Collaboration Agreement and Stock Purchase Agreement with Bristol Myers Squibb	9 Months Ended
Sep. 30, 2023
Collaboration And Stock Purchase Agreement [Abstract]
Collaboration Agreement and Stock Purchase Agreement with Bristol Myers Squibb	8. Collaboration Agreement and Stock Purchase Agreement with Bristol-Myers Squibb In January 2019, the Company entered into the Bristol-Myers Squibb Collaboration Agreement with Celgene Corporation, which was acquired by Bristol-Myers Squibb in November 2019, whereby the Company will carry out initial research and development activities with the goal of identifying and developing drug candidates for certain cancer types. Concurrent with execution of the Bristol-Myers Squibb Collaboration Agreement, the Company entered into a stock purchase agreement with Bristol-Myers Squibb, which resulted in the issuance of 14,545,450 shares of Series A-1 Preferred Stock (the “Stock Purchase Agreement”). In connection with the Company’s initial public offering (“IPO”), the series A-1 preferred stock converted into common stock. Agreement Structure Under the Bristol-Myers Squibb Collaboration Agreement, the Company will conduct exploratory and discovery activities, with the goal of identifying product candidates for certain targets, which are in the kynurenine pathway, which the Company is developing as IK-412, and the AHR pathway, which the Company is developing as IK-175. The Company is obligated to advance research and development activities through the earlier of January 2024 or the completion of a Phase 1b clinical trial for each program (“the research term”). Bristol-Myers Squibb has the option to receive a global-development, manufacture and commercialization license for the product candidate, which expires in January 2024. Subsequent to the delivery of a license, Bristol-Myers Squibb is responsible for the worldwide development, manufacturing and commercialization of these product candidates. Bristol-Myers Squibb paid the Company a total of $95.0 million in aggregate upfront consideration related to the Bristol-Myers Squibb Collaboration Agreement and Stock Purchase Agreement. The Company is eligible to receive $50.0 million, in case of an exercise of its option with respect to IK-175, and $40.0 million, in case of an exercise of its option with respect to IK-412. If the Company does not complete a Phase 1b clinical trial by the end of the research term, the Company may provide a data package to Bristol-Myers Squibb to support the decision to exercise the option for an additional $0.25 million. Upon the exercise of the delivery of each license, the Company becomes eligible to receive up to $450 million in milestone payments, as well as a tiered royalty on worldwide sales from the high single to low teen digits. Accounting Considerations of the Agreement The Bristol-Myers Squibb Collaboration Agreement and the Stock Purchase Agreement were executed concurrently and in contemplation of each other. The issuance of Series A-1 Preferred Stock was initially accounted for at fair value. The purchase price for the Series A-1 Preferred Stock was considered to be at a discount from fair value, and therefore $1.8 million of the upfront from the Bristol-Myers Squibb Collaboration Agreement was allocated to the equity arrangement. The Company determined that the Bristol-Myers Squibb Collaboration Agreement represented a contract with a customer and should be accounted for in accordance with ASC 606. The Company identified the two performance obligations, which are research and development services for IK-175 and IK-412. The options to receive worldwide development and commercialization licenses for the two targets and the option to receive manufacturing services in the future were determined to not provide any material rights to the customer and are therefore not considered to be performance obligations. The arrangement also contains certain other items, including participation on joint oversight committees. The Company identified $78.7 million of total transaction price which represents the upfront consideration allocated to the revenue arrangement. Additional consideration to be paid to the Company upon exercise of a right to receive a license or potential milestone and royalty payments are excluded from the transaction price as they relate to amounts that can only be achieved subsequent to the exercise of an option and are outside of the initial contact term. Based on the distinct performance obligations identified above, the Company allocated the $78.7 million transaction price based on relative estimated standalone selling prices of each of its performance obligations as follows: • $41.2 million for research and development services for IK-175; and • $37.5 million for research and development services for IK-412. The Company determined the estimated standalone selling price for the research and development services based on internal estimates of the costs to perform the services, including expected internal expenses and expenses with third parties, adjusted to include a reasonable profit margin. Significant inputs used to determine the total expense of the research and development activities include the length of time required and the number and cost of various studies that will be performed to complete the applicable development plan. The Company is recognizing revenue related to each of its performance obligations as the research and development services are performed through January 2024. The Company recognizes revenue related to research and development services performed using an input method by calculating costs incurred at each period end relative to total costs expected to be incurred. In December 2021, the Company re-assessed the IK-412 program, which experienced manufacturing delays as a key component required in the manufacturing of IK-412, is similarly essential to the manufacturing of COVID-19 vaccines and therapies. As such, the availability of the component was delayed as resources were allocated towards vaccine production. Considering these delays and the timeline of the Bristol-Myers Squibb partnership, the Company made the strategic decision to pause IK-412 development activities for the remainder of the Bristol-Myers Squibb research term outside of the committed manufacturing efforts, which were completed in 2022. The Company recognized revenue of $1.2 million and $6.4 million in the three months ended September 30, 2023 and 2022 and $8.5 million and $10.2 million nine months ended September 30, 2023 and 2022 respectively, from the Bristol-Myers Squibb Collaboration Agreement, that in each case was previously included in deferred revenue at the beginning of the respective period. The condensed consolidated balance sheet as of September 30, 2023 includes current deferred revenue of $0.7 million related to this agreement. This amount is expected to be recognized as performance obligations are satisfied through the completion of the research and development services for the partnered programs.

Collaboration Agreement and Stock Purchase Agreement with Bristol Myers Squibb

9 Months Ended

Sep. 30, 2023

Collaboration And Stock Purchase Agreement [Abstract]

Collaboration Agreement and Stock Purchase Agreement with Bristol Myers Squibb

8. Collaboration Agreement and Stock Purchase Agreement with Bristol-Myers Squibb

In January 2019, the Company entered into the Bristol-Myers Squibb Collaboration Agreement with Celgene Corporation, which was acquired by Bristol-Myers Squibb in November 2019, whereby the Company will carry out initial research and development activities with the goal of identifying and developing drug candidates for certain cancer types. Concurrent with execution of the Bristol-Myers Squibb Collaboration Agreement, the Company entered into a stock purchase agreement with Bristol-Myers Squibb, which resulted in the issuance of 14,545,450 shares of Series A-1 Preferred Stock (the “Stock Purchase Agreement”). In connection with the Company’s initial public offering (“IPO”), the series A-1 preferred stock converted into common stock.

Agreement Structure

Under the Bristol-Myers Squibb Collaboration Agreement, the Company will conduct exploratory and discovery activities, with the goal of identifying product candidates for certain targets, which are in the kynurenine pathway, which the Company is developing as IK-412, and the AHR pathway, which the Company is developing as IK-175. The Company is obligated to advance research and development activities through the earlier of January 2024 or the completion of a Phase 1b clinical trial for each program (“the research term”). Bristol-Myers Squibb has the option to receive a global-development, manufacture and commercialization license for the product candidate, which expires in January 2024. Subsequent to the delivery of a license, Bristol-Myers Squibb is responsible for the worldwide development, manufacturing and commercialization of these product candidates.

Bristol-Myers Squibb paid the Company a total of $95.0 million in aggregate upfront consideration related to the Bristol-Myers Squibb Collaboration Agreement and Stock Purchase Agreement. The Company is eligible to receive $50.0 million, in case of an exercise of its option with respect to IK-175, and $40.0 million, in case of an exercise of its option with respect to IK-412. If the Company does not complete a Phase 1b clinical trial by the end of the research term, the Company may provide a data package to Bristol-Myers Squibb to support the decision to exercise the option for an additional $0.25 million. Upon the exercise of the delivery of each license, the Company becomes eligible to receive up to $450 million in milestone payments, as well as a tiered royalty on worldwide sales from the high single to low teen digits.

Accounting Considerations of the Agreement

The Bristol-Myers Squibb Collaboration Agreement and the Stock Purchase Agreement were executed concurrently and in contemplation of each other. The issuance of Series A-1 Preferred Stock was initially accounted for at fair value. The purchase price for the Series A-1 Preferred Stock was considered to be at a discount from fair value, and therefore $1.8 million of the upfront from the Bristol-Myers Squibb Collaboration Agreement was allocated to the equity arrangement.

The Company determined that the Bristol-Myers Squibb Collaboration Agreement represented a contract with a customer and should be accounted for in accordance with ASC 606. The Company identified the two performance obligations, which are research and development services for IK-175 and IK-412. The options to receive worldwide development and commercialization licenses for the two targets and the option to receive manufacturing services in the future were determined to not provide any material rights to the customer and are therefore not considered to be performance obligations. The arrangement also contains certain other items, including participation on joint oversight committees.

The Company identified $78.7 million of total transaction price which represents the upfront consideration allocated to the revenue arrangement. Additional consideration to be paid to the Company upon exercise of a right to receive a license or potential milestone and royalty payments are excluded from the transaction price as they relate to amounts that can only be achieved subsequent to the exercise of an option and are outside of the initial contact term.

Based on the distinct performance obligations identified above, the Company allocated the $78.7 million transaction price based on relative estimated standalone selling prices of each of its performance obligations as follows:

•

$41.2 million for research and development services for IK-175; and

•

$37.5 million for research and development services for IK-412.

The Company determined the estimated standalone selling price for the research and development services based on internal estimates of the costs to perform the services, including expected internal expenses and expenses with third parties, adjusted to include a reasonable profit margin. Significant inputs used to determine the total expense of the research and development activities include the length of time required and the number and cost of various studies that will be performed to complete the applicable development plan.

The Company is recognizing revenue related to each of its performance obligations as the research and development services are performed through January 2024. The Company recognizes revenue related to research and development services performed using an input method by calculating costs incurred at each period end relative to total costs expected to be incurred.

In December 2021, the Company re-assessed the IK-412 program, which experienced manufacturing delays as a key component required in the manufacturing of IK-412, is similarly essential to the manufacturing of COVID-19 vaccines and therapies. As such, the availability of the component was delayed as resources were allocated towards vaccine production. Considering these delays and the timeline of the Bristol-Myers Squibb partnership, the Company made the strategic decision to pause IK-412 development activities for the remainder of the Bristol-Myers Squibb research term outside of the committed manufacturing efforts, which were completed in 2022.

The Company recognized revenue of $1.2 million and $6.4 million in the three months ended September 30, 2023 and 2022 and $8.5 million and $10.2 million nine months ended September 30, 2023 and 2022 respectively, from the Bristol-Myers Squibb Collaboration Agreement, that in each case was previously included in deferred revenue at the beginning of the respective period. The condensed consolidated balance sheet as of September 30, 2023 includes current deferred revenue of $0.7 million related to this agreement. This amount is expected to be recognized as performance obligations are satisfied through the completion of the research and development services for the partnered programs.