UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-36014

AGIOS PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	26-0662915
(State or Other Jurisdiction of  Incorporation or Organization)	(I.R.S. Employer  Identification No.)
88 Sidney Street, Cambridge, Massachusetts	02139
(Address of Principal Executive Offices)	(Zip Code)

(617) 649-8600

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.001 per share	AGIO	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No    ☒

Number of shares of the registrant’s Common Stock, $0.001 par value, outstanding on July 23, 2021: 58,951,469

AGIOS PHARMACEUTICALS, INC.

FORM 10-Q

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021

TABLE OF CONTENTS

 

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020	2
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2021 and 2020	3
	Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2021 and 2020	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27
PART II. OTHER INFORMATION		28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 6.	Exhibits	55
	Signatures	56

PART I. FINANCIAL INFORMATION

Item 1.        Financial Statements (Unaudited)

AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share data)	June 30, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	969,124	$	127,436
Marketable securities	703,864		445,493
Other receivable	8,131		—
Prepaid expenses and other current assets	21,443		15,889
Current assets of discontinued operations	—		47,859
Total current assets	1,702,562		636,677
Marketable securities	61,313		97,608
Operating lease assets	79,901		84,661
Property and equipment, net	27,056		30,815
Financing lease assets	871		590
Other non-current assets	2,900		—
Non-current assets of discontinued operations	—		2,601
Total assets	$	1,874,603	$	852,952
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	7,654	$	17,724
Accrued expenses	36,054		30,801
Operating lease liabilities	8,932		7,093
Financing lease liabilities	839		317
Taxes payable	7,170		—
Current liabilities of discontinued operations	—		38,459
Total current liabilities	60,649		94,394
Operating lease liabilities, net of current portion	91,971		97,458
Financing lease liabilities, net of current portion	167		331
Non-current liabilities of discontinued operations	—		261,269
Total liabilities	152,787		453,452
Stockholders’ equity:
Preferred stock, $0.001 par value; 25,000,000 shares authorized; no shares issued or outstanding at June 30, 2021 and December 31, 2020	—		—
Common stock, $0.001 par value; 125,000,000 shares authorized; 70,404,782 shares issued and 59,910,814 outstanding at June 30, 2021, and 69,293,920 shares issued and outstanding at December 31, 2020	70		69
Additional paid-in capital	2,306,304		2,242,801
Accumulated other comprehensive (loss) income	(144)		105
Accumulated deficit	(55,367)		(1,843,475)
Treasury stock, at cost (10,493,968 shares at June 30, 2021 and no shares at December 31, 2020)	(529,047)		—
Total stockholders’ equity	1,721,816		399,500
Total liabilities and stockholders’ equity	$	1,874,603	$	852,952

See accompanying Notes to Condensed Consolidated Financial Statements.

1

AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except share and per share data)	2021		2020		2021		2020
Cost and expenses:
Research and development	$	62,007	$	54,086	$	119,674	$	109,445
Selling, general and administrative	29,215		29,178		62,765		60,849
Total cost and expenses	91,222		83,264		182,439		170,294
Loss from operations	(91,222)		(83,264)		(182,439)		(170,294)
Gain on sale of oncology business	2,000		—		2,000		—
Interest (expense) income, net	(92)		1,769		248		4,705
Other income, net	6,524		—		6,524		—
Net loss from continuing operations	(82,790)		(81,495)		(173,667)		(165,589)
Net income (loss) from discontinued operations, net of tax	(3,427)		(8,983)		1,961,775		34,855
Net income (loss)	$	(86,217)	$	(90,478)	$	1,788,108	$	(130,734)
Net loss from continuing operations per share - basic and diluted	$	(1.36)	$	(1.18)	$	(2.66)	$	(2.41)
Net income (loss) from discontinued operations per share - basic and diluted	$	(0.06)	$	(0.13)	$	30.05	$	0.51
Net income (loss) per share - basic and diluted	$	(1.41)	$	(1.31)	$	27.39	$	(1.90)
Weighted-average number of common shares used in computing net loss per share from continuing operations, net income (loss) per share from discontinued operations and net income (loss) per share – basic and diluted	61,066,977		68,958,091		65,281,827		68,784,109

See accompanying Notes to Condensed Consolidated Financial Statements.

2

AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2021		2020		2021		2020
Net income (loss)	$	(86,217)	$	(90,478)	$	1,788,108	$	(130,734)
Other comprehensive (loss) income
Unrealized (loss) gain on available-for-sale securities	(141)		1,562		(249)		1,434
Comprehensive income (loss)	$	(86,358)	$	(88,916)	$	1,787,859	$	(129,300)

See accompanying Notes to Condensed Consolidated Financial Statements.

3

AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Treasury Stock			Total Stockholders’ Equity
(in thousands, except share amounts)	Shares	Amount								Shares	Amount
Balance at December 31, 2020	69,293,920	$	69	$	2,242,801	$	105	$	(1,843,475)	—	$	—	$	399,500
Common stock issued under stock incentive plan and ESPP	518,285	1		7,346		—		—		—	—		7,347
Stock-based compensation expense	—	—		14,854		—		—		—	—		14,854
Other comprehensive loss	—	—		—		(108)		—		—	—		(108)
Net income	—	—		—		—		1,874,325		—	—		1,874,325
Disposition of oncology business	—	—		712		—		—		—	—		712
Balance at March 31, 2021	69,812,205	$	70	$	2,265,713	$	(3)	$	30,850	—	$	—	$	2,296,630
Common stock issued under stock incentive plan and ESPP	592,577	$	—	$	25,673	$	—	$	—	—	$	—	$	25,673
Stock-based compensation expense	—	—		14,885		—		—		—	—		14,885
Repurchase of common stock	—	—		—		—		—		(10,493,968)	(529,047)		(529,047)
Other comprehensive loss	—	—		—		(141)		—		—	—		(141)
Net loss	—	—		—		—		(86,217)		—	—		(86,217)
Disposition of oncology business	—	—		33		—		—		—	—		33
Balance at June 30, 2021	70,404,782	$	70	$	2,306,304	$	(144)	$	(55,367)	(10,493,968)	$	(529,047)	$	1,721,816

See accompanying Notes to Condensed Consolidated Financial Statements.

4

AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Total Stockholders’ Equity
(in thousands, except share amounts)	Shares	Amount
Balance at December 31, 2019	68,401,105	$	68	$	2,156,363	$	202	$	(1,516,105)	$	640,528
Common stock issued under stock incentive plan and ESPP	388,820	1		5,464		—		—		5,465
Stock-based compensation expense	—	—		15,670		—		—		15,670
Other comprehensive loss	—	—		—		(128)		—		(128)
Net loss	—	—		—		—		(40,256)		(40,256)
Disposition of oncology business	—	—		4,020		—		—		4,020
Balance at March 31, 2020	68,789,925	$	69	$	2,181,517	$	74	$	(1,556,361)	$	625,299
Common stock issued under stock incentive plan and ESPP	268,771	$	—	$	1,652	$	—	$	—	$	1,652
Stock-based compensation expense	—	—		17,614		—		—		17,614
Other comprehensive income	—	—		—		1,562		—		1,562
Net loss	—	—		—		—		(90,478)		(90,478)
Disposition of oncology business	—	—		2,816		—		—		2,816
Balance at June 30, 2020	69,058,696	$	69	$	2,203,599	$	1,636	$	(1,646,839)	$	558,465

See accompanying Notes to Condensed Consolidated Financial Statements.

5

AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
(In thousands)	2021		2020
Operating activities
Net income (loss)	$	1,788,108	$	(130,734)
Less: Net Income from discontinued operations	1,961,775		34,855
Net loss from continuing operations	(173,667)		(165,589)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Depreciation and amortization	4,829		4,887
Stock-based compensation expense	29,739		33,284
Net amortization of premium (accretion of discount) on marketable securities	3,422		473
Loss on disposal of property and equipment	12		—
Non-cash operating lease expense	4,760		4,435
Changes in operating assets and liabilities:
Other receivables	(8,131)		—
Prepaid expenses and other current and non-current assets	(8,454)		1,295
Accounts payable	(5,561)		(2,562)
Accrued expenses and other current liabilities	(2,547)		(8,265)
Operating lease liabilities	(3,631)		(4,149)
Net cash used in operating activities - continuing operations	(159,229)		(136,191)
Net cash used in operating activities - discontinued operations	(78,814)		(36,964)
Net cash used in operating activities	(238,043)		(173,155)
Investing activities
Purchases of marketable securities	(498,896)		(189,601)
Proceeds from maturities and sales of marketable securities	273,149		328,883
Purchases of property and equipment	(1,261)		(8,340)
Net cash (used in) provided by investing activities - continuing operations	(227,008)		130,942
Net cash provided by (used in) investing activities - discontinued operations	1,802,936		(348)
Net cash provided by investing activities	1,575,928		130,594
Financing activities
Payments on financing lease obligations	(170)		(166)
Purchase of treasury stock	(529,047)		—
Net proceeds from stock option exercises and employee stock purchase plan	33,020		7,117
Net cash (used in) provided by financing activities - continuing operations	(496,197)		6,951
Net cash provided by financing activities - discontinued operations	—		250,537
Net cash (used in) provided by financing activities	(496,197)		257,488
Net change in cash and cash equivalents	841,688		214,927
Cash and cash equivalents at beginning of the period	127,436		80,931
Cash and cash equivalents at end of the period	$	969,124	$	295,858
Supplemental disclosure of non-cash investing and financing transactions
Additions to property and equipment in accounts payable and accrued expenses	$	56	$	3,621
Operating lease liabilities arising from obtaining operating lease assets	$	—	$	—
Financing lease liabilities arising from obtaining financing lease assets	$	511	$	—

See accompanying Notes to Condensed Consolidated Financial Statements.

6

AGIOS PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Overview and Basis of Presentation

References to Agios

Throughout this Quarterly Report on Form 10-Q, “we,” “us,” and “our,” and similar expressions, except where the context requires otherwise, refer to Agios Pharmaceuticals, Inc. and its consolidated subsidiaries, and “our Board of Directors” refers to the board of directors of Agios Pharmaceuticals, Inc.

Overview

We are a biopharmaceutical company committed to transforming patients’ lives through scientific leadership in the field of cellular metabolism and adjacent areas of biology, with the goal of creating differentiated, small molecule medicines for genetically defined diseases, or GDDs. To address our focus areas, we take a systems biology approach to deeply understand disease states, drive the discovery and validation of novel therapeutic targets, and define patient selection strategies, thereby increasing the probability that our experimental medicines will have the desired therapeutic effect. We are located in Cambridge, Massachusetts.

Sale of our Oncology Business to Servier

On March 31, 2021, we completed the sale of our oncology business to Servier Pharmaceuticals LLC, or Servier. The transaction included the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs for a payment of approximately $1.8 billion in cash at the closing, subject to certain adjustments, and a payment of $200 million in cash, if, prior to January 1, 2027, vorasidenib is granted new drug application, or NDA, approval from the U.S. Food and Drug Administration, or FDA, with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an isocitrate dehydrogenase 1 or 2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval), as well as a royalty of 5% of U.S. net sales of TIBSOVO® from the close of the transaction through loss of exclusivity, and a royalty of 15% of U.S. net sales of vorasidenib from the first commercial sale of vorasidenib through loss of exclusivity. Servier also acquired our co-commercialization rights for Bristol Myers Squibb’s IDHIFA® and the right to receive a $25.0 million potential milestone payment under our prior collaboration agreement with Celgene Corporation, and following the sale Servier will conduct certain clinical development activities within the IDHIFA® development program.

We recorded income from royalties of approximately $2.0 million on U.S. net sales of TIBSOVO® by Servier in the gain on sale of oncology business line item within the condensed consolidated statements of operations, for the three and six months ended June 30, 2021. We also recorded approximately $3.5 million of cash receipts from customers owed to Servier within the prepaid expenses and other current assets line item within the condensed consolidated balance sheet as of June 30, 2021.

Basis of presentation

The condensed consolidated balance sheet as of June 30, 2021, the condensed consolidated statements of operations, comprehensive income (loss) and stockholders' equity for the three and six months ended June 30, 2021 and 2020, and the condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of our management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state our financial position as of June 30, 2021, our results of operations and stockholders' equity for the three and six months ended June 30, 2021 and 2020, and cash flows for the six months ended June 30, 2021 and 2020. The financial data and the other financial information disclosed in these notes to the condensed consolidated financial statements related to the three and six-month periods are also unaudited. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other future annual or interim period. The condensed consolidated balance sheet data as of December 31, 2020 was derived from our audited financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles, or U.S. GAAP. The condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 that was filed with the Securities and Exchange Commission, or the SEC, on February 25, 2021.

In late March 2021, our oncology business met all the conditions to be classified as held for sale and, because we consider the disposal of the oncology business to be a strategic shift that had a major effect on our operations and financial results,

7

represented a discontinued operation. All assets and liabilities associated with our oncology business were therefore classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets for the periods presented. Further, all historical operating results for our oncology business are reflected within discontinued operations in the condensed consolidated statements of operations for all periods presented. For additional information, see Note 3, Discontinued Operations.

Our condensed consolidated financial statements include our accounts and the accounts of our wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared in conformity with U.S. GAAP.

Reclassifications

Certain amounts in prior periods have been reclassified to reflect the impact of the discontinued operations treatment of the oncology business in order to conform to the current period presentation.

Use of estimates

The preparation of our condensed consolidated financial statements requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, judgments and methodologies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenues and expenses. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including expenses, reserves and allowances, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and any variant strains of the virus and the actions taken to contain the pandemic or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. We have made estimates of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates.

Liquidity

On March 31, 2021 we completed the sale of our oncology business to Servier, and received approximately $1.8 billion in cash at closing. In connection with the sale, on March 25, 2021, we announced that our board of directors authorized the repurchase of up to $1.2 billion of our outstanding shares of common stock, or the Repurchase Program, using the proceeds from the sale of our oncology business to Servier. On March 31, 2021, in connection with the Repurchase Program, we entered into a definitive share repurchase agreement with Bristol-Myers Squibb Company, or BMS, to repurchase 7,121,658 shares of our common stock held by certain subsidiaries of BMS for an aggregate purchase price of $344.5 million, or $48.3785 per share. This repurchase was completed on April 5, 2021. Further, on April 2, 2021, in connection with the Repurchase Program, we entered into a Rule 10b5-1 repurchase plan pursuant to which we may repurchase up to $600 million of shares of our common stock. As of June 30, 2021, we have repurchased approximately 3.4 million shares for $184.5 million, or $54.71 per share, under the plan with approximately $415.5 million remaining under the plan for additional repurchases. In total, as of June 30, 2021, we have repurchased 10.5 million common shares for $529.0 million under the Repurchase Program.

As of June 30, 2021, 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 will be sufficient to fund current operations for at least the next twelve months from the issuance date of these financial statements.

2. Summary of Significant Accounting Policies

Discontinued Operations

We accounted for the sale of our oncology business in accordance with Accounting Standards Codification, ASC, 205 Discontinued Operations and Accounting Standards Update, ASU, No. 2014-08, Reporting of Discontinued Operations and Disclosures of Disposals of Components of an Entity. We followed the held-for-sale criteria as defined in ASC 306 and ASC 205. ASC 205 requires that a component of an entity that has been disposed of or is classified as held for sale and has operations and cash flows that can be clearly distinguished from the rest of the entity be reported as assets held for sale and discontinued operations. In the period a component of an entity has been disposed of or classified as held for sale, the results of operations for the periods presented are reclassified into separate line items in the unaudited condensed consolidated statements of operations. Assets and liabilities are also reclassified into separate line items on the related condensed consolidated balance sheets for the periods presented. The statements of cash flows for the periods presented are also reclassified to reflect the results of discontinued operations as separate line items. ASU 2014-08 requires that only a disposal of a component of an entity, or a

8

group of components of an entity, that represents a strategic shift that has, or will have, a major effect on the reporting entity’s operations and financial results be reported in the financial statements as discontinued operations. ASU 2014-08 also provides guidance on the financial statement presentations and disclosures of discontinued operations.

Due to the sale of the oncology business during the first quarter of 2021, see Note 3, Discontinued Operations, in accordance with ASC 205, Discontinued Operations, we have classified the results of the oncology business as discontinued operations in our unaudited condensed consolidated statements of operations and cash flows for all periods presented. All assets and liabilities associated with our oncology business were therefore classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets for the periods presented. All amounts included in the notes to the unaudited condensed consolidated financial statements relate to continuing operations unless otherwise noted.

Treasury Stock

Treasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock.

There have been no other material changes to the significant accounting policies previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

Recent accounting pronouncements

Other accounting standards that have been issued by the Financial Accounting Standards Board or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our financial statements upon adoption.

3. Discontinued Operations

On March 31, 2021, we completed the sale of our oncology business to Servier. We have determined the sale of the oncology business represents a strategic shift that had a major effect on our business and therefore met the criteria for classification as discontinued operations at March 31, 2021. Accordingly, the oncology business is reported as discontinued operations in accordance with ASC 205-20, Discontinued Operations. The related assets and liabilities of the oncology business are classified as assets and liabilities of discontinued operations in the condensed consolidated balance sheets and the results of operations from the oncology business as discontinued operations in the condensed consolidated statements of operations. Applicable amounts in prior years have been recast to conform to this discontinued operations presentation. We recognized a gain on the sale of the oncology business upon closing.

The following table presents the assets and liabilities of the discontinued operations as of December 31, 2020:

(in thousands)	December 31, 2020
Assets
Current assets:
Accounts receivable, net	$	21,328
Collaboration receivable – related party	2,123
Collaboration receivable – other	1,948
Inventory	14,698
Prepaid expenses and other current assets	7,762
Total current assets of discontinued operations	47,859
Other non-current assets	2,601
Total assets of discontinued operations	$	50,460
Liabilities
Current liabilities:
Accounts payable	$	9,120
Accrued expenses	29,339
Total current liabilities of discontinued operations	38,459
Liability related to the sale of future revenue, net of debt issuance costs	261,269
Total liabilities of discontinued operations	$	299,728

9

The following table presents the net liabilities transferred for the sale oncology business for the quarter ended March 31, 2021:

(in thousands)	March 31, 2021
Assets
Current assets:
Accounts receivable, net	$	25,386
Collaboration receivable – related party	2,253
Collaboration receivable – other	2,438
Inventory	16,190
Prepaid expenses and other current assets	7,125
Total current assets of discontinued operations	53,392
Other non-current assets	2,234
Total assets of discontinued operations	$	55,626
Liabilities
Current liabilities:
Accounts payable	$	4,245
Accrued expenses	30,288
Total current liabilities of discontinued operations	34,533
Liability related to the sale of future revenue, net of debt issuance costs	264,281
Total liabilities of discontinued operations	298,814
Net liabilities distributed to Servier	$	(243,188)

The following table presents the gain on the sale for the quarter ended March 31, 2021:

(in thousands)	March 31, 2021
Cash proceeds	$	1,802,936
Less: transaction and insurance costs	(53,573)
Less: net liabilities distributed	(243,188)
Gain on sale, pre-tax	1,992,551
Income tax	(12,867)
Gain on sale, net of tax	$	1,979,684

As of June 30, 2021, there were no assets or liabilities classified as discontinued operations.

10

The following table presents the financial results of the discontinued operations:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020
Revenues:
Product revenue, net	$	—	$	27,581	$	36,909	$	50,255
Collaboration revenue – related party	—		5,735		1,350		65,832
Collaboration revenue – other	—		692		491		1,685
Royalty revenue – related party	—		3,339		2,659		6,673
Total revenue	—		37,347		41,409		124,445
Cost and expenses:
Cost of sales	—		675		706		1,208
Research and development	207		36,831		41,564		72,728
Selling, general and administrative	420		6,773		8,551		13,603
Total cost and expenses	627		44,279		50,821		87,539
(Loss) income from discontinued operations	(627)		(6,932)		(9,412)		36,906
Non-cash interest expense for the sale of future revenue	—		(2,051)		(5,697)		(2,051)
Gain on the sale of the oncology business	(2,800)		—		1,989,751		—
Income from discontinued operations, pre-tax	(3,427)		(8,983)		1,974,642		34,855
Income tax expense	—		—		(12,867)		—
Net income from discontinued operations	$	(3,427)	$	(8,983)	$	1,961,775	$	34,855

In accordance with ASC 205-20, only expenses specifically identifiable and related to a business to be disposed may be presented in discontinued operations. As such, the research and development, marketing, selling and general and administrative expenses in discontinued operations include corporate costs incurred directly to solely support our oncology business.

We have also entered into a Transition Services Agreement with Servier, through which we will provide transitional services related to discovery, clinical development, technical operations, commercial and general and administrative related activities for periods ranging from one month to approximately one year after March 31, 2021.

The milestone payment for approval of vorasidenib and royalty payments related to vorasidenib and TIBSOVO® represent contingent consideration. Contingent consideration has been accounted for as a gain contingency in accordance with ASC 450, Contingencies, and will be recognized in earnings in the period when realizable.

4. Fair Value Measurements

We record cash equivalents and marketable securities at fair value. ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, directly or indirectly, for substantially the full term of the asset or liability.

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

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The following table summarizes our cash equivalents and marketable securities measured at fair value on a recurring basis as of June 30, 2021:

(In thousands)	Level 1		Level 2		Level 3		Total
Cash equivalents	$	834,786	$	70,898	$	—	$	905,684
Total cash equivalents	834,786		70,898		—		905,684
Marketable securities:
U.S. Treasuries	—		85,251		—		85,251
Government securities	—		101,976		—		101,976
Corporate debt securities	—		577,950		—		577,950
Total marketable securities	—		765,177		—		765,177
Total cash equivalents and marketable securities	$	834,786	$	836,075	$	—	$	1,670,861

Cash equivalents and marketable securities have been initially valued at the transaction price and subsequently, at the end of each reporting period, valued utilizing third-party pricing services or other observable market data. The pricing services utilize industry standard valuation models, including both income and market-based approaches, and observable market inputs to determine value. After completing our validation procedures, we did not adjust or override any fair value measurements provided by the pricing services as of June 30, 2021.

There have been no changes to the valuation methods during the six months ended June 30, 2021. We have no financial assets or liabilities that were classified as Level 3 at any point during the six months ended June 30, 2021.

5. Marketable Securities

Our marketable securities are classified as available-for-sale pursuant to ASC 320, Investments – Debt and Equity Securities, and are recorded at fair value. Unrealized gains are included as a component of accumulated other comprehensive (loss) income in the condensed consolidated balance sheets and statements of stockholders’ equity and a component of total comprehensive loss in the condensed consolidated statements of comprehensive (loss) income, until realized. Unrealized losses are evaluated for impairment under ASC 326, Financial Instruments - Credit Losses, to determine if the impairment is credit-related or noncredit-related. Credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings, and noncredit-related impairment is recognized in other comprehensive income, net of taxes. Realized gains and losses are included in investment income on a specific-identification basis. There were no material realized gains or losses on marketable securities for the three and six months ended June 30, 2021 or 2020.

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Marketable securities at June 30, 2021 consisted of the following:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Current:
U.S. Treasuries	$	85,256	$	2	$	(7)	$	85,251
Government securities	76,980		16		—		76,996
Corporate debt securities	541,713		11		(107)		541,617
Total Current	703,949		29		(114)		703,864
Non-current:
Government securities	25,000		—		(20)		24,980
Corporate debt securities	36,372		—		(39)		36,333
Total Non-current	61,372		—		(59)		61,313
Total marketable securities	$	765,321	$	29	$	(173)	$	765,177

Marketable securities at December 31, 2020 consisted of the following:

(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Current:
U.S. Treasuries	$	113,559	$	134	$	(21)	$	113,672
Government securities	108,263		37		(8)		108,292
Corporate debt securities	223,461		140		(72)		223,529
Total Current	445,283		311		(101)		445,493
Non-current:
U.S. Treasuries	15,147		—		(10)		15,137
Government securities	26,831		8		—		26,839
Corporate debt securities	55,735		2		(105)		55,632
Total Non-current	97,713		10		(115)		97,608
Total marketable securities	$	542,996	$	321	$	(216)	$	543,101

As of June 30, 2021 and December 31, 2020, we held both current and non-current investments. Investments classified as current have maturities of less than one year. Investments classified as non-current are those that: (i) have a maturity of greater than one year, and (ii) we do not intend to liquidate within the next twelve months, although these funds are available for use and, therefore, are classified as available-for-sale.

As of June 30, 2021 and December 31, 2020, we held 113 and 87 debt securities, respectively, that were in an unrealized loss position for less than one year. We did not record an allowance for credit losses as of June 30, 2021 and December 31, 2020 related to these securities. The aggregate fair value of debt securities in an unrealized loss position at June 30, 2021 and December 31, 2020 was $559.3 million and $299.0 million, respectively. There were no individual securities that were in a significant unrealized loss position as of June 30, 2021 and December 31, 2020. We regularly review the securities in an unrealized loss position and evaluate the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions. We do not consider these marketable securities to be impaired as of June 30, 2021 and December 31, 2020.

6. Leases

Our building leases are comprised of office and laboratory space under non-cancelable operating leases. These lease agreements have remaining lease terms of seven years and contain various clauses for renewal at our option. The renewal options were not included in the calculation of the operating lease assets and the operating lease liabilities as the renewal options are not reasonably certain of being exercised. The lease agreements do not contain residual value guarantees.

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The components of lease expense and other information related to leases were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2021		2020		2021		2020
Operating lease costs	$	3.8	$	3.8	$	7.6	$	7.6
Cash paid for amounts included in the measurement of operating lease liabilities	$	3.6	$	3.5	$	7.2	$	7.4

We have not entered into any material short-term leases or financing leases as of June 30, 2021.

As of June 30, 2021, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter were as follows:

(In thousands)
Remaining 2021	$	6,039
2022	16,773
2023	18,126
2024	18,660
2025	19,507
Thereafter	44,385
Undiscounted minimum rental commitments	$	123,490
Interest	(22,587)
Operating lease liabilities	$	100,903

In arriving at the operating lease liabilities as of June 30, 2021 and December 31, 2020, we applied the weighted-average incremental borrowing rate of 5.7% for both periods over a weighted-average remaining lease term of 6.7 years and 7.2 years, respectively.

7. Accrued Expenses

Accrued expenses consist of the following:

(In thousands)	June 30, 2021		December 31, 2020
Accrued compensation	$	10,559	$	20,345
Accrued research and development costs	7,627		5,444
Accrued professional fees	3,075		2,897
Accrued other	14,793		2,115
Total accrued expenses	$	36,054	$	30,801

8. Share-Based Payments

2013 Stock Incentive Plan

In June 2013, our Board of Directors adopted and, in July 2013 our stockholders approved, the 2013 Stock Incentive Plan, or the 2013 Plan. The 2013 Plan became effective upon the closing of our initial public offering and provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, or RSUs, performance-based share units, or PSUs, and other stock-based awards to employees, non-employees and non-employee directors. Following the adoption of the 2013 Plan, we granted no further stock options or other awards under the 2007 Stock Incentive Plan, or the 2007 Plan. Any options or awards outstanding under the 2007 Plan at the time of adoption of the 2013 Plan remain outstanding and effective. As of June 30, 2021, the total number of shares reserved under the 2007 Plan and the 2013 Plan was 11,532,771, and we had 4,814,051 shares available for future issuance under the 2013 Plan.

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Stock options

The following table presents stock option activity for the six months ended June 30, 2021:

	Number of Stock Options	Weighted-Average Exercise Price
Outstanding at December 31, 2020	6,143,046	$	58.46
Granted	999,488	56.17
Exercised	(677,154)	45.79
Forfeited/Expired	(1,213,538)	61.89
Outstanding at June 30, 2021	5,251,842	$	58.87
Exercisable at June 30, 2021	3,412,161	$	61.00
Vested and expected to vest at June 30, 2021	5,251,842	$	58.87

At June 30, 2021, there was approximately $58.8 million of total unrecognized compensation expense related to unvested stock option awards, which we expect to recognize over a weighted-average period of approximately 2.6 years.

Restricted stock units

The following table presents RSU activity for the six months ended June 30, 2021:

	Number of Stock Units	Weighted-Average Grant Date Fair  Value
Unvested shares at December 31, 2020	1,284,378	$	50.78
Granted	785,094	56.02
Vested	(374,307)	57.74
Forfeited	(510,152)	51.84
Unvested shares at June 30, 2021	1,185,013	$	51.60

As of June 30, 2021, there was approximately $47.2 million of total unrecognized compensation expense related to RSUs, which we expect to recognize over a weighted-average period of approximately 2.1 years.

Performance-based stock units

The following table presents PSU activity for the six months ended June 30, 2021:

	Number of Stock Units	Weighted-Average Grant Date Fair  Value
Unvested shares at December 31, 2020	142,229	$	54.28
Granted	121,000	56.68
Vested	—	—
Forfeited	(24,059)	49.49
Unvested shares at June 30, 2021	239,170	$	55.98

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, 2021, there was no unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered probable of achievement, and $13.4 million of total unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered not probable of achievement.

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Market-based stock units

The following table presents market-based stock unit, or MSU, activity for the six months ended June 30, 2021:

	Number of Stock Units	Weighted-Average Grant Date Fair Value
Unvested shares at December 31, 2020	42,695	$	41.50
Granted	—	—
Unvested shares at June 30, 2021	42,695	$	41.50

The fair value of MSUs are estimated using a Monte Carlo simulation model. Assumptions and estimates utilized in the model include the risk-free interest rate, dividend yield, expected stock volatility and the estimated period to achievement of the market condition. As of June 30, 2021, there was no remaining unrecognized compensation expense related to MSUs.

2013 Employee Stock Purchase Plan

In June 2013, our Board of Directors adopted, and in July 2013 our stockholders approved, the 2013 Employee Stock Purchase Plan, or the 2013 ESPP. We issued and sold 59,401 and 62,694 shares of common stock during the six months ended June 30, 2021 and 2020, respectively, under the 2013 ESPP. The 2013 ESPP provides participating employees with the opportunity to purchase up to an aggregate of 1,345,454 shares of our common stock. As of June 30, 2021, we had 921,043 shares of common stock available for future issuance under the 2013 ESPP.

Stock-based compensation expense

Stock-based compensation expense by award type included within the condensed consolidated statements of operations is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2021		2020		2021	2020
Stock options	$	8,789	$	10,143	$