Item 7. Management’s Discussion and Analysis
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a global commercial-stage biopharmaceutical company that discovers, develops, manufactures and commercializes novel therapeutics based on RNAi. Our commercial products and broad pipeline of investigational RNAi therapeutics are focused in four STArs: Genetic Medicines, Cardio-Metabolic Diseases, Hepatic Infectious Diseases and CNS/Ocular Diseases.
As described in Part I, Item 1. "Business," of this annual report on Form 10-K, we currently have four products that have received marketing approval, including one partnered product, and six late-stage investigational programs advancing towards potential commercialization. In Part I, Item 1. "Business" you can also find a summary of key events in 2020 and 2021 to-date related to our marketed products and our clinical development programs.
We have incurred significant losses since we commenced operations in 2002 and as of December 31, 2020, we had an accumulated deficit of $4.59 billion. Historically, we have generated losses principally from costs associated with research and development activities, acquiring, filing and expanding intellectual property rights, and selling, general and administrative costs. As a result of planned expenditures for research and development activities relating to our research platform, our drug development programs, including clinical trial and manufacturing costs, the establishment of late-stage clinical and commercial capabilities, including global commercial operations, continued management and growth of our patent portfolio, collaborations and general corporate activities, we expect to incur additional operating losses, however we expect 2019 represents our peak
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non-GAAP operating loss year as we transition towards a self-sustainable financial profile. We anticipate that our operating results will continue to fluctuate for the foreseeable future. Therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods.
We currently have programs focused on a number of therapeutic areas and in August 2018 received regulatory approval from the FDA and EC for our first product, ONPATTRO, and began to generate net revenues from product sales during the third quarter of 2018. Furthermore, in November 2019 we received FDA approval for our second product, GIVLAARI, and began to generate net revenues from product sales during the fourth quarter of 2019. In November 2020, we received FDA and EC approval for our third product, OXLUMO and began to generate net revenues from product sales during the fourth quarter of 2020. However, our ongoing development efforts may not be successful and we may not be able to commence sales of any other products and/or successfully market and sell ONPATTRO, GIVLAARI, OXLUMO or any other approved products in the future. A substantial portion of our total revenues in recent years has been derived from collaboration revenues from strategic alliances with Regeneron, Vir, Sanofi Genzyme and Novartis. In addition to revenues from the commercial sales of ONPATTRO, GIVLAARI, OXLUMO and potentially from sales of future products, we expect our sources of potential funding for the next several years to continue to be derived in part from existing and new strategic alliances, including our strategic financing collaboration with Blackstone. Such alliances may include license and other fees, funded research and development, milestone payments and royalties on product sales by our licensors, including royalties on sales of Leqvio made by our partner Novartis, as well as proceeds from our term loan facility or the sale of equity or debt.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in our consolidated financial statements. Actual results may differ from these estimates under different assumptions or conditions and could have a material impact on our reported results. While our significant accounting policies are more fully described in the Notes to our consolidated financial statements included elsewhere in this annual report on Form 10-K, we believe the following accounting policies to be the most critical in understanding the judgments and estimates we use in preparing our consolidated financial statements:
Net Product Revenues
Our net product revenues are recognized, net of variable consideration related to certain allowances and accruals, at the time the customer obtains control of our product. We use the expected value method, which is the sum of probability-weighted amounts in a range of possible consideration amounts, or the most likely amount method, which is the single most likely amount in a range of possible considerations, to estimate variable consideration related to our product sales. We use the expected value method to estimate variable consideration for certain rebates, chargebacks, product returns, and other incentives and we use the most likely amount method for certain rebates and trade discounts and allowances.
We record reserves, based on contractual terms, for components related to product sold during the reporting period, as well as our estimate of product that remains in the distribution channel inventory at the end of the reporting period that we expect will be sold to qualified healthcare providers. On a quarterly basis, we update our estimates and record any needed adjustments in the period we identify the adjustments. The following are the components of variable consideration related to product revenues:
Chargebacks : We estimate obligations resulting from contractual commitments with the government and other entities to sell products to qualified healthcare providers at prices lower than the list prices charged to the customer who directly purchases from us. The customer charges us for the difference between what it pays to us for the product and the selling price to the qualified healthcare providers.
Rebates : We are subject to discount obligations under government programs, including Medicaid in the U.S. and similar programs in certain other countries, including countries in which we are accruing for estimated rebates because final pricing has not yet been negotiated. We are also subject to potential rebates in connection with our VBAs with certain commercial payors. We record reserves for rebates in the same period the related product revenue is recognized, resulting in a reduction of product revenues and a current liability that is included in accrued expenses on our consolidated balance sheet. Our estimate for rebates is based on statutory discount rates, expected utilization or an estimated number of patients on treatment, as applicable.
Trade discounts and allowances : We provide customary invoice discounts on product sales to our customers for prompt payment and we pay fees for distribution services, such as fees for certain data that customers provide to us. We estimate our customers will earn these discounts and fees, and deduct these discounts and fees in full from gross product revenues and accounts receivable at the time we recognize the related revenues.
Product returns: We offer customers product return rights if products are damaged, defective or expired, with “expired” defined within each customer agreement. We estimate the amount of product that will be returned using a probability-weighted estimate based on our sales history.
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Other incentives: Other incentives include co-payment assistance we provide to patients with commercial insurance that have coverage and reside in states that allow co-payment assistance. We estimate the average co-payment assistance amounts for our products based on expected customer demographics and record any such amounts within accrued expenses on our consolidated balance sheet.
Net Revenues from Collaborations
We earn revenue in connection with collaboration agreements which allow our collaboration partners to utilize our technology platforms and develop product candidates. Our collaboration agreements are detailed in Note 4, Net Revenues from Collaborations, to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this annual report on Form 10-K. For each collaboration partner, we discuss our revenue recognition, including our significant performance obligations under each agreement.
At contract inception, we assess whether the collaboration arrangements are within the scope of Accounting Standards Codification, or ASC, Topic 808, Collaborative Arrangements, or ASC 808, to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed based on the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, we first determine which elements of the arrangement are within the scope of ASC 808 and which elements are within the scope of ASC Topic 606, Revenue from Contracts with Customers, or ASC 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, either by analogy to authoritative accounting literature or by applying a reasonable and rational policy election.
For elements of collaboration arrangements that are accounted for pursuant to ASC 606, we identify the performance obligations and allocate the total consideration we expect to receive on a relative standalone selling price basis to each performance obligation. Variable consideration such as performance-based milestones will be included in the total consideration if we expect to receive such consideration and if it is probable that the inclusion of the variable consideration will not result in a significant reversal in the cumulative amount of revenue recognized under the arrangement. Our estimate of the total consideration we expect to receive under each collaboration arrangement is updated for each reporting period, and any adjustments to revenue are recorded on a cumulative catch-up basis. We exclude sales-based royalty and milestone payments from the total consideration we expect to receive until the underlying sales occur because the license to our intellectual property is deemed to be the predominant item to which the royalties or milestones relate as it is the primary driver of value in our collaboration arrangements.
Key assumptions to determine the standalone selling price may include forecasted revenues, development timelines, reimbursement rates for personnel costs, the expected number of targets or indications expected to be pursued under each license, discount rates and probabilities of technical and regulatory success. We recognize revenue associated with each performance obligation as the control over the promised goods or services transfer to our collaboration partner which occurs either at a point in time or over time. If control transfers over time, revenue is recognized by using a method of measuring progress that best depicts the transfer of goods or services. We evaluate the measure of progress and related inputs each reporting period and any resulting adjustments to revenue are recorded on a cumulative catch-up basis.
Consideration received that does not meet the requirements to satisfy ASC 808 or ASC 606 revenue recognition criteria is recorded as deferred revenue in the accompanying consolidated balance sheets, classified as either short-term (less than 12 months) or long-term (more than 12 months) deferred revenue based on our best estimate of when such revenue will be recognized.
Liability Related to the Sale of Future Royalties
We account for the liability related to the sale of future royalties as a debt financing, as we have significant continuing involvement in the generation of the cash flows. Interest on the liability related to the sale of future royalties will be recognized using the effective interest rate method over the life of the related royalty stream.
The liability related to the sale of future royalties and the related interest expense are based on our current estimates of future royalties and commercial milestones expected to be paid over the life of the arrangement, which we determine by using third-party forecasts of inclisiran’s global net revenue. We will periodically assess the expected payments and to the extent the amount or timing of our future estimated payments is materially different than our previous estimates, we will account for any such change by adjusting the liability related to the sale of future royalties and prospectively recognizing the related non-cash interest expense.
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Results of Operations
The following data summarizes the results of our operations:
Year Ended December 31,
(In thousands) 2020 2019 2018
Revenues $ 492,853 $ 219,750 $ 74,908
Operating costs and expenses $ 1,321,291 $ 1,159,181 $ 889,581
Loss from operations $ (828,438) $ (939,431) $ (814,673)
Net loss $ (858,281) $ (886,116) $ (761,497)
For discussion of our 2019 results and a comparison with 2018 results please refer to "Management's Discussion and Analysis of Financial Conditions and Results of Operations" in our annual report on Form 10-K for the fiscal year ended December 31, 2019 that was filed with the SEC on February 13, 2020.
Revenues
The following table summarizes our total consolidated revenues:
Years Ended December 31, 2020 vs 2019 2019 vs 2018
(In thousands, except percentages) 2020 2019 2018 Dollar Change Percent Change Dollar Change Percent Change
Net product revenues $ 361,520 $ 166,537 $ 12,535 $ 194,983 117 % $ 154,002 1,229 %
Net revenues from collaborations 131,333 53,213 62,373 78,120 147 % (9,160) (15) %
Total $ 492,853 $ 219,750 $ 74,908 $ 273,103 124 % $ 144,842 193 %
Net Product Revenues
Net product revenues consist of the following:
Year Ended December 31, 2020 vs 2019 2019 vs 2018
(In thousands, except percentages) 2020 2019 2018 Dollar Change Percent Change Dollar Change Percent Change
ONPATTRO
United States $ 151,574 $ 116,302 $ 8,589 $ 35,272 30 % $ 107,713 1,254 %
Europe 107,755 43,980 3,946 63,775 145 % 40,034 1,015 %
Rest of World (primarily Japan) 46,752 6,105 — 40,647 666 % 6,105 N/A
Total $ 306,081 $ 166,387 $ 12,535 $ 139,694 84 % $ 153,852 1,227 %
GIVLAARI
United States $ 42,797 $ 150 $ — $ 42,647 28,431 % $ 150 N/A
Europe 12,000 — — 12,000 N/A — N/A
Rest of World 309 — — 309 N/A — N/A
Total $ 55,106 $ 150 $ — $ 54,956 36,637 % $ 150 N/A
OXLUMO
Europe $ 333 $ — $ — $ 333 N/A $ — N/A
Total net product revenues $ 361,520 $ 166,537 $ 12,535 $ 194,983 117 % $ 154,002 1,229 %
Net product revenues increased during the year ended December 31, 2020, compared to the year ended December 31, 2019, as a result of the continued, global expansion of ONPATTRO and GIVLAARI into additional major markets, an entire year of GIVLAARI revenues following commercial launch in the U.S. in the fourth quarter of 2019, and net product revenues from OXLUMO sales following regulatory approval in the fourth quarter of 2020.
We expect net product revenues to increase during 2021 as compared to 2020 as we continue to add new patients onto our commercial products, as well as launch our approved products into additional markets, assuming regulatory approvals.
Please read Note 3 to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this annual report on Form 10-K for balances and activity in each product revenue allowance and reserve category for the years ended December 31, 2020 and 2019.
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Net Revenues from Collaborations
The following table summarizes our total consolidated net revenues from collaborations under our research and development collaboration agreements:
Years Ended December 31, 2020 vs 2019 2019 vs 2018
(In thousands, except percentages) 2020 2019 2018 Dollar Change Percent Change Dollar Change Percent Change
Regeneron Pharmaceuticals $ 74,072 $ 26,075 $ — $ 47,997 184 % $ 26,075 N/A
Vir Biotechnology 31,396 12,809 12,778 18,587 145 % 31 — %
The Medicines Company (acquired by Novartis AG) 22,208 2,315 2,789 19,893 859 % (474) (17) %
Sanofi Genzyme 995 10,976 46,000 (9,981) (91) % (35,024) (76) %
Other 2,662 1,038 806 1,624 156 % 232 29 %
Total $ 131,333 $ 53,213 $ 62,373 $ 78,120 147 % $ (9,160) (15) %
Net revenues from collaborations increased during the year ended December 31, 2020, as compared to the year ended December 31, 2019, primarily due to an increase in revenue recognized in connection with our collaboration agreements with Regeneron and Vir as a result of increased activities and with Novartis, as well as of the achievement of certain milestones, partially offset by a decrease in activities in connection with our collaboration agreements with Sanofi.
We expect net revenues from collaborations to increase during 2021, as compared to 2020, primarily due to increased reimbursable activities, the anticipated achievement of milestones under our collaboration agreements with Regeneron, Vir and Novartis in addition to royalty revenues recognized under our Novartis agreement associated with the commercialization of Leqvio ® (inclisiran) in the EU and potentially other geographies assuming regulatory approval.
Operating Costs and Expenses
The following table summarizes our operating costs and expenses:
Year Ended December 31, 2020 vs 2019 2019 vs 2018
(In thousands, except percentages) 2020 2019 2018 Dollar Change Percent Change Dollar Change Percent Change
Cost of goods sold $ 78,052 $ 25,062 $ 1,802 $ 52,990 211 % $ 23,260 1,291 %
Research and development 654,819 655,114 505,420 (295) — % 149,694 30 %
Selling, general and administrative
588,420 479,005 382,359 109,415 23 % 96,646 25 %
Total
$ 1,321,291 $ 1,159,181 $ 889,581 $ 162,110 14 % $ 269,600 30 %
Cost of Goods Sold
Cost of goods sold increased during the year ended December 31, 2020, as compared to the year ended December 31, 2019, primarily due to increased third-party royalties and increased sales of capitalized inventory associated with both our net product revenues and product supply under our collaboration agreements. During the year ended December 31, 2020, product sold and recognized as revenue was substantially from capitalized inventory, whereas during 2019, the majority of the units of product sold and recognized as revenue were zero-cost inventory. We will continue to sell our zero-cost inventory of GIVLAARI in 2021.
We anticipate variability in our cost of goods sold as a percentage of net product revenues due to the timing of manufacturing runs and utilization and the depletion of zero-cost inventories, as well as future product launches. We expect that cost of goods sold will increase during 2021, as compared to 2020, primarily as a result of an increase in net product revenues and net revenues from collaborations, as well as an increase in sales of capitalized inventory.
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Research and Development
The following table summarizes the components of our research and development expenses:
Year Ended December 31, 2020 vs 2019 2019 vs 2018
(In thousands, except percentages) 2020 2019 2018 Dollar Change Percent Change Dollar Change Percent Change
Clinical trial and manufacturing $ 218,752 $ 203,897 $ 173,271 $ 14,855 7 % $ 30,626 18 %
Compensation and related 190,705 157,001 116,350 33,704 21 % 40,651 35 %
External services 70,120 75,448 55,165 (5,328) (7) % 20,283 37 %
Facilities-related 69,769 54,650 42,159 15,119 28 % 12,491 30 %
Stock-based compensation 60,464 88,930 80,509 (28,466) (32) % 8,421 10 %
Lab supplies, materials and other 42,229 38,158 30,007 4,071 11 % 8,151 27 %
License fees 2,780 37,030 7,959 (34,250) (92) % 29,071 365 %
Total
$ 654,819 $ 655,114 $ 505,420 $ (295) — % $ 149,694 30 %
Research and development expenses were relatively consistent during the year ended December 31, 2020, as compared to the year ended December 31, 2019, primarily due to offsetting increases and decreases of expenses, as follows:
• Increased compensation and related expenses and facilities-related expenses, as a result of increased headcount to support long-term strategic growth; and
• Increased clinical trial and manufacturing expenses as a result of increased services related to the advancement of our early and late-stage programs to support long-term strategic growth.
Offset by:
• Decreased stock-based compensation primarily due to the achievement of certain performance-based milestones in 2019; and
• Decreased license fees relative to license fees associated with the execution of our collaboration agreement with Regeneron in 2019 and certain regulatory milestones achieved in 2019.
During the years ended December 31, 2020 and 2019, in connection with advancing activities under our collaboration agreements, we incurred research and development expenses, primarily related to external development and manufacturing services. The following table summarizes the expenses incurred, for which we recognize net revenue, under our collaboration agreements by collaboration partner:
Year Ended December 31,
(In thousands) 2020 2019 2018
Regeneron Pharmaceuticals $ 57,833 $ 24,916 $ —
Vir Biotechnology 30,644 15,479 16,071
Sanofi Genzyme 2,957 13,856 43,219
The Medicines Company (acquired by Novartis AG) 1,699 2,721 1,869
Other — — 3,247
Total $ 93,133 $ 56,972 $ 64,406
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Selling, General and Administrative
The following table summarizes the components of our selling, general and administrative expenses:
Year Ended December 31, 2020 vs 2019 2019 vs 2018
(In thousands, except percentages) 2020 2019 2018 Dollar Change Percent Change Dollar Change Percent Change
Compensation and related
$ 200,071 $ 148,271 $ 107,376 $ 51,800 35 % $ 40,895 38 %
Consulting and professional services
176,097 155,843 137,201 20,254 13 % 18,642 14 %
Stock-based compensation
79,409 85,911 77,243 (6,502) (8) % 8,668 11 %
Facilities-related 45,387 35,779 25,658 9,608 27 % 10,121 39 %
Other 87,456 53,201 34,881 34,255 64 % 18,320 53 %
Total
$ 588,420 $ 479,005 $ 382,359 $ 109,415 23 % $ 96,646 25 %
Selling, general and administrative expenses increased during the year ended December 31, 2020, as compared to the year ended December 31, 2019, primarily due to the following:
• Increased compensation and related, consulting and professional services, and facilities-related expenses as a result of increased commercial and medical affairs headcount and increased commercial-related services to support long-term strategic growth, as well as the continued expansion of our commercial products into additional major markets; and
• Increased other expenses primarily due to a change in an estimated accrual for a contingent liability related to our arbitration with Ionis.
We expect that research and development expenses combined with selling, general and administrative expenses will increase during 2021, as compared to 2020, as we continue to develop our pipeline, advance our product candidates, including partnered programs, into later-stage development, prepare regulatory submissions and continue to build-out our global commercial infrastructure and field team to support ONPATTRO, GIVLAARI, OXLUMO and potentially additional product launches. However, we expect that certain expenses will be variable depending on the timing of manufacturing batches, clinical trial enrollment and results, regulatory review of our product candidates and programs, and stock-based compensation expenses due to our determination regarding the probability of vesting for performance-based awards.
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Total Other (Expense) Income
Total other (expense) income consists of the following:
Year Ended December 31, 2020 vs 2019 2019 vs 2018
(In thousands, except percentages) 2020 2019 2018 Dollar Change Percent Change Dollar Change Percent Change
Interest expense $ (84,496) $ — $ — $ (84,496) N/A $ — N/A
Interest income 11,809 33,448 29,262 (21,639) (65) % 4,186 14 %
Other income:
Realized and unrealized gains on marketable equity securities 54,042 11,288 3,564 42,754 379 % 7,724 N/A
Change in fair value of development derivative liability (17,185) — — (17,185) N/A — N/A
Change in fair value of liability obligation — 9,422 — (9,422) (100) % 9,422 N/A
Gain on litigation settlement — — 20,564 — N/A (20,564) (100) %
Other income 8,668 20 609 8,648 43,240 % (589) (97) %
Total $ (27,162) $ 54,178 $ 53,999 $ (81,340) (150) % $ 179 — %
Total other expense increased during the year ended December 31, 2020, as compared to the year ended December 31, 2019, primarily due to the following:
• $84.5 million of interest expense associated with the sale of future royalties;
• Decreased interest income of $21.6 million as a result of lower interest rates;
• Loss of $17.2 million as a result of a mark-to-market adjustment related to the development derivative liability; and
Offset by:
• Increased other income due to realized and unrealized gains in marketable equity securities.
Liquidity and Capital Resources
The following table summarizes our cash flow activities:
Year Ended December 31,
(In thousands) 2020 2019 2018
Net loss $ (858,281) $ (886,116) $ (761,497)
Non-cash adjustments to reconcile net loss to net cash used in operating activities: 256,021 205,308 153,782
Changes in operating assets and liabilities: (12,701) 402,381 45,099
Net cash used in operating activities (614,961) (278,427) (562,616)
Net cash (used in) provided by investing activities (435,518) (417,677) 272,945
Net cash provided by financing activities 994,979 823,184 65,470
Effect of exchange rate changes on cash, cash equivalents and restricted cash 4,918 (83) —
Net (decrease) increase in cash, cash equivalents and restricted cash (50,582) 126,997 (224,201)
Cash, cash equivalents and restricted cash, beginning of period
549,628 422,631 646,832
Cash, cash equivalents and restricted cash, end of period $ 499,046 $ 549,628 $ 422,631
Since we commenced operations in 2002, we have generated significant losses and as of December 31, 2020, we had an accumulated deficit of $4.59 billion. As of December 31, 2020, we had cash, cash equivalents and marketable securities of $1.87 billion, compared to $1.54 billion as of December 31, 2019.
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Operating Activities
Net cash used in operating activities increased during the year ended December 31, 2020, compared to the year ended December 31, 2019, primarily due to the receipt of $400.0 million in May 2019 for the upfront payment associated with our strategic collaboration with Regeneron resulting in an increase to deferred revenue.
Investing Activities
Net cash used in investing activities increased during the year ended December 31, 2020, compared to the year ended December 31, 2019, primarily due to a net increase in our marketable debt securities and restricted investment activities offset by a decrease in capital expenditures primarily related to our Norton manufacturing facility.
Financing Activities
Net cash provided by financing activities increased during the year ended December 31, 2020, compared to the year ended December 31, 2019, primarily due to $500.0 million received from our sale to Blackstone of one-half of our royalty interest under the MDCO agreement in April 2020, increased net proceeds of $129.2 million from the issuance of common stock in connection with stock option exercises and other types of equity and proceeds of $200.0 million in connection with the first draw down on our credit agreement, compared to the prior year proceeds of $400.0 million from our issuance of common stock to Regeneron in April 2019 and $381.9 million received from our January 2019 underwritten public offering.
Operating Capital Requirements
We currently have programs focused on a number of therapeutic areas and, as of December 31, 2020, have received regulatory approval and commercially launched three products: ONPATTRO, GIVLAARI and OXLUMO. In early 2021, we announced Alnylam P 5 x25, which is aimed at our planned transition to a top 5 biotech in market capitalization. As part of this strategy, our goal is to achieve sustainable non-GAAP profitability by the end of 2025. However, our ongoing development efforts may not be successful and we may not be able to commence sales of any other products in the future. In addition, we anticipate that we will continue to generate losses as a result of planned expenditures for research and development activities relating to our research platform, our drug development programs, including clinical trial and manufacturing costs, the establishment of late-stage clinical, manufacturing and commercial capabilities, including global operations, continued management and growth of our intellectual property including our patent portfolio, collaborations and general corporate activities.
Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of December 31, 2020, together with the cash we expect to generate from product sales and under our current alliances, in addition to our strategic financing collaboration with The Blackstone Group Inc. and certain of its affiliates, will be sufficient to enable us to advance our long-term strategic goals for at least the next 12 months from the filing of this annual report on Form 10-K. However, due to numerous factors described in more detail under the caption Part I, Item 1A, "Risk Factors" of this annual report on Form 10-K, we may require significant additional funds earlier than we currently expect in order to continue to commercialize ONPATTRO, GIVLAARI and OXLUMO, and to develop, conduct clinical trials for, manufacture and, if approved, commercialize additional product candidates.
Off-Balance Sheet Arrangements
In connection with license agreements we may enter with companies to obtain rights to intellectual property, we may be required to indemnify such companies for certain damages arising in connection with the intellectual property rights licensed under the agreements. Under such indemnification agreements we may be responsible for paying the costs of any litigation relating to the license agreements or the underlying intellectual property rights, including the costs associated with certain litigation regarding the licensed intellectual property. In addition, we are a party to a number of agreements entered into in the ordinary course of business, which contain typical provisions that obligate us to indemnify the other parties to such agreements upon the occurrence of certain events, including litigation. For example, under the underwriting agreement entered into in connection with our November 2017 public offering, we have an obligation to indemnify the underwriters and each person, if any, who controls the underwriters, for certain costs and expenses arising in connection with the class action complaint filed against us and such underwriters in New York state court. These indemnification costs are charged to selling, general and administrative expense and are considered off-balance sheet arrangements in accordance with GAAP. To date, other than certain costs associated with certain previously settled litigation, we have not encountered material costs as a result of such obligations and have not accrued any liabilities related to such obligations in our consolidated financial statements.
Contractual Obligations
In the table below, we set forth our enforceable and legally binding obligations and future commitments as of December 31, 2020. Some of the figures that we include in this table are based on management’s estimates and assumptions about these obligations, including their duration, the possibility of renewal, anticipated actions by third parties and other factors.
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Because these estimates and assumptions are necessarily subjective, the obligations we will actually pay in future periods may vary from those reflected in the table.
Payments Due by Period
(In thousands) 2021 2022 and 2023 2024 and 2025 After 2025 Total
Facility lease obligations (1) $ 38,593 $ 90,156 $ 84,108 $ 323,473 $ 536,330
Long-term debt — — — 200,000 200,000
Total contractual cash obligations $ 38,593 $ 90,156 $ 84,108 $ 523,473 $ 736,330
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(1) Relates primarily to our Cambridge, Massachusetts non-cancelable facility lease agreements.
The table above excludes approximately $441.4 million of commitments related to clinical and manufacturing-related agreements, as they are cancellable. The table above also excludes payments under our purchase and sale and funding agreements with Blackstone, as such payments are contingent on either future sales or the successful achievement of certain development and regulatory events. In addition, we have collaboration agreements relating to the research, development and commercialization of certain of our product candidates. Pursuant to these agreements, we will be required to make additional payments, including in some cases, milestone payments if and when we achieve specified development, regulatory and commercialization events, as well as royalty payments on sales of our approved products. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent upon the successful achievement of such milestones. Based on our current development plans, during the next 12 months from the filing of this annual report on Form 10-K, potential milestone payments due to third parties are immaterial in connection with our various collaboration and license agreements. These milestones generally become due and payable upon achievement. Because the achievement of these milestones was not considered probable as of December 31, 2020, such contingencies have not been recorded in our consolidated financial statements.
Recent Accounting Pronouncements
Please read Note 2 to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this annual report on Form 10-K for a description of recent accounting pronouncements applicable to our business.