10-Q

Nuvation Bio Inc.

SEC Document
SEC Filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended March 31, 2024


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

For the transition period from to

Commission File Number: 001-39351

Nuvation Bio Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	85-0862255
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1500 Broadway, Suite 1401 New York, New York	10036
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (332) 208-6102

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

    Title of each class

    Trading
Symbol(s)

    Name of each exchange on which registered

    Class A Common Stock, $0.0001 par value per share
Redeemable Warrants, each whole warrant
exercisable for one share of Common Stock at an
exercise price of $11.50 per share

    NUVB
 
NUVB.WS

    The New York Stock Exchange
 
The New York Stock Exchange

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

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

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


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

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

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

As of April 30, 2024, the registrant had 247,170,648 shares of common stock, $0.0001 par value per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will” and “would,” or the negative of these terms or other similar expressions intended to identify statements about the future. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements include, without limitation, statements about:

•

our ability to recognize the anticipated benefits of the Merger (as defined below), which may be affected by, among other things, competition and our ability to grow and manage growth profitably;

•

our plans to develop and commercialize our product candidates;

•

the initiation, timing, progress and results of our current and future preclinical studies and clinical trials, as well as our research and development programs;

•

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•

our ability to successfully acquire or in-license additional product candidates on reasonable terms;

•

our ability to maintain and establish collaborations or obtain additional funding;

•

our ability to obtain regulatory approval of our current and future product candidates;

•

our expectations regarding the potential market size and the rate and degree of market acceptance of such product candidates;

•

our continued reliance on third parties to conduct clinical trials of our product candidates, and for the manufacture of our product candidates for preclinical studies and clinical trials;

•

our ability to fund our working capital requirements and expectations regarding the sufficiency of our capital resources;

•

the implementation of our business model and strategic plans for our business and product candidates;

•

our intellectual property position and the duration of our patent rights;

•

developments or disputes concerning our intellectual property or other proprietary rights;

•

our expectations regarding government and third-party payor coverage and reimbursement;

•

our ability to compete in the markets we serve;

•

the impact of government laws and regulations and liabilities thereunder;

•

our need to hire additional personnel and our ability to attract and retain such personnel;

•

our ability to raise additional funding in the future; and

•

the anticipated use of our cash and cash equivalents.

The foregoing list of forward-looking statements is not exhaustive. These statements speak only as of the date of this report and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The section of Part II of this report titled “Section 1A. Risk Factors” identifies important factors that could harm our business and financial performance and cause our actual results to differ materially from those expressed or implied by our forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise, except as required by law.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations and Comprehensive Loss	2
	Consolidated Statements of Stockholders' Equity	3
	Consolidated Statements of Cash Flows	4
	Notes to Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22

PART II.	OTHER INFORMATION	23

Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	69
Item 5.	Other Information	69
Item 6.	Exhibits	69
Signatures		71

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

NUVATION BIO INC. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)


	March 31, 2024			December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	34,510		$	42,649
Prepaid expenses and other current assets		6,796			1,519
Marketable securities		562,466			568,564
Interest receivable on marketable securities		4,283			3,702
Total current assets		608,055			616,434
Property and equipment, net		686			717
Lease security deposit		141			141
Operating lease right-of-use assets		3,168			3,605
Other non-current assets		1,075			587
Total assets	$	613,125		$	621,484
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,436		$	2,209
Current operating lease liabilities		2,023			1,972
Accrued expenses		11,303			9,793
Total current liabilities		15,762			13,974
Warrant liability		1,812			353
Non-current operating lease liabilities		1,509			2,035
Total liabilities		19,083			16,362
Commitments and contingencies (Note 9)
Stockholders’ equity
Class A and Class B common stock and additional paid in capital, $0.0001 par value per share; 1,060,000,000 (Class A 1,000,000,000, Class B 60,000,000) shares authorized as of March 31, 2024 and December 31, 2023. 219,083,219 (Class A 218,083,219, Class B 1,000,000) and 219,046,219 (Class A 218,046,219, Class B 1,000,000) shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively		952,807			947,745
Accumulated deficit		(357,596	)		(342,804	)
Accumulated other comprehensive loss		(1,169	)		181
Total stockholders’ equity		594,042			605,122
Total liabilities and stockholders’ equity	$	613,125		$	621,484

See accompanying notes to the unaudited consolidated financial statements.

NUVATION BIO INC. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited, In thousands, except per share data)


	For the Three Months Ended March 31,
	2024			2023
Operating expenses:
Research and development	$	12,842		$	18,787
General and administrative		7,357			7,734
Total operating expenses		20,199			26,521
Loss from operations		(20,199	)		(26,521	)
Other income (expense):
Interest income		7,130			4,979
Investment advisory fees		(265	)		(230	)
Change in fair value of warrant liability		(1,459	)		142
Net gain (loss) on marketable securities		1			(96	)
Total other income (expense), net		5,407			4,795
Loss before income taxes		(14,792	)		(21,726	)
Provision for income taxes		—			—
Net loss	$	(14,792	)	$	(21,726	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.07	)	$	(0.10	)
Weighted average common shares outstanding, basic and diluted		219,048			218,741
Comprehensive loss:
Net loss	$	(14,792	)	$	(21,726	)
Other comprehensive loss, net of taxes:
Unrealized (loss) gain on available-for-sale securities, net		(1,350	)		2,588
Comprehensive loss	$	(16,142	)	$	(19,138	)

See accompanying notes to the unaudited consolidated financial statements.

NUVATION BIO INC. and Subsidiaries

Consolidated Statements of Stockholders' Equity

(Unaudited, In thousands, except share data)

For the Three Months Ended March 31, 2024 and 2023


	Common Stock and Additional Paid-in Capital						Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Class A Shares		Class B Shares		Amount		Deficit			Income (Loss)			Equity

Balance, December 31, 2023		218,046,219		1,000,000	$	947,745	$	(342,804	)	$	181		$	605,122
Exercise of stock options		37,000		—		21		—			—			21
Stock-based compensation		—		—		5,041		—			—			5,041
Net loss		—		—		—		(14,792	)		—			(14,792	)
Other comprehensive loss		—		—		—		—			(1,350	)		(1,350	)
Balance, March 31, 2024		218,083,219		1,000,000	$	952,807	$	(357,596	)	$	(1,169	)	$	594,042


	Common Stock and Additional Paid-in Capital						Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Class A Shares		Class B Shares		Amount		Deficit			Loss			Equity

Balance, December 31, 2022		217,632,699		1,000,000	$	927,604	$	(267,002	)	$	(5,526	)	$	655,076
Exercise of stock options		171,023		—		298		—			—			298
Stock-based compensation		—		—		4,837		—			—			4,837
Net loss		—		—		—		(21,726	)		—			(21,726	)
Other comprehensive income		—		—		—		—			2,588			2,588
Balance, March 31, 2023		217,803,722		1,000,000	$	932,739	$	(288,728	)	$	(2,938	)	$	641,073

See accompanying notes to the unaudited consolidated financial statements.

NUVATION BIO INC. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited, In thousands)


For the Three Months Ended March 31,	2024			2023
Cash flows from operating activities:
Net loss	$	(14,792	)	$	(21,726	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		5,041			4,837
Depreciation and amortization		58			56
Non-cash lease expense		(38	)		(17	)
Change in fair value of warrant liability		1,459			(142	)
Net amortization on marketable securities		(2,820	)		(2,147	)
Net (gain) loss on marketable securities		(1	)		96
Net loss on disposal of property and equipment		—			12
Change in operating assets and liabilities:
Prepaid expenses and other current assets		(5,277	)		137
Interest receivable on marketable securities		(581	)		212
Other non-current assets		(488	)		—
Accounts payable		227			806
Accrued expenses		1,510			(1,454	)
Net cash used in operating activities		(15,702	)		(19,330	)
Cash flow from investing activities:
Purchases of marketable securities		(128,409	)		(236,967	)
Proceeds from sale of marketable securities		135,978			184,983
Purchases of property and equipment		(27	)		(12	)
Net cash provided by (used in) investing activities		7,542			(51,996	)
Cash flow from financing activities:
Proceeds from exercises of options		21			298
Net cash provided by financing activities		21			298
Net decrease in cash and cash equivalents		(8,139	)		(71,028	)
Cash and cash equivalents, beginning of the period		42,649			101,099
Cash and cash equivalents, end of the period	$	34,510		$	30,071

See accompanying notes to the unaudited consolidated financial statements.

NUVATION BIO INC. and Subsidiaries

Notes to Consolidated Financial Statements

1. Nature of Operations

Nuvation Bio Inc. and subsidiaries (“Nuvation Bio”), a Delaware corporation, is a biopharmaceutical company tackling some of the greatest unmet needs in oncology by developing differentiated and novel therapeutic candidates. Nuvation Bio was incorporated on March 20, 2018 (inception date) and has offices in New York, San Francisco, Beijing, Guangzhou, Hangzhou, Shanghai and Yantai.

On February 10, 2021, (the “Closing Date”), Nuvation Bio Inc., a Delaware corporation (“Legacy Nuvation Bio”), Panacea Acquisition Corp. (“Panacea”), and Panacea Merger Subsidiary Corp, a Delaware corporation and a direct, wholly owned subsidiary of Panacea (“Merger Sub”) consummated the transactions contemplated by an Agreement and Plan of Merger among them dated October 20, 2020 (“Merger Agreement”).

Pursuant to the terms of the Merger Agreement, a business combination of Panacea and Legacy Nuvation Bio was effected through the merger of Merger Sub with and into Legacy Nuvation Bio, with Legacy Nuvation Bio surviving as a wholly owned subsidiary of Panacea (the “Merger”) and, collectively with the other transactions described in the Merger Agreement. On the Closing Date, Legacy Nuvation Bio changed its name to Nuvation Bio Operating Company Inc. and Panacea changed its name to Nuvation Bio Inc. (the “Company” or “Nuvation Bio”).

2. Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.

Principles of Consolidation

The consolidated financial statements include the balances of the Company and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, have been prepared in accordance with GAAP for interim financial statements and pursuant to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are considered necessary for a fair statement of the financial position of the Company as of March 31, 2024, the results of operations for the three months ended March 31, 2024 and 2023 and the cash flows for the three months ended March 31, 2024 and 2023. The condensed consolidated balance sheet as of December 31, 2023 has been derived from the Company’s audited consolidated financial statements. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Certain information and disclosures normally included in the notes to annual financial statements prepared in accordance with GAAP have been omitted from these interim financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the financial statements for the fiscal year ended December 31, 2023, which are included in the Company’s 10-K filed with the SEC on February 29, 2024.

Liquidity

As of March 31, 2024, the Company has an accumulated deficit of approximately $357.6 million and net cash used in operating activities was approximately $15.7 million for the three months ended March 31, 2024. Management expects to continue to incur operating losses and negative cash flows from operations for the foreseeable future.

As of March 31, 2024, the Company had cash, cash equivalents, and marketable securities of $597.0 million. The Company believes that its existing cash, cash equivalents, and marketable securities will be sufficient to meet its cash commitments for at least the next 12 months after the date that these consolidated financial statements are issued. The Company’s research and development activities can be costly, and the timing and outcomes are uncertain. The assumptions upon which the Company has based its estimates are routinely evaluated and may be subject to change. The actual amount of the Company’s expenditures will vary depending upon a

number of factors including but not limited to the progress of the Company’s research and development activities and the level of financial resources available.

Significant Risks and Uncertainties

The Company’s operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the results of research and development, clinical testing and trial activities of the Company’s products, the Company’s ability to obtain regulatory approval to market its products, competition from products manufactured and sold or being developed by other companies, the price of, and demand for, Company’s products, the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, and the Company’s ability to raise capital.

The Company currently has no commercially approved products and there can be no assurance that the Company’s research and development will be successfully commercialized. Developing and commercializing a product requires significant time and capital and is subject to regulatory review and approval as well as competition from other biotechnology and pharmaceutical companies. The Company operates in an environment of rapid change and is dependent upon the continued services of its employees and vendors and obtaining and protecting intellectual property.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the year. Accordingly, actual results could differ from those estimates and those differences could be significant. Significant estimates and assumptions reflected in the accompanying consolidated financial statements include, but are not limited to, warrant liabilities, leases, stock options granted and depreciation expense.

Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid instruments, consisting of money market accounts, a money market mutual fund and short-term investments with maturities from the date of purchase of 90 days or less. The majority of cash and cash equivalents are maintained with major financial institutions in North America. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits. These deposits may be redeemed upon demand which reduces counterparty performance risk.

Marketable Securities

Debt securities have been classified as available-for-sale which may be sold before maturity or are not classified as held to maturity or trading. Marketable debt securities classified as available-for-sale are carried at fair value with unrealized gains or losses reported in other comprehensive income (loss). Exchange traded funds are equity securities, which are reported as marketable securities with readily determinable fair values, are also carried at fair value with unrealized gains and losses included in other (expense) income, net. Realized gains and losses on both debt and equity securities are included in other (expense) income, net.

For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If management determines there is any other than temporary impairment, the entire difference between amortized cost and fair value is recognized as impairment through earnings.

The Company is exposed to credit losses primarily through its available-for-sale investments. The Company assesses whether its available-for sale investments are impaired at each reporting period. Unrealized losses or impairments resulting from the amortized cost basis of any available-for-sale debt security exceeding its fair value are evaluated for identification of credit losses and non-credit related losses. Any credit losses are charged to earnings against the allowance for credit losses of the debt security, limited to the difference between the fair value and the amortized cost basis of the debt security. Any difference between the fair value of the debt security and the amortized cost basis, less the allowance for expected credit losses, are reported in other comprehensive income (loss). Expected cash inflows due to improvements in credit are recognized through a reversal of the allowance for expected credit losses subject to the total allowance previously recognized. The Company’s expected loss allowance methodology for the debt securities includes reviewing the extent of the unrealized loss, the size, term, geographical location, and industry of the issuer, the issuers’ credit ratings and any changes in those ratings, as well as reviewing current and future economic market conditions and the issuers’ current status and financial condition. As of March 31, 2024, the Company has not recognized an allowance for expected credit losses related

to available-for-sale investments as the Company has not identified any unrealized losses for these investments attributable to credit factors.

Interest income includes amortization and accretion of purchase premium and discount. Premiums and discounts on debt securities are amortized on the effective-interest method. Gains and losses on sales are recorded on the settlement date and determined using the specific identification method.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash, cash equivalents and marketable securities. The Company maintains its cash and cash equivalent balances in the form of business checking accounts and money market accounts, the balances of which, at times, may exceed federally insured limits. Exposure to cash and cash equivalents credit risk is reduced by placing such deposits with major financial institutions and monitoring their credit ratings. Marketable securities consist primarily of government and corporate bonds, municipal securities and exchange traded funds with fixed interest rates. Exposure to credit risk of marketable securities is reduced by maintaining a diverse portfolio and monitoring their credit ratings.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the related assets of generally five years for computers and seven years for furniture and equipment. The cost of leasehold improvements is amortized on the straight-line method over the lesser of the estimated asset life or remaining term of the lease. Maintenance costs are expensed as incurred, while major betterments are capitalized.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and an impairment assessment may be performed on the recoverability of the carrying amounts. If an impairment occurs, the loss is measured by comparing the fair value of the asset to its carrying amount.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their fair value on the date of issuance and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

Following the Merger, there were 5,787,472 warrants to purchase common stock outstanding, consisting of 4,791,639 Public Warrants, 162,500 Private Placement Warrants and 833,333 Forward Purchase Warrants (as defined below). Each whole warrant entitles the registered holder to purchase one share of our Class A common stock at a price of $11.50 per share. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of our Class A common stock.

The Company evaluated Public Warrants, Private Placement Warrants and Forward Purchase Warrants (the “Warrants”) under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and concluded that they do not meet the criteria to be classified in stockholders’ equity. Specifically, the settlement value of the Warrants is dependent, in part, on the holder of the Warrants at the time of settlement. Because the holder of an instrument is not an input into the pricing of a fixed-for-fixed option on our common stock, the Warrants fail the indexation guidance in ASC 815-40, which would preclude classification in stockholders’ equity. Additionally, the exercise of the Warrants may be settled in cash upon the occurrence of a tender offer or exchange that involves more than 50% of the outstanding shares of the Company’s common stock. Because not all of the Company’s stockholders need to participate in such tender offer or exchange to trigger the potential cash settlement and the Company does not control the occurrence of such an event, the Company concluded that the Warrants do not meet the conditions to be classified in equity. Since the Warrants meet the definition of a derivative under ASC 815, the Company recorded these Warrants as liabilities on the balance sheet at fair value upon the closing of the Merger, with subsequent changes in their respective fair values recognized in the consolidated statement of operations and comprehensive loss at each reporting date. The fair value of Public and Forward Purchase Warrants was determined using the

closing price of the warrants on the NYSE market. The fair value of the Private Warrants was estimated using a Black-Scholes option pricing model (see Note 3).

Leases

The Company determines if an arrangement contains a lease at inception. For arrangements where the Company is the lessee, operating leases are included in operating lease right-of-use, or ROU assets; current operating lease liabilities; and non-current operating lease liabilities on its balance sheets. The Company currently does not have any finance leases.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. ROU assets also include any initial direct costs incurred and any lease payments made on or before the lease commencement date, less lease incentives received. The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as the Company’s leases generally do not provide an implicit rate. The incremental borrowing rate is reevaluated upon a lease modification. The operating lease ROU asset also includes any initial direct costs and prepaid lease payments made less any lease incentives. The Company considered information available at the adoption date of Topic 842 to determine the incremental borrowing rate for leases in existence as of this date. The incremental borrowing rate used was the weighted average rate between secured and unsecured lending arrangements. Lease terms may include options to extend or terminate the lease when the Company is reasonably certain that the option will be exercised. Variable payments included in the lease agreement are expensed as incurred. Lease expense is recognized on a straight-line basis over the lease term.

The Company elected to apply each of the practical expedients described in ASC Topic 842-10-65-1(f) which allow companies not to reassess: (i) whether any expired or existing agreements contain leases, (ii) the classification of any expired or existing leases, and (iii) the capitalization of initial direct costs for any existing leases. The Company also elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for short-term operating leases. A short-term operating lease is a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. The Company also elected not to separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component.

Segment Information

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company’s operations are focused on oncology development activities.

Research and Development Costs

Costs incurred in connection with research and development activities are expensed as incurred. These costs include fees paid to consultants, vendors and various entities that perform certain research and testing on behalf of the Company.

Stock-based Compensation

The Company recognizes compensation cost for grants of employee stock options using a fair-value measurement method, that is recognized in operating results as compensation expense based on fair value over the requisite service period of the awards. Forfeitures are recorded as they occur instead of estimating forfeitures that are expected to occur.

The Company determines the fair value of stock-based awards that are based only on a service condition using the Black-Scholes option-pricing model which uses both historical and current market data to estimate fair value. The method incorporates various assumptions such as the risk-free interest rate, volatility, dividend yield, and expected life of the options.

The Company determines the fair value of stock-based awards that are based on both a service condition and achievement of the first to occur of a market or performance condition using a Monte Carlo simulation.

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. The difference between the financial statement and tax basis of assets and liabilities is determined annually. Deferred income tax assets and liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the years in which they are expected to affect taxable income. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense.

The Company uses a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate. The Company’s policy is to record interest and penalties related to income taxes as part of the tax provision. Returns for tax years beginning with those filed for the period ended December 31, 2018 are open to federal and state tax examination.

Recent Accounting Pronouncements

In November 2023, the FASB issued Topic 280 "Improvements to Reportable Segment Disclosures" which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. This guidance is effective for our annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

In December 2023, the FASB issued Topics 740 "Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. This guidance is effective for our annual periods beginning January 1, 2025, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

3. Fair Value Measurements and Marketable Securities Available-for-Sale

The Company provides disclosure of financial assets and financial liabilities that are carried at fair value based on the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements may be classified based on the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities using the following three levels:

Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 — Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 — Unobservable inputs that reflect the Company’s estimates of the assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including its own data.

The following table presents information about the Company’s marketable securities as of March 31, 2024 and December 31, 2023 and the Warrant liability as of March 31, 2024 and December 31, 2023, measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. The Company’s Warrant liabilities are included within the Level 1 and Level 3 fair value hierarchy. The fair value of the Public and Forward Purchase Warrants is determined using the closing price of the warrants on the NYSE market. The fair value of the Private Placement Warrants is determined using the Black-Scholes option pricing formula. The primary unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility. The expected volatility was estimated considering observable Nuvation public warrant pricing, Nuvation’s own historical volatility and the volatility of guideline public companies. There have not been any transfers between the levels during the periods.


	March 31, 2024
	Total		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Cash equivalents:
Money market funds	$	14,575	$	14,575	$	—	$	—
U.S. government and government agency securities		8,191		—		8,191		—
		22,766		14,575		8,191		—
Marketable securities:
Certificate of deposits		17,097		—		17,097		—
Commercial paper		28,216		—		28,216		—
U.S. government and government agency securities		436,691		—		436,691		—
Corporate bonds		80,462		—		80,462		—
		562,466		—		562,466		—
Total financial assets:	$	585,232	$	14,575	$	570,657	$	—

Financial liabilities:
Warrants	$	1,812	$	1,701	$	—	$	111


	December 31, 2023
	Total		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Cash equivalents:
Money market funds	$	20,574	$	20,574	$	—	$	—
U.S. government and government agency securities		4,988		—		4,988		—
Corporate bonds		947		—		947		—
		26,509		20,574		5,935		—
Marketable securities:
Certificate of deposits		10,176		—		10,176		—
Commercial paper		23,628		—		23,628		—
U.S. government and government agency securities		453,175		—		453,175		—
Corporate bonds		81,585		—		81,585		—
		568,564		—		568,564		—
Total financial assets:	$	595,073	$	20,574	$	574,499	$	—

Financial liabilities:
Warrants	$	353	$	338	$	—	$	15

Marketable securities consist primarily of U.S. government and government agency, certificate of deposits, commercial paper, corporate bond and municipal securities ("Debt Securities"). Based on the Company’s intentions regarding its marketable securities, all Debt Securities are classified as available-for-sale and are carried at fair value based on the price that would be received upon sale of the security. The following table provides the amortized cost, aggregate fair value, and unrealized gains (losses) of marketable securities as of March 31, 2024 and December 31, 2023:


	March 31, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(In thousands)
Cash equivalents:
Money market funds	$	14,575	$	—	$	—		$	14,575
U.S. government and government agency securities		8,191		—		—			8,191
		22,766		—		—			22,766
Marketable securities:
Certificate of deposits		17,095		6		(4	)		17,097
Commercial paper		28,238		5		(27	)		28,216
U.S. government and government agency securities		437,674		160		(1,143	)		436,691
Corporate bonds		80,628		45		(211	)		80,462
		563,635		216		(1,385	)		562,466
	$	586,401	$	216	$	(1,385	)	$	585,232


	December 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(In thousands)
Cash equivalents:
Money market funds	$	20,574	$	—	$	—		$	20,574
U.S. government and government agency securities		4,987		1		—			4,988
Corporate bonds		947		—		—			947
		26,508		1		—			26,509
Marketable securities:
Certificate of deposits		10,171		7		(2	)		10,176
Commercial paper		23,609		22		(3	)		23,628
U.S. government and government agency securities		452,813		1,095		(733	)		453,175
Corporate bonds		81,791		68		(274	)		81,585
		568,384		1,192		(1,012	)		568,564
	$	594,892	$	1,193	$	(1,012	)	$	595,073

For the three months ended March 31, 2024 and 2023, there was no unrealized gains or losses on equity securities. The activity related to the net gains (losses) on marketable securities included in other income (expense) on the consolidated statements of operations and comprehensive loss were as follows (in thousands):


	Three months ended March 31,
	2024		2023
Net realized gains (losses) on available-for-sale securities were as follows:
Realized gains from sales of available-for-sale securities	$	1	$	—
Realized losses from sales of available-for-sale securities		—		(96	)
Total losses on marketable securities	$	1	$	(96	)

The following tables provide marketable securities with continuous unrealized losses for less than 12 months and 12 months or greater and the related fair values as of March 31, 2024 and December 31, 2023 were as follows:


	March 31, 2024
	Less than 12 Months					12 Months or Greater					Total		Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Certificate of deposits	$	9,863	$	(4	)	$	—	$	—		$	9,863	$	(4	)
Commercial paper		23,247		(27	)		—		—			23,247		(27	)
U.S. government and government agency securities		287,141		(1,097	)		6,322		(46	)		293,463		(1,143	)
Corporate bonds		33,790		(51	)		23,385		(160	)		57,175		(211	)
	$	354,041	$	(1,179	)	$	29,707	$	(206	)	$	383,748	$	(1,385	)


	December 31, 2023
	Less than 12 Months					12 Months or Greater					Total		Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Certificate of deposits	$	5,693	$	(2	)	$	—	$	—		$	5,693	$	(2	)
Commercial paper		9,101		(3	)		—		—			9,101		(3	)
U.S. government and government agency securities		199,552		(694	)		24,761		(38	)		224,313		(732	)
Corporate bonds		21,844		(28	)		26,484		(246	)		48,328		(274	)
	$	236,190	$	(727	)	$	51,245	$	(284	)	$	287,435	$	(1,011	)

Unrealized losses from the marketable securities are primarily attributable to changes in interest rates. The Company does not believe the unrealized losses represent impairments because the unrealized losses on certain of the Company's marketable securities are due to general market factors. The Company has not recognized an allowance for expected credit losses related to available-for-sale investments as the Company has not identified any unrealized losses for these investments attributable to credit factors during the three months ended March 31, 2024. As of March 31, 2024, the Company does not intend to sell these securities nor does the Company believe that it will be required to sell these securities before the recovery of their amortized cost basis.

Maturity information based on fair value is as follows as of March 31, 2024:


	Within one year		After one year through five years		Total
	(In thousands)
Certificate of deposits	$	16,472	$	625	$	17,097
Commercial paper		28,216		—		28,216
U.S. government and government agency securities		258,059		178,632		436,691
Corporate bonds		56,196		24,266		80,462
	$	358,943	$	203,523	$	562,466

4. Leases

Our principal executive office is located in New York, New York, where we lease approximately 7,900 square feet of office space under a lease that terminates in 2027, with an option for the Company to extend the lease for an additional five years which is not reasonably assured of exercise. We also occupy approximately 25,139 square feet of office space in San Francisco, California, under a lease that terminates in 2025 and a total of approximately 1,582 square meters of office space in the People’s Republic of China, in the cities of Beijing, Guangzhou, Hangzhou, Shanghai and Yantai, under leases that terminate in 2024 through 2026.

Operating lease expense was $0.5 million and $0.3 million for the three months ended March 31, 2024 and 2023, respectively. Expense related to variable leases was not significant for the three months ended March 31, 2024 and 2023. Operating cash flows for the three months ended March 31, 2024 and 2023 included $0.5 million and $0.3 million for operating leases, respectively.

The following table presents the future minimum lease analysis of the Company's operating lease liabilities showing the aggregate lease payments as of March 31, 2024.


	March 31, 2024
	(In thousands)
2024 (remaining 9 months)	$	1,634
2025		1,416
2026		629
2027 and thereafter		81
Total undiscounted lease payments		3,760
Less: imputed interest