What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-03 compared with 2022-08-04 · 117 added, 110 removed, 194 unchanged (54% of the section changed)

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Forward-looking Information

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021, 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, 2021 filed with the SEC on February 24, 2022.

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021, 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, 2021 filed with the SEC on February 24, 2022.

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.

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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.

We are a biopharmaceutical company committed to transforming patients’ lives through leadership in the field of cellular metabolism, with the goal of creating differentiated, small molecule medicines for genetically defined diseases, or GDDs.

With a history of focused study on cellular metabolism, we have a deep and mature understanding of this biology, which is involved in the healthy functioning of nearly every system in the body.

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On February 17, 2022, the U.S.

Food and Drug Administration, or FDA, approved PYRUKYND® for the treatment of hemolytic anemia in adults with pyruvate kinase (PK) deficiency in the United States.

In June 2021, we submitted a marketing authorization application, or MAA, to the European Medicines Agency, or EMA, for the treatment of adults with PK deficiency in the European Union.

The MAA has passed validation, and the regulatory review process is ongoing.

We expect a regulatory decision by the end of 2022.

Food and Drug Administration, or FDA, approved PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency in the United States.

In June 2021, we submitted a marketing authorization application, or MAA, to the European Medicines Agency, or EMA, for the treatment of adults with PK deficiency in the European Union, or EU.

In September 2022, the Committee for Medicinal Products for Human Use of the EMA, or CHMP, adopted a positive opinion recommending the granting of a marketing authorization for PYRUKYND®.

In October 2022, we submitted a marketing authorization application in Great Britain for PYRUKYND® under the European Commission Decision Reliance Procedure.

We expect to receive a decision from both the EU and Great Britain regulatory authorities by the end of 2022.

In addition, we are currently evaluating PYRUKYND® in clinical trials for the treatment of thalassemia, sickle cell disease, or SCD, and in pediatric patients with PK deficiency.

We are also developing AG-946, a novel, next-generation PK activator, for the potential treatment of hemolytic anemias and other indications.

In addition to the aforementioned development programs, we continue to prioritize investment in advancing our late lead-optimization research programs – a branched chain amino acid aminotransferase-2, or BCAT2, inhibitor, for the treatment of propionic and methylmalonic acidemia, or MMA, and a phenylalanine hydroxylate, or PAH, stabilizer, for the treatment of phenylketonuria, or PKU.

We are also developing AG-946, a novel PK activator, for the potential treatment of lower-risk myelodysplastic syndrome, hemolytic anemias and other indications.

In addition to the aforementioned development programs, we continue to prioritize investment in advancing our late lead-optimization research.

We believe this combination of assets represents an attractive portfolio of programs that aligns with our strategy and core expertise in non-malignant hematology and inborn errors of metabolism, and leaves room for continued growth of our pipeline.

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On March 31, 2021, we completed the sale of our oncology business to Servier Pharmaceuticals, LLC, or Servier, which represented a discontinued operation.

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 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.

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.

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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, or Celgene, and following the sale Servier will conduct certain clinical development activities within the IDHIFA® development program.

As discussed above in Note 12, Subsequent Eve nts , on October 27 2022, we sold our rights to the royalty on U.S.

net sales of TIBSOVO® to entities affiliated with Sagard Healthcare Partners, or Sagard, for $131.8 million.

We retained our rights to the potential milestone payment and royalties from Servier if vorasidenib is approved by the FDA.

Evolution of our Research Organization

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Impact of COVID-19 on our Business

As of June 30, 2022, 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, and we may in the future experience further such disruptions.

As of September 30, 2022, 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 and we may in the future experience further such disruptions.

In addition, we have experienced disruptions to certain clinical and research activities at our contract research organizations, or CROs, due to the recent COVID-19 surges.

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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 have financed and 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 and royalties from Servier if vorasidenib is approved by the FDA, the actual and potential sales of PYRUKYND® if successfully launched by us and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions.

Following the sale of our oncology business to Servier on March 31, 2021, we have financed and expect to continue to finance our operations primarily through cash on hand, royalty payments from Servier with respect to U.S.

net sales of TIBSOVO® prior to the sale of these royalty rights to Sagard, proceeds from the sale of our rights to the royalty on U.S.

net sales of TIBSOVO® to Sagard, a potential milestone payment and royalties from Servier if vorasidenib is approved by the FDA, the actual and potential future sales of PYRUKYND® and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions.

We have historically incurred operating losses.

Our net loss for the six months ended June 30, 2022 was $186.6 million and our net income for the six months ended June 30, 2021 was $1,788.1 million.

As of June 30, 2022, we had an accumulated deficit of $425.3 million.

The net income we generated in the six months ended June 30, 2021 was primarily due to the sale of our oncology business to Servier, which was consummated on March 31, 2021.

Our net loss for the nine months ended September 30, 2022 was $268.3 million and our net income for the nine months ended September 30, 2021 was $1,699.3 million.

As of September 30, 2022, we had an

accumulated deficit of $507.1 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.

We expect to incur significant expenses and net losses until such time we are able to report profitable results.

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PYRUKYND®, and AG-946;

continue to prioritize advancement of our late lead-optimization programs for PAH stabilization in PKU and for BCAT2 inhibition in propionic acidemia and MMA;

expand and protect our intellectual

property portfolio, including by in-licensing or acquiring assets for pipeline growth;

continue to prioritize advancement of our late lead-optimization research;

expand and protect our intellectual property portfolio, including by in-licensing or acquiring assets for pipeline growth;

and hire additional commercial and development personnel.

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Cost of sales consists primarily of manufacturing costs for sales of PYRUKYND®.

Based on our policy to expense costs associated with the manufacturing of our products prior to regulatory approval, certain of the manufacturing costs associated with product shipments of PYRUKYND® recorded during the three and six months ended June 30, 2022 were expensed prior to February 17, 2022, and, therefore, are not included in costs of sales during the three and six months ended June 30, 2022.

Based on our policy to expense costs associated with the manufacturing of our products prior to regulatory approval, certain of the manufacturing costs associated with product shipments of PYRUKYND® recorded during the three and nine months ended September 30, 2022 were expensed prior to February 17, 2022, and, therefore, are not included in costs of sales during the three and nine months ended September 30, 2022.

Research and development expenses

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In February 2022, the FDA approved PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency in the United States.

In June 2021 , we submitted an MAA to the EMA for the treatmen t of adults with PK deficiency the European Union.

The MAA has passed validation, and the regulatory review process is ongoing.

We expect a regulatory decision by the end of 2022.

In June 2021, we submitted an MAA to the EMA for the treatment of adults with PK deficiency in the EU.

In September 2022, the Committee for Medicinal Products for Human Use of the EMA, or CHMP, adopted a positive opinion recommending the granting of a marketing authorization for PYRUKYND®.

In October 2022, we submitted a marketing authorization application in Great Britain for PYRUKYND® under the European Commission Decision Reliance Procedure.

We expect to receive a decision on marketing authorization from both the EU and Great Britain regulatory authorities by the end of 2022.

We have worldwide development and commercial rights to PYRUKYND® and expect to fund the future development and commercialization costs related to this program.

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Additionally, PYRUKYND® has received orphan drug designation from the FDA for the treatment of thalassemia and SCD.

We have built our commercial infrastructure to support the commercial launch of PYRUKYND® in the United States and continue to evaluate all options for the commercialization and continued development of PYRUKYND® outside of the United States in order to maximize the benefit to patients and value to our shareholders, including through exploring potential partnership opportunities.

We have built our commercial infrastructure to support the commercial launch of PYRUKYND® in adult PK deficiency in the United States.

If approved, we are committed to providing patient access in the EU and Great Britain.

Our current plan is to provide access through a global managed access program, which provides a pathway for eligible adults receiving care in the EU and Great Britain who are diagnosed with PK deficiency to have access to PYRUKYND® free of charge.

Beyond the global managed access program, we continue to evaluate options for the commercialization of PYRUKYND® outside of the United States, including through exploring potential partnership opportunities.

We are evaluating PYRUKYND® in the following clinical trials:

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The phase 3 portion includes a 52-week randomized, placebo-controlled period in which participants will be randomized in a 2:1 ratio to receive the recommended PYRUKYND® dose level or placebo.

The primary endpoints are hemoglobin response, defined as ≥1 g/dL increase in average hemoglobin from baseline to Week 52, and annualized rate of sickle cell pain crises.

The primary endpoints are hemoglobin response, defined as ≥1 g/dL increase in average hemoglobin from baseline to Week 52, and annualized rate of sickle

cell pain crises.

Participants who complete either the phase 2 or phase 3 portion will have the option to move into a 216-week open-label extension period to continue to receive PYRUKYND®.

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Both trials are enrolling patients.

• An extension study evaluating the long-term safety, tolerability and efficacy of treatment with PYRUKYND® in patients from ACTIVATE and ACTIVATE-T, our completed pivotal trials of PYRUKYND® in not regularly transfused and regularly transfused patients with PK deficiency.

• An extension study evaluating the long-term safety, tolerability and efficacy of treatment with PYRUKYND® in patients from DRIVE PK, our completed global phase 2, first-in-patient, open-label safety and efficacy clinical trial of PYRUKYND® in adult, not regularly transfused patients with PK deficiency.

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The trial has completed enrollment and patient follow-up is ongoing, and a 2-year extension study has been activated for patients who complete the follow-up period.

Novel, Next-generation PK Activator

We are developing AG-946, a novel, next-generation PK activator, for the potential treatment of hemolytic anemias and other indications.

Novel PK Activator

We are developing AG-946, a novel PK activator, for the potential treatment of hemolytic anemias and other indications.

We are evaluating AG-946, in a phase 1 trial of AG-946 in healthy volunteers and in patients with SCD.

The trial has completed the healthy volunteer cohort, and we have initiated the SCD patient cohort of this trial.

We expect to initiate a phase 2a study of AG-946 in adults with L-IR MDS by year-end 2022.

Other research and platform programs

Other research and platform programs include our late lead-optimization research programs for PAH stabilization in PKU and for BCAT2 inhibition in propionic acidemia and MMA.

We initiated a phase 2a study of AG-946 in adults with lower-risk myelodysplastic syndrome, or MDS, in the third quarter of 2022.

In addition to the aforementioned development programs, we are advancing our late lead-optimization research.

Selling, general and administrative expenses

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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 six months ended June 30, 2022 and 2021

Three Months Ended June 30, Six Months Ended June 30,

Comparison of the three and nine months ended September 30, 2022 and 2021

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

(In thousands) 2022 2021 2022 2021

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Total revenue $ 3,516 $ — $ 9,930 $ —

Total Revenue - Three Months Ended June 30, 2022 vs.

Three Months Ended June 30, 2021 – The increase in total revenue of $5.6 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was due to product revenue associated with PYRUKYND®, which was approved in February 2022, and revenue recognized associated with the licensing of intellectual property for our Friedreich's Ataxia preclinical program.

Total Revenue - Six Months Ended June 30, 2022 vs.

Six Months Ended June 30, 2021 – The increase in total revenue of $6.4 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was due to product revenue associated with PYRUKYND®, which was approved in February 2022, and revenue recognized associated with the licensing of intellectual property for our Friedreich's Ataxia preclinical program.

Total Revenue - Three Months Ended September 30, 2022 vs.

Three Months Ended September 30, 2021 – The increase in total revenue of $3.5 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 was due to product revenue associated with PYRUKYND®, which was approved in February 2022.

Total Revenue - Nine Months Ended September 30, 2022 vs.

Nine Months Ended September 30, 2021 – The increase in total revenue of $9.9 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 was due to product revenue associated with PYRUKYND®, which was approved in February 2022, and revenue recognized associated with the licensing of intellectual property for our Friedreich's Ataxia preclinical program.

Total Operating Expenses

Three Months Ended June 30, Six Months Ended June 30,

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

(In thousands) 2022 2021 2022 2021

Cost and expenses:

Operating expenses:

Cost of sales $ 517 $ — $ 1,291 $ —

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Total operating expenses $ 94,606 $ 91,152 $ 299,805 $ 273,591

Total Operating Expenses - Three Months Ended June 30, 2022 vs.

Three Months Ended June 30, 2021 – The increase in total operating expenses of $12.0 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was primarily due an increase in research and development expenses of $12.5 million which is described below under Research and Development Expenses.

Total Operating Expenses - Six Months Ended June 30, 2022 vs.

Six Months Ended June 30, 2021 – The increase in total operating expenses of $22.8 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to an increase in research and development expenses of $25.0 million which is described below under Research and Development Expenses, partially offset by a decrease in selling, general and administrative expenses of $3.0 million due to a reduction in workforce-related expenses.

Included in selling, general and administrative expenses for the six months ended June 30, 2021 is approximately $2.1 million of reimbursable transition related services we provided to Servier related to the sale of the oncology business.

Total Operating Expenses - Three Months Ended September 30, 2022 vs.

Three Months Ended September 30, 2021 – The increase in total operating expenses of $3.5 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 was primarily due to an increase in selling, general and administrative expenses of $2.0 million, driven by an increase in workforce-related expenses.

Total Operating Expenses - Nine Months Ended September 30, 2022 vs.

Nine Months Ended September 30, 2021 – The increase in total operating expenses of $26.2 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 was primarily due to an increase in research and development expenses of $25.9 million which is described below under Research and Development Expenses, partially offset by a decrease in selling, general and administrative expenses of $1.0 million due to a reduction in workforce-related expenses.

Included in selling, general and administrative expenses for the nine months ended September 30, 2021 is approximately $3.4 million of reimbursable transition related services we provided to Servier related to the sale of the oncology business.

Research and Development Expenses

Our research and development expenses, by major program, are outlined in the table below:

Three Months Ended June 30, Six Months Ended June 30,

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

(In thousands) 2022 2021 2022 2021

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Total research and development expense $ 64,966 $ 64,000 $ 209,612 $ 183,674

Total Research and Development Expenses - Three Months Ended June 30, 2022 vs.

Three Months Ended June 30, 2021 – The increase in total research and development expenses of $12.5 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was due to an $8.2 million increase in our direct expenses and a $4.3 million increase in our indirect expenses.

The increase in direct expenses was due to a $3.4 million increase in other research and platform programs, a $2.9 million increase in AG-946 costs, and a $1.9 million increase in PYRUKYND® costs.

The increase in other research and platform programs was primarily driven by planned increased activity associated with our preclinical PAH program as well as planned increased activity on various other exploratory activities.

The increase in AG-946 costs was primarily due to start-up costs for the phase 2 trial of AG-946 in patients with MDS and increased spend for the phase 1 trial of AG-946 in healthy volunteers and in patients with SCD.

The increase in PYRUKYND® costs was primarily due to startup costs for the phase 3 trials of PYRUKYND® in pediatric patients with PKD, ACTIVATE-kids and ACTIVATE-kidsT, and the phase 2/3 trial of PYRUKYND® in patients with SCD, RISE UP, offset by closeouts of the ACTIVATE and ACTIVATE-T studies.

The increase in indirect expenses was primarily due to an $8.9 million increase in compensation and related expenses primarily due to increased headcount and workforce-related expenses associated with the evolution of our research organization.

This increase was partially offset by $4.4 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 related activities, which was recorded in the second quarter of 2021.

Total Research and Development Expenses - Six Months Ended June 30, 2022 vs.

Six Months Ended June 30, 2021 – The increase in total research and development expenses of $25.0 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was due to an $18.4 million increase in our direct expenses and a $6.6 million increase in our indirect expenses.

The increase in direct expenses was due to a $7.1 million increase in other research and platform programs, a $6.7 million increase in PYRUKYND® costs and a $4.5 million increase in AG-946 costs.

Total Research and Development Expenses - Three Months Ended September 30, 2022 vs.

Three Months Ended September 30, 2021 – Total research and development expenses for the three months ended September 30, 2022 remained relatively consistent with the three months ended September 30, 2021.

Total Research and Development Expenses - Nine Months Ended September 30, 2022 vs.

Nine Months Ended September 30, 2021 – The increase in total research and development expenses of $25.9 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 was due to an $18.1 million increase in our direct expenses and a $7.8 million increase in our indirect expenses.

The increase in direct expenses was due to a $7.5 million increase in PYRUKYND® costs, a $6.0 million increase in other research and platform programs, and a $4.6 million increase in AG-946 costs.

The increase in PYRUKYND® costs was primarily due to startup costs for the phase 3 trials of PYRUKYND® in patients with thalassemia, ENERGIZE and ENERGIZE-T, the phase 3 trials of PYRUKYND® in pediatric patients with PK deficiency, ACTIVATE-kids and ACTIVATE-kidsT, and the phase 2/3 trial of PYRUKYND® in patients with SCD, RISE UP, offset by closeouts of the ACTIVATE and ACTIVATE-T studies.

The increase in PYRUKYND® costs was primarily due to startup costs for the phase 3 trials of PYRUKYND® in patients with thalassemia, ENERGIZE and ENERGIZE-T, the phase 3 trials of PYRUKYND® in pediatric patients with PKD, ACTIVATE-kids and ACTIVATE-kidsT, and the phase 2/3 trial of PYRUKYND® in patients with SCD, RISE UP, offset by closeouts of the ACTIVATE and ACTIVATE-T studies.

The increase in indirect expenses was primarily due to an $11.4 million increase in compensation and related expenses primarily due to increased headcount and workforce-related expenses associated with the evolution of our research organization.

Included in total indirect research and development expenses for the six months ended June 30, 2022 was $1.5 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 related activities, which were completed during the three months ended March 31, 2022.

The increase in AG-946 costs was primarily due to start-up costs for the phase 2 trial of AG-946 in patients with lower-risk MDS and increased spend for the phase 1 trial of AG-946 in healthy volunteers and in patients with SCD.

The increase in indirect expenses was primarily due to an $15.5 million increase in compensation and related expenses primarily due to increased headcount, as well as certain workforce-related expenses associated with the evolution of our research organization.

This increase was partially offset by $6.1 million of additional reimbursable transition related services we provided to Servier in the nine months ended September 30, 2021 compared to the nine months ended September 30, 2022 related to the sale of the oncology business for discovery, clinical development, technical operations, and related activities, which were completed during the three months ended March 31, 2022.

Other Income and Expense

Three Months Ended June 30, Six Months Ended June 30,

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

(In thousands) 2022 2021 2022 2021

Royalty income from gain on sale of oncology business $ 4,443 $ 1,996 $ 9,851 $ 3,996

Interest income (expense), net 1,793 (92) 2,487 248

Interest income, net 3,818 256 6,305 504

Other income, net 1,082 4,641 5,392 11,165

Other Income and Expense - Three Months Ended June 30, 2022 vs.

Three Months Ended June 30, 2021 – The $5.2 million decrease in other income, net in the three months ended June 30, 2022 compared to the three months ended June 30, 2021 primarily relates to approximately $6.5 million of reimbursable transition related services and fees for the sale of the oncology business in the three months ended June 30, 2021, partially offset by sublease income of $1.3 million in the three months ended June 30, 2022.

The $1.9 million increase in interest income, net is primarily attributable to an increase in interest rates.

The $0.7 million increase in royalty income from gain on sale of oncology business relates to higher income from royalties on U.S.

net sales of TIBSOVO® by Servier in the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

Other Income and Expense - Six Months Ended June 30, 2022 vs.

Six Months Ended June 30, 2021 – The $3.4 million increase in royalty income from gain on sale of oncology business relates to higher income from royalties on U.S.

net sales of TIBSOVO® by Servier in the the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The $2.2 million increase in interest income, net in the the six months ended June 30, 2022 compared to the six months ended June 30, 2021 is primarily attributable to an increase in interest rates.

The $2.2 million decrease in other income, net in the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily relates to approximately $6.5 million of reimbursable transition related services and fees for the sale of the oncology business in the six months ended June 30, 2021 compared to $2.6 million in the six months ended June 30, 2022, partially offset by sublease income of $1.7 million in the six months ended June 30, 2022.

Other Income and Expense - Three Months Ended September 30, 2022 vs.

Three Months Ended September 30, 2021 – The $3.6 million decrease in other income, net in the three months ended September 30, 2022 compared to the three months ended September 30, 2021 primarily related to approximately $4.5 million of reimbursable transition related services and fees for the sale of the oncology business in the three months ended September 30, 2021, partially offset by sublease income of $1.0 million in the three months ended September 30, 2022.

The $3.6 million increase in interest income, net in the three months ended September 30, 2022 compared to the three months ended September 30, 2021 was primarily attributable to an increase in interest rates.

The $2.4 million increase in royalty income from gain on sale of oncology business related to higher income from royalties on U.S.

net sales of TIBSOVO® by Servier in the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

Other Income and Expense - Nine Months Ended September 30, 2022 vs.

Nine Months Ended September 30, 2021 – The $5.9 million increase in royalty income from gain on sale of oncology business related to higher income from royalties on U.S.

net sales of TIBSOVO® by Servier in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The $5.8 million increase in interest income, net in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 is primarily attributable to an increase in interest rates.

The $5.8 million decrease in other income, net in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 primarily related to approximately $11.0 million of reimbursable transition related services and fees for the sale of the oncology business in the nine months ended September 30, 2021 compared to $2.6 million in the nine months ended September 30, 2022, partially offset by sublease income of $2.7 million in the nine months ended September 30, 2022.

Loss from Operations and Net (Loss) Income

Three Months Ended June 30, Six Months Ended June 30,

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

(In thousands) 2022 2021 2022 2021

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Net (loss) income $ (81,747) $ (88,766) $ (268,327) $ 1,699,342

Loss from Operations and Net (Loss) Income - Three Months Ended June 30, 2022 vs.

Three Months Ended June 30, 2021 – The $9.0 million increase in net loss from continuing operations for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was primarily driven by the higher research and development expenses discussed above under Research and Development Expenses and the decrease in other income, net discussed above under Other Income and Expense, partially offset by the increase in revenue discussed above under Revenues.

The change in net (loss) income from discontinued operations for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was driven by the sale of our oncology business to Servier.

Loss from Operations and Net (Loss) Income - Six Months Ended June 30, 2022 vs.

Six Months Ended June 30, 2021 – The $12.9 million increase in net loss from continuing operations for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily driven by the higher research and development expenses discussed above under Research and Development Expenses, partially offset by the increase in revenue in the six months ended June 30, 2022 discussed above under Revenues and a the increase in royalty income from gain on sale of oncology business related to income from royalties on U.S.

net sales of TIBSOVO® by Servier discussed above under Other Income and Expense.

The change in net (loss) income from discontinued operations and net (loss) income for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 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 (loss) income from discontinued operations.

Loss from Operations and Net (Loss) Income - Three Months Ended September 30, 2022 vs.

Three Months Ended September 30, 2021 – The $2.5 million decrease in net loss from continuing operations for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 was primarily driven by the increase in revenue discussed above under Revenues and the increase in interest income, net and royalty income from gain on sale of oncology business discussed above under Other Income and Expense, partially offset by a decrease in other income, net discussed above under Other Income and Expense, higher selling, general and administrative expenses discussed above under Total Operating Expenses and higher research and development expenses discussed above under Research and Development Expenses.

The change in net (loss) income from discontinued operations for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 was driven by the sale of our oncology business to Servier.

Loss from Operations and Net (Loss) Income - Nine Months Ended September 30, 2022 vs.

Nine Months Ended September 30, 2021 – The $10.4 million increase in net loss from continuing operations for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 was primarily driven by the higher research and development expenses discussed above under Research and Development Expenses and a decrease in other income, net discussed above under Other Income and Expense, partially offset by the increase in revenue in the nine months ended September 30, 2022 discussed above under Revenues and the increase in interest income, net and royalty income from gain on sale of oncology business discussed above under Other Income and Expense.

The change in net (loss) income from discontinued operations and net (loss) income for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 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 (loss) income from discontinued operations.

Liquidity and Capital Resources

Sources of liquidity

Since our inception, and through June 30, 2022, we have funded our operations 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 have financed and expect to continue 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 and royalties from Servier if vorasidenib is approved by the FDA, the actual and potential sales of PYRUKYND®, if successfully launched by us and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions.

Since our inception, and through September 30, 2022, we have funded our operations 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.

net sales of TIBSOVO® prior to the sale of these royalty rights to Sagard, proceeds from the sale of our rights to the royalty on U.S.

On March 31, 2021, we completed the sale of our oncology business to Servier.

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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, and following the sale Servier is responsible for conducting certain clinical development activities within the IDHIFA® development program.

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, and following the sale Servier is responsible for conducting certain clinical development activities

within the IDHIFA® development progra m.

As discussed above in Note 12, Subsequent Events , on October 27, 2022, we sold our rights to the royalty on U.S.

net sales of TIBSOVO® to Sagard for $131.8 million.

We retained our rights to the potential milestone payment and royalties from Servier if vorasidenib is approved by the FDA.

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.

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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.

As of June 30, 2022 and December 31, 2021, we repurchased approximately 9.1 million shares of common stock for $458.0 million, or $50.35 per share, under the Rule 10b5-1 repurchase plan.

As of June 30, 2022, we have not repurchased any shares under the Rule 10b-18 repurchase plan.

In total, as of June 30, 2022, we repurchased 16.2 million shares of common stock for $802.5 million, or $49.49 per share, under the Repurchase Program.

We have not repurchased any shares of common stock in fiscal year 2022 and as of December 31, 2021, we repurchased approximately 9.1 million shares of common stock for $458.0 million, or $50.35 per share, under the Rule 10b5-1 repurchase plan.

As of September 30, 2022, we have not repurchased any shares under the Rule 10b-18 repurchase plan.

In total, as of September 30, 2022, we repurchased 16.2 million shares of common stock for $802.5 million, or $49.49 per share, 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 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, we are eligible to receive a $200.0 million milestone payment and royalty payments under our transaction agreement with Servier.

In addition to our cash, cash equivalents and marketable securities of $1.0 billion and the $131.8 million payment received from Sagard on October 27, 2022, we are eligible to receive a $200.0 million milestone payment and royalty payments on U.S.

net sales of vorasidenib under our transaction agreement with Servier.

Our right to such payments under our transaction agreement with 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.

The following table provides information regarding our cash flows for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

Furthermore, we cannot predict what success, if any, Servier may have in the United States with respect to sales of vorasidenib, if approved, 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 vorasidenib.

The following table provides information regarding our cash flows for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,

(In thousands) 2022 2021

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Net cash used in operating activities.

Cash used in operating activities of $172.0 million during the six months ended June 30, 2022, of which all was used by continuing operations, was primarily due to operating expenses driven by research and development costs described above under Research and Development Expenses, partially offset by cash received from revenues of $5.2 million and royalties of $5.3 million on U.S.

net sales of TIBSOVO®.

Cash used in operating activities of $238.0 million during the six months ended June 30, 2021, of which $159.2 million was used by continuing operations and $78.8 million was used by discontinued operations, was primarily due to operating expenses driven by research and development costs described above under Research and Development Expenses, partially 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 $243.3 million during the nine months ended September 30, 2022, of which all was used by continuing operations, was primarily due to operating expenses driven by research and development costs described above under Research and Development Expenses, partially offset by cash received from revenues of $8.8 million and royalties on U.S.

net sales of TIBSOVO® of $8.6 million.

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.

Net cash provided by investing activities .

Cash provided by investing activities of $56.2 million during the six months ended June 30, 2022, of which all was used by continuing operations, was primarily due to higher proceeds from maturities and sales of marketable securities than purchases of marketable securities.

Cash provided by investing activities of $1.6 billion for the six months ended June 30, 2021, of which $227.0 million was used by operating activities 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 $160.3 million during the nine months ended September 30, 2022, of which all was used by continuing operations, was primarily due to higher proceeds from maturities and sales of marketable securities than purchases of marketable securities.

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.

Net cash provided by (used in) financing activities .

Cash provided by financing activities of $1.1 million during the six months ended June 30, 2022, of which all was provided by continuing operations, was primarily the result of the $1.3 million of proceeds received from stock option exercises and purchases made pursuant to our 2013 Employee Stock Purchase Plan, or 2013 ESPP.

Cash used in financing activities for the six months ended June 30, 2021, of which all was provided by continuing operations, was primarily the result of the $529.0 million in common stock repurchases in the second quarter of 2021 under our Repurchase Program, partially offset by the $33.0 million of proceeds received from stock option exercises and purchases made pursuant to our 2013 ESPP.

Cash provided by financing activities of $2.3 million during the nine months ended September 30, 2022, of which all was provided by continuing operations, was primarily the result of the $2.6 million of

proceeds received from stock option exercises and purchases made pursuant to our 2013 Employee Stock Purchase Plan, or 2013 ESPP.

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, 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.

Funding requirements

Although our expenses decreased following the completion of the sale of our oncology business to Servier on March 31, 2021, we anticipated that this decrease will be offset as we continue the research, development and clinical trials of, seek marketing approvals for, and commercialize our product candidates in our GDD portfolio, including as we commercialize PYRUKYND®.

Although our expenses decreased 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 continue the research, development and clinical trials of, seek marketing approvals for, and commercialize our product candidates in our GDD portfolio, including as we commercialize PYRUKYND®.

If we obtain marketing approval for PYRUKYND® in other indications outside of the United States or for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.

We expect that our existing cash, cash equivalents and marketable securities as of June 30, 2022, will enable us to execute our operating plan through major catalysts and to cash-flow positivity without the need to raise additional equity.

We expect that our existing cash, cash equivalents and marketable securities as of September 30, 2022 and the $131.8 million payment received from Sagard on October 27, 2022 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 and timing of future revenue received from commercial sales of PYRUKYND® or any of our product candidates for which we may receive marketing approval;

• the amount of contingent consideration we ultimately receive in connection with the sale of our oncology business to Servier;

• the amount of contingent consideration we ultimately receive from Servier;

• the costs and timing of our ongoing commercialization activities, including product manufacturing, sales, marketing and distribution for PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency;

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• operational delays due to the ongoing COVID-19 pandemic;

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.

• operational delays, disruptions and/or increased costs associated with rising global energy prices or energy shortages or rationing.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs primarily through cash on hand, proceeds from the sale of our rights to the royalty on U.S.

net sales of TIBSOVO® to Sagard, the potential milestone payment and royalties from Servier if vorasidenib is approved by the FDA, the actual and potential sales of PYRUKYND® 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.

We do not have any committed external source of funds other than the potential milestone and royalty payments that we are eligible to receive with respect to vorasidenib 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.

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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.

commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations

During the six months ended June 30, 2022, there were no material 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, 2021.

During the nine months ended September 30, 2022, there were no material 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, 2021.

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 2. Management’s Discussion and Analysis