What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-04-29 compared with 2020-11-05 · 213 added, 353 removed, 253 unchanged (69% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

2021 December 31,

2 unchanged sentences

Marketable securities 447,578 445,493

Accounts receivable, net 18,989 8,952

Collaboration receivable – related party 2,334 1,539

Collaboration receivable – other 1,992 1,928

Royalty receivable – related party — 2,900

Inventory 11,371 7,331

Prepaid expenses and other current assets 19,511 15,889

Current assets of discontinued operations — 47,859

Total current assets 2,355,114 636,677

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Financing lease assets 502 590

Other assets 1,350 —

Non-current assets of discontinued operations — 2,601

Total assets $ 2,488,434 $ 852,952

3 unchanged sentences

Accrued expenses 23,601 30,801

Deferred revenue – related party — 10,933

Operating lease liabilities 7,988 7,093

Financing lease liabilities 321 317

Taxes payable 13,370 —

Current liabilities of discontinued operations — 38,459

Total current liabilities 96,504 94,394

Deferred revenue, net of current portion – related party — 50,580

Operating lease liabilities, net of current portion 95,052 97,458

Financing lease liabilities, net of current portion 248 331

Liability related to the sale of future revenue, net of debt issuance costs 258,121 —

Non-current liabilities of discontinued operations — 261,269

Total liabilities 191,804 453,452

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25,000,000 shares authorized;

no shares issued or outstanding at September 30, 2020 and December 31, 2019

no shares issued or outstanding at March 31, 2021 and December 31, 2020

Common stock, $ 0.001 par value;

125,000,000 shares authorized;

69,198,063 and 68,401,105 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

69,812,205 and 69,293,920 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital 2,265,713 2,242,801

Accumulated other comprehensive income 663 202

Accumulated deficit ( 1,745,818 ) ( 1,516,105 )

Accumulated other comprehensive (loss) income ( 3 ) 105

Retained earnings (Accumulated deficit) 30,850 ( 1,843,475 )

Total stockholders’ equity 2,296,630 399,500

3 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except share and per share data)

2020 2019 2020 2019

Product revenue, net $ 31,716 $ 17,422 $ 81,971 $ 40,287

Collaboration revenue – related party 1,206 5,516 67,038 32,414

Collaboration revenue – other 1,101 420 2,786 2,202

Royalty revenue – related party 683 2,666 7,356 7,569

Total revenue 34,706 26,024 159,151 82,472

Cost and expenses:

Cost of sales 638 393 1,846 1,030

Research and development $ 57,667 $ 55,358

3 unchanged sentences

Interest income, net 340 2,936

Non-cash interest expense for the sale of future revenue ( 9,767 ) — ( 11,818 ) —

Net loss $ ( 98,979 ) $ ( 106,173 ) $ ( 229,713 ) $ ( 309,122 )

Net loss per share – basic and diluted $ ( 1.43 ) $ ( 1.81 ) $ ( 3.33 ) $ ( 5.27 )

Weighted-average number of common shares used in computing net loss per share – basic and diluted 69,144,061 58,803,534 68,905,853 58,661,607

Net loss from continuing operations ( 90,877 ) ( 84,094 )

Net income from discontinued operations, net of tax 1,965,202 43,838

Net income (loss) $ 1,874,325 $ ( 40,256 )

Net loss from continuing operations per share - basic and diluted $ ( 1.31 ) $ ( 1.23 )

Net income from discontinued operations per share - basic and diluted $ 28.26 $ 0.64

Net income (loss) per share - basic and diluted $ 26.95 $ ( 0.59 )

Weighted-average number of common shares used in computing net income (loss) per share from continuing operations and discontinued operations and net income (loss) per share – basic and diluted 69,543,510 68,608,279

See accompanying Notes to Condensed Consolidated Financial Statements.

AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended September 30, Nine Months Ended September 30,

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended March 31,

(In thousands)

2020 2019 2020 2019

Net loss $ ( 98,979 ) $ ( 106,173 ) $ ( 229,713 ) $ ( 309,122 )

Other comprehensive (loss) income

Unrealized (loss) gain on available-for-sale securities ( 973 ) ( 26 ) 461 2,635

Comprehensive loss $ ( 99,952 ) $ ( 106,199 ) $ ( 229,252 ) $ ( 306,487 )

Net income (loss) $ 1,874,325 $ ( 40,256 )

Other comprehensive loss

Unrealized loss on available-for-sale securities ( 108 ) ( 128 )

Comprehensive income (loss) $ 1,874,217 $ ( 40,384 )

See accompanying Notes to Condensed Consolidated Financial Statements.

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Other comprehensive loss — — — ( 108 ) — ( 108 )

Net loss — — — — ( 40,256 ) ( 40,256 )

Net income — — — — 1,874,325 1,874,325

Disposition of oncology business — — 712 — — 712

Balance at March 31, 2021 69,812,205 $ 70 $ 2,265,713 $ ( 3 ) $ 30,850 $ 2,296,630

Common stock issued under stock incentive plan and ESPP 268,771 $ — $ 1,652 $ — $ — $ 1,652

Stock-based compensation expense — — 20,430 — — 20,430

Other comprehensive income — — — 1,562 — 1,562

Net loss — — — — ( 90,478 ) ( 90,478 )

Balance at June 30, 2020 69,058,696 $ 69 $ 2,203,599 $ 1,636 $ ( 1,646,839 ) $ 558,465

Common stock issued under stock incentive plan and ESPP 139,367 $ — $ 3,532 $ — $ — $ 3,532

Stock-based compensation expense — — 18,407 — — 18,407

Other comprehensive loss — — — ( 973 ) — ( 973 )

Net loss — — — — ( 98,979 ) ( 98,979 )

Balance at September 30, 2020 69,198,063 $ 69 $ 2,225,538 $ 663 $ ( 1,745,818 ) $ 480,452

See accompanying Notes to Condensed Consolidated Financial Statements.

AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Stockholders' Equity (Continued)

Common Stock Additional

8 unchanged sentences

Stock-based compensation expense — — 15,670 — — 15,670

Other comprehensive income — — — 1,687 — 1,687

Net loss — — — — ( 93,078 ) ( 93,078 )

Balance at March 31, 2019 58,659,821 $ 59 $ 1,818,393 $ ( 484 ) $ ( 1,197,711 ) $ 620,257

Common stock issued under stock incentive plan and ESPP 89,365 $ — $ 2,770 $ — $ — $ 2,770

Stock-based compensation expense — — 18,547 — — 18,547

Other comprehensive income — — — 974 — 974

Net loss — — — — ( 109,871 ) ( 109,871 )

Balance at June 30, 2019 58,749,186 $ 59 $ 1,839,710 $ 490 $ ( 1,307,582 ) $ 532,677

Common stock issued under stock incentive plan and ESPP 128,505 $ — $ 3,225 $ — $ — $ 3,225

Stock-based compensation expense — — 18,588 — — 18,588

Other comprehensive loss — — — ( 128 ) — ( 128 )

Net loss — — — — ( 40,256 ) ( 40,256 )

Balance at September 30, 2019 58,877,691 $ 59 $ 1,861,523 $ 464 $ ( 1,413,755 ) $ 448,291

Disposition of oncology business — — 4,020 — — 4,020

Balance at March 31, 2020 68,789,925 $ 69 $ 2,181,517 $ 74 $ ( 1,556,361 ) $ 625,299

See accompanying Notes to Condensed Consolidated Financial Statements.

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Condensed Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

(In thousands) 2021 2020

Operating activities

Net loss $ ( 229,713 ) $ ( 309,122 )

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss) $ 1,874,325 $ ( 40,256 )

Net Income from discontinued operations 1,965,202 43,838

Net loss from continuing operations ( 90,877 ) ( 84,094 )

Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:

Depreciation and amortization 2,479 2,474

Stock-based compensation expense 14,854 15,670

Net accretion of premium and discounts on investments 1,521 ( 2,772 )

Gain on disposal of property and equipment — 466

Net amortization of premium (accretion of discount) on marketable securities 1,664 126

Non-cash operating lease expense 2,417 2,203

Non-cash interest expense associated with the sale of future revenue 11,818 —

Non-cash royalty revenue ( 4,341 ) —

Changes in operating assets and liabilities:

Accounts receivable, net ( 10,037 ) ( 2,030 )

Collaboration receivable – related party ( 795 ) 624

Collaboration receivable – other ( 64 ) ( 199 )

Royalty receivable – related party 2,900 ( 366 )

Inventory ( 4,040 ) ( 4,980 )

Prepaid expenses and other current and non-current assets ( 3,621 ) ( 1,076 )

Accounts payable ( 2,941 ) ( 883 )

Accrued expenses 162 4,602

Deferred revenue – related party ( 61,513 ) ( 25,849 )

Accrued expenses and other current liabilities ( 12,697 ) ( 10,972 )

Operating lease liabilities ( 1,504 ) ( 2,229 )

Net cash used in operating activities - continuing operations ( 90,226 ) ( 78,781 )

Net cash used in operating activities - discontinued operations ( 30,523 ) ( 26,577 )

Net cash used in operating activities ( 120,749 ) ( 105,358 )

3 unchanged sentences

Purchases of property and equipment ( 1,012 ) ( 4,196 )

Net cash provided by investing activities - continuing operations 71,141 108,394

Net cash provided by (used in) investing activities - discontinued operations 1,802,936 ( 259 )

Net cash provided by investing activities 1,874,077 108,135

2 unchanged sentences

Net proceeds from stock option exercises and employee stock purchase plan 7,347 5,465

Proceeds from the sale of future revenue, net of issuance costs 250,537 —

Net cash provided by financing activities - continuing operations 7,261 5,385

Net cash provided by financing activities - discontinued operations — —

Net cash provided by financing activities 7,261 5,385

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and its consolidated subsidiaries, and “our Board of Directors” refers to the board of directors of Agios Pharmaceuticals, Inc.

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 patients in the areas of hematologic malignancies, solid tumors and rare genetic diseases, or RGDs.

To address these 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 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, and, prior to the completion of the sale of our oncology business to Servier Pharmaceuticals LLC, or Servier, as described below, hematologic malignancies and solid tumors.

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.

We entered into a Purchase and Sale Agreement, or the Purchase Agreement, with Servier on December 20, 2020.

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.

Basis of presentation

The condensed consolidated balance sheet as of September 30, 2020, the condensed consolidated statements of operations, comprehensive loss and stockholders' equity for the three and nine months ended September 30, 2020 and 2019, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019 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 September 30, 2020, our results of operations and stockholders' equity for the three and nine months ended September 30, 2020 and 2019, and cash flows for the nine months ended September 30, 2020 and 2019.

The financial data and the other financial information disclosed in these notes to the condensed consolidated financial statements related to the three and nine-month periods are also unaudited.

The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any other future annual or interim period.

The condensed consolidated balance sheet as of March 31, 2021, the condensed consolidated statements of operations, comprehensive income (loss) and stockholders' equity for the three months ended March 31, 2021 and 2020, and the condensed consolidated statements of cash flows for the three months ended March 31, 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 March 31, 2021, our results of operations and stockholders' equity for the three months ended March 31, 2021 and 2020, and cash flows for the three months ended March 31, 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-month periods are also unaudited.

The results of operations for the three months ended March 31, 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.

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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 will have a major effect on our operations and financial results, 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.

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The condensed consolidated financial statements have been prepared in conformity with U.S.

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

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Actual results may differ from these estimates.

On June 11, 2020, we sold our tiered, sales-based royalty rights on worldwide net sales of IDHIFA® (enasidenib), as well as our rights to receive up to $ 55.0 million in outstanding regulatory milestone payments from Bristol Myers Squibb, or BMS, to Royalty Pharma, or RPI, for $ 255.0 million.

Under the 2010 Agreement, we remain eligible to receive a $ 25.0 million potential

milestone payment for the enasidenib program upon achievement of a specified ex-U.S.

commercial milestone event, as well as reimbursement for costs incurred for our co-commercialization efforts and development activities.

As of September 30, 2020, we had cash, cash equivalents and marketable securities of $ 722.4 million.

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.

We expect to conduct the share repurchases over the next 12 — 18 months, including executing a meaningful portion of the planned repurchases by the end of 2021 through a combination of 10b5-1 plans, open market purchases and privately negotiated block sales.

As of March 31, 2021, we had cash, cash equivalents and marketable securities of $ 2.4 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.

Summary of Significant Accounting Policies

Significant accounting policies

In June 2016, the Financial Accounting Standards Board, or FASB issued Accounting Standards Update, or ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope.

The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments.

Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.

The guidance is effective for fiscal years beginning after December 31, 2019, including interim periods within those years.

In the quarter ended March 31, 2020, we adopted ASU 2016-13, which eliminated the concept of other-than-temporary impairments and required credit losses on debt securities to be recorded through an allowance for credit losses instead of as a reduction in the amortized cost basis of the securities.

Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date.

Based upon our analysis, the adoption of this final rule did not have a material impact on the financial statements.

Liability related to sale of future revenue

We treat the sale of future revenue to RPI as a debt financing, as we have significant continuing involvement in the generation of the cash flows.

As result, we recorded the proceeds from this transaction as a liability related to the sale of future revenue to be amortized to interest expense using the effective interest rate method over the life of the arrangement.

The liability related to sale of future revenue and the related interest expense are based on our current estimates of future royalties expected to be paid over the life of the arrangement.

We will periodically assess the expected royalty payments using a combination of internal projections and forecasts from external sources.

To the extent our future estimates of royalty payments are greater or less than previous estimates or the estimated timing of such payments is materially different than its previous estimates, we will prospectively recognize related non-cash interest expense.

For further discussion of the sale of future revenue, refer to Note 10, Sale of Future Revenue .

Amortization of issuance costs

We treated the liability related to sale of future revenue as a debt financing.

As such, the long-term liability is initially recorded at its proceeds, net of deferred costs.

Issuance costs, fees directly related to the sale of future revenue, are offset against initial carrying value of the long-term liability and are amortized on a straight-line basis over the remaining patent life of the product to an operating expense.

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 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 amounts included in the notes to the unaudited condensed consolidated financial statements relate to continuing operations unless otherwise noted.

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 FASB 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.

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.

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 will have 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

Current assets:

Accounts receivable, net $ 21,328

Collaboration receivable – related party 2,123

Collaboration receivable – other 1,948

Inventory 14,698

Prepaid expenses and other current assets 7,762

Total current assets of discontinued operations 47,859

Other non-current assets 2,601

Total assets of discontinued operations $ 50,460

Current liabilities:

Accounts payable $ 9,120

Accrued expenses 29,339

Total current liabilities of discontinued operations 38,459

Liability related to the sale of future revenue, net of debt issuance costs 261,269

Total liabilities of discontinued operations $ 299,728

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

Current assets:

Accounts receivable, net $ 25,386

Collaboration receivable – related party 2,253

Collaboration receivable – other 2,438

Inventory 16,190

Prepaid expenses and other current assets 7,125

Total current assets of discontinued operations 53,392

Other non-current assets 2,234

Total assets of discontinued operations $ 55,626

Current liabilities:

Accounts payable $ 4,245

Accrued expenses 30,288

Total current liabilities of discontinued operations 34,533

Liability related to the sale of future revenue, net of debt issuance costs 264,281

Total liabilities of discontinued operations 298,814

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

transaction and insurance costs ( 53,573 )

net liabilities distributed ( 243,188 )

Gain on sale, pre-tax 1,992,551

Income tax ( 12,867 )

Gain on sale, net of tax $ 1,979,684

The following table presents the financial results of the discontinued operations:

Three Months Ended March 31,

(in thousands) 2021 2020

Product revenue, net $ 36,909 $ 22,674

Collaboration revenue – related party 1,350 60,097

Collaboration revenue – other 491 993

Royalty revenue – related party 2,659 3,334

Total revenue 41,409 87,098

Cost and expenses:

Cost of sales 706 533

Research and development 41,357 35,897

Selling, general and administrative 8,131 6,830

Total cost and expenses 50,194 43,260

(Loss) income from discontinued operations ( 8,785 ) 43,838

Non-cash interest expense for the sale of future revenue ( 5,697 ) —

Gain on the sale of the oncology business 1,992,551 —

Income from discontinued operations, pre-tax 1,978,069 43,838

Income tax expense ( 12,867 ) —

Net income from discontinued operations $ 1,965,202 $ 43,838

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.

Pursuant to the Purchase Agreement, 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 G&A 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.

Fair Value Measurements

We record cash equivalents and marketable securities at fair value.

Accounting Standards Codification, or 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).

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:

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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.

The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of September 30, 2020:

The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of March 31, 2021:

(In thousands) Level 1 Level 2 Level 3 Total

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Total cash equivalents and marketable securities $ 55,058 $ 469,176 $ — $ 524,234

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 market observable 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 September 30, 2020.

There have been no changes to the valuation methods during the nine months ended September 30, 2020.

We evaluate transfers between levels at the end of each reporting period.

We have no financial assets or liabilities that were classified as Level 3 at any point during the nine months ended September 30, 2020.

After completing our validation procedures, we did not adjust or override any fair value measurements provided by the pricing services as of March 31, 2021.

There have been no changes to the valuation methods during the three months ended March 31, 2021.

We have no financial assets or liabilities that were classified as Level 3 at any point during the three months ended March 31, 2021.

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 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, until realized.

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 income (loss), 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.

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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 nine months ended September 30, 2020 or 2019.

Marketable securities at September 30, 2020 consisted of the following:

There were no material realized gains or losses on marketable securities for the three months ended March 31, 2021 or 2020.

Marketable securities at March 31, 2021 consisted of the following:

(In thousands) Amortized

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Total marketable securities $ 542,996 $ 321 $ ( 216 ) $ 543,101

As of September 30, 2020 and December 31, 2019, we held both current and non-current investments.

As of March 31, 2021 and December 31, 2020, we held both current and non-current investments.

Investments classified as current have maturities of less than one year.

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(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 September 30, 2020 and December 31, 2019, we held 74 and 113 debt securities, respectively, that were in an unrealized loss position for less than one year.

We did no t record an allowance for credit losses as of September 30, 2020 and December 31, 2019 related to these securities.

The aggregate fair value of debt securities in an unrealized loss position at September 30, 2020 and December 31, 2019 was $ 247.7 million and $ 345.7 million, respectively.

There were no individual securities that were in a significant unrealized loss position as of September 30, 2020 and December 31, 2019.

Given our intent and ability to hold such securities until recovery, and the lack of significant change in the credit risk of these investments, we do not consider these marketable securities to be impaired as of September 30, 2020 and December 31, 2019.

Inventory, which consists of commercial supply of TIBSOVO®, consists of the following:

(In thousands) September 30,

2020 December 31,

Raw materials $ 1,406 $ 180

Work-in-process 9,166 6,808

Finished goods 799 343

Total inventory $ 11,371 $ 7,331

As of March 31, 2021 and December 31, 2020, we held 78 and 87 debt securities, respectively, that were in an unrealized loss position for less than one year.

We did no t record an allowance for credit losses as of March 31, 2021 and December 31, 2020 related to these securities.

The aggregate fair value of debt securities in an unrealized loss position at March 31, 2021 and December 31, 2020 was $ 248.3 million and $ 299.0 million, respectively.

There were no individual securities that were in a significant unrealized loss position as of March 31, 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 March 31, 2021 and December 31, 2020.

Our building leases are comprised of office and laboratory space under non-cancelable operating leases.

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The lease agreements do not contain residual value guarantees.

Operating lease costs for the three and nine months ended September 30, 2020 were $ 3.8 million and $ 11.4 million, respectively, and cash paid for amounts included in the measurement of operating lease liabilities for the three and nine months ended September 30, 2020 were $ 3.5 million and $ 10.9 million, respectively.

Operating lease costs for the three and nine months ended September 30, 2019 were $ 3.8 million and $ 10.6 million, respectively, and cash paid for amounts included in the measurement of operating lease liabilities for the three and nine months ended September 30, 2019 were $ 2.2 million and $ 8.5 million, respectively.

We have not entered into any material short-term leases or financing leases as of September 30, 2020.

As of September 30, 2020, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter were as follows:

The components of lease expense and other information related to leases were as follows:

Three Months Ended

(In millions) 2021 2020

Operating lease costs $ 3.8 $ 3.8

Cash paid for amounts included in the measurement of operating lease liabilities $ 3.6 $ 3.9

We have not entered into any material short-term leases or financing leases as of March 31, 2021.

As of March 31, 2021, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter were as follows:

(In thousands)

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Operating lease liabilities $ 103,040

In arriving at the operating lease liabilities as of September 30, 2020 and December 31, 2019, we applied the weighted-average incremental borrowing rate of 5.7 % for both periods over a weighted-average remaining lease term of 7.4 years and 8.2 years, respectively.

In arriving at the operating lease liabilities as of March 31, 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 6.9 years and 7.2 years, respectively.

Accrued Expenses

Accrued expenses consist of the following:

(In thousands) September 30,

(In thousands) March 31,

2021 December 31,

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Accrued professional fees 2,486 2,897

Accrued revenue-related reserves and other 11,018 4,048

Accrued other 8,432 2,115

Total accrued expenses $ 23,601 $ 30,801

Product Revenue

We sell TIBSOVO®, our wholly owned product, to a limited number of specialty distributors and specialty pharmacy providers, or collectively, the Customers.

The Customers subsequently resell TIBSOVO® to pharmacies or dispense directly to patients.

In addition to distribution agreements with Customers, we enter into arrangements with healthcare providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of TIBSOVO®.

The performance obligation related to the sale of TIBSOVO® is satisfied and revenue is recognized when the Customer obtains control of the product, which occurs at a point in time, typically upon delivery to the Customer.

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

Product revenue, net $ 31,716 $ 17,422 $ 81,971 $ 40,287

Reserves for Variable Consideration

Revenues from product sales are recorded at the net sales price, or transaction price, which includes estimates of variable consideration for which reserves are established and result from contractual adjustments, government rebates, returns and other allowances that are offered within the contracts with our Customers, healthcare providers, payors and other indirect customers relating to the sale of our products.

Contractual Adjustments

We generally provide Customers with discounts, including prompt pay discounts, and allowances that are explicitly stated in the contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized.

In addition, we receive sales order management, data and distribution services from certain Customers.

Chargebacks for fees and discounts represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to Customers who directly purchase the product from us.

Customers charge us for the difference between what they pay for the product and the ultimate selling price to the qualified healthcare providers.

These reserves are estimated using the expected value method, based upon a range of possible outcomes that are probability-weighted for the estimated channel mix and are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue.

Government Rebates

Government rebates include Medicare, TriCare, and Medicaid rebates, which we estimate using the expected value method, based upon a range of possible outcomes that are probability-weighted for the estimated payor mix.

These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue.

For Medicare, we also estimate the number of patients in the prescription drug coverage gap for whom we will owe an additional liability under the Medicare Part D program.

We estimate the amount of product sales that may be returned by Customers and record this estimate as a reduction of revenue in the period the related product revenue is recognized.

We currently estimate product return liabilities using the expected value method, based on available industry data, including our visibility into the inventory remaining in the distribution channel.

The following table summarizes balances and activity in each of the product revenue allowance and reserve categories for the nine months ended September 30, 2020:

(In thousands) Contractual Adjustments Government Rebates Returns Total

Balance at December 31, 2019 $ 874 $ 1,124 $ 1,798 $ 3,796

Current provisions relating to sales in the current year 10,261 9,299 1,296 20,856

Adjustments relating to prior years ( 3 ) 122 ( 476 ) ( 357 )

Payments/returns relating to sales in the current year ( 8,966 ) ( 2,260 ) — ( 11,226 )

Payments/returns relating to sales in the prior years ( 653 ) ( 677 ) — ( 1,330 )

Balance at September 30, 2020 $ 1,513 $ 7,608 $ 2,618 $ 11,739

Total revenue-related reserves above, included in our condensed consolidated balance sheets, are summarized as follows:

(In thousands) September 30,

2020 December 31,

Reduction of accounts receivable $ 732 $ 540

Component of accrued expenses 11,007 3,256

Total revenue-related reserves $ 11,739 $ 3,796

The following table presents changes in our contract assets during the nine months ended September 30, 2020:

(In thousands) December 31,

2019 Additions Deductions September 30,

Contract assets (1)

Accounts receivable, net $ 8,952 $ 102,504 $ ( 92,467 ) $ 18,989

(1) Additions to contract assets relate to amounts billed to Customers for product sales and deductions to contract assets primarily relate to collection of receivables during the reporting period.

Collaboration and License Agreements

Accounting analysis and revenue recognition

Our collaboration and license agreements typically involve us granting licenses of our intellectual property and performing research and development services in exchange of upfront fees, milestone payments and royalty payments.

Since December 31,

2019, there have been no material changes to the key terms of our collaboration or license agreements.

For further information on the terms and conditions of our existing collaboration and license agreements, please see the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Collaboration revenue

We recognize revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services .

In determining the appropriate amount of revenue to be recognized, we performed the following steps:

(i) identified the promised goods or services in the contract;

(ii) determined whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;

(iii) measured the transaction price, including the constraint on variable consideration;

(iv) allocated the transaction price to the performance obligations;

and (v) recognized revenue when (or as) we satisfied each performance obligation.

Royalty revenue

For arrangements that include sales-based royalties and sales-based milestones and in which the license is deemed to be the predominant item to which the royalties relate, we recognize royalty revenue upon the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Milestone revenue

At each reporting period we evaluate whether milestones are considered probable of being reached and, to the extent that a significant reversal would not occur in future periods, estimate the amount to be included in the transaction price using the most likely amount method.

Milestone payments that are not within our control, such as regulatory approvals, are considered constrained and are excluded from the transaction price until those approvals are received.

Celgene Corporation

We have entered into the following collaboration agreements, or collectively, the Collaboration Agreements, with Celgene, a wholly owned subsidiary of BMS, which is a related party through ownership of our common stock:

• In April 2010, we entered into a discovery and development collaboration and license agreement focused on cancer metabolism, or the 2010 Agreement, which was amended in October 2011 and July 2014.

The discovery phase of the 2010 Agreement expired in April 2016.

On August 15, 2016, we terminated the 2010 Agreement as to the program directed to the isocitrate dehydrogenase 1, or IDH1, target, for which ivosidenib was the lead development candidate.

Accordingly, the sole program remaining under the 2010 Agreement is IDHIFA® (enasidenib), a co-commercialized licensed program for which Celgene leads and funds global development and commercialization activities.

Under the 2010 Agreement, we remain eligible to receive a $ 25.0 million potential milestone payment for the enasidenib program upon achievement of a specified ex-U.S.

commercial milestone event, as well as reimbursement for costs incurred for our co-commercialization efforts and development activities.

• In April 2015, we entered into a joint worldwide development and profit share collaboration and license agreement with Celgene, and our wholly owned subsidiary, Agios International Sarl, entered into a collaboration and license agreement with Celgene International II Sarl, or collectively, the AG-881 Agreements, to establish a worldwide collaboration focused on the development and commercialization of vorasidenib products.

Under the AG-881 Agreements, we and Celgene split all worldwide development costs for vorasidenib, subject to specified exceptions.

The AG-881 Agreements were terminated effective September 4, 2018, upon which we received sole global rights to vorasidenib.

In connection with the termination of the AG-881 Agreements, Celgene will be eligible to receive royalties from us at a low single-digit percentage rate on worldwide net sales of products containing vorasidenib.

• In May 2016, we entered into a master research and collaboration agreement with Celgene, or the 2016 Agreement, focused on metabolic immuno-oncology, or MIO, a developing field which aims to modulate the activity of relevant immune cells by targeting critical metabolic nodes, thereby enhancing the immune mediated anti-tumor response.

The initial four-year research term of the 2016 Agreement ended May 2020.

On March 25, 2020 Celgene declined the option to extend the research agreement for up to two , or in specified cases, up to four additional one-year terms which would have required the payment of a $ 40.0 million extension fee.

Further, on April 10, 2020 Celgene notified us that they will be declining to elect any program as a continuation program under the 2016 agreement.

Celgene had designated AG-270, our inhibitor of methionine adenosyltransferase 2a, or MAT2A, as a development candidate under the 2016 Agreement.

On March 25, 2020, Celgene notified us of their decision to decline their option to enter into a Development & Commercialization Agreement with respect to the MAT2A program under the 2016 Agreement which

would have required the payment of a $ 30.0 million fee.

As a result of the decisions, the research services were fully satisfied as of May 17, 2020, no additional performance obligations remain under the 2016 Agreement and we are no longer eligible for any milestone payments for the 2016 Agreement.

Collaboration revenue

During the three and nine months ended September 30, 2020 and 2019, we recognized the following collaboration revenue:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

Services performed that were considered performance obligations as of the modification dates

On-going research and development services $ 199 $ 4,695 $ 64,133 $ 29,915

Services performed that were not considered performance obligations as of the modification dates

Commercialization activities 1,007 821 2,905 2,499

Total collaboration revenue - related party $ 1,206 $ 5,516 $ 67,038 $ 32,414

The following table presents changes in our contract assets and liabilities during the nine months ended September 30, 2020:

(In thousands) December 31,

2019 Additions Deductions September 30,

Contract assets

Collaboration receivable – related party (1)

$ 1,539 $ 4,228 $ ( 4,693 ) $ 1,074

Unbilled receivable - related party (2)

— 1,606 ( 346 ) 1,260

Royalty receivable – related party (3)

2,900 5,015 ( 7,915 ) —

Contract liabilities

Deferred revenue – related party, current and net of current portions (4)

61,513 2,421 ( 63,934 ) —

(1) Additions to collaboration receivables - related party relate to amounts billed to Celgene for reimbursable costs incurred by us during the reporting period.

Deductions to receivables relate to collection of receivables during the reporting period.

(2) Unbilled receivables - related party amounts relate to future reimbursable costs to Celgene.

(3) Additions to royalty receivables - related party relate to amounts billed to Celgene during the reporting period.

Deductions to receivables relate to collection of receivables during the reporting period.

(4) Additions to deferred revenue - related party relate to consideration from Celgene during the reporting period.

Deductions relate to deferred revenue recognized as revenue during the reporting period.

The change in collaboration revenue from on-going research and development services during the three and nine months ended September 30, 2020 is primarily due to our updated estimate of the future costs that would be incurred from on-going research and development services to complete one of our performance obligations under the 2016 Agreement that is recognized over time using an input method, due to Celgene’s decision to decline extending the research term in the first quarter of 2020.

During the three and nine months ended September 30, 2020 and 2019, we recognized the following as revenue due to changes in the contract liability balances:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

Amounts included in the contract liability at the beginning of the period $ — $ 4,404 $ 61,513 $ 28,823

Performance obligations satisfied in previous periods — — — —

As of September 30, 2020, the aggregate amount of the transaction price allocated to performance obligations that are partially unsatisfied was $ 4.5 million.

This amount is expected to be recognized as performance obligations are satisfied through September 2023.

Royalty revenue

As the underlying performance obligation, or delivery of the enasidenib license, had been satisfied as of June 2014, royalty revenue is recognized as the related sales occur.

During the three and nine months ended September 30, 2020 and 2019, we recognized the following as royalty revenue:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

Royalty revenue – related party $ 683 $ 2,666 $ 7,356 $ 7,569

For further discussion of the sale of future revenue, refer to Note 10, Sale of Future Revenue .

Milestone revenue

No milestones were achieved during the three and nine months ended September 30, 2020 or 2019.

The next potential milestone expected to be achieved under the remaining terms of our Collaboration Agreements is the achievement of a specified ex-U.S.

commercial milestone event, which would result in a milestone payment of $ 25.0 million under the 2010 Agreement.

CStone Pharmaceuticals

In June 2018, we and CStone Pharmaceuticals, or CStone, entered into an exclusive license agreement, or the CStone Agreement, to grant CStone specified intellectual property licenses to enable CStone to develop and commercialize certain products containing ivosidenib in mainland China, Hong Kong, Macau and Taiwan, or the CStone Territory.

We retain development and commercialization rights for the rest of the world.

On March 2, 2020, we amended the CStone Agreement to include Singapore as part of the CStone Territory.

Pursuant to the CStone Agreement, CStone will initially be responsible for the development and commercialization of ivosidenib in acute myeloid leukemia, or AML, cholangiocarcinoma, and, at our discretion, brain cancer indications.

CStone is responsible for all costs it incurs in developing, obtaining regulatory approval of, and commercializing ivosidenib in the CStone Territory, as well as certain costs incurred by us.

Pursuant to the CStone Agreement, we received an initial upfront payment in the amount of $ 12.0 million and are entitled to receive up to an additional $ 407.0 million in milestone payments upon the achievement of certain development, regulatory and sales milestone events.

We will also be entitled to receive tiered royalties, ranging from 15 % to 19 % percent, on annual net sales, if any, of ivosidenib in the CStone Territory.

Collaboration revenue

During the three and nine months ended September 30, 2020 and 2019, we recognized the following collaboration revenue -other:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2020 2019 2020 2019

Services performed that were considered performance obligations as of the inception date

License and other services $ — $ ( 103 ) $ 192 $ ( 103 )

Services performed that were not considered performance obligations as of the inception date

Other services 1,101 523 2,594 2,305

Total collaboration revenue - other $ 1,101 $ 420 $ 2,786 $ 2,202

The following table presents changes in our contract assets during the nine months ended September 30, 2020:

(In thousands) December 31,

2019 Additions Deductions September 30,

Contract assets (1)

Collaboration receivable - other $ 1,928 $ 2,786 $ ( 2,722 ) $ 1,992

(1) Additions to contract assets relate to amounts receivable from CStone.

Deductions to contract assets relate to collection of receivables during the reporting period.

As of September 30, 2020, the aggregate amount of the transaction price allocated to performance obligations that are partially unsatisfied was $ 0.5 million.

Royalty revenue

The license was determined to be the predominant item to which sales-based royalties and sales-based milestones relate.

As the license was delivered in June 2018, we will recognize royalty revenue when the related sales occur.

To date, no royalties have been received under the CStone Agreement.

Milestone revenue

No milestones were earned during the three and nine months ended September 30, 2020 and 2019.

The next potential milestone expected to be achieved under the CStone Agreement is the dosing of the first patient in a local study in a solid tumor indication in mainland China.

Achievement of this event will result in a milestone payment of $ 5.0 million.

Sale of Future Revenue

The gross proceeds of $ 255.0 million approximate the fair value of the liability related to the sale of future revenue based on a discounted cash flow model.

The fair value for the liability related to the sale of future revenue at the time of the transaction was based on our current estimates of future royalties expected to be paid to RPI over the remaining patent life of the product, which are considered level 3 inputs.

Under the terms of the Purchase Agreement, although we sold all of our rights to receive royalties on worldwide net sales of IDHIFA® and future regulatory milestone payments, we continue to co-promote IDHIFA® and are therefore involved in the generation of these royalties.

Due to our continuing involvement, we will continue to account for any royalties earned as revenue.

We recorded the net proceeds from this transaction as a liability related to sale of future revenue, or Royalty Obligation, that will be amortized using the effective interest method over the remaining patent life.

As royalties are remitted to RPI from BMS, the balance of the Royalty Obligation will be effectively repaid over the life of the BMS license agreement.

In order to determine the amortization of the Royalty Obligation, we are required to estimate the total amount of future royalty payments to RPI over the life of the BMS license agreement.

The $ 255.0 million recorded will be accreted to the total of these royalty payments as interest expense over the life of the Royalty Obligation.

At execution, our estimate of this total interest expense resulted in an effective annual interest rate of approximately 16.4 %.

This estimate contains significant assumptions that impact both the amount recorded at execution and the interest expense that will be recognized over the royalty period.

We will periodically assess the estimated royalty payments to RPI from BMS and to the extent the amount or timing of such payments is materially different than the original estimates, an adjustment will be recorded prospectively to increase or decrease interest expense.

There are a number of factors that could materially affect the amount and timing of royalty payments to RPI from BMS, and correspondingly, the amount of interest expense recorded by us, most of which are not within our control.

Such factors include, but are not limited to, delays or discontinuation of development of enasidenib, regulatory approval, changing standards of care, the introduction of competing products, manufacturing or other delays, generic competition, intellectual property matters, adverse events that result in governmental health authority imposed restrictions on the use of the drug products, significant changes in foreign exchange rates as the royalties remitted to RPI are made in U.S.

dollars (USD) while the underlying sales of enasidenib will be made in currencies other than USD, and other events or circumstances that are not currently foreseen.

Changes to any of these factors could result in increases or decreases to both royalty revenues and interest expense.

The following table shows the activity of the Royalty Obligation since the transaction inception through September 30, 2020:

(in thousands) September 30, 2020

Proceeds from the sale of future revenue $ 255,000

Issuance costs ( 4,463 )

Non-cash royalty related to the sale of future revenue

Non-cash interest expense associated with the sale of future revenue 11,818

Amortization of issuance costs 107

Liability related to the sale of future revenue

During the three and nine months ended September 30, 2020, $ 2.7 million and $ 4.3 million of non-cash royalty revenue from net sales of IDHIFA® were recognized, respectively .

Share-Based Payments

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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 stock units, or PSUs, and other stock-based awards to employees, non-employees and non-employee directors.

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 September 30, 2020, the total number of shares reserved under the 2007 Plan and the 2013 Plan was 10,680,089 , and we had 2,919,442 shares available for future issuance under the 2013 Plan.

As of March 31, 2021, the total number of shares reserved under the 2007 Plan and the 2013 Plan was 12,082,101 , and we had 4,382,070 shares available for future issuance under the 2013 Plan.

Stock options

The following table presents stock option activity for the nine months ended September 30, 2020:

The following table presents stock option activity for the three months ended March 31, 2021:

Stock Options Weighted-Average

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Forfeited/Expired ( 711,343 ) 56.04

Outstanding at September 30, 2020 6,370,245 $ 58.85

Exercisable at September 30, 2020 4,067,553 $ 61.23

Vested and expected to vest at September 30, 2020 6,370,245 $ 58.85

At September 30, 2020, there was approximately $ 77.4 million of total unrecognized compensation expense related to unvested stock option awards, which we expect to recognize over a weighted-average period of approximately 2.4 years.

Outstanding at March 31, 2021 6,181,953 $ 58.76

Exercisable at March 31, 2021 4,050,765 $ 61.02

Vested and expected to vest at March 31, 2021 6,181,953 $ 58.76

At March 31, 2021, there was approximately $ 67.9 million of total unrecognized compensation expense related to unvested stock option awards, which we expect to recognize over a weighted-average period of approximately 2.7 years.

Restricted stock units

The following table presents RSU activity for the nine months ended September 30, 2020:

The following table presents RSU activity for the three months ended March 31, 2021:

Stock Units Weighted-Average

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Forfeited ( 386,136 ) 52.15

Unvested shares at September 30, 2020 1,205,478 $ 53.77

As of September 30, 2020, there was approximately $ 41.7 million of total unrecognized compensation expense related to RSUs, which we expect to recognize over a weighted-average period of approximately 1.9 years.

Unvested shares at March 31, 2021 1,263,094 $ 51.34

As of March 31, 2021, there was approximately $ 54.6 million of total unrecognized compensation expense related to RSUs, which we expect to recognize over a weighted-average period of approximately 2.2 years.

Performance-based stock units

The following table presents PSU activity for the nine months ended September 30, 2020:

The following table presents PSU activity for the three months ended March 31, 2021:

Stock Units Weighted-Average

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Granted 121,000 56.68

Vested ( 78,920 ) 54.82

Forfeited ( 10,850 ) 61.93

Unvested shares at September 30, 2020 142,229 $ 54.28

Unvested shares at March 31, 2021 252,379 $ 55.10

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 September 30, 2020, there was no unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered probable of achievement, and $ 5.9 million of total unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered not probable of achievement.

As of March 31, 2021, there was no unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered probable of achievement, and $ 13.9 million of total unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered not probable of achievement.

Market-based stock units

The following table presents market-based stock unit, or MSU, activity for the nine months ended September 30, 2020:

The following table presents market-based stock unit, or MSU, activity for the three months ended March 31, 2021:

Stock Units Weighted-Average

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Unvested shares at December 31, 2020 42,695 $ 41.50

Unvested shares at September 30, 2020 42,695 $ 41.50

Unvested shares at March 31, 2021 42,695 $ 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 September 30, 2020, there was no remaining unrecognized compensation expense related to MSUs.

As of March 31, 2021, there was no remaining unrecognized compensation expense related to MSUs.

2013 Employee Stock Purchase Plan

In June 2013, our Board of Directors adopted, and in July 2013 our stockholders approved, the 2013 Employee Stock Purchase Plan, or the 2013 ESPP.

We issued and sold 120,293 and 77,981 shares of common stock during the nine months ended September 30, 2020 and 2019, respectively, under the 2013 ESPP.

We issued and sold 59,401 and 62,694 shares of common stock during the three months ended March 31, 2021 and 2020, respectively, under the 2013 ESPP.

The 2013 ESPP provides participating employees with the opportunity to purchase up to an aggregate of 1,345,454 shares of our common stock.

As of September 30, 2020, we had 471,353 shares of common stock available for future issuance under the 2013 ESPP.

As of March 31, 2021, we had 921,043 shares of common stock available for future issuance under the 2013 ESPP.

Stock-based compensation expense

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Three Months Ended

September 30, Nine Months Ended

September 30,

(In thousands) 2021 2020

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Three Months Ended

September 30, Nine Months Ended

September 30,

(In thousands) 2021 2020

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Diluted net loss per share is calculated by adjusting the weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury stock method.

be common stock equivalents, while PSUs and MSUs with performance and market vesting conditions, respectively, that were not deemed probable as of September 30, 2020 are not considered to be common stock equivalents.

Since we had a net loss for all periods presented, the effect of all potentially dilutive securities is anti-dilutive.

Accordingly, basic and diluted net loss per share was the same for all periods presented.

For purposes of the dilutive net loss per share calculation, stock options, RSUs, PSUs and MSUs for which the performance and market vesting conditions, respectively, have been deemed probable, and 2013 ESPP shares are considered to be common stock equivalents, while PSUs and MSUs with performance and market vesting conditions, respectively, that were not deemed probable as of March 31, 2021 are not considered to be common stock equivalents.

We utilize the control number concept in the computation of diluted earnings per share to determine whether potential common stock equivalents are dilutive.

The control number used is loss from continuing operations.

The control number concept requires that the same number of potentially dilutive securities applied in computing diluted earnings per share from continuing operations be applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories.

Since we had a net loss for continuing operations for all periods presented, no dilutive effect has been recognized in the calculation of income from discontinued operations per share.

Basic and diluted net loss per share was the same for all periods presented.

The following common stock equivalents were excluded from the calculation of diluted net loss per share applicable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

Three and Nine Months Ended September 30,

Three Months Ended March 31,

Stock options 6,181,953 6,749,373

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Total common stock equivalents 7,452,431 8,132,598

We recorded a provision for income taxes of $ 12.9 million for the three months ended March 31, 2021 and no income tax provision for the three months ended March 31, 2020.

The tax provision has been recorded within discontinued operations as it

relates to the income tax impact on the sale of its oncology business to Servier.

There is no income tax expense recorded in continuing operations for the three months ended March 31, 2021 and 2020, respectively.

Subsequent Events

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements