Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

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 condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC on February 27, 2025 (2024 Form 10-K). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Item 1A. Risk Factors" section of this Quarterly Report and our other filings with the SEC, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical-stage biopharmaceutical company focused on creating precisely targeted therapies for patients with cancer. We leverage our team's deep expertise in chemistry and structure-based drug design to develop innovative small molecules that are designed with the aim to overcome the limitations of existing therapies for clinically proven kinase targets.

Limitations faced by currently available kinase inhibitors can include (i) kinase resistance, or the emergence of new mutations in the kinase target that can enable resistance to existing therapies, (ii) kinase selectivity, or the potential for existing therapies to inhibit other structurally similar kinase targets and lead to off-target adverse events, and (iii) limited brain penetrance, or the ability for the therapy to treat disease that has spread or metastasized to the brain. By prioritizing target selectivity, we believe our drug candidates have the potential to overcome resistance, avoid dose-limiting off-target adverse events, address brain metastases, and drive more durable responses. This may result in the potential to drive deeper, more durable responses with minimal adverse events, and we believe these potential benefits may support opportunities for clinical utility earlier in the treatment paradigm.

Candidate Overview

Zidesamtinib (NVL-520)

Our first lead product candidate, zidesamtinib (NVL-520), is being developed for patients with ROS proto-oncogene 1 (ROS1)-positive non-small cell lung cancer (NSCLC). Zidesamtinib is a novel ROS1-selective inhibitor designed with the aim to address the clinical challenges of emergent treatment resistance, central nervous system (CNS)-related adverse events, and brain metastases that may limit the use of currently available ROS1 tyrosine kinase inhibitors (TKIs). Zidesamtinib has received FDA Breakthrough Therapy designation for the treatment of patients with ROS1-positive metastatic NSCLC who have previously been treated with two or more prior ROS1 TKIs, and orphan drug designation for ROS1-positive NSCLC.

Our ARROS-1 clinical trial is a first-in-human global Phase 1/2, multicenter, open-label, dose-escalation and expansion study evaluating zidesamtinib as an oral monotherapy in patients with advanced ROS1-positive NSCLC and other solid tumors. Dosing was initiated in the Phase 1 portion of the ARROS-1 clinical trial in January 2022. From January 2022 to August 2023, the Phase 1 portion of the ARROS-1 trial enrolled 104 patients (99 NSCLC, 5 other solid tumors).

In September 2023, we announced the initiation of the Phase 2 portion of the ARROS-1 clinical trial, following alignment with the FDA on a recommended Phase 2 dose (RP2D) of 100 mg once daily (QD). The Phase 2 portion of the ARROS-1 clinical trial is designed to evaluate the safety and activity of zidesamtinib in patients with advanced ROS1-positive NSCLC and other solid tumors, examining several specific cohorts of patients based on the prior anti-cancer therapies that such patients have received. Phase 2 cohorts have been designed to support potential registration in TKI-naïve and/or TKI pre-treated ROS1-positive NSCLC patients.

In June 2025, we announced positive pivotal data for zidesamtinib in TKI pre-treated patients with advanced ROS1-positive NSCLC from the global ARROS-1 Phase 1/2 clinical trial, and in September 2025, we presented the pivotal dataset at the International Association for the Study of Lung Cancer 2025 World Conference on Lung Cancer. In this pivotal dataset, data were pooled across Phase 1 and 2 and reported for the primary objective of objective response rate (ORR, RECIST 1.1) by blinded independent central review (BICR). Key secondary objectives include duration of response (DOR), intracranial ORR (IC-ORR), and safety.

As of the data cut-off date of March 21, 2025, 514 patients with ROS1-positive solid tumors had received zidesamtinib at any starting dose across the Phase 1 and Phase 2 portions of the ARROS-1 clinical trial. Of these, 432 patients with advanced ROS1-positive NSCLC were treated with zidesamtinib at the RP2D.

The primary efficacy analysis population consisted of 117 TKI pre-treated patients with advanced ROS1-positive NSCLC with measurable disease who received zidesamtinib at the RP2D by May 31, 2024, with DOR follow-up of at least 6 months available for nearly all responders.

The primary efficacy analysis population was distinct from the ROS1 TKI pre-treated populations that have been reported for the current available and investigational ROS1 TKIs:

Activity was observed across subsets of TKI pre-treated patients, and DOR was assessed as the probability of patients remaining in response for at least 6, 12 and 18 months by Kaplan-Meier estimate (Table 1). Median duration of response (mDOR) continues to mature.

NE = not estimable

a The median duration of follow-up was 11.1 months (range 0.2 - 25.6) and mDOR continues to mature. For responders, the emerging mDOR was 22.0 months (95% CI: 17.2, NE) overall and 17.2 months (95% CI: 3.7, NE) for the subset with G2032R. Median progression free survival (mPFS) was 9.7 months (95% CI: 5.5, NE) with median follow-up of 11.1 months (range 0.2 - 25.6).

b The median duration of follow-up was 11.8 months (range 1.2 - 25.6), and mDOR and mPFS continue to mature. For responders, the emerging mDOR was 22.0 months (95% CI: 22.0, NE) overall and NE (95% CI: 1.9, NE) for the subset with G2032R. The emerging mPFS was 23.8 months (95% CI: 23.8, NE).

c Includes responses observed in patients previously treated with at least 2 prior ROS1 TKIs ± chemotherapy (22/58, ORR = 38%), and in patients previously treated with repotrectinib (8/17, ORR = 47%) or taletrectinib (3/7, ORR = 43%). The estimated DOR was 71% (95% CI: 46, 86) at 6 months and 56% (95% CI: 29, 76) at 12 months.

d For patients receiving crizotinib only ± chemotherapy, ORR was 68% (19/28) with no progression events among responders (DOR range: 7.3+ to 23.2+ months). The PFS rate was 89% (95% CI: 70, 96) at 6, 12, and 18 months with median not reached. For patients receiving entrectinib only ± chemotherapy, ORR was 33% (9/27) with three progression events among responders.

e Estimated by Kaplan-Meier analysis.

f ROS1 G2032R mutation identified in local or central testing of blood (ctDNA) or tissue.

In patients that had measurable CNS lesions by BICR at baseline (n = 56), the IC-ORR was 48% with 20% (11/56) intracranial complete responses (CR) and 2 unconfirmed partial responses (PR), and intracranial DOR (IC-DOR) ≥ 6 months of 79% (95% CI: 56, 91) and ≥ 12 months of 71% (95% CI: 46, 87).

Zidesamtinib demonstrated a generally safe and well-tolerated safety profile consistent with its ROS1-selective, tropomyosin receptor kinase (TRK)-sparing design. In the 432 patients with advanced ROS1-positive NSCLC treated at RP2D as of the data cut-off date, the median duration of exposure was 5 months (range, 0, 32). The most frequent treatment-emergent adverse events (TEAEs) occurring in ≥ 15% of patients were peripheral edema (36%), constipation (17%), blood creatine phosphokinase (CPK) increase (16%), fatigue (16%), and dyspnea (15%). The only treatment-related adverse event in ≥ 15% of patients was peripheral edema (29%). Dose reductions due to TEAEs occurred in 10% of patients, with the most common TEAEs occurring in > 2 patients that led to dose reduction being peripheral edema (n = 8), blood CPK increase (n = 4), peripheral sensory neuropathy (n = 4), arthralgia (n = 3), and paresthesia (n = 3). Only 2% of patients discontinued treatment due to TEAEs.

In June 2025, we also shared the first report of preliminary data from the Phase 2 TKI-naïve cohort in the ARROS-1 clinical trial, in which enrollment is ongoing. Encouraging preliminary data were available for 35 TKI-naïve patients with advanced ROS1-positive NSCLC treated with zidesamtinib at RP2D as of August 31, 2024. Patients may have received up to one prior line of chemotherapy.

In the TKI-naïve ROS1-positive NSCLC population, the preliminary ORR was 89% (31/35) and DOR ranged from 1.9+ to 13.9+ months with DOR ≥ 6 months and 12 months of 96% (95% CI: 76, 99). In 6 patients with measurable intracranial lesions, the IC-ORR was 83% (5/6) and the intracranial CR rate was 67% (4/6). The IC-DOR ranged from 4.6+ to 11.1+ months with no CNS progression among responders.

As of June 16, 2025, a total of 104 patients had been enrolled in the ongoing TKI-naïve cohort of the ARROS-1 trial.

In September 2025, we completed our rolling NDA submission for zidesamtinib in TKI pre-treated advanced ROS1-positive NSCLC under the FDA's Real-Time Oncology Review pilot program, which facilitates earlier submission of topline efficacy and safety results prior to submission of the complete application, to support an earlier start to the FDA's evaluation of the application. We continue to engage with the FDA on potential opportunities for line-agnostic expansion.

Neladalkib (NVL-655)

Our second lead product candidate, neladalkib (NVL-655), is being developed for patients with anaplastic lymphoma kinase (ALK)-positive NSCLC. Neladalkib is a brain-penetrant ALK-selective inhibitor designed with the aim to address the clinical challenges of emergent treatment resistance, CNS-related adverse events, and brain metastases that may limit the use of first-generation (1G; crizotinib), second-generation (2G; ceritinib, alectinib, or brigatinib), and third-generation (3G; lorlatinib) ALK inhibitors. Neladalkib has received FDA Breakthrough Therapy designation for the treatment of patients with locally advanced or metastatic ALK-positive NSCLC who have been previously treated with two or more ALK TKIs, and orphan drug designation for ALK-positive NSCLC.

Our ALKOVE-1 clinical trial is a first-in-human Phase 1/2, multicenter, open-label, dose-escalation and expansion study evaluating neladalkib as an oral monotherapy in patients with advanced ALK-positive NSCLC and other solid tumors. Dosing was initiated in the Phase 1 portion of the ALKOVE-1 clinical trial in June 2022. From June 2022 to February 2024, the Phase 1 portion of the ALKOVE-1 trial enrolled 133 patients (131 NSCLC, 2 other solid tumors).

In February 2024, we announced the initiation of the Phase 2 portion of the ALKOVE-1 clinical trial, following alignment with the FDA on a RP2D of 150 mg QD. The Phase 2 portion of the ALKOVE-1 clinical trial is designed to evaluate the safety and activity of neladalkib in several expansion cohorts of patients defined based on the number and type of prior anti-cancer therapies they have received. The Phase 2 cohorts are designed with registrational intent for TKI pre-treated patients with ALK-positive NSCLC and to enable preliminary evaluation for patients with ALK-positive NSCLC who are TKI-naïve.

At the European Society for Medical Oncology Congress (ESMO) in September 2024, we presented updated data from the Phase 1 dose-escalation portion of the ALKOVE-1 clinical trial, based on a data cut-off date of June 15, 2024. Data presented showed that treatment with neladalkib resulted in durable clinical responses in heavily pre-treated patients with ALK-positive NSCLC, including in subgroups of patients who had likely exhausted all available therapies, including lorlatinib, had a history of brain metastases, or had single or compound ALK resistance mutations. Additionally, neladalkib demonstrated a favorable preliminary safety profile consistent with its ALK-selective, TRK-sparing design.

Between February 2024 and December 31, 2024, 463 patients were enrolled in the Phase 2 portion of the ALKOVE-1 clinical trial. Enrollment in the Phase 2 TKI pre-treated NSCLC cohorts of the ALKOVE-1 trial is complete, and we expect to report pivotal data for TKI pre-treated patients with advanced ALK-positive NSCLC by year-end 2025.

We believe that the previously presented data in heavily pre-treated patients could have the potential to translate to deep, durable responses in the front-line setting. In July 2025, we announced the initiation of a Phase 3 clinical trial, which we refer to as the ALKAZAR trial, with registrational intent for TKI-naïve patients with advanced ALK-positive NSCLC. The ALKAZAR trial is a global, randomized, controlled trial designed to evaluate neladalkib versus the current standard of care. Patients are randomized 1:1 to receive neladalkib monotherapy or ALECENSA®(alectinib) monotherapy, reflecting input from collaborating physician-scientists and alignment with global regulatory agencies. The ALKAZAR trial is designed to enroll approximately 450 patients with TKI-naïve ALK-positive NSCLC. The primary endpoint is PFS based on BICR. Secondary endpoints include overall survival, PFS based on investigator's assessment, time to intracranial response, and BICR assessment of IC-ORR, IC-DOR, ORR, DOR, time to intracranial progression, and safety.

At ESMO in October 2025, we also presented preliminary data for neladalkib in patients with advanced ALK-positive solid tumors outside of NSCLC from the ongoing ALKOVE-1 clinical trial. Neladalkib demonstrated encouraging activity across a diverse set of ALK TKI-naïve and previously treated advanced ALK-positive solid tumors, and was generally well-tolerated with a preliminary overall safety profile consistent with its ALK-selective, TRK sparing design, and with previously reported data.

NVL-330

Our third product candidate, NVL-330, is a brain-penetrant human epidermal growth factor receptor 2 (HER2)-selective inhibitor designed with the aim to address the combined medical needs of treating tumors driven by HER2 mutations and alterations, including HER2 exon 20 insertion mutations (HER2ex20), treating brain metastases, and avoiding treatment-limiting adverse events including due to off-target inhibition of wild-type epidermal growth factor receptor (EGFR). Preclinical data have shown that NVL-330 inhibited a broad range of HER2 oncogenic alterations, including HER2ex20, in cell-based assays, was brain penetrant and was selective for HER2 oncogenic alterations over the structurally related wild-type EGFR. Additionally, new preclinical data were presented at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics in October 2025, further supporting NVL-330's potentially differentiated brain-penetrant profile. Compared to several currently available and investigational HER2 TKIs in the same preclinical assays, NVL-330 demonstrated a favorable efflux ratio and brain partitioning, metrics that are potentially positive predictors of brain exposure in humans. In preclinical models of intracranial activity, NVL-330 induced deep intracranial regression in mice. In the same models, the approved therapies T-DXd and zongertinib did not induce intracranial regression at their clinically relevant doses. Additionally, NVL-330 induced intracranial tumor regression in mice that had progressed in the CNS on zongertinib.

We are currently enrolling patients in the HEROEX-1 clinical trial, a Phase 1a/1b, multicenter, open-label, dose-escalation and expansion trial evaluating NVL-330 in pre-treated patients with advanced HER2-altered NSCLC, including those with HER2ex20 mutations. In July 2024, we announced that the first patient was dosed with NVL-330 in the HEROEX-1 trial. The HEROEX-1 trial is evaluating the overall safety and tolerability of NVL-330. Additional objectives include determination of the RP2D, characterization of the pharmacokinetic profile, and preliminary evaluation of anti-tumor activity.

Discovery Programs

We have prioritized a number of additional small molecule research programs following an assessment of medical need. Research for these programs is ongoing.

Financial Overview

Since commencing significant operations in 2018, we have focused substantially all of our efforts and financial resources on research and development activities for our programs, including zidesamtinib, neladalkib and NVL-330, establishing and maintaining our intellectual property portfolio, organizing and staffing our Company, business planning, raising capital, preparing for potential commercialization and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated revenue from product sales or any other source.

We have incurred significant net losses since our inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development of, receipt of marketing approval from regulatory authorities for, and eventual

commercialization of our product candidates. We reported net losses of $306.7 million for the nine months ended September 30, 2025, and $260.8 million for the year ended December 31, 2024. As of September 30, 2025, we had an accumulated deficit of $853.7 million. We expect to incur significant expenses for the foreseeable future in connection with ongoing activities, particularly if and as we:

We will not generate revenue from product sales unless and until we successfully complete clinical development of, obtain regulatory approval for and successfully commercialize one or more of our product candidates. As a result, we may need additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. Our ability to raise additional funds may be adversely impacted by general economic conditions, both inside and outside the U.S., including disruptions to, and instability and volatility in, the credit and financial markets in the U.S. and worldwide, including heightened inflation, interest rate and currency rate fluctuations, and economic slowdown or recession as well as concerns related to public health emergencies, natural disasters or geopolitical events, including actual or threatened tariffs or other changes in trade policy, civil or political unrest or military conflicts. In addition, market instability and volatility, high levels of inflation and interest rate fluctuations may increase our cost of financing or restrict our access to potential sources of future liquidity. Our failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to have to delay, reduce or eliminate our product development or commercialization efforts. Insufficient liquidity may also require us to relinquish rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of September 30, 2025, we had cash, cash equivalents and marketable securities of $943.1 million. We believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements into 2028. Our existing cash, cash equivalents and marketable securities will not be sufficient to fund all of our product candidates through regulatory approval, and we may need to raise additional capital to complete the development and commercialization of our product candidates. See"-Liquidity and Capital Resources."

Components of Our Results of Operations

Operating expenses

Our operating expenses are comprised of research and development expenses and general and administrative expenses.

Research and development expenses

Research and development expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel engaged in research and development functions; costs incurred in connection with the advancement of our discovery programs and product candidates in preclinical and clinical studies, including under agreements with contract research organizations (CROs); and

the cost of developing and scaling our manufacturing process and manufacturing drug substance and drug product for use in our research and preclinical and clinical studies, including under agreements with contract manufacturing organizations (CMOs).

We track our direct external research and development expenses on a program-by-program basis, including costs incurred with our CROs and CMOs, in connection with our preclinical, clinical and manufacturing activities. Costs incurred prior to nominating a development candidate are included in discovery programs. We do not allocate employee costs or other indirect costs to specific product development programs because these costs are deployed across multiple programs and, as such, are not separately classified.

We expect to incur substantial research and development expenses as we continue to advance zidesamtinib, neladalkib, and NVL-330 in clinical development, and expand our discovery, research and preclinical activities in the near term and in the future. Although the ALKAZAR Phase 3 clinical trial, the Phase 2 portions of our ARROS-1 and ALKOVE-1 clinical trials and the HEROEX-1 Phase 1 clinical trial are ongoing, at this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any product candidates we may develop. A change in the outcome of any number of variables with respect to product candidates we may develop could significantly change the costs and timing associated with the development of that product candidate. The duration, costs and timing of preclinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including:

Any changes in the outcome of any of these factors could significantly impact the costs, timing and viability associated with the development of our product candidates. For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate.

General and administrative expenses

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance, commercial and administrative functions. General and administrative expenses also include professional fees for legal, patent, consulting, investor and public relations and accounting and audit services, as well as fees for commercialization preparation activities. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the growth of our organization as well as prepare for the commercial launch of our product candidates that obtain regulatory approval.

Other income (expense)

Change in fair value of related party revenue share liability

We have a revenue sharing agreement with Deerfield Healthcare Innovations Fund, L.P. and Deerfield Private Design Fund, IV, L.P. (collectively, Deerfield), each an investor in the Company, to pay Deerfield a fixed low single-digit percentage rate of net sales of certain commercial products. We account for the liability to Deerfield at fair value with changes recognized in the consolidated statements of operations and comprehensive loss.

Interest income and other income (expense), net

Interest income and other income (expense), net consists of interest income earned on our cash, cash equivalents and marketable securities and other income (expense) unrelated to our core operations.

Results of Operations

Comparison of the three months ended September 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024 (in thousands):

Research and development expenses

The following table summarizes our research and development expenses for the three months ended September 30, 2025 and 2024 (in thousands):

Research and development expenses were $83.8 million for the three months ended September 30, 2025, compared to $60.6 million for the three months ended September 30, 2024. The increase in direct external research and development expenses related to neladalkib of $9.3 million was primarily due to costs related to the ongoing Phase 2 portion of the ALKOVE-1 clinical trial and costs

related to the Phase 3 ALKAZAR clinical trial, which was initiated in July 2025. The increase in direct external research and development expenses related to NVL-330 of $4.6 million was primarily due to costs related to the ongoing HEROEX-1 Phase 1 clinical trial and increased manufacturing costs. The increase in personnel-related expenses of $8.6 million was primarily due to an increase of $4.0 million in stock-based compensation expense and an increase in headcount. For the three months ended September 30, 2025 and 2024, stock-based compensation expense was $12.3 million and $8.3 million, respectively.

General and administrative expenses

The following table summarizes our general and administrative expenses for the three months ended September 30, 2025 and 2024 (in thousands):

General and administrative expenses were $28.9 million for the three months ended September 30, 2025, compared to $15.8 million for the three months ended September 30, 2024. The increase in personnel-related expenses of $6.2 million was primarily due to an increase of $2.8 million in stock-based compensation expense and an increase in headcount. For the three months ended September 30, 2025 and 2024, stock-based compensation expense was $10.0 million and $7.2 million, respectively. The increase in commercial preparation and other expenses of $5.9 million was primarily due to costs incurred in preparation for the potential commercial launch of our product candidates.

Other income (expense)

Change in fair value of related party revenue share liability

The change in fair value of the related party revenue share liability was $19.8 million and $16.6 million for the three months ended September 30, 2025 and 2024, respectively. For the three months ended September 30, 2025 and 2024, the change in fair value of the related party revenue share liability was due to changes in certain assumptions in the model used to calculate fair value such as the probability and timing of obtaining regulatory approval and estimated future product revenues.

Interest income and other income (expense), net

Interest income and other income (expense), net for the three months ended September 30, 2025 and 2024 consisted primarily of interest income of $10.2 million and $8.7 million, respectively. The increase in interest income was primarily due to higher cash, cash equivalents and marketable securities during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Comparison of the nine months ended September 30, 2025 and 2024

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024 (in thousands):

Research and development expenses

The following table summarizes our research and development expenses for the nine months ended September 30, 2025 and 2024 (in thousands):

Research and development expenses were $239.2 million for the nine months ended September 30, 2025, compared to $148.4 million for the nine months ended September 30, 2024. The increase in direct external research and development expenses related to neladalkib of $41.7 million was primarily due to costs related to the ongoing Phase 2 portion of the ALKOVE-1 clinical trial and costs related to the Phase 3 ALKAZAR clinical trial, which was initiated in July 2025, as well as increased manufacturing costs. The increase in direct external research and development expenses related to NVL-330 of $10.8 million was primarily due to costs related to the ongoing HEROEX-1 Phase 1 clinical trial and increased manufacturing costs. The increase in direct external research and development expenses related to zidesamtinib of $6.1 million was primarily due to costs related to the ongoing Phase 2 portion of the ARROS-1 clinical trial and professional services, partially offset by decreased manufacturing costs. The increase in personnel-related expenses of $26.7 million was primarily due to an increase of $13.7 million in stock-based compensation expense and an increase in headcount. For the nine months ended September 30, 2025 and 2024, stock-based compensation expense was $36.0 million and $22.3 million, respectively.

General and administrative expenses

The following table summarizes our general and administrative expenses for the nine months ended September 30, 2025 and 2024 (in thousands):

General and administrative expenses were $72.9 million for the nine months ended September 30, 2025, compared to $45.7 million for the nine months ended September 30, 2024. The increase in personnel-related expenses of $13.8 million was primarily due to an increase of $6.6 million in stock-based compensation expense and an increase in headcount. For the nine months ended September 30, 2025 and 2024, stock-based compensation expense was $28.8 million and $22.2 million, respectively. The increase in commercial preparation and other expenses of $11.2 million was primarily due to costs incurred in preparation for the potential commercial launch of our product candidates.

Other income (expense)

Change in fair value of related party revenue share liability

The change in fair value of the related party revenue share liability was $27.3 million and $16.6 million for the nine months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025 and 2024, the change in fair value of the related party revenue share liability was due to changes in certain assumptions in the model used to calculate fair value such as the probability and timing of obtaining regulatory approval and estimated future product revenues.

Interest income and other income (expense), net

Interest income and other income (expense), net for the nine months ended September 30, 2025 and 2024 consisted primarily of interest income of $33.2 million and $25.3 million, respectively. The increase in interest income was primarily due to higher cash, cash equivalents and marketable securities during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Liquidity and Capital Resources

Since our inception, we have incurred significant net losses. We have not yet commercialized any of our product candidates and our ability to generate revenue from product sales will depend heavily on the successful clinical development of, receipt of marketing approval from regulatory authorities for, and eventual commercialization of one or more of our product candidates. Through September 30, 2025, we have funded our operations primarily with proceeds from the sales of convertible preferred stock, the issuance of convertible notes, debt financing from stockholders and proceeds from the sale of common stock in our public offerings. As of September 30, 2025, we had cash, cash equivalents and marketable securities of $943.1 million and accounts payable and accrued expenses and other current liabilities of $89.2 million.

In August 2022, we entered into a Sales Agreement (as amended, the Sales Agreement) with Cowen and Company, LLC (Cowen) under which we may issue and sell shares of our Class A common stock, from time to time, having an aggregate offering price of up to $150.0 million through Cowen as our Sales Agent (the ATM Facility). We agreed to pay Cowen a commission of up to 3% of the gross proceeds of any shares of Class A common stock sold pursuant to the Sales Agreement. In October 2022, we entered into Amendment No. 1 to the Sales Agreement with Cowen (the Sales Agreement Amendment), which reduced the maximum aggregate offering price of the Class A common stock to $135.0 million. The registration statement on Form S-3 that registered the issuance and sale of shares of our Class A common stock under the ATM Facility expired on August 16, 2025. We did not sell any shares of our Class A common stock under the ATM Facility prior to the expiration of the registration statement.

Cash Flows

The following table summarizes our cash flows for each of the periods presented (in thousands):

Operating activities

During the nine months ended September 30, 2025, operating activities used $201.9 million of cash, resulting from our net loss of $306.7 million adjusted for non-cash items, primarily stock-based compensation expense of $64.8 million, change in fair value of related party revenue share liability of $27.3 million and net accretion on marketable securities of $9.2 million, and net cash provided by changes in our operating assets and liabilities of $21.7 million. Our net loss was primarily due to clinical trial and manufacturing costs to support the development of our product candidates, personnel-related expenses due to the growth of our Company, costs related to professional services and costs incurred in preparation for the potential commercial launch of our product candidates, partially offset by interest income due to our cash, cash equivalents and marketable securities. Net cash provided by changes in our operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses and other liabilities of $34.5 million, partially offset by an increase in other assets of $13.1 million.

During the nine months ended September 30, 2024, operating activities used $123.1 million of cash, resulting from our net loss of $186.0 million adjusted for non-cash items, including stock-based compensation expense of $44.4 million, change in fair value of related party revenue share liability of $16.6 million and net accretion on marketable securities of $9.7 million, and net cash provided by changes in our operating assets and liabilities of $11.6 million. Net cash provided by changes in our operating assets and liabilities was due to an increase in accounts payable and accrued expenses and other liabilities of $19.7 million, partially offset by increases in prepaid expenses and other current assets of $4.8 million and other assets of $3.3 million.

Changes in prepaid expenses and other current assets, other assets, accounts payable, and accrued expenses and other liabilities were generally due to growth in our business, the advancement of our research and development programs and the timing of vendor invoicing and payments.

Investing activities

During the nine months ended September 30, 2025, net cash provided by investing activities was $156.9 million, primarily due to proceeds from maturities of marketable securities of $769.7 million, partially offset by purchases of marketable securities of $613.7 million.

During the nine months ended September 30, 2024, net cash used in investing activities was $403.5 million, primarily due to purchases of marketable securities of $712.5 million, partially offset by proceeds from maturities of marketable securities of $308.0 million.

Financing activities

During the nine months ended September 30, 2025, net cash provided by financing activities was $15.1 million, primarily due to proceeds from the exercise of options to purchase common stock of $14.6 million.

During the nine months ended September 30, 2024, net cash provided by financing activities was $560.4 million, primarily due to proceeds from an underwritten public offering of $540.5 million, net of underwriting discounts and commissions, and proceeds from the exercise of options to purchase common stock of $20.4 million.

Funding Requirements

We expect to incur significant expenses in connection with our ongoing activities, particularly as we advance our preclinical, clinical, and commercialization preparation activities for our product candidates in development and any future product candidates. The timing and amount of our operating expenditures will depend largely on:

As of September 30, 2025, we had cash, cash equivalents and marketable securities of $943.1 million. We expect that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements into 2028. Our existing cash, cash equivalents and marketable securities will not be sufficient to fund all of our product candidates through regulatory approval, and we may need to raise additional capital to complete the development and commercialization of our product candidates. Our estimate as to how long we expect our existing cash, cash equivalents and marketable securities to fund our operations does not include potential product revenue and is based on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including those listed above.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Other Commitments

During the nine months ended September 30, 2025, there were no material changes to our contractual obligations and commitments from those described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations and Other Commitments" included in our 2024 Form 10-K.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements as defined in the rules and regulations of the SEC.

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates from those disclosed in our consolidated financial statements and the related notes and other financial information included in our 2024 Form 10-K.

Recently Issued and Adopted Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is set forth in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report.