Company: DAWN
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0000950170-25-026654
Chunk: 303

Company: Day One Biopharmaceuticals, Inc.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 1B
Chunk 303
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 accordance with terms established with third-party service providers under the service agreements. The Company makes 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.The Company makes payments in connection with the clinical trials under contracts with contract research organizations who conduct and manage our clinical trials. The financial terms of these contracts are subject to negotiation, which vary by contract and may result in payments that do not match the periods over which materials or services are provided. Generally, these agreements set forth the scope of work to be performed at a fixed fee, unit price or on a time and materials basis. In the event the Company makes advance payments for goods or services that will be used or rendered for future research and development activities, the payments are deferred and capitalized as a prepaid expense and recognized as expense as the goods are received or the related services are rendered. Such payments are evaluated for current or long-term classification based on when they are expected to be realized.Patent CostsAll patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty of the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses in the statements of operations.Share-Based Compensation The Black-Scholes option-pricing model, used to estimate fair value of stock options awards, requires the use of the following assumptions: •Fair Value of Common Stock—The Company’s closing price on the Nasdaq market at the grant date. •Expected Term—The expected term represents the period that the share-based awards are expected to be outstanding. The expected term for stock options is calculated using the simplified method, as the weighted-average vesting term of the award and the award’s contract period (generally 10 years). The Company utilizes this method due to lack of historical exercise data and the plain-vanilla nature of the Company’s service condition share-based awards. For the Company's performance condition stock option awards, the Company calculated the expected term by taking into consideration the options' contractual life, the timing of when milestones are expected to be achieved, and the expected exercise period by a holder from the vesting date until the contractual term (generally 10 years). •Expected Volatility—Since the Company does not have sufficient trading history for its common stock, the expected volatility is estimated based on the average historical volatilities of common stock of comparable publicly traded biopharmaceutical companies over a period equal