AGIOS PHARMACEUTICALS, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-looking Information The following discussion of our financial condition and results of operations should be read with our unaudited condensed consolidated financial statements as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020, and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 25, 2021. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates, forecasts and projections, and the beliefs and assumptions of our management, and include, without limitation, statements with respect to our expectations regarding our research, development and commercialization plans and prospects, results of operations, selling, general and administrative expenses, research and development expenses, the sufficiency of our cash for future operations and business activity disruption due to the COVID-19 pandemic. Words such as “anticipate,” “believe,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “predict,” “project,” “strategy,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “vision” and similar statements or variation of these terms or the negative of those terms and similar expressions are intended to identify these forward-looking statements. Readers are cautioned that these forward-looking statements are predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by our forward-looking statements are those discussed under the heading “Risk Factors” in Part II, Item 1A and elsewhere in this report, and in our Annual Report on Form 10-K for the year ended December 31, 2020. We undertake no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law. Overview We are a biopharmaceutical company committed to transforming patients’ lives through scientific leadership in the field of cellular metabolism and adjacent areas of biology, with the goal of creating differentiated, small molecule medicines for genetically defined diseases, or GDDs. To address our focus areas, we take a systems biology approach to deeply understand disease states, drive the discovery and validation of novel therapeutic targets, and define patient selection strategies, thereby increasing the probability that our experimental medicines will have the desired therapeutic effect. Sale of our Oncology Business to Servier On March 31, 2021, we completed the sale of our oncology business to Servier Pharmaceuticals LLC, or Servier. The transaction included the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs for a payment of approximately $1.8 billion in cash at the closing, subject to certain adjustments, and a payment of $200 million in cash, if, prior to January 1, 2027, vorasidenib is granted new drug application, or NDA, approval from the U.S. Food and Drug Administration, or FDA, with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an isocitrate dehydrogenase 1 or 2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval), as well as a royalty of 5% of U.S. net sales of TIBSOVO® from the close of the transaction through loss of exclusivity, and a royalty of 15% of U.S. net sales of vorasidenib from the first commercial sale of vorasidenib through loss of exclusivity. Servier also acquired our co-commercialization rights for Bristol Myers Squibb’s IDHIFA® and the right to receive a $25.0 million potential milestone payment under our prior collaboration agreement with Celgene Corporation, and following the sale Servier will conduct certain clinical development activities within the IDHIFA® development program. The oncology business met the criteria within Accounting Standards Codification 205-20 to be reported as discontinued operations because the transaction was a strategic shift in business that had a major effect on our operations and financial results. Therefore, we have reported the historical results of the oncology business including the results of operations and cash flows as discontinued operations, and related assets and liabilities were retrospectively reclassified as assets and liabilities of discontinued operations for all periods presented herein. Unless otherwise noted, applicable amounts in the prior year have been recast to conform to this discontinued operations presentation. Refer to Note 3 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information. Unless otherwise indicated, the following information relates to our continuing operations following the sale to Servier. A more complete description of our business prior to the consummation of the transaction is included in Item 1. “Business”, in Part I of the Annual Report on Form 10-K for the year ended December 31, 2020 that was previously filed with the Securities and Exchange Commission, or SEC, on February 25, 2021. 19 Table of Contents GDDs Our primary focus in the GDD area relates to therapeutic categories where we believe we have differentiated expertise and demonstrated capabilities (e.g., -enzyme stabilizers, pyruvate kinase, phenylalanine hydroxylase). As a result, we expect the new therapies that we plan to advance through the discovery, development and commercialization stages to be in the areas of non-malignant hematology and inborn errors of metabolism, though our future efforts may not be limited to these categories. The lead product candidate in our GDD portfolio, mitapivat, targets pyruvate kinase-R, or PKR, for the treatment of pyruvate kinase, or PK, deficiency and other hemolytic anemias including thalassemia and sickle cell disease, or SCD. Mitapivat is an orally available small molecule and a potent activator of the wild-type (normal) and mutated PKR enzymes, which has resulted in restoration of adenosine triphosphate levels and a decrease in 2,3-diphosphoglycerate levels in blood sampled from patients with PK deficiency and treated ex-vivo with mitapivat. PK deficiency is a rare genetic disorder that often results in severe hemolytic anemia, jaundice and lifelong conditions associated with chronic anemia and secondary complications due to inherited mutations in the pyruvate kinase enzyme within red blood cells. We are currently developing mitapivat for the treatment of patients with PK deficiency, thalassemia and SCD in the following ongoing or planned pivotal clinical trials: Pyruvate Kinase Deficiency: • ACTIVATE-T, a single arm, global, pivotal trial of mitapivat in regularly-transfused patients with PK deficiency. This trial has completed enrollment and we are conducting an extension study for previously enrolled patients, which is designed to evaluate the long-term safety, tolerability and efficacy of treatment with mitapivat. • ACTIVATE, a 1:1 randomized, placebo-controlled, global, pivotal trial of mitapivat in patients with PK deficiency who do not receive regular transfusions. This trial has completed enrollment and we are conducting an extension study for previously enrolled patients, which is designed to evaluate the long-term safety, tolerability and efficacy of treatment with mitapivat. • Pivotal trials of mitapivat in pediatric PK deficiency, which we expect to initiate in 2022. Thalassemia: • ENERGIZE and ENERGIZE-T, phase 3 trials of mitapivat in not-regularly-transfused and regularly-transfused adults with thalassemia, have been initiated. SCD: • RISE UP, a phase 2/3 trial of mitapivat in patients with SCD, is expected to initiate by the end of 2021. We have worldwide development and commercial rights to mitapivat and expect to fund the future development and commercialization costs related to this program. The FDA and European Medicines Agency, or EMA, granted orphan drug designations for mitapivat for the treatment of patients with PK deficiency, and the FDA granted orphan drug designation for mitapivat for the treatment of patients with thalassemia and patients with SCD. In June 2021, we submitted an NDA for mitapivat to the FDA for the treatment of adults with PK deficiency in the United States and a marketing authorization application, or MAA, to the EMA for the treatment of adults with PK deficiency the European Union. Our NDA was accepted with priority review and granted a Prescription Drug User Fee Act, or PDUFA, action date of February 17, 2022. The MAA has passed validation, and both regulatory review processes are ongoing. We also expect to continue to grow our U.S. commercial infrastructure and evaluate all options to maximize the patient impact and value of mitapivat globally, including strategic transactions. We are also developing AG-946, a novel activator of both the PKR and PKM2 isoforms of pyruvate kinase, in an ongoing phase 1 trial which is currently enrolling healthy volunteers. PKR activation is specific to red blood cells and hemolytic anemias, while PKM2 activation occurs in other tissues which express this isoform, and is potentially important in a variety of disease indications. In addition to these development programs, we are seeking to advance a number of early-stage discovery programs for GDDs. Drug candidates for PK activation and other mechanisms, while primarily targeting GDD may also have utility in nongenetically defined disease, or non-GDD indications. Where differentiated, nonclinical proof of concept emerges for these non-GDD indications, appropriate partnership may be used to drive the best patient benefit. Critical Accounting Policies and Estimates Our critical accounting policies are those policies which require the most significant judgments and estimates in the preparation of our condensed consolidated financial statements. We have determined that our most critical accounting policies are those relating to accrued research and development expenses and stock-based compensation. Except those that have been disclosed in Note 2, Summary of Significant Accounting Policies, of the notes to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no significant changes to our existing critical accounting policies discussed in our Annual Report on Form 10-K for the year ended December 31, 2020. 20 Table of Contents Financial Operations Overview Impact of COVID-19 on our Business As of September 30, 2021, we have not experienced a significant financial or supply chain impact directly related to the COVID-19 pandemic but have experienced some disruptions to clinical operations, including timelines to complete patient enrollment in some of our clinical trials, as further described below. We are continuing to serve third parties while taking precautions to provide a safe work environment for our employees and third parties. Our lab-based employees who need to be onsite to fulfill their job responsibilities have been onsite since late May 2020, and we have opened our Cambridge office to employees who prefer to work onsite. Our field-based employees engage with healthcare providers and other third parties remotely and, where local regulations allow, on a limited in-person basis. We are conducting our return to work program under strict guidelines as required by federal, state, and local authorities. Effective November 8, 2021, we will require all employees, regardless of role or work location, to be fully vaccinated against COVID-19, as defined by the Center of Disease Control and Prevention's guidelines, subject to limited exceptions. We have been monitoring our supply chain network for disruptions due to the COVID-19 pandemic, and our third-party manufacturers remain largely unaffected, with any campaign delays experienced to date being limited to a few days in duration. Although global shipping continues to be disrupted due to the pandemic, we have not experienced a supply impact. The extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time. Future developments include changes in the duration, scope and severity of the pandemic, including any variant strains of the COVID-19 virus, the actions taken to contain or mitigate its impact, the impact on governmental programs and budgets, the supply, distribution and efficacy of vaccines, and the resumption of widespread economic activity. Any prolonged material disruption of our employees, suppliers, manufacturing, or third parties could negatively impact our consolidated financial position, consolidated results of operations and consolidated cash flows. As a result, we may have to take further actions that we determine are in the best interests of our employees or as required by federal, state, or local authorities. General Since inception, our operations have primarily focused on organizing and staffing our company, business planning, raising capital, assembling our core capabilities in cellular metabolism, identifying potential product candidates, undertaking preclinical studies, conducting clinical trials, establishing a commercial infrastructure and, prior to the sale of our oncology business to Servier on March 31, 2021, marketing our approved products. Through March 31, 2021, we have financed our operations primarily through proceeds from the sale of our royalty rights, commercial sales of TIBSOVO®, funding received from our collaboration agreements, private placements of our preferred stock, our initial public offering of our common stock and concurrent private placement of common stock to an affiliate of Celgene, and our follow-on public offerings. Following the sale of our oncology business to Servier on March 31, 2021, we expect to finance our operations primarily through cash on hand, royalty payments from Servier with respect to U.S. net sales of TIBSOVO®, the potential milestone payment from Servier if vorasidenib is approved by the FDA, and future potential sales of mitapivat if approved for marketing by regulatory authorities and successfully launched by us and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions. We have historically incurred operating losses. Our net income for the nine months ended September 30, 2021 was $1,699.3 million and our net loss for the nine months ended September 30, 2020 was $229.7 million. As of September 30, 2021, we had an accumulated deficit of $144.1 million. The net income we generated in the nine months ended September 30, 2021 was primarily due to the sale of our oncology business to Servier, which was consummated on March 31, 2021. Following the consummation of the sale of our oncology business, we expect to incur significant expenses and net losses until such time we are able to report profitable results. Our net losses may fluctuate significantly from year to year. We expect that we will continue to incur significant expenses as we continue to advance and expand clinical development activities for our lead programs: mitapivat, and AG-946; continue to discover and validate novel targets and drug product candidates; expand and protect our intellectual property portfolio; and hire additional commercial, development and scientific personnel. Research and development expenses Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect research and development costs related to our GDD portfolio to increase significantly for the foreseeable future as our product candidate development programs progress. However, the successful development of our product candidates is highly uncertain. As such, at this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the remainder of the development and to commercialize these product candidates. We are also unable to predict when future net cash inflows will commence from 21 Table of Contents mitapivat, AG-946 or any of our other product candidates. This is due to the numerous risks and uncertainties associated with developing medicines, including the uncertainty of: • establishing an appropriate safety profile with an investigational new drug application, or IND, and/or NDA-enabling toxicology and clinical trials; • the successful enrollment in, and completion of, clinical trials; • the receipt of marketing approvals from applicable regulatory authorities; • establishing compliant commercial manufacturing capabilities or making arrangements with third-party manufacturers; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates; • launching commercial sales of the products, if and when approved, whether alone or in collaboration with others; and • maintaining an acceptable safety profile of the products following approval. A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs and timing associated with the development of that product candidate. Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include: • employee-related expenses, including salaries, benefits and stock-based compensation expense; • expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research and development and both preclinical and clinical activities on our behalf, and the cost of consultants; • the cost of lab supplies and acquiring, developing and manufacturing preclinical and clinical study materials; and • facilities, depreciation, and other expenses, which include direct and allocated expenses for rent and the maintenance of facilities, insurance and other operating costs. The following summarizes the clinical development activities related to our most advanced programs. The timing of trial and site initiations, enrollment and data readouts may be impacted depending on the duration, scope and severity of the COVID-19 pandemic : Mitapivat: PK Activator • DRIVE PK, a global phase 2, first-in-patient, open-label safety and efficacy clinical trial of mitapivat in adult, transfusion-independent patients with PK deficiency. This trial has completed enrollment and we are conducting an extension study for previously enrolled patients, which is designed to evaluate the long-term safety, tolerability and efficacy of treatment with mitapivat. • ACTIVATE-T, a single arm, global, pivotal trial of mitapivat in regularly-transfused patients with PK deficiency. We reported in June 2021, in a full analysis of updated data, that this trial met its primary endpoint of a statistically significant and clinically meaningful reduction in transfusion burden and that improvements were also observed for certain patient reported outcomes. This trial has completed enrollment and we are conducting an extension study for previously enrolled patients, which is designed to evaluate the long-term safety, tolerability and efficacy of treatment with mitapivat. • ACTIVATE, a 1:1 randomized, placebo-controlled, global, pivotal trial of mitapivat in patients with PK deficiency who do not receive regular transfusions. We reported in June 2021, in a full analysis of updated data, that this trial met its primary endpoint of a statistically significant, sustained increase in hemoglobin compared to placebo. In addition, data from the trial demonstrated that treatment with mitapivat showed statistically significant improvement in key pre-specified secondary endpoints including patient reported outcomes This trial has completed enrollment and we are conducting an extension study for previously enrolled patients, which is designed to evaluate the long-term safety, tolerability and efficacy of treatment with mitapivat. • A phase 2, open-label safety and efficacy clinical trial of mitapivat in adult patients with non-transfusion-dependent α- and β-thalassemia. We reported in June 2021 that this trial met its primary endpoint of hemoglobin increase of greater than or equal to 1.0 gram per deciliter from baseline at one or more assessments during weeks 4-12 of the trial. The trial has completed enrollment and we are conducting an extension study for previously enrolled patients, which is designed to evaluate the long-term safety, tolerability and efficacy of treatment with mitapivat. • In collaboration with the National Institutes of Health, or NIH, we are evaluating mitapivat in a phase 1 trial in patients with SCD pursuant to a cooperative research and development agreement. Enrollment has been completed in the core trial period, and patients are enrolling in an ongoing long-term extension study. In June 2020, clinical proof of concept was established based on a preliminary analysis of the data from this trial. 22 Table of Contents • In collaboration with UMC Utrecht, or UMC, we are evaluating mitapivat in patients with SCD pursuant to an investigator sponsored trial agreement. The trial is ongoing and enrolling patients, although UMC experienced disruptions related to the COVID-19 pandemic. In the third quarter of 2021, we initiated two phase 3 trials of mitapivat, ENERGIZE and ENERGIZE-T, in not regularly transfused and regularly transfused adults with thalassemia. We expect to initiate RISE UP, a phase 2/3 trial of mitapivat in patients with SCD, by the end of 2021. We expect to initiate pivotal trials of mitapivat in pediatric PK deficiency in 2022. AG-946: Novel PK Activator • A phase 1 trial of AG-946 in healthy volunteers and in patients with SCD. The trial is currently enrolling healthy volunteers. Other research and platform programs Other research and platform programs include activities related to exploratory efforts, target validation and lead optimization for our discovery and follow-on programs, and our proprietary metabolomics platform. Selling, general and administrative expenses Selling, general and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, business development, commercial, legal and human resources functions. Other significant costs include facility-related costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters, and fees for accounting and consulting services. We anticipate that our selling, general and administrative expenses will increase in the future to support continued research and development activities and future commercialization activities related to our GDD portfolio, including the potential commercialization of our product candidates. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses. Results of Operations 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. Comparison of the three and nine months ended September 30, 2021 and 2020 Total Operating Expenses Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Cost and expenses: Research and development $ 64,000 $ 51,943 $ 183,674 $ 161,388 Selling, general and administrative 27,152 28,347 89,917 89,196 Total Operating Expenses $ 91,152 $ 80,290 $ 273,591 $ 250,584 Total Operating Expenses - Three Months ended September 30, 2021 vs. Three Months ended September 30, 2020 - The increase in total operating expenses of $10.9 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily due to an increase in research and development expenses of $12.1 million which is described below under Research and Development Expenses. Included in selling, general and administrative expenses is approximately $1.3 million of reimbursable transition related services we provided to Servier related to the sale of the oncology business. Total Operating Expenses - Nine Months ended September 30, 2021 vs. Nine Months ended September 30, 2020 - The increase in total operating expenses of $23.0 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily due to an increase in research and development expenses of $22.3 million which is described below under Research and Development Expenses. Included in selling, general and administrative expenses is approximately $3.4 million of reimbursable transition related services we provided to Servier related to the sale of the oncology business. 23 Table of Contents Research and Development Expenses Our research and development expenses, by major program, are outlined in the table below: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Mitapivat (PKR activator) $ 20,130 $ 10,634 $ 49,543 $ 31,410 AG-946 (Novel PK activator) 2,820 2,357 6,849 7,195 Other research and platform programs 6,109 3,522 14,684 9,478 Total direct research and development expenses 29,059 16,513 71,076 48,083 Compensation and related expenses 21,816 23,153 70,965 76,124 Facilities and IT related expenses & other 9,883 12,277 33,987 37,181 Other expenses - transition services 3,242 — 7,646 — Total indirect research and development expenses 34,941 35,430 112,598 113,305 Total research and development expense $ 64,000 $ 51,943 $ 183,674 $ 161,388 Total Research and Development Expenses - Three Months ended September 30, 2021 vs. Three Months ended September 30, 2020 - The increase in total research and development expenses of $12.1 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily due to a $9.5 million increase in mitapivat costs due to start up costs for the initiated phase 3 trials of mitapivat, ENERGIZE and ENERGIZE-T, and the planned phase 2/3 trial of mitapivat in patients with SCD, RISE UP, and launch preparation activities. The increase in other research and platform programs of $2.6 million was primarily driven by planned increased activity on various exploratory and discovery activities. Included in total indirect research and development expenses was $3.2 million of reimbursable transition related services we provided to Servier related to the sale of the oncology business for discovery, clinical development, technical operations, and commercial related activities which will continue for periods ranging from one month to approximately one year after March 31, 2021. Total Research and Development Expenses - Nine Months ended September 30, 2021 vs. Nine Months ended September 30, 2020 - The increase in total research and development expenses of $22.3 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily due to a $18.1 million increase in mitapivat costs due to start up costs for the initiated phase 3 trials of mitapivat, ENERGIZE and ENERGIZE-T, the planned phase 2/3 trial of mitapivat in patients with SCD, RISE UP, and filing and launch preparation activities which includes $0.5 million in filing fees. The increase in other research and platform programs of $5.2 million was primarily driven by planned increased activity on various exploratory and discovery activities. Included in total indirect research and development expenses was $7.6 million of reimbursable transition related services we provided to Servier related to the sale of the oncology business related to discovery, clinical development, technical operations, and commercial related activities which will continue for periods ranging from one month to approximately one year after March 31, 2021. Other Income and Expense Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Gain on sale of oncology business $ 1,996 $ — $ 3,996 $ — Interest income, net 256 1,115 504 5,820 Other income, net 4,641 — 11,165 — Other Income and Expense- Three Months ended September 30, 2021 vs. Three Months ended September 30, 2020 - The increase in other income, net primarily relates to approximately $4.5 million of reimbursable transition related services for the sale of the oncology business for the three months ended September 30, 2021. The increase in gain on sale of oncology business primarily relates to income from royalties on U.S. net sales of TIBSOVO® by Servier of approximately $2.0 million in the third quarter of 2021. The decrease in interest income, net is primarily attributable to a decrease in interest rates. Other Income and Expense- Nine Months ended September 30, 2021 vs. Nine Months ended September 30, 2020 - The increase in other income, net primarily relates to approximately $11.0 million of reimbursable transition related services and fees for the sale of the oncology business for the nine months ended September 30, 2021. The increase in gain on sale of oncology business 24 Table of Contents primarily relates to income from royalties on U.S. net sales of TIBSOVO® by Servier of approximately $4.0 million for the nine months ended September 30, 2021. The decrease in interest income, net is primarily attributable to a decrease in interest rates. Loss from Operations and Net (Loss) Income Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Net loss from continuing operations $ (84,259) $ (79,175) $ (257,926) $ (244,764) Net (loss) income from discontinued operations (4,507) (19,804) 1,957,268 15,051 Net (loss) income (88,766) (98,979) 1,699,342 (229,713) Loss from Operations and Net (Loss) Income – Three Months ended September 30, 2021 vs. Three Months ended September 30, 2020 – The increase in net loss from continuing operations for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily driven by the higher research and development expenses discussed above under Research and Development Expenses, partially offset by $4.5 million of reimbursable transition related services related to the sale of the oncology business and a $2.0 million gain on sale of oncology business related to income from royalties on U.S. net sales of TIBSOVO® by Servier, both occurring in the third quarter of 2021. The change in net loss from discontinued operations for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily driven by the sale of our oncology business to Servier in the first quarter of 2021, which significantly reduced revenues and expenses related to our oncology programs. The decrease in net (loss) income for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily driven by the increase in net loss from continuing operations discussed above, partially offset by a lower net loss from discontinued operations for the three months ended September 30, 2021 on the sale of the oncology business discussed above. Loss from Operations and Net (Loss) Income – Nine Months ended September 30, 2021 vs. Nine Months ended September 30, 2020 – The increase in loss from continuing operations for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily driven by the higher research and development expenses discussed above under Research and Development Expenses, partially offset by $11.0 million of reimbursable transition related services and fees related to the sale of the oncology business and a $4.0 million gain on sale of oncology business related to income from royalties on U.S. net sales of TIBSOVO® by Servier, both occurring in the nine months ended September 30, 2021. The change in net income from discontinued operations and net (loss) income for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily driven by the sale of our oncology business to Servier for approximately $1.8 billion in cash in the first quarter of 2021, which is included within net income from discontinued operations. Liquidity and Capital Resources Sources of liquidity Since our inception, and through September 30, 2021, we have funded our operations through proceeds from the sale of our oncology business, commercial sales of TIBSOVO®, upfront, milestone, extension, cost reimbursement and royalty payments related to our collaboration agreements, product sales, proceeds from the sale of our royalty rights, proceeds received from our issuance of preferred stock, our initial public offering and concurrent private placement of common stock to an affiliate of Celgene, and our follow-on public offerings. As of September 30, 2021, we had cash, cash equivalents and marketable securities of $1.4 billion. On March 25, 2021, we announced that our board of directors authorized the repurchase of up to $1.2 billion of our outstanding shares of common stock, or the Repurchase Program, using the proceeds from the sale of our oncology business to Servier. On March 31, 2021, in connection with the Repurchase Program, we entered into a definitive share repurchase agreement with Bristol-Myers Squibb Company, or BMS, to repurchase 7,121,658 shares of our common stock held by certain subsidiaries of BMS for an aggregate purchase price of $344.5 million, or $48.3785 per share. This repurchase was completed on April 5, 2021. Further, on April 2, 2021, in connection with the Repurchase Program, we entered into a Rule 10b5-1 repurchase plan pursuant to which we may repurchase up to $600 million of shares of our common stock. As of September 30, 2021, we have repurchased approximately 8.7 million shares of common stock for $438.9 million, or $50.57 per share, under the plan. On October 5, 2021, we terminated our Rule 10b5-1 share repurchase program and on October 13, 2021 entered into a Rule 10b-18 repurchase plan that allows us to conduct open market repurchases over time up to our remaining authorization under the Repurchase Program. We have paused our share repurchases and for the foreseeable future, we expect that our capital allocation will be prioritized towards 25 Table of Contents opportunities to accelerate programs in our development pipeline and/or pursue potential complementary business development opportunities. In addition to our existing cash, cash equivalents and marketable securities, under the purchase agreement we are eligible to receive a $200 million milestone payment upon regulatory approval of vorasidenib, and royalty payments with respect to U.S. net sales of TIBSOVO® and, if approved, vorasidenib. Our right to such payments from Servier is our only committed potential external source of funds. Whether the regulatory approval milestone for vorasidenib will be achieved is subject to various risks and uncertainties, many of which are outside our control, including adverse clinical developments with respect to vorasidenib. Furthermore, we cannot predict what success, if any, Servier may have in the United States with respect to sales of TIBSOVO® and, if approved, vorasidenib, and consequently we cannot estimate the amount of royalty payments that we can expect to receive from Servier under the purchase agreement prior to the loss of exclusivity of these products. Cash flows The following table provides information regarding our cash flows for the nine months ended September 30, 2021 and 2020: Nine Months Ended September 30, (In thousands) 2021 2020 Net cash used in operating activities $ (323,227) $ (241,362) Net cash provided by investing activities 1,343,197 4,350 Net cash (used in) provided by financing activities (747,182) 260,936 Net change in cash and cash equivalents $ 272,788 $ 23,924 Net cash used in operating activities. Cash used in operating activities of $323.2 million during the nine months ended September 30, 2021, of which $234.1 million was used by continuing operations and $89.1 million was used by discontinued operations, was primarily driven by research and development costs described above under Research and Development Expenses, offset by cash received of $39.5 million from sales of TIBSOVO®, and $1.2 million in cost reimbursements related to our collaboration agreements with Celgene. Cash used in operating activities of $241.4 million during the nine months ended September 30, 2020, of which $192.8 million was used by continuing operations and $48.6 million was used by discontinued operations, was primarily due to operating expenses driven by research and development costs described above in Research and Development Expenses and increased staffing needs due to our expanding operations, offset by cash received of $83.3 million from sales of TIBSOVO®, $12.6 million in royalty payments and cost reimbursements under our collaboration agreements with Celgene, $6.1 million in interest received, and $2.7 million in cost reimbursement related to our collaboration agreement with CStone Pharmaceuticals. Net cash provided by investing activities . Cash provided by investing activities of $1.3 billion for the nine months ended September 30, 2021, of which $459.7 million was used by continuing operations and $1.8 billion was provided by discontinued operations, was primarily due to the approximately $1.8 billion in cash proceeds received from the sale of our oncology business to Servier that was completed on March 31, 2021, partially offset by lower proceeds from maturities and sales of marketable securities than purchases of marketable securities. Cash provided by investing activities of $4.4 million for nine months ended September 30, 2020, of which approximately all was provided by continuing operations and $348.0 thousand was used by discontinued operations, was primarily the result of higher proceeds from maturities and sales of marketable securities than purchases of marketable securities, offset by $13.9 million in purchases of property and equipment. Net cash (used in) provided by financing activities . Cash used in financing activities of $747.2 million for the nine months ended September 30, 2021, of which all was provided by continuing operations and none was used by discontinued operations, was primarily the result of $783.4 million in common stock repurchases in the nine months ended September 30, 2021 under our Repurchase Program, partially offset by the $37.0 million of proceeds received from stock option exercises and purchases made pursuant to our 2013 ESPP. Cash provided by financing activities of $260.9 million for the nine months ended September 30, 2020, of which $10.4 million was provided by continuing operations and $250.5 million was provided by discontinued operations, was primarily the result of net proceeds of $250.5 million from the sale of our tiered, sales-based royalty rights on worldwide net sales of IDHIFA® (enasidenib) and our ex-US regulatory milestones to Royalty Pharma in June 2020 and $10.6 million of proceeds received from stock option exercises and purchases made pursuant to our 2013 ESPP. Funding requirements Although we expect our expenses to decrease following the completion of the sale of our oncology business to Servier on March 31, 2021, we anticipate that this decrease will be offset as we transition our operations to focus solely on GDDs, particularly as we continue the research, development and clinical trials of, seek marketing approvals for, and commercialize our product candidates. If we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. 26 Table of Contents We expect that our existing cash, cash equivalents and marketable securities as of September 30, 2021, will enable us to execute our operating plan through major catalysts and to cash-flow positivity without the need to raise additional equity. Our future capital requirements will depend on many factors, including: • the amount of contingent consideration we ultimately receive in connection with the sale of our oncology business to Servier; • the scope, progress, results and costs of drug discovery, preclinical development, laboratory testing and clinical trials for our product candidates; • the costs, timing and outcome of regulatory review of our product candidates; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • the costs and timing of future commercialization activities, including product manufacturing, sales, marketing and distribution, for any of our product candidates for which we may receive marketing approval; • the amount and timing of revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; • our ability to establish and maintain collaborations on favorable terms, if at all; • our ability to successfully execute on our strategic plans; • operational delays due to the ongoing COVID-19 pandemic; and • the extent to which we acquire or in-license, or monitor or out-license, other medicines and technologies. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs primarily through cash on hand, royalty payments from Servier with respect to U.S. net sales of TIBSOVO®, a potential milestone payment from Servier if vorasidenib is approved by the FDA and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions. In addition, in connection with potential future strategic transactions, we may pursue opportunistic debt offerings, and equity or equity-linked offerings. We do not have any committed external source of funds other than the potential milestone and royalty payments that we are eligible to receive under our purchase agreement with Servier. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed or on attractive terms, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Off-Balance Sheet Arrangements We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules. Contractual Obligations We have entered into agreements in the normal course of business with CROs for clinical trials and contract manufacturing organizations for supply manufacturing and with vendors for preclinical research studies and other services and products for operating purposes. These contractual obligations are cancelable at any time by us, generally upon prior written notice to the vendor. During the three and nine months ended September 30, 2021, there were no significant changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020.