Company: DAWN
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0000950170-25-026654
Chunk: 260

Company: Day One Biopharmaceuticals, Inc.
Filing Date: 2025-02-25
Form: 10-K
Item: Item 1B
Chunk 260
---
 transaction price allocated to the licenses was recognized as revenue upon delivery of the licenses in the year ended of December 31, 2024. The transaction price allocated to the research and development services is being recognized over time as services are delivered.

Operating expenses 

Cost of product revenue

Cost of product revenue includes the cost of inventory sold, amortization expense of intangible assets and third-party royalties payable on our net product revenue. Cost of goods sold may also include costs related to excess or obsolete inventory adjustment charges, abnormal costs, unabsorbed manufacturing and overhead costs, and manufacturing variances. We expect to use inventory previously expensed to research and development within the next seven months, and accordingly, we expect our cost of product revenue of OJEMDA to increase as a percentage of product revenue in future periods as we produce and sell inventory that reflects the full cost of manufacturing the product.

Research and development expenses 

Research and development expenses consist primarily of external and internal expenses incurred for our research activities, including our discovery and in-licensing undertakings, and the development of our product candidates. 

External expenses include: 

•costs incurred under agreements with third-party contract research organizations, or CROs, contract manufacturing organizations, or CMOs, and other third parties that conduct clinical activities on our behalf;

•costs associated with acquiring technology and intellectual property licenses that have no alternative future uses; and

•other business operational costs, such as rent, facilities and maintenance, travel and information technology, incurred related to research and development activities, but are not allocable to a specific product or product candidate.

Internal expenses include: 

•employee-related costs, including salaries, bonuses, benefits and share-based compensation expense, for our research and development personnel.  

We expense research and development expenses as incurred. We track external costs by program, which currently consist of expenses for our OJEMDA, DAY301, and VRK1 programs. We do not track indirect costs on a program specific basis because these costs are deployed across multiple programs and, as such, are not separately classified. 

Research and development activities are central to our business model. We expect that our research and development expenses will increase for the foreseeable future as we continue to implement our business strategy; 

117

advance our product candidates through clinical trials and conduct larger clinical trials; expand our research and development efforts; and identify, acquire and develop additional product candidates, particularly as more of our product candidates move into clinical development and later stages of clinical development.

The successful development of