AGIOS PHARMACEUTICALS, INC. 10-Q

Item 1. Financial Statements (Unaudited) AGIOS PHARMACEUTICALS, INC. Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except share and per share data) March 31, 2021 December 31, 2020 Assets Current assets: Cash and cash equivalents $ 1,888,025 $ 127,436 Marketable securities 447,578 445,493 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 Marketable securities 21,598 97,608 Operating lease assets 82,244 84,661 Property and equipment, net 28,976 30,815 Financing lease assets 502 590 Non-current assets of discontinued operations — 2,601 Total assets $ 2,488,434 $ 852,952 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 51,224 $ 17,724 Accrued expenses 23,601 30,801 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 Operating lease liabilities, net of current portion 95,052 97,458 Financing lease liabilities, net of current portion 248 331 Non-current liabilities of discontinued operations — 261,269 Total liabilities 191,804 453,452 Stockholders’ equity: Preferred stock, $ 0.001 par value; 25,000,000 shares authorized; no shares issued or outstanding at March 31, 2021 and December 31, 2020 — — Common stock, $ 0.001 par value; 125,000,000 shares authorized; 69,812,205 and 69,293,920 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively 70 69 Additional paid-in capital 2,265,713 2,242,801 Accumulated other comprehensive (loss) income ( 3 ) 105 Retained earnings (Accumulated deficit) 30,850 ( 1,843,475 ) Total stockholders’ equity 2,296,630 399,500 Total liabilities and stockholders’ equity $ 2,488,434 $ 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 March 31, (In thousands, except share and per share data) 2021 2020 Cost and expenses: Research and development $ 57,667 $ 55,358 Selling, general and administrative 33,550 31,672 Total cost and expenses 91,217 87,030 Loss from operations ( 91,217 ) ( 87,030 ) Interest income, net 340 2,936 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. 2 Table of Contents AGIOS PHARMACEUTICALS, INC. Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three Months Ended March 31, (In thousands) 2021 2020 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. 3 Table of Contents AGIOS PHARMACEUTICALS, INC. Condensed Consolidated Statements of Stockholders' Equity (Unaudited) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Stockholders’ Equity (in thousands, except share amounts) Shares Amount Balance at December 31, 2020 69,293,920 $ 69 $ 2,242,801 $ 105 $ ( 1,843,475 ) $ 399,500 Common stock issued under stock incentive plan and ESPP 518,285 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, 2021 69,812,205 $ 70 $ 2,265,713 $ ( 3 ) $ 30,850 $ 2,296,630 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Stockholders’ Equity (in thousands, except share amounts) Shares Amount Balance at December 31, 2019 68,401,105 $ 68 $ 2,156,363 $ 202 $ ( 1,516,105 ) $ 640,528 Common stock issued under stock incentive plan and ESPP 388,820 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, 2020 68,789,925 $ 69 $ 2,181,517 $ 74 $ ( 1,556,361 ) $ 625,299 See accompanying Notes to Condensed Consolidated Financial Statements. 4 Table of Contents AGIOS PHARMACEUTICALS, INC. Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, (In thousands) 2021 2020 Operating activities Net income (loss) $ 1,874,325 $ ( 40,256 ) Less: 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 amortization of premium (accretion of discount) on marketable securities 1,664 126 Non-cash operating lease expense 2,417 2,203 Changes in operating assets and liabilities: Prepaid expenses and other current and non-current assets ( 3,621 ) ( 1,076 ) Accounts payable ( 2,941 ) ( 883 ) 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 ) Investing activities Purchases of marketable securities ( 61,863 ) ( 54,911 ) Proceeds from maturities and sales of marketable securities 134,016 167,501 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 Financing activities Payments on financing lease obligations ( 86 ) ( 80 ) Net proceeds from stock option exercises and employee stock purchase plan 7,347 5,465 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 Net change in cash and cash equivalents 1,760,589 8,162 Cash and cash equivalents at beginning of the period 127,436 80,931 Cash and cash equivalents at end of the period $ 1,888,025 $ 89,093 Supplemental disclosure of non-cash investing and financing transactions Additions to property and equipment in accounts payable and accrued expenses $ 6 $ 5,444 Operating lease liabilities arising from obtaining operating lease assets $ — $ — See accompanying Notes to Condensed Consolidated Financial Statements. 5 Table of Contents 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, 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 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. 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 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 6 Table of Contents 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 sales, 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 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. 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. 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 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. 7 Table of Contents 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 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 Assets 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 Liabilities 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 8 Table of Contents 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 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 Liabilities 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 Less: transaction and insurance costs ( 53,573 ) Less: 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 9 Table of Contents The following table presents the financial results of the discontinued operations: Three Months Ended March 31, (in thousands) 2021 2020 Revenues: 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. 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. 10 Table of Contents 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 Cash equivalents $ 55,058 $ — $ — $ 55,058 Total cash equivalents 55,058 — — 55,058 Marketable securities: U.S. Treasuries — 121,759 — 121,759 Government securities — 101,285 — 101,285 Corporate debt securities — 246,132 — 246,132 Total marketable securities — 469,176 — 469,176 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 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 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. 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 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. 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 months ended March 31, 2021 or 2020. Marketable securities at March 31, 2021 consisted of the following: (In thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Current: U.S. Treasuries $ 111,508 $ 34 $ ( 7 ) $ 111,535 Government securities 96,481 19 — 96,500 Corporate debt securities 239,590 34 ( 81 ) 239,543 Total Current 447,579 87 ( 88 ) 447,578 Non-current: U.S. Treasuries 10,227 — ( 3 ) 10,224 Government securities 4,779 6 — 4,785 Corporate debt securities 6,594 — ( 5 ) 6,589 Total Non-current 21,600 6 ( 8 ) 21,598 Total marketable securities $ 469,179 $ 93 $ ( 96 ) $ 469,176 11 Table of Contents 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 securities 108,263 37 ( 8 ) 108,292 Corporate debt securities 223,461 140 ( 72 ) 223,529 Total Current 445,283 311 ( 101 ) 445,493 Non-current: U.S. Treasuries 15,147 — ( 10 ) 15,137 Government securities 26,831 8 — 26,839 Corporate debt securities 55,735 2 ( 105 ) 55,632 Total Non-current 97,713 10 ( 115 ) 97,608 Total marketable securities $ 542,996 $ 321 $ ( 216 ) $ 543,101 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. 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 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. 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. The components of lease expense and other information related to leases were as follows: Three Months Ended March 31, (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. 12 Table of Contents 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) Remaining 2021 $ 9,640 2022 16,773 2023 18,126 2024 18,660 2025 19,507 Thereafter 44,385 Undiscounted minimum rental commitments $ 127,091 Interest ( 24,051 ) Operating lease liabilities $ 103,040 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. 7. Accrued Expenses Accrued expenses consist of the following: (In thousands) March 31, 2021 December 31, 2020 Accrued compensation $ 7,348 $ 20,345 Accrued research and development costs 5,335 5,444 Accrued professional fees 2,486 2,897 Accrued other 8,432 2,115 Total accrued expenses $ 23,601 $ 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 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 three months ended March 31, 2021: Number of Stock Options Weighted-Average Exercise Price Outstanding at December 31, 2020 6,143,046 $ 58.46 Granted 872,672 56.17 Exercised ( 122,422 ) 41.06 Forfeited/Expired ( 711,343 ) 56.04 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 13 Table of Contents 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 three months ended March 31, 2021: Number of Stock Units Weighted-Average Grant Date Fair Value Unvested shares at December 31, 2020 1,284,378 $ 50.78 Granted 701,314 56.08 Vested ( 336,462 ) 58.16 Forfeited ( 386,136 ) 52.15 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 three months ended March 31, 2021: Number of Stock Units Weighted-Average Grant Date Fair Value Unvested shares at December 31, 2020 142,229 $ 54.28 Granted 121,000 56.68 Vested — — Forfeited ( 10,850 ) 61.93 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 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 three months ended March 31, 2021: Number of Stock Units Weighted-Average Grant Date Fair Value Unvested shares at December 31, 2020 42,695 $ 41.50 Granted — — 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 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 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 March 31, 2021, we had 921,043 shares of common stock available for future issuance under the 2013 ESPP. 14 Table of Contents Stock-based compensation expense Stock-based compensation expense by award type included within the condensed consolidated statements of operations is as follows: Three Months Ended March 31, (In thousands) 2021 2020 Stock options $ 8,396 $ 9,309 Restricted stock units 6,205 4,459 Performance-based stock units — 1,335 Employee stock purchase plan 253 297 Other stock awards — 270 Total stock-based compensation expense $ 14,854 $ 15,670 Expenses related to stock options and stock-based awards were allocated as follows in the condensed consolidated statements of operations: Three Months Ended March 31, (In thousands) 2021 2020 Research and development expense $ 6,973 $ 6,999 Selling, general and administrative expense 7,881 8,671 Total stock-based compensation expense $ 14,854 $ 15,670 9. Loss per Share Basic net loss per share is calculated by dividing net loss by the weighted-average shares outstanding during the period, without consideration for common stock equivalents. 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. 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 Months Ended March 31, 2021 2020 Stock options 6,181,953 6,749,373 Restricted stock units 1,263,094 1,290,875 Performance-based stock units — 78,920 Employee stock purchase plan shares 7,384 13,430 Total common stock equivalents 7,452,431 8,132,598 10. Income Taxes 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 15 Table of Contents 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. 11. 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. 16 Table of Contents