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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-36014
AGIOS PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware26-0662915
(State or Other Jurisdiction of
 Incorporation or Organization)
(I.R.S. Employer
 Identification No.)
88 Sidney Street, Cambridge, Massachusetts
02139
(Address of Principal Executive Offices)(Zip Code)
(617649-8600
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, Par Value $0.001 per shareAGIONasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer☐  Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No    ☒
Number of shares of the registrant’s Common Stock, $0.001 par value, outstanding on July 23, 2021: 58,951,469


Table of Contents
AGIOS PHARMACEUTICALS, INC.
FORM 10-Q
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021
TABLE OF CONTENTS
 
Page
No.
Item 1.
Item 2.
Item 3.
Item 4.
Item 1A.
Item 2.
Item 6.



Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.        Financial Statements (Unaudited)
AGIOS PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share data)
June 30,
2021
December 31,
2020
Assets
Current assets:
Cash and cash equivalents$969,124 $127,436 
Marketable securities703,864 445,493 
Other receivable8,131  
Prepaid expenses and other current assets21,443 15,889 
Current assets of discontinued operations 47,859 
Total current assets1,702,562 636,677 
Marketable securities61,313 97,608 
Operating lease assets79,901 84,661 
Property and equipment, net27,056 30,815 
Financing lease assets871 590 
Other non-current assets2,900  
Non-current assets of discontinued operations 2,601 
Total assets$1,874,603 $852,952 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$7,654 $17,724 
Accrued expenses36,054 30,801 
Operating lease liabilities8,932 7,093 
Financing lease liabilities839 317 
Taxes payable7,170  
Current liabilities of discontinued operations 38,459 
Total current liabilities60,649 94,394 
Operating lease liabilities, net of current portion91,971 97,458 
Financing lease liabilities, net of current portion167 331 
Non-current liabilities of discontinued operations 261,269 
Total liabilities152,787 453,452 
Stockholders’ equity:
Preferred stock, $0.001 par value; 25,000,000 shares authorized; no shares issued or outstanding at June 30, 2021 and December 31, 2020
  
Common stock, $0.001 par value; 125,000,000 shares authorized; 70,404,782 shares issued and 59,910,814 outstanding at June 30, 2021, and 69,293,920 shares issued and outstanding at December 31, 2020
70 69 
Additional paid-in capital2,306,304 2,242,801 
Accumulated other comprehensive (loss) income(144)105 
Accumulated deficit(55,367)(1,843,475)
Treasury stock, at cost (10,493,968 shares at June 30, 2021 and no shares at December 31, 2020)
(529,047) 
Total stockholders’ equity1,721,816 399,500 
Total liabilities and stockholders’ equity$1,874,603 $852,952 
See accompanying Notes to Condensed Consolidated Financial Statements.
1

Table of Contents
AGIOS PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
(In thousands, except share and per share data)
2021202020212020
Cost and expenses:
Research and development$62,007 $54,086 $119,674 $109,445 
Selling, general and administrative29,215 29,178 62,765 60,849 
Total cost and expenses91,222 83,264 182,439 170,294 
Loss from operations(91,222)(83,264)(182,439)(170,294)
Gain on sale of oncology business
2,000  2,000  
Interest (expense) income, net(92)1,769 248 4,705 
Other income, net6,524  6,524  
Net loss from continuing operations(82,790)(81,495)(173,667)(165,589)
Net income (loss) from discontinued operations, net of tax(3,427)(8,983)1,961,775 34,855 
Net income (loss)$(86,217)$(90,478)$1,788,108 $(130,734)
Net loss from continuing operations per share - basic and diluted$(1.36)$(1.18)$(2.66)$(2.41)
Net income (loss) from discontinued operations per share - basic and diluted$(0.06)$(0.13)$30.05 $0.51 
Net income (loss) per share - basic and diluted$(1.41)$(1.31)$27.39 $(1.90)
Weighted-average number of common shares used in computing net loss per share from continuing operations, net income (loss) per share from discontinued operations and net income (loss) per share – basic and diluted61,066,977 68,958,091 65,281,827 68,784,109 

See accompanying Notes to Condensed Consolidated Financial Statements.
2

Table of Contents
AGIOS PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
(In thousands)
2021202020212020
Net income (loss)$(86,217)$(90,478)$1,788,108 $(130,734)
Other comprehensive (loss) income
Unrealized (loss) gain on available-for-sale securities(141)1,562 (249)1,434 
Comprehensive income (loss)$(86,358)$(88,916)$1,787,859 $(129,300)

See accompanying Notes to Condensed Consolidated Financial Statements.

3

Table of Contents
AGIOS PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited)
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
(Loss) Income
Accumulated
Deficit
Treasury StockTotal
Stockholders’
Equity
(in thousands, except share amounts)SharesAmountSharesAmount
Balance at December 31, 202069,293,920 $69 $2,242,801 $105 $(1,843,475) $ $399,500 
Common stock issued under stock incentive plan and ESPP518,285 1 7,346 — — — — 7,347 
Stock-based compensation expense— — 14,854 — — — — 14,854 
Other comprehensive loss— — — (108)— — — (108)
Net income— — — — 1,874,325 — — 1,874,325 
Disposition of oncology business— — 712 — — — — 712 
Balance at March 31, 202169,812,205 $70 $2,265,713 $(3)$30,850  $ $2,296,630 
Common stock issued under stock incentive plan and ESPP592,577 $— $25,673 $— $— — $— $25,673 
Stock-based compensation expense— — 14,885 — — — — 14,885 
Repurchase of common stock— — — — — (10,493,968)(529,047)(529,047)
Other comprehensive loss— — — (141)— — — (141)
Net loss— — — — (86,217)— — (86,217)
Disposition of oncology business— — 33 — — — — 33 
Balance at June 30, 202170,404,782 $70 $2,306,304 $(144)$(55,367)(10,493,968)$(529,047)$1,721,816 
See accompanying Notes to Condensed Consolidated Financial Statements.
4

Table of Contents
AGIOS PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited)

Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
(Loss) Income
Accumulated
Deficit
Total
Stockholders’
Equity
(in thousands, except share amounts)SharesAmount
Balance at December 31, 201968,401,105 $68 $2,156,363 $202 $(1,516,105)$640,528 
Common stock issued under stock incentive plan and ESPP388,820 1 5,464 — — 5,465 
Stock-based compensation expense— — 15,670 — — 15,670 
Other comprehensive loss— — — (128)— (128)
Net loss— — — — (40,256)(40,256)
Disposition of oncology business— — 4,020 — — 4,020 
Balance at March 31, 202068,789,925 $69 $2,181,517 $74 $(1,556,361)$625,299 
Common stock issued under stock incentive plan and ESPP268,771 $— $1,652 $— $— $1,652 
Stock-based compensation expense— — 17,614 — — 17,614 
Other comprehensive income— — — 1,562 — 1,562 
Net loss— — — — (90,478)(90,478)
Disposition of oncology business— — 2,816 — — 2,816 
Balance at June 30, 202069,058,696 $69 $2,203,599 $1,636 $(1,646,839)$558,465 
See accompanying Notes to Condensed Consolidated Financial Statements.
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AGIOS PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
(In thousands)20212020
Operating activities
Net income (loss)$1,788,108 $(130,734)
Less: Net Income from discontinued operations1,961,775 34,855 
Net loss from continuing operations(173,667)(165,589)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Depreciation and amortization4,829 4,887 
Stock-based compensation expense29,739 33,284 
Net amortization of premium (accretion of discount) on marketable securities3,422 473 
Loss on disposal of property and equipment12  
Non-cash operating lease expense4,760 4,435 
Changes in operating assets and liabilities:
Other receivables(8,131) 
Prepaid expenses and other current and non-current assets(8,454)1,295 
Accounts payable(5,561)(2,562)
Accrued expenses and other current liabilities(2,547)(8,265)
Operating lease liabilities(3,631)(4,149)
Net cash used in operating activities - continuing operations(159,229)(136,191)
Net cash used in operating activities - discontinued operations(78,814)(36,964)
Net cash used in operating activities(238,043)(173,155)
Investing activities
Purchases of marketable securities(498,896)(189,601)
Proceeds from maturities and sales of marketable securities273,149 328,883 
Purchases of property and equipment(1,261)(8,340)
Net cash (used in) provided by investing activities - continuing operations(227,008)130,942 
Net cash provided by (used in) investing activities - discontinued operations1,802,936 (348)
Net cash provided by investing activities1,575,928 130,594 
Financing activities
Payments on financing lease obligations(170)(166)
Purchase of treasury stock(529,047) 
Net proceeds from stock option exercises and employee stock purchase plan33,020 7,117 
Net cash (used in) provided by financing activities - continuing operations(496,197)6,951 
Net cash provided by financing activities - discontinued operations 250,537 
Net cash (used in) provided by financing activities(496,197)257,488 
Net change in cash and cash equivalents841,688 214,927 
Cash and cash equivalents at beginning of the period127,436 80,931 
Cash and cash equivalents at end of the period$969,124 $295,858 
Supplemental disclosure of non-cash investing and financing transactions
Additions to property and equipment in accounts payable and accrued expenses$56 $3,621 
Operating lease liabilities arising from obtaining operating lease assets$ $ 
Financing lease liabilities arising from obtaining financing lease assets$511 $ 
See accompanying Notes to Condensed Consolidated Financial Statements.
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AGIOS PHARMACEUTICALS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Overview and Basis of Presentation
References to Agios
Throughout this Quarterly Report on Form 10-Q, “we,” “us,” and “our,” and similar expressions, except where the context requires otherwise, refer to Agios Pharmaceuticals, Inc. and its consolidated subsidiaries, and “our Board of Directors” refers to the board of directors of Agios Pharmaceuticals, Inc.
Overview
We are a biopharmaceutical company committed to transforming patients’ lives through scientific leadership in the field of cellular metabolism and adjacent areas of biology, with the goal of creating differentiated, small molecule medicines for genetically defined diseases, or GDDs. To address our focus areas, we take a systems biology approach to deeply understand disease states, drive the discovery and validation of novel therapeutic targets, and define patient selection strategies, thereby increasing the probability that our experimental medicines will have the desired therapeutic effect. We are located in Cambridge, Massachusetts.
Sale of our Oncology Business to Servier
On March 31, 2021, we completed the sale of our oncology business to Servier Pharmaceuticals LLC, or Servier. The transaction included the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs for a payment of approximately $1.8 billion in cash at the closing, subject to certain adjustments, and a payment of $200 million in cash, if, prior to January 1, 2027, vorasidenib is granted new drug application, or NDA, approval from the U.S. Food and Drug Administration, or FDA, with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an isocitrate dehydrogenase 1 or 2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval), as well as a royalty of 5% of U.S. net sales of TIBSOVO® from the close of the transaction through loss of exclusivity, and a royalty of 15% of U.S. net sales of vorasidenib from the first commercial sale of vorasidenib through loss of exclusivity. Servier also acquired our co-commercialization rights for Bristol Myers Squibb’s IDHIFA® and the right to receive a $25.0 million potential milestone payment under our prior collaboration agreement with Celgene Corporation, and following the sale Servier will conduct certain clinical development activities within the IDHIFA® development program.
We recorded income from royalties of approximately $2.0 million on U.S. net sales of TIBSOVO® by Servier in the gain on sale of oncology business line item within the condensed consolidated statements of operations, for the three and six months ended June 30, 2021. We also recorded approximately $3.5 million of cash receipts from customers owed to Servier within the prepaid expenses and other current assets line item within the condensed consolidated balance sheet as of June 30, 2021.
Basis of presentation
The condensed consolidated balance sheet as of June 30, 2021, the condensed consolidated statements of operations, comprehensive income (loss) and stockholders' equity for the three and six months ended June 30, 2021 and 2020, and the condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of our management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state our financial position as of June 30, 2021, our results of operations and stockholders' equity for the three and six months ended June 30, 2021 and 2020, and cash flows for the six months ended June 30, 2021 and 2020. The financial data and the other financial information disclosed in these notes to the condensed consolidated financial statements related to the three and six-month periods are also unaudited. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other future annual or interim period. The condensed consolidated balance sheet data as of December 31, 2020 was derived from our audited financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles, or U.S. GAAP. The condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 that was filed with the Securities and Exchange Commission, or the SEC, on February 25, 2021.
In late March 2021, our oncology business met all the conditions to be classified as held for sale and, because we consider the disposal of the oncology business to be a strategic shift that had a major effect on our operations and financial results,
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represented a discontinued operation. All assets and liabilities associated with our oncology business were therefore classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets for the periods presented. Further, all historical operating results for our oncology business are reflected within discontinued operations in the condensed consolidated statements of operations for all periods presented. For additional information, see Note 3, Discontinued Operations.
Our condensed consolidated financial statements include our accounts and the accounts of our wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared in conformity with U.S. GAAP.
Reclassifications
Certain amounts in prior periods have been reclassified to reflect the impact of the discontinued operations treatment of the oncology business in order to conform to the current period presentation.
Use of estimates
The preparation of our condensed consolidated financial statements requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, judgments and methodologies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenues and expenses. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including expenses, reserves and allowances, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and any variant strains of the virus and the actions taken to contain the pandemic or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. We have made estimates of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates.
Liquidity
On March 31, 2021 we completed the sale of our oncology business to Servier, and received approximately $1.8 billion in cash at closing. In connection with the sale, on March 25, 2021, we announced that our board of directors authorized the repurchase of up to $1.2 billion of our outstanding shares of common stock, or the Repurchase Program, using the proceeds from the sale of our oncology business to Servier. On March 31, 2021, in connection with the Repurchase Program, we entered into a definitive share repurchase agreement with Bristol-Myers Squibb Company, or BMS, to repurchase 7,121,658 shares of our common stock held by certain subsidiaries of BMS for an aggregate purchase price of $344.5 million, or $48.3785 per share. This repurchase was completed on April 5, 2021. Further, on April 2, 2021, in connection with the Repurchase Program, we entered into a Rule 10b5-1 repurchase plan pursuant to which we may repurchase up to $600 million of shares of our common stock. As of June 30, 2021, we have repurchased approximately 3.4 million shares for $184.5 million, or $54.71 per share, under the plan with approximately $415.5 million remaining under the plan for additional repurchases. In total, as of June 30, 2021, we have repurchased 10.5 million common shares for $529.0 million under the Repurchase Program.
As of June 30, 2021, we had cash, cash equivalents and marketable securities of $1.7 billion. Although we have incurred recurring losses and expect to continue to incur losses for the foreseeable future, we expect our cash, cash equivalents and marketable securities will be sufficient to fund current operations for at least the next twelve months from the issuance date of these financial statements.
2. Summary of Significant Accounting Policies
Discontinued Operations
We accounted for the sale of our oncology business in accordance with Accounting Standards Codification, ASC, 205 Discontinued Operations and Accounting Standards Update, ASU, No. 2014-08, Reporting of Discontinued Operations and Disclosures of Disposals of Components of an Entity. We followed the held-for-sale criteria as defined in ASC 306 and ASC 205. ASC 205 requires that a component of an entity that has been disposed of or is classified as held for sale and has operations and cash flows that can be clearly distinguished from the rest of the entity be reported as assets held for sale and discontinued operations. In the period a component of an entity has been disposed of or classified as held for sale, the results of operations for the periods presented are reclassified into separate line items in the unaudited condensed consolidated statements of operations. Assets and liabilities are also reclassified into separate line items on the related condensed consolidated balance sheets for the periods presented. The statements of cash flows for the periods presented are also reclassified to reflect the results of discontinued operations as separate line items. ASU 2014-08 requires that only a disposal of a component of an entity, or a
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group of components of an entity, that represents a strategic shift that has, or will have, a major effect on the reporting entity’s operations and financial results be reported in the financial statements as discontinued operations. ASU 2014-08 also provides guidance on the financial statement presentations and disclosures of discontinued operations.
Due to the sale of the oncology business during the first quarter of 2021, see Note 3, Discontinued Operations, in accordance with ASC 205, Discontinued Operations, we have classified the results of the oncology business as discontinued operations in our unaudited condensed consolidated statements of operations and cash flows for all periods presented. All assets and liabilities associated with our oncology business were therefore classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets for the periods presented. All amounts included in the notes to the unaudited condensed consolidated financial statements relate to continuing operations unless otherwise noted.
Treasury Stock
Treasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock.
There have been no other material changes to the significant accounting policies previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.
Recent accounting pronouncements
Other accounting standards that have been issued by the Financial Accounting Standards Board or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption.
3. Discontinued Operations
On March 31, 2021, we completed the sale of our oncology business to Servier. We have determined the sale of the oncology business represents a strategic shift that had a major effect on our business and therefore met the criteria for classification as discontinued operations at March 31, 2021. Accordingly, the oncology business is reported as discontinued operations in accordance with ASC 205-20, Discontinued Operations. The related assets and liabilities of the oncology business are classified as assets and liabilities of discontinued operations in the condensed consolidated balance sheets and the results of operations from the oncology business as discontinued operations in the condensed consolidated statements of operations. Applicable amounts in prior years have been recast to conform to this discontinued operations presentation. We recognized a gain on the sale of the oncology business upon closing.
The following table presents the assets and liabilities of the discontinued operations as of December 31, 2020:
(in thousands)December 31, 2020
Assets
Current assets:
Accounts receivable, net$21,328 
Collaboration receivable – related party2,123 
Collaboration receivable – other1,948 
Inventory14,698 
Prepaid expenses and other current assets7,762 
Total current assets of discontinued operations47,859 
Other non-current assets2,601 
Total assets of discontinued operations$50,460 
Liabilities
Current liabilities:
Accounts payable$9,120 
Accrued expenses29,339 
Total current liabilities of discontinued operations38,459 
Liability related to the sale of future revenue, net of debt issuance costs261,269 
Total liabilities of discontinued operations$299,728 
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The following table presents the net liabilities transferred for the sale oncology business for the quarter ended March 31, 2021:
(in thousands)March 31, 2021
Assets
Current assets:
Accounts receivable, net$25,386 
Collaboration receivable – related party2,253 
Collaboration receivable – other2,438 
Inventory16,190 
Prepaid expenses and other current assets7,125 
Total current assets of discontinued operations53,392 
Other non-current assets2,234 
Total assets of discontinued operations$55,626 
Liabilities
Current liabilities:
Accounts payable$4,245 
Accrued expenses30,288 
Total current liabilities of discontinued operations34,533 
Liability related to the sale of future revenue, net of debt issuance costs264,281 
Total liabilities of discontinued operations298,814 
Net liabilities distributed to Servier$(243,188)
The following table presents the gain on the sale for the quarter ended March 31, 2021:
(in thousands)March 31, 2021
Cash proceeds$1,802,936 
Less: transaction and insurance costs(53,573)
Less: net liabilities distributed(243,188)
Gain on sale, pre-tax1,992,551 
Income tax(12,867)
Gain on sale, net of tax$1,979,684 
As of June 30, 2021, there were no assets or liabilities classified as discontinued operations.









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The following table presents the financial results of the discontinued operations:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2021202020212020
Revenues:
Product revenue, net$ $27,581 $36,909 $50,255 
Collaboration revenue – related party 5,735 1,350 65,832 
Collaboration revenue – other 692 491 1,685 
Royalty revenue – related party 3,339 2,659 6,673 
Total revenue 37,347 41,409 124,445 
Cost and expenses:
Cost of sales 675 706 1,208 
Research and development207 36,831 41,564 72,728 
Selling, general and administrative420 6,773 8,551 13,603 
Total cost and expenses627 44,279 50,821 87,539 
(Loss) income from discontinued operations(627)(6,932)(9,412)36,906 
Non-cash interest expense for the sale of future revenue (2,051)(5,697)(2,051)
Gain on the sale of the oncology business(2,800) 1,989,751  
Income from discontinued operations, pre-tax(3,427)(8,983)1,974,642 34,855 
Income tax expense  (12,867) 
Net income from discontinued operations$(3,427)$(8,983)$1,961,775 $34,855 
In accordance with ASC 205-20, only expenses specifically identifiable and related to a business to be disposed may be presented in discontinued operations. As such, the research and development, marketing, selling and general and administrative expenses in discontinued operations include corporate costs incurred directly to solely support our oncology business.
We have also entered into a Transition Services Agreement with Servier, through which we will provide transitional services related to discovery, clinical development, technical operations, commercial and general and administrative related activities for periods ranging from one month to approximately one year after March 31, 2021.
The milestone payment for approval of vorasidenib and royalty payments related to vorasidenib and TIBSOVO® represent contingent consideration. Contingent consideration has been accounted for as a gain contingency in accordance with ASC 450, Contingencies, and will be recognized in earnings in the period when realizable.
4. Fair Value Measurements
We record cash equivalents and marketable securities at fair value. ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, directly or indirectly, for substantially the full term of the asset or liability.
Level 3 – Unobservable inputs that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.
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The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of June 30, 2021:
(In thousands)Level 1Level 2Level 3Total
Cash equivalents$834,786 $70,898 $ $905,684 
Total cash equivalents834,786 70,898  905,684 
Marketable securities:
U.S. Treasuries 85,251  85,251 
Government securities 101,976  101,976 
Corporate debt securities 577,950  577,950 
Total marketable securities 765,177  765,177 
Total cash equivalents and marketable securities$834,786 $836,075 $ $1,670,861 
Cash equivalents and marketable securities have been initially valued at the transaction price and subsequently, at the end of each reporting period, valued utilizing third-party pricing services or other observable market data. The pricing services utilize industry standard valuation models, including both income and market-based approaches, and observable market inputs to determine value. After completing our validation procedures, we did not adjust or override any fair value measurements provided by the pricing services as of June 30, 2021.
There have been no changes to the valuation methods during the six months ended June 30, 2021. We have no financial assets or liabilities that were classified as Level 3 at any point during the six months ended June 30, 2021.
5. Marketable Securities
Our marketable securities are classified as available-for-sale pursuant to ASC 320, Investments – Debt and Equity Securities, and are recorded at fair value. Unrealized gains are included as a component of accumulated other comprehensive (loss) income in the condensed consolidated balance sheets and statements of stockholders’ equity and a component of total comprehensive loss in the condensed consolidated statements of comprehensive (loss) income, until realized. Unrealized losses are evaluated for impairment under ASC 326, Financial Instruments - Credit Losses, to determine if the impairment is credit-related or noncredit-related. Credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings, and noncredit-related impairment is recognized in other comprehensive income, net of taxes. Realized gains and losses are included in investment income on a specific-identification basis. There were no material realized gains or losses on marketable securities for the three and six months ended June 30, 2021 or 2020.
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Marketable securities at June 30, 2021 consisted of the following:
(In thousands)Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Current:
U.S. Treasuries$85,256 $2 $(7)$85,251 
Government securities76,980 16  76,996 
Corporate debt securities541,713 11 (107)541,617 
Total Current703,949 29 (114)703,864 
Non-current:
Government securities25,000  (20)24,980 
Corporate debt securities36,372  (39)36,333 
Total Non-current61,372  (59)61,313 
Total marketable securities$765,321 $29 $(173)$765,177 
Marketable securities at December 31, 2020 consisted of the following:
(In thousands)Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Fair
Value
Current:
U.S. Treasuries$113,559 $134 $(21)$113,672 
Government securities108,263 37 (8)108,292 
Corporate debt securities223,461 140 (72)223,529 
Total Current445,283 311 (101)445,493 
Non-current:
U.S. Treasuries15,147  (10)15,137 
Government securities26,831 8  26,839 
Corporate debt securities55,735 2 (105)55,632 
Total Non-current97,713 10 (115)97,608 
Total marketable securities$542,996 $321 $(216)$543,101 
As of June 30, 2021 and December 31, 2020, we held both current and non-current investments. Investments classified as current have maturities of less than one year. Investments classified as non-current are those that: (i) have a maturity of greater than one year, and (ii) we do not intend to liquidate within the next twelve months, although these funds are available for use and, therefore, are classified as available-for-sale.
As of June 30, 2021 and December 31, 2020, we held 113 and 87 debt securities, respectively, that were in an unrealized loss position for less than one year. We did not record an allowance for credit losses as of June 30, 2021 and December 31, 2020 related to these securities. The aggregate fair value of debt securities in an unrealized loss position at June 30, 2021 and December 31, 2020 was $559.3 million and $299.0 million, respectively. There were no individual securities that were in a significant unrealized loss position as of June 30, 2021 and December 31, 2020. We regularly review the securities in an unrealized loss position and evaluate the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions. We do not consider these marketable securities to be impaired as of June 30, 2021 and December 31, 2020.
6. Leases
Our building leases are comprised of office and laboratory space under non-cancelable operating leases. These lease agreements have remaining lease terms of seven years and contain various clauses for renewal at our option. The renewal options were not included in the calculation of the operating lease assets and the operating lease liabilities as the renewal options are not reasonably certain of being exercised. The lease agreements do not contain residual value guarantees.
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The components of lease expense and other information related to leases were as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
(In millions)2021202020212020
Operating lease costs$3.8 $3.8 $7.6 $7.6 
Cash paid for amounts included in the measurement of operating lease liabilities$3.6 $3.5 $7.2 $7.4 
We have not entered into any material short-term leases or financing leases as of June 30, 2021.
As of June 30, 2021, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter were as follows:
(In thousands)
Remaining 2021$6,039 
202216,773 
202318,126 
202418,660 
202519,507 
Thereafter44,385 
Undiscounted minimum rental commitments$123,490 
Interest(22,587)
Operating lease liabilities$100,903 
In arriving at the operating lease liabilities as of June 30, 2021 and December 31, 2020, we applied the weighted-average incremental borrowing rate of 5.7% for both periods over a weighted-average remaining lease term of 6.7 years and 7.2 years, respectively.
7. Accrued Expenses
Accrued expenses consist of the following:
(In thousands)June 30,
2021
December 31,
2020
Accrued compensation$10,559 $20,345 
Accrued research and development costs7,627 5,444 
Accrued professional fees3,075 2,897 
Accrued other14,793 2,115 
Total accrued expenses$36,054 $30,801 

8. Share-Based Payments
2013 Stock Incentive Plan
In June 2013, our Board of Directors adopted and, in July 2013 our stockholders approved, the 2013 Stock Incentive Plan, or the 2013 Plan. The 2013 Plan became effective upon the closing of our initial public offering and provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, or RSUs, performance-based share units, or PSUs, and other stock-based awards to employees, non-employees and non-employee directors. Following the adoption of the 2013 Plan, we granted no further stock options or other awards under the 2007 Stock Incentive Plan, or the 2007 Plan. Any options or awards outstanding under the 2007 Plan at the time of adoption of the 2013 Plan remain outstanding and effective. As of June 30, 2021, the total number of shares reserved under the 2007 Plan and the 2013 Plan was 11,532,771, and we had 4,814,051 shares available for future issuance under the 2013 Plan.
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Stock options
The following table presents stock option activity for the six months ended June 30, 2021:
Number of
Stock Options
Weighted-Average
Exercise Price
Outstanding at December 31, 20206,143,046 $58.46 
Granted999,488 56.17 
Exercised(677,154)45.79 
Forfeited/Expired(1,213,538)61.89 
Outstanding at June 30, 20215,251,842 $58.87 
Exercisable at June 30, 20213,412,161 $61.00 
Vested and expected to vest at June 30, 20215,251,842 $58.87 
At June 30, 2021, there was approximately $58.8 million of total unrecognized compensation expense related to unvested stock option awards, which we expect to recognize over a weighted-average period of approximately 2.6 years.
Restricted stock units
The following table presents RSU activity for the six months ended June 30, 2021:
Number of
Stock Units
Weighted-Average
Grant Date Fair 
Value
Unvested shares at December 31, 20201,284,378 $50.78 
Granted785,094 56.02 
Vested(374,307)57.74 
Forfeited(510,152)51.84 
Unvested shares at June 30, 20211,185,013 $51.60 
As of June 30, 2021, there was approximately $47.2 million of total unrecognized compensation expense related to RSUs, which we expect to recognize over a weighted-average period of approximately 2.1 years.
Performance-based stock units
The following table presents PSU activity for the six months ended June 30, 2021:
Number of
Stock Units
Weighted-Average
Grant Date Fair 
Value
Unvested shares at December 31, 2020142,229 $54.28 
Granted121,000 56.68 
Vested  
Forfeited(24,059)49.49 
Unvested shares at June 30, 2021239,170 $55.98 
Stock-based compensation expense associated with these PSUs is recognized if the underlying performance condition is considered probable of achievement using our management’s best estimates.
As of June 30, 2021, there was no unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered probable of achievement, and $13.4 million of total unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered not probable of achievement.
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Market-based stock units
The following table presents market-based stock unit, or MSU, activity for the six months ended June 30, 2021:
Number of
Stock Units
Weighted-Average
Grant Date Fair
Value
Unvested shares at December 31, 202042,695 $41.50 
Granted  
Unvested shares at June 30, 202142,695 $41.50 
The fair value of MSUs are estimated using a Monte Carlo simulation model. Assumptions and estimates utilized in the model include the risk-free interest rate, dividend yield, expected stock volatility and the estimated period to achievement of the market condition. As of June 30, 2021, there was