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Basis of Presentation and Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2025
Accounting Policies [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of presentation and consolidation

The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and under the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Nuvalent Securities Corporation. All intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform with current period presentation.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the fair value of the related party revenue share liability, the accounting for research and development contracts, including clinical trial accruals, and valuation of equity instruments. The Company bases its estimates, assumptions, and judgments on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Actual results may differ from those estimates or assumptions.

Concentrations of credit risk and of significant suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company’s cash, cash equivalents and marketable securities may be held in accounts at financial institutions that may exceed federally insured limits. However, the Company mitigates credit risk by maintaining a diversified portfolio, placing its cash with high credit quality financial institutions and limiting the amount of investment exposure as to maturity and investment type according to its investment policy. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to significant credit risk beyond the standard credit risk associated with commercial banking relationships.

The Company is dependent on third-party vendors for the manufacturing of its product candidates. In particular, the Company relies, and expects to continue to rely, on a small number of vendors to manufacture materials and components required for the production of its product candidates. These programs could be adversely affected by a significant interruption in the manufacturing process.

Cash and cash equivalents

The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. Cash equivalents may include money market funds and marketable securities. The Company records interest income received on cash, cash equivalents, and marketable securities to other income (expense) in the consolidated statements of operations

and comprehensive loss. The Company invests its excess cash in money market funds, commercial paper, corporate bonds, government and agency securities and U.S. treasury bills.

Fair value measurements

The Company follows the provision of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements (“ASC 820”), which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices for identical assets or liabilities in active markets.

Level 2 — quoted prices for similar assets or liabilities in active markets or inputs that are observable.

Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions).

The Company’s cash equivalents, marketable securities, and related party revenue share liability are carried at fair value, determined according to the fair value hierarchy described above (see Note 4).

Marketable securities

The Company accounts for marketable securities in accordance with FASB ASC Topic 320, Investments - Debt and Equity Securities. The Company’s marketable securities are classified as available-for-sale debt securities and recorded at fair value based on inputs that are observable, either directly or indirectly, such as quoted prices for identical securities in active markets (Level 1) or quoted prices for similar securities in active markets or inputs that are observable (Level 2). At the time of purchase, the Company classifies marketable securities with maturities of three months or less as cash equivalents on the consolidated balance sheets. The Company’s available-for-sale securities are classified as current assets as they are readily available to be converted to cash and for use in the Company’s current operations.

Unrealized gains and losses are included as a component of accumulated other comprehensive income (loss) in the consolidated statements of stockholders’ equity. Realized gains and losses are recorded to other income (expense) in the consolidated statements of operations and comprehensive loss.

When the fair value is below the amortized cost of an available-for-sale security, the Company must determine if the decline in fair value below the amortized cost basis has resulted from a credit loss or other factors. If the Company determines that the decline in fair value below the amortized cost basis is due to credit-related factors, the Company measures the credit loss and recognizes an allowance for credit losses in the consolidated balance sheet and the credit-related impairment in the consolidated statements of operations and comprehensive loss. The allowance for credit losses is measured as the amount by which the amortized cost basis exceeds the present value of expected cash flows, limited to the difference between the amortized cost basis and the security’s fair value. The Company subsequently assesses whether the measurement of credit losses has increased or decreased and adjusts the allowance for credit losses with corresponding gains or losses recognized in the consolidated statements of operations and comprehensive loss. Impairments not relating to credit losses are recorded to other comprehensive income (loss).

If the Company intends to sell the available for sale security or it is more likely than not that the Company will be required to sell the security prior to the recovery of its amortized cost basis, then the allowance for the credit losses is written off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations and comprehensive loss.

Fair value option for related party revenue share liability

The Company has a revenue sharing agreement with Deerfield Healthcare Innovations Fund, L.P. and Deerfield Private Design Fund IV, L.P. (collectively, “Deerfield”), each an investor in the Company, to pay a fixed low single-digit percentage rate of net sales of certain commercial products, which represents a freestanding financial instrument. In accordance with FASB ASC Topic 825, Financial Instruments, the Company elected the fair value option. Accordingly, the related party revenue share liability was measured at fair value upon issuance and is remeasured at the end of each reporting period with changes in fair value recognized as a component of other income (expense) in the consolidated statements of operations and comprehensive loss. The fair value of the related party revenue share liability is estimated using a discounted cash flow model to calculate the estimated payments that could become due following commercialization. Assumptions in the model include but are not limited to the following: probability and timing of product approval, future product revenues and discount rate. The fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement.

Research and development and clinical trial accruals

Research and development costs are expensed as incurred. These consist primarily of salaries and related costs, including stock-based compensation, for personnel engaged in research and development functions; costs incurred in connection with the advancement of the Company’s discovery programs and product candidates in preclinical and clinical studies, including under agreements with contract

research organizations (“CROs”); and the cost of developing and scaling the Company’s manufacturing process, including under agreements with contract manufacturing organizations, to manufacture drug substance and drug product for use in the Company’s research and preclinical and clinical studies and manufacture commercial-scale validation batches in preparation for the commercial launch of the Company’s product candidates that obtain regulatory approval.

Payments for such activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and may be reflected in the consolidated balance sheets as prepaid or accrued expenses. Determining the prepaid and accrued expenses balances at the end of any reporting period incorporates certain judgments and estimates by management that are based on information available to the Company including information provided by employees and vendors regarding the progress to completion of specific tasks or costs incurred.

Patent costs

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses.

Stock-based compensation

The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation — Stock Compensation (“ASC 718”). The Company has granted stock options and restricted stock units (“RSUs”), both of which are subject to service-based vesting conditions, and RSUs with performance-based vesting conditions (“PSUs”). In accordance with ASC 718, the Company recognizes stock-based compensation expense in the consolidated statements of operations and comprehensive loss based on a stock award’s grant-date fair value.

The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options granted. For RSUs and PSUs, the fair value is equal to the market price of a share of the Company’s Class A common stock on the grant date. The Company recognizes forfeitures as they occur. Stock-based compensation expense for stock awards with service-based vesting conditions is recognized on a straight-line basis based on the grant-date fair value over the associated service period of the award, which is generally the vesting period. Stock awards with service-based vesting conditions generally vest over three- or four-year service periods and stock options expire after ten years. Stock-based compensation expense for stock awards with performance-based vesting conditions is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the underlying stock award when the performance-based vesting condition is deemed probable to occur. The Company reassesses the probability of vesting at each reporting period and adjusts stock-based compensation expense, if applicable, based on its probability assessment.

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

The assumptions used in the Company’s Black-Scholes option-pricing model for stock options are as follows:

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

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

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

Expected Dividends — The expected dividend yield is 0% as the Company has not historically paid, and does not expect for the foreseeable future to pay, a dividend on its common stock.

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

Net income (loss) per share

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period, including potentially dilutive common shares. For periods in which the Company reported a net loss, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Income taxes

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

The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. Any resulting unrecognized tax benefits are recorded within the provision for income taxes.

Recently adopted accounting pronouncements

Effective January 1, 2025, the Company prospectively adopted Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) on an annual basis, which requires public entities to provide disclosure of specific categories in their income tax rate reconciliations, as well as disclosure of income taxes paid disaggregated by jurisdiction.

Recently issued accounting pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public entities, at annual and interim reporting periods, to disclose in a tabular format additional information about specific expense categories in the notes to the consolidated financial statements. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company does not expect the impact of the adoption of this standard to be material to its consolidated financial statements or disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which modernizes the accounting for internal use software. The standard removes references to project stages and clarifies the criteria for capitalizing software costs. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company does not expect the impact of the adoption of this standard to be material to its consolidated financial statements or disclosures.