Nuvalent, Inc. (NUVL) FY 2024 MD&A

Item 7. 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 consolidated financial statements and related notes appearing elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. For a detailed discussion on our business environment, please read Item 1. Business, included in this Annual Report. As a result of many factors, including those factors set forth in Item 1A. Risk Factors of this Annual Report, 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 ROS1-positive NSCLC. Zidesamtinib is a novel ROS1-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 currently available ROS1 TKIs. Zidesamtinib has received FDA Breakthrough Therapy designation for the treatment of patients with ROS1-positive 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 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 RP2D of 100 mg 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.

At the ESMO Congress in September 2024, we presented updated data from the Phase 1 dose-escalation portion of the ARROS-1 clinical trial based on a data cut-off date on July 1, 2024. Data presented showed that treatment with zidesamtinib resulted in durable clinical responses in heavily pre-treated patients with ROS1-positive NSCLC, including in subgroups of patients who had likely exhausted all available therapies, including lorlatinib and/or repotrectinib, had a history of brain metastases, or had the G2032R resistance mutation. Additionally, zidesamtinib was well-tolerated with a preliminary safety profile that was favorable and consistent with its ROS1-selective, TRK-sparing design.

Between September 2023 and December 31, 2024, 326 patients were enrolled in the Phase 2 portion of the ARROS-1 clinical trial. We periodically review data from the ARROS-1 clinical trial to provide progress updates on the trial’s status and to form the basis for engagement with the FDA on, among other things, the appropriate amount of information that may be sufficient to support an NDA submission. We expect to report topline pivotal data for TKI pre-treated patients with advanced ROS1-positive NSCLC in the first half of 2025 in support of an anticipated NDA submission by mid-year 2025, with an initial target indication of TKI pre-treated patients with advanced ROS1-positive NSCLC. We plan to continue engagement with the FDA on accelerated opportunities towards a potential line-agnostic indication supported by the ongoing TKI-naïve cohort in the Phase 2 portion of the ARROS-1 trial.

Neladalkib (NVL-655)

Our second lead product candidate, neladalkib (NVL-655), is being developed for patients with 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;

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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 ESMO Congress 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. 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 the first half of 2025, we plan to initiate a Phase 3 clinical trial, which we refer to as the ALKAZAR trial, with registrational intent for TKI-naïve patients. The ALKAZAR trial will be a global, randomized, controlled trial designed to evaluate neladalkib versus the current standard of care for the treatment of patients with TKI-naïve ALK-positive NSCLC. Patients will be randomized 1:1 to receive neladalkib monotherapy or ALECENSA® (alectinib) monotherapy, reflecting input from collaborating physician-scientists and alignment with the FDA. 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.

NVL-330

Our third product candidate, NVL-330, is a brain-penetrant HER2-selective inhibitor designed with the aim to address the combined medical need of treating tumors driven by HER2ex20, treating brain metastases, and avoiding treatment-limiting adverse events including due to off-target inhibition of wild-type 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.

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 operating losses since our inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our product candidates. We reported net losses of $260.8 million, $126.2 million, and $81.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, we had an accumulated deficit of $547.1 million. We expect to incur significant expenses at

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an increasing rate and increasing operating losses for the foreseeable future. We expect our expenses and capital requirements will increase substantially in connection with ongoing activities, particularly if and as we:

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continue to advance zidesamtinib, neladalkib and NVL-330 in clinical development;

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advance the development of our discovery programs;

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expand our pipeline of product candidates through our product discovery and development efforts;

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seek regulatory approvals for any product candidates that successfully complete clinical trials;

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establish a sales, marketing and distribution infrastructure to commercialize any approved product candidates and incur related additional commercial manufacturing costs;

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implement operational, financial and management systems;

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attract, hire and retain additional clinical, scientific, management and administrative personnel;

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maintain, expand, protect and enforce our intellectual property portfolio, including patents, trade secrets and know how;

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acquire or in-license other product candidates and technologies; and

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operate as a public company.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our product candidates. If we obtain regulatory approval for any of our product candidates and do not enter into a commercialization partnership, we expect to incur significant expenses related to developing our internal commercialization capabilities to support product sales, marketing and distribution. Further, we expect to continue to incur additional costs associated with operating as a public company.

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 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 future 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 increased 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, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of December 31, 2024, we had cash, cash equivalents and marketable securities of $1.1 billion. 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 costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include:

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personnel-related costs, including salaries, benefits and stock-based compensation expense, for employees engaged in research and development functions;

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expenses incurred in connection with our research programs, including under agreements with third parties, such as consultants, contractors and CROs; and

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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 third parties, such as consultants, contractors and CMOs.

We track our direct external research and development expenses on a program-by-program basis. These consist of costs that include fees, reimbursed materials, and other costs paid to consultants, contractors, CMOs, and CROs 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, costs associated with our discovery efforts, and facilities expenses, including depreciation 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 that our research and development expenses will increase substantially 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 Phase 2 portions of our ARROS-1 and ALKOVE-1 clinical trials and the HEROEX-1 Phase 1a clinical trial are ongoing and we plan to initiate the ALKAZAR Phase 3 clinical trial in the first half of 2025, 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:

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the timing and progress of development activities relating to zidesamtinib, neladalkib, NVL-330 and any future product candidates from our discovery programs, including any additional costs that may result from delays in enrollment or other factors;

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the number and scope of preclinical and clinical programs we decide to pursue;

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our ability to maintain our current research and development programs and to establish new ones;

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successful patient enrollment in, and the initiation and completion of, clinical trials;

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the number of trials required for regulatory approval;

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the countries in which the trials are conducted;

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the length of time required to enroll eligible subjects and initiate clinical trials;

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the number of subjects that participate in the trials and per subject trial costs;

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potential additional safety monitoring requested by regulatory authorities;

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the duration of subject participation in the trials and follow-up;

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the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to applicable regulatory authorities;

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the receipt of approvals from applicable regulatory authorities;

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the timing, receipt and terms of any marketing approvals and post-marketing approval commitments from applicable regulatory authorities;

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the extent to which we establish collaborations, strategic partnerships or other strategic arrangements with third parties, if any, and the performance of any such third party;

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establishing commercial manufacturing capabilities or making arrangements with CMOs;

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development and timely delivery of commercial-grade drug formulations that can be used in our clinical trials and for commercial launch; and

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obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights.

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

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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. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount and continue to incur increased accounting, audit, legal, regulatory compliance, and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company.

Other income (expense)

Change in fair value of related party revenue share liability

We have a revenue sharing agreement with Deerfield, 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

The following discussion and analysis of our results of operations includes a comparison of the year ended December 31, 2024 to the year ended December 31, 2023. For the discussion and analysis of our results of operations for the year ended December 31, 2023 compared with the year ended December 31, 2022, refer to Part II, 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, 2023 filed with the SEC on February 27, 2024 (the 2023 Form 10-K), which is incorporated herein by reference.

Comparison of the Years Ended December 31, 2024 and 2023

The following table summarizes our results of operations for the years ended December 31, 2024 and 2023 (in thousands):

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Research and development expenses

The following table summarizes our research and development expenses for the years ended December 31, 2024 and 2023 (in thousands):

Research and development expenses were $217.8 million for the year ended December 31, 2024, compared to $113.2 million for the year ended December 31, 2023. The increase in direct research and development expenses related to zidesamtinib of $34.2 million was primarily due to increased manufacturing costs and costs related to the ongoing Phase 2 portion of the ARROS-1 clinical trial. The increase in direct research and development expenses related to neladalkib of $35.9 million was primarily due to increased costs related to the ongoing Phase 2 portion of the ALKOVE-1 clinical trial and preparation for the planned initiation of the Phase 3 ALKAZAR clinical trial in the first half of 2025, and increased manufacturing costs. The increase in personnel-related expenses of $30.9 million was primarily due to an increase of $19.8 million in stock-based compensation expense and an increase in headcount. For the years ended December 31, 2024 and 2023, stock-based compensation expense was $31.4 million and $11.6 million, respectively.

General and administrative expenses

The following table summarizes our general and administrative expenses for the years ended December 31, 2024 and 2023 (in thousands):

General and administrative expenses were $62.6 million for the year ended December 31, 2024, compared to $36.2 million for the year ended December 31, 2023. The increase in personnel-related costs of $19.0 million was primarily due to an increase of $15.2 million in stock-based compensation expense and an increase in headcount. For the years ended December 31, 2024 and 2023, stock-based compensation expense was $29.2 million and $14.0 million, respectively.

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 for the year ended December 31, 2024, was $17.9 million, due to changes in certain assumptions related to the probability of product approval and the timing thereof, as well as changes in certain assumptions underlying the related sales projections. There was de minimis change in fair value for the year ended December 31, 2023.

Interest income and other income (expense), net

Interest income and other income (expense), net for the year ended December 31, 2024 and 2023, consisted primarily of interest income of $38.4 million and $23.3 million, respectively. The increase in interest income was primarily due to an increase in cash, cash equivalents and marketable securities.

Liquidity and Capital Resources

Since our inception, we have incurred significant operating losses. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from product sales for several years, if at all. Through December 31, 2024, we have funded our operations primarily with proceeds from the sales of convertible preferred stock, the issuance of convertible notes, debt financing from

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stockholders and proceeds from the sale of common stock in our public offerings. As of December 31, 2024, we had cash, cash equivalents and marketable securities of $1.1 billion and accounts payable and accrued expenses of $54.0 million.

In September 2024, we issued and sold 5,750,000 shares of our Class A common stock in an underwritten public offering, including the exercise in full by the underwriters of their option to purchase an additional 750,000 shares of our Class A common stock, at a public offering price of $100.00 per share. We received net proceeds of $540.0 million, after deducting equity issuance costs and underwriting discounts and commissions.

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 will 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). The Sales Agreement Amendment was effective immediately and reduced the maximum aggregate offering price of the Class A common stock that we may sell under the ATM Facility to $135.0 million. As of December 31, 2024, we have not sold any shares of our Class A common stock pursuant to the Sales Agreement.

The following discussion and analysis of a summary of our cash flows includes a comparison of the year ended December 31, 2024 to the year ended December 31, 2023. For the discussion and analysis that compares our summary of cash flows for the year ended December 31, 2023 with the year ended December 31, 2022, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Form 10-K, which is incorporated herein by reference.

Cash Flows

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

Operating activities

During the year ended December 31, 2024, operating activities used $185.1 million of cash, resulting from our net loss of $260.8 million adjusted for non-cash items, including stock-based compensation expense of $60.6 million, change in fair value of related party revenue share liability of $17.9 million and net accretion on marketable securities of $14.7 million, and net cash provided by changes in our operating assets and liabilities of $11.8 million. The increase in our net loss was primarily due to increased clinical trial and manufacturing costs to support the development of our product candidates and increased personnel-related expenses due to the growth of our company, partially offset by increased interest income due to an increase in cash, cash equivalents and marketable securities. Net cash provided by changes in our operating assets and liabilities was due to an increase in accrued expenses of $26.9 million, partially offset by an increase in prepaid expenses and other current assets of $7.6 million, a decrease in accounts payable of $4.0 million, and an increase in other assets of $3.4 million.

During the year ended December 31, 2023, operating activities used $99.7 million of cash, resulting from our net loss of $126.2 million adjusted for non-cash items, including stock-based compensation of $25.6 million and net accretion on marketable securities of $10.1 million, and net cash provided by changes in our operating assets and liabilities of $11.0 million. Net cash provided by changes in our operating assets and liabilities was due to an increase in accounts payable and accrued expenses of $11.8 million and a decrease in prepaid expenses and other current assets of $0.6 million, partially offset by an increase in other assets of $1.4 million.

Changes in accounts payable, accrued expenses, prepaid expenses and other current assets, and other assets 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 year ended December 31, 2024, net cash used in investing activities was $573.5 million, due to purchases of marketable securities of $1.0 billion, partially offset by proceeds from maturities of marketable securities of $450.5 million.

During the year ended December 31, 2023, net cash used in investing activities was $143.5 million, due to purchases of marketable securities of $459.5 million, partially offset by proceeds from maturities of marketable securities of $313.0 million.

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Financing activities

During the year ended December 31, 2024, net cash provided by financing activities was $568.9 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 common stock options of $28.8 million.

During the year ended December 31, 2023, net cash provided by financing activities was $336.8 million, primarily due to proceeds from a follow-on public offering of $324.3 million, net of underwriting discounts and commissions, and proceeds from the exercise of common stock options of $13.8 million.

Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical and clinical activities and clinical trials for our product candidates in development and any product candidates we may discover and develop in the future. The timing and amount of our operating expenditures will depend largely on:

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the initiation, progress, timing, costs and results of preclinical studies and clinical trials for our discovery programs and product candidates, including the advancement of zidesamtinib, neladalkib and NVL-330 throughout clinical development;

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the clinical development plans we establish for our product candidates, including zidesamtinib, neladalkib and NVL-330;

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the number and characteristics of product candidates that we discover and develop through our product discovery and research efforts;

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the terms of any collaboration agreements we may choose to pursue;

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the outcome, timing and cost of meeting regulatory requirements established by the FDA, the EMA and other comparable foreign regulatory authorities;

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the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;

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the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us;

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the effect of competing technological and market developments;

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the cost and timing of completion of commercial-scale outsourced manufacturing activities; and

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the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own.

As of December 31, 2024, we had cash, cash equivalents and marketable securities of $1.1 billion. 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 future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

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Contractual Obligations and Other Commitments

We have obligations under revenue sharing agreements with Deerfield and our scientific founder to pay each of Deerfield and our scientific founder a fixed low single-digit percentage rate of net sales of certain commercial products. See Note 10 in the notes to the consolidated financial statements included elsewhere in this Annual Report for additional information regarding our obligations under the revenue sharing agreements. We lease office space for our corporate headquarters, which is located in Cambridge, Massachusetts. We enter into contracts in the normal course of business with our CMOs, CROs and other third parties to support preclinical research studies and other research and development activities. These contracts are generally terminable by us for convenience or for breach after reasonable cure periods.

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.

While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Accrued research and development expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of services performed and the associated cost incurred for the services when we have not yet been invoiced or otherwise notified of actual costs. We make estimates of our accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of the estimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include activities with vendors in connection with preclinical development activities, CROs in connection with preclinical and clinical studies and testing and CMOs in connection with the process development and scale up activities and the production of materials.

We base the expense recorded related to contract research and manufacturing on our estimates of the services received and efforts expended pursuant to the terms of the individual agreements with the CROs and CMOs that conduct services and supply materials. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses. While the majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met, some require advance payments. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. We record these as prepaid expenses and other current assets and other assets on our consolidated balance sheets.

Stock-based compensation

We account for our stock-based compensation awards in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Compensation — Stock Compensation (ASC 718). We have issued stock options and restricted stock units (RSUs). In accordance with ASC 718, we recognize stock-based compensation expense in the consolidated statements of operations and comprehensive loss based on a stock-based award’s grant date fair value.

We use the Black-Scholes option-pricing model to determine the fair value of stock options granted. For RSUs, the fair value of an RSU is equal to the market price of a share of our Class A common stock on the grant date. We recognize forfeitures as they occur. Stock-based compensation expense for our stock-based awards is recognized on a straight-line basis based on the grant date fair value

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over the associated service period of the award, which is generally the vesting period. Stock-based awards generally vest over three- or four-year service periods and stock options expire after ten years.

We record stock-based compensation expense to research and development expense or general and administrative expense based on the underlying function of the individual that was granted the stock-based compensation award. Shares issued upon stock option exercise and RSU vesting are newly-issued shares.

The assumptions used in our Black-Scholes option-pricing model for stock options are as follows:

Expected Term — As we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term, we utilize the “simplified” method, as prescribed in the SEC’s Staff Accounting Bulletin No. 107, whereby the expected term equals the arithmetical average of the vesting term and the original contractual term of the stock option.

Expected Volatility — The expected volatility is based on the historical volatility of our Company and that of similar entities within our industry for periods corresponding with the expected term of the grant.

Risk-Free Interest Rate — The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant for a period that corresponds with the expected term of the grant.

Expected Dividends — The expected dividend yield is 0% as we have not historically paid, and do not expect for the foreseeable future to pay, a dividend on our common stock.

The assumptions used in our Black-Scholes option-pricing model are inherently subjective and represent management’s best estimates. These assumptions involve a number of variables, uncertainties and the application of management’s judgment. If any assumptions change, our stock-based compensation expense could be materially different in the future.

Stock-based compensation expense was $60.6 million, $25.6 million and $10.3 million for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, we had $144.5 million of unrecognized stock-based compensation expense, which is expected to be recognized over a remaining weighted-average period of 2.5 years.

Related party revenue share liability

We account for the related party revenue share liability with Deerfield at fair value. The revenue sharing agreement with Deerfield obligates us to pay a fixed low single-digit percentage rate of net sales of certain commercial products. In accordance with FASB ASC 825, Financial Instruments, we elected the fair value option. Each reporting period, we remeasure the liability to estimated fair value using a discounted cash flow model based on the most recent assumptions related to the probability and timing of product approval, future product revenues and discount rate. The estimated fair value as of December 31, 2024 and December 31, 2023 was determined to be $17.9 million and de minimis, respectively. Changes in fair value each reporting period are recognized as a component of other income (expense) in the consolidated statements of operations and comprehensive loss. We have not recorded any net sales and, as a result, have not paid any amounts under this obligation.

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 disclosed in Note 2 to our consolidated financial statements included in this Annual Report.