Revenues

12 Months Ended

Dec. 31, 2024

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

The following table summarizes our revenues by collaboration, category of revenue, and the method of recognition (in millions):

			Year Ended December 31,
	Over time	Point in time	2024		2023		2022
Gilead Collaboration
License and R&D services	*		$	207	$	75	$	74
R&D services	*		8		4		—
Access rights	*		28		33		33
Taiho Collaboration
License revenue		*	15		—		—
Other	*		—		5		5
Total revenues			$	258	$	117	$	112
Total revenues from collaborations			$	207	$	80	$	74
Total revenues from a customer			$	51	$	37	$	38

Revenues from Gilead accounted for 94%, 96% and 96% of Total revenues for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table summarizes the revenue recognized as a result of changes in the deferred revenue balance (in millions):

	Year Ended December 31,
	2024		2023		2022
Revenue recognized from amounts in deferred revenue at the beginning of the period	$	243	$	108	$	112

We had $319 million and $398 million of deferred revenue remaining on our Consolidated Balance Sheets at December 31, 2024 and 2023, respectively, allocated between current and noncurrent based on the expected timing of future recognition.

Revenue from the Gilead Collaboration

In January 2024, we entered into the Third Gilead Collaboration Agreement Amendment, which we determined was a change in scope and price of the original contract and we accounted for this contract modification as both a modification of the existing contract and the creation of a new contract. Under the applicable accounting rules for such contract modifications, we did not adjust the accounting for completed performance obligations that were distinct from the modified goods or services. However, we adjusted revenue previously recognized to reflect the effect of the contract modification due to the updated estimated transaction price allocated to the partially satisfied performance obligations and the updated measure of progress as of the modification date. Accordingly, we allocated the transaction price to the remaining performance obligations (both from the existing contract and the modification) and recognized a cumulative catch-up to revenue of $107 million based on the updated transaction price and measure of progress for the partially satisfied performance obligations. This cumulative catch-up reduced net loss per share, basic and diluted, in the year ended December 31, 2024 by $1.19, see Note 3, Related party - Gilead Sciences, Inc., for more information.

The following table summarizes the transaction price (in millions):

Transaction price	Amount
Premium from Third Stock Purchase Agreement Amendment	$	87
Option continuation payment received in the third quarter of 2024	100
Deferred revenue as of January 2024	335
Total transaction price	$	522

Our assessment of the updated transaction price for the Third Gilead Collaboration Agreement Amendment included an analysis of amounts we expected to receive, which at contract amendment consisted of: $100 million option continuation payment that Gilead committed to and paid in the third quarter of 2024 for continued access to our pipeline; $87 million allocated from the premium from the Third Stock Purchase agreement; and $335 million deferred revenue remaining from the First Gilead Collaboration Agreement Amendment effective December 2021. We determined the entire $522 million to be the allocable transaction price as of the amendment closing date, due to the history of timely payments by Gilead.

The following table summarizes the allocation of the transaction price to the performance obligations (in millions):

Allocation to performance obligations	Distinct	Combined	Amount
Etrumadenant - License and R&D services		*	$	210
Quemliclustat - License and R&D services		*	168
Domvanalimab - R&D services	*		33
Access rights	*		57
Option continuation periods	*		20
Rights to certain studies	*		34
Total allocated transaction price			$	522

We accounted for each performance obligation as follows:

Etrumadenant – License and R&D Services

Under the Gilead Collaboration Agreement, Gilead obtained an option to the exclusive rights to our adenosine receptor program, etrumadenant, in exchange for an option payment of $250 million, if exercised.

Effective December 2021, under the First Gilead Collaboration Agreement Amendment, Gilead exercised the option and obtained an exclusive license to etrumadenant and we were also obligated to perform further R&D services for Gilead related to etrumadenant. We determined that the license and R&D services were combined at the inception of the agreement based on an evaluation of the delivery of the license, due to the early stage of the technology and the specialized nature of our know-how. We determined the standalone selling price of the license using a discounted cash flow method and the R&D services using an expected cost-plus margin approach. We recognize the amounts allocated to the combined license and services as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program. Prior to the closing of the Third Gilead Collaboration Agreement Amendment, we had $129 million of deferred revenue on our Consolidated Balance Sheet related to this performance obligation.

Effective January 2024, under the Third Gilead Collaboration Agreement Amendment, this performance obligation was partially satisfied and there were no changes to the scope of the related R&D service obligation as a result of the amendment. We allocated the updated transaction price to this performance obligation based on the standalone selling price and adjusted revenue based on an updated measure of progress, which resulted in a cumulative catch-up of revenue of $14 million.

We recognized $47 million, $52 million, and $34 million in the years ended December 31, 2024, 2023 and 2022, respectively, within License and development services revenue in our Consolidated Statements of Operations. At December 31, 2024 and 2023, we had $166 million and $133 million, respectively, of deferred revenue remaining on our Consolidated Balance Sheet related to this performance obligation.

Quemliclustat – License and R&D Services

Under the Gilead Collaboration Agreement, Gilead obtained an option to the exclusive rights to our CD73 program, quemliclustat, in exchange for an option payment of $200 million, if exercised.

Effective December 2021, under the First Gilead Collaboration Agreement Amendment, Gilead exercised the option and obtained an exclusive license to quemliclustat and we were also obligated to perform further R&D services for Gilead related to quemliclustat. We determined that the license and R&D services were combined at the inception of the agreement based on an evaluation of the delivery of the license, due to the early stage of the technology and the specialized nature of our know-how. We determined the standalone selling price of the license using a discounted cash flow method and the R&D services using an expected cost-plus margin approach. We recognize the amounts allocated to the combined license and services as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program. Prior to the closing of the Third Gilead Collaboration Agreement Amendment, we had $130 million of deferred revenue on our Consolidated Balance Sheet related to this performance obligation.

Effective January 2024, under the Third Gilead Collaboration Agreement Amendment, this performance obligation was partially satisfied and there was a reduction to the scope of the related R&D service obligation as a result of the amendment. Specifically, the amendment provides that we will independently initiate, operationalize and fund a Phase 3 study to evaluate quemliclustat in pancreatic cancer, which reduces our estimated obligation to perform further R&D services for Gilead related to quemliclustat under the collaboration. We allocated the updated transaction price to this performance obligation based on the standalone selling price and adjusted revenue based on an updated measure of progress which resulted in cumulative catch-up of revenue of $88 million.

We recognized $147 million, $17 million, and $26 million in the years ended December 31, 2024, 2023 and 2022, respectively, within License and development service revenue in our Consolidated Statements of Operations. At December 31, 2024 and 2023, we had $23 million and $132 million, respectively, of deferred revenue remaining on our Consolidated Balance Sheet related to this performance obligation.

Domvanalimab – R&D Services

Under the First Gilead Collaboration Agreement Amendment, we determined that we retain a separate performance obligation to perform further R&D services for Gilead related to domvanalimab. The standalone selling price of this obligation was determined using an expected cost-plus margin approach. We recognize the amounts allocated to these services as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program. Prior to the closing of the Third Gilead Collaboration Agreement Amendment, we had $25 million of deferred revenue on our Consolidated Balance Sheet related to this performance obligation.

Effective January 2024, under the Third Gilead Collaboration Agreement Amendment, this performance obligation was partially satisfied and there were no significant changes to the scope of this obligation as a result of the amendment. We allocated the updated transaction price to this performance obligation based on the standalone selling price and adjusted revenue based on an updated measure of progress which resulted in cumulative catch-up of revenue of $5 million.

We recognized $13 million, $5 million, and $5 million in the years ended December 31, 2024, 2023, and 2022, respectively, within License and development services revenue in our Consolidated Statements of Operations. At December 31, 2024 and 2023, we had $21 million and $25 million, respectively, of deferred revenue remaining on our Consolidated Balance Sheet related to this performance obligation.

Zimberelimab – R&D and Commercialization Services

Under the First Gilead Collaboration Agreement Amendment, we determined that we retained separate performance obligations to perform further R&D and commercialization services for Gilead related to zimberelimab, as a monotherapy and in combination with other agents. The standalone selling price of these obligations were determined using an expected cost-plus margin approach. We recognize the amounts allocated to these services as the performance obligations are satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program.

We recognized $1 million and $9 million for R&D and commercialization services in the years ended December 31, 2023 and 2022, respectively, within License and development service revenue in our Consolidated Statements of Operations. At December 31, 2023, the performance obligation was fully satisfied and all revenue has been recognized.

Access Rights and Option Continuation Periods

Under the First Gilead Collaboration Agreement Amendment, Gilead has exclusive access to our current programs as well as the future programs for a period of ten years, contingent upon option continuation payments totaling $300 million, consisting of a $100 million payment on each of the fourth, sixth, and eighth anniversaries of the Gilead Collaboration Agreement. Prior to the closing of the Third Gilead Collaboration Agreement Amendment, we had $51 million of deferred revenue on our Consolidated Balance Sheet related to these performance obligations.

Effective January 2024, under the Third Gilead Collaboration Agreement Amendment, Gilead agreed to pay the $100 million option continuation payment due on the fourth anniversary of the Gilead Collaboration Agreement, which occurred and was received in the third quarter of 2024, and we included this payment in the transaction price. By exercising this right Gilead’s exclusive access to our current programs as well as any future programs is extended to 2026. We determined that as of the closing date in January 2024, Gilead is not obligated to make the remaining contingent payments totaling $200 million due on the sixth and eighth anniversaries of the Gilead Collaboration Agreement and accordingly, we have excluded these payments from the transaction price. Failure to pay the non-obligatory option continuation payments will result in Gilead’s loss of certain rights to access and obtain licenses to the programs arising from our R&D pipeline.

The standalone selling price of the ongoing R&D pipeline access and the option continuation material rights were determined using an expected cost-plus margin approach, with the option continuation material rights probability-adjusted for the likelihood of exercise. We use a time-elapsed input method to measure progress toward satisfying the access rights performance obligation, which is the method we believe most faithfully depicts the Company's performance in transferring the promised services during the time period in which Gilead has access to our R&D pipeline. Accordingly, the revenue allocated to the initial four-year access rights performance obligation is being recognized using this input method over the remaining period through July 2024, and for the access rights continuation, over the two-year period commencing July 2024. For the remaining access rights option continuation periods commencing on the sixth, and eighth, anniversaries of the agreement, if Gilead elects to exercise their option, we will recognize the revenue allocated to that option together with the $100 million continuation payment over the new minimum access period or immediately if the option lapses.

We recognized $28 million, $33 million, and $33 million in the years ended December 31, 2024, 2023, and 2022, respectively, within Other collaboration revenue in our Consolidated Statements of Operations. At December 31, 2024 and 2023, we had $52 million and $54 million, respectively, of deferred revenue on our Consolidated Balance Sheet related to these performance obligations.

Rights to Certain Studies

Effective January 2024, under the Third Gilead Collaboration Agreement Amendment, we will solely fund certain studies, but Gilead retains exclusive rights to reinstate into the collaboration each study at specified time-points for a payment. We have determined that these are material rights and we estimated the standalone selling price of these performance obligations using a discounted cash flow method probability-adjusted for the likelihood of exercise. We will recognize the amount allocated to each right if and when the related study is reinstated into the parties' co-development plans or if the option lapses.

At December 31, 2024, we had $34 million of deferred revenue remaining on our Consolidated Balance Sheet related to these performance obligations.

Inflammation Programs - R&D Services

In addition to the amendments noted above, in May 2023, we entered into the Second Gilead Collaboration Agreement Amendment pursuant to which we expanded our collaboration to provide Gilead with options to license up to four jointly selected research-stage programs that target inflammatory diseases for which we will lead discovery and early development activities, see Note 3, Related party - Gilead Sciences, Inc., for more information. In 2023, we received a total upfront payment of $35 million for an initial two jointly selected research-stage programs. We determined that the Second Gilead Collaboration Agreement Amendment represented a separate contract and, at the amendment closing date, we allocated the transaction price of $35 million to the performance obligations created as of the date of this amendment.

The following table summarizes the allocation of the transaction price to the performance obligations (in millions):

Allocation to performance obligations	Distinct	Amount
Inflammation target 1 - R&D services	*	$	18
Inflammation target 2 - R&D services	*	17
Total allocated transaction price		$	35

We determined that we have separate performance obligations to perform R&D services for Gilead related to discovery and early development activities for each research program for which they have made an upfront payment. The standalone selling prices of these obligations were determined using an expected cost-plus margin approach. We recognize the amounts allocated to these services as the performance obligation is satisfied, calculated as an estimated percentage of completion based on management's estimated total effort for the program. The options to acquire additional licenses or services did not result in additional performance obligations because they did not provide a material right at contract inception, primarily due to the very early stages of the programs.

We recognized revenue of $8 million and $4 million for the years ended December 31, 2024 and 2023, respectively, within Other collaboration revenue in our Consolidated Statements of Operations. At December 31, 2024 and 2023, we had $23 million and $31 million, respectively, of deferred revenue remaining on our Consolidated Balance Sheet related to these performance obligations.

Revenue from the Taiho Collaboration

Quemliclustat - License

In July 2024, Taiho exercised its option under the agreement we entered into in 2017 and obtained an exclusive license for quemliclustat (the CD73 program) for the Taiho Territory for an option payment of $15 million which was received in the third quarter 2024.

We determined that this license was the only performance obligation and we recognized upon delivery the full $15 million of revenue in the year ended December 31, 2024 within License and development services revenue in our Consolidated Statements of Operations.

Capitalized Costs to Obtain Contracts

We incurred $8 million of costs in the first quarter 2024 to obtain the Third Gilead Collaboration Agreement Amendment, Third Stock Purchase Agreement Amendment and the Second Investor Rights Agreement Amendment, which consisted of consultant fees that were payable upon the successful completion of the agreements. We determined that $5 million of these costs were related to the Third Stock Purchase Agreement Amendment which were recognized as offering costs in additional paid-in capital. The remaining costs were combined with $3 million in capitalized costs that remained from the initial Gilead Collaboration Agreement and subsequent amendments, and the total was allocated to the various remaining performance obligations, to be recognized as the underlying performance obligations are satisfied and revenue is recognized.

For the years ended December 31, 2024, 2023, and 2022, we recognized $3 million, $1 million, and $4 million, respectively, of expense in G&A expense. At each of December 31, 2024 and 2023, we had $3 million in capitalized costs to obtain the contracts, allocated between Prepaid expenses and other current assets and Other noncurrent assets in our Consolidated Balance Sheets based on the expected timing of future recognition.