2023, 85,464 and 379,321 shares of common stock were issued under the Company’s equity incentive plans, generating net proceeds of $0.5 million and $2.2 million, respectively. During the three and six months ended June 30, 2022, 51,264 and 205,836 shares of common stock were issued under the Company’s equity incentive plans, generating net proceeds of $0.4 million and $2.9 million, respectively.

Issuances Under Employee Stock Purchase Plan

On May 11, 2023, an amendment to the Company’s 2013 Employee Stock Purchase Plan (“ESPP”) was approved by the Company’s shareholders, to increase the aggregate number of shares of common stock reserved for issuance under the ESPP by 750,000 shares. During the three and six months ended June 30, 2023, 105,352 shares of common stock were issued under the Company’s ESPP, generating net proceeds of $3.3 million. During the three and six months ended June 30, 2022, 29,891 shares of common stock were issued under the Company’s ESPP, generating net proceeds of $1.0 million.

Warrants

As of June 30, 2023, the following warrants for common stock were issued and outstanding:

Issue Date	Expiration Date	Exercise Price		Number of Warrants Outstanding
January 11, 2017	None	$	0.001	3,578,036
November 20, 2017	None	$	0.001	3,669,360
June 11, 2018	None	$	0.001	358,415
				7,605,811

No warrants were exercised during the three and six months ended June 30, 2023 or 2022.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted.

In the opinion of management, the information reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for the full year. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Use of Estimates

Use of Estimates

The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.

Reported amounts and footnote disclosures reflect the overall economic conditions that are most likely to occur and anticipated measures management intends to take. Actual results could differ materially from those estimates. Estimates and assumptions are reviewed quarterly. Any revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid securities with original maturities at the date of acquisition of ninety days or less.

Short-term Investments

Investments with an original maturity of more than ninety days are considered short-term investments and have been classified by management as available-for-sale. These investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current consolidated balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary.

Concentration of Credit Risk

Concentration of Credit Risk

The Company invests its excess cash in accordance with its investment policy. The Company’s investments are comprised primarily of commercial paper and debt instruments of financial institutions, corporations, U.S. government-sponsored agencies and the U.S. Treasury. The Company mitigates credit risk by maintaining a diversified portfolio and limiting the amount of investment exposure as to institution, maturity and investment type. Financial instruments that potentially subject the Company to significant credit risk consist principally of cash equivalents and short-term investments.

Accounts Receivable, Net

Accounts Receivable, net

Accounts receivable, net consists of trade receivables which are amounts due from customers related to product sales. The Company records trade receivables net of chargebacks, invoice discounts, distribution service fees and any allowances for doubtful accounts for potential credit losses. An allowance for doubtful accounts is determined based on the financial condition and creditworthiness of customers and the Company considers economic factors and events or trends expected to affect future collections experience. Any allowance would reduce the net receivables to the amount that is expected to be collected. The payment history of the Company’s customers will be considered in future assessments of collectability as these patterns are established over a longer period. As of June 30, 2023 and December 31, 2022, the Company determined an allowance for doubtful accounts was not required.

Inventory

Inventory

The Company began capitalizing inventory for KRAZATI, which received approval by the U.S. Food and Drug Administration (“FDA”) and launched commercially in the U.S. in December 2022. KRAZATI (adagrasib) is approved for the treatment of adult patients with KRAS G12C-mutated non-small cell lung cancer (“NSCLC”) who have received at least one prior systemic therapy. Prior to regulatory approval, all direct and indirect manufacturing costs were charged to research and development expense in the period incurred.

Inventory is comprised of raw materials, work-in-process and finished goods, and includes costs related to third-party contract manufacturing, packaging, freight-in and overhead. Inventory is stated at the lower of cost or net realizable value with cost based on the first-in-first-out method. The Company performs an assessment of recoverability of capitalized inventory during each reporting period based on an analysis of forecasted demand compared to quantities on hand and any firm purchase orders, as well as product shelf life, and writes down any excess, obsolete or unsaleable inventory to its estimated realizable value in the period which the impairment is first identified. Such write downs, should they occur, are charged to cost of product revenue in the condensed consolidated statements of operations and comprehensive loss. As of June 30, 2023 and December 31, 2022, the Company did not identify any impaired inventory.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue in accordance with the guidance of Revenue From Contracts With Customers, Accounting Standards Codification (“ASC”) Topic 606 (“Topic 606”). Under Topic 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements the Company determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Product revenue, net

The Company’s product revenue consists of sales of KRAZATI. The Company sells KRAZATI principally to specialty pharmacies and specialty distributors, which are referred to as the Company’s customers. These customers subsequently resell the product to healthcare providers and patients. Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer.

The Company records revenues from product sales at the net sales price, or transaction price, which includes estimates of variable consideration for which reserves are established primarily from chargebacks, government and commercial rebates, incentives, product returns, trade discounts and other allowances that are offered in contracts between the Company and its customers, healthcare providers and other third-party payors relating to the sales of its product. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of trade receivables, if the amount is deductible by the customer from payments to the Company, which is included within accounts receivable, net on the condensed consolidated balance sheets, or a current liability, if the amount is payable by the Company to a customer or third-party, which is included within accrued liabilities on the condensed consolidated balance sheets. The Company estimates the amount of variable consideration to include in the transaction price using the expected value method. These estimates take into consideration relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data, forecasted customer buying and payment patterns, and the Company’s historical experience that will develop over time as KRAZATI is the Company’s first commercial product. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of its contracts. The amount of variable consideration may be constrained and is included in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenues and earnings in the period such variances become known.

From time to time, the Company may sell KRAZATI to other commercial customers conducting clinical trials. These sales are recorded as part of product revenue, net and reflected at the transaction price, which includes estimates of variable consideration for trade allowances as discussed below.

The following are the components of variable consideration related to product revenue:

Chargebacks. Chargebacks relate to contracts with various third-party payors, including governmental healthcare programs, managed care providers, group purchasing organizations and other organizations, that generally purchase the product from a specialty distributor at a discounted price. The specialty distributor, in turn, charges back to the Company the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by its contracted customer. The allowance for chargebacks is based on actual chargebacks received and an estimate of sales by the specialty distributor to its contracted customers. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and a reduction of trade receivables.

Government rebates. The Company is subject to discount obligations under Medicare, Medicaid, and other governmental healthcare programs in the U.S. The Company’s estimates of rebates are based on the government-mandated discounts, which are statutorily-defined and applicable to these government funded programs. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and the accrual of an estimated liability. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom it will owe an additional liability under the Medicare Part D program.

Commercial rebates. The Company contracts with various private payor organizations and group purchasing organizations for the payment of rebates with respect to the utilization of its product. The Company’s estimates for the expected utilization of rebates are based on customer and payor data received from the specialty pharmacies and specialty distributors and historical utilization rates that will develop over time as KRAZATI is the Company’s first commercial product. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and the accrual of an estimated liability.

Incentives. The Company offers incentives such as co-payment assistance to commercially insured patients in the U.S. who meet certain eligibility requirements. The Company may provide financial assistance to participating patients with prescription drug co-payments required by the patients’ insurance provider, up to a specified dollar amount. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and the accrual of an estimated liability.

Product returns. Generally, the Company’s customers have the right to return product for a limited time before and after its expiration date. Since the Company does not have its own returns experience, it estimates returns based on available industry data for comparable products in the market as well as other information, such as visibility into the inventory remaining in the distribution channel and expiration date. As the Company distributes its product and establishes historical sales over a longer period of time, the Company will be able to place more reliance on historical purchasing, demand and return patterns of

its customers when evaluating its reserves for product returns. The estimate for product returns is recorded as an accrued liability and a reduction of revenue in the period the related product sales are recognized.

Trade allowances. The Company may provide invoice discounts on product sales to its customers for prompt payment based on contractual terms. These discounts are recorded as a reduction of revenue in the period the related product revenue is recognized. Trade receivables are recorded net of the allowance for these discounts. The Company also pays fees to its distributors for their services. The Company has determined such services are not distinct from the Company’s sale of product to its customers and therefore records these payments as a reduction of revenue and a reduction of trade receivables in the period the related product revenue is recognized. To the extent the services received are distinct from the Company’s sale of product to its customers, these payments will be recorded within selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive loss.

License and collaboration revenues

The Company’s license and collaboration revenues have been generated primarily through collaborative research, development, manufacture and commercialization agreements. The terms of these agreements generally include the license of intellectual property and associated know-how and the provision of other goods and services. Payments to the Company under these arrangements typically include one or more of the following: non-refundable, up-front license fees; manufacturing supply services; milestone payments; and royalties on future product sales.

License of Intellectual Property. If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes 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 progress for purposes of recognizing revenue associated with the bundled performance obligation.

Manufacturing Supply Services. The Company’s obligation under the agreements may include the initial supply of material for clinical development. If determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to this performance obligation when the collaborative partner obtains control of the goods. If determined not to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the combined performance obligation as the related performance obligations are satisfied.

Milestone Payments. At the inception of each arrangement that includes milestone payments based upon the achievement of specified clinical development, regulatory and/or sales milestones, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price. If it is probable that a significant revenue reversal would not occur, the associated milestone amount is included in the transaction price. Milestone payments that are dependent on factors outside of the Company’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. These payments are fully constrained and therefore are not included in the transaction price. At the end of each reporting period, the Company re-evaluates the probability of achievement of each milestone and any related constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect the reported amount of license and collaboration revenues in the period of adjustment.

Royalties. For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Intangible Asset, Net

Intangible Asset, Net

The Company’s finite-lived intangible asset resulted from the capitalization of a milestone payment due under a license and collaboration agreement in connection with the first commercial sale of KRAZATI in the U.S. in December 2022. The intangible asset will be amortized on a straight-line basis over its remaining useful life, which is estimated to be the remaining patent life of KRAZATI. Amortization expense is recorded as cost of product revenue - intangible asset amortization in the condensed consolidated statements of operations and comprehensive loss.

Cost of Product Revenue

Cost of Product Revenue

Cost of product revenue includes direct and indirect costs related to the manufacturing and distribution of KRAZATI, including materials, third-party contract manufacturing costs, packaging services, freight-in, overhead, royalties payable on net sales of KRAZATI and inventory reserves. All product costs incurred prior to FDA approval of KRAZATI in December 2022 were charged to research and development expense.

Leases

Leases

The Company determines if an arrangement is a lease at inception. Lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. For operating leases with an initial term greater than 12 months, the Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of lease payments over the lease term at the commencement date. Operating lease right-of-use assets are comprised of the lease liability plus any lease payments made and excludes lease incentives. Lease terms include options to renew or terminate the lease when the Company is reasonably certain that the renewal option will be exercised or when it is reasonably certain that the termination option will not be exercised. For the Company’s operating leases, if the interest rate used to determine the present value of future lease payments is not readily determinable, the Company estimates its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected the practical expedient to not separate lease and non-lease components.

Net Loss per Share

Net Loss per ShareBasic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for common share equivalents as they are anti-dilutive. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents outstanding for the period, as well as certain shares that are contingently issuable. Common share equivalents outstanding, determined using the treasury stock method, are comprised of shares that may be issued under the Company’s stock option and warrant agreements, as well as restricted stock units and performance stock units.

Recently Adopted and Recently Issued Accounting Pronouncements

Recently Issued and Recently Adopted Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. The Company has evaluated recently issued accounting pronouncements and does not believe any will have a material impact on the Company’s condensed consolidated financial statements or related financial statement disclosures.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Schedule of Potentially Dilutive Securities not included in the Calculation of Diluted Net Loss per Share

The following table presents the weighted-average number of common share equivalents, calculated using the treasury stock method, as well as certain shares that are contingently issuable, not included in the calculation of diluted net loss per share due to the anti-dilutive effect of the securities:

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Common stock options	593,009	1,010,399	645,774	1,297,818
Common stock warrants	7,605,626	7,605,691	7,605,634	7,605,719
Unvested restricted stock units and performance stock units	3,365,759	1,164,045	3,255,723	1,115,727
Total	11,564,394	9,780,135	11,507,131	10,019,264

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Investments (Tables)

6 Months Ended

Jun. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Schedule of Short-Term Investments

The following tables summarize the Company’s short-term investments (in thousands):

		As of June 30, 2023
	Maturity	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	2 years or less	$	12,866	$	—	$	(47)	$	12,819
Commercial paper	1 year or less	400,771		13		(631)		400,153
U.S. Agency bonds	2 years or less	176,624		63		(787)		175,900
U.S. Treasury bills	2 years or less	60,914		—		(218)		60,696
		$	651,175	$	76	$	(1,683)	$	649,568

		As of December 31, 2022
	Maturity	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Corporate debt securities	2 years or less	$	95,195	$	—	$	(662)	$	94,533
Commercial paper	1 year or less	443,489		65		(811)		442,743
U.S. Agency bonds	2 years or less	90,351		22		(434)		89,939
U.S. Treasury bills	2 years or less	223,216		8		(1,862)		221,362
		$	852,251	$	95	$	(3,769)	$	848,577

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize the assets measured at fair value on a recurring basis (in thousands):

	June 30, 2023
	Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
Cash	$	19,244	$	19,244	$	—	$	—
Money market funds	110,622		110,622		—		—
Total cash and cash equivalents	129,866		129,866		—		—
Short-term investments:
U.S. Treasury bills	60,696		60,696		—		—
Corporate debt securities	12,819		—		12,819		—
Commercial paper	400,153		—		400,153		—
U.S. Agency bonds	175,900		—		175,900		—
Total short-term investments	649,568		60,696		588,872		—
Long-term investment:
ORIC Pharmaceuticals, Inc.	4,565		4,565		—		—
Total	$	783,999	$	195,127	$	588,872	$	—

	December 31, 2022
	Total		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents:
Cash	$	53,033	$	53,033	$	—	$	—
Money market funds	174,262		174,262		—		—
U.S. Agency bonds	7,965		—		7,965		—
Total cash and cash equivalents	235,260		227,295		7,965		—
Short-term investments:
U.S. Treasury bills	221,362		221,362		—		—
Corporate debt securities	94,533		—		94,533		—
Commercial paper	442,743		—		442,743		—
U.S. Agency bonds	89,939		—		89,939		—
Total short-term investments	848,577		221,362		627,215		—
Long-term investment:
ORIC Pharmaceuticals, Inc.	3,465		3,465		—		—
Total	$	1,087,302	$	452,122	$	635,180	$	—

Schedule of Changes in Estimated Fair Value of Assets with Unobservable Inputs

The following table represents the change in estimated fair value of and transfer activity for the Company’s Level 3 investment (in thousands):

Balance as of December 31, 2021	$	8,218
Change in fair value at lock-up expiration	(3,100)
Transfer from Level 3 to Level 1 at lock-up expiration	(5,118)
Balance as of March 31, 2022	$	—

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Inventory (Tables)

6 Months Ended

Jun. 30, 2023

Inventory Disclosure [Abstract]

Schedule of Inventory, Current

Inventory consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Raw materials	$	69	$	—
Work-in-process	8,034		2,994
Finished goods	541		26
Total inventory	$	8,644	$	3,020

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Other Current Assets and Other Long-Term Assets (Tables)

6 Months Ended

Jun. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Other Current Assets

Other current assets and other long-term assets consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Other current assets:
Prepaid expenses	$	15,141	$	15,207
Deposits and other receivables	3,527		3,162
Interest receivables	1,648		2,870
Total other current assets	$	20,316	$	21,239
Other long-term assets:
Deposits and prepaid expenses	$	24,246	$	21,025
Restricted cash	620		620
Total other long-term assets	$	24,866	$	21,645

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Accrued Liabilities and Other Liabilities (Tables)

6 Months Ended

Jun. 30, 2023

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

Accrued liabilities and other liabilities consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Accrued liabilities:
Accrued clinical expense	$	41,584	$	37,604
Accrued manufacturing expense	6,114		6,605
Accrued development expense	4,629		20,107
Accrued compensation and benefits	34,932		40,208
Accrued commercial expense	4,547		3,941
Accrued royalty expense	869		—
Accrued adjustments to product revenue	1,922		152
Lease liability (current)	7,961		7,844
Other accrued expenses	4,925		4,126
Total accrued liabilities	$	107,483	$	120,587
Other liabilities	$	3,380	$	3,022

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Intangible Assets, Net (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

Intangible asset, net consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Gross carrying value	$	15,000	$	15,000
Less: Accumulated amortization	(603)		(86)
Intangible asset, net	$	14,397	$	14,914

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

As of June 30, 2023, the estimated future amortization expense associated with the Company’s intangible asset is as follows (in thousands):

Remainder of 2023	$	516
2024	1,034
2025	1,034
2026	1,034
2027	1,034
Thereafter	9,745
Total	$	14,397

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Warrants (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Warrants Issued and Outstanding

As of June 30, 2023, the following warrants for common stock were issued and outstanding:

Issue Date	Expiration Date	Exercise Price		Number of Warrants Outstanding
January 11, 2017	None	$	0.001	3,578,036
November 20, 2017	None	$	0.001	3,669,360
June 11, 2018	None	$	0.001	358,415
				7,605,811

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Commitment and Contingencies (Tables)

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments

As of June 30, 2023, the approximate future minimum lease payments under the Amended and Restated Lease are as follows (in thousands):

	Operating Lease
Remainder of 2023	$	3,951
2024	8,080
2025	8,322
2026	8,572
2027	8,829
Thereafter	50,857
Total operating lease payments(†)	88,611
Less: Amount representing interest	(37,928)
Total lease liability	$	50,683

____________________

†The Company has an early termination right in 2028 in which the total contractual obligation would be reduced by $41.1 million.

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Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Employee Service Share-based Compensation Allocation

Total share-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development expense	$	18,399	$	22,807	$	43,038	$	49,067
Selling, general and administrative expense	21,000		15,877		43,322		32,522
	$	39,399	$	38,684	$	86,360	$	81,589

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Description of Business - Narrative (Details)	6 Months Ended
	Jun. 30, 2023 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments	1

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Summary of Significant Accounting Policies - Narrative (Details)	6 Months Ended
	Jun. 30, 2023
Marketable Securities
Minimum original maturity period of marketable securities	90 days

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Summary of Significant Accounting Policies - Antidilutive Securities (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (shares)	11,564,394	9,780,135	11,507,131	10,019,264
Common stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (shares)	593,009	1,010,399	645,774	1,297,818
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (shares)	7,605,626	7,605,691	7,605,634	7,605,719
Unvested restricted stock units and performance stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (shares)	3,365,759	1,164,045	3,255,723	1,115,727

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Investments - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-sale [Line Items]
Amortized cost	$ 651,175	$ 852,251
Gross unrealized gains	76	95
Gross unrealized losses	(1,683)	(3,769)
Estimated fair value	649,568	848,577
Corporate debt securities
Debt Securities, Available-for-sale [Line Items]
Amortized cost	12,866	95,195
Gross unrealized gains	0	0
Gross unrealized losses	(47)	(662)
Estimated fair value	$ 12,819	$ 94,533
Corporate debt securities | Maximum
Debt Securities, Available-for-sale [Line Items]
Maturity	2 years	2 years
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Amortized cost	$ 400,771	$ 443,489
Gross unrealized gains	13	65
Gross unrealized losses	(631)	(811)
Estimated fair value	$ 400,153	$ 442,743
Commercial paper | Maximum
Debt Securities, Available-for-sale [Line Items]
Maturity	1 year	1 year
U.S. Agency bonds
Debt Securities, Available-for-sale [Line Items]
Amortized cost	$ 176,624	$ 90,351
Gross unrealized gains	63	22
Gross unrealized losses	(787)	(434)
Estimated fair value	$ 175,900	$ 89,939
U.S. Agency bonds | Maximum
Debt Securities, Available-for-sale [Line Items]
Maturity	2 years	2 years
U.S. Treasury bills
Debt Securities, Available-for-sale [Line Items]
Amortized cost	$ 60,914	$ 223,216
Gross unrealized gains	0	8
Gross unrealized losses	(218)	(1,862)
Estimated fair value	$ 60,696	$ 221,362
U.S. Treasury bills | Maximum
Debt Securities, Available-for-sale [Line Items]
Maturity	2 years	2 years

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Investments - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Schedule of Investments [Line Items]
Allowance for credit losses on available-for-sale investments	$ 0		$ 0		$ 0
Impairment loss on investments	0	$ 0	0	$ 0
Investments	(649,568,000)		(649,568,000)		(848,577,000)
Gain (loss) on investments	1,200,000	$ 500,000	1,100,000	$ 5,600,000
Long-term Investments
Schedule of Investments [Line Items]
Investments	$ (4,565,000)		$ (4,565,000)		$ (3,465,000)
ORIC
Schedule of Investments [Line Items]
Stock held in investment (shares)	588,235		588,235		588,235

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Fair Value Measurements - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	$ 129,866	$ 235,260
Short-term investments:	649,568	848,577
Total	783,999	1,087,302
U.S. Treasury bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	60,696	221,362
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	12,819	94,533
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	400,153	442,743
U.S. Agency bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	7,965
Short-term investments:	175,900	89,939
Long-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	4,565	3,465
Cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	19,244	53,033
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	110,622	174,262
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	129,866	227,295
Short-term investments:	60,696	221,362
Total	195,127	452,122
Level 1 | U.S. Treasury bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	60,696	221,362
Level 1 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	0	0
Level 1 | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	0	0
Level 1 | U.S. Agency bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	0
Short-term investments:	0	0
Level 1 | Long-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	4,565	3,465
Level 1 | Cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	19,244	53,033
Level 1 | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	110,622	174,262
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	0	7,965
Short-term investments:	588,872	627,215
Total	588,872	635,180
Level 2 | U.S. Treasury bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	0	0
Level 2 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	12,819	94,533
Level 2 | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	400,153	442,743
Level 2 | U.S. Agency bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	7,965
Short-term investments:	175,900	89,939
Level 2 | Long-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	0	0
Level 2 | Cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	0
Level 2 | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	0	0
Short-term investments:	0	0
Total	0	0
Level 3 | U.S. Treasury bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	0	0
Level 3 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	0	0
Level 3 | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	0	0
Level 3 | U.S. Agency bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	0
Short-term investments:	0	0
Level 3 | Long-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	0	0
Level 3 | Cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	0	0
Level 3 | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents:	$ 0	$ 0

XML

Fair Value Measurements - Changes in Estimated Fair Value of Assets with Unobservable Inputs (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)
Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Transfer from Level 3 to Level 1 at lock-up expiration	$ 5,118
Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of period	8,218
Change in fair value at lock-up expiration	(3,100)
Balance at end of period	$ 0

XML

Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw materials	$ 69	$ 0
Work-in-process	8,034	2,994
Finished goods	541	26
Inventory	$ 8,644	$ 3,020

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Other Current Assets and Other Long-Term Assets - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Other current assets:
Prepaid expenses	$ 15,141	$ 15,207
Deposits and other receivables	3,527	3,162
Interest receivables	1,648	2,870
Total other current assets	20,316	21,239
Other long-term assets:
Deposits and prepaid expenses	24,246	21,025
Restricted cash	620	620
Other long-term assets	$ 24,866	$ 21,645

XML

Accrued Liabilities and Other Liabilities - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Accrued liabilities:
Accrued clinical expense	$ 41,584	$ 37,604
Accrued manufacturing expense	6,114	6,605
Accrued development expense	4,629	20,107
Accrued compensation and benefits	34,932	40,208
Accrued commercial expense	4,547	3,941
Accrued royalty expense	869	0
Accrued adjustments to product revenue	1,922	152
Other accrued expenses	4,925	4,126
Lease liability (current)	7,961	7,844
Total accrued liabilities	107,483	120,587
Other liabilities	$ 3,380	$ 3,022

XML

Revenue - Product Revenue, Net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Total revenue	$ 13,690	$ 5,362	$ 20,857	$ 6,071
Accounts receivable, net	10,523		10,523		$ 865
Chargebacks, Discounts, and Allowances	(800)		(800)		(100)
Accrued adjustments to product revenue	1,922		1,922		$ 152
Product Revenue
Disaggregation of Revenue [Line Items]
Total revenue	13,365	$ 0	$ 19,656	$ 0
Product Revenue | KRAZATI
Disaggregation of Revenue [Line Items]
Total revenue	$ (1,700)

XML

Revenue- Narrative (Details)				1 Months Ended	3 Months Ended		6 Months Ended		9 Months Ended	102 Months Ended
	May 28, 2021 USD ($)	Aug. 03, 2020 USD ($) shares	Jan. 07, 2018 USD ($)	Oct. 31, 2014	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Sep. 30, 2022 USD ($)	Mar. 31, 2023 USD ($)	Oct. 01, 2014 USD ($)
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Expenses related to collaboration agreement					$ 124,187,000	$ 128,339,000	$ 250,870,000	$ 259,315,000
Unrealized gain (loss) on available-for-sale investments					26,000	(909,000)	2,069,000	(5,711,000)
Total revenue					13,690,000	5,362,000	20,857,000	6,071,000
Cost of product revenue					1,025,000	0	1,583,000	0
Product Revenue
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Total revenue					13,365,000	0	19,656,000	0
Milestone Payments
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Expenses related to collaboration agreement						0		0
BeiGene Agreement
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Non-refundable, non-creditable up-front fee			$ 10,000,000
Milestone payments			$ 123,000,000
Termination of contract, period after first commercial sale of product			10 years
Period required for notice of termination of contract			60 days
Performance obligation, compensation to be earned			$ 500,000
Milestone payments earned					0	0	0	0
Royalty revenue					0	0	0	0
BeiGene Agreement | Maximum
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty percentage rate (up to)			0.20
BeiGene Agreement | Licenses of Intellectual Property
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Performance obligation, compensation to be earned			$ 9,500,000
Pfizer Agreement
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Termination of contract, period after first commercial sale of product				10 years
Period required for notice of termination of contract				60 days
Pfizer Agreement | Development Milestone Payments
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Potential development milestone payments											$ 9,300,000
Development milestone payments					0		1,000,000			$ 10,500,000
Pfizer Agreement | Sales Milestone Payments
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Potential development milestone payments											$ 337,000,000
Pfizer Agreement | Milestone Payments - First Commercial Sale of KRAZATI
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Potential development milestone payments					15,000,000		15,000,000
Pfizer Agreement | Royalties
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Cost of product revenue					900,000		1,400,000
ORIC Pharmaceuticals Agreement
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Stock received as part of stock issuance and license agreements (shares) | shares		588,235
License agreement, period of transfer restrictions		18 months
License agreement, period of agreement after first commercial sale		10 years
ORIC Pharmaceuticals Agreement | Level 3
Research and Development Arrangement, Contract to Perform for Others [Line Items]
One-time non-cash payment		$ 11,400,000
Zai Agreement
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Period required for notice of termination of contract	12 months
Milestone payments earned					0	5,000,000		5,000,000
Termination of contract, period after first commercial sale of product	10 years
Up-front fee received	$ 65,000,000
Transaction price of arrangement	66,600,000
Zai Agreement | Licenses of Intellectual Property
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Revenue recognized									$ 66,600,000
Income tax recovery									$ 3,300,000
Zai Agreement | Manufacturing Supply Services
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Revenue recognized					300,000	400,000	1,200,000	1,100,000
Zai Agreement | Sales Milestone Payments
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Revenue from performance obligation expected to be earned	180,000,000
Zai Agreement | Development and Regulatory Milestone Payments
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Revenue from performance obligation expected to be earned	$ 93,000,000
Zai Agreement | Royalties
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Royalty revenue					$ 0	$ 0	$ 0	$ 0

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Intangible Assets, Net - Schedule of Intangibles (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Gross carrying value	$ 15,000	$ 15,000
Less: Accumulated amortization	(603)	(86)
Intangible asset, net	$ 14,397	$ 14,914

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Intangible Assets, Net - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Finite-Lived Intangible Asset, Useful Life					14 years 6 months
Amortization of Intangible Assets	$ 0.3	$ 0.0	$ 0.5	$ 0.0

XML

Intangible Assets, Net - Future Amortization (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2023	$ 516
2024	1,034
2025	1,034
2026	1,034
2027	1,034
Thereafter	9,745
Intangible asset, net	$ 14,397	$ 14,914

XML

Warrants - Summary (Details) - $ / shares	3 Months Ended	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2023	Jun. 11, 2018	Nov. 20, 2017	Jan. 11, 2017
Class of Warrant or Right [Line Items]
Warrants exercised via cashless exercises (shares)	0	0
Private Placement
Class of Warrant or Right [Line Items]
Number of warrants outstanding (shares)	7,605,811	7,605,811
January 11, 2017 Warrants | Private Placement
Class of Warrant or Right [Line Items]
Exercise price of warrants (USD per share)					$ 0.001
Number of warrants outstanding (shares)	3,578,036	3,578,036
November 20, 2017 Warrants | Private Placement
Class of Warrant or Right [Line Items]
Exercise price of warrants (USD per share)				$ 0.001
Number of warrants outstanding (shares)	3,669,360	3,669,360
June 11, 2018 Warrants | Private Placement
Class of Warrant or Right [Line Items]
Exercise price of warrants (USD per share)			$ 0.001
Number of warrants outstanding (shares)	358,415	358,415

XML

Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Jun. 30, 2020
Lessee, Lease, Description [Line Items]
Right-of-use asset	$ 35,431		$ 35,431		$ 36,122
Lease liability (current)	7,961		7,961		7,844
Operating lease liability, noncurrent	42,722		42,722		43,661
Current Headquarters
Lessee, Lease, Description [Line Items]
Discount rate (as a percent)						12.00%
Right-of-use asset	35,400		35,400		36,100
Total lease liability	50,683		50,683		51,500
Lease liability (current)	8,000		8,000		7,800
Operating lease liability, noncurrent	42,700		42,700		$ 43,700
Operating lease cost	$ 2,000	$ 1,900	3,900	$ 3,800
Building | Future Headquarters
Lessee, Lease, Description [Line Items]
Lease term						12 years
Operating Lease, Future Monthly Rent Payment			$ 600
Annual rent increase (as a percent)						3.00%

XML

Commitments and Contingencies - Future Minimum Lease Payments (Details) - Current Headquarters - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Lessee, Lease, Description [Line Items]
Remainder of 2023	$ 3,951
2024	8,080
2025	8,322
2026	8,572
2027	8,829
Thereafter	50,857
Total operating lease payments	88,611
Less: Amount representing interest	(37,928)
Total lease liability	50,683	$ 51,500
Reduction of lease liability, amount	$ 41,100

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Shareholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	May 11, 2023	Dec. 31, 2022	Jul. 02, 2021	Jul. 02, 2020
Class of Stock [Line Items]
Proceeds from sale of stock	$ 155,000
Common stock, par value (USD per share)		$ 0.001		$ 0.001			$ 0.001
Proceeds from issuance of common stock from employee stock purchase plan				$ 3,328	$ 995
Employee Stock Purchase Plan, Shares Reserved for Future Issuance						750,000
Common Stock
Class of Stock [Line Items]
Issuance of common stock under equity incentive plans (shares)		85,464	51,264	379,321	205,836
Proceeds from stock options exercised		$ 500	$ 400	$ 2,200	$ 2,900
Proceeds from issuance of common stock from employee stock purchase plan				$ 3,300	$ 1,000
At the Market Facility
Class of Stock [Line Items]
Stock issued in transaction (shares)		0	0	0	0
Common stock, par value (USD per share)									$ 0.001
Aggregate offering price									$ 200,000
Excess Stock, Shares Issued		1,880,097		1,880,097
Amended and Restated At the Market Facility
Class of Stock [Line Items]
Common stock, par value (USD per share)								$ 0.001
Aggregate offering price								$ 500,000

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Shareholders' Equity - Summary (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	$ 39,399	$ 38,684	$ 86,360	$ 81,589
Research and development expense
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	18,399	22,807	43,038	49,067
Selling, general and administrative expense
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	$ 21,000	$ 15,877	$ 43,322	$ 32,522