Indicate by check mark whether the issuer (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 ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes☒ No ☐

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

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 ~~November 3, 2017, 38,408,626~~July 31, 2023, the registrant had 66,767,779 shares of ~~the registrant’s~~ common stock, ~~were~~$0.00001 par value per share, outstanding.

This Quarterly Report on Form 10-Q contains certain forward-looking statements that involve risks and uncertainties. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including those factors identified in “Risk Factors” or “Management’s Discussion and Analysis of Financial Condition and Results of Operations” or the following:

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other 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 these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A. Risk Factors and discussed elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for certain drugs and therapeutic biologics, including data regarding the estimated size of those markets, their projected growth rates and the incidence of certain medical conditions. Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained these industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications, government data and similar sources. In some cases, we do not expressly refer to the sources from which these data are derived.

Except where the context otherwise requires, in this Quarterly Report on Form 10-Q, “we,” “us,” “our” and the “Company” refer to CytomX Therapeutics, Inc.~~, a Delaware corporation.~~

This Quarterly Report on Form 10-Q includes trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included in this Quarterly Report on Form 10-Q are the property of their respective owners.

1. Description of the Business

CytomX Therapeutics, Inc. (the “Company”) is a clinical-stage, oncology-focused biopharmaceutical company ~~pioneering~~dedicated to destroying cancer differently. The Company aims to build a ~~novel class~~commercial enterprise to maximize its impact on the treatment of ~~investigational antibody~~cancer. The Company is advancing potential first-in-class and best-in-class antibody-based therapeutics ~~based on~~created using its Probody® therapeutic technology platform that could meaningfully improve outcomes for cancer patients. Its proprietary and unique Probody technology ~~platform. Probody therapeutics are masked antibodies that remain inert~~platform is designed to enable “conditional activation” of antibody-based drugs in the tumor microenvironment while minimizing drug activity in healthy ~~tissue but are activated specifically~~tissues and in ~~the disease microenvironment.~~circulation. The Company is located in South San Francisco, California and was incorporated in the state of Delaware in September 2010.

2. ~~Liquidity~~

~~Since inception, the Company has incurred recurring net operating losses. As~~Basis of ~~September 30, 2017~~Presentation and December 31, 2016, the Company had an accumulated deficit of $220.1 million and $176.4 million, respectively, and expects to incur losses for the foreseeable future. To date, the Company has financed its operations primarily through sales of its common stock in conjunction with the Company’s initial public offering (“IPO”), sales of its convertible preferred securities and payments received under its collaboration agreements. As of September 30, 2017 and December 31, 2016, the Company had cash, cash equivalents and short-term investments of $331.3 million and $181.9 million, respectively.

~~The Company expects its existing capital resources will be sufficient to fund its operations for a period of at least twelve months from the date the financial statements are issued. However~~, if the anticipated operating results are not achieved in future periods, the Company’s planned expenditures may need to be reduced in order to extend the time period over which the then-available resources would be able to fund operations. The cost and timing of developing the Company’s products, including CX-072 and CX-2009, are highly uncertain and are subject to substantial risks and many changes. As such, the Company may alter its expenditures as a result of contingencies such as the failure of one of these product candidates in clinical development, the identification of a more promising product candidate in its research efforts or unexpected operating costs and expenditures. The Company will need to raise additional funds in the future. There can be no assurance, however, that such efforts will be successful or that, in the event that they are successful, the terms and conditions of such financing will be favorable to the Company.

3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting.

Unaudited Interim Financial Information

The accompanying interim condensed financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented.

Certain reclassifications have been made to prior period amounts to conform to the current period presentation. For the three and nine months ended September 30, 2016, a reclassification of interest expense to interest income was made in the condensed statements of operations to conform to the current period presentation.

~~The December 31, 2016 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.~~ The condensed results of operations for the three months and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period. The accompanying condensed financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 filed with the SEC.

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent ~~assets and~~ liabilities at the date of the financial

~~CYTOMX THERAPEUTICS, INC.~~

~~Notes to Condensed Financial Statements (unaudited)—(Continued)~~

statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

~~Concentration of Credit Risk~~Cash, Cash Equivalents and ~~Other Risks and Uncertainties~~

The Company is subject to a number of risks similar to other biopharmaceutical companies in the early stage, including, but not limited to, the need to obtain adequate additional funding, possible failure of preclinical testing or clinical trials, the need to obtain marketing approval for its product candidates, competitors developing new technological innovations, the need to successfully commercialize and gain market acceptance of the Company’s products, and protection of proprietary technology. If the Company does not successfully obtain regulatory approval, commercialize or partner any of its product candidates, it will be unable to generate revenue from product sales or achieve profitability.

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, short-term investments and accounts receivable. Substantially all the Company’s cash is held by one financial institution. Such deposits may, at times, exceed federally insured limits. The Company invests its cash equivalents and short-term investments in highly rated money market funds and its short-term investments in U.S. Government Bonds.

~~Customers who represent 10% or more of the Company’s total revenue during each period presented or accounts receivable balance at each respective balance sheet date are as follows:~~

Restricted Cash

Revenue

Accounts Receivable, net

Three Months Ended September 30,

Nine Months Ended September 30,

September 30,

December 31,

2017

2016

2017

2016

2017

2016

Customer A

34
%

52
%

41
%

61
%

1
%

93
%
Customer C

64
%

30
%

41
%

21
%

—

—

Customer B

2
%

18
%

3
%

18
%

—

7
%
Customer D

—

—

15
%

—

—

—

Customer E

—

—

—

—

99
%

—

~~All of the Company’s customers are located in the United States of America.~~

~~Segments~~

Management has determined that it has one business activity and operates as one operating segment as it only reports financial information on an aggregate basis to its chief executive officer, who is the Company’s chief operating decision maker. All long-lived assets are maintained in the United States of America.

~~Cash and Cash Equivalents~~

The Company considers all highly liquid investments purchased with original maturities of three months or less at the date of purchase to be cash equivalents.

~~Restricted Cash~~

Restricted cash represents a standby letter of credit issued pursuant to an office ~~lease entered in December 2015.~~lease.

~~Short-term Investments~~

~~All investments~~ ~~have been classified as “available-for-sale”~~The following table provides a reconciliation of cash, cash equivalents, and are carried at fair value as determined based upon quoted market prices or pricing models for similar securities at period end. Generally, those investments with contractual maturities less than 12 months atrestricted cash reported within the date of purchase are considered short-term investments. Unrealized gains and losses, deemed temporary in nature, are reported as a component of accumulated other comprehensive income (loss), net of tax.

~~A decline in the fair value of any security below cost~~balance sheets that ~~is deemed other than temporary results in a charge~~sum to ~~earnings and the corresponding establishment of a new cost basis for the security. The amortized cost of securities is adjusted for amortization of~~

~~CYTOMX THERAPEUTICS, INC.~~

~~Notes to Condensed Financial Statements (unaudited)—(Continued)~~

premiums and accretion of discounts to maturity. Dividend and interest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of securities sold.

~~Property and Equipment, net~~

Property and equipment are recorded at cost net of accumulated depreciation and amortization. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets. The useful lives of property and equipment are as follows:

~~Machinery and equipment~~		~~5 years~~
~~Computer equipment and software~~		~~3 years~~
~~Furniture and fixtures~~		~~3 years~~
~~Leasehold improvements~~		~~Shorter of remaining~~
		~~lease term or estimated life of the assets~~

~~Maintenance and repairs that do not extend the life or improve the asset are expensed when incurred.~~

~~Goodwill and Intangible Assets~~

Goodwill represents the excess of the purchase price paid over the fair value of tangible and identifiable intangible assets acquired in business combinations. Goodwill and other intangible assets with indefinite lives are not amortized, but are assigned to reporting units and tested for impairment annually, or whenever there is an impairment indicator. Intangible assets are comprised of in-process research and development (“IPR&D”). IPR&D acquired through a business combination is capitalized as indefinite-lived intangible asset, regardless of whether the IPR&D asset has alternative future use. IPR&D not acquired through a business combination is capitalized if it has an alternative future use and expensed if it does not have an alternative future use. The Company assesses impairment indicators annually or more frequently, if a change in circumstances or the occurrence of events suggests the remaining value may not be recoverable. Intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives. There was no impairment of goodwill or intangible assets identified during the nine months ended September 30, 2017 and the year ended December 31, 2016.

~~Impairment of Long-Lived Assets~~

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable and prior to any goodwill impairment test. An impairment loss is recognized when the total of ~~estimated undiscounted future cash flows expected to result from~~ the use of the asset (or asset group) and its eventual disposition is less than its carrying amount. Impairment, if any, would be assessed using discounted cash flows or other appropriate measures of fair value. There was no impairment of long-lived assets during the periods presented in these interim condensed financial statements.

~~CYTOMX THERAPEUTICS, INC.~~

~~Notes to Condensed Financial Statements (unaudited)—(Continued)~~

~~Accrued Research and Development Costs~~

~~The Company records accrued liabilities for estimated costs of research and development activities~~ conducted by third-party service providers, which include the conduct of preclinical and clinical studies, and contract manufacturing activities. The Company records the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced, and include these costs in accrued liabilities in the balance sheets and within research and development expenseamounts shown in the statements of operations. These costs are a significant component of the Company’s research and development expenses. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers under the service agreements. The Company makes significant judgments and estimates in determining the accrued liabilities balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities. The Company has not experienced any material differences between accrued costs and actual costs incurred. However, the status and timing of actual services performed may vary from the Company’s estimates, resulting in adjustments to expense in future periods. Changes in these estimates that result in material changes to the Company’s accruals could materially affect the Company’s results of operations.cash flows:

~~Comprehensive Income (Loss)~~


	June 30, 2023		December 31, 2022		June 30, 2022		December 31, 2021
	(in thousands)
Cash and cash equivalents	$	57,536	$	193,650	$	129,290	$	205,530
Restricted cash - non-current assets		917		917		917		917
Total	$	58,453	$	194,567	$	130,207	$	206,447

Contract Balances

Customer payments are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until the Company satisfies its performance obligations under these arrangements. Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional.

Leases

The Company determines if an arrangement is or contains a lease at inception. Operating leases are recorded as operating lease right-of-use (“ROU”) assets and operating lease liabilities in the Company’s balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses an implicit rate when readily available, or its incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. The operating lease ROU assets also include any lease prepayments made and ~~their financial statement reported amounts. A valuation allowance is provided against deferred tax assets unless~~reduced by lease incentives. The Company’s lease terms may include options to extend the lease when it is ~~more likely than not~~reasonably certain that ~~they~~such option will be ~~realized.~~

exercised. Lease expenses are recognized on a straight-line basis over the lease term. The Company elected the short-term lease recognition exemption. The Company’s operating lease arrangement includes lease and non-lease components which are generally accounted for separately. The Company recognizes ~~benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination based solely~~sublease income on ~~their technical merits, as~~a straight-line basis over the ~~largest amount of benefit that is more likely than not to be realized upon the ultimate settlement. The Company’s policy is to recognize interest~~sublease term and ~~penalties related to the underpayment of~~records sublease income ~~taxes as~~on a ~~component of income tax expense or benefit. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.~~net basis against rent expense.

3. Net Loss ~~per~~Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the ~~period, without consideration~~period. Diluted net loss per share is calculated using the weighted-average number of ~~potentially~~common shares outstanding, plus potential dilutive ~~securities.~~common stock during the period. Diluted net loss per share is the same as basic net loss per share since the effect of the potentially dilutive securities is anti-dilutive.

~~Adopted Accounting Pronouncements~~

~~Beginning 2017,~~The following weighted-average outstanding shares of potentially dilutive securities are excluded from the ~~Company adopted~~ ~~ASU No. 2016-09, Improvements to employee share-based payment,~~ ~~which simplifies the accounting for employee share-based transactions. The amendments in this update cover such areas as the recognition~~computation of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification, and the

~~CYTOMX THERAPEUTICS, INC.~~

~~Notes to Condensed Financial Statements (unaudited)—(Continued)~~

classification of those taxes paid on the statement of cash flows. The Company adopted ASU No. 2016-09 in the first quarter of 2017. As a result of adopting this standard, the Company made an accounting policy election to account for forfeitures as they occur. Adoption of this guidance did not have a material impact on the Company’s financial statements or its tax position.

~~Recent Accounting Pronouncements~~

~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,~~ ~~Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled~~diluted net loss per share for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will be effective for the Company on January 1, 2018, which is the effective date for public companies. Early application is permitted as of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. Additionally, in March 2016, the FASB issued ASU No. 2016-08, ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the implementation guidance on principal versus agent considerations in ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10,~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies certain aspects of identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU No. 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~, which relates to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers. These standardsperiods presented, because including them would have the same effective date and transition date of January 1, 2018. The Company will adopt this ASU on January 1, 2018, using the modified retrospective approach. As part of the Company’s assessment work to date, it has formed an implementation work team to assess what impact the provisions of ASU 2014-09, if any, may have on the Company’s financial statements. The Company is completing an assessment of the potential impact from adopting this new standard on its financial reporting and disclosures. The Company will continue to evaluate the potential impact of the new standard, and its preliminary assessments are subject to change. Additionally, the Company will continue to monitor industry activities and any additional guidance provided by regulators, standards setters, or the accounting profession as an ongoing component of its assessment and implementation plans.been anti-dilutive:

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases(Topic 842)~~. Under ASU No. 2016-2, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company plans to adopt this guidance beginning with its first quarter ending March 31, 2019. The Company is in the process of evaluating the future impact of ASU No. 2016-02 on its financial statements.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Options and ESPP to purchase common stock		14,091,647		14,288,092		14,039,714		14,023,590
TRSUs		1,594,493		938,728		1,566,926		864,762
Total		15,686,140		15,226,820		15,606,640		14,888,352

~~In June 2016, the FASB~~ ~~issued ASU No. 2016-13,~~ ~~Financial Instruments-Credit Losses(Topic 326): Measurement of Credit Losses on Financial Instruments~~. The new standard changes the impairment model for most financial assets and certain other instruments. Under the new standard, entities holding financial assets and net investment in leases that are not accounted for at fair value through net income are to be presented at the net amount expected to be collected. An allowance for credit losses will be a valuation account that will be deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The new standard will be effective for the Company on January 1, 2020. ~~The Company is in the process of evaluating the future impact of ASU No. 2016-13 on its financial statements.~~

~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~Restricted Cash, Statement of Cash Flows (Topic 230)~~. ASU No. 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU should be applied using a retrospective transition method to each period presented. ~~The Company is in the process of evaluating the future impact of ASU No. 2016-18 on its financial statements.~~

~~CYTOMX THERAPEUTICS, INC.~~

~~Notes to Condensed Financial Statements (unaudited)—(Continued)~~

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~. The new standard simplifies the measurement of goodwill by eliminating the Step 2 impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The new guidance becomes effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, though early adoption is permitted. The Company is currently assessing the impact of this new guidance.

~~In May 2017, the FASB issued ASU No. 2017-09, Compensation -~~ ~~Stock Compensation (Topic 718): Scope of Modification Accounting~~. This accounting standard update provides clarity when a change to terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the vesting condition, fair value or the award classification is not the same both before and after a change to the terms and conditions of the award. The new guidance is effective on a prospective basis beginning on January 1, 2018 with early adoption permitted. T~~he adoption of this guidance is not expected to have a significant impact on the Company’s financial statements.~~

4. Fair Value Measurements and ~~Short-Term~~ Investments

In accordance with Accounting Standards Codification (“ASC”) 820-10, Fair Value Measurements and Disclosures, the Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows:

•

Level I: Inputs which include quoted prices in active markets for identical assets and liabilities.

•

Level II: Inputs other than Level I that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level III: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of the Company’s financial instruments, including restricted cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities. The Company’s financial instruments consist of Level I ~~assets. Level I~~ assets which consist primarily of highly liquid money market funds, some of which are included in restricted cash and U.S. Treasury ~~securities.~~securities that are included in cash equivalents or short-term investments.

The following tables set forth the fair value of the Company’s ~~financial assets and liabilities~~investments subject to fair value measurements on a recurring basis and the level of inputs used in such ~~measurements (in thousands):~~measurements:


										June 30, 2023
	September 30, 2017								Valuation Hierarchy	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
	Level I		Level II		Level III		Total			(in thousands)
Assets
Money market funds	$	273,227	$	—	$	—	$	273,227	Level I	$	33,435	$	—	$	—	$	33,435
Restricted cash (money market funds)		917		—		—		917	Level I		917		—		—		917
U.S. Treasury securities		47,050		—		—		47,050
U.S. Treasury Securities									Level I		147,975		35		—		148,010
Total	$	321,194	$	—	$	—	$	321,194		$	182,327	$	35	$	—	$	182,362

December 31, 2016

Level I

Level II

Level III

Total

Assets

Money market funds

$
89,626

$
—

$
—

$
89,626

Restricted cash (money market funds)

917

—

—

917

U.S. Treasury securities

—

77,293

—

77,293

Total

$
90,543

$
77,293

$
—

$
167,836

The following tables set forth the gross unrealized gains and losses on the Company’s investments (in thousands), none of which have been deemed to be other than temporarily impaired. The Company intends and has the ability to hold the following investments until their recovery.

1411

~~CYTOMX THERAPEUTICS, INC.~~CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements ~~(unaudited)—(Continued)~~(Unaudited)

September 30, 2017

Amortized Cost

Gross Unrealized Holding Gains

Gross Unrealized Holding Losses

Aggregate Fair Value

Investment Securities

Money market funds

$
273,227

$
—

$
—

$
273,227

Restricted cash (money market funds)

917

—

—

917

U.S. Treasury securities

47,086

—

(36
)

47,050

Total securities

$
321,230

$
—

$
(36
)

$
321,194


		December 31, 2022
	Valuation Hierarchy	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
		(in thousands)
Assets
Money market funds	Level I	$	64,706	$	—	$	—	$	64,706
Restricted cash (money market funds)	Level I		917		—		—		917
U.S. Treasury Securities	Level I		29,941		10		—		29,951
Total		$	95,564	$	10	$	—	$	95,574

December 31, 2016

Amortized Cost

Gross Unrealized Holding Gains

Gross Unrealized Holding Losses

Aggregate Fair Value

Investment Securities

Money market funds

$
89,626

$
—

$
—

$
89,626

Restricted cash (money market funds)

917

—

—

917

U.S. Treasury securities

77,295

8

(10
)

77,293

Total securities

$
167,838

$
8

$
(10
)

$
167,836

~~The following tables set forth~~As of June 30, 2023, the remaining contractual ~~maturities~~terms of ~~the securities listed above:~~

September 30, 2017

Due within one year

$
321,194

Total

$
321,194

~~5. Property and Equipment~~

~~Property and equipment, net consisted of the following (in thousands):~~

September 30,

December 31,

2017

2016

Machinery and equipment

$
6,601

$
5,973

Computer equipment and software

897

888

Furniture and fixtures

643

651

Leasehold improvements

701

578

Construction in progress

86

45

Total property and equipment

8,928

8,135

Less: accumulated depreciation and amortization

(4,841
)

(3,743
)
Property and equipment, net

$
4,087

$
4,392

Depreciation and amortization expense was $368,000 and $443,000 for the three months ended September 30, 2017 and 2016, respectively, and $1.1 million and $1.2 million for the nine months ended September 30, 2017 and 2016, respectively.

~~6. Goodwill and Intangible Assets~~

~~Goodwill and in-process research and development (“IPR&D”) assets resulted from~~those investments are less than a series of integrated financing transactions in 2010 that was accounted for as a business combination. The in-process research and development relates to the Company’s proprietary Probody technology platform and is accounted for as an indefinite-lived intangible asset until the underlying project is completed or abandoned.year.

~~CYTOMX THERAPEUTICS, INC.~~

~~Notes to Condensed Financial Statements (unaudited)—(Continued)~~

~~Goodwill and intangible assets consisted of the following (in thousands):~~

September 30,

December 31,

2017

2016

Goodwill

$
949

$
949

In-process research and development

1,641

1,750

In connection with the collaboration agreements, the Company began amortizing the IPR&D in 2017. The IPR&D is being amortized over the estimated lives of the patents which average 12 years. The amortization for the three and nine months ended September 30, 2017 was $109,000.

7.5. Accrued Liabilities

Accrued liabilities consisted of the following:


	June 30,		December 31,
	2023		2022
	(in thousands)
Research and clinical expenses	$	9,251	$	13,089
Payroll and related expenses		5,441		8,060
Legal and professional expenses		855		1,413
Operating lease liabilities - short term		4,330		4,082
Restructuring expenses		30		1,627
Other accrued expenses		161		261
Total	$	20,068	$	28,532

6. Collaboration and License Agreements

The following ~~(in thousands):~~table summarizes the revenue by collaboration partner:

September 30,

December 31,

2017

2016

Research and clinical expenses

$
7,324

$
3,909

Payroll and related expenses

2,889

3,971

Legal and professional expenses

1,094

264

Property and equipment

—

331

Other accrued expenses

137

349

Total

$
11,444

$
8,824


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
	(in thousands)				(in thousands)
AbbVie	$	—	$	6,775	$	3,988	$	8,526
Amgen		1,720		357		3,496		2,594
Astellas		5,350		4,657		14,055		9,423
Bristol Myers Squibb		13,879		1,064		21,603		1,350
Regeneron		1,754		—		2,335		—
Moderna		2,021		—		2,746		—
Total revenue	$	24,724	$	12,853	$	48,223	$	21,893

~~8. Research and Collaboration Agreements~~

AbbVie Ireland Unlimited Company

OnIn April ~~21,~~ 2016, the Company and AbbVie ~~Ireland Unlimited Company (“AbbVie”)~~ entered into two agreements, a CD71 Co-Development and Licensing Agreement (the “CD71 Agreement”) and a Discovery Collaboration and Licensing Agreement ~~(the~~(as amended and restated in June 2019, the “Discovery Agreement” and together with the CD71 Agreement the “AbbVie Agreements”). Under the terms of the CD71 Agreement, the Company and AbbVie ~~will co-develop~~were co-developing a ~~Probody Drug Conjugates~~conditionally activated antibody-drug conjugate (“~~PDC”~~ADC”) against CD71, with the Company being responsible for ~~pre-clinical~~preclinical and early clinical development. AbbVie ~~will~~was to be responsible for later development and commercialization, with global late-stage development costs shared between the two companies. The Company will assume 35% of the net profits or net losses related to later development unless it opts-out. If the Company opts-out from participation of co-development of the CD71 PDC, AbbVie will have sole right and responsibility for the further development, manufacturing and commercialization of such CD71 PDC. AbbVie, at its sole discretion, may stop development of any CD71 PDC and terminate the CD71 Agreement if the Company does not meet certain preclinical research criteria by the applicable deadline. In such case, the Company and AbbVie may evaluate and approve an alternate CD71 PDC. If such alternate CD71 PDC is approved, then the Company and AbbVie will,has received in ~~good faith, negotiate amendments to the timelines and, if necessary, the content in the research and development plan and budget and extensions to the deadlines to achieve defined success criteria.~~

~~Under the CD71 Agreement, the Company received an upfront payment of $20.0~~aggregate $100.0 million in ~~April 2016,~~upfront and ~~is eligible to receive up to $470.0 million in development, regulatory and commercial~~ milestone payments and royalties on ex-US sales in the high teens to low twenties if the Company participates in the co-development of the CD71 Licensed Product subject to a reduction in such royalties if the Company opts-out from the co-development of the CD71 PDC. The Company’s share of later stage co-development costs for each CD71 PDC are capped, provided that AbbVie may offset the Company’s co-development cost above the capped amounts from future payments such as milestone payments and royalties. In July 2017, the Company received a milestone payment of $14.0 million (net of the associated license fees), which the Company recognized as revenues during the period, from AbbVie for achieving certain milestones required to be met to begin GLP toxicology studies under the CD71 Agreement.

~~Under~~In March 2023, the ~~terms~~Company announced that it would evaluate the potential next steps for CX-2029 following the decision from AbbVie, to not advance CX-2029 into additional clinical studies. As a result of AbbVie’s decision, the ~~Discovery~~2016 CD71 License and Collaboration Agreement ~~AbbVie receives~~has been terminated and the Company has an exclusive ~~worldwide~~option to re-acquire full rights to ~~develop and commercialize PDC against up to two targets, one of which was selected in March 2017. The Company shall perform research services to discover the Probodies~~

1612

~~CYTOMX THERAPEUTICS, INC.~~CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements ~~(unaudited)—(Continued)~~(Unaudited)

and create PDCs for the nominated collaboration targets. From that point, AbbVie shall have sole right and responsibility for development and commercialization of products comprising or containing such PDCs (“Discovery Licensed Products”).

~~Under the Discovery Agreement, the~~CX-2029. The Company received an upfront payment of $10.0 million in April 2016 and may receive an additional payment upon the selection by AbbVie of the second target and the satisfaction of certain performance conditions under the CD71 Agreement. AbbVie has ~~not selected the second target, but~~completed the performance ~~conditions~~obligation under the CD71 Agreement ~~were met in September 2016. The Company is also eligible to receive up to $275.0~~as of March 31, 2023 and recognized the related remaining deferred revenue of $4.0 million in ~~target nomination, development, regulatory and commercial milestone payments and royalties in~~ the ~~high single to low teens from commercial sales~~first quarter of ~~any resulting PDCs.~~ 2023.

The Company has determined that the CD71 and Discovery Agreements with AbbVie should be combined and evaluated as a single arrangement in determining revenue recognition, because both agreements were concurrently negotiated and executed.

~~The Company identified the following deliverables at the inception of the AbbVie Agreements: (1)~~In December 2022, the research ~~development and commercialization license for CD71 Probody, (2)~~on the ~~research services related to CD71 Probody, (3) the obligation to participate in the CD71 Agreement joint research committee, (4) the research services related to the first~~two discovery ~~target (5) the research, development and commercialization license for the first discovery target, and (6) the obligation to participate in~~targets under the Discovery Agreement ~~joint research committee.~~

~~The Company determined that~~has concluded with no plans to advance the ~~research, development and commercialization licenses for CD71 and~~ discovery targets do not have a standalone value without the Company’s respective research services and expertise. The Company considered factors such as novelty of the Probody and PDC technology and lack of other parties’ expertise in this space, the Company’s rightsinto clinical studies or to ~~technology relating to a proprietary platform to enable the Probody development and AbbVie’s contractual obligation to use the Company’s research services.~~ pursue new programs. The Company also determined that the CD71 Agreement research, development and commercialization license, related research service and participation in the joint research committee as a single unit of accounting has a standalone value from the Discovery Agreement ~~research, development~~has also been terminated and commercialization license, related research service and participation in the joint research committee. Therefore, the Company concluded that there are two units of accounting: CD71 Agreement unit of accounting consisting of the CD71 Agreement research, development and commercialization license, related research service and participation in the joint research committee, and the Discovery Agreement unit of accounting consisting of the Discovery Agreement research, development and commercialization license, related research service and participation in the joint research committee.all target rights have reverted back to CytomX.

The upfront payments under the AbbVie Agreements are allocated between two units of accounting based on the estimated relative selling prices of each unit. In order to determine the best estimate of selling price, the Company used the discounted cash flow method by calculating risk-adjusted net present values of estimated cash flows. The Company recognizes the allocated amounts ratably over the estimated research service period of five years. The Company recognized revenue of $15.4 million and $1.0 million for the three months ended September 30, 2017 and 2016, respectively, and $18.1 million and $1.8 million for the nine months ended September 30, 2017 and 2016, respectively, related to the AbbVie Agreements. The $15.4 million and $18.1 million of revenues recognized for the three and nine months ended September 30, 2017, respectively, include a $14.0 million milestone payment (net of the associated license fees), the Company received from AbbVie, offset by $1.0 million of sublicense fees paid, as a result of the Company achieving certain milestones required to be met to begin GLP toxicology studies under the CD71 Agreement. As of September 30, 2017 and December 31, 2016, deferred revenue related to the CD71 unit of accounting was $14.7 million and $17.7 million, respectively, and deferred revenue related to the Discovery Agreement unit of accounting was $7.3 million and $8.9 million, respectively.

Amgen, Inc.

On September 29, 2017, the Company and Amgen, Inc. (“Amgen”) entered into a Collaboration and License Agreement (the “Amgen Agreement”). Pursuant to the Amgen Agreement, the Company received an upfront payment of ~~$40.0~~$40.0 million in October 2017. Concurrent with ~~the entry into~~ the Amgen Agreement, the Company and Amgen entered into a Share Purchase Agreement ~~(the “Purchase Agreement”)~~ pursuant to which Amgen ~~agreed to purchase~~ purchased 1,156,069 shares of the Company’s common stock ~~par value $0.00001 per share,~~ at a price of ~~$17.30~~$17.30 per share ~~(calculated based on a 20-day volume-weighted average price),~~ for total proceeds of ~~$20.0 million, which the Company received on~~$20.0 million.

In October ~~6, 2017, the closing date of the transaction. On the closing date, the Registration Rights Agreement (the “Registration Rights Agreement”) between the Company~~2021, CytomX and Amgen ~~went into effect. Pursuant~~executed an amendment to the ~~Registration Rights~~Amgen Agreement primarily to (1) extend the target selection date for Amgen ~~agreed not~~ to ~~dispose~~select its additional targets for research and development, and (2) reduce the total number of ~~any~~milestone events and increase the total amount of ~~the shares purchased during the six-month period following the closing date (the “lock-up period”) without the prior approval of a majority of the Company’s Board of Directors.~~ ~~The Company estimated a premium on the stock sold to~~milestone payments for EGFR Products. In May 2023, CytomX and Amgen ~~of $0.5 million, which takes into account a discount due~~executed an amendment to the ~~lack of marketability~~Amgen Agreement to extend the target selection period for Amgen to select its additional targets for research and ~~the six-month lockup period.~~development as further discussed below.

Under the terms of the Amgen Agreement, as amended, the Company and Amgen will co-develop a ~~Probody~~conditionally activated T-cell engaging ~~bi-specific~~bispecific therapeutic targeting ~~EGFR (“EGFR~~epidermal growth factor receptor (the “EGFR Products”). The Company ~~will be~~is responsible for early-stage development of EGFR Products and ~~all related costs (up to certain pre-set costs and certain limits based on clinical study size).~~ Amgen will be responsible for late-stage

~~CYTOMX THERAPEUTICS, INC.~~

~~Notes to Condensed Financial Statements (unaudited)—(Continued)~~

development ~~commercialization,~~ and ~~all related costs~~commercialization of EGFR Products. Following early-stage development, the Company will have the right to elect to participate financially in the global co-development of EGFR Products with Amgen, during which the Company would bear a certain percentage of the worldwide development costs for EGFR Products and Amgen would bear the rest of such costs (the “EGFR Co-Development Option”). If the Company exercises its EGFR Co-Development Option, the Company will share in somewhat less than ~~50%~~50% of the profit and losses from sales of such EGFR Products in the U.S., subject to certain caps, offsets, and deferrals. If the Company chooses not to exercise its EGFR Co-Development Option, the Company will not bear any costs of later stage development. The Company is also eligible to receive up to ~~$455.0~~$460.0 million in development, regulatory, and commercial milestone payments for EGFR Products, and royalties in the ~~low-~~low-double-digit to ~~mid-double digit~~mid-teen percentage of worldwide commercial sales, provided that if the Company exercises its EGFR Co-Development option, it shall ~~only~~ receive a profit and loss split of sales in the United States and royalties in the ~~low-~~low-double-digit to ~~mid-double digit~~mid-teen percentage of commercial sales outside of the ~~U.S..~~United States. In January 2022, the IND for the EGFR product (CX-904) was allowed to proceed by the U.S. Food and Drug Administration (“FDA”).

Amgen also has the right to select a total of up to three targets, including the two additional targets discussed below. The Company and Amgen ~~will~~ collaborate in the research and development of ~~Probody~~conditionally activated T-cell engaging ~~bi-specifics~~bispecifics products directed against such targets. Amgen has selected one such target (the “Amgen Other Product”). If Amgen exercises its option within a specified period of time, it can select two such additional targets (the “Amgen Option Products” and, together with the Amgen Other Product, the “Amgen Products”). Except with respect to preclinical activities to be conducted by CytomX, Amgen will be responsible, at its expense, for the development, manufacture, and commercialization of all Amgen Products. If Amgen exercises all of its options and advances all three of the Amgen Products, CytomX is eligible to receive up to ~~$950.0~~$950.0 million in upfront, development, regulatory, and commercial milestones and tiered high single-digit to low-teen percentage royalties. The Company concluded that, at the inception of the agreement and subsequent amendments, Amgen’s option to select the two additional targets is not a material right and does not represent a ~~deliverable~~performance obligation of the ~~agreement because it is a substantive option and was not issued at a significant or incremental discount.~~agreement.

At the initiation of the collaboration, CytomX ~~has~~had the option to select, from programs specified in the Amgen Agreement, an existing ~~pre-clinical~~preclinical stage T-cell engaging bispecific product from the Amgen ~~pre-clinical~~preclinical pipeline. In March 2018, CytomX ~~will be~~selected the program and this program is currently in preclinical development. CytomX is responsible, at its expense, for converting this program to a ~~Probody~~conditionally activated T-cell engaging bispecific product, and thereafter, will be responsible for development, manufacturing, and commercialization of the product (“CytomX Product”). Amgen is eligible to receive up to ~~$203.0~~$203.0 million in development, regulatory, and commercial milestone payments for the CytomX Product, and tiered mid-single digit to low double-digit percentage royalties.

As of June 30, 2023 and December 31, 2022, deferred revenue related to the EGFR Products performance obligation was $14.9 million and $18.0 million, respectively. As of June 30, 2023 and December 31, 2022, deferred revenue related to the Amgen Other Products performance obligation was $0.2 million and $0.6 million, respectively.

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

Astellas Pharma Inc.

The Company ~~considered~~and Astellas Pharma, Inc. (“Astellas”) entered into a Collaboration and License Agreement (the “Astellas Agreement”) on March 23, 2020, the ~~criteria~~effective date, to collaborate on preclinical research activities to discover and develop certain antibody compounds for ~~combining contracts~~the treatment of cancer using the Company’s Probody therapeutic technology.

Under the terms of the Astellas Agreement, the Company granted Astellas an exclusive, worldwide right to develop and commercialize Probody therapeutics for up to four collaboration targets including one initial target and three additional targets (“Additional Targets”). In addition, Astellas had the right to expand the number of Additional Targets from three up to five (the “Expansion Option”) before the third anniversary of the effective date. Furthermore, for a specified number of targets, at a pre-specified time prior to the initiation of the first pivotal study of a product against such target, the Company may elect to participate in ~~ASC 605~~certain development costs and ~~determined that~~share in the ~~Amgen Agreement and~~profits generated in the ~~Purchase Agreement should be combined into one contract.~~United States with respect to such product (“Cost Share Option”). The Cost Share Option, if exercised, will also provide the option for the Company to co-commercialize such product in the United States. The Company ~~accounted for~~does not consider the ~~Amgen Agreement based on the fair values of the assets and services exchanged. The Company identified the following significant deliverables~~Cost Share Option as a performance obligation at the inception of the ~~Amgen Agreement: (1)~~agreement as the participation is at the Company’s discretion.

Pursuant to the Astellas Agreement, the consideration from Astellas is comprised of an upfront fee of $80.0 million and contingent payments for development, regulatory and sales milestones of up to an aggregate of approximately $1.6 billion.The Company is also entitled to tiered royalties from high-single digit to mid-teen percentage royalties from potential future sales. Astellas is responsible for all preclinical research ~~development~~costs incurred by either party as set forth in the preclinical research plan and ~~commercialization license, (2)~~ the Company will receive research and development ~~services for~~service fees based on a prescribed full-time employee ("FTE") rate.

In January 2023, the ~~EGFR Products and~~Company announced that it achieved a clinical candidate milestone under the ~~Amgen Other Product, and (3)~~Astellas Agreement which triggered a $5.0 million milestone payment to the ~~obligation to participate~~Company. The $5.0 million milestone payment was fully recognized in the ~~joint steering committee (“JSC”) and~~first quarter of 2023 as the ~~joint research committee (JRC”). The~~ Company ~~determined that research, development and commercialization license and~~had completed its related performance obligation of the ~~participation~~collaboration target which resulted in the JSC and JRC do not have stand-alone value from the research and development services and therefore those deliverables were combined into one unit of accounting. The Amgen Other Products will be accountedclinical candidate nomination for ~~as a separate unit of accounting from the EGFR Products as each has a standalone value to Amgen.~~further development.

Concurrent with the execution of the Amgen Agreement, the Company entered into a sublicense agreement whereby the Company granted Amgen a sublicense of its rights to one patent family that is co-owned with UCSB under its existing license agreement entered into in 2010 with UCSB. This sublicense was incremental to the patents, patent applications and knowhow covering T-cell engaging bispecific Probody molecules that is developed and owned by CytomX and licensed to Amgen. Under the existing agreement with UCSB, the Company is obligated to make a royalty payment to UCSB equal to 15% of certain kinds of proceeds from the sublicense of the technology. The Company determined that the calculation of the sublicense fee is not specifically addressed in the sublicense agreement when the Company simultaneously licenses the UCSB technology along with the technology the Company has developed internally.

As of September 30,2017, the Company recorded an accrued liability of $1.2 million, which represents the Company’s current estimate of the amount to be remitted to UCSB. The Company expects to have a resolution on this estimate in 2017.

~~The total transaction price of $51.2 million, consisting of the $40.0 million upfront payment, an estimated fair value of $10.7 million for the CytomX Product~~June 30, 2023 and $0.5 million of premium on the sale of our equity, was allocated between two units of accounting based on the estimated relative standalone selling price of each unit. To determine the best estimate of selling price, the Company used the discounted cash flow method by calculating risk-adjusted net present values of estimated cash flows. The Company will recognize the allocated amounts ratably over the estimated research service period.

~~CYTOMX THERAPEUTICS, INC.~~

~~Notes to Condensed Financial Statements (unaudited)—(Continued)~~

The $10.7 million allocated to the CytomX Product was recorded to research and development expense because it has no alternative future uses, and the $0.5 million premium was recorded to equity, together with the proceeds from the sale of our common stock, which closed in October 2017. The estimated fair value of assets and services received approximates the total fair value of consideration given, resulting in no gain or loss recognized on the transaction.

~~The Company did not recognize any revenue for the three months ended September 30, 2017 as the research term commenced close to the end of the quarter. As of September 30, 2017,~~December 31, 2022, deferred revenue relating to the ~~Amgen~~Astellas Agreement was ~~$51.2 million.~~$38.0 million and $44.5 million, respectively. The amount due from ~~Amgen~~Astellas under the ~~Amgen~~Astellas Agreement was ~~$40.0~~$1.3 million and $1.0 million as of ~~September~~June 30, ~~2017.~~2023 and December 31, 2022, respectively.

~~Bristol-Myers~~

Bristol Myers Squibb Company

On May 23, 2014, the Company and ~~Bristol-Myers~~Bristol Myers Squibb Company (“~~BMS”~~Bristol Myers Squibb”) entered into a Collaboration and License Agreement (the “BMS Agreement”) to discover and develop compounds for use in human therapeutics aimed at multiple immuno-oncology targets using the Company’s Probody therapeutic technology. The effective date of the BMS Agreement was July 7, 2014.

Under the terms of the BMS Agreement, the Company granted ~~BMS~~Bristol Myers Squibb exclusive worldwide rights to develop and commercialize Probody therapeutics for up to four oncology targets. Bristol Myers Squibb had additional rights to substitute up to two collaboration targets within three years of the effective date of the BMS Agreement. These rights expired in May 2017. Each collaboration target ~~has~~had a two-year research term and the two additional targets ~~must~~had to be nominated by ~~BMS~~Bristol Myers Squibb within five years of the effective date of the BMS Agreement. The research term for each collaboration target ~~can~~could be extended in one year increments up to three times.

Pursuant to the BMS Agreement, the financial consideration from ~~BMS~~Bristol Myers Squibb was comprised of an upfront payment of ~~$50.0~~$50.0 million and estimated research and development service fees, and the Company was initially entitled to receive contingent payments of up to ~~an aggregate of $1,217.0 million as follows: (i) up to $25.0~~$25.0 million for additional ~~targets; (ii) up to $114.0 million in development milestone payments per research target program or up to $456.0 million if the maximum of four research~~ targets ~~are selected; (iii) up to $124.0 million in milestone~~and contingent payments for development, regulatory and sales milestones. In addition, the first commercial sale in various territories for up to three indications per research target program or up to $496.0 million if the maximum of four research targets are selected, and (iv) up to $60.0 million in sales milestones payments per research target program or up to $240.0 million if maximum of four research targets are selected. The Company iswas entitled to royalty payments in the ~~mid to high single~~mid-single digits to low ~~teens~~double-digit percentages from potential future sales. ~~The Company will also receive research and development service fees based on a prescribed full-time employee (“FTE”) rate that is capped.~~

The BMS Agreement also required BMS to purchase the Company’s common stock upon an IPO if certain conditions were met. In connection with the IPO in October 2015, BMS purchased 833,333 shares of the Company’s common stock at the initial public offering price and on the same terms as other purchasers in the offering.

The Company identified the following deliverables at the inception of the BMS Agreement: (1) the exclusive research, development and commercialization license, (2) the research and development services and (3) the obligation to participate in the joint research committee. The Company determined that the license does not have stand-alone value to BMS without the Company’s research services and expertise related to the development of the product candidates, and accordingly, it was combined with the research services and participation in the joint research committee as a single unit of accounting.

The Company received an upfront payment of $50.0 million from BMS in July 2014. The upfront payment was recorded as deferred revenue and being recognized on a ratable basis over the estimated performance period of ten years. The Company determined that the contingent payments under the BMS Agreement relating to development, sales milestone and royalties do not constitute substantive milestones and will not be accounted for under the milestone method of revenue recognition. The events leading to these payments do not meet the definition of a substantive milestone because the achievement of these events solely depends on BMS’s performance. Accordingly, any revenue from these contingent payments would be subject to an allocation of arrangement consideration and would be recognized over any remaining period of performance obligations, if any, relating to this arrangement. If there are no remaining performance obligations under the arrangement at the time the contingent payment is triggered, the contingent payment will be recognized as revenue in full upon triggering the event.

~~CYTOMX THERAPEUTICS, INC.~~

~~Notes to Condensed Financial Statements (unaudited)—(Continued)~~

In January 2016, BMS selected the third target pursuant to the BMS Agreement. Under the terms of the BMS Agreement, BMS paid the Company a $10.0 million payment. In December 2016, BMS selected the fourth and its final target pursuant to the BMS Agreement. Under the terms of the BMS Agreement, BMS paid the Company a $15.0 million payment. Both payments were recorded as deferred revenue and as a result of the fourth target selection, the performance period has been reduced from ten years to seven years and the deferred revenue is being recognized over this new performance period. In December 2016, BMS selected a clinical candidate pursuant to the BMS Agreement, which triggered a $2.0 million pre-clinical milestone payment to the Company. This milestone payment was recognized as revenue in its entirety upon the selection because the achievement of this milestone was based on the Company’s performance.

On March 17, 2017, the Company and ~~BMS~~Bristol Myers Squibb entered into Amendment Number 1 to Extend Collaboration and License Agreement ~~(the “Amendment”~~(“Amendment 1”). ~~The~~ Amendment ~~grants BMS~~1 granted Bristol Myers Squibb exclusive worldwide rights to develop and commercialize Probody therapeutics for up to ~~six~~eight additional ~~oncology targets and two non-oncology~~ targets. The effective date of ~~the~~ Amendment 1 was April 25, 2017 (“Amendment Effective Date”).

Under the terms of ~~the~~ Amendment 1, the Company ~~will continue~~continued to ~~collaborate with BMS~~have obligations to Bristol Myers Squibb to discover and conduct preclinical development of Probody therapeutics against any targets ~~selected by BMS~~they chose to select during the research period under the terms of ~~the Amendment.~~Amendment 1.

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

Pursuant to ~~the~~ Amendment 1, the financial consideration from ~~BMS~~Bristol Myers Squibb was comprised of an upfront payment of ~~$200.0~~$200.0 million, estimated research and ~~the Company will be eligible to receive up to an aggregate of $3,586.4 million as follows: (i) up to $116.0 million in~~ development ~~milestone~~service fees, and contingent payments ~~per target or up to $928 million if the maximum of eight targets are selected~~for development, regulatory and sales milestones for the first product modality; (ii) up to $124.0 million in milestone payments for the first commercial sale in various territories for up to three indications per target program or up to $992.0 million if the maximum of eight targets are selected for the first product modality; (iii) up to $60.0 million in sales milestone payments per target or up to $480.0 million if maximum of eight targets are selected for the first product modality; and (iv) up to $56.3 million in development milestone payments or up to $450.4 million if the maximum of eight targets are selected for the second product modality; (v) up to $62.0 million in milestone payments for the first commercial sale in various territories for up to three indications per target program or up to $496.0 million if the maximum of eight targets are selected for the second product modality; (iii) up to $30.0 million in sales milestone payments per target or up to $240.0 million if maximum of eight targets are selected for the second product modality. targets. The Company iswas also entitled to tiered mid-single to low double-digit percentage royalties from potential future sales. ~~The~~ Amendment ~~does~~1 did not change the term of ~~the BMS’~~Bristol Myers Squibb’s royalty obligation under the BMS Agreement. ~~BMS’~~Bristol Myers Squibb’s royalty obligation continues on a ~~licensed product-by~~licensed-product by licensed-product basis until the later of (i) the expiration of the last claim of the licensed patents covering the licensed products in the country, (ii) the twelfth anniversary of the first commercial sale of a licensed product in a country, or (iii) the expiration of any applicable regulatory, pediatric, orphan drug or data exclusivity with respect to such product.

The ~~Company received an upfront payment from~~initial transaction price for the BMS ~~under the~~Agreement and Amendment ~~of $200.0~~1, collectively, was $304.7 million ~~in May 2017. Upon receipt~~consisting of the upfront ~~payment from BMS,~~fees of $250.0 million, target selection fees for the ~~Company made a payment~~third and fourth targets of ~~$10.0~~$25.0 million, estimated research and development service fees of $17.7 million and milestone payments received up to ~~the Regents~~January 1, 2018, of the University of California (“UC”), acting through its Santa Barbara campus, under the terms of our exclusive license agreement with UC. The upfront payment was recorded as deferred revenue and is being recognized on a ratable basis over the estimated performance period of eight years. In addition, the Company concluded the Amendment to be a modification of the BMS Agreement. As a result, the Company is currently recognizing the remaining deferred revenue balance relating to the upfront payment received under the BMS Agreement as of the Amendment Effective Date prospectively over the new estimated performance period of eight years.

$12.0 million. The Company determined that the remaining potential milestone payments were probable of significant revenue reversal as their achievement was highly dependent on factors outside the Company’s control. Therefore, these payments were fully constrained and were not included in the transaction price upon the adoption of ASC 606 on January 1, 2018. The initial transaction price for the combined obligation for each collaboration target is recognized using an input measure.

In February 2021, the Company and Bristol Myers Squibb entered into Amendment Number 2 to amend the Collaboration and License Agreement (“Amendment 2”), as amended by Amendment 1. Subsequent to Amendment 2, in addition to Bristol Myers Squibb’s ongoing development of the CTLA-4 program, Bristol Myers Squibb also had the exclusive worldwide rights to develop and commercialize Probody therapeutics for up to five oncology targets. Under the terms of Amendment 2, the period for target selection was extended and the Company will continue to collaborate with Bristol Myers Squibb to discover and conduct preclinical development of Probody therapeutics against targets selected by Bristol Myers Squibb over the estimated research period, which is projected to end in April 2025. Pursuant to Amendment 2, the Company was eligible to receive contingent payments ~~under the Amendment relating~~for development, regulatory and sales milestones. It is also entitled to ~~development, sales milestone and~~tiered mid-single to low double-digit percentage of royalties ~~do not constitute substantive milestones and will not be~~from potential future sales. The Company accounted for ~~under~~Amendment 2 as a modification and reallocated the remaining unrecognized transaction price to the remaining performance obligations.

In October 2022, the Company and Bristol Myers Squibb entered into Amendment Number 3 to amend the Collaboration and License Agreement (“Amendment 3”), as amended by Amendment 1 and Amendment 2, to clarify the rights and restrictions of certain new proprietary antibodies that the parties exchanged. There were no substantive changes to each party's performance obligations. As of June 30, 2023, the Company is eligible for up to approximately $2.1 billion in contingent payments for development, regulatory and sales milestones based on the ongoing collaboration projects, including the CTLA-4 program, with BMS.

The Company reevaluated the remaining potential milestone ~~method of~~payments and determined that significant revenue ~~recognition. The events leading to these payments do not meet the definition of a substantive milestone because~~reversal was probable as the achievement of such milestones was highly dependent on factors outside the Company’s control. As a result, these ~~events solely depends on BMS’s performance. Accordingly, any revenue from these contingent~~ payments ~~would~~continued to be ~~subject to an allocation~~fully constrained and were not included in the transaction price as of arrangement consideration and would be recognized over any remaining period of performance obligations, if any, relating to this arrangement. If there are no remaining performance obligations under the arrangement at the time the contingent payment is triggered, the contingent payment will be recognized as revenue in full upon triggering the event.June 30, 2023.

The Company recognized revenue of $8.2 million and $1.8 million for the three months ended September 30, 2017 and 2016, respectively, and $18.4 million and $5.3 million for the nine months ended September 30, 2017 and 2016, respectively. As of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, deferred revenue relating to the BMS Agreement was ~~$243.1~~$147.6 million and ~~$60.9~~$169.2 million, respectively. ~~The amount due from BMS under the BMS Agreement was $0.2 million and $2.2 million as of September 30, 2017 and December 31, 2016, respectively.~~

~~CYTOMX THERAPEUTICS, INC.~~ModernaTX, Inc.

~~Notes to Condensed Financial Statements (unaudited)—(Continued)~~

~~ImmunoGen, Inc.~~

~~In January 2014, the~~The Company and ~~ImmunoGen,~~ModernaTX, Inc. (“~~ImmunoGen”~~Moderna”) entered into ~~the Research~~a Collaboration and License Agreement (the ~~“ImmunoGen~~“Moderna Agreement”)~~. The ImmunoGen Agreement provides~~ on December 30, 2022, the ~~Company with the right~~effective date, to ~~use ImmunoGen’s Antibody Drug Conjugate (“ADC”) technology in combination with~~collaborate on discovery and preclinical research and development activities to create investigational messenger RNA (mRNA) based conditionally activated therapies using the Company’s Probody technology to create a PDC directed at one specified target under a research license, and to subsequently obtain an exclusive, worldwide development and commercialization license to use ImmunoGen’s ADC technology to develop and commercialize such PDCs. The Company made no upfront cash payment in connection with the execution of the agreement. Instead, the Company provided ImmunoGen with the rights to CytomX’s Probody technology to create PDCs directed at two targets under the research license and to subsequently obtain exclusive, worldwide development and commercialization licenses to develop and commercialize such PDCs. ImmunoGen discontinued one of the two programs being developed under the ImmunoGen Agreement in July 2017 and substitution rights for this program terminated in February 2017. The Company recognized the remaining deferred revenue related to the discontinued program upon termination of the program. ImmunoGen continues research work on the second collaboration target.

Under the terms of the agreement, both the Company and ImmunoGen are required to perform research activities on behalf of the other party for no monetary consideration. The research activities for a particular target will last until January 2018 unless they are terminated by one of the parties or when a development and commercialization license is obtained with respect to that target. Each partytherapeutic technology. Moderna is solely responsible for the development (preclinical and clinical), manufacturing, and commercialization of any products ~~resulting from the exclusive development and commercialization license obtained by such party~~ under the ~~agreement. Each party may be liable to pay annual maintenance fees to~~Moderna Agreement.

Under the ~~other party if the licensed product candidate covered under each development and commercialization license has not progressed to the clinical stage of development within six years~~terms of the ~~exercise of~~Moderna Agreement, the ~~development~~Company granted Moderna an exclusive, worldwide right to develop and ~~commercialization license.~~

~~In consideration~~commercialize Probody therapeutics for the exclusive development and commercialization license that may be obtained by ImmunoGen, the Company is entitled to receive up to $30.0 million in development and regulatory milestone payments per the research program target, up to $50.0 million in sales milestone payments per target and royalties in the mid-single digits on the commercial sales of any resulting product. For the development and commercialization license that may be obtained by the Company, ImmunoGen is entitled to receive up to $60.0 million in development and regulatory milestone payments, up to $100.0 million in sales milestone payments and royalties in the mid to high single digits on the commercial sales of any resulting product.collaboration programs. In ~~August 2017, the Company made a milestone payment of $1.0 million to ImmunoGen for the first patient dosing with CX-2009.~~

The Company accounted for the ImmunoGen Agreement based on the fair value of the assets and services exchanged. The Company identified the following significant deliverables at the inception of the ImmunoGen Agreement: (1) the research license, (2) the research services, (3) the obligation to participate in the joint research committee, (4) the exclusive research, development and commercialization license and (5) the obligation to provide future technology improvements, when available. The Company determined that the research license, participation in the joint steering committee and the research services do not have stand-alone value from the development and commercialization license and therefore those deliverables were combined into one unit of accounting. The Company considered factors such the limited economic benefits to ImmunoGen if development and commercialization license is not obtained and the lack of sublicensing rights in the research license.

The estimated total fair value of the consideration of $13.2 million was recorded as deferred revenue, of which $13.0 million, or $6.5 million per target, was allocated to the unit of accounting comprised of the research license, research services, participation in the joint research committee and the development and commercialization license, and $0.2 million was allocated to the future technological improvements. The Company is currently recognizing the $13.0 million upon delivery of the development and commercialization licenses.

The estimated fair value of assets and services received was also $13.2 million, of which $12.7 million was allocated to the licenses received and was charged to research and development expense, with the remaining amount of $0.5 million was allocated to the research services, joint research committee participation and technology improvements, which is being expensed over the period of services to be provided.

In February 2017, ImmunoGen exercised its option to obtain a development and commercialization license for one of the two targets under the ImmunoGen Agreement. Revenue for the three months ended September 30, 2017 and 2016 was $0.1 million and $0, respectively. The Company recognized revenue of $6.6 million and $0 million related primarily to the allocated revenue to the exercise of the development and commercialization license for this target for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017 and December 31, 2016, deferred revenue relating to the ImmunoGen Agreement was $6.6 million and $13.2 million, respectively.

~~CYTOMX THERAPEUTICS, INC.~~

~~Notes to Condensed Financial Statements (unaudited)—(Continued)~~

~~MD Anderson~~

In November 2015, the Company entered into a research collaboration agreement with MD Anderson to research Probody-enabled chimeric antigen receptor killer (CAR-NK) cell therapies, known as ProCAR-NK cell therapies. Under this collaboration, MD Anderson will use the Company’s Probody technology to conduct research of ProCAR-NK cell therapies against certain targets selected by the Company in cancer immunotherapy. In October 2017, the Company extended the research term of the agreement. Under the research collaboration agreement, the Company has the right to exercise an option, during the option period expiring on October 23, 2019 and upon payment of an option exercise fee, to negotiate and acquire a worldwide, exclusive, sublicensable license from MD Anderson for development and commercialization of products directed against any of the selected targets. The research collaboration agreement will continue in effect until the earlier of (i) the date that the Company exercises the option to acquire the license from MD Anderson and (ii) the expiration of the option period. The impact of this agreement was not material for the financial statements for the three and nine months ended September 30, 2017 and 2016.

~~Pfizer Inc.~~

In May 2013, the Company and Pfizer Inc. (“Pfizer”) entered into a Research Collaboration, Option and License Agreement (the “Pfizer Agreement”) to collaborate on the discovery and preclinical research activities related to Probody therapeutics, and PDCs for research project targets nominated by Pfizer. Pfizer nominated two research targets in 2013 and, pursuant to the Pfizer Agreement, had the option of nominating two additional research targets. In December 2014, Pfizer selected an additional research target. The option to select a fourth target lapsed in May 2016. Pfizer has discontinued the epidermal growth factor receptor (“EGFR”) program and continues research work on two targets.

The Pfizer Agreement provides Pfizer with an option to acquire an exclusive development and commercialization license for each research project target. Upon exercise of the option, Pfizer (1) will receive an exclusive development and commercialization license for use of the Probody therapeutic during the development, manufacturing and commercialization of the potential product, and (2) will be responsible for the development, manufacturing and commercialization of such potential products.

~~Pursuant to the Pfizer Agreement,~~exchange, the Company received an upfront payment of ~~$6.0~~$35.0 million in January 2023, including $5.0 million of prepaid research and development service fees. The Company will continue to receive research and development service fees according to the preclinical research work plans based on a prescribed FTE rate and is eligible to receive up to approximately $1.2 billion in future development, regulatory, and commercial milestone payments. The Company is also eligible to receive tiered royalties from high-single digit to low-teen percentage rates of annual global net sales of any products that are commercialized under the Moderna Agreement. The Moderna Agreement also provided Moderna with an option to participate in an equity financing by CytomX at market price, subject to certain terms, conditions and regulatory requirements.

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

As of June 30, 2023 and December 31, 2022, deferred revenue relating to the Moderna Agreement was $32.3 million and $35.0 million, respectively. The amount due from Moderna under the Moderna Agreement was $0 and $35.0 million as of June 30, 2023 and December 31, 2022, respectively.

Regeneron Pharmaceuticals, Inc.

The Company and Regeneron Pharmaceuticals Inc. (“Regeneron”) entered into a Collaboration and License Agreement (the “Regeneron Agreement”) on November 16, 2022, to collaborate on creation of conditionally-activated investigational bispecific cancer therapies utilizing the Company’s Probody® therapeutic platform and Regeneron’s Veloci-Bi® bispecific antibody development platform. The Company and Regeneron will collaborate on preclinical research and discovery activities for initially agreed upon collaboration programs (“Collaboration Program”) with an option to expand additional Collaboration Programs (“Additional Collaboration Program Option”).

Under the Collaboration and License Agreement, the Company granted Regeneron an exclusive, worldwide, royalty-bearing license under certain Company intellectual property to develop, manufacture, commercialize and otherwise exploit licensed products (“Licensed Products”) for all human and non-human diagnostic, prophylactic and therapeutic uses in oncology. Regeneron is ~~entitled~~responsible for funding the cost of preclinical research and discovery activities of both parties for all Licensed Products and for funding the cost of development, manufacturing and commercialization of all Licensed Products worldwide.

Pursuant to ~~receive~~the Regeneron Agreement, the consideration from Regeneron is comprised of an upfront fee of $30.0 million, contingent payments for development and regulatory milestones and commercial milestone payments of up to an aggregate of ~~$263.5 million as follows: (i)~~approximately $0.8 billion. If Regeneron exercises its Additional Collaboration Program Option, the Company would be eligible to receive additional upfront and milestone payments aggregating up to $4.5 million upon exercise of the license options, (ii) up to $38.0 million from the achievement of development milestones for the research target programs, (iii) up to $101.0 million in milestone payments for the first commercial sale in various territories for up to three indications per research target program, and (iv) up to $120.0 million in sales milestones payments for the research target programs.approximately $1.2 billion. The Company is also entitled to ~~receive~~tiered royalties ~~in the mid-single~~from high-single digit to low-teen percentage royalties from potential future ~~sales of product candidates. The~~sales. In addition, the Company will ~~also~~ receive research and development service fees based on a prescribed FTE ~~rate per year that is capped.~~rate.

In accordance with ASC 605-25, the Company identified the following deliverables at the inception of the Pfizer Agreement: (1) the research license, (2) the research services and (3) the obligation to participate in the joint research committee. The Company determined that the research license does not have stand-alone value to Pfizer due to the specialized nature of the research services to be provided by the Company, and accordingly, this deliverable was combined with the research services and participation in the joint research committee as a single unit of accounting. The Company concluded that, at the inception of the agreement, Pfizer’s options to obtain an exclusive development and commercialization license for each research project target do not represent deliverables of the agreement because they are substantive options and do not contain a significant or incremental discount.

The upfront payment of $6.0 million was recorded as deferred revenue and is being recognized on a ratable basis over the estimated performance period of seven years. In December 2014, Pfizer selected an additional target and paid $1.5 million, which was recorded as deferred revenue and is being recognized over the remaining performance period. Following the lapse of the Pfizer’s option to select a fourth target in May 2016, the amortization period of deferred revenue was adjusted to five and a half years.

The Company recognized revenue of $0.5 million and $0.6 million for the three months ended September 30, 2017 and 2016, respectively and $1.4 million and $1.6 million for the nine months ended September 30, 2017 and 2016, respectively. As of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, deferred revenue relating to the ~~Pfizer~~Regeneron Agreement was ~~$2.1~~$28.2 million and ~~$3.4~~$30.0 million, respectively. The amount due from ~~Pfizer~~Regeneron under the Regeneron Agreement was ~~$0.1~~$0.5 million and ~~$0.1~~$30.0 million as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016,~~2022, respectively.

Contract Liabilities

The following table presents changes in the Company’s total contract liabilities during the six months ended June 30, 2023 and 2022:


	Balance at 12/31/2022		Additions		Revenue Recognized			Balance at 06/30/2023
	(in thousands)
Contract liabilities:
Deferred revenue	$	301,326	$	2,514	$	(42,687	)	$	261,153


	Balance at 12/31/2021		Additions		Revenue Recognized			Balance at 06/30/2022
	(in thousands)
Contract liabilities:
Deferred revenue	$	284,760	$	2,093	$	(21,958	)	$	264,895

The Company expects that the $261.2 million of deferred revenue related to the following contracts as of June 30, 2023 will be recognized as revenue based on actual FTE effort and estimated program progress as set forth below. However, the timing of revenue recognition could differ from the estimates depending on facts and circumstances impacting the various contracts, including progress of research and development, resources assigned to the contracts by the Company or its collaboration partners or other factors outside of the Company’s control.

•

The $14.9 million of deferred revenue related to the Amgen EGFR Products is expected to be recognized until 2026.

•

The $0.2 million of deferred revenue related to the Amgen Other Products is expected to be recognized within 2023.

•

The $38.0 million of deferred revenue related to the Astellas Agreement, together with research and development service fees, is expected to be recognized until 2026.

~~CYTOMX THERAPEUTICS, INC.~~CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements ~~(unaudited)—(Continued)~~(Unaudited)

~~9. License Agreement~~

•

The ~~Company has an exclusive, worldwide license agreement (the “UC Agreement”) with the Regents~~$147.6 million of ~~the University of California (the “UC Regents”), acting through its Santa Barbara Campus, relating~~deferred revenue related to the ~~use~~BMS Agreement is expected to be recognized until 2025.

•

The $32.3 million of ~~certain patents and technology relating to its core technology, including its therapeutic antibodies. Pursuant~~deferred revenue related to the UCModerna Agreement, the Company is obligated to (i) make royalty payments to the UC Regents on net sales of its products covered under the agreement, subject to annual minimum amounts, (ii) make milestone payments to the UC Regents upon the occurrence of certain events, (iii) make a milestone payment to the UC Regents upon occurrence of an IPO or change of control, and (iv) reimburse the UC Regents for prosecution and maintenance of the licensed patents. If the Company sublicenses its rights under the UC Agreement, it is obligated to pay the UC Regents a percentage of the total gross proceeds received in consideration of the grant of the sublicense, which total amount would be first reduced by the aggregate amount of certaintogether with research and development ~~related expenses incurred by the Company.~~

~~In 2013, the Company amended the UC Agreement~~service fees, is expected to ~~reduce the amounts due~~be recognized until 2027.

•

The $28.2 million of deferred revenue related to the ~~UC Regents upon receipt by~~Regeneron Agreement, together with research and development service fees, is expected to be recognized until 2026.

7. Stock-Based Compensation

Stock Options

Activities for the Company’s stock option plans for the six months ended June 30, 2023 were as follows:


	Options Outstanding
	Number of Options			Weighted- Average Exercise Price Per Share
Balance at December 31, 2022		13,289,838		$	7.67
Options granted		1,398,673			2.42
Options exercised		(16,535	)		1.57
Option forfeited/expired		(851,515	)		6.25
Balance at June 30, 2023		13,820,461		$	7.24

The Company recorded $1.7 million and $2.8 million of ~~upfront payments, milestone payments and royalties from sublicensees. In exchange for this amendment, the Company issued~~stock-based compensation expense related to the ~~UC Regents 157,332 shares of common stock. The UC Agreement, as amended, will remain in effect until the expiration or abandonment of the last to expire of the licensed patents.~~

~~The Company incurred expenses of $1.7 million and $0 million~~stock options for the three months ended June 30, 2023 and 2022, respectively.

The Company recorded $3.6 million and $5.7 million of stock-based compensation expense related to the stock options for the six months ended June 30, 2023 and 2022, respectively.

Time-based RSUs ("TRSU")

Activities for the Company’s TRSUs for the six months ended June 30, 2023 were as follows:


	Number of Shares			Weighted Average Grant Date Fair Value Per Share

Balance at December 31, 2022		1,212,884		$	2.81
TRSUs awarded		643,892			2.45
TRSUs vested		(323,204	)		2.37
TRSUs cancelled		(42,638	)		3.83
Balance at June 30, 2023		1,490,934		$	2.72

The Company recorded $0.5 million and $0.4 million of stock-based compensation expense related to the TRSUs for the three months ended June 30, 2023 and 2022, respectively.

The Company recorded $1.0 million and $0.7 million of stock-based compensation expense related to the TRSUs for the six months ended June 30, 2023 and 2022, respectively.

Performance-based RSUs ("PSUs")

In October 2021, the Company granted 435,000 PSUs to executive employees with an aggregated grant date fair value of $2.3 million. Vesting for 50% of the PSUs granted will occur within one year of the grant date upon achievement of certain specific milestones ("2021-Tranche 1") and the remaining 50% will vest within two years of the grant date upon achievement of additional company objectives ("2021-Tranche 2").

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

In July 2022, the Company determined that the performance condition for 2021-Tranche 1 was met and recorded $1.0 million of stock-based compensation expense for the year ended December 31, 2022. As the achievement of the milestones for Tranche 2 was not considered probable, no compensation cost was recorded for 2021-Tranche 2 of these awards through June 30, 2023.

In August 2022, the Company granted 250,000 PSUs to executive employees with an aggregated grant date fair value of approximately $0.4 million. Vesting for 50% of the PSUs granted will occur upon attaining certain specific milestones by December 2023 (“2022-Tranche 1”), and the remaining 50% will vest upon attaining certain specific milestones by December 2024 (“2022-Tranche 2”). As of December 31, 2022, and June 30, 2023, the Company determined that it is probable that the performance conditions for 2022-Tranche 1 will be satisfied and hence recorded $55,000, $33,000 and $62,000 compensation cost, respectively, for those awards for the year ended December 31, 2022 and for the three and six months ended June 30, 2023. As of December 31, 2022 and June 30, 2023, the Company determined that it is not probable that the performance conditions for 2022-Tranche 2 will be satisfied and hence recorded no compensation cost for those awards through June 30, 2023.

In February 2023, the Company granted 710,000 PSUs to executive employees with an aggregated grant date fair value of approximately $1.8 million. Vesting for 50% of the PSUs granted will occur upon attaining certain specific milestones by December 2024 (“2023-Tranche 1”), and the remaining 50% will vest upon attaining certain specific milestones by December 2025 (“2023-Tranche 2”). The Company determined that it is not probable that the performance conditions will be satisfied for each of these tranches and hence no compensation cost was recorded for these awards through June 30, 2023.

Activities for the Company’s PSUs for the six months ended June 30, 2023 were as follows:


	Number of Shares			Weighted Average Grant Date Fair Value Per Share

Balance at December 31, 2022		383,750		$	2.96
PSUs awarded		710,000			2.59
PSUs vested		—			—
PSUs cancelled		(33,750	)		3.81
Balance at June 30, 2023		1,060,000		$	2.68

Stock-based Compensation

Total stock-based compensation recorded was as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
	(in thousands)
Stock-based compensation expense:
Research and development	$	914	$	2,091	$	1,875	$	3,696
General and administrative		1,457		2,399		2,905		4,164
Total stock-based compensation expense	$	2,371	$	4,490	$	4,780	$	7,860

8. Commitments and Contingencies

Legal Proceedings

On March 4, 2020, Vytacera Bio, LLC filed a patent infringement lawsuit against the Company in the U.S. District Court for the District of Delaware. The lawsuit alleges that the Company's use, offers to sell, and/or sales of the Probody® technology platform for basic research applications constitutes infringement. The complaint seeks unspecified monetary damages. In September 2022, the Company filed a motion to dismiss the case and the Court granted the parties’ stipulation to stay all pending case deadlines until that motion is finally resolved. The Company believes that the lawsuit is without merit and intends to vigorously defend itself. The Company does not believe a loss is probable and has not recorded any amount as a contingent liability for claims associated with this lawsuit as of June 30, 2023.

9. Income Taxes

CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements (Unaudited)

The Company maintains a full valuation allowance against its net deferred tax assets due to the Company’s history of losses as of June 30, 2023 and December 31, 2022.

The Company files income taxes in the U.S. federal jurisdiction, the state of California and various other U.S. states. The Company is currently under examination by the state of California for the years 2017 and ~~2016, respectively~~2018. The examination contests the Company’s tax position on revenue apportionment for upfront and ~~$12.0~~milestone payments resulting from the Company’s collaboration and licensing agreements. As of the date of this filing, the state of California has not proposed adjustments to the tax returns. Due to the ongoing nature of the examination and discussions with the state of California, the Company is unable to estimate a date by which this matter will be resolved or reasonably estimate the potential impact should the tax position be revised. Based on the Company's current expectations and understanding of the reasonably possible outcomes, the Company does not anticipate that the resolution of this matter would result in a material impact on its financial position or results of operations.

10. Restructuring

On July 13, 2022, the Company announced a restructuring plan to prioritize its resources on its emerging pre-clinical and early clinical pipeline as well as its existing collaboration partnerships. The restructuring plan resulted in a reduction to its workforce of approximately 40%. Restructuring costs of $2.4 million and ~~$1.1~~$5.1 million ~~for~~were recorded in general and administrative expense and research and development expense, respectively, in the ~~nine months ended September~~third and fourth quarters of 2022. The restructuring was substantially complete as of December 31, 2022.

The following is a summary of accrued restructuring costs as of June 30, ~~2017 and 2016, respectively, to the UC Regents under the provisions of the UC Agreement. See Note 8 under Amgen for a discussion of the $1.2 million estimated sublicense fee payable to the UC Regents.~~2023 (in thousands):

~~Royalty obligations~~



	Severance and Benefits Costs			Contract Termination Cost			Stock Based Compensation			Total
Total restructuring cost recorded	$	7,617		$	178		$	175		$	7,970
Cash payment		(5,812	)		—			—			(5,812	)
Change in estimates		(293	)		(14	)		—			(307	)
Non-cash charges		—			—			(175	)		(175	)
Balance at December 31, 2022		1,512			164			—			1,676
Cash payment		(1,427	)		(50	)		—			(1,477	)
Change in estimates		(55	)		(114	)		—			(169	)
Balance at June 30, 2023	$	30		$	—		$	—		$	30

11. Leases

Sublease

The Company has ~~annual minimum royalty obligations of $150,000 under the terms of certain exclusive licensed patent rights.~~

~~10. Commitments and Contingencies~~

~~Operating Lease~~

~~Facility Leases~~

~~On December 10, 2015, the Company entered into~~ a lease ~~(the “Lease”) with HCP Oyster Point III LLC (the “Landlord”) to lease approximately 76,173 rentable square feet~~ of office and laboratory space located in South San Francisco, California for the Company’s corporate ~~headquarters.~~ headquarters (the “2016 Lease”). The Company previously leased office and laboratory space located in South San Francisco, California, pursuant to a lease dated March 29, 2013, which expired pursuant to a lease termination agreement (“Lease Termination”) entered into in March 2016. The Lease Termination provided for an early termination of the prior lease and was effective on November 30, 2016. The Company was not required to pay the landlord a termination payment in connection with the early termination of the lease.

~~The term of the Lease commenced on October 1, 2016. The~~2016 Lease has an initial term of ten years ~~from the commencement date,~~ through 2026 and the Company has an option to extend the initial term for an additional five years at the then fair rental value as determined pursuant to the 2016 Lease.

The Lease provides for annual base rent of approximately $3.1 million in the first year of the lease term. The annual base rent for the second twelve months will be approximately $4.3 million, which will increase on an annual basis beginning from the 25^th month to approximately $5.5 million for the tenth year of the lease. The Company was entitled to an improvement allowance of up to $12.6 million, of which $2.3 million is recoverable by the landlord through an increase in rent which continues through the expiration of the initial lease term.

In ~~addition,~~March 2023, the Company ~~obtained~~entered into a ~~standby letter~~sublease agreement for a portion of ~~credit (the “Letter of Credit”) in~~its existing office and laboratory space. The sublease is classified as an amount of approximately $0.9 million, which may be drawn by the Landlord to be applied for certain purposes upon the Company’s breach of any provisions under the Lease. The Company has recorded the $0.9 million Letter of Credit in restricted cash as a non-current asset on its balance sheet at September 30, 2017 and December 31, 2016.

~~Rent expense~~operating lease whereby sublease income is recognized on a straight-line basis over the sublease term ofthat expires on September 30, 2026. For the ~~lease~~three and ~~accordingly the Company records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability.~~six months ended June 30, 2023, sublease income was $0.3 million.


	June 30, 2023
	(in thousands)
Future sublease income payments
Remainder of 2023	$	649
2024		1,333
2025		1,379
2026		1,067
Total sublease income payments	$	4,428

~~CYTOMX THERAPEUTICS, INC.~~CytomX Therapeutics, Inc.

Notes to Condensed Financial Statements ~~(unaudited)—(Continued)~~(Unaudited)

12. Subsequent Event

~~The future minimum lease payments~~

In July 2023, the Company entered into an agreement with BVF Partners L.P. (“BVF”) for ~~all~~a private placement that resulted in initial gross proceeds of ~~the Company’s facility leases are as follows (in thousands):~~

Year Ending December 31:

2017 (three months remaining)

$
1,173

2018

4,723

2019

4,855

2020

4,990

2021 and beyond

31,511

Total

$
47,252

Rent expense was $1.1 million and $0.3 million for the three months ended September 30, 2017 and 2016, respectively, and $3.2 million and $0.5 million for the nine months ended September 30, 2017 and 2016, respectively. The amount for the nine months ended September 30, 2016 included a one-time adjustment of $0.2 million to deferred rent pursuant to the termination of the Company’s previous lease for former office and laboratory space.

~~Legal Proceedings~~

The Company is subject to claims and assessments from time to time in the ordinary course of business but is not aware of any such matters, individually or in the aggregate, that will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

~~Indemnifications~~

approximately $30.0 million. In the ~~ordinary course of business, the Company enters into agreements that may include indemnification provisions.~~

~~Pursuant~~private placement, CytomX issued pre-funded warrants to ~~such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses~~BVF to those arising from third party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be requiredpurchase up to make under these provisions is not determinable. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ insurance.

~~11. Common Stock~~

In October 2015, the Company’s board of directors and stockholders approved the Company’s amended and restated certificate of incorporation. The amended and restated certificate of incorporation was effective as of October 14, 2015, and provides for 75,000,000 authorized14,423,077 shares of common stock, ~~with a par value of $0.00001 per share and 10,000,000 shares of preferred stock with a par value of $0.00001 per share.~~

~~Common stockholders are entitled~~accompanying Tranche 1 warrants to ~~dividends if and when declared by the Board of Directors subject~~purchase up to ~~the prior rights of the preferred stockholders. As of September 30, 2017 and December 31, 2016, no dividends on common stock had been declared by the Board of Directors.~~

~~The Company had reserved~~5,769,231 shares of common stock ~~for issuance as follows:~~

September 30, 2017

December 31, 2016

Options issued and outstanding

6,603,015

6,158,746

Shares available for future stock option grants

2,551,424

2,493,188

Shares reserved under the ESPP

1,005,095

683,234

10,159,534

9,335,168

~~CYTOMX THERAPEUTICS, INC.~~

~~Notes~~and accompanying Tranche 2 warrants to ~~Condensed Financial Statements (unaudited)—(Continued)~~

~~12. Stock Option Plans~~

~~In 2010, the Company adopted its 2010 Stock Incentive Plan (the “2010 Plan”) which provided for the granting of stock options~~purchase up to ~~employees, directors and consultants of the Company. Options granted under the 2010 Plan were either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”).~~

In February 2012, the Company adopted its 2011 Stock Incentive Plan (the “2011 Plan”). The 2011 Plan is divided into two separate equity programs, an option and stock appreciation rights grant program and a stock award program. In conjunction with adopting the 2011 Plan, the Company discontinued the 2010 Plan and released the shares reserved and still available under that plan.

In connection with the consummation of the IPO in October 2015, the board of directors adopted the Company’s 2015 Equity Incentive Plan (the “2015 Plan”). In conjunction with adopting the 2015 Plan, the Company discontinued the 2011 Plan with respect to new equity awards.

~~The initial number of~~5,769,231 shares of common stock, ~~available for future issuance under the 2015 Plan was 2,444,735. Beginning on January 1, 2016 and continuing until the expiration~~at a combined price of ~~the 2015 Plan, the total number~~$2.08 per share.

Each pre-funded warrant has an exercise price of ~~shares~~$0.00001 per share of common stock, ~~available~~are immediately exercisable and will be exercisable for ~~issuance under the 2015 Plan will automatically increase annually on January~~20 years. The accompanying Tranche 1 ~~by 4%~~warrants have an exercise price of ~~the total number of issued and outstanding shares~~$4.16 per share of common stock, asare immediately exercisable and will expire in July 2025. The accompanying Tranche 2 warrants have an exercise price of ~~January 1 of the same year. As of September 30, 2017, 2,551,424 shares~~$6.24 per share of common stock, ~~were available for future issuance under the 2015 Plan.~~

Options under the 2015 Plan may be granted for periods of up to ten years. All options issued to date have had a 10-year life. Under the terms of the 2015 Plan, options may be granted at an exercise price not less than the estimated fair value of the shares on the date of grant, as determined by the Company’s board of directors. For employees holding more than 10% of the voting rights of all classes of stock, the exercise price of ISOsare immediately exercisable and NSOs may not be less than 110% of the estimated fair value of the shares on the date of grant, as determined by the board of directors. To date, options granted generally vest over four years and vest at a rate of 25% upon the first anniversary of the issuance date and 1/48th per month thereafter.will expire in July 2026.

~~Activity under the Company’s stock option plans is set forth below:~~

Options Outstanding

Number of
Options

Weighted-Average Exercise Price
Per Share

Balances at December 31, 2016

6,158,746

$
5.939

Options granted

1,786,420

12.414

Options exercised

(562,253
)

4.168

Option forfeited/expired

(779,898
)

9.028

Balances at September 30, 2017

6,603,015

$
7.477

Options exercisable at September 30, 2017

3,627,011

$
5.119

~~13. Employee Stock Purchase Plan~~

Concurrent with the completion of the IPO in October 2015, the Company’s Employee Stock Purchase Plan (“ESPP”) became effective. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP generally provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of the offering period. 43,040 shares were issued under the ESPP during the nine months ended September 30, 2017.

Shares available for future purchase under the ESPP were 1,005,095 at September 30, 2017. The compensation expense related to the ESPP was $76,000 and $61,000 for the three months ended September 30, 2017 and 2016, respectively, and $207,000 and $82,000 for the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, there was $51,000 of unrecognized compensation cost related to the ESPP, which we expect to recognize over 2 months.

2520

~~CYTOMX THERAPEUTICS, INC.~~CytomX Therapeutics, Inc.

~~Notes to Condensed~~

Item 2. Management’s Discussion and Analysis of Financial ~~Statements (unaudited)—(Continued)~~Condition and Results of Operations

~~14. Stock Based Compensation~~

~~Total stock-based compensation recorded related to options granted to employees and non-employees and employee stock purchase plan was as follows (in thousands):~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Stock-based compensation expense:

Research and development

$
1,267

$
1,315

$
3,813

$
3,844

General and administrative

1,514

1,405

4,724

3,788

Total stock-based compensation expense

$
2,781

$
2,720

$
8,537

$
7,632

~~15. Related Party Transactions~~

Certain employees of Third Rock Ventures, a stockholder of the Company, provide consulting services to the Company. General and administrative expense for these services of $10,000 and $12,000 were recorded for the three months ended September 30, 2017 and 2016, respectively, and $28,000 and $36,000 were recorded for the nine months ended September 30, 2017 and 2016, respectively. The amounts outstanding and included in accounts payable were $10,000 and $12,000 as of September 30, 2017 and December 31, 2016, respectively.

Revenues from related party refer to the collaboration agreement with Pfizer, one of the Company’s stockholders. The Company recognized revenue of $0.5 million and $0.6 million for the three months ended September 30, 2017 and 2016, respectively, and $1.4 million and $1.6 million for the nine months ended September 30, 2017 and 2016, respectively (Note 8). As of September 30, 2017 and December 31, 2016, deferred revenue relating to the Pfizer Agreement was $2.1 million and $3.4 million, respectively. The amount due from Pfizer under the agreement was $68,000 and $0.1 million as of September 30, 2017 and December 31, 2016, respectively.

~~16. Employee Benefit Plans~~

~~Defined Contribution Plan~~

The Company sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code covering substantially all full-time U.S. employees. Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal tax regulations. The Company made contributions to the plan of $27,000 and $15,000 for the three months ended September 30, 2017 and 2016, respectively, and $229,000 and $187,000 for the nine months ended September 30, 2017 and 2016, respectively.

~~17. Net Loss Per Share~~

The following weighted-average outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented, because including them would have been anti-dilutive:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Options to purchase common stock

6,713,038

6,155,800

6,976,470

6,082,572

Total

6,713,038

6,155,800

6,976,470

6,082,572

~~Item 2.~~

~~Management’s Discussion and Analysis of~~ ~~Financial Condition and Results of Operations~~

You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended December 31, ~~2016,~~2022, included in our Annual Report on Form 10-K as filed with the U.S. Securities and Exchange Commission (“SEC”) on March ~~2, 2017.~~27, 2023. This discussion and other parts of this report contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report titled “Risk Factors.” Except as may be required by law, we assume no obligation to update these forward-looking statements or the reasons that results could differ from these forward-looking statements.

~~Overview~~

Overview

We are a clinical-stage, oncology-focused biopharmaceutical company focused on developing novel conditionally activated, biologics localized to the tumor microenvironment. We aim to build a commercial enterprise to maximize our impact on the treatment of cancer. By pioneering a novel class of ~~investigational antibody~~localized biologic drug candidates, powered by our Probody® therapeutic technology platform, we lead the field of conditionally activated oncology therapeutics ~~based~~and have established biologics localization as a strategic area of research and development. Our goal is to transcend the limits of current cancer treatments by successfully leveraging therapeutic targets and strategies that were once thought to be inaccessible.

Our proprietary and versatile Probody technology platform is designed to enable conditional activation of biologic therapeutic candidates within the tumor microenvironment, while minimizing drug activity in healthy tissues and circulation. Our industry-leading platform is built on a strong foundation of tumor biology expertise, including deep knowledge of tumor-associated enzymes known as proteases. Proteases are tightly controlled in normal tissues but often poorly regulated and active in tumor microenvironments where they play important roles in cancer cell migration, invasion and metastasis. Leveraging our deep scientific knowledge, we conceived of and constructed our Probody ~~technology platform. We use our~~therapeutic platform which allows us to create proprietary cancer immunotherapies against clinically-validated targets, such as PD-L1, and develop first-in-class cancer therapeutics against difficult-to-drug targets, such as CD166. Probody therapeutics aregenetically engineer biologic therapeutic candidates to contain protease-cleavable masks. Our masking strategy is designed to ~~take advantage~~reduce binding of ~~unique conditions~~biologic therapeutics to their targets until the mask is removed by proteases in the tumor microenvironment, providing more selective targeting of the tumor. We believe this innovative approach has the potential to ~~enhance~~improve cancer treatment in three ways:

Allowing the ~~tumor-targeting features~~pursuit of high potential targets that were previously considered “undruggable” due to their ubiquitous expression on normal tissues;

Enhancing a potential product’s “therapeutic window,” the balance between tolerability and anti-tumor activity; and

Enabling the development of new combination therapies, including immunotherapies, by improving tolerability.

We are employing our leading, conditional activation platform technology to address some of the biggest challenges today in oncology biologics research and development. These include the validation of potential new targets for antibody-drug conjugates (“ADCs”), opening solid tumor opportunities for T-cell engaging bispecific antibodies (“TCBs”), and increasing the therapeutic window for immune modulators such as cytokines and checkpoint inhibitors (“CPIs”). Additionally, we have recently initiated a research collaboration with our Probody platform beyond cancer into other therapeutic areas.

We have utilized our multi-modality Probody platform to build a promising, broad pipeline of potential first-in-class and best-in-class therapeutics that includes molecules in clinical testing including: CX-2029, a Probody ADC targeting CD71; CX-904, a conditionally activated TCB, targeting the epidermal growth factor receptor (“EGFR”) on tumor cells and the CD3 receptor on T cells and BMS-986288, a Probody version of a non-fucosylated anti-CTLA-4 antibody.

We also have a broad pre-clinical pipeline across our collaborations and internally, including two wholly-owned next-generation molecules in investigational new drug application (“IND”) enabling studies. For our next generation molecules, we have selected the previously validated anti-cancer targets, the epithelial cell adhesion molecule (EpCAM) and interferon alpha-2b (IFNa2b), that have been limited in their potential due to systemic toxicities. In the molecular design of CX-2051, an ~~antibody~~ADC, and ~~reduce drug~~CX-801, a masked cytokine, we have incorporated our platform expertise and clinical learnings to optimize predicted therapeutic index in order to potentially broaden the clinical utility of these promising targets through tumor localized conditional activation.

CX-2029, which was partnered with Abbvie until March 2023, is a conditionally activated ADC directed toward the previously undruggable target CD71. Having demonstrated favorable tolerability and encouraging anti-tumor activity in ~~healthy tissues.~~ Phase 1 studies, CX-2029 entered into a four-cohort Phase 2 expansion study initially designed to enroll twenty-five efficacy evaluable patients per cohort in the following malignancies:

CytomX Therapeutics, Inc.

squamous non-small cell lung cancer (“sqNSCLC”), head and neck squamous cell carcinoma (“HNSCC”), esophageal and gastro-esophageal junction (“E/GEJ”) cancers, and diffuse large B-cell lymphoma (“DLBCL”). The DLBCL cohort was later deprioritized due to strategic and competitive reasons and did not enroll any patients. In January 2023, a data update for the Phase 2 expansion was disclosed which included data across all fully enrolled cohorts. The study results reflected an August 5, 2022 full data cut-off and an October 4, 2022 data snapshot for efficacy. The data demonstrated encouraging clinical activity in unselected, heavily pre-treated patients with tumors of squamous histology including a 21% objective response rate (ORR) in squamous esophageal cancer and a 10% ORR in squamous non-small cell lung cancer (sqNSCLC). The adverse event (AE) profile was consistent with Phase 1 observations with anemia (82.6%) being the most common treatment related adverse event (TRAE). Anemia was managed with transfusions, dose delays, and dose reductions. The treatment discontinuation rate due to AEs was 3.3% as a result of anemia. In March 2023, CytomX announced that it would evaluate potential next steps for CX-2029 following the decision from its collaboration partner, AbbVie, Inc., to not advance CX-2029 into additional clinical studies. As a result of AbbVie’s decision, the 2016 CD71 License and Collaboration Agreement has been terminated and CytomX has an exclusive option to re-acquire full rights to CX-2029.

Our ~~two lead programs, CX-072,~~partner, Bristol Myers Squibb, is conducting a ~~wholly-owned PD-L1-targeting~~randomized Phase 2 study evaluating BMS-986249, a Probody ~~therapeutic and CX-2009, a first-in-class Probody drug conjugate targeting~~version of ipilimumab, the ~~highly expressed tumor antigen, CD166, are both currently being evaluated~~anti-CTLA-4 antibody, in ~~Phase 1/2 studies.~~combination with nivolumab, the anti-PD-1 antibody, in patients with metastatic melanoma. In addition, ~~both CX-072~~BMS-986249 is being studied in combination with nivolumab in three additional indications: advanced hepatocellular carcinoma, metastatic castration-resistant prostate cancer and ~~CX-2009 are part~~advanced TNBC. Bristol Myers Squibb also continues to evaluate BMS-986288, a Probody version of ~~PROCLAIM (Probody Clinical Assessment~~non-fucosylated ipilimumab, as monotherapy or in ~~Man) (“PROCLAIM”), an international umbrella~~combination with nivolumab in a Phase 1 / 2 clinical ~~trial~~study. In February 2023, BMS prioritized BMS-986288 as its lead next-generation anti-CTLA-4 program ~~that provides clinical trial sites with access to~~over two other anti-CTLA-4 programs including BMS-986249.

Reinforcing our ~~novel therapies under one central protocol. In October 2016, we initiated IND-enabling studies of CX-188, our wholly-owned PD-1-targeting Probody therapeutic and anticipate filing an IND~~leadership in the ~~second half~~field of ~~2018.~~conditional activation, in 2022 we advanced our first T-cell engaging bispecific antibody (TCB) into the clinic. CX-904, partnered with Amgen, is a conditionally activated TCB against EGFR and CD3. In ~~addition~~preclinical studies, CytomX’s Probody EGFRxCD3 bispecific therapeutics demonstrated anti-tumor activity and better tolerability when compared to ~~our proprietary programs, we are collaborating~~EGFRxCD3 bispecifics without Probody masking. In May 2022, the first patient was dosed in a Phase 1 study evaluating CX-904 as a treatment for patients with strategic partners, including AbbVie Ireland Unlimited Company (“AbbVie”), Amgen Inc. (“Amgen”), Bristol-Myers Squibb Company (“BMS”), ImmunoGen, Inc. (“ImmunoGen”), MD Anderson Cancer Center (“MD Anderson”) and Pfizer Inc. (“Pfizer”). The two most advanced ~~programs from our collaborations are a Probody therapeutic directed against CTLA-4,~~solid tumors. Patient enrollment in the ~~target~~Phase 1 dose escalation portion of the ~~BMS immune checkpoint inhibitor, Yervoy and CX-2029, a CD71 directed Probody Drug Conjugate being advanced with AbbVie. BMS anticipates initiating a clinical trial~~study continues to progress. We reported in January 2023 that the initial single patient cohort phase of the ~~CTLA-4-directed Probody therapeutic by early 2018. We have initiated IND-enabling studies for CX-2029~~study was complete and ~~an IND filing is anticipated~~that the “3+3” patient cohort phase had been initiated. The Company anticipates initial CX-904 Phase 1 dose escalation data in the first half of ~~2018.~~ 2024.

Our pipeline also includes CX-2051, a wholly-owned conditionally activated ADC paired with a next-generation camptothecin payload and directed toward the epithelial cellular adhesion molecule (EpCAM). CX-2051 has been tailored to optimize the therapeutic index for the systemic treatment of EpCAM-expressing epithelial cancers where previous industry efforts targeting EpCAM have not been successful due to dose-limiting toxicities. CX-2051 has demonstrated a wide predicted therapeutic index and strong preclinical activity and tolerability in multiple preclinical models, including colorectal cancer. We plan to submit an IND for this program in the fourth quarter of 2023.

Praluzatamab ravtansine is our conditionally activated ADC directed toward CD166 which has been evaluated in a three-arm study in patients with advanced human epidermal growth factor receptor 2 (“HER2”)-non-amplified breast cancer. Arms A and B examined praluzatamab ravtansine monotherapy in patients with hormone receptor-positive/HER2-non-amplified breast cancer and triple-negative breast cancer (“TNBC”), respectively. Arm C studied praluzatamab ravtansine in combination with pacmilimab (CX-072), our wholly-owned PD-L1 inhibitor, in patients with TNBC. In July 2022, Phase 2 topline results were disclosed for Arms A and B. Based on the reported results, the Company deprioritized further investment.

Another wholly-owned emerging product candidate is CX-801, an interferon ("IFN") alpha-2b Probody. IFNa2b provides a potentially superior approach to activating anti-tumor immune responses than other cytokines. CX-801 is a dually masked, conditionally activated version of IFNa2b that has the potential to become a unique centerpiece of combination therapy for a wide range of tumor types. An IND submission for CX-801 is planned in the fourth quarter of 2023.

We are also ~~advancing an EGFR targeting~~continuously engaged in drug discovery efforts towards the generation of new clinical candidates across multiple modalities for the treatment of cancer, including additional ADCs, Cytokines, TCBs, and most recently, mRNAs reflecting the versatility of our Probody ~~T-Cell bispecific with Amgen.~~

platform. We currently have ~~two product candidates in clinical trials but we~~more than 15 active drug discovery and/or development programs.

We do not have any ~~product candidates~~products approved for sale, and we continue to incur significant research and development and general administrative expenses related to our operations. We are not profitable and have incurred losses in each year since our founding in 2008. Our net loss was ~~$10.2~~$1.1 million and $4.4 million for the three and six months ended ~~September~~June 30, ~~2017 and $43.7 million for the nine months ended September 30, 2017.~~2023. As of ~~September~~June 30, ~~2017,~~2023 and December 31, 2022, we had an accumulated deficit of ~~$220.1 million.~~$727.3 million and $722.9 million, respectively. We expect to continue to incur significant losses for the foreseeable future.

CytomX Therapeutics, Inc.

Global health authorities, including the FDA, regulate many aspects of a product candidate’s life cycle, including research and development and preclinical and clinical testing. We will need to commit significant time, resources, and funding to develop our wholly-owned and partnered product candidates in clinical trials. We are unable to provide the nature, timing, and estimated costs of the efforts necessary to complete the development of our product candidates because, among other reasons, of regulatory uncertainty, manufacturing limitations, and the pace of enrollment of our clinical trials, which is a function of many factors, including the availability and proximity of patients with the relevant condition.

We currently have no manufacturing capabilities and do not intend to establish any such capabilities in the near term. As such, we are dependent on third parties to supply our product candidates according to our specifications, in sufficient quantities, on time, in compliance with appropriate regulatory standards and at competitive prices.

Impact of COVID-19

The COVID-19 pandemic previously impacted our ongoing operations, including clinical trials, however, any resulting financial impact cannot be reasonably estimated. The extent to which the COVID-19pandemic may continue to impact our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions necessary to contain the virus or treat its impact, among others. We will continue to monitor the COVID-19 situation closely and operate in accordance with all relevant health and safety guidelines as they evolve in response to changing public health conditions.

Critical Accounting Policies and Estimates

The preparation of our Condensed Financial Statements requires us to make estimates and judgments that affect the reported amounts in the financial statements and related disclosures. On an ongoing basis, management evaluates its significant accounting policies and estimates. We base our estimates on historical experience and on various market-specific and other relevant assumptions that we believe to be 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. Actual results may differ significantly from these estimates. Estimates are assessed each period and updated to reflect current information. ~~A summary of~~There are no material changes to our critical accounting policies and estimates isas presented in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2016. There have been no material changes to our critical accounting policies and estimates during the nine months ended September 30, 2017.~~2022.

Components of Results of Operations

Revenue

Our revenue to date has been primarily derived from non-refundable license payments, milestone payments and reimbursements for research and development expenses under our research, collaboration, and license agreements. We recognize revenue from upfront payments ~~ratably~~ over the term of our estimated period of performance under the ~~agreement.~~agreement using an input method for the entire performance obligation. In applying the input method of revenue recognition, we use actual full-time equivalent (FTE) hours incurred relative to estimated total FTE hours expected to be incurred for each combined performance obligation over the estimated research service period of each collaboration target. In addition to receiving upfront payments, we are entitled to variable payments related to research and development services provided and may ~~also~~ be entitled to milestone and other contingent payments upon achieving predefined objectives. Revenue from milestones, if they are nonrefundable and deemed substantive, is recognized upon successful accomplishment of the milestones. To the extent that non-substantive milestones are achieved and we have remaining performance obligations, milestones are deferred and recognized as revenue over the estimated remaining period of performance. Reimbursements from Pfizer and BMS forvariable payments related to research and development ~~costs incurred under our research, collaboration~~or milestones and ~~license agreements with them~~other contingent payments, when it is probable that there will not be a significant revenue reversal, are ~~classified as revenue.~~also recognized over the performance period based on a similar method.

For the foreseeable future, we do not expect to generate any revenue from the sale of products unless and until such time as our product candidates have advanced through clinical development and obtained regulatory approval. We expect that any revenue we do generate in the foreseeable future will fluctuate from year to year as a result of the timing and amount of milestones and other payments from our ~~collaborations~~collaboration agreements with ~~AbbVie,~~ Amgen, ~~BMS, ImmunoGen and Pfizer,~~Astellas, Bristol Myers Squibb, Regeneron, Moderna and any ~~future~~other collaboration partners, and as a result of the fluctuations in the research and development expenses we incur in the performance of assigned activities under these agreements.

AbbVie, one of our previous collaboration partners, entered into a license agreement with Seagen Inc. (“SGEN”) to license certain intellectual property rights. As part of the collaboration agreement with AbbVie, we received a sublicense to these intellectual property rights and therefore paid SGEN sublicense fees. These sublicense fees were treated as reductions to the transaction price and combined with the performance obligation to which they relate. Milestone payments, when considered probable of being reached and when a significant revenue reversal would not be probable of occurring, are also recorded net of the associated sublicense fees and included in the transaction price.

CytomX Therapeutics, Inc.

Research and Development Expenses

Our research and development expenses consist primarily of costs incurred to conduct research, such as the discovery and development of our product candidates, clinical development, including activities with third parties, such as ~~clinical~~contract research organizations (“~~CROs”~~CRO”) and contract development and manufacturing organizations (“~~CMOs”~~CMO”), and the manufacture of drug products we used in clinical trials, as well as the development of product candidates pursuant to our research, collaboration and license agreements. Research and development expenses include personnel costs, including stock-based compensation expense, contractor services, laboratory materials and supplies, depreciation and maintenance of research equipment, and an allocation of related facilities costs. We expense research and development costs as ~~they are~~ incurred.

We expect our research and development expenses ~~to increase~~could vary substantially ~~in absolute dollars~~ in the future as we prioritize our pipeline opportunities, advance our product candidates ~~into and~~ through clinical trials, initiate additional clinical trials, and pursue regulatory approval of our product candidates, and expand the breadth of our clinical stage pipeline. For example, we received clearance from the FDA for our IND for CX-072 in December 2016 and treated our first patient in our Phase 1/2 clinical trial in January 2017. We also received clearance from the FDA for our IND for CX-2009 in May 2017 and treated our first patient in our Phase 1/2 clinical trial in June 2017. In addition, we have initiated IND-enabling studies for both CX-188 and CX-2029.candidates. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors including: the safety and efficacy of our product candidates, early clinical data, investment in our clinical program, the ability of collaborators to successfully develop our licensed product candidates, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of our product candidates.

General and Administrative Expenses

General and administrative expenses include personnel costs, expenses for outside professional services and other allocated expenses. Personnel costs consist of salaries, bonuses, benefits and stock-based compensation. Outside professional services consist of ~~legal,~~ accounting and audit services, legal and other consulting fees. Allocated expenses primarily consist of rent expense related to our office and ~~research and development facility. We expect to incur additional expenses as a result of operating as a public company, including expenses~~information technology related to compliance with the rules and regulations of the SEC, and those of any national securities exchange on which our securities are traded, additional insurance expenses, investor relations activities and other administrative and professional services. We also expect to increase our administrative headcount to operate as a public company and as we advance our product candidates through clinical development, which will also increase our general and administrative expenses.costs.

Interest Income ~~net~~

Interest income primarily consists of interest income from our cash equivalents and ~~short-term~~ investments, and ~~interest costs related to~~accretion of discounts or amortization of premiums on our ~~short-term~~ investments.

Other Income (Expense), ~~net~~Net

Other income (expense), net consists primarily of ~~gain~~gains and losses ~~related~~resulting from changes to ~~changes in~~ currency exchange rates.

Results of Operations

~~For~~Revenue

The following table summarizes our revenue by collaboration partner during the ~~Three and Nine Months Ended September 30, 2017 and 2016.~~respective periods:

~~Revenues~~


	Three Months Ended June 30,							Six Months Ended June 30,
	2023		2022		Change			2023		2022		Change
	(in thousands)							(in thousands)
AbbVie	$	—	$	6,775	$	(6,775	)	$	3,988	$	8,526	$	(4,538	)
Amgen		1,720		357		1,363			3,496		2,594		902
Astellas		5,350		4,657		693			14,055		9,423		4,632
Bristol Myers Squibb		13,879		1,064		12,815			21,603		1,350		20,253
Regeneron		1,754		—		1,754			2,335		—		2,335
Moderna		2,021		—		2,021			2,746		—		2,746
Total revenue	$	24,724	$	12,853	$	11,871		$	48,223	$	21,893	$	26,330

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

Change

2017

2016

Change

(in thousands)

(in thousands)

Total revenues

$
24,144

$
3,454

$
20,690

$
44,550

$
8,771

$
35,779

~~Revenue increased $20.7~~24

CytomX Therapeutics, Inc.

The increase in revenue of $11.9 million ~~during~~for the three months ended ~~September~~June 30, ~~2017~~2023 compared to the corresponding period of 2022 was primarily due to:

•

An increase in ~~2016.~~ revenue under the BMS Agreement driven by higher percentage of completion of the existing and new targets selected in 2022;

•

An increase in revenue under the Regeneron Agreement and Moderna Agreement due to new preclinical studies that commenced during the current period;

•

A decrease in revenue under the AbbVie Agreement due to termination of the agreement in March 2023.

The increase in revenue of $26.3 million for the six months ended June 30, 2023 compared to the corresponding period of 2022 was primarily due ~~to recognition~~to:

•

An increase in revenue under the BMS Agreement driven by higher percentage of ~~$14.0 million, net~~completion of the ~~associated license fees,~~existing and new targets selected in 2022;

•

An increase in revenue under the Astellas Agreement primarily driven by a $5.0 million clinical candidate milestone achieved in January 2023;

•

A decrease in revenue under the AbbVie Agreement due to termination of the agreement in March 2023, partially offset by an increase from the ~~milestone payment we received from AbbVie~~the remaining deferred revenue of $4.0 million was recognized in full in the first quarter of 2023;

•

An increase in revenue under the Regeneron Agreement and Moderna Agreement due to new preclinical studies that commenced during the current period.

Operating Costs and Expenses

Research and Development Expenses

The following table summarizes our research and development expenses by program incurred during the respective periods presented:


	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2023		2022		Change			2023		2022		Change
External costs incurred by product candidate (target):	(in thousands)							(in thousands)
Praluzatamab ravtansine, CX-2009 (CD166)	$	1,166	$	3,746	$	(2,580	)	$	1,818	$	8,619	$	(6,801	)
CX-2029 (CD71)		353		3,001		(2,648	)		1,060		5,079		(4,019	)
Pacmilimab, CX-072 (PD-L1)		95		1,037		(942	)		324		1,036		(712	)
CX-904		406		845		(439	)		842		1,512		(670	)
Other wholly owned and partnered programs		7,924		4,566		3,358			14,669		8,029		6,640
General research and development expenses		1,891		3,471		(1,580	)		5,257		7,723		(2,466	)
		11,835		16,666		(4,831	)		23,970		31,998		(8,028	)
Internal costs		8,836		14,493		(5,657	)		17,876		29,720		(11,844	)
Total research and development expenses	$	20,671	$	31,159	$	(10,488	)	$	41,846	$	61,718	$	(19,872	)

Research and development expenses decreased by $10.5 million and $19.9 million for the three months and six months ended June 30, 2023, respectively, compared to the corresponding periods of 2022. This was primarilydue to a decrease in personnel related expenses, as well as winding down of laboratory contract services and clinical study activities related to the CX-2009 and CX-2029 programs, partially offset by an increase in laboratory contract services related to IND enabling activities.

General and Administrative Expenses


	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2023		2022		Change			2023		2022		Change
	(in thousands)							(in thousands)
General and administrative expenses	$	7,401	$	11,748	$	(4,347	)	$	15,378	$	22,291	$	(6,913	)

CytomX Therapeutics, Inc.

General and administrative expenses decreased by $4.3 million and $6.9 million for the three months and six months ended June 30, 2023, respectively, compared to the corresponding periods of 2022 primarily due to a decrease in personnel related expenses as a result of the ~~Company achieving certain milestones required to be met to begin GLP toxicology studies under~~workforce reduction in 2022 and patent related legal expenses.

Interest Income and Other Income (Expense)


	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2023			2022		Change			2023			2022		Change
	(in thousands)								(in thousands)
Interest income	$	2,308		$	262	$	2,046		$	4,635		$	330	$	4,305
Other income (expense), net		(47	)		296		(343	)		(32	)		309		(341	)
Total interest and other income	$	2,261		$	558	$	1,703		$	4,603		$	639	$	3,964

Interest Income

Interest income increased by $2.0 million and $4.3 million for the CD71 Agreement, an increase of $6.3 million related to the recognition of the an upfront payment we received from BMS in connection with the expansion of our collaboration pursuant to an amendment of our Collaborationthree months and License Agreement that we entered into in March 2017 (the “BMS Amendment”), an increase of $0.5 million related to the recognition of an upfront payment we received pursuant to the Development and Licensing Agreement and Discovery Collaboration and Licensing Agreement we entered into with AbbVie in April 2016 (collectively the “AbbVie Agreements”) resulting from the selection of a second target in October 2016, and an increase of $0.4 million in recognized revenue related to payments made by BMS in connection with the selection of its fourth target under our Collaboration and License Agreement entered into in 2014 (the “BMS Agreement”), which increases were partially offset by a $0.2 million of amortization of deferred research and development costs related to the AbbVie Agreements and a decrease in service revenue of $0.2 million resulting from decreased activities on the BMS and Pfizer programs.

~~Revenue increased $35.8 million during the nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the corresponding ~~period in 2016. The increase in revenue~~periods of 2022 was primarily due to the recognition of $14.0 million, net of the associated license fees, from the milestone payment we received from AbbVie as a result of the Company achieving certain milestones required to be met to begin GLP toxicology studies under the CD71 Agreement, an increase of $6.5 milliondriven by higher interest rates in recognized revenue triggered by our delivery of a Development and Commercialization License to ImmunoGen in connection with our collaboration agreement with ImmunoGen, which we entered into in January 2014, an increase of $10.8 million related to the recognition of an upfront payment we received from BMS in connection with the expansion of our collaboration, an increase of $2.3 million related to the recognition of the upfront payment we received pursuant to the AbbVie Agreements, an increase of $1.4 million related to the recognition of payments made by BMS in connection with the selection of its fourth target under our Collaboration and License Agreement, and an increase of $0.7 million in recognized revenue due to the acceleration of the research timeline triggered by BMS’s selection of fourth target under the BMS Agreement.2023.

~~Operating Costs and Expenses~~

~~Research and Development Expenses~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

Change

2017

2016

Change

(in thousands)

(in thousands)

Research and development expenses

$
28,920

$
13,337

$
15,583

$
71,573

$
39,407

$
32,166

Research and development expenses increased $15.6 million during the three months ended September 30, 2017 compared to the corresponding period in 2016. The increase was attributable to $10.7 million of IPR&D expense recognized as a result of the Amgen Agreement and a $1.2 million sublicense fee payable to UCSB as a result of the Amgen agreement, an increase of $1.7 million in pharmacology studies and clinical trial expenses resulting from the advancement of CX-072, CX-2009 and CX-2029 in 2017, an increase of $0.9 million in allocations resulting from increases in facilities-related expenses, an increase of $0.4 million in consulting and contracted services due primarily to regulatory filings and an increase of $0.4 million in personnel-related expense resulting from an increase in headcount.

Research and development expenses increased $32.2 million during the nine months ended September 30, 2017 compared to the corresponding period in 2016. The increase was attributable to $10.7 million of IPR&D expense recognized as a result of the Amgen Agreement and a $1.2 million sublicense fee payable to UCSB as a result of the Amgen agreement, a $10.0 million sublicense payment made to UCSB which was triggered by the $200.0 million upfront payment made by BMS in connection with our expanded collaboration, an increase of $6.3 million to advance CX-072, CX-2009 and CX-2029 into Phase 1/2 clinical development, an increase

of $2.7 million in facilities-related expenses incurred during the period, an increase of $2.3 million in personnel-related expenses due to an increase in headcount, an increase of $0.6 million in expenses related to acquisitions with respect to our patent portfolios and an increase of $0.4 million in consulting fees, which expenses were partially offset by a decrease of $3.0 million in manufacturing expenses for our CX-072 and CX-2009 programs.

~~General and Administrative Expenses~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

Change

2017

2016

Change

(in thousands)

(in thousands)

General and administrative expenses

$
6,249

$
5,033

$
1,216

$
17,989

$
14,720

$
3,269

General and administrative expenses increased $1.2 million during the three months ended September 30, 2017 compared to the corresponding period in 2016. The increase was attributable to an increase of $0.3 million in personnel-related expenses due to an increase in headcount, an increase of $0.3 million in legal expenses and an increase of $0.4 million in consulting and public relations expenses.

General and administrative expenses increased $3.3 million during the nine months ended September 30, 2017 compared to the corresponding period in 2016. The increase was attributable to an increase of $2.1 million in personnel-related expense due to an increase in headcount, an increase of $0.4 million in severance expense, an increase of $0.3 million in facilities-related expenses and an increase of $0.3 million in repairs and maintenance and general expenses.

~~Interest Income, Interest Expense and Other Income (Expense), net~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

Change

2017

2016

Change

(in thousands)

(in thousands)

Interest income, net

$
806

$
210

$
596

$
1,400

$
542

$
858

Other income (expense), net

(47
)

45

(92
)

(101
)

(46
)

(55
)
Total Interest and other income

$
759

$
255

$
504

$
1,299

$
496

$
803

~~Interest Income, net~~

Interest income, net increased $0.6 million during the three months ended September 30, 2017 compared to the corresponding period in 2016. Interest income, net increased $0.9 million during the nine months ended September 30, 2017 compared to the corresponding period in 2016. The increases for both the three months and the nine months ended September 30, 2017 were primarily attributable to lower amortization of premiums on our short-term investments.

Liquidity and Capital Expenditures

Sources of Liquidity

As of ~~September~~June 30, ~~2017,~~2023, we had cash, cash equivalents and ~~short-term~~ investments of ~~$331.3~~$180.9 million and an accumulated deficit of ~~$220.1~~$727.3 million, compared to cash, ~~and~~ cash equivalents and investments of ~~$181.9~~$193.7 million and an accumulated deficit of ~~$176.4~~$722.9 million as of December 31, ~~2016.~~2022. To date, we have financed our operations primarily through sales of our common stock in conjunction with the IPO, subsequent stock offerings and through our at-the-market offering, sales of our convertible preferred securities prior to our IPO and payments received under our collaboration agreements. In November 2022, we entered into a Collaboration and License Agreement with Regeneron Pharmaceuticals, Inc. (the “Regeneron Agreement”) to collaborate on preclinical research activities to discover and develop certain antibody compounds for the treatment of cancer using the Company’s Probody therapeutic technology. Pursuant to the Regeneron Agreement, we collected an upfront fee of $30.0 million. In December 2022, we entered into a Collaboration and License Agreement with ModernaTX, Inc. (the “Moderna Agreement”) to collaborate on discovery and preclinical research and development activities to create investigational messenger RNA (mRNA) based conditionally activated therapies using the Company’s Probody therapeutic technology. Pursuant to the Moderna Agreement, we collected an upfront fee and prepaid research funding of $35.0 million in January 2023. In July 2023, we completed a private placement that resulted in initial gross proceeds of approximately $30.0 million.

On July 13, 2022, we announced a restructuring plan to prioritize resources on our emerging pre-clinical and early clinical pipeline as well as our existing collaboration partnerships. The restructuring plan resulted in a reduction to our workforce by approximately 40%, and was substantially completed by the fourth quarter of 2022. We incurred aggregate restructuring charges of approximately $7.5 million, primarily related to one-time severance payments and other employee-related costs.

Based upon our current operating plan, we expect our existing capital resources will be sufficient to fund ~~our~~ operations into ~~2020.~~the second half of 2025. However, if the anticipated operating results and future financing are not achieved in future periods, our planned expenditures may need to be reduced in order to extend the time period over which the then-available resources would be able to fund the operations. The amounts and timing of our actual expenditures depend on numerous factors, including the progress of our preclinical and clinical development efforts, the results of any clinical trials and other studies, our operating costs and expenditures and other factors ~~describe~~described under the caption “Risk Factors” in this Quarterly Report on Form 10-Q. The cost and timing of developing our ~~products, including CX-072, CX-2009, CX-2029 and CX-188 are~~product candidates is highly uncertain ~~are~~and subject to substantial risks and ~~many~~ changes. As such, we may alter our expenditures as a result of contingencies such as the failure of one or ~~both~~all of ~~these~~our product candidates currently in clinical development, the acceleration of one or ~~both~~all of ~~these~~our product candidates in clinical development, the initiating of clinical trials for additional product candidates, the identification of a more promising product ~~candidate~~candidates in our research efforts or unexpected operating costs and expenditures. We will need to raise additional funds in the future. There can be no assurance, however, that such efforts will be ~~successful~~successful; or ~~that, in the event that~~if they are successful, that the terms and conditions of such financing will be favorable to us.

CytomX Therapeutics, Inc.

Summary Statement of Cash Flows

The following table summarizes our cash flows for the periods indicated:

Nine Months Ended

September 30,

2017

2016

(in thousands)

Net cash provided by operating activities

$
148,371

$
(3,968
)
Net cash provided by investing activities

28,492

3,409

Net cash provided by financing activities

2,717

495

Net increase in cash and cash equivalents

$
179,580

$
(64
)


	Six Months Ended
	June 30,
	2023			2022
	(in thousands)
Net cash used in operating activities	$	(15,829	)	$	(75,550	)
Net cash used in investing activities		(120,602	)		(1,148	)
Net cash provided by financing activities		317			458
Net increase (decrease) in cash and cash equivalents	$	(136,114	)	$	(76,240	)

Cash Flows from Operating Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, cash ~~provided by~~used in operating activities was ~~$148.4~~$15.8 million, which consisted of a net loss of ~~$43.7~~$4.4 million, adjusted by non-cash charges of ~~$20.9~~$4.6 million and a net ~~increase~~decrease of ~~$171.2~~$16.0 million inrelating to the change of our net operating ~~assets.~~assets and liabilities. The non-cash charges primarily consisted of ~~$8.5~~$4.8 million in stock-based compensation, ~~$10.7~~$1.8 million in non-cash ~~acquisition of in-process research and development~~lease expense, $1.2 million in depreciation and amortization, ~~and $0.4~~partially offset by $3.2 million in ~~amortization premiums~~accretion of discounts on ~~our short-term~~ investments.

The change in our net operating assets and liabilities was primarily ~~attributable to an increase~~due to:

•

a net decrease of ~~$169.6~~$40.2 million in deferred revenue ~~which was~~resulting from the continued recognition of deferred revenue from existing and new customers;

•

a decrease of $12.3 million in accounts payable, accrued and other long-term liabilities primarily due to decrease of payroll-related expenses and restructuring related expenses as well as timing of other payments; offset by

•

an increase of $34.1 million in cash flows from accounts receivable primarily related to the receipt of the $35.0 million upfront payment and prepaid research under the Moderna agreement entered into in December 2022.

•

an increase $2.4 million in cashflows from prepaid and other current assets primarily due to a ~~$200.0 million upfront payment from BMS~~decrease in ~~connection with the BMS Amendment entered into in March 2017, partially offset by the recognition~~advance payments to our third party manufacturing vendors and timing of upfront fees of $23.9 million under certain of our collaboration agreements and $6.5 million in recognized revenue from our delivery of a Development and Commercialization License to ImmunoGen in connection with our collaboration agreement; an increase in accrued liabilities of $4.1 million due primarily to the accrual of the $1.2 million of sublicense fee payable to UCSB, $2.2 million increase in clinical expense accrual, and $1.2 million increase in long-term accrued liabilities resulting from deferred rent recorded on the new headquarter office; and an increase of $2.1 million in accounts receivable. These increases were partially offset by an increase of $1.0 million in prepaid expenses and other current assets, and a decrease of $3.5 million in accounts payable.payments.

During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2022, cash used in operating activities was ~~$4.0~~$75.6 million, which consisted of a net loss of ~~$44.9~~$61.5 million, adjusted by non-cash charges of ~~$10.1~~$10.7 million and a net ~~increase~~decrease of ~~$30.8~~$24.8 million inrelating to the change of our net operating ~~assets.~~assets and liabilities. The non-cash charges primarily consisted of ~~$7.5~~$7.9 million in stock-based compensation, $1.6 million in non-cash lease expense and $1.2 million in depreciation and ~~amortization and $1.3 million in amortization premiums on our short-term investments.~~ amortization.

The change in our net operating assets and liabilities was primarily ~~attributable to an increase~~due to:

•

a net decrease of ~~$32.4~~$19.9 million in deferred revenue ~~which was primarily due to a $30.0 million upfront payment~~resulting from ~~AbbVie in connection with AbbVie Agreements and a $10.0 million milestone payment~~the continued recognition of deferred revenue from ~~BMS in connection with its selection of a third target and an increase of $4.1 million in accrued liabilities. Such increase was partially offset by~~ existing customers;

•

a decrease of ~~$4.1~~$5.3 million in accounts payable, accrued and ~~$2.1~~other long-term liabilities primarily due to timing of payment; and

•

an increase of $0.4 million in cash flows from accounts receivable and prepaid ~~expenses~~ and other current ~~assets.~~

assets primarily due to decreased advance payments to our third party manufacturing vendors and timing of payments.

Cash Flows from Investing Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, cash ~~provided by~~used in investing activities was ~~$28.5~~$120.6 million, which consisted of ~~$84.0~~$220.0 million used in the purchase of short-term investments and $0.6 million of capital expenditures used to purchase property and equipment, partially offset by $100.0 million in proceeds received upon the maturity of marketable securities. ~~Such increase was partially offset by $54.2 million~~

During the six months ended June 30, 2022, cash used in ~~the purchase of short-term investments and $1.3~~investing activities was $1.1 million of capital expenditures used to purchase property and equipment.

During the nine months ended September 30, 2016, cash provided by investing activities was $3.4 million, which consisted of $126.5 million in proceeds received upon the maturity of marketable securities, offset by $121.5 million used in the purchase of short-term and long-term investments and $1.6 million of capital expenditures used to purchase property and equipment.27

CytomX Therapeutics, Inc.

Cash Flows from Financing Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, cash provided by financing activities consisted of ~~proceeds from the exercise of stock options.~~

~~During the nine months ended September 30, 2016, cash provided by financing activities primarily consisted~~$0.3 million of proceeds from the exercise of stock options and ~~repayment~~employee stock purchases under the employee stock purchase plan.

During the six months ended June 30, 2022, cash provided by financing activities consisted of ~~stockholder notes.~~$0.5 million of proceeds from the exercise of stock options and employee stock purchases under the employee stock purchase plan.

Contractual Obligations

~~The following table summarizes our~~

During the six months ended June 30, 2023, there were no material changes in contractual obligations ~~as of September 30, 2017 (in thousands):~~

Payments Due by Period⁽¹⁾

2017 ⁽²⁾

2018

2019

2020

2021 +

Total

Operating leases⁽³⁾

$
1,173

$
4,723

$
4,855

$
4,990

$
31,511

$
47,252

Total contractual obligations

$
1,173

$
4,723

$
4,855

$
4,990

$
31,511

$
47,252

⁽¹⁾	~~This table does not include any milestone payments or royalty payments to third parties as the amounts, timing and likelihood of such payments are not known.~~

⁽²⁾	~~Remainder of the year~~

⁽³⁾	~~We lease our current facility under a long-term operating lease, which expires in 2026.~~

~~We enter into agreements~~from the amounts disclosed in our Annual Report on Form 10-K for the normal course of business with contract research organizations for clinical trials and with vendors for pre-clinical studies and other services and products for operating purposes, which are cancelable at any time by us, generally upon 30 to 60 days of prior written notice. These payments are not included in the above table of contractual obligations. The above table also excludes unrecognized tax benefits of $1.2 million as ofyear ended December 31, ~~2016 because these uncertain tax positions, if recognized, would be an adjustment to our deferred tax assets.~~2022.

~~Segment Information~~

~~We have one primary business activity and operate as one reportable segment.~~

~~Off-Balance Sheet Arrangements~~

~~We have not entered into any off-balance sheet arrangements and do not have any holdings in variable interest entities.~~

~~JOBS Act Accounting Election~~

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. We do intend to rely on other exemptions provided by the JOBS Act, including, without limitation, providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. We will remain an emerging growth company until the earlier of (1) December 31, 2020, (2) the last day of the fiscal year (a) in which we have total annual gross revenue of at least $1.07 billion, or (b) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, and (3) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

~~Item 3.~~

~~Quantitative and Qualitative Disclosure About Market Risk~~

Item 3. Quantitative and Qualitative Disclosure About Market Risk

We are ~~exposed~~a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to ~~market risks in~~provide the ordinary course of our business. These risks primarily relate to interest rate risks. We had cash, cash equivalents and short-term investments of $331.3 million and $181.9 million as of September 30, 2017 and December 31, 2016, respectively, which consists of bank deposits, money market funds and U.S. government bonds. Such interest-bearing instruments carry a degree of interest rate risk; however, historical fluctuations of interest income have not been significant.information required under this item.

We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate exposure. We have not historically been exposed to material risks due to changes in interest rates. Due to the short-

term duration of our investment portfolio and low risk profile of our investments, an immediate 100 basis point increase in interest rates would not have material effect on the fair value of our portfolio.

~~Item 4.~~

~~Controls and Procedures~~

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”) refers to controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its ~~principal executive~~Principal Executive and ~~principal financial officers,~~Principal Financial Officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.

Our management, with the participation of our ~~Chief~~Principal Executive ~~Officer~~ and ~~Chief~~Principal Financial ~~Officer,~~Officers, has evaluated the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2017,~~2023, the end of the period covered by this Quarterly Report on Form 10-Q. ~~Management’s assessment of internal control over financial reporting was conducted using~~Based on their evaluation and subject to the ~~criteria defined in~~foregoing, the ~~Internal Control—Integrated Framework (2013)~~ ~~issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based upon such evaluation, our Chief~~Principal Executive ~~Officer~~ and ~~Chief~~Principal Financial ~~Officer have~~Officers concluded that our disclosure controls and procedures were effective ~~at the reasonable assurance level~~ as of ~~such date.~~June 30, 2023.

Remediation of Material Weakness

In connection with preparing our financial statements for the year ending December 31, 2022 and evaluating new collaboration and license agreements initiated in the fourth quarter of 2022, we re-evaluated our previous application of ASC 606 for our collaboration and license agreements and identified an error. Upon reassessment, we have determined that certain revenue should be recognized over time using an input method as an appropriate measure of progress, rather than ratably over the estimated research period. The Company’s internal control to perform a technical accounting analysis for collaboration and license agreements failed to operate as designed. As a result, we concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2022. The Company identified a material weakness in internal control over financial reporting related to its application of ASC 606 for license and collaboration agreements.

To remediate this material weakness, during the six months ended June 30, 2023, we have implemented and improved the operation of our controls related to the application of ASC 606 to our collaboration and license agreements and the related controls to measure the progress in satisfying the performance obligations. Management has determined that the material weakness was remediated during the three months ended June 30, 2023, due to enhancements made to our related technical accounting analysis processes and internal controls during the period.

Changes in Internal Controls Over Financial Reporting

~~There~~28

CytomX Therapeutics, Inc.

Except as discussed above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our ~~most recent~~ fiscal quarter ended June 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CytomX Therapeutics, Inc.

PART II – OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

Item 1. Legal Proceedings

We are subject to claims and assessments from time to time in the ordinary course of business but isare not aware of any such matters, individually or in the aggregate, that will have a material adverse effect on our financial position, results of operations or cash flows.

On March 4, 2020, Vytacera Bio, LLC filed a patent infringement lawsuit against us in the U.S. District Court for the District of Delaware. The lawsuit alleges that our use, offers to sell, and/or sales of the Probody® technology platform for basic research applications constitutes infringement. The complaint seeks unspecified monetary damages. In September 2022, we filed a motion to dismiss the case and the Court granted the parties’ stipulation to stay all pending case deadlines until that motion is finally resolved. We believe that the lawsuit is without merit and intend to vigorously defend ourselves. Accordingly, we cannot reasonably estimate any range of potential future charges, and we have not recorded any accrual for a contingent liability associated with these legal proceedings.

~~Item 1A.~~

~~Risk Factors~~

Item 1A. Risk Factors

Risk Factors Summary

We are providing the following summary of risk factors contained in this Quarterly Report on Form 10-Q to enhance the readability and accessibility of our risk factor disclosures in accordance with SEC rules. Please carefully review the full risk factors pertaining to this summary and to additional general risk factors contained in this Quarterly Report on Form 10-Q in their entirety for additional information regarding the material factors that make an investment in our securities speculative or risky. These risks and uncertainties include, but are not limited to, the following:

•

We are a clinical-stage biopharmaceutical company with a limited operating history and have not generated any revenue from product sales.

•

Clinical development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.

•

Our product candidates are in early stages of development and may fail or suffer delays that materially and adversely affect their commercial viability.

•

Interim, “top-line,” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

•

Our product candidates may cause undesirable side effects at any time during or after the clinical trial process that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any, including withdrawal from the market.

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If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

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Our approach to the discovery and development of our therapeutic treatments is based on novel technologies that are unproven and may not result in marketable products.

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The market may not be receptive to our product candidates based on a novel therapeutic modality, and we may not generate any future revenue from the sale or licensing of product candidates.

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We have entered, and may in the future seek to enter, into collaborations with third parties for the development and commercialization of our product candidates using our Probody platform. If we fail to enter into such collaborations, or such collaborations are not successful, we may not be able to capitalize on the market potential of our Probody platform and resulting product candidates.

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If we do not achieve our projected development and commercialization goals in the timeframes we announce and expect, the commercialization of any of our product candidates may be delayed, or never attained, and our business will be harmed.

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We may not successfully engage in strategic transactions, including any additional collaborations we seek, which could adversely affect our ability to develop and commercialize product candidates, impact our cash position, increase our expense and present significant distractions to our management.

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We rely on third parties to conduct all of our clinical trials and certain of our preclinical studies and intend to continue to do so, and if such third parties do not perform as contractually required, fail to satisfy regulatory or legal requirements or miss expected deadlines, our development programs could be delayed with material and adverse effects on our business, financial condition, results of operations and prospects.

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Because we have no long-term contracts with and rely on third-party manufacturing and supply partners, most of which are sole source suppliers, our supply of research and development, preclinical and clinical development materials may become limited or interrupted or may not be of satisfactory quantity or quality.

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We, or third-party manufacturers, may be unable to successfully scale-up manufacturing of our product candidates in sufficient quality and quantity, which would delay or prevent us from developing our product candidates and commercializing approved products, if any.

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We face competition from entities that have developed or may develop product candidates for cancer, including companies developing novel treatments and technology platforms. If these companies develop technologies or product candidates more rapidly than we do or their technologies are more effective, our ability to develop and successfully commercialize product candidates may be adversely affected.

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If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner or with adequate compliance, we may be subject to a loss of stockholder confidence and sanctions or investigations by regulatory authorities or litigation.

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Our stock price may be volatile and purchasers of our common stock could incur substantial losses.

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The COVID-19 pandemic or any future pandemic could adversely impact our business, including our research, clinical trials, including clinical trial site initiation and patient enrollment, and financial condition.

Risk Factors

You should consider carefully the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If any of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. The risks described below are not the only risks facing the Company. Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, results of operations and/or prospects.

Risks Related to Our Business

We are a clinical-stage biopharmaceutical company with a limited operating history and have not generated any revenue from product sales. We have a history of losses, expect to continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability, which could result in a decline in the market value of our common stock.

We are a clinical-stage biopharmaceutical company with a limited operating history, developing a novel class of therapeutic antibody product candidates, based on our proprietary biologic Probody technology platform. Since our inception, we have devoted our resources to the development of Probody therapeutics. We have had significant operating losses since our inception. As of ~~September~~June 30, ~~2017,~~2023 and December 31, 2022, we had an accumulated deficit of ~~$220.1 million. For the three and nine months ended September 30, 2017, our net loss was $10.2~~$727.3 million and ~~$43.7~~$722.9 million, respectively. Substantially all of our losses have resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations.

Though we have developed our Probody platform, our technologies and product candidates are in early stages of development, and we are subject to the risks of failure inherent in the development of product candidates based on novel technologies. We have not yet demonstrated our ability to successfully complete any mid or late-stage clinical trials, including large-scale, pivotal clinical trials, obtain regulatory approvals, arrange for a third party to manufacture a commercial-scale product candidate, or conduct sales and marketing activities necessary for successful commercialization. Typically, it takes many years to develop one product candidate from the time it enters initial preclinical studies to when it is available for treating patients. Consequently, any predictions made about our future success or viability may not be as accurate as they could be if we had a longer operating history. We will need to transition from a company with a research and development focus to a company capable of supporting commercial activities. We may not be successful in such a transition.

Furthermore, we have never generated any revenue from product sales, and have not obtained regulatory approval for any of our product candidates.

~~Furthermore, we~~ We also do not expect to generate any revenue from product sales for the foreseeable future, and we expect to continue to incur

CytomX Therapeutics, Inc.

significant operating losses for the foreseeable future due to the cost of research and development, preclinical studies and clinical trials and the regulatory approval process for our product candidates. We expect our net losses to increase substantially over time as we continue ~~clinical~~the development of our ~~lead programs~~pipeline and advance additional programs into clinical development. However, the amount of our future losses is uncertain. Our ability to achieve profitability, if ever, will depend on, among other things, our, or our ~~existing or future~~ collaborators, successfully developing product candidates, obtaining regulatory approvals to market and commercialize product candidates, manufacturing any approved products on commercially reasonable terms, establishing a sales and marketing organization or suitable third-party alternatives for any approved product and raising sufficient funds to finance business activities. If we, or our ~~existing or future~~ collaborators, are unable to develop our technologies and commercialize one or more of our product candidates or if sales revenue from any product candidate that receives approval is insufficient, we will not achieve profitability, which could have a material and adverse effect on our business, financial condition, results of operations and prospects.

We expect that we will need to raise substantial additional funds to advance development of our product candidates and we cannot guarantee that this additional funding will be available on acceptable terms or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development and commercialization of our current or future product candidates.

The development of biopharmaceutical product candidates is capital-intensive. To date, we have used substantial funds to develop our technology and product candidates and will require significant funds to conduct our ongoing clinical trials as well as to further our research and development, ~~and~~ preclinical testing and future clinical trials of ~~our~~additional product candidates, to seek regulatory approvals for our product candidates and to manufacture and market any products that are approved for commercial sale. In addition, we have incurred and will continue to incur additional costs associated with operating as a public company. However, financial market conditions, including the public equity markets, and government regulation, including the Inflation Reduction Act of 2022, signed into law by President Biden in August 2022, may make it difficult for biotechnology companies to raise additional funds. We cannot predict when or if market conditions will change.

As of ~~September~~June 30, ~~2017,~~2023, we had ~~$331.3 million in~~ cash, cash equivalents and ~~investments. Based on our current operating plan, we expect~~investments of $180.9 million and subsequently raised approximately $30.0 million in a financing transaction in July 2023. We believe that our existing capital resources will be sufficient to fund our planned operations into ~~2020.~~the second half of 2025. Our future capital requirements and the period for which we expect our existing resources to support our operations may vary significantly from what we ~~expect.~~expect and we may not achieve the expected cash flow savings that we anticipate as a result of our recent restructuring. Our monthly spending levels vary based on our ongoing clinical trials, new and ongoing research and development and other corporate activities. For instance, in March 2023, AbbVie terminated the collaboration agreement for CX-2029 and the ongoing discovery agreement we had entered into with them in 2016. We are evaluating the further development of CX-2029 and if we elect to move it forward in further clinical trials without a partner, we will need to allocate additional internal capital resources to the effort. Because the length of time and activities associated with ~~successful research~~conducting our clinical trials and ~~development of~~successfully researching and developing our product candidates is highly uncertain, we are unable to estimate the actual funds we will require for development and, once any product candidate is approved, any subsequent marketing and commercialization activities.

The timing and amount of our operating expenditures will depend largely on:

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the scope, timing and progress of our ongoing clinical trials as well as any other preclinical and clinical development ~~activities;~~

activities which may be affected by, among other things, the COVID-19 pandemic;

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the number, size and type of clinical trials and preclinical studies ~~and clinical trials~~ that we may be required to complete for our product candidates, as well as the cost and time of such studies and trials;

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

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the time and cost necessary to produce clinical supplies of our product candidates;

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the time and cost necessary to scale our manufacturing capabilities prior to or following regulatory approval and commercial launch of any product candidates;

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the progress of the development efforts of parties with whom we have entered or may in the future enter into collaborations and research and development agreements;

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the timing and amount of ~~milestone~~ payments we may receive or are obligated to pay under our ~~collaborations~~collaboration agreements and license agreements;

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our ability to maintain our current licenses and research and development programs and to establish new collaboration arrangements;

CytomX Therapeutics, Inc.

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the costs involved in prosecuting and enforcing patent and other intellectual property ~~claims;~~

claims, including the ongoing patent infringement lawsuit brought by Vytacera against us;

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the cost of any existing or future litigation to which we are or may become a party;

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the cost and timing of regulatory approvals; and

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our efforts to enhance operational systems and hire additional personnel, including personnel to support development and commercialization of our product candidates and satisfy our obligations as a public company.

If we are unable to obtain funding on a timely basis or on acceptable terms, we may have to delay, reduce or terminate our research and development programs and preclinical studies or clinical trials, limit strategic opportunities or undergo reductions in our workforce or other corporate restructuring activities. We also could be required to seek funds through arrangements with collaborators or others that may require us to relinquish rights to some of our technologies or product candidates that we would otherwise pursue on our own. For example, in July 2022, we announced that we would seek a partner to further develop praluzatamab ravtansine. We have not yet obtained a partner for praluzatamab ravtansine and we may not be able to do so in the future for the development of that product candidate. We do not expect to realize revenue from sales of products or royalties from licensed products in the foreseeable future, if at all, and unless and until our product candidates are clinically tested, approved for commercialization and successfully marketed. To date, we have financed our operations primarily through sales of our common stock, ~~in conjunction with our IPO,~~ sale of our convertible preferred securities prior to our IPO and payments received under our collaboration ~~agreements.~~agreements, including, more recently, the collaboration and license agreements that we entered into with each of Regeneron and Moderna in November and December 2022, respectively, and funding we received in a private placement announced in June 2023. We will be required to seek additional funding in the future and currently intend to do so through additional collaborations, public or private equity offerings or debt financings, credit or loan facilities or a combination of one or more of these funding sources. Our ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond our ~~control.~~control, including the COVID-19 pandemic. Additionally, our stock price has declined and our ability to raise adequate funding through equity offerings, if at all, may be limited. Additional funds may not be available to us on acceptable terms or at all. If we raise additional funds by issuing equity securities, our stockholders will suffer dilution and the terms of any financing may adversely affect the rights of our stockholders. For example, when we issue shares of common stock upon exercise of the pre-funded warrants, Tranche 1 warrants and Tranche 2 warrants (collectively, the Tranche 1 warrants and Tranche 2 warrants, the “Tranche Warrants”) issued in our June 2023 private placement, our existing stockholders will suffer dilution. In addition, as a condition to providing additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. Debt financing, if available, is likely to involve restrictive covenants limiting our flexibility in conducting future business activities, and, in the event of insolvency, debt holders would be repaid before holders of our equity securities received any distribution of our corporate assets.

Clinical development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

As is the case with all oncology drugs, our product candidates in clinical development or preclinical development go through a long process and have a high risk of failure, including termination for strategic reasons. It is impossible to predict when or if any of our or our partner’s product candidates will prove safe, pure and potent (or effective) in humans or will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we or our partners must complete extensive clinical trials to demonstrate the safety, purity and potency (or efficacy) of our product candidates in humans. Commencement of initial clinical trials for future programs is subject to finalizing the trial design and submission of an IND or similar submission to the FDA or similar global health authorities. In addition, even if we submit an IND or a comparable submission in other jurisdictions for CX-801 and CX-2051 or other product candidates, the FDA or other regulatory authorities could disagree that we have satisfied their requirements to commence our clinical trials or disagree with our study design, which may require us to complete additional preclinical studies or amend our protocols or impose stricter conditions on the commencement of clinical trials and may delay our ability to begin Phase 1 clinical trials, causing an increase in the amount of time and expense required to develop our product candidates, including CX-801 and CX-2051. As a result of the foregoing, the research and development, preclinical studies and clinical testing of any product candidate is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the development process.

Further, we or our collaborators may also experience delays in completing ongoing clinical trials, completing preclinical studies or initiating further clinical trials of our product candidates, including, for example, among other things, as a result of the COVID-19 pandemic. We do not know whether our or our collaborators’ ongoing clinical trials or preclinical studies will be completed on schedule or at all, or whether planned clinical trials or preclinical studies will begin on time, need to be redesigned, enroll patients on time or be completed on schedule, if at all. We or our collaborators may have insufficient internal resources to complete ongoing clinical trials or initiate clinical trials for our

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other product candidates. The development programs for our product candidates may also be delayed for a variety of reasons, including delays related to:

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recruiting suitable patients to participate in a clinical trial, particularly in light of the COVID-19 pandemic;

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developing and validating any companion diagnostic to be used in a clinical trial;

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the FDA or other regulatory authorities requiring us to submit additional data or imposing other requirements before permitting us to initiate a clinical trial;

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obtaining regulatory clearance to commence a clinical trial;

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reaching agreement on acceptable terms with prospective contract research organization (“CROs”) and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;

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obtaining institutional review board (“IRB”) approval at each clinical trial site;

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having patients complete a clinical trial or return for post-treatment follow-up;

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clinical trial sites deviating from trial protocol or dropping out of a trial;

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adding new clinical trial sites;

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manufacturing our product candidates in sufficient quality and quantity for use in clinical trials; or

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collaborators electing to not pursue development and commercialization of our product candidates.

In addition, the results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or safety profiles, notwithstanding promising results in earlier trials.

Our product candidates are in early stages of development and ~~only two have entered into testing in human subjects to date. Our product candidates~~ may fail ~~in development~~ or suffer delays that materially and adversely affect their commercial viability. If we are unable to advance our product candidates through clinical development, obtain regulatory approval and ultimately commercialize such product candidates, or experience significant delays in doing so, our business will be materially harmed.

We are very early in our development efforts, with only two product candidates, CX-2029 and CX-904, currently continuing in early-stage clinical development. We have no products on the market and ~~only two of~~ our ~~product candidates are in clinical stages of development. Our~~ ability to achieve and sustain profitability depends on obtaining regulatory approvals for and successfully commercializing our product candidates, either alone or with third parties. Before obtaining regulatory approval for the commercial distribution of our product candidates, we or ~~an existing or future~~our collaborator must conduct extensive preclinical tests and clinical trials to demonstrate ~~the~~sufficient safety, purity and ~~efficacy in humans~~potency (or efficacy) of our product ~~candidates.~~candidates in patients.

As a result, we may not have the financial resources to continue development of, or to modify existing or enter into new collaborations for, a product candidate if we experience any issues that delay or prevent regulatory approval of, or our ability to commercialize, product candidates, including:

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negative or inconclusive results from our clinical trials, the clinical trials of our collaborators or the clinical trials of others for product candidates similar to ours, leading to a decision or requirement to conduct additional preclinical testing or clinical trials or abandon a program;

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product-related side effects experienced by participants in our clinical trials, the clinical trials of our collaborators or by individuals using drugs or therapeutic biologics similar to our product candidates;

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delays in submitting INDs or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial, or a suspension or termination of a clinical trial once commenced;

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conditions imposed by the ~~United States Food and Drug Administration (“FDA”)~~FDA or comparable foreign authorities regarding the scope or design of our clinical trials;

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delays in enrolling research subjects in clinical trials;

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high drop-out rates of research subjects;

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inadequate supply or quality of product candidate components or materials or other supplies necessary for the conduct of our or our collaborators’ clinical ~~trials or the clinical trials of our collaborators;~~

trials;

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greater than anticipated clinical trial costs;

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~~poor effectiveness~~delay in the development or approval of companion diagnostic tests for our product ~~candidates during clinical trials;~~

candidates;

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unfavorable FDA or other regulatory agency inspection and review of a clinical trial site;

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failure of our third-party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner, or at all;

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delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our technology in particular; or

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varying interpretations of data by the FDA and similar foreign regulatory agencies.

In addition, our current and future clinical trials will need to demonstrate sufficient safety and efficacy for approval by regulatory authorities in larger patient populations. Our Phase 1/2 clinical trial of CX-072 was initiated in January 2017 and was the first time CX-072 had been administered to cancer patients. It is possible that patients enrolled in our Phase 1/2 clinical trial of CX-072 or any future clinical trials we commence for other product candidates could respond in unexpected ways. For instance, our Phase 1/2 clinical trial is being conducted in patients with advanced cancers, including ~~metastatic or locally advanced unresectable solid tumors or lymphomas,~~ who have failed other approved therapies for their disease, and as such, it may be difficult to establish safety and efficacy in this type of patient population. In addition, certain arms of our clinical trial of CX-072 enroll patients with tumor types that are not known to be responsive to PD-L1 agents and therefore may be less likely to show effectiveness. Because certain PD-1 and PD-L1 agents are already approved for the treatment of some tumor types, we cannot test CX-072 on those tumor types and will not be able to obtain clinical information about how CX-072 acts in these tumors. Furthermore, a portion of our Phase 1/2 clinical trial includes the administration of CX-072 in combination ~~with Yervoy~~^® ~~(ipilimumab) or Zelboraf~~^®~~(vemurafenib), which could exacerbate immune system related adverse events, cause increased toxicity or otherwise lead to unexpected adverse events.~~

We treated the first patient in our Phase 1/2 clinical trial of CX-2009 in June 2017. CX-2009 targets CD-166, an antigen that has not been targeted previously in human beings. The effects in human beings of targeting CD-166, a target that is broadly expressed on normal tissue, are not known and could create unacceptable toxicity or fail to result in anti-tumor activity. We could find that ~~targeting CD-166 is~~the therapeutics we or our collaborators pursue are not ~~efficacious.~~

We may experience delays in completing our preclinical studies and initiating or completing clinical trials of our product candidates. We do not know whether planned preclinical studies and clinical trials will be completed on schedule or at all, or whether planned clinical trials will begin on time, need to be redesigned, enroll patients on time or be completed on schedule, if at all. We may have insufficient internal resources to initiate and complete clinical studies of all of our product candidates. Our development programs may be delayed for a variety of reasons, including delays related to:

~~the FDA or other regulatory authorities requiring us to submit additional data or imposing other requirements before permitting us to initiate a clinical trial;~~

~~obtaining regulatory clearance to commence a clinical trial;~~

reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;

~~obtaining institutional review board (“IRB”) approval at each clinical trial site;~~

~~recruiting suitable patients to participate in a clinical trial;~~

~~developing and validating the companion diagnostic to be used in a clinical trial;~~

~~having patients complete a clinical trial or return for post-treatment follow-up;~~

•

~~clinical trial sites deviating from trial protocol or dropping out of a trial;~~

~~adding new clinical trial sites; or~~

~~manufacturing sufficient quantities of our product candidates for use in clinical trials.~~

Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs or therapeutic biologics that may be approved for the indications we are investigating. For example, CX-072 is directed against PD-L1 and there are currently hundreds of clinical studies exploring the use of PD-1 and PD-L1 agents. As such, there can be no assurance that patients will choose to enroll in our studies. In addition, many oncologists and their patients may choose to use an approved PD-1 or PD-L1 agent rather than participate in a clinical trial, particularly now as more global approvals for PD-1 and /or PD-L1 agents are continuing to be achieved in a growing list of cancer types. Furthermore, the part of our Phase 1/2 clinical trial of CX-072 in which patients are treated with the combination of CX-072 and vemurafenib can only enroll those patients who do not have access to MEK inhibitors because the emerging standard of care in jurisdictions where MEK inhibitors are available is to combine a PD-1 or PD-L1 agent with a BRAF inhibitor (like vemurafenib) and a MEK inhibitor. This may have an impact on enrollment in this part of the trial. In addition, our Phase 1/2 clinical trial of CX-2009 studies patients who have one of seven specific tumor types rather than patients suffering from any cancer, which may limit the rate of enrollment of the trial. As with the clinical studies of CX-072, our Phase 1/2 clinical trial of CX-2009 is also competing with hundreds of clinical studies with alternative anti-cancer drugs in a similar class (e.g. antibody drug conjugates)safe, pure, potent (or efficacious). ~~Any delays relating to patient enrollment could cause significant delays in the timing of our clinical trials.~~

We could also encounter delays in the development of any of our product candidates if prescribing physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles. Further, a clinical trial may be suspended or terminated by us, our collaborators, the IRBs of the institutions in which such trials are being conducted, the Data Safety Monitoring Board for such trial or by the FDA or other regulatory authorities due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a drug or therapeutic biologic, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Furthermore, we expect to rely on our collaborators, ~~contract research organizations (“CROs”)~~CROs and clinical trial sites to ensure proper and timely conduct of our clinical trials and while we expect to enter into agreements governing their committed activities, we have limited influence over their actual performance.

If we or our collaborators experience delays in the completion of, or termination of, any clinical trial of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenues or receive royalties from any of these product candidates will be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down our product development and approval process and jeopardize our ability to commence product sales and generate revenues. Furthermore, if one or more of our product candidates or our Probody therapeutic technology generally prove to be ineffective, unsafe or commercially unviable, the development of our entire platform and pipeline could be delayed, potentially permanently. For example, in March 2020, we made the strategic decision to terminate our Phase 2 clinical trial evaluating pacmilimab in combination ipilimumab in melanoma. This decision followed a re-evaluation of the evolving clinical, competitive and commercial landscapes in immuno-oncology, taken together with the impact of the COVID-19 pandemic. In July 2022, we announced topline results of our Phase 2 clinical trial evaluating praluzatamab ravtansine in patients with breast cancer and that we do not plan to further advance this program without a partner. This decision followed an evaluation of the clinical trial results, the competitive landscape and our estimate of the resources necessary to continue the development of praluzatamb ravtansine alone. Additionally, in March 2023, AbbVie announced that it would not advance CX-2029 into additional clinical trials and terminated our 2016 CD71 License and Collaboration Agreement for CX-2029. Any ~~of these~~similar occurrences may materially and adversely affect our business, financial condition, results of operations and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

From time to time, we may publicly disclose preliminary or top-line data from our preclinical studies and clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. For example, in December 2021 we announced preliminary data on two of the four expansion cohorts for CX-2029. In January 2023, we announced further clinical results on three expansion cohorts for CX-2029 and the updated data provided further understanding and perspective on the drug candidate. We can make no assurances that the ultimate trial results for these three cohorts will be consistent with or better or worse than that reported data. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the top-line or preliminary results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Top-line data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, top-line data should be viewed with caution until the final data are available.

From time to time, we may also disclose interim data from our preclinical studies and clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and

CytomX Therapeutics, Inc.

more patient data become available or as patients from our clinical trials continue other treatments for their disease. Adverse differences between preliminary, top-line, or interim data and final data could significantly harm our business prospects.

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

Undesirable side effects caused by our product candidates could cause us, our collaborators or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities. As is the case with all oncology drugs, there may be immediate or late side effects associated with the use of our product candidates, including praluzatamab ravtansine (CX-2009), CX-2029 and CX-904. There can be no assurance that unexpected adverse events will not occur in our ongoing trials or in future trials involving our product candidates or the product candidates of our collaborators. Undesirable side effects may appear in later trials that were not observed in our earlier trials or may be more severe in later trials than earlier trials.

Administration of praluzatamab ravtansine has been generally well tolerated with most reported treatment-related adverse events (“TRAEs”) being Grade 1/2. In May 2020, we announced that 34/92 (37%) patients experienced a Grade 3/4 TRAE. The most common adverse event observed was ocular toxicity, an anticipated toxicity associated with the DM4 payload. Other Grade 3/4 TRAEs included liver function test abnormalities, gastrointestinal disorders and nervous system disorders. In July 2022, we elected to discontinue further development of praluzatamab without a collaboration partner.

In May 2020, we announced that CX-2029 was generally well tolerated at doses up to 3 mg/kg with the most common TRAEs being infusion related reactions, anemia and neutropenia/leukopenia. Grade 3 or greater hematologic TRAEs, anemia and neutropenia, were dose dependent, with anemia being managed with transfusions and supportive care. In January 2023, we announced that the safety results for CX-2029 for the three ongoing expansion cohorts were consistent with previous observations, with no new safety signals identified. The most common TRAEs in 10% or more of patients (All Grade, Grade 3+) were anemia (82.6%, 76.1%), infusion related reactions (70.7%, 3.3%), neutropenia (23.9%, 17.4%), fatigue (17.4%, 1.1%), nausea (13.0%, 1.1%), and diarrhea (10.9%, 0%). There was 1 febrile neutropenia event (Grade 3) reported. The etiology of anemia remains under investigation and is likely to be multi-factorial. While the MMAE payload is known to be associated with anemia, preclinical studies have shown that reduction of red blood cell precursors has been observed in response to targeting CD71, which is known to play a role in early erythroid development. Although we believe such incidences of anemia can be managed, we continue to explore strategies for the management and mitigation of anemia but there can be no assurance that anemia can be managed sufficiently for eventual commercial acceptance. Additionally, although we believe the other TRAEs are manageable, there can be no assurance that the rate or severity of any of these side effects will not increase over time with more patients being treated in ongoing or future studies.

The results of our or our collaborators’ future clinical trials could reveal a high and unacceptable severity of adverse side effects, including immune system related adverse events or increased toxicity, and it is possible that patients enrolled in such clinical trials could respond in unexpected ways or otherwise have unexpected adverse events. For example, in 2022 we have initiated a first-in-human Phase 1 clinical trial with CX-904 and, while we believe our preclinical studies indicate the potential to reach a favorable therapeutic index, clinical data will be necessary to specify an acceptable dose. We cannot provide assurance that we will reach an acceptable dose for CX-904.

Additionally, the Phase 2 clinical trial of BMS-986249 being conducted by Bristol Myers Squibb includes, and the Phase 2 clinical trial of BMS-986288 may include, the administration of the product candidate at relatively high dosage levels, which could further exacerbate such risks. In our Phase 2 clinical trial with CX-2029, we are targeting CD71, a target that is broadly expressed on normal tissue, which could create unacceptable toxicity or fail to result in anti-tumor activity. For instance, CD71 is a metabolic protein with high levels of expression in healthy tissues, and the consequences of targeting such protein in humans are unknown. Any future clinical trials of our product candidates could face similar or heightened risks depending on the modality. Similarly, the combination of EGFR and CD3 has been shown to induce significant toxicities in preclinical animal studies due to the widespread expression of each target.

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In the event that our clinical trials or the clinical trials of our collaborators reveal severe adverse side effects, our or our collaborators’ clinical trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could impose a clinical hold, order us to cease further development of or deny approval of our product candidates for any or all targeted indications. Such side effects could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. For example, in our Phase 1/2 clinical trial of praluzatamab ravtansine, some patients stopped treatment due to ocular toxicity. In addition, any occurrences of side effects with respect to one of our product candidates could negatively affect our or any collaborator’s ability to enroll patients and seek regulatory approval for other product candidates that we have developed using our Probody platform, which could also result in a collaborator terminating any program utilizing our Probody platform and the termination of such collaborative relationship. Any of these occurrences may materially and adversely affect our business, financial condition, results of operations and prospects. Further, clinical trials by their nature utilize a sample of the potential patient population. With a limited number of patients and limited duration of exposure, rare and severe side effects of our product candidates may only be uncovered with a significantly larger number of patients exposed to the product candidate.

In the event that any of our product candidates receives regulatory approval and we, our collaborators or others identify undesirable side effects caused by such product or any other Probody therapeutics, any of the following adverse events could occur, which could result in the loss of significant revenue to us and materially and adversely affect our results of operations and business:

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regulatory authorities may withdraw their approval of the product or seize the product;

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we or our collaborators may be required to recall the product or change the way the product is administered to patients;

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additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any component thereof;

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we may be subject to fines, injunctions or the imposition of civil or criminal penalties;

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regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;

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we may be required to create a Medication Guide outlining the risks of such side effects for distribution to patients;

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

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the product may become less competitive; and

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our reputation may suffer.

In addition, adverse side effects caused by any drugs of other companies utilizing the same or similar antibodies of our product candidates, or that are similar in nature to our product candidates could delay or prevent regulatory approval of our product candidates, limit the commercial profile of an approved label for our product candidates, or result in significant negative consequences following marketing approval.

We believe that any of these events could prevent us from achieving or maintaining market acceptance of our product candidates and could substantially increase the costs of commercializing our product candidates, if approved, and significantly impact our ability to successfully commercialize our product candidates and generate revenues.

If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside the United States. Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors, including:

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the size and nature of the target patient population;

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the eligibility criteria for the clinical trial;

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the design of the clinical trial;

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the availability of an appropriate genomic screening test;

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

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the efforts to facilitate timely enrollment in clinical trials;

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the patient referral practices of physicians;

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the ability to monitor patients adequately during and after treatment;

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the proximity and availability of clinical trial sites for prospective patients; and

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potential pandemics, including the COVID-19 pandemic.

In addition, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs or therapeutic biologics that may be approved for the indications we are investigating, could affect our ability to enroll a sufficient number of eligible patients in our clinical trials. There can be no assurance that new or further trials with our current or future drug candidates will not be adversely affected by a limited patient population. Our clinical trials of praluzatamab ravtansine and CX-2029 study or have studied patients who have one or a select number of specific tumor types rather than patients suffering from any cancer, which limits the rate of enrollment of the trial. In addition, some of our clinical trials seek to treat indications with small population sizes which could be particularly difficult to enroll. The clinical trials for our molecules also compete with thousands of clinical trials with alternative anti-cancer drugs in similar classes (e.g. antibody-drug conjugates), and certain arms of the clinical trials may be difficult to enroll due to the emerging standard of care for such indications in certain jurisdictions, including the United States. Likewise, our clinical trial of CX-904 is also competing with thousands of other anti-cancer clinical trials. Any clinical trials of our product candidates initiated by our collaborators, including Bristol Myers Squibb’s ongoing and planned Phase 2 clinical trials, face similar and additional risks relating to enrollment. We or our collaborators could also encounter delays in the development of any of our product candidates if prescribing physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles. Any delays relating to patient enrollment could cause significant delays in the timing of our or our collaborators’ clinical trials, which may materially and adversely affect our business, financial condition, results of operations and prospects.

Our approach to the discovery and development of our therapeutic treatments is based on novel technologies that are unproven and may not result in marketable products.

We plan to continue to develop a pipeline of product candidates using our proprietary Probody platform. We believe that product candidates (including cancer immunotherapies, ~~Probody Drug Conjugates (“PDCs”)~~conditionally activated ADCs and bispecific antibodies) identified with our product discovery platform may offer an improved therapeutic approach by taking advantage of unique conditions in the tumor microenvironment, thereby reducing the dose-limiting toxic effects associated with traditional antibody products, which can also attack healthy tissue. However, the scientific research that forms the basis of our efforts to develop product candidates based on our Probody platform is ~~ongoing. Further,~~ongoing, including the ~~scientific evidence to support the feasibility of developing therapeutic treatments based on~~research resulting from our ~~Probody platform is both preliminary~~ongoing clinical trials for praluzatamab ravtansine (CX-2009), CX-2029, pacmilimab (CX-072) and ~~limited.~~CX-904.

We may ultimately discover that our Probody platform and any product candidates resulting from it do not possess certain properties required for therapeutic effectiveness or protection from toxicity. For example, when Probody therapeutics are administered ~~in a~~to human subjects, protease levels in ~~the tumor~~tumors may not be sufficient and the peptide mask may not be cleaved, which would limit the potential efficacy of the ~~antibody and reduce the potential to limit the toxicity of the anti-cancer agent.~~antibody. In addition, if the peptide mask is inappropriately released, for example, due to an inflammatory disease, it may reduce the potential to limit toxicity of the anti-cancer agent or result in unforeseen events when administered in humans. Binding of the peptide mask to the antigen-binding domain of the Probody may not be constant, which could lead to intermittent periods when the antigen-binding domain or antibody portion is unmasked. Furthermore, Probody product candidates may ~~also be unable to~~not remain stable in the human body for the period of time required for the drug to reach and to bind to the target tissue or they may trigger immune responses that inhibit the ability of the product candidate to reach the target tissue or that cause adverse side effects in humans. We currently have only limited data, and no conclusive evidence, to suggest that we can introduce these necessary properties into our Probody platform and any product candidates. We may spend substantial funds attempting to introduce these properties and may never succeed in doing so.tissue. In addition, product candidates based on our Probody platform may demonstrate different chemical and pharmacological properties in patients than they do in laboratory studies. Although our Probody platform and certain product candidates have demonstrated successful results in animal studies, they may not demonstrate the same chemical and pharmacological properties in humans and may interact with human biological systems in unforeseen, ineffective, or harmful ways. Our understanding of the molecular pharmacology of Probody therapeutics, that is, the precise manner and sequence in which they are activated and behave in vivo, is incomplete. Probody therapeutics are complex biological molecules and we are evaluating the performance of this new technology in cancer patients for the first time. Many specific elements of Probody therapeutic function may contribute to their overall safety and efficacy profile including, but not limited to, the removal of only one mask from the dually-masked antibody, the removal of both masks from the dually-masked antibody, the binding strength of masks for the underlying antibody, and the binding strength of the underlying antibody for its target. We have limited structural evidence for how masks interact with antibodies. It may take many years before we develop a full understanding of Probody pharmacology, and we may never know precisely how they function in vivo.As with any new biologic or product developed on a novel platform, we have a limited understanding of the immunogenicity profile of Probody therapeutics. As a result, our Probody product candidates may trigger immune responses, such as anti-drug antibody (“ADA”), that may inhibit the ability of the antibody to reach the target tissue, inhibit the ability of the antibody to bind to its target, cause adverse side effects in humans or cause hypersensitivity reactions. For example, we reported in February 2019 that in our pacmilimab trial at the 10 mg/kg dose, the ADA rate was approximately 62%. We do not believe the ADA rate impacted our ability to reach targeted drug exposures. However, we cannot provide assurance that it will not later limit drug exposure or cause severe adverse events for pacmilimab or our other drug candidates. Problems that are specific to our Probody platform

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may have an unfavorable impact on all of our product candidates. As a result, we may never succeed in developing a marketable product and we may never become profitable, which would cause the value of our common stock to decline.

~~Further,~~

In addition, the scientific evidence to support the feasibility of developing product candidates against novel, difficult to drug targets, is both preliminary and limited. For example, our understanding of the expression of CD166 and CD71 in both healthy and diseased tissues is still developing. As a result, we ~~are~~cannot provide any assurance that we will be able to successfully identify and advance any product candidates to target novel, difficult-to-drug targets.

Additionally, we recently entered into a collaboration with Moderna for the development of mRNA based product candidates. We do not ~~aware of any company currently in clinical development with a therapeutic using a prodrug approach~~know whether our Probody platform will be able to ~~antibody drug development and no regulatory authority has granted approval for a therapeutic of~~successfully develop product candidates utilizing this ~~kind. As such, we~~mRNA technology.

We believe that the FDA and foreign regulatory authorities have limited ~~clinical~~ experience with ~~Probody-based~~conditionally activated therapeutics in oncology, such experience primarily coming from praluzatamab ravtansine, CX-2029, BMS-986249, BMS-986288, and ~~no clinical experience in other disease areas. The only clinical experience thus far with Probody based therapeutics comes from the first, ongoing trials of CX-072 and CX-2009, and~~pacmilimab. We believe that such limited experience may increase the complexity, uncertainty and length of the regulatory approval process for our product candidates and may keep us from commencing first-in-human trials in certain countries. As there is limited historical precedent for the regulatory clearance of Probody-based therapeutics in oncology, there is a higher degree of risk that the FDA or other regulatory authorities could disagree that we or our collaborators have satisfied their requirements to commence clinical trials for ~~products other than CX-072 and CX-2009~~some product candidates or disagree with our study designs, which may require us to complete additional preclinical studies or amend our protocols or impose stricter conditions on the commencement of clinical trials. In addition, local clinical practice in other countries may affect whether we or our collaborators are able to initiate a clinical trial there. As a result, we and our ~~existing or future~~ collaborators may never receive approval to market and commercialize any product candidate. Even if we or ~~an existing or future collaborator obtains~~our collaborators obtain regulatory approval, the approval may be for targets, disease indications or patient populations that are not as broad as we or they intended or desired or may require labeling that includes significant use or distribution restrictions or safety warnings. We or ~~an existing or future collaborator~~our collaborators may be required to perform additional or unanticipated clinical trials to obtain approval or be subject to post-marketing testing requirements to maintain regulatory approval. If one or more of our product candidates or our Probody ~~technologies~~technology generally prove to be ineffective, unsafe or commercially unviable, our entire platform and pipeline ~~would~~may have little, if any, value, which would have a material and adverse effect on our business, financial condition, results of operations and prospects.

The market may not be receptive to our product candidates based on a novel therapeutic modality, and we may not generate any future revenue from the sale or licensing of product candidates.

Even if regulatory approval is obtained for a product candidate, we may not generate or sustain revenue from sales of the product due to factors such as whether the product can be sold at a competitive cost and whether it will otherwise be accepted in the market. The product candidates that we are developing are based on our Probody platform, which is a new technology and therapeutic approach. Market participants with significant influence over acceptance of new treatments, such as physicians and third-party payors, may not adopt a product or treatment based on our Probody platform and technologies, and we may not be able to convince the medical community and third-party payors to accept and use, or to provide favorable reimbursement for, any product candidates developed by us or our ~~existing or future~~ collaborators. This may be particularly true for any of our product candidates (including ~~CX-072)~~BMS-986288) for which there are existing approved therapies, such as approved agents targeting ~~PD-L1 or PD-1.~~CTLA-4. Market acceptance of our product candidates will depend on, among other factors:

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the timing of our receipt of any marketing and commercialization approvals;

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the terms of any approvals and the countries in which approvals are obtained;

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the safety, ~~and efficacy~~purity, potency (or efficacy) of our product ~~candidates;~~

candidates, including those being developed by our collaborators;

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the prevalence and severity of any adverse side effects associated with our product candidates;

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limitations or warnings contained in any labeling approved by the FDA or other regulatory authority;

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the availability of effective companion diagnostics;

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relative convenience and ease of administration of our product candidates;

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the willingness of patients to accept any new methods of administration;

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the success of our physician education programs;

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the availability of coverage and adequate reimbursement from government and third-party ~~payor reimbursement;~~

payors;

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the pricing of our products, particularly as compared to alternative treatments; and

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~~the pricing of our products, particularly as compared to alternative treatments; and~~

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the availability of alternative effective treatments for the disease indications our product candidates are intended to treat and the relative risks, benefits and costs of those treatments.

If any product candidate we commercialize fails to achieve market acceptance, it could have a material and adverse effect on our business, financial condition, results of operations and prospects.

Since 2013, we have entered into collaborations with AbbVie, Amgen, Astellas, Bristol Myers Squibb, ImmunoGen, Moderna, Pfizer, ~~BMS, ImmunoGen, AbbVie~~Regeneron and ~~Amgen~~others to develop certain Probody therapeutics. We may in the future seek third-party collaborators for development and commercialization of other therapeutic technologies or product candidates. Biopharmaceutical companies are our prior and likely future collaborators for any marketing, distribution, development, licensing or broader collaboration arrangements. With respect to our existing collaboration agreements, and what we expect will be the case with any future collaboration agreements, we have and would expect to have limited control over whether such collaborations pursue the development of our product candidates or the amount and timing of resources that such collaborators dedicate to the development or commercialization of our product candidates. For instance, ~~Pfizer allowed its option to select a fourth target pursuant to our~~in March 2023, AbbVie terminated the collaboration agreement ~~lapse~~for CX-2029 and the ongoing discovery agreement we had entered into with them in ~~May 2016, discontinued its epidermal growth factor receptor probody drug conjugate (“EGFR-PDC”)~~2016. Our partners have chosen multiple targets for research, some of which continue to be advanced and others which do not continue to advance. Our partners will continue to choose early research targets from time to time, some of which will advance into further research and development and some of which will not. For example, in January 2023, Bristol Myers Squibb announced that it would deprioritize the Phase 2 clinical program for BMS 986249 and ~~has not yet advanced any program to clinical candidate stage.~~advance the BMS-986288 into a Phase 2 program. As a result, there can be no assurances that any of the ~~development and potential commercialization of any product candidates for the targets~~programs covered by our ~~collaboration agreement with Pfizer could~~existing or future collaborations will be ~~delayed. In July 2017, ImmunoGen discontinued the preclinical evaluation of one of its two programs being~~ developed ~~under our collaboration.~~further. Further, our ability to generate revenues from ~~these~~our existing and future arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.

Additionally, some of our collaborations may require us to share in certain development and commercialization expenses. If we cannot afford to share such expenses when required, our rights under such collaborations may be adversely affected, including potentially that our collaborators may terminate the relevant agreement. Overall, collaborations involving our product candidates currently pose, and will continue to pose, the following risks to us:

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collaborators have significant discretion in determining the amount and timing of efforts and resources that they will apply to these ~~collaborations;~~

collaborations, including, with respect to Bristol Myers Squibb, BMS-986249 and BMS-986288 and with respect to Amgen, CX-904;

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collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on preclinical or clinical trial results, changes in the collaborators’ strategic focus or available funding or resources, or external factors such as an acquisition that diverts resources or creates competing priorities;

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collaborators have significant discretion in designing any clinical trials they operate pursuant to our collaboration agreements, including Bristol Myers Squibb’s ongoing Phase 2 cohort expansion of BMS-986249 and its Phase 1/2 clinical trial of BMS-986288, and may release data from such clinical trials, including with respect to our Probody therapeutics, without consulting us;

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collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing and are not necessarily required to give us information about their clinical data;

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collaborators may independently develop, or develop with third parties, products that compete directly or indirectly with our product candidate if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

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collaborators with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;

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collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to litigation or potential liability;

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collaborators may infringe, misappropriate or otherwise violate the intellectual property rights of third parties, which may expose us to litigation and potential liability;

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disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our product candidate or that result in costly litigation or arbitration that diverts management attention and resources; and

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collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.

For example, in January 2023, we announced topline results of the Phase 2 expansion cohorts of CX-2029 and in March 2023, AbbVie decided not to continue the future development of CX-2029.

As a result of the foregoing, our current and any future collaboration agreements may not lead to development or commercialization of our product candidates in the most efficient manner or at ~~all.~~all and may not result in the realization of the benefits we expected to achieve upon our entry into such agreements. Any failure to successfully develop or commercialize our product candidates pursuant to our current or any future collaboration agreements could have a material and adverse effect on our business, financial condition, results of operations and prospects.

If our collaborators cease development efforts under our ~~existing or future~~ collaboration agreements, or if any of those agreements are terminated, these collaborations may fail to lead to commercial products and we may never receive milestone payments or future royalties under these agreements.

Substantially all of our revenue to date has been derived from our existing collaboration agreements, including, most recently, the ~~Collaboration and License Agreement~~agreements that we entered into with ~~Amgen~~Regeneron and Moderna in ~~September 2017,~~2022, and a significant portion of our future revenue and cash resources is expected to be derived from these agreements or other similar agreements we may enter into in the future. Revenue from research and development collaborations depend upon continuation of the collaborations, reimbursement of development costs, the achievement of milestones and royalties, if any, derived from future products developed from our research. If our development partners do not select additional targets and we are unable to successfully advance the development of our product candidates or achieve milestones, revenue and cash resources from milestone payments under our collaboration agreements will be substantially less than expected.

In addition, to the extent that any of our ~~existing or future~~ collaborators were to terminate a collaboration agreement, ~~or to forego the selection of target product candidates (as Pfizer has done with respect to its fourth target),~~ we may decide ~~in some cases,~~ to independently develop these product candidates ~~including~~to the extent we retain development rights. Such development could include funding preclinical or clinical trials, assuming marketing and distribution costs and defending intellectual property ~~rights, or,~~rights. Alternatively, in certain instances, we may choose to abandon product candidates ~~altogether,~~altogether. For instance, in March 2018, Pfizer terminated our 2013 collaboration agreement with them, and from time to time some of our research programs have been terminated by our partners. The termination of any of ~~which~~our collaboration agreements or individual programs within a collaboration agreement could result in a change to our business plan and may have a material adverse effect on our business, financial condition, results of operations and prospects. If a collaboration is terminated, we would not be eligible to receive the milestone, royalty or other payments that would have been payable under the collaboration agreement. For example, as a result of ImmunoGen’s decision to out-license the EpCAM program and our licensing of the program from them in 2019, their license for the program from us ended and we will not receive milestone or other payments from them.

For planning purposes, we sometimes estimate the timing of the accomplishment of various scientific, clinical, regulatory and other product development objectives. These milestones may include our expectations regarding the commencement or completion of scientific studies and clinical trials, the submission of regulatory filings, or commercialization objectives. From time to time, we may publicly announce the expected timing of some of these milestones, such as the completion of an ongoing clinical trial, the initiation of other clinical programs, receipt of marketing approval, or a commercial launch of a product. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions which may cause the timing of achievement of the milestones to vary considerably from our estimates, including:

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our available capital resources or capital constraints we experience;

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the rate of progress, costs and results of our clinical trials and research and development activities, including the extent of scheduling conflicts with participating clinicians and collaborators;

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our ability to identify and enroll patients who meet clinical trial eligibility criteria;

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our receipt of approvals by the FDA and other regulatory authorities and the timing thereof;

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other actions, decisions or rules issued by regulators;

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our ability to access sufficient, reliable and affordable supplies of materials used in the manufacture of our product candidates;

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our ability to manufacture and supply clinical trial materials to our clinical sites on a timely basis;

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the efforts of our collaborators with respect to the commercialization of our products; and

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the securing of, costs related to, and timing issues associated with, product manufacturing as well as sales and marketing activities.

For example, in March 2020, we announced the temporary pause in new patient enrollment and new site activation in our Phase 2 clinical trial of praluzatamab ravtansine (CX-2009) as a result of the COVID-19 pandemic and the termination of the Phase 2 clinical trial of pacmilimab (CX-072) in combination with ipilimumab after a re-evaluation of the evolving clinical, competitive and commercial landscapes in immuno-oncology, taken together with the impact of the COVID-19 pandemic. Additionally, in July 2022, we announced that we would cease to continue the praluzatamab ravtansine program without a partner.

If we fail to achieve announced milestones in the timeframes we expect, the commercialization of any of our product candidates may be delayed or never attained, and our business and results of operations may be harmed.

Since commencing operations, we have entered into several collaboration ~~agreements, including, most~~agreements. Most recently, ~~the Collaboration~~in November 2022 and ~~License Agreement that~~December 2022, we entered into strategic collaborations with ~~Amgen in September 2017.~~Regeneron and Moderna, respectively. From time to time, we may consider additional strategic transactions, such as additional collaborations, acquisitions of companies, asset purchases and out- or in-licensing of product candidates or technologies. In particular, we will evaluate and, if strategically attractive, seek to enter into additional collaborations, including with major biotechnology or biopharmaceutical companies. In July 2022, in connection with our announcement of Phase 2 topline results for praluzatamab ravtansine, we communicated our plans to seek collaborators to advance the program further. The competition for collaborators is intense and ~~the~~there can be no assurances that we will be able to secure any collaboration for praluzatamab ravtansine or any other program. The negotiation process for strategic collaborations is time-consuming and complex. Any new collaboration may be on terms that are not optimal for us, and we may not be able to maintain any new collaboration if, for example, development or approval of a product candidate is delayed, sales of an approved product candidate do not meet expectations or the collaborator terminates the collaboration. Any such collaboration, or other strategic transaction, may require us to incur non-recurring or other charges, increase our near- and long-term expenditures and pose significant integration or implementation challenges or disrupt our management or business. These transactions would entail numerous operational and financial risks, including exposure to unknown liabilities, disruption of our business and diversion of our management’s time and attention in order to manage a collaboration or develop acquired products, product candidates or technologies, incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs, higher than expected collaboration, acquisition or integration costs, write-downs of assets or goodwill or impairment charges, increased amortization expenses, difficulty and cost in facilitating the collaboration or combining the operations and personnel of any acquired business, impairment of relationships with key suppliers, manufacturers or customers of any acquired business due to changes in management and ownership and the inability to retain key employees of any acquired business. Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, any transactions that we do complete may be subject to the foregoing or other risks and have a material and adverse effect on our business, financial condition, results of operations and prospects. The termination by a collaborator of a collaboration may cause a decrease in the price of our stock. Conversely, any failure to enter any additional collaboration or other strategic transaction that would be beneficial to us could delay the development and potential commercialization of our product candidates and have a negative impact on the competitiveness of any product candidate that reaches market.

If we are unable to successfully develop companion diagnostic tests for certain of our product candidates, or experience significant delays in doing so, we may not realize the full commercial potential of our product candidates.

Because we are focused on precision medicine, in which predictive biomarkers will be used to identify the right patients for our product candidates, we believe that our success may depend, in part, on the development of companion diagnostic tests, including for CX-2029. To successfully develop a companion diagnostic test, we would need to address a number of scientific, technical and logistical challenges. However, we have little experience in the development of companion diagnostic tests and may not be successful in developing appropriate tests to pair with any of our product candidates. Companion diagnostic tests are subject to regulation by the FDA and similar regulatory authorities outside the United States as medical devices and require separate regulatory approval prior to commercialization. Given our limited experience in developing companion diagnostic tests, we could seek to rely on third parties to design, manufacture, and obtain regulatory approval for any companion diagnostic tests for our product candidates. However, we and such collaborators may encounter difficulties in developing and obtaining approval for the companion diagnostic tests, including issues relating to selectivity/specificity,

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analytical validation, reproducibility, or clinical validation. Any delay or failure by us or our collaborators to develop or obtain regulatory approval of the companion diagnostic tests could delay or prevent approval of our product candidates. As a result, our business would be harmed, possibly materially.

We rely on third parties to conduct ~~some of our preclinical studies and~~ all of our clinical trials and certain of our preclinical studies and intend to continue to do so, and if such third parties do not perform as contractually required, fail to satisfy regulatory or legal requirements or miss expected deadlines, our development programs could be delayed with material and adverse effects on our business, financial condition, results of operations and prospects.

We do not have the ability to independently conduct clinical trials. As such, we currently rely and intend to continue to rely on third-party clinical investigators, CROs, clinical data management organizations and consultants to help us design, conduct, supervise and monitor clinical trials of our product candidates. As a result, we will have less control over the timing, quality and other aspects of our clinical trials than we would have had we conducted them on our own. These investigators, CROs and consultants are not our employees and we have limited control over the amount of time and resources that they dedicate to our programs. These third parties may have contractual relationships with other entities, some of which may be our competitors, which may draw time and resources from our programs. The third parties with which we contract might not be diligent, careful or timely in conducting our preclinical studies or clinical trials, resulting in the preclinical studies or clinical trials being delayed or unsuccessful. Furthermore, our third-party contractors, including CROs are being and may continue to be impacted in their ability to conduct our work as a result of the COVID-19 pandemic.

If we cannot contract with acceptable third parties on commercially reasonable terms, or at all, or if these third parties do not carry out their contractual duties, satisfy legal and regulatory requirements for the conduct of preclinical studies or clinical trials or meet expected deadlines, our clinical development programs could be delayed and otherwise adversely affected. In all events, we will be responsible for ensuring that each of our preclinical studies and clinical trials are conducted in accordance with the general investigational plan and protocols for the trial. The FDA requires preclinical studies to be conducted in accordance with good laboratory practices (“GLPs”) and clinical trials to be conducted in accordance with good clinical practices (“GCPs”), including for designing, conducting, recording and reporting the results of preclinical studies and clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of clinical trial participants are protected. Our reliance on third parties that we do not control will not relieve us of these responsibilities and requirements. Any adverse development or delay in our clinical trials could have a material and adverse effect on our business, financial condition, results of operations and prospects.

We are currently conducting and will continue to conduct clinical trials and will contract with third-party manufacturers in foreign countries, which could expose us to risks that could have a material adverse effect on the success of our business.

We have enrolled or are planning to enroll patients in our clinical trials outside the United States, including in Europe and South Korea. While we generally conduct our clinical trials primarily or partially in the U.S., the acceptance of study data from clinical trials conducted outside the U.S. or another jurisdiction by the FDA or comparable foreign regulatory authority may be subject to certain conditions or may not be accepted at all. In cases where data from foreign clinical trials are intended to serve as the sole basis for marketing approval in the U.S., the FDA will generally not approve the application on the basis of foreign data alone unless (i) the data are applicable to the U.S. population and U.S. medical practice; (ii) the trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations; and (iii) the data may be considered valid without the need for an on-site inspection by the FDA, or if the FDA considers such inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. In addition, even where the foreign study data are not intended to serve as the sole basis for approval, the FDA will not accept the data as support for an application for marketing approval unless the study is well-designed and well-conducted in accordance with GCP requirements and the FDA is able to validate the data from the study through an onsite inspection if deemed necessary. Many foreign regulatory authorities have similar approval requirements. In addition, such foreign trials would be subject to the applicable local laws of the foreign jurisdictions where the trials are conducted. There can be no assurance that the FDA or any comparable foreign regulatory authority will accept data from trials conducted outside of the U.S. or the applicable jurisdiction. If the FDA or any comparable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which could be costly and time-consuming, and which may result in current or future product candidates that we may develop not receiving approval for commercialization in the applicable jurisdiction.

We currently contract manufacturing operations to third parties, and certain of our product candidates are manufactured by and will in the future be manufactured by third parties outside the U.S., including in China. For example, we have a contract with a third-party manufacturer located in China for our CX-801 product candidate and accordingly we are exposed to the possibility of drug product supply disruption, delay and increased costs in the event of changes in the policies of the U.S. or Chinese governments, political unrest or unstable economic conditions in China.

CytomX Therapeutics, Inc.

Conducting clinical trials and contracting with third-party manufacturers outside the United States also exposes us to additional risks, including risks associated with additional foreign regulatory requirements; foreign exchange fluctuations; patient monitoring and compliance; compliance with foreign manufacturing, customs, shipment and storage requirements; the severity of the COVID-19 pandemic in such jurisdictions; and cultural differences in medical practice and clinical research. We are also subject to risks associated with doing business globally, including commercial, political, and financial risks. In addition, we are subject to potential disruption caused by military conflicts; potentially unstable governments or legal systems; civil or political upheaval or unrest; local labor policies and conditions; possible expropriation, nationalization, or confiscation of assets; problems with repatriation of foreign earnings; economic or trade sanctions; closure of markets to imports; anti-American sentiment; terrorism or other types of violence in or outside the United States; health pandemics; and a significant reduction in global travel. For example, pandemics and public health emergencies, such as the COVID-19 pandemic, have disrupted and delayed and could in the future disrupt or delay enrollment in our clinical trials in Europe, South Korea and elsewhere. Our success will depend, in part, on our ability to overcome the challenges we encounter with respect to these risks and other factors affecting U.S. companies with global operations. If our global clinical trials or foreign third-party suppliers were to experience significant disruption due to these risks or for other reasons, it could have a material adverse effect on our business, financial condition, results of operations and prospects.

We rely on third-party contract manufacturers to manufacture our ~~preclinical and~~ clinical trial and preclinical study product supplies, some of which are located in foreign countries, which, in addition to having other issues, could be adversely impacted by the COVID-19 pandemic. Most of our clinical trial manufacturing contractors and suppliers are our sole source for their respective manufacturing and supplies. Failure of any of these contractors could put our ability to have clinical trial material available when needed. This could result in a substantial delay of our clinical trials. For each of praluzatamab ravtansine (CX-2009), CX-2029, pacmilimab (CX-072), and CX-904, our manufacturing supply chain includes several contract manufacturers, and failure by any of these manufacturers could result in interruptions of our clinical studies. For example, in November 2019, one of our contract manufacturers that manufactures pacmilimab experienced a production failure. If we had not been able to assure sufficient supplies of clinical trial drug product after the production failure, we may have been required to suspend any ongoing trials and postpone future trials. Although we took sufficient steps to assure our current supply of pacmilimab, there can be no assurance that we will not have future production failures, which could affect our ability to conduct our trials for CX-2029, CX-904 or any other clinical trial drug candidates, including CX-801 and CX-2051, on our planned timeline or at all. We do not own manufacturing facilities for producing such supplies and do not have any long-term contracts and we do not currently have an alternative to any of our third-party contract manufacturers. There can be no assurance that our preclinical and clinical development product supplies will not be limited, interrupted, or of satisfactory quality or continue to be available at acceptable prices. In particular, any replacement of any of our third-party contract manufacturers could require significant effort and expertise because there may be a limited number of qualified replacements. In addition, we may encounter issues with transferring technology to a new third-party manufacturer, and we may encounter regulatory delays if we need to move the manufacturing of our products from one third-party manufacturer to another. For example, we were dependent on ImmunoGen under our collaboration for certain steps in the manufacturing of clinical quantities of praluzatamab ravtansine. At the end of 2018, ImmunoGen closed their clinical manufacturing facility in Norwood, MA. This site provided clinical manufacturing support for the praluzatamab ravtansine program. We completed transfer of the drug substance manufacturing process from ImmunoGen to a CMO, where we have an existing relationship and which has expertise in the manufacture of antibody-drug conjugates at a clinical and commercial scale. While the manufacturing transfer process was completed, there can be no assurance that we will not experience a disruption in the supply of any other drug substance or drug product.

The manufacturing process for a product candidate is subject to FDA and foreign regulatory authority review. Suppliers and manufacturers must meet applicable manufacturing requirements and undergo rigorous facility and process validation tests required by regulatory authorities in order to comply with regulatory standards, such as current Good Manufacturing Practices (“cGMPs”). In the event that any of our manufacturers fails to comply with such requirements or to perform its obligations to us in relation to quality, timing or otherwise, such as the pacmilimab manufacturing production failure our contract manufacturer experienced in November 2019, or if our supply of components or other materials becomes limited or interrupted for other reasons, such as one of our manufacturers going out of business, we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilities or resources, or enter into an agreement with another third party, which we may not be able to do on reasonable terms, if at all. In some cases, the technical skills or technology required to manufacture our product candidates may be unique or proprietary to the original manufacturer and we may have difficulty transferring such skills or technology to another third party and a feasible alternative may not exist. These factors would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to have another third party manufacture our product candidates. If we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. The delays associated with the verification of a new manufacturer could negatively affect our ability to develop product candidates in a timely manner or within budget.

CytomX Therapeutics, Inc.

We expect to continue to rely on third-party manufacturers if we receive regulatory approval for any product candidate. To the extent that we have existing, or enter into future, manufacturing arrangements with third parties, we will depend on these third parties to perform their obligations in a timely manner consistent with contractual and regulatory requirements, including those related to quality control and assurance. If we are unable to obtain or maintain third-party manufacturing for product candidates, or to do so on commercially reasonable terms, we may not be able to develop and commercialize our product candidates successfully. We may find that our ~~third party~~third-party manufacturer is unable to scale up the process in order to produce commercial quantities of our products. Our or a third party’s failure to execute on our manufacturing requirements and comply with cGMPs could adversely affect our business in a number of ways, including:

•

an inability to initiate or continue clinical trials of product candidates under development;

•

delay in submitting regulatory applications, or receiving regulatory approvals, for product candidates;

•

loss of the cooperation of ~~an existing or future~~a collaborator;

•

subjecting third-party manufacturing facilities or our manufacturing facilities to additional inspections by regulatory authorities;

•

requirements to cease distribution or to recall batches of our product candidates; and

•

in the event of approval to market and commercialize a product candidate, an inability to meet commercial demands for our products.

The supply chain for the manufacturing of our product candidates is complicated and can involve many parties. This is especially the case for ~~CX-2009~~our clinical-stage conditionally activated ADCs, praluzatamab ravtansine and ~~CX-2029, our lead clinical candidate under our CD71 collaboration with AbbVie Inc..~~CX-2029. If we were to experience any supply chain issues, our product supply could be seriously disrupted. In addition, we expect to the logistical challenges associated with our supply chain to grow more complex as additional product candidates ~~such as CX-2029,~~ commence any clinical trials.

It may prove more challenging than we anticipate to manufacture products that incorporate our Probody therapeutic technology. In order to conduct clinical trials of our product candidates, including our ~~Phase 1/2~~ clinical trials for ~~CX-072~~CX-2029 and ~~CX-2009,~~CX-904, we will need to manufacture them in large quantities. To date, we have generally been able to successfully manufacture CX-2029, and CX-904 for our ongoing early-stage clinical trials. However, in November 2019, we had a production failure at one of our contract manufacturers that manufactured pacmilimab for our Phase 1/2 clinical trial and for our future trials. If we had not been able to assure sufficient supplies of clinical trial drug product after the production failure, we may have been required to suspend any ongoing trials and postpone future trials. Although we took sufficient steps to assure our current supply of pacmilimab clinical trial drug product for our planned clinical trials, there can be no assurance that we will not have future production failures, which could affect our ability to conduct our trials for CX-2029, CX-904 or any other clinical trial drug candidates, including CX-801 and CX-2051, on our planned timeline or at all. Furthermore, in order to conduct later stage clinical trials of our product candidates, such as our Phase 2 clinical trial for CX-2029 and eventually, if approved, commercial products, we will need to manufacture them in larger quantities. We, or any manufacturing partners, may be unable to successfully increase the manufacturing scale and capacity for any of our product candidates in a timely or cost-effective manner, or at ~~all, although~~all. However, we may have to ~~date~~start late-stage trials with our early clinical trial drug product and switch to late-stage or commercial drug product mid trial. In such event, the FDA will require us to complete bridging studies to compare the earlier stage material with late-stage or commercial material to assure comparability between the earlier trial material and the late- stage or commercial material. Changing formulation and scaling up the process is a complicated and difficult task. While we ~~have been~~believe we can complete this process successfully, there can be no assurances that the changes we make to the drug product and manufacturing process will be successful or completed in a timely manner or that the FDA will not require additional development steps or studies from those we believe are necessary. If we are not able to scale up our manufacturing capabilities with respect to any of our product candidates, increase the life of drug stability of product candidates, or successfully complete the FDA’s bridging requirements, we may not be able to successfully ~~manufacture clinical quantities of CX-072~~obtain FDA approval and ~~CX-2009. In particular, we are dependent on ImmunoGen under our collaboration for certain steps~~commercialize product candidates in a timely manner or at all.

For CX-2029, the manufacturing of additional clinical quantities ~~of CX-2009. However, contract manufacturing is not ImmunoGen’s primary business and ImmunoGen may not have sufficient resources~~could be particularly difficult because we are relying on three different parties to ~~commit to manufacturing for third parties. In addition, quality issues may arise during scale-up activities.~~manufacture supplies. If we, or any manufacturing partners, are unable to successfully scale up the manufacture of our product candidates in sufficient quality and quantity, the development, testing, and clinical trials of that product candidate may be delayed or infeasible, and regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.

~~We may acquire assets or form strategic alliances in the future, and we may not realize the benefits of such acquisitions.~~45

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We may acquire additional technologies and assets, form strategic alliances or create joint ventures with third parties that we believe will complement or augment our existing business, such as the T-cell engaging bispecific program we received from Amgen. If we acquire assets with promising markets or technologies, we may not be able to realize the benefit of acquiring such assets if we are unable to successfully integrate them with our existing technologies.

We may encounter numerous difficulties in developing, manufacturing and marketing any new products resulting from the Amgen program or from any other strategic alliance or acquisition that delay or prevent us from realizing their expected benefits or enhancing our business. We cannot assure you that, following any such acquisition, we will achieve the expected synergies to justify the transaction.

We may expend our limited resources to pursue a particular product candidate and fail to capitalize on product candidates that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we focus on specific product candidates ~~including CX-072, CX-2009~~ and ~~CX-2029.~~indications. For example, in July 2022, we announced that we would not continue the development of pralauzatamab ravtansine without a partner. As a result, we may forgo or delay pursuit of opportunities with those products in other indications or with other product candidates that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable product candidates. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

We may experience difficulties in managing our growth and expanding when needed.

Over the last few years, we have expanded our workforce and activities to manage our expanding pipeline, including Phase 2 clinical trials. However, in July 2022, we announced we will not advance praluzatamab ravtansine into further clinical trials and will seek a partner for the program. As a result, we announced that we would reduce our workforce, primarily development and general and administrative staff, by approximately 40%. In the future we may need to grow our organization substantially to continue development and pursue the potential commercialization of our product candidates, including CX-801 and CX-2051, as well as function as a public company. As we increase the number of our product candidates entering and advancing through preclinical studies and clinical trials, we will need to expand our development, regulatory and manufacturing capabilities or contract with additional organizations to provide these capabilities for us. In addition, we expect our collaborations to require greater resources as the development of our product candidates under such agreements progresses. In the future, we expect to also have to manage additional relationships with collaborators or partners, including Regeneron and Moderna, suppliers and other organizations. In particular, if the third parties on which we currently rely are not capable of delivering services or supplies in a manner that is sufficient to meet our requirements as we expand our operations, we could be required to contract with new third parties and there can be no assurances that the services or supplies of such third parties will be available on commercially reasonable terms, or at all. Furthermore, our ability to manage our operations and future growth will require us to continue to increase headcount as well as improve our operational, financial and management controls, reporting systems and procedures. We may not be able to implement improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls.

The development and commercialization of drugs and therapeutic biologics is highly competitive. We compete with a variety of multinational biopharmaceutical companies and specialized biotechnology companies, as well as technology being developed at universities and other research institutions. Our competitors have developed, are developing or will develop product candidates and processes competitive with our product candidates. Competitive therapeutic treatments include those that have already been approved and accepted by the medical community and any new treatments that enter the market. We believe that a significant number of products are currently under development, and may become commercially available in the future, for the treatment of conditions for which we may try to develop product candidates. ~~There~~Additionally, there is intense and rapidly evolving competition in the biotechnology, biopharmaceutical and antibody and immunoregulatory therapeutics ~~fields.~~ fields, and our competitors include larger and better funded biopharmaceutical, biotechnological and therapeutics companies. In addition, these companies compete with us in recruiting scientific and managerial talent.

We believe that while our Probody platform, its associated intellectual property and our scientific and technical know-how, give us a competitive advantage in this space, competition from many sources remains. ~~Our competitors include larger~~The clinical development pipeline for cancer includes small molecules, antibodies and ~~better funded biopharmaceutical, biotechnological and therapeutics companies. Moreover, we also compete with current and future therapeutics developed at universities and other research institutions.~~

~~We are aware~~therapies from a variety of several companies that are developing cancer immunotherapies and ADCs, including certain companies that are exploring antibody masking and/or conditional activation strategies including Akriveia, Amunix, BioAtla, Halozyme, Maverick Therapeutics and Revitope. These companies may be well-capitalized and may have significant clinical experience.groups. In addition, ~~these companies may include~~numerous compounds are in clinical development for cancer treatment. As a result, our ~~existing or future collaborators. In addition, these companies compete with us in recruiting scientific and managerial talent.~~

~~Our~~ success will partially depend on our ability to develop and protect therapeutics that are safer and more effective than competing products. Our commercial opportunity and success will be reduced or eliminated if competing products that are safer, more effective, or less expensive than the therapeutics we ~~develop.~~

Ifdevelop or if we are unable to utilize our ~~lead~~Probody therapeutic technology to differentiate our Probody therapeutics from the products of our competitors. For instance, if any of our product candidates, ~~CX-072 and CX-2009,~~including, CX-2029, are approved, they will compete with a range of therapeutic treatments that are either in development or currently marketed. ~~Indeed, a~~A variety of oncology drugs and therapeutic biologics are currently on the market or in clinical ~~development. Such marketed therapies range~~development Given the amount of time required to successfully develop and obtain regulatory approval for each of our product candidates, it is therefore possible that by the time we obtain any such approval, if ever, and commence sales, we may no longer be able to differentiate such product candidate from ~~ADCs such as Genentech,~~those of our competitors.

CytomX Therapeutics, Inc.’s Kadcyla, immune checkpoint inhibitors such as BMS’s Opdivo and T-cell engager immunotherapies such as Amgen, Inc.’s BLINCYTO. The market for immunotherapies like CX-072 is, in particular, highly competitive and the field is changing quickly, causing a product to lose its differentiation before it even reaches the market. In addition, numerous compounds are in clinical development for cancer treatment. The clinical development pipeline for cancer includes small molecules, antibodies and therapies from a variety of groups.

We face substantial competition from ~~biotechnology and biopharmaceutical~~pharmaceutical companies developing products in ~~immuno-oncology,~~oncology, including companies such as Amgen, AstraZeneca PLC, ~~BMS,~~Bristol Myers Squibb, GlaxoSmithKline plc, Merck & Co., Inc. Novartis AG, Pfizer, Roche Holding Ltd. and Sanofi SA. Many large and mid-sized biotech companies, including BeiGene, Incyte, Nektar, and Alkermes have ongoing efforts in cancer immunotherapy. Several companies, including Adagene, Amgen, Sanofi, BioAtla, Halozyme, Harpoon Therapeutics, Revitope, Roche, Seagen, Takeda, Werewolf Therapeutics, and Xilio are exploring antibody masking and/or conditional activation strategies, which could compete with our Probody platform. We are also aware of several companies that are developing ADCs, such as AbbVie, ADC Therapeutics, Daiichi Sankyo, Gilead, ImmunoGen, Merck & Co., ~~Sanofi SA, BeiGene, TESARO, Inc.~~Mersana Therapeutics, Pfizer, Roche Holding Ltd. Seagen and Takeda. Furthermore, several large pharmaceutical companies, including Amgen, Novartis AG and Roche Holding Ltd., are developing T-cell engaging immunotherapies, and ~~numerous~~we are aware of several mid-sized biotech companies, such as MacroGenics and Xencor, and small ~~companies.~~companies with ongoing efforts to develop T-cell engaging immunotherapies. Any of these companies may be well capitalized and may have significant clinical experience. In addition, these companies include our collaborators.

Many of our competitors have significantly greater financial, technical, manufacturing, marketing, sales and supply resources or experience than we do. If we successfully obtain approval for any product candidate, we will face competition based on many different factors, including the safety and effectiveness of our products, the ease with which our products can be administered and the extent to which patients accept relatively new routes of administration, the timing and scope of regulatory approvals for these products, the availability and cost of manufacturing, marketing and sales capabilities, price, reimbursement coverage and patent position. Competing products could present superior treatment alternatives, including by being more effective, safer, less expensive or marketed and sold more effectively than any products we may develop. Competitive products may make any products we develop less differentiated or noncompetitive before we recover the expense of developing and commercializing our product candidates. Such competitors could also recruit our employees, which could negatively impact our level of expertise and our ability to execute our business plan.

Any inability to attract and retain qualified key management and technical personnel would impair our ability to implement our business plan.

Our success largely depends on the continued service of key management, advisors and other specialized personnel, including Sean A. McCarthy, D.Phil., our ~~president and~~ chief executive officer ~~W. Michael Kavanaugh, M.D., our chief scientific officer~~ and ~~Rachel W. Humphrey, M.D., our chief medical officer.~~chairman. The loss of one or more members of our management team or other key employees or advisors could delay our research and development programs and have a material and adverse effect on our business, financial condition, results of operations and prospects. The relationships that our key managers have cultivated within our industry make us particularly dependent upon their continued employment with us. We are dependent on the continued service of our technical personnel because of the highly technical nature of our product candidates and technologies and the specialized nature of the regulatory approval process. Because our management team and key employees are not obligated to provide us with continued service, they could terminate their employment with us at any time without penalty. In particular, as a result of the COVID-19 pandemic, the ability of employees to engage in a remote working environment has increased the competitive landscape across the country for us in seeking qualified employees. Employees are now able to consider opportunities across the country and it may be more difficult to hire employees. Furthermore, it is more difficult to engage employees in Company culture and build working rapport when they are working remotely. As a result, it may be more difficult to retain employees on a long-term basis. Our future success will depend in large part on our continued ability to attract and retain other highly qualified scientific, technical and management personnel, as well as personnel with expertise in clinical testing, manufacturing, governmental regulation and commercialization. We face competition for personnel from other companies, universities, public and private research institutions, government entities and other ~~organizations.~~organizations, especially as job opportunities in the biotechnology industry have recently increased significantly in the San Francisco Bay Area and across the country.

~~We may experience difficulties in managing our growth and expanding our operations successfully.~~

We will need to grow our organization substantially to continue development and pursue the potential commercialization of CX-072, CX-2009, CX-2029, CX-188 and our other product candidates, as well as function as a public company. We have conducted limited product development to date and have not begun clinical trials for any of our product candidates, other than CX-072 and CX-2009. As our product candidates enter and advance through preclinical studies and any clinical trials, we will need to expand our development, regulatory and manufacturing capabilities or contract with other organizations to provide these capabilities for us. In the future, we expect to have to manage additional relationships with collaborators or partners, suppliers and other organizations. In particular, if the third-parties on which we currently rely are not capable of delivering services or supplies in a manner that is sufficient to meet our requirements as we expand our operations, we could be required to contract with new third parties and there can be no assurances that the services or supplies of such third parties will be available on commercially reasonable terms, or at all. Furthermore, our ability to manage our operations and future growth will require us to continue to improve our operational, financial and management controls, reporting systems and procedures. We may not be able to implement improvements to our management information and control systems in an efficient or timely manner and may discover deficiencies in existing systems and controls.

If any of our product candidates are approved for marketing and commercialization and we are unable to develop sales, marketing and distribution capabilities on our own or enter into agreements with third parties to perform these functions on acceptable terms, we will be unable to commercialize successfully any such future products.

We currently have no sales, marketing or distribution capabilities or experience. If any of our product candidates is approved, we will need to develop internal sales, marketing and distribution capabilities to commercialize such products, which would be expensive and time-consuming, or enter into collaborations with third parties to perform these services. If we decide to market our products directly, we will need to commit significant financial and managerial resources to develop a marketing and sales force with technical expertise and supporting distribution, administration and compliance capabilities. If we rely on third parties with such capabilities to market our products or decide to co-promote products with collaborators, we will need to establish and maintain marketing and distribution arrangements with third parties, and there can be no assurance that we will be able to enter into such arrangements on acceptable terms or at all. In entering into third-party marketing or distribution arrangements, any revenue we receive will depend upon the efforts of the third parties and there can be no assurance that such third parties will establish adequate sales and distribution capabilities or be successful in gaining market acceptance of any approved

CytomX Therapeutics, Inc.

product. If we are not successful in commercializing any product approved in the future, either on our own or through third parties, our business, financial condition, results of operations and prospects could be materially and adversely affected.

~~Our future growth may depend, in part, on our ability to operate in foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.~~

Our future growth may depend, in part, on our ability to develop and commercialize our product candidates in foreign markets for which we may rely on collaboration with third parties. We are not permitted to market or promote any of our product candidates before we receive regulatory approval from the applicable regulatory authority in that foreign market, and we may never receive such regulatory approval for any of our product candidates. To obtain separate regulatory approval in many other countries we must comply with numerous and varying regulatory requirements of such countries regarding safety and efficacy and governing, among other things, clinical trials and commercial sales, pricing and distribution of our product candidates, and we cannot predict success in these jurisdictions. If we obtain approval of our product candidates and ultimately commercialize our product candidates in foreign markets, we would be subject to the risks and uncertainties, including the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements and the reduced protection of intellectual property rights in some foreign countries. We may need to rely on third parties to market, distribute and sell our products in foreign markets.

Price controls imposed in foreign markets may adversely affect our future profitability.

In some countries, particularly member states of the European Union, the pricing of prescription drugs is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after receipt of marketing approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. In some countries, we or future collaborators may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of our Probody therapeutic candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of any product candidate approved for marketing is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business, financial condition, results of operations or prospects could be materially and adversely affected. We currently do not know how the exit of the United Kingdom from the European Union will affect the pricing of prescription drugs, either in the United Kingdom or in the remaining European Union member states.

Our business entails a significant risk of product liability and our ability to obtain sufficient insurance coverage could have a material and adverse effect on our business, financial condition, results of operations and prospects.

We are exposed to significant product liability risks inherent in the development, testing, manufacturing and marketing of therapeutic treatments, including as a result of the clinical testing of ~~CX-072, CX-2009~~praluzatamab ravtansine (CX-2009), CX-2029, BMS-986249, BMS-986288, pacmilimab (CX-072) and CX-904 and any of our other product candidates ~~we may conduct clinical trials for in the future.~~or those of our collaborators. Product liability claims could delay or prevent completion of our development programs. If we succeed in marketing ~~products,~~product candidates, such claims could result in an FDA investigation of the safety and effectiveness of our ~~products,~~product candidates, our manufacturing processes and facilities (or the manufacturing processes and facilities of our third-party manufacturers) or our marketing programs and potentially a recall of our products or more serious enforcement action, limitations on the approved indications for which they may be used or suspension or withdrawal of approvals. Regardless of the merits or eventual outcome, liability claims may also result in decreased demand for our products, injury to our reputation, costs to defend the related litigation, a diversion of management’s time and our resources, substantial monetary awards to trial participants or patients and a decline in our stock price. We currently have insurance that we believe is appropriate for our stage of development and may need to obtain higher levels of insurance prior to marketing any of our product candidates. Any insurance we have or may obtain may not provide sufficient coverage against potential liabilities. Furthermore, clinical trial and product liability insurance is becoming increasingly expensive. As a result, we may be unable to obtain sufficient insurance at a reasonable cost to protect us against losses caused by product liability claims that could have a material and adverse effect on our business, financial condition, results of operations and prospects.

Our employees and independent contractors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk of fraud or other misconduct by our employees or independent contractors. Misconduct by these parties could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards we may establish, comply with federal and state data privacy, security, fraud and abuse, and other healthcare laws and regulations, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws could also involve the improper use or misrepresentation of information obtained in the course of clinical trials, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Additionally, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a material and adverse effect on our business, financial condition, results of operations and prospects, including the imposition of significant fines or other sanctions.

Our internal computer systems, or those of our CROs or other contractors or consultants we may utilize, may fail or suffer security breaches, which could result in a material disruption of our product development programs.

Despite the implementation of security measures, our internal computer systems and those of our CROs and other contractors and consultants we may utilize, may be vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Such events could cause interruptions of our operations. For instance, the loss of preclinical data or data from any current or future clinical trial involving our product candidates could result in delays in our development and regulatory filing efforts and significantly increase our costs. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data, or inappropriate disclosure of confidential or proprietary information, we could incur liability, recovery of our data could take a prolonged period of time, and the development of our product candidates could be delayed.48

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~~If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.~~

Our research, development and manufacturing involve the use of hazardous materials and various chemicals. We maintain quantities of various flammable and toxic chemicals in our facilities in South San Francisco, California that are required for our research, development and manufacturing activities. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. We believe our procedures for storing, handling and disposing these materials in our South San Francisco facilities comply with the relevant guidelines of South San Francisco, the state of California and the Occupational Safety and Health Administration of the U.S. Department of Labor. Although we believe that our safety procedures for handling and disposing of these materials comply with the standards mandated by applicable regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. If an accident occurs, we could be held liable for resulting damages, which could be substantial. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of animals and biohazardous materials. Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of these materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological or hazardous materials. Additional federal, state and local laws and regulations affecting our operations may be adopted in the future. We may incur substantial costs to comply with, and substantial fines or penalties if we violate, any of these laws or regulations.

~~Our information technology systems could face serious disruptions that could adversely affect our business.~~

Our information technology and other internal infrastructure systems, including corporate firewalls, servers, leased lines and connection to the Internet, face the risk of systemic failure that could disrupt our operations. A significant disruption in the availability of our information technology and other internal infrastructure systems could cause interruptions and delays in our research and development work.

Our current operations are concentrated in one location, and we or the third parties upon whom we depend may be adversely affected by earthquakes or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

Our current operations are located in our facilities in South San Francisco, California. Any unplanned event, such as flood, fire, explosion, earthquake, extreme weather condition, medical epidemics, power shortage, telecommunication failure or other natural or manmade accidents or incidents that result in us being unable to fully utilize our facilities, or the manufacturing facilities of our third-party contract manufacturers, may have a material and adverse effect on our ability to operate our business, particularly on a daily basis, and have significant negative consequences on our financial and operating conditions. Loss of access to these facilities may result in increased costs, delays in the development of our product candidates or interruption of our business operations. Earthquakes or other natural disasters could further disrupt our operations and have a material and adverse effect on our business, financial condition, results of operations and prospects. If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our research facilities or the manufacturing facilities of our third-party contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time. For example, in March 2020, the COVID-19 pandemic caused us to restrict access to our facility and initiate a work-from-home program limiting onsite activity to a substantially reduced level of laboratory research activities. Although we have gradually increased levels of our laboratory research activities, we continue to operate in a hybrid, work-from-home environment and there can be no assurance that we will be able to continue to increase or maintain current levels of such activity or that the COVID-19 pandemic will not continue to impact our ability to conduct business.

The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material and adverse effect on our business. As part of our risk management policy, we maintain insurance coverage at levels that we believe are appropriate for our business. However, in the event of an accident or incident at these facilities, we cannot assure you that the amounts of insurance will be sufficient to satisfy any damages and losses. If our facilities, or the manufacturing facilities of our third-party contract manufacturers, are unable to operate because of an accident or incident or for any other reason, even for a short period of time, any or all of our research and development programs may be harmed. Any business interruption may have a material and adverse effect on our business, financial condition, results of operations and prospects.

Our ~~Reported Financial Results May~~reported financial results may be ~~Adversely Affected~~adversely affected by ~~Changes~~changes in ~~Accounting Principles Generally Accepted~~accounting principles generally accepted in the U.S.

We prepare our financial statements in conformity with accounting principles generally accepted in the U.S. These accounting principles are subject to interpretation by the Financial Accounting Standards Board (“FASB”) and the ~~Securities and Exchange Commission.~~SEC. A change in these policies or interpretations could have a significant effect on our reported financial results, may retroactively affect previously reported results, could cause unexpected financial reporting fluctuations, and may require us to make costly changes to our operational processes and accounting systems. ~~In May 2014,~~Additionally, for the ~~FASB issued Accounting Standards Update (“ASU”) 2014-09,~~ ~~Revenue from Contracts with Customers,~~ ~~which requires an entity~~purpose of revenue recognition, we are required to ~~recognize~~estimate the amount of ~~revenue~~effort to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in the U.S. GAAP when it becomes effective. The new standard will be effective for our fiscal year 2018 with early adoption permitted for our fiscal year 2017. Although we are currently in the process of evaluating the impact of ASU 2014-09 on our financial statements, it could change the way we account for certaincomplete, as measured by full-time equivalent hours of our ~~sales transactions. Thus, adoption of the standard could have a significant impact on our financial statements~~research development programs. Such estimates are inherently uncertain and may retroactively affect the accounting treatment of transactions completed before adoption. See “Note 3 – Summary of Significant Accounting Policies” for additional discussion of the accounting changes.result in changes in subsequent periods.

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

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “IRC”), if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage points change (by value) in the ownership of its equity over a rolling three-year period), the corporation’s ability to use its pre-change net operating loss carryforwards and certain other pre-change tax attributes to offset its post-change income and taxes may be limited. California has similar rules. ~~We have~~For example, we performed an IRC Section 382 analysis in 2017 and determined there was an ownership change that resulted in ~~2015. As a result, the~~Section 382 limitations. The ownership change limited our ability to utilize net operating losses against taxable income in 2018 for both federal and ~~state carryforwards associated with the~~California tax purposes. The remaining net operating ~~loss~~losses and credit ~~deferred tax assets were reduced by the amount of tax attributes estimated to expire~~will be available in future years before expiration during their respective carryforward periods. We may experience ownership changes in the future as a result of shifts in our stock ownership, some of which are outside our ~~control. As of December 31, 2016, we had federal and state net operating loss carryforwards of approximately $71.5 million and $14.3 million, respectively,~~control, and our ability to utilize ~~those~~ net operating loss carryforwards could be limited by an “ownership change” as described above, which could result in additional increased tax liability to ~~our company.~~the Company.

Risks Related to Intellectual Property

If we are not able to obtain and enforce patent protection for our technologies or product candidates, development and commercialization of our product candidates may be adversely affected.

Our success depends in part on our ability to obtain and maintain patents and other forms of intellectual property rights, including in-licenses of intellectual property rights of others, for our product candidates, methods used to manufacture our product candidates and methods for

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treating patients using our product candidates, as well as our ability to preserve our trade secrets, to prevent third parties from infringing upon our proprietary rights and to operate without infringing upon the proprietary rights of others. AsWe have a substantial number of ~~October 15, 2017, we solely own 50~~issued patents and ~~167 pending patent applications; we co-own one pending patent application with Bristol-Myers Squibb Company, and we co-own six patents and six~~ pending patent applications, some of which are co-owned with ~~UC, acting through its Santa Barbara Campus~~a third party, covering our Probody platforms and ~~two patent~~products as well as methods of use and one pending patent application with UC, acting through its San Francisco Campus; and, under an exclusive, worldwide license agreement with UC, acting through its Santa Barbara Campus (the “UC Agreement”),production thereof; we have exclusively licensed ~~eighteen~~UCSB’s interest in the patent family co-owned with UCSB that covers Probody and other pro-protein technology in the fields of therapeutics, in vivo diagnostics and prophylactics. In addition, we have exclusively licensed a patent portfolio of three patent families from UCSB that includes patents and ~~six pending~~ patent applications that cover compositions and methods related to the screening for and identification of the masks and protease-cleavable linkers that we incorporate into our Probody candidates. ~~We also exclusively licensed UCSB’s rights in the co-owned patent family.~~ We may not be able to apply for patents on certain aspects of our product candidates in a timely fashion or at all. Our existing issued and granted patents and any future patents we obtain may not be sufficiently broad to prevent others from using our technology or from developing competing products and technology. There is no guarantee that any of our pending patent applications will result in issued or granted patents, that any of our issued or granted patents will not later be found to be invalid or unenforceable or that any issued or granted patents will include claims that are sufficiently broad to cover our product candidates or to provide meaningful protection from our competitors. Moreover, the patent position of biotechnology and biopharmaceutical companies can be highly uncertain because it involves complex legal and factual questions. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our current and future proprietary technology and product candidates are covered by valid and enforceable patents or are effectively maintained as trade secrets. If third parties disclose or misappropriate our proprietary rights, it may materially and adversely affect our position in the market.

The U.S. Patent and Trademark Office (“USPTO”) and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case. The standards applied by the USPTO and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in biotechnology and biopharmaceutical patents. As such, we do not know the degree of future protection that we will have on our proprietary products and technology. While we will endeavor to try to protect our product candidates with intellectual property rights such as patents, as appropriate, the process of obtaining patents is time-consuming, expensive and sometimes unpredictable.

In addition, there are numerous recent changes to the patent laws and proposed changes to the rules of the USPTO that may have a significant impact on our ability to protect our technology and enforce our intellectual property rights. For example, the America Invents Act (“AIA”) enacted within the last several years involves significant changes in patent legislation. The Supreme Court has ruled on several patent cases in recent years, some of which cases either narrow the scope of patent protection available in certain circumstances or weaken the rights of patent owners in certain situations. The recent decision by the Supreme Court in Association for Molecular Pathology v. Myriad Genetics, Inc. precludes a claim to a nucleic acid having a stated nucleotide sequence that is identical to a sequence found in nature and ~~unmodified.~~has not been modified. We currently are not aware of an immediate impact of this decision on our patents or patent applications because we are developing product candidates that contain modifications, such as our Probody substrates and masks, that we believe are not found in nature. However, this decision has yet to be clearly interpreted by courts and by the USPTO. We cannot assure you that the interpretations of this decision or subsequent rulings will not adversely impact our patents or patent applications. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

Once granted, patents may remain open to opposition, interference, re-examination, post-grant review, inter partes review, nullification or derivation action in court or before patent offices or similar proceedings for a given period after allowance or grant, during which time third parties can raise objections against such initial grant. In the course of such proceedings, which may continue for a protracted period of time, the patent owner may be compelled to limit the scope of the allowed or granted claims thus attacked, or may lose the allowed or granted claims altogether. In addition, there can be no assurance that:

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Others will not or may not be able to make, use or sell compounds that are the same as or similar to our product candidates but that are not covered by the claims of the patents that we own or license.

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We or our licensors, or our ~~existing or future~~ collaborators are the first to make the inventions covered by each of our issued patents and pending patent applications that we own or license.

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We or our licensors, or our ~~existing or future~~ collaborators are the first to file patent applications covering certain aspects of our inventions.

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Others will not independently develop similar or alternative technologies or duplicate any of our technologies without infringing, misappropriating or otherwise violating our intellectual property rights.

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A third party may not challenge our patents and, if challenged, a court would hold that our patents are valid, enforceable and infringed.

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Any issued patents that we own or have licensed will provide us with any competitive advantages, or will not be challenged by third parties.

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We may develop additional proprietary technologies that are patentable.

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The patents of others will not have a material or adverse effect on our business, financial condition, results of operations and prospects.

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Our competitors do not conduct research and development activities in countries where we do not have enforceable patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets.

Other companies or organizations may challenge our or our licensors’ patent rights or may assert patent rights that prevent us from developing and commercializing our products.

Probody therapeutics are a relatively new scientific field. We have obtained grants and issuances of Probody therapeutic patents and have licensed one patent family comprising several of these patents from a third party on an exclusive basis for therapeutics applications. The issued patents and pending patent applications in the ~~U.S.~~United States and in key markets around the world that we own or license claim many different methods, compositions and processes relating to the discovery, development, manufacture and commercialization of antibody and immunoregulatory therapeutics. Specifically, we own and have licensed a portfolio of patents, patent applications and other intellectual property covering Probody compositions of matter as well as their methods of manufacturing and use.

As the field of antibody and immunoregulatory therapeutics matures, patent applications are being processed by national patent offices around the world. There is uncertainty about which patents will issue, and, if they do, as to when, to whom, and with what claims. In addition, third parties may attempt to invalidate our intellectual property rights.

Even if our rights are not directly challenged, disputes could lead to the weakening of our intellectual property rights. Our defense against any attempt by third parties to circumvent or invalidate our intellectual property rights could be costly to us, could require significant time and attention of our management and could have a material and adverse effect on our business, financial condition, results of operations and prospects or our ability to successfully compete.

There are many issued and pending patents that claim aspects of our product candidates and modifications that we may need to apply to our product candidates. There are also many issued patents that claim antibodies or portions of antibodies that may be relevant for Probody products we wish to develop. Thus, it is possible that one or more organizations will hold patent rights to which we will need a license. If those organizations refuse to grant us a license to such patent rights on reasonable terms, we may not be able to market products or perform research and development or other activities covered by these patents.

We may not be able to protect our intellectual property rights throughout the world.

Obtaining a valid and enforceable issued or granted patent covering our technology in the U.S. and worldwide can be extremely costly. In jurisdictions where we have not obtained patent protection, competitors may use our technology to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but where it is more difficult to enforce a patent as compared to the U.S. Competitor products may compete with our future products in jurisdictions where we do not have issued or granted patents or where our issued or granted patent claims or other intellectual property rights are not sufficient to prevent competitor activities in these jurisdictions. The legal systems of certain countries, particularly certain developing countries, make it difficult to enforce patents and such countries may not recognize other types of intellectual property protection, particularly that relating to biopharmaceuticals. This could make it difficult for us to prevent the infringement of our patents or marketing of competing products in violation of our proprietary rights generally in certain jurisdictions. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

For example, in March 2022, Russia adopted a decree allowing local companies and individuals to use inventions from certain countries designated as “unfriendly”, including the U.S. Further, under current U.S. currency restrictions on payments to entities in Russia, we may be

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unable in the future to pay for the prosecution of patent applications or the maintenance of existing patents in Russia. As a result of these actions, we may not be able to protect our technology from unlicensed use in Russia.

We generally file a provisional patent application first (a priority filing) at the USPTO. An international application under the Patent Cooperation Treaty (“PCT”) is usually filed within twelve months after the priority filing. Based on the PCT filing, national and regional patent applications may be filed in the United States, ~~European Union,~~Europe, Japan, Australia and Canada and, depending on the individual case, also in any or all of, inter alia, Brazil, China, Hong Kong, India, Indonesia, Israel, Malaysia, Mexico, New Zealand, Russia or Eurasian Patent Organization, Singapore, South Africa, South Korea and other jurisdictions. We have so far not filed for patent protection in all national and regional jurisdictions where such protection may be available. In addition, we may decide to abandon national and regional patent applications before grant. Finally, the grant proceeding of each national or regional patent is an independent proceeding which may lead to situations in which applications might in some jurisdictions be refused by the relevant registration authorities, while granted by others. It is also quite common that depending on the country, various scopes of patent protection may be granted on the same product candidate or technology.

The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws in the U.S., and many companies have encountered significant difficulties in protecting and defending such rights in such jurisdictions. If we or our licensors encounter difficulties in protecting, or are otherwise precluded from effectively protecting, the intellectual property rights important for our business in such jurisdictions, the value of these rights may be diminished and we may face additional competition from others in those jurisdictions. Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any of our licensors are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position in the relevant jurisdiction may be impaired and our business and results of operations may be adversely affected.

We or our licensors, or any future strategic partners may become subject to third party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights, and we may need to resort to litigation to protect or enforce our patents or other proprietary rights, all of which could be costly, time consuming, delay or prevent the development and commercialization of our product candidates, or put our patents and other proprietary rights at risk.

We or our licensors, or any future strategic partners may be subject to third-party claims for infringement or misappropriation of patent or other proprietary rights. We are generally obligated under our license or collaboration agreements to indemnify and hold harmless our licensors or collaborators for damages arising from intellectual property infringement by us. For example, in March 2020, Vytacera Bio, LLC filed a patent infringement lawsuit against the Company in the U.S. District Court for the District of Delaware. The lawsuit alleges that the Company’s use, offers to sell, and/or sales of the Probody technology platform for basic research applications constitutes infringement. The complaint seeks unspecified monetary damages. The Company believes that the lawsuit is without merit and intends to vigorously defend itself. However, there can be no assurance that a court might not rule against us in these proceedings. Even if we are successful in defending against such claim, this litigation could divert management’s attention, as well as our resources, from our business and any claims paid out of our cash reserves would harm our financial condition and operating results.

If we or our licensors, or any future strategic partners are found to infringe a third-party patent or other intellectual property rights, we could be required to pay damages, potentially including treble damages, if we are found to have willfully infringed. In addition, we or our licensors, or any future strategic partners may choose to seek, or be required to seek, a license from a third party, which may not be available on acceptable terms, if at all. Even if a license can be obtained on acceptable terms, the rights may be non-exclusive, which could give our competitors access to the same technology or intellectual property rights licensed to us. If we fail to obtain a required license, we or our ~~existing or future~~ collaborators may be unable to effectively market product candidates based on our technology, which could limit our ability to generate revenue or achieve profitability and possibly prevent us from generating revenue sufficient to sustain our operations. In addition, we may find it necessary to pursue claims or initiate lawsuits to protect or enforce our patent or other intellectual property rights. The cost to us in defending or initiating any litigation or other proceeding relating to patent or other proprietary rights, even if resolved in our favor, could be substantial, and litigation would divert our management’s attention. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could delay our research and development efforts and limit our ability to continue our operations.

If we were to initiate legal proceedings against a third party to enforce a patent covering one of our products or our technology, the defendant could counterclaim that our patent is invalid or unenforceable. In patent litigation in the U.S., defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone

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connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on one or more of our products or certain aspects of our platform technology. Such a loss of patent protection could have a material and adverse effect on our business, financial condition, results of operations and prospects. Patents and other intellectual property rights also will not protect our technology if competitors design around our protected technology without legally infringing, misappropriating or otherwise violating our patents or other intellectual property rights.

Intellectual property rights of third parties could adversely affect our ability to commercialize our product candidates, and we might be required to litigate or obtain licenses from third parties in order to develop or market our product candidates. Such litigation or licenses could be costly or not available on commercially reasonable terms.

Because the antibody landscape is still evolving, including the masked antibody landscape, it is difficult to conclusively assess our freedom to operate without infringing on third-party rights. There are numerous companies that have pending patent applications and issued patents broadly covering antibodies generally or covering antibodies directed against the same targets as, or targets similar to, those we are pursuing. There are many issued patents and patent applications covering antibodies targeted against PD-1 and, to a lesser extent, PD-L1, and the intellectual property covering PD-1 has been the subject of litigation and licensing, especially regarding how broadly certain claims should be construed. If the claims were to be construed broadly by the courts, we may need to obtain a license to some of such intellectual property, covering PD-1, which would decrease the profits we would realize from the sale of such products. An increasing number of third parties are filing masked antibody patent applications, several of which contain claims that are patterned after our own patent claims. Our competitive position may suffer if patents issued to third parties or other third-party intellectual property rights cover our products or product candidates or elements thereof, or our manufacture or uses relevant to our development plans. In such cases, we may not be in a position to develop or commercialize products or product candidates unless we successfully pursue litigation to nullify or invalidate the third-party intellectual property right concerned, or enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms. There may be issued patents of which we are not aware, held by third parties that, if found to be valid and enforceable, could be alleged to be infringed by our Probody therapeutic technologies. There also may be pending patent applications of which we are not aware that may result in issued patents, which could be alleged to be infringed by our Probody therapeutic technologies. If such an infringement claim should be brought and be successful, we may be required to pay substantial damages, be forced to abandon our product candidates or seek a license from any patent holders. No assurances can be given that a license will be available on commercially reasonable terms, if at all.

It is also possible that we have failed to identify relevant third-party patents or applications. For example, U.S. applications filed before November 29, 2000, and certain U.S. applications filed after that date that will not be filed outside the U.S. remain confidential until patents issue. Patent applications in the U.S. and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering our products or platform technology could have been filed by others without our knowledge. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our platform technologies, our products or the use of our products. Third-party intellectual property right holders may also actively bring infringement claims against us. We cannot guarantee that we will be able to successfully settle or otherwise resolve such infringement claims. If we are unable to successfully settle future claims on terms acceptable to us, we may be required to engage in or continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in marketing our products. If we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily or permanently prohibited from commercializing any of our product candidates that are held to be infringing. We might, if possible, also be forced to redesign product candidates so that we no longer infringe the third-party intellectual property rights. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.

Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.

Litigation, including the ongoing patent infringement lawsuit brought by Vytacera Bio, LLC (“Vytacera”) against us, or other legal proceedings relating to intellectual property claims, with or without merit, is unpredictable and generally expensive and time consuming and is likely to divert significant resources from our core business, including distracting our technical and management personnel from their normal responsibilities. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities.

We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and

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more mature and developed intellectual property portfolios. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon, misappropriating or ~~misappropriating~~otherwise violating or from successfully challenging our intellectual property rights. For example, although we believe the Vytacera lawsuit is without merit and we intend to vigorously defend ourselves, we cannot provide any assurance that we will be successful. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material and adverse effect on our ability to compete in the marketplace.

If we fail to comply with our obligations under any license, collaboration or other agreements, we may be required to pay damages and could lose our rights to intellectual property rights that are necessary for developing and protecting our product candidates or we could lose certain rights to grant sublicenses.

Our licenses from ~~UCSB~~Amgen, ImmunoGen and ~~ImmunoGen~~UCSB impose, and any future licenses we enter into are likely to impose, various development, commercialization, funding, ~~milestone, royalty,~~ diligence, sublicensing, insurance, patent prosecution and enforcement and/or other obligations on ~~us. If~~us, including various payment obligations such as milestone and royalty payments and payments based on sublicensing revenues. Our rights under our agreements with our licensors or collaborators may be limited or modified according to their terms. Additionally, if we breach any of these obligations, or use the intellectual property licensed to us in an unauthorized manner, we may be required to pay damages and the licensor may have the right to terminate the license, which could result in us being unable to develop, manufacture and sell products that are covered by the licensed technology or enable a competitor to gain access to the licensed technology. Moreover, our licensors and collaborators may own or control intellectual property that has not been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing, misappropriating or otherwise violating the licensor’s rights. In addition, while we cannot currently determine the amount of the royalty or sublicense revenue payment obligations we would be required to pay on development or sales of future products, if any, the amounts may be significant. The amount of our future royalty or sublicense revenue payment obligations will depend on the technology and intellectual property we use in products that we successfully develop and commercialize, if any. Therefore, even if we successfully develop and commercialize products, we may be unable to achieve or maintain profitability.

Our intellectual property agreements with our licensors, collaborators and third parties may be subject to disagreements over contract interpretation, which could narrow the scope of, or result in termination of, our rights to the relevant intellectual property or technology or increase our financial or other obligations to such third parties.

Certain provisions in our intellectual property agreements may be susceptible to multiple interpretations. For example, we may disagree with our licensors or collaborators regarding whether, when and to what extent various obligations under these agreements apply to certain of our product candidates and products, including various payment, development, commercialization, funding, diligence, sublicensing, insurance, patent prosecution and enforcement and/or other obligations. The resolution of any contract interpretation disagreement that may arise could affect the scope of our rights to the relevant intellectual property or technology, or affect financial or other obligations under the relevant agreement. In either case, such disagreement could have a material adverse effect on our business, financial condition, results of operations and prospects.

In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact conceives or develops intellectual property that we regard as our own. Our assignment agreements may not be self‑executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to seeking patent protection for certain aspects of our product candidates, we also consider trade secrets, including confidential and unpatented know-how, important to the maintenance of our competitive position. We protect trade secrets and confidential and unpatented know-how, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to such knowledge, such as our employees, corporate collaborators, outside scientific collaborators, CROs, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants that obligate them to maintain confidentiality and assign their inventions to us.

Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts in the U.S. and certain foreign jurisdictions are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.

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We may be subject to claims that we or our employees or consultants have wrongfully used or disclosed alleged trade secrets of our employees’ or consultants’ former employers or their clients. These claims may be costly to defend and if we do not successfully do so, we may be required to pay monetary damages and may lose valuable intellectual property rights or personnel.

Many of our employees were previously employed at universities or biotechnology or biopharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper our ability to commercialize, or prevent us from commercializing, our product candidates, which could severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Our trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names or may be forced to stop using these names, which we need for name recognition by potential partners or customers in our markets of interest. If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively and our business may be adversely affected.

Risks Related to Government Regulation

~~Clinical development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.~~

Our product candidates in clinical development or preclinical development have a high risk of failure. We commenced enrollment of our Phase 1/2 clinical trial of CX-072, our candidate directed against PD-L1, for cancer and treated our first patient in January 2017. We commenced a Phase 1/2 clinical trial of CX-2009, our PDC candidate directed against CD-166, for cancer in June 2017. It is impossible to predict when or if any of our product candidates will prove effective and safe in humans or will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical studies and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the development process. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or safety profiles, notwithstanding promising results in earlier trials.

Commencement of clinical trials for programs beyond CX-072 and CX-2009 is subject to finalizing the trial design and filing an IND or similar filing with the FDA or similar foreign regulatory authority. However, even after we file our IND or comparable submissions in other jurisdictions, the FDA or other regulatory authorities could disagree that we have satisfied their requirements to commence our clinical trials or disagree with our study design, which may require us to complete additional preclinical studies or amend our protocols or impose stricter conditions on the commencement of clinical trials and may delay our ability to begin Phase 1 clinical trials, causing an increase in the amount of time and expense required to develop our product candidates.

We may be unable to obtain or be delayed in obtaining U.S. or foreign regulatory approval and, as a result, be unable or delayed in being able to commercialize our product candidates.

Our product candidates that we are currently developing are regulated as therapeutic biologics that are subject to requirements for review and approval of a BLA by the FDA’s Center for Drug Evaluation and Research (“CDER”). Therefore, our product candidates are subject to extensive governmental regulations relating to, among other things, research, testing, development, manufacturing, safety, efficacy, approval, recordkeeping, reporting, labeling, storage, packaging, advertising and promotion, pricing, marketing and distribution of drugs and therapeutic biologics. Rigorous preclinical testing and clinical trials and an extensive regulatory approval process are required to be successfully completed in the U.S. and in many foreign jurisdictions before a new drug or therapeutic biologic can be marketed. Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. For example, recently the FDA launched Project Optimus, an initiative to reform the dose optimization and dose selection paradigm in oncology drug development. While the effort is intended to help drive better ultimate outcomes in the development of oncology drugs, these efforts could also lead to longer and more expensive early development efforts for companies, including us, before we are able to initiate registrational studies for our product candidates. Additionally, at this time it is impossible to predict whether the COVID-19 pandemic will cause regulatory delays in the U.S. or foreign jurisdictions. It is possible that none of the product candidates we may develop will obtain the regulatory approvals necessary for us or our existing or future collaborators to begin selling them.

As a company, we have limited experience in conducting and managing the clinical trials necessary to obtain regulatory approvals, including approval by the FDA. The time required to obtain FDA and other approvals is unpredictable but typically takes many years following the commencement of clinical trials, depending upon the type, complexity and novelty of the product candidate. The standards that the FDA and its foreign counterparts use when regulating us require judgment and can change, which makes it difficult to predict with certainty how they will be applied. Any analysis we perform of data from preclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. We may also encounter unexpected delays or increased costs due to new government regulations, for example, from future legislation or administrative action, or from changes in FDA policy during the period of product development, clinical trials and FDA regulatory review. Further, government shutdowns, such as the partial U.S. federal government shutdown in late 2018 or the United Kingdom’s departure from the European Union may impact our ability to access government agencies in a timely manner or otherwise impact our ability to move our product candidates through the regulatory process. It is impossible to predict whether legislative changes will be enacted, or whether FDA or foreign regulations, guidance or interpretations will be changed, or what the impact of such changes, if any, may be.

Because the product candidates we are developing may represent a new class of therapeutic biologics, the FDA and its foreign counterparts have not yet established any definitive policies, practices or guidelines in relation to these product candidates. While we believe the product candidates that we are currently developing are regulated as therapeutic biologics that are subject to requirements for review and approval of a BLA by the FDA’s Center for Drug Evaluation and Research (“CDER”), the FDA could decide to regulate them as drugs that are subject to requirements for review and approval of an NDA by CDER or as biological products that are subject to requirements for review and approval of a BLA by the FDA’s Center for Biologics Evaluation and Research (“CBER”). The lack of policies, practices or guidelines may hinder or slow review by the FDA of any regulatory filings that we may submit.

Moreover, the FDA may respond to ~~these~~our submissions by defining requirements we may not have anticipated. Such responses could lead to significant delays in the clinical development of our product candidates. In addition, because there may be approved treatments for some of the diseases for which we may seek approval, in order to receive regulatory approval, we may need to demonstrate through clinical trials that the product candidates we develop to treat these diseases, if any, are not only safe and effective, but safer or more effective than existing products. Furthermore, in recent years, there has been increased public and political pressure on the FDA with respect to the approval process for new drugs and therapeutic biologics, and the FDA’s standards, especially regarding product safety, appear to have become more stringent.

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Any delay or failure in obtaining required approvals could have a material and adverse effect on our ability to generate revenues from the particular product candidate for which we are seeking approval. Furthermore, any regulatory approval to market a product may be subject to limitations on the approved uses for which we may market the product or the labeling or other restrictions. In addition, the FDA has the authority to require a ~~risk evaluation and mitigation strategies (“REMS”) plan~~REMS as part of ~~an NDA or~~a BLA or after approval, which may impose further requirements or restrictions on the distribution or use of an approved drug or biologic, such as limiting prescribing to certain physicians or medical centers that have undergone specialized training, limiting treatment to patients who meet certain safe-use criteria and requiring treated patients to enroll in a registry. These limitations and restrictions may limit the size of the market for the product and affect reimbursement by third-party payors.

We are also subject to numerous foreign regulatory requirements governing, among other things, the conduct of clinical trials, manufacturing and marketing authorization, pricing and third-party reimbursement. The foreign regulatory approval process varies among countries and may include all of the risks associated with FDA approval described above as well as risks attributable to the satisfaction of local regulations in foreign jurisdictions. Moreover, the time required to obtain approval may differ from that required to obtain FDA approval. Approval by the FDA does not ensure approval by regulatory authorities outside the U.S. and vice versa.

Even if we receive regulatory approval for any of our product candidates, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense. Additionally, our product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.

Any regulatory approvals that we or our ~~existing or future~~ collaborators obtain for our product candidates may also be subject to limitations on the approved indicated uses for which a product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including “Phase 4” clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. In addition, if the FDA or a comparable foreign regulatory authority approves any of our product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, import, export, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and good clinical practices for any clinical trials that we conduct post-approval. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

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restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market or voluntary or mandatory product recalls;

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fines, warning letters or holds on clinical trials;

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refusal by the FDA to approve pending applications or supplements to approved applications filed by us or our strategic partners;

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suspension or revocation of product ~~license~~ approvals;

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product seizure or detention or refusal to permit the import or export of products; and

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injunctions or the imposition of civil or criminal penalties.

The FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. For example, in December 2016, the 21st Century Cures Act, or “Cures Act”, was signed into law. The Cures Act, among other things, is intended to modernize the regulation of drugs and biologics and to spur innovation, but its ultimate implementation is unclear.candidates If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business.

We also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. ~~For example, certain~~If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may be subject to enforcement action, and we may not achieve or sustain profitability.

Our product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.

The Affordable Care Act includes a subtitle called the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, an application for a highly similar or “biosimilar” product may not be submitted to the FDA until four years following the date that the reference product was first approved by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first approved. During this 12-year period of

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exclusivity, another company may still market a competing version of the ~~Trump administration~~reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product.

We believe that any of our product candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our product candidates to be reference products for competing products, potentially creating the opportunity for competition sooner than anticipated. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our ~~business~~reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and ~~industry. Namely, the Trump administration has taken several executive actions, including the issuance of~~will depend on a number of ~~Executive Orders,~~marketplace and regulatory factors that are still developing.

Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could ~~impose significant burdens on,~~hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise ~~materially delay,~~prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s ability to ~~engage in routine regulatory~~hire and ~~oversight activities such as implementing statutes through rulemaking, issuance~~retain key personnel and accept the payment of ~~guidance,~~user fees, and ~~review and approval of marketing applications. Notably, on January 30, 2017, President Trump issued an Executive Order, applicable to all executive agencies, including the FDA,~~other events that requires that for each notice of proposed rulemaking or final regulation to be issued in fiscal year 2017, the agency shall identify at least two existing regulations to be repealed, unless prohibited by law. These requirements are referred to as the “two-for-one” provisions. This Executive Order includes a budget neutrality provision that requires the total incremental cost of all new regulations in the 2017 fiscal year, including repealed regulations, to be no greater than zero, except in limited circumstances. For fiscal years 2018 and beyond, the Executive Order requires agencies to identify regulations to offset any incremental cost of a new regulation and approximate the total costs or savings associated with each new regulation or repealed regulation. In guidance issued by the Office of Information and Regulatory Affairs within OMB on April 5, 2017, the administration indicates that the “two-for-one” provisions may apply not only to agency regulations, but also to significant agency guidance documents. Moreover, on February 24, 2017, President Trump issued an Executive Order requiring each agency to designate a regulatory reform officer and create a regulatory reform task force to evaluate existing regulations and make recommendations regarding their repeal, replacement, or modification, and on September 8, 2017, the FDA published notices in the Federal Register soliciting broad public comment to identify regulations that could be modified in compliance with these Executive Orders. It is difficult to predict how these requirements will be implemented, and the extent to which they will impactotherwise affect the FDA’s ability to ~~exercise~~perform routine functions. Average review times at the FDA have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for therapeutic biologics or modifications to approved therapeutic biologics to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough FDA employees and stop critical activities.

Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections of domestic and foreign manufacturing facilities at various points. Even though the FDA has since resumed standard inspection operations of domestic facilities where feasible, the FDA has continued to monitor and implement changes to its inspectional activities to ensure the safety of its employees and those of the firms it regulates as it adapts to the evolving COVID-19 pandemic, and any resurgence of the virus or emergence of new variants may lead to further inspectional delays. Regulatory authorities outside the United States may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic. If a prolonged government shutdown occurs, or if global health concerns continue to prevent the FDA or other regulatory ~~authority. If these executive actions impose constraints~~authorities from conducting their regular inspections, reviews or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on ~~FDA’s ability to engage in oversight and implementation activities in the normal course,~~ our ~~business may be negatively impacted.~~business.

Healthcare legislative reform measures may have a material and adverse effect on our business and results of operations.

In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare ~~costs. For example, in~~costs, and government regulation. In March 2010, the Patient Protection and Affordable Care Act, as amended by the ~~Healthcare~~Health Care and Education Reconciliation Act (together, the “ACA”), was passed, which substantially ~~changes~~changed the way healthcare is financed by both governmental and private insurers, and significantly impacts the U.S. pharmaceutical industry. The ACA, among other things, ~~subjects~~subjected therapeutic biologics to potential competition by lower-cost biosimilars, ~~addresses~~addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs and therapeutic biologics that are inhaled, infused, instilled, implanted or injected, ~~increases~~increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and ~~extends~~extended the rebate program to individuals enrolled in Medicaid managed care organizations, ~~establishes~~established annual fees and taxes on manufacturers of certain branded prescription drugs and therapeutic biologics, and created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts, which, through subsequent legislative amendments, was increased to 70% starting in 2019, off negotiated prices of applicable brand drugs and therapeutic biologics to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs and therapeutic biologics to be covered under Medicare Part D.

Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ~~ACA, and we expect there will be additional challenges and amendments~~ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA inbrought by several states without specifically ruling on the ~~future. The new Presidential Administration and U.S. Congress will likely continue to seek to modify, repeal, or otherwise invalidate all, or certain provisions~~constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden issued an executive order initiating a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare. It is ~~uncertain~~unclear how healthcare reform measures enacted by Congress or implemented by the ~~extent to which~~Biden administration, if any, ~~such changes may~~will impact our ~~business or financial condition.~~business.

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In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted to reduce healthcare expenditures. ~~Additionally, U.S. federal government agencies currently face potentially significant spending reductions, which may further impact healthcare expenditures.~~ The Budget Control Act of 2011, among other things, included aggregate reductions of Medicare payments to ~~providers of 2% per fiscal year.~~providers. These reductions went into effect on April 1, 2013, and due to subsequent legislative amendments to the statute, will remain in effect through ~~2025~~2032, with the exception of a temporary suspension from May 2, 2020 through March 31, 2022, unless additional Congressional action is taken. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. If federal spending is further reduced, anticipated budgetary shortfalls may also impact the ability of relevant agencies, such as the FDA or the National Institutes of Health to continue to function at current levels. Amounts allocated to federal grants and contracts may be reduced or eliminated. These reductions may also impact the ability of relevant agencies to timely review and approve research and development, manufacturing, and marketing activities, which may delay our ability to develop, market and sell any products we may develop.

Moreover, payment methodologies, including payment for companion diagnostics, may be subject to changes in healthcare legislation and regulatory initiatives. For example, in March 2018, the Centers for Medicare & Medicaid Services (“CMS”) ~~has begun bundling~~finalized a national coverage determination extending coverage under the Medicare ~~payments~~program for certain diagnostic laboratory tests ~~ordered while~~using next generation sequencing (“NGS”) that are approved by the FDA as a ~~patient received services~~companion in vitro diagnostic and used in a ~~hospital outpatient setting~~cancer with an FDA-approved companion diagnostic indication. Under the national coverage determination, diagnostic tests that meet these criteria are covered only in patients with recurrent, metastatic, relapsed, refractory or stages III or IV cancer if the test has an FDA-approved or cleared indication for use in that patient’s cancer and ~~beginning in 2018, CMS will pay~~results are provided to the treating physician for ~~clinical laboratory services based on~~management of the patient using a ~~weighted average of reported prices that~~report template to specify treatment options. Although the Medicare program increasingly is used as a model for how private payors ~~Medicare Advantage plans,~~ and ~~Medicaid Managed Care plans pay~~other governmental payors develop their coverage and reimbursement policies, it is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for ~~laboratory services.~~ any companion diagnostics associated with our product candidates.

In addition, recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed bills designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. ~~For example,~~In March 2021, the ~~21st Century Cures~~American Rescue Plan Act ~~changed~~of 2021 was signed into law, which eliminates the ~~reimbursement methodology for infusion drugs and biologics furnished through durable medical equipment in an attempt to remedy over- and underpayment~~statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, beginning January 1, 2024. Most recently, on August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law by President Biden. Among other things, the IRA requires manufacturers of certain ~~products.~~drugs to engage in price negotiations with Medicare (beginning in 2026), imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023), and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025). The IRA permits the Secretary of the Department of Health and Human Services (HHS) to implement many of these provisions through guidance, as opposed to regulation, for the initial years. For that and other reasons, it is currently unclear how the IRA will be effectuated. These laws and future laws may negatively impact the ability of biotechnology companies, including us, to raise funds from investors for or to obtain collaboration partners who assist us in the funding of research and development of future medicines. Individual states in the United States have also become increasingly ~~aggressive~~active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or companion diagnostics or additional pricing pressures.

If we or ~~existing or future~~our collaborators, manufacturers or service providers fail to comply with healthcare laws and regulations, we or they could be subject to enforcement actions, which could affect our ability to develop, market and sell our products and may harm our reputation.

Although we do not currently have any products on the market, ~~once~~if and when we begin commercializing our product candidates, we will be subject to additional healthcare statutory and regulatory requirements and enforcement by the federal government and the states and foreign governments in which we conduct our business. Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain

CytomX Therapeutics, Inc.

the business or financial arrangements and relationships through which we market, sell and distribute our product candidates for which we obtain marketing approval. ~~In addition, we may be subject to patient data privacy and security regulation by both the U.S. federal government and the states in which we conduct our business.~~ Restrictions under applicable federal and state healthcare laws and regulations, include the following:

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the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind to induce or reward either the referral of an individual for, or the purchase, or order or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

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the U.S. federal False Claims Act, which imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent, knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. In addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act;

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the U.S. federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

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HIPAA, as amended by the Health Information Technology for Economics and Clinical Health Act (“HITECH”), which imposes obligations on certain covered entity healthcare providers, health plans, and healthcare clearinghouse as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information;

the U.S. federal legislation commonly referred to as Physician Payments Sunshine Act, enacted as part of the ACA, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the CMS information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified registered nurse anesthetists and certified nurse midwives) and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members; and

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

information.

Ensuring that our future business arrangements with ~~third-parties~~third parties comply with applicable healthcare laws and regulations could involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any such requirements, we may be subject to penalties, including civil or criminal penalties, monetary damages, the curtailment or restructuring of our operations, loss of eligibility to obtain approvals from the FDA, or exclusion from participation in government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, any of which could adversely our financial results. Although effective compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, these risks cannot be entirely eliminated. Any action against us for an alleged or suspected violation could cause us to incur significant legal expenses and could divert our management’s attention from the operation of our business, even if our defense is successful. In addition, achieving and sustaining compliance with applicable laws and regulations may be costly to us in terms of money, time and resources.

If we or future collaborators, manufacturers or service providers fail to comply with applicable federal, state or foreign laws or regulations, we could be subject to enforcement actions, which could affect our ability to develop, market and sell our products successfully and could harm our reputation and lead to reduced acceptance of our products by the market. These enforcement actions include, among others:

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adverse regulatory inspection findings;

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warning letters;

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voluntary or mandatory product recalls or public notification or medical product safety alerts to healthcare professionals;

CytomX Therapeutics, Inc.

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restrictions on, or prohibitions against, marketing our products;

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restrictions on, or prohibitions against, importation or exportation of our products;

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suspension of review or refusal to approve pending applications or supplements to approved applications;

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exclusion from participation in government-funded healthcare programs;

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exclusion from eligibility for the award of government contracts for our products;

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suspension or withdrawal of product approvals;

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seizures or administrative detention of products;

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injunctions; and

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civil and criminal penalties and fines.

If we fail to comply with U.S. and foreign regulatory requirements, regulatory authorities could limit or withdraw any marketing or commercialization approvals we may receive and subject us to other penalties that could materially harm our business.

Even if we receive marketing and commercialization approval of a product candidate, we will be subject to continuing regulatory requirements, including in relation to adverse patient experiences with the product and clinical results that are reported after a product is made commercially available, both in the U.S. and any foreign jurisdiction in which we seek regulatory approval. The FDA has significant post-market authority, including the authority to require labeling changes based on new safety information and to require post-market studies or clinical trials to evaluate safety risks related to the use of a product or to require withdrawal of the product from the market. The FDA also has the authority to require a REMS plan after approval, which may impose further requirements or restrictions on the distribution or use of an approved drug or therapeutic biologic. The manufacturer and manufacturing facilities we use to make a future product, if any, will also be subject to periodic review and inspection by the FDA and other regulatory agencies, including for continued compliance with cGMP requirements. The discovery of any new or previously unknown problems with our third-party manufacturers, manufacturing processes or facilities may result in restrictions on the product, manufacturer or facility, including withdrawal of the product from the market. If we rely on third-party manufacturers, we will not have control over compliance with applicable rules and regulations by such manufacturers. Any product promotion and advertising will also be subject to regulatory requirements and continuing regulatory review. If we or our ~~existing or future~~ collaborators, manufacturers or service providers fail to comply with applicable continuing regulatory requirements in the U.S. or foreign jurisdictions in which we seek to market our products, we or they may be subject to, among other things, fines, warning letters, holds on clinical trials, delay of approval or refusal by the FDA to approve pending applications or supplements to approved applications, suspension or withdrawal of regulatory approval, product recalls and seizures, administrative detention of products, refusal to permit the import or export of products, operating restrictions, injunction, civil penalties and criminal prosecution.

Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition.

The regulatory environment surrounding data privacy and security is increasingly demanding. We are or may in the future be subject to numerous U.S. federal and state laws and non-U.S. regulations governing the collection, use, disclosure, retention, and security of personal and confidential information of our clinical subjects, clinical investigators, employees and vendors/business contacts. Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their requirements may have on our business. This evolution may create uncertainty in our business, affect our ability to operate in certain jurisdictions or to collect, store, transfer use and share personal information, necessitate the acceptance of more onerous obligations in our contracts, result in liability or impose additional costs on us. The cost of compliance with these laws, regulations and standards is high and is likely to increase in the future. Any failure or perceived failure by us to comply with federal, state or foreign laws or regulations, our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity, government investigations and enforcement actions, claims by third parties and damage to our reputation, any of which could have a material adverse effect on our business, results of operation, and financial condition.

In the United States, HIPAA imposes, among other things, certain standards relating to the privacy, security, transmission and breach reporting of individually identifiable health information. We may obtain health information from third parties (including research institutions from which we obtain clinical trial data) that are subject to privacy and security requirements under HIPAA. Depending on the facts and circumstances, we could be subject to significant penalties if we violate HIPAA. Certain states have also adopted comparable privacy and security laws and regulations, some of which may be more stringent than HIPAA. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners. For example, the California Consumer Privacy Act (“CCPA”) went into effect on January 1, 2020. The CCPA creates

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individual privacy rights for California consumers, including the expanded right to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches, that has increased the likelihood of, and risks associated with data breach litigation. Further, the California Privacy Rights Act (“CPRA”) generally went into effect on January 1, 2023 and significantly amends the CCPA. The CPRA imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data. It also creates a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. Additional compliance investment and potential business process changes may also be required. Similar laws have passed in Virginia, Utah, Connecticut and Colorado, and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.

Our operations abroad may also be subject to increased scrutiny or attention from data protection authorities. For example, the GDPR went into effect in May 2018, and imposes stringent requirements for processing the personal data of individuals within the EEA. Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to 4% total worldwide annual turnover or €20 million, whichever is higher. Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States; in July 2020, the Court of Justice of the European Union (“CJEU”) limited how organizations could lawfully transfer personal data from the EU/EEA to the United States by invalidating the EU-US Privacy Shield Framework for purposes of international transfers and imposing further restrictions on the use of standard contractual clauses (“SCCs”). In March 2022, the US and EU announced a new regulatory regime intended to replace the invalidated regulations; however, this new EU-US Data Privacy Framework has not been implemented beyond an executive order signed by President Biden on October 7, 2022 on Enhancing Safeguards for United States Signals Intelligence Activities. European court and regulatory decisions subsequent to the CJEU decision of July 16, 2020 have taken a restrictive approach to international data transfers. As supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the standard contractual clauses cannot be used, or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our products and services, the geographical location or segregation of our relevant systems and operations, and could adversely affect our financial results.

Further, from January 1, 2021, we have had to comply with the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of €20 million (£17.5 million) or 4% of global turnover. As we continue to expand into other foreign countries and jurisdictions, we may be subject to additional laws and regulations that may affect how we conduct business.

Although we work to comply with applicable laws, regulations and standards, our contractual obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which we must comply. Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in significant fines, penalties and damage to our reputation, and we may be forced to change the way we operate. This could result in additional cost and liability to us, which could negatively affect our business, results of operation, and financial condition.

Even if we are able to commercialize any product candidate, such product candidate may become subject to unfavorable pricing regulations or third-party coverage and reimbursement policies, which would harm our business.

The regulations that govern regulatory approvals, pricing and reimbursement for new drugs and therapeutic biologics vary widely from country to country. Some countries require approval of the sale price of a drug or therapeutic biologic before it can be marketed. In many countries, the pricing review period begins after marketing approval is granted. In some foreign markets, prescription biopharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain regulatory approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods and negatively impact the revenues we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain regulatory approval.

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Our ability to commercialize any products successfully also will depend in part on the extent to which coverage and reimbursement for these products and related treatments will be available from government authorities, private health insurers and other organizations. Even if we succeed in bringing one or more products to the market, these products may not be considered cost-effective, and the amount reimbursed for any products may be insufficient to allow us to sell our products on a competitive basis. Because our programs are in the early stages of development, we are unable at this time to determine their cost effectiveness or the likely level or method of reimbursement. Increasingly, the third-party payors who reimburse patients or healthcare providers, such as government and private insurance plans, are requiring that drug companies provide them with predetermined discounts from list prices, and are seeking to reduce the prices charged or the amounts reimbursed for biopharmaceutical products. If the price we are able to charge for any products we develop, or the reimbursement provided for such products, is inadequate in light of our development and other costs, our return on investment could be adversely affected. There may be significant delays in obtaining reimbursement for newly-approved drugs or therapeutic biologics, and coverage may be more limited than the purposes for which the drug or therapeutic biologic is approved by the FDA or similar regulatory authorities outside of the United States. Moreover, eligibility for reimbursement does not imply that any drug or therapeutic biologic will be reimbursed in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs or therapeutic biologics, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may be based on payments allowed for lower-cost drugs or therapeutic biologics that are already reimbursed, may be incorporated into existing payments for other services and may reflect budgetary constraints or imperfections in Medicare data. Net prices for drugs or therapeutic biologics may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs or therapeutic biologics from countries where they may be sold at lower prices than in the U.S. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates. Our inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for new drugs or therapeutic biologics that we develop and for which we obtain regulatory approval could have a material and adverse effect on our operating results, our ability to raise capital needed to commercialize products and our financial condition.

We may seek and fail to obtain fast track or breakthrough therapy designations for our current or future product candidates. If ~~any of our product candidates receives marketing approval and~~ we ~~or others later identify undesirable side effects caused by the product candidate, our ability to market and derive revenue from the product candidates could be compromised.~~

Undesirable side effects caused by our product candidates could cause regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities. There may be side effects associated with the use of our product candidates, including CX-072 and CX-2009, and we expect to receive safety data regarding CX-072 and CX-2009 in 2018. Results of our trials could reveal a high and unacceptable severity and prevalence ofare successful, these or other side effects. In such an event, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications. Such side effects could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may materially and adversely affect our business, financial condition, results of operations and prospects. Further, clinical trials by their nature utilize a sample of the potential patient population. With a limited number of patients and limited duration of exposure, rare and severe side effects of our product candidates may only be uncovered with a significantly larger number of patients exposed to the product candidate.

In the event that any of our product candidates receives regulatory approval and we or others identify undesirable side effects caused by one of our products, any of the following adverse events could occur, which could result in the loss of significant revenue to us and materially and adversely affect our results of operations and business:

~~regulatory authorities may withdraw their approval of the product or seize the product;~~

~~we may be required to recall the product or change the way the product is administered to patients;~~

~~additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any component thereof;~~

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~~we may be subject to fines, injunctions or the imposition of civil or criminal penalties;~~

~~regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;~~

~~we may be required to create a Medication Guide outlining the risks of such side effects for distribution to patients;~~

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

~~the product may become less competitive; and~~

~~our reputation may suffer.~~

~~A Breakthrough Therapy Designation by the FDA for any of our product candidates~~programs may not lead to a faster development or regulatory review ~~or approval~~ process, and ~~it does~~they do not ~~increase the likelihood that our product candidates~~guarantee we will receive ~~marketing approval.~~

approval for any product candidate. We may also seek ~~a Breakthrough Therapy Designation~~to obtain accelerated approval for some of our product candidates. A breakthrough therapy is defined as a product that is intended, alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For products that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Products designated as breakthrough therapies by the FDA can also be eligible for accelerated approval.

Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a Breakthrough Therapy Designation for a product candidate may not result in a faster development process, review or approval compared to products considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our product candidates ~~qualify as breakthrough therapies,~~but the FDA may ~~later decide~~disagree that we have met the ~~products no longer meet the conditions~~requirements for ~~qualification and rescind the breakthrough designation.~~such approval.

~~A Fast Track Designation by the FDA for any of our product candidates may not actually lead to a faster development or regulatory review or approval process.~~

~~We may seek Fast Track Designation for some of our product candidates.~~ If a product is intended for the treatment of a serious or life-threatening condition and ~~the product demonstrates~~preclinical or clinical data demonstrate the potential to address an unmet medical ~~needs~~need for this condition, the product sponsor may apply for fast track designation. Fast ~~Track Designation.~~track designation provides increased opportunities for sponsor meetings with the FDA during preclinical and clinical development, in addition to the potential for rolling review of a BLA, if the sponsor provides a schedule for the submission of the sections of the BLA, the FDA agrees to accept sections of the BLA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the BLA. The FDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation, we cannot assure you that the FDA would decide to grant it. Even if we do receive ~~Fast Track Designation,~~fast track designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA may ~~withdraw Fast Track Designation~~rescind the fast track designation if it believes that the designation is no longer supported by data from our clinical development program.

We may also seek breakthrough therapy designation for any product candidate that we develop. A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over currently approved therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Like fast track designation, breakthrough therapy designation is within the discretion of the FDA. Accordingly, even if we believe a product candidate we develop meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of breakthrough therapy designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if a product candidate we develop qualifies as a breakthrough therapy, the FDA may later decide that the drug no longer meets the conditions for qualification and rescind the designation.

Product candidates may also be eligible for accelerated approval if the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. The FDA considers a clinical benefit to be a positive therapeutic effect that is clinically meaningful in the context of a given disease, such as irreversible morbidity or mortality. For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. An intermediate clinical endpoint is a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality that is reasonably likely to predict an effect on irreversible

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morbidity or mortality or other clinical benefit. As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled confirmatory clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit. Products receiving accelerated approval may be subject to expedited withdrawal procedures if the sponsor fails to conduct the required confirmatory studies in a timely manner or if such studies fail to verify the predicted clinical benefit. In addition, the FDA requires pre-approval of promotional materials for accelerated approval products, once approved. We cannot guarantee that the FDA will agree any of our product candidates has met the criteria to receive accelerated approval, which would require us to conduct additional clinical testing prior to seeking FDA approval. Even if any of our product candidates received approval through this pathway, the product may fail required confirmatory clinical trials, and we may be required to remove the product from the market or amend the product label in a way that adversely impacts its marketing.

We may seek Orphan Drug Designation for some of our product candidates, and we may be unsuccessful or may be unable to maintain the benefits associated with Orphan Drug Designation, including the potential for market exclusivity.

As part of our business strategy, we may seek Orphan Drug Designation for our product candidates, and we may be unsuccessful. Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs and therapeutic biologics for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a drug or therapeutic biologic as an orphan drug if it is a drug or therapeutic biologic intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals ~~annually~~ in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug or therapeutic biologic will be recovered from sales in the United States. In the United States, Orphan Drug Designation entitles a party to financial incentives such as opportunities for grant funding toward clinical trial costs, tax advantages and user-fee waivers. In addition, if a product that has Orphan Drug Designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including a full ~~NDA or~~ BLA, to market the same product for the same ~~indication for~~disease or condition or seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or where the manufacturer is unable to assure sufficient product quantity.

Even if we obtain Orphan Drug Designation for our product candidates in specific indications, we may not be the first to obtain marketing approval of these product candidates for the orphan-designated ~~indication~~disease or condition due to the uncertainties associated with developing pharmaceutical products. In addition, exclusive marketing rights in the United States may be limited if we seek approval for an ~~indication~~disease or condition broader than the orphan-designated indication or may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different ~~drugs or therapeutic~~ biologics ~~with different active moieties~~ can be approved for the same disease or condition. Even after an orphan product is approved, the FDA can subsequently approve the same drug or therapeutic biologic ~~with~~for the same ~~active moiety for the same~~disease or condition if the FDA concludes that the later drug or therapeutic biologic is safer, more effective or makes a major contribution to patient care. Orphan Drug Designation neither shortens the development time or regulatory review time of a drug or therapeutic biologic nor gives the drug or therapeutic biologic any advantage in the regulatory review or approval process. In addition, while we may seek Orphan Drug Designation for our product candidates, we may never receive such designations.

Tax reform legislation passed in 2017 reduced the amount of the qualified clinical research costs for a designated orphan product that a sponsor may claim as a credit from 50% to 25%. Thus, further limiting the advantage and may impact our future business strategy of seeking the Orphan Drug Designation.

Risks Related to Ownership of Our Common Stock

Our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.

We expect our operating results to be subject to quarterly fluctuations. Our net loss and other operating results will be affected by numerous factors, including:

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variations in the level of expense related to the ongoing development of our Probody platform, our product candidates or future development programs;

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results of clinical trials, or the addition or termination of clinical trials or funding support by us, or existing or future collaborators or licensing partners;

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our execution of any additional collaboration, licensing or similar arrangements, and the timing of payments we may make or receive under existing or future arrangements or the termination or modification of any such existing or future arrangements;

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developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products;

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any intellectual property infringement lawsuit or opposition, interference or cancellation proceeding in which we may become ~~involved;~~

involved, including the ongoing patent infringement lawsuit brought by Vytacera against us;

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additions and departures of key personnel;

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strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

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if any of our product candidates receives regulatory approval, the terms of such approval and market acceptance and demand for such product candidates;

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regulatory developments affecting our product candidates or those of our competitors; and

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changes in general market and economic conditions.

If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our stock to fluctuate substantially. We believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and determine the effectiveness of our internal controls over financial reporting and provide a management report on the internal control over financial reporting. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements, and harm our operating results. In addition, we are required, pursuant to Section 404, to furnish a report by our management on, among other things, the effectiveness of our internal control over financial reporting in our Annual Report on Form 10-K. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally acceptable accounting principles in the United States (“GAAP”). This assessment includes disclosure of any material weaknesses identified by management in its internal control over financial reporting. The rules governing the standards that must be met for management to assess its internal control over financial reporting are complex and require significant documentation, testing, and possible remediation. Testing and maintaining internal controls may divert management’s attention from other matters that are important to our business. If we are no longer a “smaller reporting company,” our auditors will be required to issue an attestation report on the effectiveness of our internal controls on an annual basis.

In connection with the implementation of the necessary practices and procedures related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by our independent registered public accounting firm in connection with the issuance of its attestation report. Our testing, or the subsequent testing (if required) by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected on a timely basis. Any material weaknesses could result in a material misstatement of our annual or quarterly consolidated financial statements or disclosures that may not be prevented or detected. The existence of any material weakness would require management to devote significant time and incur significant expense to remediate any such material weakness, and management may not be able to remediate any such material weakness in a timely manner.

If we fail to implement the requirements of Section 404 in the required timeframe, we may be subject to sanctions or investigations by regulatory authorities, including the Securities and Exchange Commission (“SEC”) and The Nasdaq Global Select Market. Furthermore, if we are unable to conclude that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our securities could decline, and we could be subject to sanctions or investigations

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by regulatory authorities or litigation. Failure to implement or maintain effective internal control over financial reporting and disclosure controls and procedures required of public companies could also restrict our future access to the capital markets.

In connection with preparing our financial statements for the year ending December 31, 2022, we determined that a material weakness existed in our internal control over financial reporting due to ineffective controls for evaluation and review of the accounting for revenue recognition. We initiated plans to remediate the material weakness and determined that as of June 30, 2023, the material weakness had been remediated. There can be no assurance that we will not identify additional material weaknesses in the future.

In future periods, if our management is unable to conclude that we have effective internal control over financial reporting, or to certify the effectiveness of such controls, or if additional material weaknesses in our internal control over financial reporting are identified, our ability to record, process, and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the SEC, could be adversely affected which, in turn, may adversely affect our business and the market price of our securities.

Our stock price may be volatile and purchasers of our common stock could incur substantial losses.

Our stock price is volatile. ~~From October 8, 2015, the first day of trading~~Since our ~~common stock, through November 3, 2017,~~initial public offering (“IPO”), our stock had ~~high~~low and ~~low~~high sales prices in the range of ~~$24.68~~$1.17 and ~~$9.01~~$35.00 per share. The market price for our common stock may be influenced by many factors, including the other risks described in this section titled “Risk Factors” and the following:

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results of ~~preclinical~~clinical trials and ~~clinical~~preclinical studies of our product candidates, or those of our competitors or our ~~existing or future~~ collaborators;

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regulatory or legal developments in the U.S. and other countries, especially changes in laws or regulations applicable to our products;

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the success of competitive products or technologies;

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introductions and announcements of new products by us, our future commercialization partners, or our competitors, and the timing of these introductions or announcements;

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actions taken by regulatory agencies with respect to our products, clinical studies, manufacturing process or sales and marketing terms;

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the extent to which the COVID-19 pandemic and related governmental regulations and restrictions may impact our business, including our research, clinical trials, manufacturing and financial condition, as well as the impact of other pandemics, natural disasters and other calamities;

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~~actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us;~~

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actual or anticipated variations in our financial results or those of companies that are perceived to be similar to us;

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the success of our efforts to acquire or in-license additional technologies, products or product candidates;

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developments concerning any existing or future collaborations, including but not limited to those with our sources of manufacturing supply and our commercialization partners;

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market conditions in the pharmaceutical and biotechnology sectors;

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announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures or capital commitments;

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developments or disputes concerning patents or other proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our products;

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our ability or inability to raise additional capital and the terms on which we raise it;

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the recruitment or departure of key personnel;

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changes in the structure of healthcare payment systems;

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actual or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally;

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our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;

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fluctuations in the valuation of companies perceived by investors to be comparable to us;

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announcement and expectation of additional financing efforts;

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speculation in the press or investment community;

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trading volume of our common stock;

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sales of our common stock by us or our stockholders;

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the concentrated ownership of our common stock;

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changes in accounting principles;

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terrorist acts, acts of war or periods of widespread civil unrest;

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natural disasters and other calamities; and

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general economic, industry and market conditions.

~~In addition, the~~

The stock markets in general, and the markets for pharmaceutical, biopharmaceutical and biotechnology stocks in particular, have experienced extreme volatility, including as a result of the COVID-19 pandemic, that has been often unrelated to the operating performance of the issuer. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance.

In addition, the spread of COVID-19 may negatively impact the trading price of shares of our common stock and could further severely impact our ability to raise additional capital on a timely basis or at all.

The future issuance of equity or of debt securities that are convertible into equity will dilute our share capital.

We may choose to raise additional capital in the future, depending on market conditions, strategic considerations and operational requirements. To the extent that additional capital is raised through the issuance of shares or other securities convertible into shares, our stockholders will be diluted. On February 27, 2020, we entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC (“Jefferies”), to sell shares of our common stock, par value $0.00001 per share, with aggregate gross sales proceeds of up to $75,000,000, from time to time, through an at the market offering under which Jefferies will act as sales agent. We have issued securities under the Sales Agreement and may do so in the future. In addition, in January and February 2021, we sold 16,428,571 shares of our common stock at $7.00 per share in an underwritten public offering. In July 2023, we sold pre-funded warrants to purchase up to 14,423,077 shares of common stock and accompanying Tranche Warrants to purchase up to 11,538,462 shares of our common stock. Future issuances of our common stock or other equity securities pursuant to the Sales Agreement or otherwise, or the perception that such sales may occur, could adversely affect the trading price of our common stock and impair our ability to raise capital through future offerings of shares or equity securities. Additionally, future sales of our common stock at prices below the exercise price of the Tranche Warrants may lower the exercise price of the Tranche Warrants. No prediction can be made as to the effect, if any, that future sales of common stock or the availability of common stock for future sales will have on the trading price of our common stock.

The employment agreements with our executive officers may require us to pay severance benefits to officers in connection with termination of employment or upon a change of control of us, which could harm our financial condition.

Each of our executive officers is entitled to receive a lump sum payment equal to ~~nine months~~one year or ~~one year~~more of his or her base salary as well as continued medical and dental coverage for a period of ~~nine months~~one year or ~~one~~more plus a prorated portion of his or her target annual bonus for the calendar year in which his or her employment is terminated following his or her termination of employment due to good reason or without cause. In the event of a change in control and a termination of employment without cause or due to good reason, each of our executive officers would similarly receive ~~nine months~~one year or ~~one year~~more of his or her base salary as well as continued medical and dental coverage for a period of ~~nine months~~one year or ~~one year,~~more, as well as an additional lump sum payment equal to ~~three-fourths~~100% or ~~100%~~more of his or her target annual bonus for the calendar year in which his or her employment is terminated and full vesting of his or her outstanding option awards. The accelerated vesting of options could result in dilution to our existing stockholders and harm the market price of our common stock. Furthermore, the payment of these severance benefits could harm our financial condition. In addition, these potential severance payments may discourage or prevent third parties from seeking a business combination with us.

An active market for our common stock may not be maintained.

Prior to our IPO in October 2015, there had been no public market for shares of our common stock. Our stock began trading on ~~The NASDAQ~~the Nasdaq Global Select Market in 2015, and we can provide no assurance that we will be able to maintain an active trading market on The ~~NASDAQ~~Nasdaq Global Select Market or any other exchange in the future. If an active market for our common stock ~~does not develop or~~ is not maintained, it may be difficult ~~for our stockholders~~ to

CytomX Therapeutics, Inc.

sell shares without depressing the market price for the shares or at all. An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses, applications or technologies using our shares as ~~consideration~~consideration.

If securities or industry analysts do not publish research or reports about our business, or if they issue adverse or misleading opinions regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our target studies and operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

As of ~~September~~June 30, ~~2017,~~2023, our executive officers, directors, holders of 5% or more of our capital stock based on publicly available filings made with the SEC and their respective affiliates beneficially owned approximately ~~40%~~23% of our outstanding common stock. Therefore, these stockholders have the ability to influence us through this ownership position. These stockholders may be able to determine all matters requiring stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that our stockholders may feel are in their best interest.

~~We are an “emerging growth company” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.~~

We are an “emerging growth company” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years following the consummation of the IPO, although circumstances could cause us to lose that status earlier, including if we are deemed to be a “large accelerated filer,” which occurs when the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30, or if we have total annual gross revenue of $1.07 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31, or if we issue more than $1.0 billion in non-convertible debt during any three-year period before that time, in which case we would no longer be an emerging growth company immediately. Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our share price may be more volatile.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may delay or prevent an acquisition of us or a change in our management. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. These provisions include:

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a prohibition on actions by our stockholders by written consent;

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a requirement that special meetings of stockholders, which our company is not obligated to call more than once per calendar year, be called only by the chairman of our board of directors, our chief executive officer, our board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors, or, subject to certain conditions, by our secretary at the request of the stockholders holding of record, in the aggregate, shares entitled to cast not less than ten percent of the votes at a meeting of the stockholders (assuming all shares entitled to vote at such meeting were present and voted);

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advance notice requirements for election to our board of directors and for proposing matters that can be acted upon at stockholder meetings;

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division of our board of directors into three classes, serving staggered terms of three years each; and

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the authority of the board of directors to issue preferred stock with such terms as the board of directors may determine.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, as amended, which prohibits a person who owns in excess of 15 percent of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15 percent of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. These provisions would apply even if the proposed merger or acquisition could be considered beneficial by some stockholders.

We incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public ~~company, and particularly after we are no longer an emerging growth~~ company, we incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The ~~NASDAQ~~Nasdaq Global Select Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more ~~time-consuming~~time consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified members of our board of directors. However, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

We are required to comply with the Sarbanes-Oxley Act and the related rules and regulations of the SEC, including the requirements that we maintain disclosure controls and procedures and adequate internal control over financial reporting. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. Nevertheless, in order to maintain our compliance with the Sarbanes-Oxley Act, we will need to continue to dedicate internal resources, engage outside consultants to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate-through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404 of the Sarbanes-Oxley Act. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, if we are not able to continue to meet these requirements, we may not be able to remain listed on The NASDAQ Global Select Market.

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.

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We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

We may incur significant costs from class action litigation due to our expected stock volatility.

Our stock price may fluctuate for many reasons, including as a result of public announcements regarding the progress of our development efforts or the development efforts of future collaborators or competitors, the addition or departure of our key personnel, variations in our quarterly operating results and changes in market valuations of biopharmaceutical and biotechnology companies.

This risk is especially relevant to us because biopharmaceutical and biotechnology companies have experienced significant stock price volatility in recent years. When the market price of a stock has been volatile as our stock price may be, holders of that stock have occasionally brought securities class action litigation against the company that issued the stock. ~~If any of our stockholders were to bring~~For example, in May 2020, a putative securities class action lawsuit was brought against us (“Class Action Lawsuit”). While the Class Action Lawsuit was voluntarily dismissed without prejudice by the plaintiff and his attorneys in January 2021, a similar lawsuit or another lawsuit could be filed in the future. Stockholder lawsuits of this type against us, even if ~~the lawsuit~~it is without merit, we could cause us to incur substantial costs defending the lawsuit. The lawsuit could also divert the time and attention of our management.

Our amended and restated bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated bylaws provide that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, as amended, our amended and restated certificate of incorporation or our amended and restated bylaws, any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws or any other action asserting a claim against us that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our amended and restated certificate of incorporation described above. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

General Risk Factors

In December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 has spread to multiple countries, including the United States and European and Asia-Pacific countries, including countries in which we have planned or active clinical trial sites. As COVID-19 and its variants continue to spread around the globe, we will likely continue to experience disruptions that could severely impact our business, research, including research for our partners or research of our partners, and clinical trials, including ongoing or planned clinical trials for CX-2029, CX-904, praluzatamab ravtansine, and clinical trials of our partners, including Bristol Myers Squibb. These disruptions and impacts may include:

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delays or difficulties in enrolling patients in our clinical trials or the clinical trials of our partners;

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delays or difficulties in clinical site initiation for CX-2029, CX-904 or any other clinical trials we or our partners decide to initiate, including difficulties in recruiting clinical site investigators and clinical site staff;

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diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our or our partners’ clinical trial sites and hospital staff supporting the conduct of our or our partners’ clinical trials;

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interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others;

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difficulty in interpreting clinical data due to patients being infected by COVID-19;

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limitations in employee resources that would otherwise be focused on the conduct of our clinical trials or the clinical trials of our partners, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;

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delays in receiving approval from local regulatory authorities to initiate our or our partners’ planned clinical trials;

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delays in clinical sites receiving the supplies and materials needed to conduct our or our partners’ clinical trials;

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interruption in manufacturing or global shipping that may affect the timely delivery or transport of research materials or clinical trial materials, such as investigational drug product used in our or our partners’ clinical trials;

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changes in local regulations as part of a response to the COVID-19 outbreak which may require us or our partners to change the ways in which clinical trials are conducted, which may result in unexpected costs, or cause us or our partners to discontinue the clinical trials altogether;

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delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and

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refusal of the FDA to accept data from clinical trials in affected geographies outside the United States.

We cannot be certain of the continuing impact of the COVID-19 pandemic, including COVID-19 variants on clinical trial planning, or that site initiation, patient recruitment or other clinical trial activities for any of our product candidates will not continue to be delayed, discontinued or otherwise impacted.

Furthermore, the COVID-19 pandemic and government limitations on activities may continue to impact our ability to conduct research, including limiting our ability to obtain research materials and equipment, limiting access to our laboratories to conduct research, limiting the ability or willingness of employees to work at our facilities and limiting our ability to complete research and experiments in a timely basis or at all. In March 2020 we initiated a mandatory work-from-home program, limiting onsite activity to a substantially reduced level of laboratory research activities. Although we have gradually increased levels of such laboratory research activities to a satisfactory level, we continue to operate in a hybrid, work-from-home environment and there can be no assurance that we will be able to maintain current levels of such activity. Furthermore, China from time to time, including in March 2022, has implemented additional regional lockdowns which may continue to impact our ability to obtain some research and clinical trial materials on a timely basis. The COVID-19 pandemic and government limitations could further impact our ability to conduct business generally, including making timely payments, filing timely governmental and other business reports and filings, and otherwise comply with our obligations.

Any of the potential business, research and clinical impacts arising as a result of the COVID-19 pandemic could cause us to default on our obligations to our collaborative partners, including our specific research and development obligations, potentially resulting in termination of one or more collaborations, and could materially and adversely affect our business, financial condition, results of operation and prospects.

The global outbreak of COVID-19 continues to rapidly evolve, including with the discovery of new variants/mutations of the virus. The extent to which the COVID-19 pandemic continues to impact our business, including our clinical trials, research and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

Adverse U.S. and multi-national financial market conditions may adversely affect our business and financial position.

The Company maintains the majority of its cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions may exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position.

We may acquire assets or form strategic alliances in the future, and we may not realize the benefits of such acquisitions.

CytomX Therapeutics, Inc.

As we continue to mature our Probody platform and our clinical stage pipeline, we may seek to acquire and/or in-license other oncology products, product candidates, programs or companies that we consider complimentary to our efforts. Such efforts may never result in a transaction and any future growth through acquisition or in-licensing will depend upon the availability of suitable products, product candidates, programs or companies for acquisition or in-licensing on acceptable prices, terms and conditions. Even if appropriate opportunities are available, we may not be able to acquire rights to them on acceptable terms, or at all. The competition to acquire or in-license rights to promising products, product candidates, programs and companies is fierce, and many of our competitors are large, multinational pharmaceutical and biotechnology companies with considerably more financial, development and commercialization resources, personnel, and experience than we have. In order to compete successfully in the current business climate, we may have to pay higher prices for assets than may have been paid historically, which may make it more difficult for us to realize an adequate return on any acquisition. In addition, even if we succeed in identifying promising products, product candidates, programs or companies, we may not have the ability to develop, obtain regulatory approval for and commercialize such opportunities, or the financial resources necessary to pursue them.

Even if we are able to successfully identify and acquire or in-license new products, product candidates, programs or companies, we may not be able to successfully manage the risks associated with integrating any products, product candidates, programs or companies into our business or the risks arising from anticipated and unanticipated problems in connection with an acquisition or in-licensing. Further, while we seek to mitigate risks and liabilities of potential acquisitions through, among other things, due diligence, there may be risks and liabilities that such due diligence efforts fail to discover, that are not disclosed to us, or that we inadequately assess. Any failure in identifying and managing these risks and uncertainties effectively would have a material adverse effect on our business. In any event, we may not be able to realize the anticipated benefits of any acquisition or in-licensing for a variety of reasons, including the possibility that a product candidate fails to advance to clinical development, proves not to be safe or effective in clinical trials, or fails to reach its forecasted commercial potential or that the integration of a product, product candidate, program or company gives rise to unforeseen difficulties and expenditures. Any failure in identifying and managing these risks and uncertainties would have a material adverse effect on our business.

In addition, acquisitions create other uncertainties and risks, particularly when the acquisition takes the form of a merger or other business consolidation. We may encounter unexpected difficulties, or incur unexpected costs, in connection with transition activities and integration efforts, which include:

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high acquisition costs;

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the need to incur substantial debt or engage in dilutive issuances of equity securities to pay for acquisitions;

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the potential disruption of our historical business and our activities under our collaboration agreements;

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the strain on, and need to expand, our existing operational, technical, financial and administrative infrastructure;

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our lack of experience in late-stage product development and commercialization;

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the difficulties in assimilating employees and corporate cultures;

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the difficulties in hiring qualified personnel and establishing necessary development and/or commercialization capabilities;

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the failure to retain key management and other personnel;

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the challenges in controlling additional costs and expenses in connection with and as a result of the acquisition;

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the need to write down assets or recognize impairment charges;

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the diversion of our management’s attention to integration of operations and corporate and administrative infrastructures; and

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any unanticipated liabilities for activities of or related to the acquired business or its operations, products or product candidates.

If we fail to integrate or otherwise manage an acquired business successfully and in a timely manner, resulting operating inefficiencies could increase our costs more than we planned, could negatively impact the market price of our common stock and could otherwise distract us from execution of our strategy. Failure to maintain effective financial controls and reporting systems and procedures could also impact our ability to produce timely and accurate financial statements.

Our future growth may depend, in part, on our ability to operate in foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.

CytomX Therapeutics, Inc.

any of our product candidates. To obtain separate regulatory approval in many other countries we must comply with numerous and varying regulatory requirements of such countries regarding safety and efficacy and governing, among other things, clinical trials and commercial sales, pricing and distribution of our product candidates, and we cannot predict success in these jurisdictions. If we obtain approval of our product candidates and ultimately commercialize our product candidates in foreign markets, we would be subject to the risks and uncertainties, including the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements and the reduced protection of intellectual property rights in some foreign countries. We may need to rely on third parties to market, distribute and sell our products in foreign markets.

Our information technology systems, or those of our CROs or other contractors or consultants we may utilize, may fail, suffer disruptions or suffer security breaches, which could result in a material disruption of our product development programs.

We are increasingly dependent on information technology systems and infrastructure, including mobile technologies, to operate our business. In the ordinary course of our business, we collect and store confidential and sensitive electronic information on our networks and in our data centers. This information includes, among other things, our intellectual property and proprietary information, the confidential information of our collaborators and licensees, and the personally identifiable information of our employees. It is important to our operations and business strategy that this electronic information remains secure and is perceived to be secure. Our information technology and other internal infrastructure systems and those of our CROs and contractors and consultants are vulnerable to damage and interruption from computer viruses, unauthorized access, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, malicious code, employee theft or misuse, human error, fraud, denial or degradation of service attacks, sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization. A system interruption or security breach that leads to disclosure or modification of or prevents access to personally identifiable information or other protected information could harm our reputation, compel us to comply with federal and/or state breach notification laws and foreign law equivalents, subject us to mandatory corrective action, require us to verify the correctness of database contents and otherwise subject us to liability under laws and regulations that protect personal data, resulting in increased costs or loss of revenue. Similarly, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

Attacks upon information technology systems are also increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. As a result of the COVID-19 pandemic and continued hybrid working environment, we may also face increased cybersecurity risks due to our dependency on remote working technology and electronic monitoring of clinical trial sites, which may create additional opportunities for cybercriminals to exploit vulnerabilities. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended period. Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data, or inappropriate disclosure of confidential or proprietary information, we could incur liability, recovery of our data could take a prolonged period of time, and the development of our research or product candidates could be delayed.

We and certain of our service providers are from time to time subject to cyberattacks and security incidents. While we do not believe that we have experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss, corruption or unauthorized disclosure of our trade secrets, personal information or other proprietary or sensitive information or other similar disruptions. It could also expose us to risks, including an inability to provide our services and fulfill contractual demands, and could cause management distraction and the obligation to devote significant financial and other resources to mitigate such problems, which would increase our future information security costs, including through organizational changes, deploying additional personnel, reinforcing administrative, physical and technical safeguards, further training of employees, changing third-party vendor control practices and engaging third-party subject matter experts and consultants and reduce the demand for our technology and services. If a security breach or other incident were to result in the unauthorized access to or unauthorized use, disclosure, release or other processing of personal information, it may be necessary to notify individuals, governmental authorities, supervisory bodies, the media and other parties pursuant to privacy and security laws. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate disclosure of confidential or proprietary or personal information, we could incur liability, including litigation exposure, penalties and fines, we could become the subject of regulatory action or investigation, our competitive position could be harmed and the further development and commercialization of our products and services could be delayed. Furthermore, federal, state and international laws and regulations can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties, fines and significant legal liability, if our information technology security efforts fail.

CytomX Therapeutics, Inc.

As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. While we have implemented security measures to protect our data security and information technology systems, such measures may not prevent such events. Further, our insurance coverage may not be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of our systems. Significant disruptions of our information technology systems or breaches of data security could have a material adverse effect on our business, financial condition and results of operations.

The ongoing armed conflict between Russia and Ukraine could adversely affect our business, financial condition, and results of operations.

On February 24, 2022, Russian military forces launched a military action in Ukraine, and sustained conflict and disruption in the region is likely. The length, impact, and outcome of this ongoing military conflict is highly unpredictable, and could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, political and social instability, trade disputes or trade barriers, changes in consumer or purchaser preferences, as well as an increase in cyberattacks and espionage.

Russia’s recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military action against Ukraine have led to substantial expansion of sanction programs imposed by the United States, the European Union, the United Kingdom, Canada, Switzerland, Japan, and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic, including, among others:

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blocking sanctions against some of the largest state-owned and private Russian financial institutions (and their subsequent removal from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system) and certain Russian businesses, some of which have significant financial and trade ties to the European Union;

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blocking sanctions against Russian and Belarusian individuals, including the Russian President, other politicians, and those with government connections or involved in Russian military activities; and

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blocking of Russia’s foreign currency reserves as well as expansion of sectoral sanctions and export and trade restrictions, limitations on investments and access to capital markets, and bans on various Russian imports.

In retaliation against new international sanctions and as part of measures to stabilize and support the volatile Russian financial and currency markets, the Russian authorities also imposed significant currency control measures aimed at restricting the outflow of foreign currency and capital from Russia, imposed various restrictions on transacting with non-Russian parties, banned exports of various products, and imposed other economic and financial restrictions. The situation is rapidly evolving, additional sanctions by Russia on the one hand, and by the other countries on the other hand, could adversely affect the global economy, financial markets, energy supply and prices, certain critical materials and metals, supply chains, and global logistics and could adversely affect our business, financial condition, and results of operations.

We are actively monitoring the situation in Ukraine and Russia and assessing its impact on our business, including our business partners and customers. To date we have not experienced any material interruptions in our infrastructure, supplies, technology systems, or networks needed to support our operations. We have no way to predict the progress or outcome of the military conflict in Ukraine or its impacts in Ukraine, Russia, Belarus, Europe, or the U.S. The extent and duration of the military action, sanctions, and resulting market disruptions could be significant and could potentially have substantial impact on the global economy and our business for an unknown period of time.

If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.

Our research and development activities involve the use of hazardous materials and various chemicals. We maintain quantities of various flammable and toxic chemicals in our facilities in South San Francisco, California that are required for our research and development activities. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. We believe our procedures for storing, handling and disposing these materials in our South San Francisco facilities comply with the relevant guidelines of South San Francisco, the state of California and the Occupational Safety and Health Administration of the U.S. Department of Labor. Although we believe that our safety procedures for handling and disposing of these materials comply with the standards mandated by applicable regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. If an accident occurs, we could be held liable for resulting damages, which could be substantial. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens and the handling of animals and biohazardous materials. Although we maintain workers’ compensation insurance to cover us for costs and

CytomX Therapeutics, Inc.

expenses, we may incur due to injuries to our employees resulting from the use of these materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological or hazardous materials. Additional federal, state and local laws and regulations affecting our operations may be adopted in the future. We may incur substantial costs to comply with, and substantial fines or penalties if we violate, any of these laws or regulations.

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

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business and financial condition. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. For example, legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act (the “Tax Act”), enacted many significant changes to the U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities with respect to the Tax Act may affect us, and certain aspects of the Tax Act could be repealed or modified in future legislation. Changes in applicable tax rules, including changes to corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses under future reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future tax expense.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Equity Securities

None ~~that were not previously disclosed in our Current Reports on Form 8-K.~~

Use of Proceeds

~~There has been no material change in the planned use of proceeds from our IPO from that described in the related Prospectus.~~None

Repurchases of Shares or of Company Equity Securities

None

Item 3. Defaults Upon Senior Securities.

None

~~Defaults Upon Senior Securities.~~

~~None~~

~~Item 4.~~

~~Mine Safety Disclosures.~~

Item 4. Mine Safety Disclosures.

Not applicable

Item 5. Other Information.

On June 1, 2023, Sean McCarthy, Chief Executive Officer and Chairman, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 109,768 shares of the Company’s common stock between January 1, 2024 and February 7, 2025.

CytomX Therapeutics, Inc.

~~Other~~ ~~Information.~~

~~None~~

Item 6.Exhibits

Incorporated by Reference

Exhibit
Number

Exhibit Description

Form

Date

Number

Filed
Herewith

3.1

Amended and Restated Certificate of Incorporation.

8-K

10/19/2015

3.1

3.2

Amended and Restated Bylaws.

8-K

10/19/2015

3.2

4.1

Reference is made to Exhibits 3.1 through 3.2.

4.2

Specimen Common Stock Certificate

S-1/A

9/28/2015

4.1

4.3

Amended and Restated Investors’ Rights Agreement dated as of June 12, 2015, by and among CytomX Therapeutics, Inc. and the investors named therein.

S-1

8/28/2015

4.2

4.4

Registration Rights Agreement dated as of September 29, 2017 by and between CytomX Therapeutics, Inc. and Amgen, Inc.

X
10.1†

Collaboration and License Agreement by and between CytomX Therapeutics, Inc. and Amgen, Inc. dated as of September 29, 2017

X

31.1

Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).

X

31.2

Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).

X

32.1*

Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).

X

32.2*

Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).

X

101.INS

XBRL Instance Document.

X

101.SCH

XBRL Taxonomy Extension Schema Document.

X

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

X

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

X

101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

X

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

X


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Date	Number	Filed Herewith

3.1	Amended and Restated Certificate of Incorporation.	8-K	10/19/2015	3.1

3.2	Certificate of Amendment to Amended and Restated Certificate of Incorporation of CytomX Therapeutics, Inc.	8-K	6/23/2020	3.1

3.3	Amended and Restated Bylaws.	8-K	10/19/2015	3.2

4.1	Reference is made to Exhibits 3.1 through 3.2.

4.2	Specimen Common Stock Certificate	S-1/A	9/28/2015	4.1

4.3	Form of Pre-Funded Warrant	8-K	7/3/2023	4.1

4.4	Form of Tranche Warrant	8-K	7/3/2023	4.2

10.1††	Amendment No. 3 to the Collaboration and License Agreement, dated as of May 18, 2023, by and between CytomX Therapeutics, Inc. and Amgen, Inc.				X

10.2#	Form of Amended and Restated Severance and Change of Control Agreement by and between CytomX Therapeutics, Inc. and each of its executive officers other than Sean A. McCarthy.				X

10.3#	Employment Offer Letter Agreement between CytomX Therapeutics, Inc. and Jeffrey Landau dated as of March 31, 2021.				X

10.4	Unit Purchase Agreement by and among the CytomX Therapeutics, Inc. and certain accredited investors named therein, dated June 29, 2023.	8-K	7/3/2023	10.1

31.1	Certification of Chief Executive Principal required by Rule 13a-14(a) or Rule 15d-14(a).				X

31.2	Certification of Chief Financial Principal required by Rule 13a-14(a) or Rule 15d-14(a).				X

32.1*	Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).				X

32.2*	Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).				X

101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document				X

101.SCH	Inline XBRL Taxonomy Extension Schema Document.				X

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				X

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.				X

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.				X

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.				X

CytomX Therapeutics, Inc.


†104	~~Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment filed separately with the Securities~~	Cover Page Interactive Data File (formatted as inline XBRL and ~~Exchange Commission.~~contained in Exhibit 101)								X

The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the SEC and are not to be incorporated by reference into any filing of CytomX Therapeutics, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

†† Certain confidential portions of this exhibit have been omitted from this exhibit.

# Indicates management contract or compensatory plan.

* The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the SEC and are not to be incorporated by reference into any filing of CytomX Therapeutics, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

CytomX Therapeutics, Inc.

~~SIGNATURES~~

SIGNATURES

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


	CytomX Therapeutics, Inc.

Date: ~~November 7, 2017~~August 8, 2023	By:	/s/ Sean A. McCarthy
		Sean A. McCarthy, D. Phil.
		~~President,~~ Chief Executive Officer and ~~Director~~Chairman (~~principal executive officer)~~Principal Executive Officer)

Date: ~~November 7, 2017~~August 8, 2023	By:	/s/ ~~Debanjan Ray~~Christopher W. Ogden
		~~Debanjan Ray~~Christopher W. Ogden
		~~Chief~~Senior Vice President, Finance and Accounting (Principal Financial Officer ~~(principal financial officer~~ and ~~principal accounting officer)~~Principal Accounting Officer)


Delaware		27-3521219
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
151 Oyster Point Blvd., Suite 400 South San Francisco, CA94080 ~~(650) 515-3185~~ (Address of principal executive offices, including zip ~~code, and~~code) (650) 515-3185 (Registrant’s telephone number, including area ~~code, of registrant’s principal executive offices)~~code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00001 par value per share	CTMX	Nasdaq Global Select Market


Large accelerated filer	☐	Accelerated filer	☒☐
Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~☒	Smaller reporting company	☐☒
		Emerging growth company	☒	☐


	June 30,			December 31,
	2023			2022
	(Unaudited)			(1)
Assets
Current assets:
Cash and cash equivalents	$	57,536		$	193,650
Short-term investments		123,322			—
Accounts receivable		1,903			35,986
Prepaid expenses and other current assets		5,040			7,466
Total current assets		187,801			237,102
Property and equipment, net		4,499			5,072
Intangible assets, net		802			875
Goodwill		949			949
Restricted cash		917			917
Operating lease right-of-use asset		14,126			15,949
Other assets		91			27
Total assets	$	209,185		$	260,891
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable	$	1,029		$	2,809
Accrued liabilities		20,068			28,532
Deferred revenue, current portion		120,280			121,267
Total current liabilities		141,377			152,608
Deferred revenue, net of current portion		140,873			180,059
Operating lease liabilities - long term		11,746			13,975
Other long term liabilities		216			—
Total liabilities		294,212			346,642
Commitments and contingencies (Note 8)
Stockholders' equity (deficit):
Convertible preferred stock		—			—
Common stock		1			1
Additional paid-in capital		642,214			637,117
Accumulated other comprehensive income		35			10
Accumulated deficit		(727,277	)		(722,879	)
Total stockholders' deficit		(85,027	)		(85,751	)
Total liabilities and stockholders' equity (deficit)	$	209,185		$	260,891

	September 30,			December 31,
	2017			2016
	(unaudited))			(audited) (1)
Assets
Current assets:
Cash and cash equivalents	$	284,225		$	104,645
Short-term investments		47,050			77,293
Accounts receivable		40,183			2,159
Related party accounts receivable		68			154
Prepaid expenses and other current assets		4,848			3,896
Total current assets		376,374			188,147
Property and equipment, net		4,087			4,392
Intangible assets		1,641			1,750
Goodwill		949			949
Restricted cash		917			917
Other assets		3,071			2,973
Total assets	$	387,039		$	199,128
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	2,869		$	6,596
Accrued liabilities		11,444			8,824
Deferred revenues, current portion		56,928			20,347
Total current liabilities		71,241			35,767
Deferred revenue, net of current portion		267,996			83,803
Deferred tax liability		520			513
Other long-term liabilities		1,803			566
Total liabilities		341,560			120,649
Commitments and contingencies
Preferred stock, $0.00001 par value; 10,000,000 shares authorized and no shares issued and outstanding at September 30, 2017 and December 31, 2016.		—			—
Common stock, $0.00001 par value; 75,000,000 shares authorized; 37,095,462 and 36,490,169 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		1			1
Additional paid-in capital		265,625			254,871
Accumulated other comprehensive loss		(61	)		(27	)
Accumulated deficit		(220,086	)		(176,366	)
Total stockholders' equity		45,479			78,479
Total liabilities and stockholders' equity	$	387,039		$	199,128


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


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


	PART I – FINANCIAL INFORMATION

Item 1.	Condensed Financial Statements ~~(unaudited)~~(Unaudited)	5
	Condensed Balance Sheets	5
	Condensed Statements of Operations and Comprehensive Loss	6
	Condensed Statements of Stockholders’ Equity (Deficit)	7
	Condensed Statements of Cash Flows	78
	Notes to Condensed Financial Statements (Unaudited)	89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2721
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3228
Item 4	Controls and Procedures	3328

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	3430
Item 1A.	Risk Factors	3430
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6573
Item 3.	Defaults Upon Senior Securities	6573
Item 4.	Mine Safety Disclosures	6573
Item 5.	Other Information	6673
Item 6.	Exhibits	6674
Signatures		6776

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016

Revenues	$	23,662		$	2,829		$	43,121		$	7,151
Revenues from related party		482			625			1,429			1,620
Total revenues		24,144			3,454			44,550			8,771
Operating expenses:
Research and development		28,920			13,337			71,573			39,407
General and administrative		6,249			5,033			17,989			14,720
Total operating expenses		35,169			18,370			89,562			54,127
Loss from operations		(11,025	)		(14,916	)		(45,012	)		(45,356	)
Interest income, net		806			210			1,400			542
Other income (expense), net		(47	)		45			(101	)		(46	)
Loss before provision for income taxes		(10,266	)		(14,661	)		(43,713	)		(44,860	)
Provision (benefit) for income taxes		(19	)		1			7			7
Net loss	$	(10,247	)	$	(14,662	)	$	(43,720	)	$	(44,867	)
Net loss per share, basic and diluted	$	(0.28	)	$	(0.40	)	$	(1.19	)	$	(1.24	)
Shares used to compute net loss per share, basic and diluted		36,947,129			36,324,805			36,757,119			36,168,026
Other comprehensive loss:
Changes in unrealized (losses) / gains on short-term investments		49			(72	)		(34	)		82
Total other comprehensive (loss) / income		49			(72	)		(34	)		82
Comprehensive loss	$	(10,198	)	$	(14,734	)	$	(43,754	)	$	(44,785	)


							Accumulated
					Additional		Other					Total
	Common Stock				Paid-in		Comprehensive		Accumulated			Stockholders'
	Shares		Amount		Capital		Income (Loss)		Deficit			Equity (Deficit)
Balance at December 31, 2022		66,228,046	$	1	$	637,117	$	10	$	(722,879	)	$	(85,751	)
Release of RSUs		110,892		—		—		—		—			—
Stock-based compensation		—		—		2,409		—		—			2,409
Other comprehensive income		—		—		—		16		—			16
Net loss		—		—		—		—		(3,311	)		(3,311	)
Balance at March 31, 2023		66,338,938		1		639,526		26		(726,190	)		(86,637	)
Exercise of stock options		16,535		—		26		—		—			26
Release of RSUs		212,312		—		—		—		—			—
Issuance of common stock under the ESPP		199,994		—		291		—		—			291
Stock-based compensation				—		2,371		—		—			2,371
Other comprehensive loss		—		—		—		9		—			9
Net loss		—		—		—		—		(1,087	)		(1,087	)
Balance at June 30, 2023		66,767,779		1		642,214		35		(727,277	)		(85,027	)

	Revenue												Accounts Receivable, net
	Three Months Ended September 30,						Nine Months Ended September 30,						September 30,			December 31,
	2017			2016			2017			2016			2017			2016
Customer A		34	%		52	%		41	%		61	%		1	%		93	%
Customer C		64	%		30	%		41	%		21	%		—			—
Customer B		2	%		18	%		3	%		18	%		—			7	%
Customer D		—			—			15	%		—			—			—
Customer E		—			—			—			—			99	%		—

	December 31, 2016
	Level I		Level II		Level III		Total
Assets
Money market funds	$	89,626	$	—	$	—	$	89,626
Restricted cash (money market funds)		917		—		—		917
U.S. Treasury securities		—		77,293		—		77,293
Total	$	90,543	$	77,293	$	—	$	167,836

	September 30, 2017
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Aggregate Fair Value
Investment Securities
Money market funds	$	273,227	$	—	$	—		$	273,227
Restricted cash (money market funds)		917		—		—			917
U.S. Treasury securities		47,086		—		(36	)		47,050
Total securities	$	321,230	$	—	$	(36	)	$	321,194

Year Ending December 31:
2017 (three months remaining)	$	1,173
2018		4,723
2019		4,855
2020		4,990
2021 and beyond		31,511
Total	$	47,252

	September 30, 2017		December 31, 2016
Options issued and outstanding		6,603,015		6,158,746
Shares available for future stock option grants		2,551,424		2,493,188
Shares reserved under the ESPP		1,005,095		683,234
		10,159,534		9,335,168


	Options Outstanding
	Number of Options			Weighted-Average Exercise Price Per Share
Balances at December 31, 2016		6,158,746		$	5.939
Options granted		1,786,420			12.414
Options exercised		(562,253	)		4.168
Option forfeited/expired		(779,898	)		9.028
Balances at September 30, 2017		6,603,015		$	7.477
Options exercisable at September 30, 2017		3,627,011		$	5.119

	Payments Due by Period⁽¹⁾
	2017 ⁽²⁾		2018		2019		2020		2021 +		Total
Operating leases⁽³⁾	$	1,173	$	4,723	$	4,855	$	4,990	$	31,511	$	47,252
Total contractual obligations	$	1,173	$	4,723	$	4,855	$	4,990	$	31,511	$	47,252