What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-10-31 compared with 2024-08-01 · 147 added, 94 removed, 365 unchanged (40% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

2024 December 31,

15 unchanged sentences

Accrued expenses 33,307 43,167

Income taxes payable 52,682 —

Operating lease liabilities 16,319 15,008

6 unchanged sentences

25,000,000 shares authorized;

no shares issued or outstanding at June 30, 2024 and December 31, 2023

no shares issued or outstanding at September 30, 2024 and December 31, 2023

Common stock, $ 0.001 par value;

125,000,000 shares authorized;

73,091,490 shares issued and 56,875,079 shares outstanding at June 30, 2024, and 72,161,489 shares issued and 55,945,078 shares outstanding at December 31, 2023

73,237,954 shares issued and 57,021,543 shares outstanding at September 30, 2024, and 72,161,489 shares issued and 55,945,078 shares outstanding at December 31, 2023

Additional paid-in capital 2,478,066 2,436,523

Accumulated other comprehensive loss ( 1,045 ) ( 441 )

Treasury stock, at cost ( 16,216,411 shares at June 30, 2024 and December 31, 2023)

Accumulated other comprehensive income (loss) 3,420 ( 441 )

Treasury stock, at cost ( 16,216,411 shares at September 30, 2024 and December 31, 2023)

( 802,486 ) ( 802,486 )

5 unchanged sentences

Condensed Consolidated Statements of Operations

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

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

(In thousands, except share and per share data)

8 unchanged sentences

Loss from operations ( 102,811 ) ( 100,897 ) ( 300,700 ) ( 285,210 )

Gain on sale of contingent payments 889,136 — 889,136 —

Milestone payment from gain on sale of oncology business 200,000 — 200,000 —

Interest income, net 13,059 8,375 30,068 24,720

Other income, net 1,651 1,198 4,864 4,342

Net loss $ ( 96,118 ) $ ( 83,806 ) $ ( 177,667 ) $ ( 164,824 )

Net loss per share - basic and diluted $ ( 1.69 ) $ ( 1.51 ) $ ( 3.14 ) $ ( 2.97 )

Weighted-average number of common shares used in computing net loss per share – basic and diluted 56,802,546 55,604,330 56,593,011 55,435,796

Net income (loss) before taxes 1,001,035 ( 91,324 ) 823,368 ( 256,148 )

Income tax expense 53,120 — 53,120 —

Net income (loss) $ 947,915 $ ( 91,324 ) $ 770,248 $ ( 256,148 )

Net income (loss) per share - basic $ 16.65 $ ( 1.64 ) $ 13.58 $ ( 4.61 )

Net income (loss) per share - diluted $ 16.22 $ ( 1.64 ) $ 13.38 $ ( 4.61 )

Weighted-average number of common shares used in computing net income (loss) per share – basic 56,939,403 55,803,663 56,709,318 55,559,766

Weighted-average number of common shares used in computing net income (loss) per share – diluted 58,432,796 55,803,663 57,581,382 55,559,766

See accompanying Notes to Condensed Consolidated Financial Statements.

AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Comprehensive Loss

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

Condensed Consolidated Statements of Comprehensive Income (Loss)

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

(In thousands)

2024 2023 2024 2023

Net loss $ ( 96,118 ) $ ( 83,806 ) $ ( 177,667 ) $ ( 164,824 )

Other comprehensive income (loss)

Unrealized gain (loss) on available-for-sale securities 42 ( 459 ) ( 604 ) 3,665

Comprehensive loss $ ( 96,076 ) $ ( 84,265 ) $ ( 178,271 ) $ ( 161,159 )

Net income (loss) $ 947,915 $ ( 91,324 ) $ 770,248 $ ( 256,148 )

Other comprehensive income

Unrealized gain on available-for-sale securities 4,465 2,974 3,861 6,639

Comprehensive income (loss) $ 952,380 $ ( 88,350 ) $ 774,109 $ ( 249,509 )

See accompanying Notes to Condensed Consolidated Financial Statements.

19 unchanged sentences

Balance at June 30, 2024 73,091,490 $ 73 $ 2,464,284 $ ( 1,045 ) $ ( 1,000,316 ) ( 16,216,411 ) $ ( 802,486 ) $ 660,510

Unrealized gain on available-for-sale securities — — — 4,465 — — — 4,465

Common stock issued under stock incentive plan and ESPP 146,464 — 2,637 — — — — 2,637

Stock-based compensation expense — — 11,145 — — — — 11,145

Net income — — — — 947,915 — — 947,915

Balance at September 30, 2024 73,237,954 73 2,478,066 3,420 ( 52,401 ) ( 16,216,411 ) ( 802,486 ) 1,626,672

Common Stock Additional

16 unchanged sentences

Balance at June 30, 2023 71,951,186 $ 72 $ 2,410,905 $ ( 8,870 ) $ ( 635,385 ) ( 16,216,411 ) $ ( 802,486 ) $ 964,236

Unrealized gain on available-for-sale securities — — — 2,974 — — — 2,974

Common stock issued under stock incentive plan and ESPP 149,198 — 1,881 — — — — 1,881

Stock-based compensation expense — — 9,076 — — — — 9,076

Net loss — — — — ( 91,324 ) — — ( 91,324 )

Balance at September 30, 2023 72,100,384 $ 72 $ 2,421,862 $ ( 5,896 ) $ ( 726,709 ) ( 16,216,411 ) $ ( 802,486 ) $ 886,843

See accompanying Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

September 30,

(In thousands) 2024 2023

Operating activities

Net loss $ ( 177,667 ) $ ( 164,824 )

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

Net income (loss) $ 770,248 $ ( 256,148 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization 4,286 5,220

1 unchanged sentence

Net accretion of discount on marketable securities ( 8,870 ) ( 4,658 )

Gain on disposal of property and equipment ( 39 ) ( 150 )

(Gain) loss on disposal of property and equipment ( 39 ) 278

Non-cash operating lease expense 8,568 7,967

Expense associated with license agreement — 17,500

Realized gain on investments ( 168 ) ( 28 )

Gain on sale of contingent payments ( 889,136 ) —

Milestone payment from gain on sale of oncology business ( 200,000 ) —

Changes in operating assets and liabilities:

4 unchanged sentences

Accrued expenses and other current liabilities ( 9,860 ) 140

Income taxes payable 52,682 —

Operating lease liabilities ( 11,162 ) ( 10,161 )

4 unchanged sentences

Proceeds from maturities and sales of marketable securities 668,248 488,492

Payments associated with license agreement — ( 17,500 )

Proceeds from sale of contingent payments 889,136 —

Proceeds from milestone payment from gain on sale of oncology business 200,000 —

Purchases of property and equipment ( 718 ) ( 765 )

29 unchanged sentences

We are also developing (i) AG-946 (tebapivat), a novel PK activator, for the potential treatment of lower-risk myelodysplastic syndrome, or LR MDS, and hemolytic anemias, and (ii) AG-181, our phenylalanine hydroxylase, or PAH, stabilizer for the potential treatment of phenylketonuria, or PKU.

In September 2024, AG-946 (tebapivat) was granted Orphan Drug Designation by the FDA for the treatment of MDS.

In addition to the aforementioned development programs, in July 2023 we entered into a license agreement with Alnylam Pharmaceuticals, Inc., or Alnylam, for the development and commercialization of products containing or comprised of an siRNA preclinical development candidate discovered by Alnylam and targeting the transmembrane serine protease 6, or TMPRSS6, gene, and we have begun preclinical development of a product candidate for the potential disease-modifying treatment of patients with polycythemia vera, or PV, a rare blood disorder.

3 unchanged sentences

Because the acquired assets do not meet the definition of a business in accordance with Accounting Standards Codification, or ASC, 805, Business Combinations , we accounted for the agreement as an asset acquisition.

In accordance with the license agreement, in the twelve months ended December 31, 2023, we made an up-front payment to Alnylam and recognized in-process research and development of $ 17.5 million.

In accordance with the license agreement, in the three months ended September 30, 2023, we made an up-front payment to Alnylam and recognized in-process research and development of $ 17.5 million.

We will also pay Alnylam for certain expenses associated with the development of the TMPRSS6 program, and these will be recorded in our Consolidated Statements of Operations as incurred.

Additionally, we are responsible to pay up to $ 130.0 million in potential development and regulatory milestones, in addition to sales milestones as well as tiered royalties on annual net sales, if any, of licensed products, which may be subject to specified reductions and offsets.

Sale of Oncology Business to Servier and Sale of Contingent Payments and Royalty Rights

Sale of Oncology Business to Servier and Sale of Contingent Payments

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 $ 200.0 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, or IDH, 1 or 2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval), or the Vorasidenib Milestone Payment, as well as a royalty of 5 % of U.S.

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 $ 200.0 million in cash, if, prior to January 1, 2027, vorasidenib is granted new drug application 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, or IDH, 1 or 2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval), or the Vorasidenib Milestone Payment, 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.

1 unchanged sentence

The Vorasidenib Milestone Payment, Vorasidenib Royalty Rights and royalty payments related to TIBSOVO® are referred to as contingent payments and recognized as income when realizable.

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.

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 has agreed to conduct certain clinical development activities within the IDHIFA® development program.

In October 2022, we sold our rights to future contingent payments associated with the royalty of 5 % of U.S.

net sales of TIBSOVO® from the close of the transaction through the loss of exclusivity to entities affiliated with Sagard Healthcare Partners, or Sagard, and recognized income of $ 127.9 million within the gain on sale of contingent payments line item in our Consolidated Statements of Operations for the year ended December 31, 2022.

In February 2024, Servier announced that it received filing acceptance and priority review from the FDA for its NDA for vorasidenib for the treatment of certain IDH-mutant diffuse glioma and accelerated assessment from the European Medicines Agency, or EMA, for its Marketing Authorization Application, or MAA, for vorasidenib.

The FDA assigned the NDA a Prescription Drug User Fee Act, or PDUFA, action date of August 20, 2024, and Servier anticipates that the European Commission will approve its MAA in the second half of 2024.

In May 2024, we entered into a purchase and sale agreement to sell the Vorasidenib Royalty Rights to Royalty Pharma Investments 2019 ICAV, or Royalty Pharma, for $ 905.0 million in cash, which sale is contingent upon NDA approval of vorasidenib by the FDA on or before October 31, 2024, and other customary closing conditions.

Upon consummation of the sale, Royalty Pharma will acquire 100% of the Vorasidenib Royalty Rights payments made by Servier on account of up to $1.0 billion in net sales for each calendar year.

net sales of TIBSOVO® from the close of the transaction through the loss of exclusivity to entities affiliated with Sagard Healthcare Partners, or Sagard, and recognized income of $ 127.9 million in our consolidated statements of operations for the year ended December 31, 2022.

In August 2024, the FDA approved vorasidenib for adult and pediatric patients 12 years and older with Grade 2 astrocytoma or oligodendroglioma with a susceptible IDH1 or IDH2 mutation, following surgery including biopsy, sub-total resection, or gross total resection.

In September 2024, we received the Vorasidenib Milestone Payment from Servier and recognized income of $ 200.0 million within the milestone payment from gain on sale of oncology business line item in our consolidated statements of operations for the three and nine months ended September 30, 2024.

The sale was contingent upon FDA approval of vorasidenib and other customary closing conditions.

Upon consummation of the sale in August 2024, Royalty Pharma acquired 100 % of the Vorasidenib Royalty Rights payments made by Servier on account of up to $ 1.0 billion in U.S.

net sales for each calendar year.

In addition, any such Vorasidenib Royalty Rights payments made by Servier on account of U.S.

net sales in each calendar year in excess of $ 1.0 billion will be split, with Royalty Pharma having the rights to a 12 % earn-out on those excess payments and Agios retaining the rights to a 3 % earn-out on those excess payments, or the Retained Earn-Out Rights.

We retain our rights to the potential Vorasidenib Milestone Payment.

As a result of the sale, we recognized $ 889.1 million ($ 905.0 million net of fees of $ 15.9 million) within the gain on sale of contingent payments line item in our consolidated statements of operations for the three and nine months ended September 30, 2024.

Royalty income related to the Retained Earn-Out Rights will be recognized in the period when realizable.

Basis of Presentation

The condensed consolidated balance sheet as of June 30, 2024, the condensed consolidated statements of operations, comprehensive loss and stockholders' equity for the three and six months ended June 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 are unaudited.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of our management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state our financial position as of June 30, 2024, our results of operations and stockholders' equity for the three and six months ended June 30, 2024 and 2023, and cash flows for the six months ended June 30, 2024 and 2023.

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

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other future annual or interim period.

The condensed consolidated balance sheet as of September 30, 2024, the condensed consolidated statements of operations, comprehensive income (loss) and stockholders' equity for the three and nine months ended September 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 are unaudited.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of our management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state our financial position as of September 30, 2024, our results of operations and stockholders' equity for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023.

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

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other future annual or interim period.

The condensed consolidated balance sheet data as of December 31, 2023 was derived from our audited financial statements, but does not include all disclosures required by U.S.

9 unchanged sentences

The full extent to which pandemics or public health emergencies, may in the future directly or indirectly impact our business, results of operations and financial condition, including expenses, reserves and allowances, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain.

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $ 645.3 million.

As of September 30, 2024, we had cash, cash equivalents and marketable securities of $ 1.7 billion.

Although we have incurred recurring losses and expect to continue to incur losses for the foreseeable future, we expect our cash, cash equivalents and marketable securities to be sufficient to fund current operations for at least the next twelve months from the issuance of the financial statements.

11 unchanged sentences

Level 3 – Unobservable inputs that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.

The following table summarizes our cash equivalents and marketable securities measured at fair value and by level on a recurring basis as of June 30, 2024:

The following table summarizes our cash equivalents and marketable securities measured at fair value and by level on a recurring basis as of September 30, 2024:

(In thousands) Level 1 Level 2 Level 3 Total

11 unchanged sentences

determine value.

After completing our validation procedures, we did not adjust or override any fair value measurements provided by the pricing services as of June 30, 2024.

There have been no changes to the valuation methods during the six months ended June 30, 2024, and we had no financial assets or liabilities that were classified as Level 3 at any point during the six months ended June 30, 2024.

After completing our validation procedures, we did not adjust or override any fair value measurements provided by the pricing services as of September 30, 2024.

There have been no changes to the valuation methods during the nine months ended September 30, 2024, and we had no financial assets or liabilities that were classified as Level 3 at any point during the nine months ended September 30, 2024.

Marketable Securities

Our marketable securities are classified as available-for-sale pursuant to ASC 320, Investments – Debt and Equity Securities , and are recorded at fair value.

Unrealized gains and losses are included as a component of accumulated other comprehensive loss in the condensed consolidated balance sheets and statements of stockholders’ equity, and a component of total comprehensive loss in the condensed consolidated statements of comprehensive loss, until realized.

Unrealized gains and losses are included as a component of accumulated other comprehensive income (loss) in the condensed consolidated balance sheets and statements of stockholders’ equity, and a component of total comprehensive income (loss) in the condensed consolidated statements of comprehensive income (loss), until realized.

Unrealized losses are evaluated for impairment under ASC 326, Financial Instruments - Credit Losses , to determine if the impairment is credit-related or noncredit-related.

1 unchanged sentence

Realized gains and losses are included in investment income on a specific-identification basis.

There were no material realized gains or losses on marketable securities for the three and six months ended June 30, 2024 or 2023.

Marketable securities at June 30, 2024 consisted of the following:

There were no material realized gains or losses on marketable securities for the three and nine months ended September 30, 2024 or 2023.

Marketable securities at September 30, 2024 consisted of the following:

(In thousands) Amortized

24 unchanged sentences

Total marketable securities $ 718,599 $ 1,285 $ ( 1,726 ) $ 718,158

As of June 30, 2024 and December 31, 2023, we held both current and non-current investments.

As of September 30, 2024 and December 31, 2023, we held both current and non-current investments.

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

Investments classified as non-current are those that:

(i) have a maturity of greater

than one year, and (ii) we do not intend to liquidate within the next twelve months, although these funds are available for use and, therefore, are classified as available-for-sale.

As of June 30, 2024 and December 31, 2023, we held 194 and 151 debt securities, respectively, that were in an unrealized loss position for less than one year.

We did no t record an allowance for credit losses as of June 30, 2024 and December 31, 2023 related to these securities.

The aggregate fair value of debt securities in an unrealized loss position at June 30, 2024 and December 31, 2023 was $ 538.0 million and $ 513.5 million, respectively.

There were no individual securities that were in a significant unrealized loss position as of June 30, 2024 and December 31, 2023.

(i) have a maturity of greater than one year, and (ii) we do not intend to liquidate within the next twelve months, although these funds are available for use and, therefore, are classified as available-for-sale.

As of September 30, 2024 and December 31, 2023, we held 91 and 151 debt securities, respectively, that were in an unrealized loss position for less than one year.

We did no t record an allowance for credit losses as of September 30, 2024 and December 31, 2023 related to these securities.

The aggregate fair value of debt securities in an unrealized loss position at September 30, 2024 and December 31, 2023 was $ 336.6 million and $ 513.5 million, respectively.

There were no individual securities that were in a significant unrealized loss position as of September 30, 2024 and December 31, 2023.

We regularly review the securities in an unrealized loss position and evaluate the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions.

We do not consider these marketable securities to be impaired as of June 30, 2024 and December 31, 2023.

We do not consider these marketable securities to be impaired as of September 30, 2024 and December 31, 2023.

Inventory, which consists of commercial supply of PYRUKYND®, consisted of the following:

(In thousands) June 30,

(In thousands) September 30,

2024 December 31,

4 unchanged sentences

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

These lease agreements have remaining lease terms of approximately four years and contain various clauses for renewal at our option.

These lease agreements have remaining lease terms of approximately three years and contain various clauses for renewal at our option.

The renewal options were not included in the calculation of the operating lease assets and the operating lease liabilities as the renewal options are not reasonably certain of being exercised.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands) 2024 2023 2024 2023

1 unchanged sentence

Cash paid for amounts included in the measurement of operating lease liabilities 4,684 4,550 14,015 $ 13,614

We have not entered into any material short-term leases or financing leases as of June 30, 2024.

In arriving at the operating lease liabilities as of June 30, 2024 and December 31, 2023, we applied the weighted-average incremental borrowing rate of 5.7 % for both periods over a weighted-average remaining lease term of 3.7 and 4.2 years, respectively.

As of June 30, 2024, undiscounted minimum rental commitments under non-cancelable leases were as follows:

We have not entered into any material short-term leases or financing leases as of September 30, 2024.

In arriving at the operating lease liabilities as of September 30, 2024 and December 31, 2023, we applied the weighted-average incremental borrowing rate of 5.7 % for both periods over a weighted-average remaining lease term of 3.4 and 4.2 years, respectively.

As of September 30, 2024, undiscounted minimum rental commitments under non-cancelable leases were as follows:

(In thousands)

7 unchanged sentences

In May 2023, we entered into a long-term sublease agreement for 7,407 square feet of office space on the first floor of 64 Sidney Street, Cambridge, Massachusetts, with the term of the lease running through April 2025.

We recorded operating sublease income of $ 1.6 million and $ 1.4 million for the three months ended June 30, 2024 and 2023, respectively, and $ 3.2 million and $ 2.8 million for the six months ended June 30, 2024 and 2023, respectively, in other income, net in the condensed consolidated statements of operations.

We recorded operating sublease income of $ 1.6 million and $ 1.7 million for the three months ended September 30, 2024 and 2023, respectively, and $ 4.8 million and $ 4.5 million for the nine months ended September 30, 2024 and 2023, respectively, in other income, net in the condensed consolidated statements of operations.

We hold security deposits from our sublessees of approximately $ 1.2 million which is recorded within other non-current assets on our condensed consolidated balance sheet.

As of June 30, 2024, the future minimum lease payments to be received under the long-term sublease agreements were as follows:

As of September 30, 2024, the future minimum lease payments to be received under the long-term sublease agreements were as follows:

(In thousands)

3 unchanged sentences

Accrued expenses consisted of the following:

(In thousands) June 30,

(In thousands) September 30,

2024 December 31,

7 unchanged sentences

These Customers subsequently resell PYRUKYND® to pharmacies or dispense PYRUKYND® directly to patients.

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

In addition to distribution agreements with Customers, we enter into arrangements with

healthcare providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of PYRUKYND®.

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

Product revenue, net, were as follows:

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

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

(In thousands) 2024 2023 2024 2023

15 unchanged sentences

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

The following table summarizes balances and activity in each of the product revenue allowance and reserve categories for the six months ended June 30, 2024:

The following table summarizes balances and activity in each of the product revenue allowance and reserve categories for the nine months ended September 30, 2024:

(In thousands) Contractual Adjustments Government Rebates Returns/ Replacement Total

4 unchanged sentences

Payments/returns relating to sales in the prior years ( 85 ) ( 373 ) ( 71 ) ( 529 )

Balance at June 30, 2024 $ 172 $ 1,603 $ 390 $ 2,165

Balance at September 30, 2024 $ 193 $ 1,846 $ 490 $ 2,529

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

(In thousands) June 30, 2024 December 31, 2023

(In thousands) September 30, 2024 December 31, 2023

Reduction of accounts receivable $ 91 $ 151

1 unchanged sentence

Total revenue-related reserves $ 2,529 $ 1,472

The following table presents changes in our contract assets during the six months ended June 30, 2024:

(In thousands) December 31, 2023 Additions Deductions June 30, 2024

The following table presents changes in our contract assets during the nine months ended September 30, 2024:

(In thousands) December 31, 2023 Additions Deductions September 30, 2024

Contract assets (1)

10 unchanged sentences

In connection with the start of employment of our Chief Executive Officer and Chief Financial Officer in 2022, and our Chief Commercial Officer in 2023, our board of directors granted each of them equity awards in the form of stock options, RSUs and PSUs, which awards were made outside our equity incentive plans as inducements material to their respective entry into employment with us in accordance with Nasdaq Listing Rule 5635(c)(4).

As of June 30, 2024, the maximum number of shares reserved under the 2013 Plan, the 2023 Plan and the inducement grants described above was 11,127,064 , and we had 2,896,048 shares available for future issuance under the 2023 Plan.

As of September 30, 2024, the maximum number of shares reserved under the 2013 Plan, the 2023 Plan and the inducement grants described above was 11,030,891 , and we had 2,819,436 shares available for future issuance under the 2023 Plan.

Stock options

The following table presents stock option activity for the six months ended June 30, 2024:

The following table presents stock option activity for the nine months ended September 30, 2024:

Stock Options Weighted-Average

5 unchanged sentences

Expired ( 24,750 ) 35.37

Outstanding at June 30, 2024 5,996,025 $ 43.57

Exercisable at June 30, 2024 3,727,328 $ 51.07

Vested and expected to vest at June 30, 2024 5,996,025 $ 43.57

At June 30, 2024, there was approximately $ 36.8 million of total unrecognized compensation expense related to unvested stock option awards, which we expect to recognize over a weighted-average period of approximately 2.61 years.

Outstanding at September 30, 2024 5,992,197 $ 43.65

Exercisable at September 30, 2024 3,840,761 $ 50.47

Vested and expected to vest at September 30, 2024 5,992,197 $ 43.65

At September 30, 2024, there was approximately $ 33.5 million of total unrecognized compensation expense related to unvested stock option awards, which we expect to recognize over a weighted-average period of approximately 2.49 years.

Restricted stock units

The following table presents RSU activity for the six months ended June 30, 2024:

The following table presents RSU activity for the nine months ended September 30, 2024:

Stock Units Weighted-Average

4 unchanged sentences

Forfeited ( 40,166 ) 30.41

Unvested shares at June 30, 2024 1,860,408 $ 29.62

As of June 30, 2024, there was approximately $ 43.8 million of total unrecognized compensation expense related to RSUs, which we expect to recognize over a weighted-average period of approximately 2.14 years.

Unvested shares at September 30, 2024 1,844,675 $ 30.08

As of September 30, 2024, there was approximately $ 39.6 million of total unrecognized compensation expense related to RSUs, which we expect to recognize over a weighted-average period of approximately 2.01 years.

Performance-based stock units

The following table presents PSU activity for the six months ended June 30, 2024:

The following table presents PSU activity for the nine months ended September 30, 2024:

Stock Units Weighted-Average

3 unchanged sentences

Vested ( 170,550 ) 35.04

Unvested shares at June 30, 2024 374,583 $ 29.45

Unvested shares at September 30, 2024 374,583 $ 29.45

Stock-based compensation expense associated with these PSUs is recognized if the underlying performance condition is considered probable of achievement using our management’s best estimates.

As of June 30, 2024, there was no unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered probable of achievement, and $ 11.0 million of total unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered not probable of achievement.

As of September 30, 2024, there was no unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered probable of achievement, and $ 11.0 million of total unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered not probable of achievement.

Market-based stock units

The following table presents market-based stock unit, or MSU, activity for the six months ended June 30, 2024:

The following table presents market-based stock unit, or MSU, activity for the nine months ended September 30, 2024:

Stock Units Weighted-Average

2 unchanged sentences

Expired ( 42,695 ) 41.50

Unvested shares at June 30, 2024 — $ —

Unvested shares at September 30, 2024 — $ —

The fair value of MSUs are estimated using a Monte Carlo simulation model.

Assumptions and estimates utilized in the model include the risk-free interest rate, dividend yield, expected stock volatility and the estimated period to achievement of the market condition.

As of June 30, 2024, there was no remaining unrecognized compensation expense related to MSUs.

As of September 30, 2024, there was no remaining unrecognized compensation expense related to MSUs.

2013 Employee Stock Purchase Plan

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

We issued and sold 52,514 and 54,867 shares of common stock during the six months ended June 30, 2024 and 2023, respectively, under the 2013 ESPP.

We issued and sold 102,805 and 112,832 shares of common stock during the nine months ended September 30, 2024 and 2023, respectively, under the 2013 ESPP.

The 2013 ESPP provides participating employees with the opportunity to purchase up to an aggregate of 2,363,636 shares of our common stock.

As of June 30, 2024, we had 1,633,525 shares of common stock available for future issuance under the 2013 ESPP.

As of September 30, 2024, we had 1,583,234 shares of common stock available for future issuance under the 2013 ESPP.

Stock-based compensation expense

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands) 2024 2023 2024 2023

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands) 2024 2023 2024 2023

2 unchanged sentences

Total stock-based compensation expense $ 11,145 $ 9,076 $ 31,944 $ 30,952

Loss per Share

Basic net loss per share is calculated by dividing net loss by the weighted-average shares outstanding during the period, without consideration for common stock equivalents.

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

For purposes of the dilutive net loss per share calculation, stock options, RSUs, PSUs and MSUs for which the performance and market vesting conditions, respectively, have been deemed probable, and 2013 ESPP shares are considered to be common stock equivalents, while PSUs and MSUs with performance and market vesting conditions, respectively, that were not deemed probable as of June 30, 2024 are not considered to be common stock equivalents.

Income (Loss) per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average shares outstanding during the period, without consideration for common stock equivalents.

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

For purposes of the dilutive net income (loss) per share calculation, stock options, RSUs and PSUs for which the performance and market vesting conditions, respectively, have been deemed probable, and 2013 ESPP shares are considered to be common stock equivalents, while PSUs with performance and market vesting conditions, respectively, that were not deemed probable as of September 30, 2024 are not considered to be common stock equivalents.

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

The control number used is net loss from continuing operations.

The control number used is net income (loss) from continuing operations.

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

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

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

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

Three and Six Months Ended June 30,

Since we had a net loss for the three and nine months ended September 30, 2023, no dilutive effect was recognized in the calculation of loss per share and basic and diluted net loss per share was the same for those periods.

The following is a reconciliation of basic weighted-average number of common shares used in computing net income (loss) per share to diluted weighted-average number of common shares used in computing net income (loss) per share for the periods indicated:

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Basic shares 56,939,403 55,803,663 56,709,318 55,559,766

Effect of dilutive securities

Stock options 557,300 — 231,082 —

Restricted stock units 927,149 — 626,208 —

Performance-based stock units — — 11,793 —

Employee stock purchase plan shares 8,944 — 2,981 —

Diluted shares 58,432,796 55,803,663 57,581,382 55,559,766

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Stock options 3,463,344 5,542,418 5,176,610 5,542,418

Restricted stock units — 1,355,987 90,480 1,355,987

Employee stock purchase plan shares 3,139 11,383 4,393 11,383

Total common stock equivalents 3,466,483 6,909,788 5,271,483 6,909,788

Subsequent Events

In July 2024, we entered into a distribution agreement with NewBridge Pharmaceuticals FZ-LLC, or NewBridge, pursuant to which we granted NewBridge the right to commercialize PYRUKYND® in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

We do not expect this agreement to have a material impact on our business, financial condition or results of operations for the fiscal year ending December 31, 2024.

We are subject to taxation in numerous U.S.

states and territories.

As a result, our effective tax rate is derived from a combination of applicable tax rates in the various places that we operate.

In preparing our financial statements, we estimate the amount of tax that will become payable in each of such places.

Nevertheless, our effective tax rate may be different from previous periods or our current expectations due to numerous factors, including as a result of changes in the mix of our profitability from state to state, the results of examinations and audits of our tax filings, our inability to secure or sustain acceptable agreements with tax authorities, changes in accounting for income taxes and changes in tax laws.

Any of these factors may result in tax obligations in excess of amounts accrued in our financial statements.

We recorded income tax expense of $ 53.1 million for the three and nine months ended September 30, 2024 compared to no income tax expense for the three and nine months ended September 30, 2023.

The income tax expense in the three and nine months ended September 30, 2024 was predominantly due to the current tax impact of the sale of the Vorasidenib Royalty Rights and the Vorasidenib Milestone Payment received in the three months ended September 30, 2024 as discussed above in Note 1 , Overview and Basis of Presentation .

While we released a portion of our valuation allowance when we utilized certain net operating loss carryforwards, or NOLs, and research and development tax credits as a result of the income associated with the sale of Vorasidenib Royalty Rights and the Vorasidenib Milestone Payment in the three months ended September 30, 2024, we continue to maintain a full valuation allowance against all of our net deferred tax assets.

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

What changed 10-Q

Item 1. Financial Statements