Company: DAWN
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0000950170-25-026654
Chunk: 284

Company: Day One Biopharmaceuticals, Inc.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 1B
Chunk 284
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 to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accrued Clinical Trial Expenses

As described in Notes 2 and 4 to the financial statements, the Company records accrued liabilities for estimated costs of clinical trials conducted by third-party service providers. As disclosed by management, these costs are accrued based on factors such as estimates of the work completed and in accordance with terms established with third-party service providers under the service agreements. Management makes judgments and estimates in determining the accrued liabilities for estimated costs of clinical trials each reporting period and monitors patient enrollment levels and related activities to the extent possible through internal reviews, correspondence with clinical research organizations (“CROs”) and review of contractual terms. Within accrued expenses and other current liabilities, management has recorded $13.1 million of accrued research and development expenses as of December 31, 2024, a portion of which relates to accrued clinical trial expenses. 

The principal considerations for our determination that performing procedures relating to accrued clinical trial expenses is a critical audit matter are (i) the significant judgment by management when developing the estimate of the accrued clinical trial expenses; and (ii) a high degree of auditor judgment and effort in performing procedures related to management’s estimate of the accrued clinical trial expenses. 

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included testing the effectiveness of controls relating to management’s estimate of accrued clinical trial expenses, including controls over the estimates of the work completed in accordance with terms established with third-party service providers under the service agreements. These procedures also included, among others, (i) testing management’s process for estimating accrued clinical trial expenses, (ii) evaluating the appropriateness of 

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the method used by management to develop the estimate, (iii) testing the completeness and accuracy of the data used by management to develop the estimate related to invoicing to date under the contracts and costs incurred for services received, and (iv) evaluating the reasonableness of the estimated costs incurred for the services which have not been invoiced by tracing to underlying supporting documentation, such as underlying