~~Under Section 382~~

Table of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards, or NOLs, and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. We have completed several financings since our inception which may have resulted in a change in control as defined by IRC Section 382. We may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.Contents

~~We must comply with environmental laws and regulations, and failure to comply with these laws and regulations could expose us to significant liabilities.~~

We are subject to a variety of federal, state and local laws and regulations governing the use, generation, manufacture, distribution, storage, handling, treatment and disposal of materials that we use in our manufacturing process. Although we believe our safety procedures for handling and disposing of these materials and waste products comply with these laws and regulations, we cannot eliminate the risk of accidental injury or contamination from the use, manufacture, distribution, storage, handling, treatment or disposal of hazardous materials. In the event of contamination or injury, or failure to comply with environmental, occupational health and safety and export control laws and regulations, we could be held liable for any resulting damages and any such liability could exceed our assets and resources. We are uninsured for third-party contamination injury.

Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial ~~markets.~~markets, including as a result of disruption in the financial markets and economies worldwide in connection with the COVID-19 pandemic. A severe or prolonged economic downturn could result in a variety of risks to our business, including, weakened demand for our approved product or any of our therapeutic candidates and our ability to raise additional capital when needed on acceptable terms, if at all. Weak global economic conditions, especially in Europe, could decrease the number of clinical trial sites available to us and hinder our ability to conduct clinical trials, which would have a material adverse effect on our business and the development of our therapeutic candidates. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

Our internal computer systems, or those of our partners, third-party CROs or other contractors or consultants, may fail or suffer data breaches and cyber-attacks, which could compromise our intellectual property or other sensitive information and could result in a material disruption of our therapeutic candidate development programs.

In the ordinary course of our business, we collect, maintain and transmit sensitive data on our networks and systems and on the networks and systems of our partners, third-party CROs and other contractors or consultants, including our intellectual property and proprietary or confidential business information (such as research data and employee personal information) and confidential information with respect to our vendors and our partners. The secure maintenance of this information is critical to our business and reputation. We believe that companies have been increasingly subject to a wide variety of security incidents, cyber-attacks and other attempts to gain unauthorized access. These threats can come from a variety of sources, ranging in sophistication from an individual hacker to a state-sponsored attack. Cyber threats may be generic, or they may be custom-crafted against our information systems. Over the past few years, cyber-attacks have become more prevalent and much harder to detect and defend against.

Our network and storage applications and those of our clinical research organizations, collaborators and vendors may be subject to unauthorized access by hackers or breached due to operator error, malfeasance or other system disruptions. It is often difficult to anticipate or immediately detect such incidents and the damage caused by such incidents. These data breaches and any unauthorized access or disclosure of our information or intellectual property could compromise our intellectual property and expose sensitive business information. A data security breach could also lead to public exposure of personal information of

our employees. Cyber-attacks could cause us to incur significant remediation costs, result in product development delays, disrupt key business operations and divert attention of management and key information technology resources. Our network security and data recovery measures and those of our clinical research organizations, collaborators and vendors may not be adequate to protect against such security breaches and disruptions. These incidents could also subject us to liability, expose us to significant expense and cause significant harm to our reputation and business. While we have not experienced any such material security breaches or disruptions to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our or our partners' regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

Risks Related to Our Common Stock

The market price of our common stock may be highly volatile, and you may not be able to resell your shares at or above the price at which you purchased them.

Since our initial public offering, the price of our common stock as reported on The ~~NASDAQ~~Nasdaq Global Market has ranged from a low of $16.78 on November 6 and 8, 2013 to a high of ~~$57.89~~$143.62 on ~~January~~February 22, ~~2014.~~2021. The market price of shares of our common stock could be subject to wide fluctuations in response to many risk factors listed in this section, and others beyond our control, including:

•results of, ~~clinical trials of our therapeutic candidates, including luspatercept, sotatercept, ACE-083~~ and ~~ACE-2494;~~

the timing of the release of results of, our clinical trials, including those that are being conducted by ~~Celgene;~~BMS;

•failure to obtain sufficient pricing and reimbursement for REBLOZYL or our therapeutic candidates, if approved, from private and governmental payers;

•failure to obtain market acceptance and adoption of REBLOZYL or our therapeutic candidates, if approved;

•results of clinical trials of our competitors' products;

•regulatory actions with respect to our products or our competitors' products;

•actual or anticipated fluctuations in our financial condition and operating results;

•publication of research reports by securities analysts about us or our competitors or our industry;

•our failure or the failure of our competitors to meet analysts' projections or guidance that we or our competitors may give to the market;

•additions and departures of key personnel;

•strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

•the passage of legislation or other regulatory developments affecting us or our industry;

•fluctuations in the valuation of companies perceived by investors to be comparable to us;

•sales of our common stock by us, our insiders or our other stockholders;

•speculation in or expectations of the press or investment ~~community;~~community, including with regard to our potential clinical trial results, royalty revenue or market opportunities;

•announcement or expectation of additional financing efforts;

•changes in accounting principles;

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•terrorist acts, acts of war or periods of widespread civil unrest;

•natural disasters and other ~~calamities;~~calamities, including outbreaks of contagious disease such as the COVID-19 pandemic;

•actual or perceived changes in current or future market conditions for biopharmaceutical stocks; and

•changes in general market and economic conditions.

In addition, the stock market has recently experienced significant volatility, particularly with respect to pharmaceutical, biotechnology and other life sciences company stocks. The volatility of pharmaceutical, biotechnology and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock. As we operate in a single industry, we are especially vulnerable to these factors to the extent that they affect our industry or our products, or to a lesser extent our markets. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management's attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.

We incur significant costs as a result of operating as a public company and complying with the Sarbanes-Oxley Act, and our management is required to devote substantial time to compliance initiatives. If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common stock.

As a public company, we incur significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act, and rules of the SEC and those of NASDAQ have imposed various requirements on public companies including requiring establishment and maintenance of effective disclosure and financial controls. Our management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased and will continue to increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We currently do not have an internal audit group, and we may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. We are required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment must include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. In addition, we are required to have our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting.

During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the NASDAQ, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

We do not expect to pay any cash dividends for the foreseeable future.

You should not rely on an investment in our common stock to provide dividend income. We do not anticipate that we will pay any cash dividends to holders of our common stock in the foreseeable future. Instead, we plan to retain any earnings to maintain and expand our operations. In addition, any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our common stock.

We could be subject to securities class action litigation.

In the past, securities class action litigation has often been brought against companies following a decline in the market price of their securities. This risk is especially relevant for us because biopharmaceutical companies have experienced significant stock price volatility in recent years. If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

Provisions in our restated certificate of incorporation, our amended and restated by-laws and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

Our restated certificate of incorporation, amended and restated by-laws and Delaware law contain provisions that may have the effect of delaying or preventing a change in control of us or changes in our management. Our restated certificate of incorporation and by-laws include provisions that:

•authorize "blank check" preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;

•create a classified board of directors whose members serve staggered three-year terms;

•specify that special meetings of our stockholders can be called only by our board of directors;

•prohibit stockholder action by written consent;

•establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;

•provide that our directors may be removed only for cause;

•provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;

•specify that no stockholder is permitted to cumulate votes at any election of directors;

•expressly authorize our board of directors to modify, alter or repeal our amended and restated by-laws; and

•require supermajority votes of the holders of our common stock to amend specified provisions of our restated certificate of incorporation and amended and restated by-laws

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These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a publicly-held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. As a result, you may lose your ability to sell your stock for a price in excess of the prevailing market price due to these protective measures and efforts by stockholders to change the direction or management of the company may be unsuccessful.

Any provision of our restated certificate of incorporation or amended and restated by-laws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

Our restated certificate of incorporation designates the Court of Chancery of the State of Delaware and federal court within the State of Delaware as the exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our restated certificate of incorporation provides that, subject to limited exceptions, the Court of Chancery of the State of Delaware and federal court within the State of Delaware will be exclusive forums for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our restated certificate of incorporation or our amended and restated by-laws, or (4) any other action asserting a claim against us that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our restated certificate of incorporation described above. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

Sales of our common stock by our employees, including our executive officers, could cause our stock price to fall or prevent it from increasing for numerous reasons, and sales by such persons could be viewed negatively by other investors.

In accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, and our policies regarding stock transactions, a number of our employees, including executive officers, have adopted and may continue to adopt stock trading plans pursuant to which they have arranged to sell shares of our common stock from time to time in the

future. Generally, sales under such plans by our executive officers and directors require public filings. Sales of our common stock by such persons could cause the price of our common stock to fall or prevent it from increasing. If sales by employees, executive officers or directors cause a substantial number of shares of our common stock to become available for purchase in the public market, the price of our common stock could fall or may not increase. Also, sales by such persons could be viewed negatively by holders and potential purchasers of our common stock.

If securities analysts do not publish research or reports about our business or if they publish negative, or inaccurate, evaluations of our stock, the price of our stock and trading volume could decline.

The trading market for our common stock may be impacted, in part, by the research and reports that securities or industry analysts publish about us or our business. There can be no assurance that analysts will cover us, continue to cover us or provide favorable coverage. If one or more analysts downgrade our stock or change their opinion of our stock, our share price may decline. In addition, if one or more analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

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Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

Our corporate, research and development, manufacturing, and clinical trial operations are located in Cambridge, Massachusetts. We lease approximately ~~99,000~~125,000 square feet of office and laboratory space in ~~four~~five adjacent buildings with aggregate monthly rent expense of approximately ~~$0.4~~$0.7 million. ~~Three~~Four of our leases expire in September 2023 and one lease expires in ~~March 2021.~~May 2026.

We believe our facilities are adequate for our current needs and that suitable additional substitute space would be available if needed.

Item 3. Legal Proceedings

While we are not currently a party to any material legal proceedings, we could become subject to legal proceedings in the ordinary course of business. We do not expect any such potential items to have a significant impact on our financial position.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information and Stockholders

Our common stock has been listed on The ~~NASDAQ~~Nasdaq Global Market under the symbol "XLRN" since September 19, 2013. Prior to that, there was no public market for our common stock. ~~The following table sets forth for the periods indicated the high and low sales prices per share of our common stock as reported on The NASDAQ Global Market:~~

Common Stock Price
2017 2016
High Low High Low
First Quarter $ 32.57
$ 23.07
$ 48.05
$ 22.67
Second Quarter $ 34.91
$ 24.37
$ 37.67
$ 25.49
Third Quarter $ 40.35
$ 29.57
$ 40.70
$ 28.29
Fourth Quarter $ 43.68
$ 33.37
$ 41.69
$ 24.77

As of January 31, ~~2018,~~2021, there were approximately 7948 holders of record of our common stock. This number does not include stockholders for whom shares are held in "nominee" or "street" name.

Dividends

We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings, if any, to fund the development and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. In addition, any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. Any future determination to pay dividends will be made at the discretion of our board of directors.

Securities Authorized for Issuance Under Equity Compensation Plans

Information about our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K.

Performance Graph

The following graph shows a comparison from ~~September 19, 2013~~December 31, 2015 through December 31, ~~2017~~2020 of cumulative total return on assumed investment of $100.00 in cash in our common stock, the ~~NASDAQ~~Nasdaq Composite Index and the ~~NASDAQ~~Nasdaq Biotechnology Index. Such returns are based on historical results and are not intended to suggest future performance. Data for the ~~NASDAQ~~Nasdaq Composite Index and the ~~NASDAQ~~Nasdaq Biotechnology Index assume reinvestment of dividends.

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COMPARISON OF ~~51 MONTH~~5 YEAR CUMULATIVE TOTAL RETURN(1)(2)

Among Acceleron Pharma Inc., the ~~NASDAQ~~Nasdaq Composite Index, and the ~~NASDAQ~~Nasdaq Biotechnology Index


~~(1)~~	(1) This performance graph shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, and shall not be deemed incorporated by reference into any filing of Acceleron Pharma Inc. ~~under the Securities Act of 1933, as amended.~~


~~(2)~~	~~$100 invested on September 19, 2013 in stock, or on August 31, 2013 in each index, including reinvestment of dividends.~~

~~Recent Sales of Unregistered Securities~~

~~We issued the following unregistered securities during the three months ended December 31, 2017:~~

~~In December 2017, we issued 2,207 shares of Common Stock upon the cashless exercise of warrants to purchase 2,702 shares of Common Stock.~~

~~These issuances of shares of our common stock were exempt from registration~~ under the Securities Act of 1933, as amended.

(2) $100 invested on December 31, 2015 in stock or ~~the Securities Act, pursuant to Rule 506~~index, including reinvestment of ~~Regulation D of the Securities Act and Section 4(a)(2) of the Securities Act.~~dividends.

Purchases of Equity Securities by the Issuer or Affiliated Purchasers

None.

Item 6. Selected Financial Data

The ~~information set forth below should be read in conjunction with~~Company has applied the ~~"Management's Discussion and Analysis~~amendment to Regulation S-K Item 301 which became effective on February 10, 2021.

Table of Financial Condition and Results of Operations" section and with our consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. The selected financial data in this section is not intended to replace the consolidated financial statements and are qualified in their entirety by the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

The selected consolidated statements of operations data for the years ended December 31, 2017, 2016 and 2015 and the consolidated balance sheet data as of December 31, 2017 and 2016 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We derived the selected consolidated financial data for the years ended December 31, 2014 and 2013 and as of December 31, 2015, 2014 and 2013 from audited financial statements which are not included in this Annual Report on Form 10-K.

~~Historical results are not necessarily indicative of the results to be expected in future periods.~~

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Year Ended December 31,
(in thousands, except per share data) 2017 2016 2015 2014 2013
Consolidated Statements of Operations Data:
Revenue:

Collaboration revenue:

License and milestone $ 541
$ 15,550
$ 1,184
$ 1,673
$ 43,948
Cost-sharing, net 12,940
12,221
16,913
12,959
13,282
Total revenue 13,481
27,771
18,097
14,632
57,230
Costs and expenses:

Research and development 89,726
68,580
58,404
50,897
36,051
Litigation settlement —
—
—
5,000
—
General and administrative 33,738
25,297
20,572
14,199
14,227
Total costs and expenses 123,464
93,877
78,976
70,096
50,278
(Loss) income from operations (109,983 ) (66,106 ) (60,879 ) (55,464 ) 6,952
Total other income (expense), net 1,561
9,116
(3,015 ) 4,205
(28,850 )
Loss before income taxes (108,422 ) (56,990 ) (63,894 ) (51,259 ) (21,898 )
Income tax provision (32 ) (24 ) —
—
—
Net loss $ (108,454 ) $ (57,014 ) $ (63,894 ) $ (51,259 ) $ (21,898 )
Reconciliation of net loss to net loss applicable to common stockholders:

Net loss $ (108,454 ) $ (57,014 ) $ (63,894 ) $ (51,259 ) $ (21,898 )
Accretion of dividends, interest, redemption value and issuance costs on redeemable convertible preferred stock —
—
—
—
(19,870 )
Gain on extinguishment of redeemable convertible preferred stock —
—
—
—
2,765
Net loss applicable to common stockholders-basic and diluted $ (108,454 ) $ (57,014 ) $ (63,894 ) $ (51,259 ) $ (39,003 )

Net loss per share applicable to common stockholders-basic and diluted(1) $ (2.68 ) $ (1.52 ) $ (1.92 ) $ (1.63 ) $ (4.15 )

Weighted-average number of common shares used in computing net loss per share applicable to common stockholders-basic and diluted 40,420
37,430
33,303
31,515
9,407

As of December 31,
(in thousands) 2017 2016 2015 2014 2013
Consolidated Balance Sheet Data:

Cash and cash equivalents $ 100,150
$ 20,950
$ 27,783
$ 176,460
$ 113,163
Short and long-term investments 272,800
213,432
108,198
—
—
Total assets 389,177
247,647
146,337
186,296
123,732
Total current liabilities 16,745
16,149
14,491
9,253
18,162
Long-term deferred revenue 3,161
3,704
4,239
4,816
5,620
Long-term deferred rent 1,818
953
1,157
1,818
2,337
Long-term notes payable —
—
—
—
9,048
Warrants to purchase common stock 2,236
1,244
17,187
14,124
30,753
Total stockholder's equity 365,217
225,597
109,263
156,285
57,812


~~(1)~~	See Note 2 within the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a description of the method used to calculate basic and diluted net loss per common share.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements included in Item 15 of this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, such as those set forth under "Risk Factors" and elsewhere in this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. Please also refer to the section under heading "Forward-Looking Statements."

Overview

We are a ~~leading~~ biopharmaceutical company indedicated to the discovery, development and ~~development~~commercialization of ~~TGF-beta~~ therapeutics to treat serious and rare diseases. Our research focuses on key natural regulators of cellular growth and repair, particularly the Transforming Growth Factor-Beta, or TGF-beta, protein superfamily. By combining our discovery and development expertise, including our proprietary knowledge of the TGF-beta superfamily, and our internal protein engineering and manufacturing capabilities, we ~~have generated several~~generate innovative therapeutic candidates, all of which encompass novel potential first-in-class mechanisms of action. ~~We have focused and prioritized our research and development activities within three key therapeutic areas: hematologic, neuromuscular and pulmonary.~~ If successful, these candidates could have the potential to significantly improve clinical outcomes for patients across these areas of high, unmet need.

~~Luspatercept,~~We focus and prioritize our commercialization, research and development activities within two key therapeutic areas: pulmonary and hematology.

Pulmonary

We are actively developing our lead pulmonary program, ~~and~~ sotatercept, are partnered with Celgene Corporation, or Celgene. Luspatercept is an erythroid maturation agent designed to promote red blood cell production through a novel mechanism, and is being developed to treat chronic anemia and associated complications in myelodysplastic syndromes, or MDS, beta-thalassemia, and myelofibrosis. Celgene is currently conducting two Phase 3 clinical trials with luspatercept; one for the treatment of patients with ~~lower-risk MDS, known as~~pulmonary arterial hypertension, or PAH. Sotatercept is generally partnered with Bristol Myers Squibb, or BMS (which acquired Celgene Corporation in November 2019), but we retain the "MEDALIST" trial, and another for the treatment of patients with beta-thalassemia, also known as the "BELIEVE" trial. Celgene has recently initiated a Phase 2 trial in non-transfusion-dependent beta-thalassemia patients, referred to as the "BEYOND" trial. We further expect Celgene to initiate a Phase 3 clinical trial, the "COMMANDS" trial, in first-line, lower-risk MDS patients in the first half of 2018. Enrollment is also currently ongoing in a Phase 2 clinical trial for the treatment of patients with myelofibrosis, a rare bone marrow disorder. If luspatercept were to receive regulatory approval for each of these indications in the United States and Europe, we believe that there is an aggregate sales opportunity for this product in excess of $2 billion.

~~For sotatercept, we announced in September 2017 that Celgene granted us the~~exclusive rights to fund, develop, and lead the global commercialization of sotatercept in pulmonary hypertension, ~~including pulmonary arterial hypertension, or~~which we refer to as the PH field, and that includes PAH. PAH is a rare and chronic, rapidly progressing disorder characterized by the constriction of small pulmonary arteries, resulting in abnormally high blood pressure in the pulmonary arteries. ~~If sotatercept is commercialized to treat PAH and~~

In June 2020, we ~~recognize such revenue, then Celgene will be eligible to receive a royalty in~~presented results of the ~~low 20% range on global net sales. In certain circumstances Celgene may recognize revenue related to the commercialization~~PULSAR Phase 2 trial of sotatercept in patients with PAH on stable background PAH-specific therapies during the "Breaking News: Clinical Trials in Pulmonary Medicine" session of the American Thoracic Society, or ATS, 2020 Virtual Conference. Study investigators reported that the trial met its primary endpoint, pulmonary vascular resistance, and its key secondary endpoint, six-minute walk distance, and showed concordance of results across multiple additional endpoints and regardless of baseline characteristics. Sotatercept was generally well tolerated in the trial and adverse events observed in the study were generally consistent with previously published data on sotatercept in clinical trials in other patient populations. We presented additional cardiac and pulmonary function data at the virtual 2020 American Heart Association Scientific Sessions in November 2020 showing improvement in right ventricular-pulmonary arterial (RV-PA) coupling, which represents the match between the output of the RV and the resistance of the pulmonary vasculature, as well as improvement in RV function. The 18-month extension period of the PULSAR trial is ongoing and we initiated our registrational Phase 3 trial, the STELLAR trial, in patients with PAH at the end of 2020. In mid 2021, we also plan to initiate the early intervention Phase 3 HYPERION trial in patients with PAH, and the later intervention Phase 3 ZENITH trial in ~~this scenario~~World Health Organization (WHO) functional class IV PAH patients.

We have completed enrollment in an exploratory study called SPECTRA to provide us with greater understanding of sotatercept's potential impact on PAH. We presented preliminary interim results in November 2020 at the virtual 2020 American Heart Association Scientific Sessions, and we ~~will be eligible~~expect to ~~receive a royalty from Celgene such~~announce additional results in the first half of 2021. We also previously announced that the ~~economic position of the parties is equivalent~~U.S. Food and Drug Administration, or FDA, has granted Breakthrough Therapy designation to ~~the scenario in which we recognize such revenue. We expect to initiate a Phase 2 clinical trial~~sotatercept for the treatment of patients with PAH, and that the European Medicines Agency, or EMA, has granted Priority Medicines, or PRIME, designation to sotatercept for the treatment of patients with PAH. In December 2020, the European Commission granted Orphan Drug designation to sotatercept for the treatment of patients with PAH.

If sotatercept is approved and commercialized to treat PAH, then we will recognize revenue from global net sales and owe BMS a royalty in the low 20% range.

In addition to sotatercept, we are currently advancing our second pulmonary therapeutic candidate, ACE-1334. ACE-1334 is a wholly owned TGF-beta superfamily-based ligand trap designed to bind and inhibit TGF-beta 1 and 3 ligands but not TGF-beta 2. We recently completed an ascending-dose Phase 1 clinical trial in healthy volunteers, and the FDA has granted Fast Track designation to ACE-1334 in patients with systemic sclerosis-associated interstitial lung disease, or SSc-ILD, as well as Orphan Drug designation for the treatment of systemic sclerosis. SSc-ILD is a rare, progressive, autoimmune connective tissue

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disorder characterized by immune dysregulation. We intend to initiate a Phase 1b/Phase 2 clinical trial with ACE-1334 in patients with SSc-ILD in 2021.

Hematology

Our first commercial product, REBLOZYL® (luspatercept-aamt), is a first-in-class erythroid maturation agent designed to promote red blood cell, or RBC, production through a novel mechanism, and is partnered with BMS. REBLOZYL is currently approved to treat certain adult patients with beta-thalassemia or MDS in the United States, European Union and Canada, as further described in "Business" above.

For additional patient populations, BMS is currently conducting a Phase 2 clinical trial with luspatercept-aamt in non-transfusion-dependent beta-thalassemia patients, referred to as the BEYOND trial, with results currently expected in the first half of ~~2018.~~2021, and a Phase 3 clinical trial, the COMMANDS trial, in first-line, lower-risk MDS patients, with topline results expected in or after 2022. In myelofibrosis, BMS is conducting a Phase 2 clinical trial with luspatercept-aamt in patients with myelofibrosis-associated anemia, and is in the process of initiating the Phase 3 INDEPENDENCE study in patients with myelofibrosis-associated anemia who are being treated with JAK inhibitor therapy and require RBC transfusions.

~~For luspatercept~~We believe that there is a global annual peak sales opportunity for REBLOZYL in excess of $4 billion for all currently approved indications and ~~outside of pulmonary hypertension, sotatercept, Celgene~~those in development, including future clinical development expansion.

BMS is responsible for paying 100% of the development costs for all clinical ~~trials.~~trials for luspatercept-aamt. We may receive a maximum of ~~$545.0~~$100.0 million for ~~the~~remaining potential ~~development,~~ regulatory and commercial milestone payments. ~~If luspatercept and, outside of pulmonary hypertension, sotatercept are commercialized, we are eligible to receive a royalty on net sales in the low-to-mid 20% range and we~~We have a co-promotion right in North America ~~for which~~and our commercialization costs ~~will be~~provided in the commercialization plan and budget approved by the Joint Commercialization Committee, or JCC, are entirely funded by ~~Celgene.~~

BMS. Activities that we elect to conduct outside of the approved development or commercialization budgets to support REBLOZYL are at our own expense. We are ~~independently developing our wholly-owned neuromuscular candidate, ACE-083. ACE-083 is designed for the treatment~~eligible to receive tiered royalty payments from BMS on net sales of focal muscle disorders, and we are currently conducting Phase 2 clinical trials with ACE-083 in patients with facioscapulohumeral dystrophy, or FSHD, as well as in patients with Charcot-Marie-Tooth disease, or CMT. In January 2018, we announced preliminary results for the first two cohorts in part 1 of the Phase 2 clinical trial with ACE-083 in patients with FSHD showing marked increasesREBLOZYL in the mean total muscle volume of the muscles treated with ACE-083 measured using magnetic resonance imaging, or MRI. We expect to initiate part 2 of the ACE-083 FSHD Phase 2 trial during the second quarter of this year,low-to-mid 20% range.

Funding and ~~we expect to report preliminary results from all dose-escalation cohorts of part 1 in both of our Phase 2 clinical trials with ACE-083 in the second half of this year.~~

In addition to our mid- to late-stage clinical programs, we initiated a Phase 1 healthy volunteer study in early 2018 with ACE-2494, our wholly-owned systemic muscle agent from our proprietary platform technology, IntelliTrap™, and we expect to report initial results from this healthy volunteer study in the first half of 2019. We are also conducting research within our three

~~focused disease areas—hematologic, neuromuscular and pulmonary—in order to identify new therapeutic candidates to advance into clinical trials.~~Expense

As of December 31, ~~2017,~~2020, our operations have been funded primarily by $105.1 million in equity investments from venture investors, ~~$539.7 million~~$1.3 billion from public investors, ~~$123.7~~$164.1 million in equity investments from our collaboration partners and ~~$273.7~~$431.7 million in upfront payments, milestones, royalties, and net research and development payments from our collaboration partners. We ~~estimate that we~~ have spent approximately ~~$89.7~~$173.9 million, ~~$68.6~~154.0 million, and ~~$58.4~~103.9 million, on research and development for the years ended December 31, ~~2017, 2016,~~2020, 2019, and ~~2015,~~2018, respectively.

~~We expect to continue to incur significant expenses and increasing operating losses over at least the next several years.~~ We expect our expenses will increase substantially in connection with our ongoing activities, if and as we:

•conduct clinical trials for ~~ACE-083,~~ sotatercept ~~ACE-2494~~in the PH field or any future therapeutic candidates;

•prepare for the potential launch and commercialization of sotatercept in the PH field;

•continue our preclinical studies and potential clinical development efforts of our existing preclinical therapeutic candidates;

•continue research activities for the discovery of new therapeutic candidates;

•manufacture therapeutic candidates for our preclinical studies and clinical ~~trials;~~trials, and potentially for commercialization;

•establish and maintain a sales, marketing and distribution infrastructure to commercialize any products for which we have or may obtain regulatory approval;

•acquire or in-license other therapeutic candidates and patents;

•seek regulatory approval for our therapeutic candidates; and

~~operate as a public company.~~•attract and retain skilled personnel.

We will not generate revenue from product sales unless and until we or a partner successfully complete development and obtain regulatory approval for one or more of our therapeutic candidates. We expect that this will take a number of years and is subject to significant uncertainty. All current and future development and commercialization costs for luspatercept and, outside of pulmonary hypertension, sotatercept, are paid by Celgene. If we obtain regulatory approval for ~~ACE-083,~~ sotatercept ~~ACE-2494~~in the PH field, or any future therapeutic candidate, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution to the extent that such costs are not paid by future partners. We will seek to fund our operations through royalty revenue from the sale of our first and only commercial product, REBLOZYL, and potentially from the sale of equity, debt financings or other sources, including potential additional collaborations. However, we may not generate sufficient royalty revenue and may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms, or at all. If we fail to ~~raise~~generate

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significant revenue or capital, or enter into such other arrangements as, and when, needed, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our therapeutic candidates.

To date, we have only generated limited revenue from royalties on the sale of our first and only commercial product, REBLOZYL, since receiving our first regulatory approval from the FDA in November 2019. Our ability to generate product revenue and become profitable depends upon our and our partners' ability to successfully commercialize products. We expect our expenses to increase and to incur losses ~~for the foreseeable future, and we expect these losses to increase~~ as we continue ~~our~~the development of, and seek regulatory approvals for, ~~our~~sotatercept in the PH field and any future therapeutic candidates, and potentially begin to commercialize any additional approved products. For a description of the numerous risks and uncertainties associated with product development, see "Risk Factors". elsewhere in this Annual Report on Form 10-K.

Financial Operations Overview

Impact of COVID-19 on our Business

A novel strain of coronavirus (COVID-19) was declared a global pandemic by the World Health Organization (WHO) in March 2020 and has caused an economic downturn on a global scale, as well as significant volatility in the financial markets. As of December 31, 2020, we have not experienced a significant financial or supply chain impact directly related to the pandemic, but have experienced some disruptions to clinical operations with regard to timelines to complete patient enrollment in our ongoing Phase 2 SPECTRA trial, and may experience similar disruptions in our planned Phase 3 sotatercept clinical trials. We have also experienced disruptions in our commercialization efforts for REBLOZYL with regard to customer engagement and in-person promotion. In addition, as various geographies in the United States and worldwide adapt to surging COVID-19 infections, we may experience additional setbacks to our operations that could have a material impact on our business.

For a discussion of the risks presented by the COVID-19 pandemic to our results, see Risk Factors in Part I, Item 1A elsewhere in this Annual Report on Form 10-K.

Revenue

Collaboration Revenue

~~We have not generated any revenue from the sale of products.~~ Our revenue to date has been predominantly derived from collaboration revenue, which includes license and milestone ~~revenues~~revenue, cost-sharing revenue, and ~~cost-sharing revenue,~~royalties, generated through collaboration and license agreements with partners for the development and commercialization of our therapeutic candidates. Cost-sharing revenue represents amounts reimbursed by our collaboration partners for expenses incurred by us for research and development activities and ~~potentially,~~ co-promotion activities under our collaboration agreements. Cost-sharing revenue is recognized in the period that the related activities are performed. Royalty revenue is recognized in the period that the related sales occur.

Costs and Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs directly incurred by us for the development of our therapeutic candidates, which include:

•direct employee-related expenses, including salaries, benefits, travel and stock-based compensation expense of our research and development personnel;

•expenses incurred under agreements with clinical research organizations, or CROs, and investigative sites that will conduct our clinical trials;

•the cost of acquiring and manufacturing preclinical and clinical study materials and developing manufacturing processes;

•allocated facilities, depreciation, and other expenses, which include rent and maintenance of facilities, insurance and other supplies;

•expenses associated with obtaining and maintaining patents; and

•costs associated with preclinical activities and regulatory compliance.

Research and development costs are expensed as incurred. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and our clinical sites.

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We cannot determine with certainty the duration and completion costs of the current or future clinical trials of our therapeutic candidates or if, when, or to what extent we will generate revenues from the commercialization and sale of any of our therapeutic candidates for which we or any partner obtain regulatory approval. We or our partners may never succeed in achieving regulatory approval for any of our therapeutic ~~candidates.~~candidates beyond the initial approvals of REBLOZYL. The duration, costs and timing of clinical trials and development of ~~our~~ therapeutic candidates will depend on a variety of factors, including:

•the scope, rate of progress, and expense of our ongoing, as well as any additional, clinical trials and other research and development activities;

•future clinical trial results;

•potential changes in government regulation; and

•the timing and receipt of any regulatory approvals.

A change in the outcome of any of these variables with respect to the development of a therapeutic candidate could mean a significant change in the costs and timing associated with the development of that therapeutic candidate. For example, if the ~~U.S. Food and Drug Administration,~~FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of the clinical development of therapeutic candidates, or if we experience significant delays in the enrollment in any clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

From inception through December 31, ~~2017,~~2020, we have incurred ~~$554.8~~$986.6 million in research and development expenses. We plan to increase our research and development expenses for the foreseeable future as we continue the development of our TGF-beta platform therapeutic candidates, the discovery and development of preclinical therapeutic candidates, and the development of our clinical programs. ~~Expenses~~Research and development expenses associated with ~~luspatercept,~~luspatercept-aamt, and outside of ~~pulmonary hypertension,~~the PH field, sotatercept, are generally reimbursed 100% by ~~Celgene.~~BMS. These reimbursements are recorded as revenue. We are expensing the costs of ~~a Phase 1 clinical trial for ACE-2494, and~~ Phase 2 clinical trials for ~~luspatercept,~~luspatercept-aamt, sotatercept, ~~dalantercept,~~ACE-1334, and ACE-083, of which the ~~luspatercept~~luspatercept-aamt clinical trials are reimbursed by ~~Celgene,~~BMS. Our Phase 2 clinical trial for ACE-083 was discontinued and all remaining material expenses were incurred as of the ~~dalantercept clinical trials are being discontinued.~~end of 2020. With respect to the ~~luspatercept Phase 3~~luspatercept-aamt clinical trials directly conducted by ~~Celgene,~~BMS, we do not incur and are not reimbursed for expenses related to these development activities.

We manage certain activities such as clinical trial operations, manufacture of therapeutic candidates, and preclinical animal toxicology studies through third-party CROs. The only costs we track by each therapeutic candidate are external costs such as services provided to us by CROs, manufacturing of preclinical and clinical drug product, and other outsourced research and development expenses. We do not assign or allocate to individual development programs internal costs such as salaries and benefits, facilities costs, lab supplies and the costs of preclinical research and ~~studies.~~studies, except for luspatercept-aamt costs for the purposes of billing BMS. Our external research and development expenses during the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, were as follows:


	Year ended December 31,							Year ended December 31,
(in thousands)	2017		2016		2015		(in thousands)	2020			2019			2018
Luspatercept-aamt (1)							Luspatercept-aamt (1)	$	2,286		$	4,387		$	6,518
Sotatercept~~(1)~~(2)	$	495	$	—	$	—	54,756			19,027			8,633
Luspatercept(1)	6,616		6,945		9,744
Dalantercept(2)	4,718		6,757		8,864
ACE-083	9,797		4,973		3,293
ACE-2494	4,382		1,045		—

ACE-083 (3)							ACE-083 (3)	7,287			27,958			11,778

ACE-1334 (4)							ACE-1334 (4)	4,159			5,282			2,064
Total direct research and development expenses	26,008		19,720		21,901		Total direct research and development expenses	68,488			56,654			28,993
Other expenses~~(3)~~(5)	63,718		48,860		36,503		105,429			97,299			74,909
Total research and development expenses	$	89,726	$	68,580	$	58,404	Total research and development expenses	$	173,917		$	153,953		$	103,902


~~(1)~~	~~Expenses associated with luspatercept and, outside of pulmonary hypertension, sotatercept, are reimbursed 100% by Celgene.~~

(1)These expenses associated with luspatercept-aamt are reimbursed 100% by BMS.


~~(2)~~	~~Development of dalantercept is being discontinued.~~


~~(3)~~	~~Other expenses include unallocated employee and contractor-related expenses, facility expenses, lab supplies and miscellaneous expenses.~~

(2)These expenses are associated with our development of sotatercept in PAH.

(3)Development of ACE-083 was discontinued. All remaining material expenses were incurred as of the end of 2020.

(4)These expenses are associated with our development of ACE-1334 in SSc-ILD.

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(5)Other expenses include employee and unallocated contractor-related expenses, facility expenses, lab supplies and miscellaneous expenses, including expenses associated with preclinical and other development programs.

Selling, General and Administrative Expenses

~~General~~Selling, general and administrative expenses consist primarily of salaries and related costs for personnel, including stock-based compensation and travel expenses for our employees in executive, commercial, operational, finance and human resource ~~functions and other~~functions. Selling, general and administrative expenses ~~including directors'~~also include directors’ fees, ~~and~~ professional fees for accounting and legal ~~services.~~

~~We continue to incur expenses related to audit, legal, regulatory and tax-related~~ services, other miscellaneous costs associated with ~~maintaining compliance with exchange listing and Securities and Exchange Commission, or SEC, requirements, director and officer insurance premiums,~~supporting our sales, marketing and investor relations ~~costs associated with being a public company.~~ activities, and allocated facilities, depreciation, and other expenses, such as rent and maintenance of facilities, insurance and other supplies.

We anticipate that our selling, general and administrative expenses will increase in the future as we increase our headcount to support our continued research and development and potential commercialization of our therapeutic candidates. Additionally, if and when we believe regulatory approval of a therapeutic candidate appears likely, to the extent that we are undertaking commercialization of such therapeutic candidate ourselves, we anticipate an increase in payroll and related expenses as a result of our preparation for commercial ~~operation.~~operations.

Other Income (Expense), Net

Other income (expense), net consists primarily of the re-measurement gain or loss associated with the change in the fair value of our common stock warrant liabilities and interest income earned on cash, cash equivalents and investments.

To estimate the fair value of our ~~liability-classified~~liability classified warrants, we use either the Monte Carlo simulation framework, which incorporates future financing events over the remaining life of the warrants to purchase common stock, or for certain re-measurement dates, due to the warrants being deeply in the money, the Black-Scholes option pricing model. We base the estimates in the pricing models, in part, on subjective assumptions, including stock price volatility, risk-free interest rate, dividend yield, and the fair value of the ~~preferred stock or~~ common stock underlying the warrants. ~~The~~All remaining outstanding warrants were remeasured using the Black-Scholes ~~option pricing~~ model ~~was used at~~upon their expiration on July 9, 2020. At December 31, ~~2017.~~2020, there were no warrants outstanding.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition and accrued ~~expenses and stock-based compensation. We also utilize significant estimates and assumptions in determining the fair value of our liability-classified warrants to purchase common stock.~~clinical expenses. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

~~We have primarily generated~~Effective January 1, 2018, we adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, (ASC 606), using the modified retrospective transition method. Under this method, results for reporting periods beginning January 1, 2018 are presented under ASC 606.

Our revenue ~~through~~to date has been predominantly derived from collaboration ~~arrangements~~revenue, which includes license and milestone revenue, cost-sharing revenue, and royalties, which are within the scope of ASC 606, with ~~strategic~~collaboration partners for the development and commercialization of ~~our~~ therapeutic candidates.

~~We recognize revenue in accordance with Accounting Standards Codification (ASC) Topic 605,~~ ~~Revenue Recognition~~. Accordingly, revenue is recognized for each unit of accounting when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured.

Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue on our consolidated balance sheets. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, current portion and amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current portion.

Under collaboration agreements, we may receive payments for non-refundable upfront fees, milestone payments upon achieving significant development events, research and development reimbursements and royalties on future product sales. These payments are received in connection with the deliverables contained in the The arrangements generally contain performance obligations, which may include (1) licenses, or options to obtain licenses, to our technology, (2) research and development activities performed for the collaboration ~~partner,~~partners, (3) participation on joint development committees (JDCs), and (4) the manufacturing of clinical or preclinical material. Payments pursuant to these arrangements typically include non-refundable, upfront payments, milestone payments upon achieving significant development events, research and development reimbursements, sales milestones, exercises of options, and royalties on future product sales.

~~Effective January 1, 2011,~~

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To determine revenue recognition for arrangements within the scope of ASC 606, we ~~adopted Accounting Standards Update (ASU) No. 2009-13,~~ ~~Multiple-Deliverable Revenue Arrangements, which amends~~perform the following five steps: (i) identify the contract(s) with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC ~~Topic 605-25,~~ ~~Revenue Recognition—Multiple Element Arrangements. This guidance applies to new arrangements as well as existing agreements~~606, we assess the goods or services promised within each contract, determines those that are ~~significantly modified after January 1, 2011.~~

~~The application~~performance obligations, and assesses whether each promised good or service is distinct. We then recognize as revenue the amount of the ~~multiple element guidance requires subjective determinations, and requires~~transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Depending on the nature of the performance obligation these assessments require management to make significant judgments and estimates. For additional information about the individual deliverables, and whether such deliverables are separable from the other aspects of the contractual relationship. Deliverables are considered separate units of accounting provided that: (1) the delivered item(s) has valueour revenue recognition policy, see Note 10 to the ~~customer~~financial statements in this Annual Report on a stand-alone basis and (2) if the arrangement includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in our control. In determining the units of accounting, management evaluates certain criteria, including whether the deliverables have stand-alone value, based on the consideration of the relevant facts and circumstances for each arrangement, such as the research, manufacturing and commercialization capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. In addition, we consider whether the collaboration partner can use the other deliverable(s) for their intended purpose without the receipt of the remaining element(s), whether the value of the deliverable is dependent on the undelivered item(s), and whether there are other vendors that can provide the undelivered element(s).Form 10-K.

Arrangement consideration that is fixed or determinable is allocated among the separate units of accounting using the relative selling price method, and the applicable revenue recognition criteria, as described above, are applied to each of the separate units of accounting in determining the appropriate period or pattern of recognition. We determine the estimated selling price for deliverables within each agreement using vendor-specific objective evidence (VSOE) of selling price, if available, third-party evidence (TPE) of selling price if VSOE is not available, or management's best estimate of selling price (BESP) if neither VSOE nor TPE is available. Subsequent to the adoption of ASU 2009-13, we typically use BESP to estimate the selling price of the deliverables. Determining the BESP for a unit of accounting requires significant judgment. In developing the BESP for a unit of accounting, we consider applicable market conditions and relevant entity-specific factors, including factors that

Milestone Payments

were contemplated in negotiating the agreement with the customer and estimated costs. We validate the BESP for units of accounting by evaluating whether changes in the key assumptions used to determine the BESP will have a significant effect on the allocation of arrangement consideration between multiple units of accounting.

Our agreements may contain options which provide the collaboration partner the right to obtain additional licenses. Options are considered substantive if, at the inception of the arrangement, we are at risk as to whether the collaboration partner will choose to exercise the option. Factors that we consider in evaluating whether an option is substantive include the overall objective of the arrangement, the benefit the collaborator might obtain from the arrangement without exercising the option, the cost to exercise the option and the likelihood that the option will be exercised. For arrangements under which an option is considered substantive, we do not consider the item underlying the option to be a deliverable at the inception of the arrangement and the associated option fees are not included in allocable arrangement consideration, assuming the option is not priced at a significant and incremental discount. Conversely, for arrangements under which an option is not considered substantive or if an option is priced at a significant and incremental discount, we would consider the item underlying the option to be a deliverable at the inception of the arrangement and a corresponding amount would be included in allocable arrangement consideration.

We typically receive upfront, non-refundable payments when licensing our intellectual property in conjunction with a research and development agreement. When we believe the license to our intellectual property has stand-alone value, we generally recognize revenue attributed to the license upon delivery. When we believe the license to our intellectual property does not have stand-alone value from the other deliverables to be provided in the arrangement, we generally recognize revenue attributed to the license on a straight-line basis over our contractual or estimated performance period, which is typically the term of our research and development or manufacturing obligations. We continually evaluate these periods, and will adjust the period of revenue recognition if circumstances change.

Research and development funding is recognized as revenue in the period that the related services are performed. When we act as the principal under our collaboration arrangements, we record payments received for the reimbursement of research and development costs as cost-sharing revenue. To the extent that we reimburse the collaborator for costs incurred, we record these costs as a reduction of cost-sharing revenue.

We periodically review the basis for our estimates, and we may change the estimates if circumstances change. These changes can significantly increase or decrease the amount of revenue recognized. As we apply our policy to our collaboration arrangements we make judgments which affected the pattern of revenue recognition. For instance, in our arrangement with Celgene, we are obligated to provide research and development services. We are recognizing revenue related to these research and development services over the estimated period of our performance, which was initially estimated to end in December 2014. The Company re-assessed the duration of its deliverables under the collaboration agreement and concluded we had completed the proof-of-concept trials for luspatercept under the Celgene collaboration in the first quarter of 2016.

~~In addition to upfront payments and research and development funding, we may also be entitled to milestone payments that are contingent upon achievement of a predefined objective.~~ At the inception of each arrangement that includes milestone payments, we evaluate whether the ~~milestone is substantive~~milestones are considered probable of being achieved and ~~at-risk. This evaluation includes an assessment of whether (1)~~estimate the ~~consideration is commensurate with either~~amount to be included in the ~~entity's performance to achieve~~transaction price using the milestone, or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting at least in part from the entity's performance to achieve the milestone, (2) the consideration relates solely to past performance, and (3) the consideration is reasonable relative to all of the deliverables and payment terms within the arrangement.most likely amount method. We evaluate factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the respective milestone ~~the level of effort and investment required to achieve the respective milestone, and whether the milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement~~ in making this assessment. OnIf it is probable that a significant revenue reversal would not occur, the associated milestone ~~achievement date, assuming all other revenue recognition criteria are met and~~value is included in the ~~milestone is deemed substantive and at-risk, we recognize the payment as license and milestone revenue. For milestones~~transaction price. Milestone payments that are not ~~deemed substantive~~within our or our licensee's control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. At the end of each subsequent reporting period, we reevaluate the probability of achievement of all milestones subject to constraint and, ~~at-risk, where payment is reasonably assured,~~if necessary, adjusts the estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. If a milestone or other variable consideration relates specifically to our efforts to satisfy a single performance obligation or to a specific outcome from satisfying the performance obligation, we ~~recognize~~generally allocate the milestone ~~payment over~~amount entirely to that performance obligation.

The next likely regulatory milestone payments for REBLOZYL would be $20.0 million, which would result from approval by a regulatory authority in Asia (as defined in the ~~remaining service period.~~

~~Sales and commercial milestones and royalties~~REBLOZYL Agreement) of a Biologics License Application (BLA) or equivalent for luspatercept-aamt in either myelodysplastic syndromes or beta-thalassemia. In accordance with our accounting policy regarding revenue recognition as described in Note 2, the revenue associated with this milestone will be recognized once it is probable that the application is approved by the regulatory authority. Milestone payments that are not within our control or the control of the licensee are not considered probable of being achieved until those approvals are received. The approval of this application is not within our control or BMS's control, and therefore, as of December 31, 2020, we cannot determine if it is probable that the regulatory agency will approve the application.

Royalties

For arrangements that include sales-based royalties, including milestone payments based on a level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Royalty revenues on commercial sales for REBLOZYL by BMS are estimated based on information provided by BMS. We exercise judgment in determining whether the information provided is sufficiently reliable for us to base our royalty revenue recognition thereon. If actual royalties vary from estimates, we may need to adjust the prior period, which would affect royalty revenue and ~~if earned, provided collectability is reasonably assured.~~collaboration receivable in the period of adjustment.

Accrued ~~Research~~ and ~~Development~~Prepaid Clinical Trial Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued and prepaid expenses. This process involves reviewing contracts, and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual ~~cost:~~costs:

•CROs and investigative sites in connection with clinical studies;

•vendors in connection with preclinical development activities; and

•vendors related to product manufacturing, development and distribution of clinical ~~supplies~~supplies.

We base our expenses related to CROs and third-party service providers on our estimates of the services ~~received~~provided and efforts expended pursuant to quotes and contracts with CROs and third parties that conduct research and development on our ~~behalf.~~behalf, as well as discussion with internal personnel and external service providers as to the progress of the services and the

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agreed-upon fee to be paid for such services. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the ~~research and development~~ expense. ~~In accruing~~Additionally, invoicing from third-party service ~~fees, we estimate the time period over which services will be~~providers may not coincide with actual work performed and can result in a prepaid position at period end. We make significant judgments and estimates in determining the ~~level~~services incurred as of ~~effort to be expended~~each balance sheet date, which may result in ~~each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the~~either an accrual or prepaid ~~accordingly.~~balance. As actual costs become known, we adjust our estimates. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed, ~~relative to~~ the ~~actual status~~number of subjects enrolled, and ~~timing~~the rate of ~~services performed~~enrollment may vary from its estimates and could result in us reporting amounts that are too high or too low in ~~any~~a particular period. Our accrued and prepaid expenses are dependent, in part, upon the receipt of timely and accurate reporting from CROs and third-party service providers. To date, we have not experienced any material differences between estimated costs and actual costs incurred.

Stock-Based Compensation

We account for our stock-based awards in accordance with ASC Topic 718, Compensation—Stock Compensation, or ASC 718, which requires all stock-based payments to employees, including grants of employee stock options, modifications to existing stock options, and restricted stock unit awards, to be recognized in the statements of operations and comprehensive income (loss) based on their fair values. We recognize the compensation cost of awards subject to service-based vesting conditions over the requisite service period, which is generally equal to the vesting term. For awards subject to both performance and service-based vesting conditions, we recognize compensation cost using an accelerated recognition method when it is probable that the performance condition will be achieved. If achievement of the performance condition is not probable, but the award will vest based on the service condition, we recognize the expense over the requisite service period. ~~We account for stock-based awards to non-employees using the fair value method. Stock options granted to non-employees~~Forfeitures are ~~subject to periodic revaluation over their vesting terms and stock-based compensation cost is~~ recognized ~~using an accelerated recognition method.~~as they occur.

We estimate the fair value of our stock-based awards to employees and non-employees using the Black-Scholes option pricing model, which requires the input of highly subjective assumptions, including (1) the expected volatility of our stock, (2) the expected term of the award, (3) the risk-free interest rate and (4) expected dividends. Due to the lack of a public market for our common stock prior to the completion of our initial public offering in September 2013, and resulting lack of company-specific historical and implied volatility data, weWe have based our estimate of expected volatility on the historical volatility of a group of similar publicly traded companies. For these analyses, we have selected companies with characteristics that we believe are comparable to ours, including enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. We compute the historical volatility data using the daily closing prices for the selected companies' shares during the equivalent period as the calculated expected term of our stock-based awards. During 2015 we began to estimateestimated our volatility by using a blend of our stock price history, for the length of time we have market data for our stock and the historical volatility of similar public companies for the expected term of each grant. As of September 2019, we had sufficient company-specific historical volatility data to begin estimating our stock's expected volatility by using our own stock's data rather than a blended rate for most awards. We have estimated the expected life of our employee stock options using the "simplified" method, whereby, the expected life equals the average of the vesting term and the original contractual term of the option. The risk-free interest rates for periods within the expected life of the option are based on the U.S. Treasury yield curve in effect during the period the options were granted.

On January 1, 2017, the Company adopted ASU 2016-09, which identifies areas for simplification involving several aspects of accounting for share-based payments, including income tax consequences, classification of awards as either equity or liabilities, an option to make a policy election to recognize gross share based compensation expense with actual forfeitures recognized as they occur as well as certain classification changes on the statement of cash flows. In connection with the adoption of this standard, the Company changed its accounting policy to record actual forfeitures as they occur, rather than estimating forfeitures by applying a forfeiture rate. The provisions of the standard related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements and forfeitures were adopted using a modified retrospective transition method. Accordingly, a cumulative adjustment of $0.1 million was booked to retained earnings for the impact of the forfeitures. The Company also recorded $21.5 million for the excess tax benefit related to equity awards, which was offset by a $21.5 million increase to the valuation allowance. The provisions of the standard related to the recognition of the excess tax benefits in the income statement and classification in the statement of cash flows were adopted prospectively and prior periods were not retrospectively adjusted.

Prior to the adoption of ASU 2016-09 on January 1, 2017, we estimated forfeitures at the time of grant, and revised those estimates in subsequent periods if actual forfeitures differed from estimates. We used historical data to estimate pre-vesting option forfeitures to the extent that actual forfeitures differed from our estimates, the difference was recorded as a cumulative adjustment in the period the estimates were revised. Stock-based compensation expense recognized in the consolidated financial statements is based on awards that are ultimately expected to vest. For the years ended December 31, 2017, 2016 and 2015, the Company applied an estimated forfeiture rate of approximately zero, 3%, and 4% , respectively.

Stock-based compensation totaled approximately ~~$28.2~~$30.2 million, ~~$18.6~~$23.0 million and ~~$12.1~~$24.6 million for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively. We expect the impact of our stock-based compensation expense for stock-based awards granted to employees and non-employees to grow in future periods due to the potential increases in the value of our common stock and headcount.

~~Warrants to Purchase Common Stock~~

As of December 31, 2017, we had warrants outstanding to purchase 60,594 shares of common stock, all of which contain a provision requiring an adjustment to the number of shares in the event we issue common stock, or securities convertible into or exercisable for common stock, at a price per share lower than the warrant exercise price. The anti-dilution feature requires the warrants to be classified as liabilities and measured at fair value, with changes in fair value recognized as a component of other income (expense). The fair value of the warrants to purchase common stock on the date of issuance and on each re-measurement date for those warrants to purchase common stock classified as liabilities was estimated using either the Monte Carlo simulation framework, which incorporates future financing events over the remaining life of the warrants to purchase common stock, or for certain re-measurement dates, when the warrants are deeply in the money, the Black-Scholes option pricing model. At each reporting period the Company evaluates the best valuation methodology. At December 31, 2017 the Black-Scholes option pricing model was used, at December 31, 2016 the Monte Carlo simulation framework was used, and at December 31, 2015 the Black-Scholes option pricing model was used. Any modifications to the warrant liabilities are recorded in earnings during the period of the modification. The significant assumptions used in estimating the fair value of our warrant liabilities include the exercise price, volatility of the stock underlying the warrant, risk-free interest rate, estimated fair value of the stock underlying the warrant, and the estimated life of the warrant. The common stock warrant liability was $2.2 million, $1.2 million and $17.2 million as of December 31, 2017, 2016 and 2015, respectively. At the end of each reporting period, we remeasured the fair value of the outstanding warrants, using current assumptions, resulting in an increase (decrease) in fair value of $1.0 million, $(7.3) million and $3.5 million for the years ended December 31, 2017, 2016 and 2015, respectively, which was recorded in other income (expense), net in the accompanying consolidated statements of operations and comprehensive loss. The changes in value of the warrant liability were primarily due to fluctuations in the market price of our common stock.

Results of Operations

Comparison of the Years Ended December 31, ~~2017~~2020 and ~~2016~~2019

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	Year Ended December 31,										Year Ended December 31,
							Increase (Decrease)								Increase (Decrease)
(in thousands)	2017			2016						(in thousands)	2020		2019
Revenue:										Revenue:
Collaboration revenue:										Collaboration revenue:
License and milestone	$	541		$	15,550		$	(15,009	)	License and milestone	$	25,000	$	60,000	$	(35,000)
Cost-sharing, net	12,940			12,221			719			Cost-sharing, net	12,674		13,993		(1,319)
Royalty										Royalty	54,849		—		54,849
Total revenue (all amounts are with a related party)	13,481			27,771			(14,290		)	Total revenue (all amounts are with a related party)	92,523		73,993		18,530
Costs and expenses:										Costs and expenses:
Research and development	89,726			68,580			21,146			Research and development	173,917		153,953		19,964
General and administrative	33,738			25,297			8,441

Selling, general and administrative										Selling, general and administrative	85,912		56,485		29,427
Total costs and expenses	123,464			93,877			29,587			Total costs and expenses	259,829		210,438		49,391
Loss from operations	(109,983		)	(66,106		)	(43,877		)	Loss from operations	(167,306)		(136,445)		(30,861)
Other (expense) income, net										Other (expense) income, net	(1,576)		819		(2,395)
Interest income										Interest income	2,873		10,706		(7,833)
Other income, net	1,561			9,116			(7,555		)	Other income, net	1,297		11,525		(10,228)
Loss before income taxes	(108,422		)	(56,990		)	(51,432		)	Loss before income taxes	(166,009)		(124,920)		(41,089)
Income tax provision	(32		)	(24		)	(8		)
Income tax (provision) benefit										Income tax (provision) benefit	(21)		62		(83)
Net loss	$	(108,454	)	$	(57,014	)	$	(51,440	)	Net loss	$	(166,030)	$	(124,858)	$	(41,172)

December 31, 2017
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
Cash and cash equivalents due in 90 days or less $ 100,150
$ —
$ —
$ 100,150
Available-for-sale securities:
Corporate obligations due in one year or less 99,792
—
(219 ) 99,573
Corporate obligations due in more than one year 57,537
—
(261 ) 57,276
U.S. Treasury securities due in one year or less 27,987
—
(93 ) 27,894
U.S. Treasury securities due in more than one year 9,968
—
(48 ) 9,920
Certificates of deposit due in one year or less 10,529
—
—
10,529
Certificates of deposit due in more than one year 1,715
—
—
1,715
Mortgage and other asset backed securities due in one year or less 39,236
—
(155 ) 39,081
Mortgage and other asset backed securities due in more than one year 26,931
—
(119 ) 26,812
Total available-for-sale securities $ 273,695
$ —
$ (895 ) $ 272,800
Total cash, cash equivalents and available-for-sale securities $ 373,845
$ —
$ (895 ) $ 372,950


	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Cash and cash equivalents due in 90 days or less	$	670,952	$	—	—		$	670,952
Available-for-sale securities:
Corporate obligations	45,989		5		(13)		45,981
U.S. Treasury securities	135,315		3		(7)		135,311
Certificates of deposit	245		1		0		246
Mortgage and other asset backed securities	5,000		0		(2)		4,998
Total available-for-sale securities (1)	$	186,549	$	9	$	(22)	$	186,536
Total cash, cash equivalents and available-for-sale securities	$	857,501	$	9	$	(22)	$	857,488

December 31, 2016
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
Cash and cash equivalents due in 90 days or less $ 20,950
$ —
$ —
$ 20,950
Available-for-sale securities:
Corporate obligations due in one year or less 45,839
1
(58 ) 45,782
Corporate obligations due in more than one year 42,895
—
(185 ) 42,710
U.S. Treasury securities due in one year or less 22,490
—
(10 ) 22,480
U.S. Treasury securities due in more than one year 11,541
—
(53 ) 11,488
Certificates of deposit due in one year or less 13,562
—
—
13,562
Certificates of deposit due in more than one year 9,811
—
—
9,811
Mortgage and other asset backed securities due in one year or less 36,948
—
(32 ) 36,916
Mortgage and other asset backed securities due in more than one year 30,771
—
(88 ) 30,683
Total available-for-sale securities $ 213,857
$ 1
$ (426 ) $ 213,432
Total cash, cash equivalents and available-for-sale securities $ 234,807
$ 1
$ (426 ) $ 234,382


	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Cash and cash equivalents due in 90 days or less	$	237,677	$	—	$	—	$	237,677
Available-for-sale securities:
Corporate obligations	124,676		219		(15)		124,880
U.S. Treasury securities	78,230		98		(1)		78,327
Certificates of deposit	490		3		0		493
Mortgage and other asset backed securities	12,476		5		(12)		12,469
Total available-for-sale securities (1)	$	215,872	$	325	$	(28)	$	216,169
Total cash, cash equivalents and available-for-sale securities	$	453,549	$	325	$	(28)	$	453,846

(1)All available-for-sale securities mature within two and three years as of December 31, 2020 and 2019, respectively.

6. Accrued Expenses

Accrued expenses consist of the following (in thousands):


	December 31,
	2020		2019
Research and development	$	22,205	$	11,844
Commercial	1,361		1,027
Royalty payable	1,191		0
Employee compensation	17,637		9,932
Professional services	1,276		976
Accrued purchases	256		119
Other	755		997
Total accrued expenses	$	44,681	$	24,895

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~~F-17~~

Table of Contents

Acceleron Pharma Inc.

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

~~6. Accrued Expenses~~

~~Accrued expenses consist of the following (in thousands):~~

December 31,
2017 2016
Research and development related $ 4,014
$ 5,238
Employee compensation 6,809
4,840
Professional services 1,183
739
Other 2,930
2,432
Total accrued expenses $ 14,936
$ 13,249

7. Warrants

Below is a summary of the number of shares issuable upon exercise of outstanding warrants and the terms and accounting treatment for the outstanding warrants (in thousands, except per share data):

Warrants as of

Weighted-
Average
Exercise

Balance Sheet
Classification
December 31, 2017 December 31, 2016
Price Per
Share
Expiration December 31, 2017 December 31, 2016
Warrants to purchase common stock 61
61
$ 5.88
June 10, 2020 - July 9, 2020 Liability Liability
Warrants to purchase common stock —
4
4.00 - 7.40
March 28, 2017 - December 31, 2017 Equity(1) (2) (3) Equity(1) (2) (3)
All warrants 61
65
$ 5.88

Warrants as of

Weighted-
Average
Exercise

Balance Sheet
Classification

December 31, 2020

December 31, 2019

Price Per
Share

Expiration

December 31, 2020

December 31, 2019

Warrants to purchase common stock

5.88

July 9, 2020

N/A (1)

Liability


~~(1)~~	~~In March 2017, the warrant holders exercised warrants to purchase 1,187 shares of Common Stock on a net basis, resulting in the issuance of 1,014 shares of Common Stock.~~


~~(2)~~	~~In December 2017, the warrant holders exercised warrants to purchase 2,702 shares of Common Stock on a net basis, resulting in the issuance of 2,207 shares of Common Stock.~~


~~(3)~~	~~Warrants to purchase common stock were issued in connection with various debt financing transactions that were consummated prior to our initial public offering.~~

In connection with the Series E redeemable convertible preferred stock (Series E Preferred Stock) financing transactions that took place in June 2010 and July 2010, the Company issued warrants to purchase up to 871,580 shares of common stock. Each warrant was immediately exercisable and expires ten years from the original date of issuance. The warrants to purchase shares of the Company's common stock have an exercise price equal to the estimated fair value of the underlying instrument as of the initial date such(1)All remaining outstanding warrants were ~~issued. Each warrant is exercisable~~automatically cashless exercised in full upon their expiration on ~~either a physical settlement or net share settlement basis from~~July 9, 2020.

Upon issuance the date of issuance. The warrant agreement contains a provision requiring an adjustment to the number of shares in the event the Company issues common stock, or securities convertible into or exercisable for common stock, at a price per share lower than the warrant exercise price. The Company concluded the anti-dilution feature required the warrants to be classified as liabilities under ASC Topic 815, Derivatives and Hedging—Contracts in Entity's Own Equity (ASC 815). The warrants ~~are~~were measured at fair value, with changes in fair value recognized as a gain or loss to other income (expense) in the consolidated statements of operations and comprehensive loss for each reporting period thereafter. ~~The fair value of the common stock warrants was recorded as a discount to the preferred stock issued, and the preferred stock was accreted to the redemption value.~~ At the end of each reporting period, the Company remeasured the fair value of the outstanding warrants using current assumptions, resulting in an increase (decrease) in fair value of $1.0 million, $(7.3) million and $3.5 million, respectively, which was recorded in other income (expense), net in the accompanying consolidated statements of operations and comprehensive loss for the years ended December 31, 2017, 2016 and 2015. The Company will continue to re-measure the fair value of the liability associated with the warrants to purchase common stock at the end of each reporting period until ~~the earlier of the exercise~~they exercised or ~~the expiration of the applicable warrants.~~expired. All remaining outstanding warrants were ~~fully vested and exercisable as of December 31, 2017.~~automatically cashless exercised in full upon their expiration on July 9, 2020.

~~F-18~~

~~Table of Contents~~

~~Acceleron Pharma Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~Years Ended December 31, 2017, 2016 and 2015~~

8. Commitments and Contingencies

Operating Leases

The Company leases its facilities under non-cancelable operating leases that expire at various dates from September 2023 through ~~September 2023.~~May 2026. All of the Company's leases contain escalating rent clauses, which require higher rent payments in future years. ~~The Company expenses rent on a straight-line basis over the term~~As of ~~the lease, including any rent-free periods. In addition,~~January 1, 2019, the Company ~~received certain~~adopted Accounting Standards Codification Topic 842, Leases (ASC 842), which requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases. As a result of this adoption, the Company recorded a right-of-use asset and corresponding lease ~~incentives, and recorded these incentives as deferred rent, which is amortized as a reduction of rent expense over~~liability on the ~~life of the lease. Rent expense of approximately $4.8 million, $3.8 million and $3.4 million were incurred during the years ended December 31, 2017, 2016 and 2015, respectively.~~

~~Future annual minimum lease payments~~consolidated balance sheets as of December 31, ~~2017, are~~2020 and 2019. The Company continues to recognize rent expense, which is calculated as ~~follows (in thousands):~~the remaining cost of the lease allocated over the remaining lease term on a straight-line basis.

2018 $ 5,551
2019 6,320
2020 6,506
2021 6,191
2022 6,207
2023 4,761
Total $ 35,536

~~In July 2017,~~On October 16, 2020, the Company entered into ~~a sublease agreement~~an amendment for ~~one if~~ its ~~facility leases. The tenant will pay rent on the lease from August, 1 2017 until July 31, 2018. On January 8, 2018, the sublessee exercised its right~~office space at 125 Sidney Street and corresponding parking lot to extend the ~~sublease by an~~lease term through May 31, 2026. See Note 2 and Note 14 for additional five months through December 31, 2018. Sublease income of approximately $0.3 million, zero, and zero was recorded during the years ended December 31, 2017, 2016 and 2015, respectively. In connection with this sublease the Company recognized a loss of $0.1 million during the year ended December 31, 2017, which represents the difference betweeninformation regarding the Company's ~~lease obligation to the landlord and the sublessee's lease obligation to the Company and other expenses associated with the sublease.~~

~~Future annual minimum sublease proceeds expected as of December 31, 2017 are as follows (in thousands):~~

2018 $ 704
Total $ 704
operating leases.

Legal Proceedings

The Company, from time to time, may be party to litigation arising in the ordinary course of its business. ~~Except as discussed below, the~~The Company was not subject to any material legal proceedings during the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, and, to the best of its knowledge, no material legal proceedings are currently pending or threatened.

Other

The Company is also party to various agreements, principally relating to licensed technology, that require future payments relating to milestones not met at December 31, ~~2017~~2020 and ~~2016,~~2019, or royalties on future sales of specified products. ~~No milestone or royalty payments under these agreements are expected to be payable in the immediate future.~~ See Note 10 for discussion of these arrangements.

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to the agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company's business partners or customers, in connection with any U.S. patent or any copyright or other intellectual property infringement claim by any third party with respect to the Company's products. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements.

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~~F-19~~

Table of Contents

Acceleron Pharma Inc.

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

9. Stockholders' Equity

On January ~~11, 2016,~~18, 2019, the Company completed the sale in an underwritten public offering of ~~3,750,000~~6,151,163 shares of common stock, including 802,325 shares of common stock sold pursuant to the underwriter's full exercise of their option to purchase additional shares, at a public offering price of ~~$40.00~~$43.00 per share, resulting in net proceeds to the Company of ~~approximately $140.3~~$248.2 million.

On ~~September 25, 2017,~~July 6, 2020, the Company completed the sale in an underwritten public offering of ~~5,405,406~~5,594,593 shares of common stock, at a public offering price of $37.00 per share. On October 4, 2017, in connection with the September 2017 public offering, the underwriters fully exercised their option to purchase an additional 810,810including 729,729 shares of common ~~stock. The total net proceeds~~stock sold pursuant to the ~~Company from the September 2017 public offering and the underwriters'~~underwriter's full exercise of their option to purchase additional shares, at a public offering price of ~~common stock was $215.8~~$92.50 per share, resulting in net proceeds to the Company of $492.4 million.

Preferred Stock

The Company’s certificate of incorporation authorizes the Board to issue up to 25,000,000 shares of preferred stock from time to time in one or more series. The rights, preferences, restrictions, qualifications and limitations of such stock are determined by the Board. As of December 31, ~~2017 no~~2020 0 preferred shares are issued or outstanding.

Common Stock

The holders of shares of common stock are entitled to ~~one~~1 vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings.

The holders of shares of common stock are entitled to receive dividends, if and when declared by the Board. NoNaN dividends have been declared or paid by the Company through December 31, ~~2017.~~2020.

Common Stock Reserved for Future Issuance

At December 31, ~~2017,~~2020, the Company has reserved for future issuance the following number of shares of common stock (in thousands):



			December 31, ~~2017~~2020
Outstanding stock options to purchase common stock			~~3,452~~3,378
Outstanding restricted stock units			~~604~~569
Shares available for future issuance under equity incentive plan			~~2,763~~5,436
Warrants to purchase common stock			610
Shares available for future issuance under the employee stock purchase plan			~~187~~87
Additional shares reserved for unissued, but designated, Preferred Stock			25,000
Total shares of authorized common stock reserved for future issuance			~~32,067~~34,470

10. Significant Agreements

~~Celgene~~BMS (Bristol Myers Squibb)

Overview

On February 20, 2008 the Company entered into an agreement with Celgene, which was acquired by BMS in November 2019 and is now referred to herein as BMS, relating to sotatercept (the Original Sotatercept Agreement), which was amended on August 2, 2011 (as amended, the Amended Sotatercept Agreement). The Company further amended and restated the Original Sotatercept Agreement in its entirety on September 18, 2017, ~~(the~~and clarified certain responsibilities of the Company and BMS in a letter agreement to the Restated Sotatercept Agreement on March 10, 2020 (collectively, the Restated Sotatercept Agreement). On August 2, 2011 the Company entered into a second agreement with ~~Celgene~~BMS for ~~luspatercept,~~REBLOZYL® (luspatercept-aamt) (the REBLOZYL Agreement, formerly the Luspatercept Agreement).

Restated Sotatercept Agreement

F-21

Table of Contents

Acceleron Pharma Inc.

Notes to Consolidated Financial Statements (Continued)

Years Ended December 31, 2020, 2019 and 2018

The Restated Sotatercept Agreement provides ~~Celgene~~BMS with an exclusive license to sotatercept outside of the field of pulmonary hypertension, referred to as the PH field, and provides the Company with the worldwide rights to develop and commercialize sotatercept in the PH field.

~~F-20~~

~~Table of Contents~~

~~Acceleron Pharma Inc.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~Years Ended December 31, 2017, 2016 and 2015~~

In connection with the Restated Sotatercept Agreement, ~~Celgene~~BMS agreed not to develop or commercialize in the PH field any compound developed under the Restated Sotatercept Agreement or the ~~Luspatercept~~REBLOZYL Agreement, and the Company agreed not to develop or commercialize any compound developed under the Restated Sotatercept Agreement or the ~~Luspatercept~~REBLOZYL Agreement in any field outside the PH field. The Company has the right to license, transfer or sell its rights to develop and commercialize sotatercept in the PH field, subject to ~~Celgene’s~~BMS's right of first negotiation.

The Company is responsible for 100% of the costs related to its development and commercialization of sotatercept in the PH field. ~~If sotatercept is commercialized~~Pursuant to ~~treat pulmonary hypertension and~~the Restate Sotatercept Agreement, the Company ~~recognizes such revenue, then Celgene~~has aligned with BMS through the Joint Commercialization Committee that the Company will be ~~eligible to receive a royalty in~~ the ~~low 20% range on global net sales. In certain circumstances Celgene may recognize revenue related to~~distributing party for the commercialization of sotatercept in the PH field, and ~~in this scenario,~~that if sotatercept is approved and commercialized to treat PAH, the Company will ~~be eligible to receive~~recognize revenue from global net sales and owe BMS a royalty ~~from Celgene such that~~in the ~~economic position of the parties is equivalent to the scenario in which the Company recognizes such revenue.~~low 20% range. With respect to the development and commercialization of sotatercept outside of the PH field or the development and commercialization of any other compound under the Restated Sotatercept Agreement, the terms of the Amended Sotatercept Agreement, described below, remained unchanged.

Pursuant to the Restated Sotatercept Agreement, ~~Celgene will provide~~BMS provided the Company with certain quantities of ~~Celgene’s~~their existing clinical supply of sotatercept for development in the PH field at no cost. For clinical ~~or commercial~~ supply of sotatercept in excess of that which is agreed to under the Restated Sotatercept Agreement, ~~Celgene can elect~~BMS had the option to provide the Company with such clinical supply of sotatercept, but has declined this option, and the Company is responsible for manufacturing future clinical supply of sotatercept in the PH field. BMS may elect, however, to provide the Company with commercial supply of sotatercept at a negotiated price or provide a tech transfer to enable the Company to manufacture on its own behalf. The conduct of the collaboration is managed by a Joint Development Committee (JDC) and Joint Commercialization ~~Committee.~~Committee (JCC). In the event of a deadlock of a committee, the Company shall determine the resolution of issues specifically related to the PH field, (other than pricing which shall be determined by consensus), and ~~Celgene~~BMS shall determine the resolution of all other issues. The ~~Joint Commercialization Committee~~JCC will oversee commercialization of sotatercept, and sotatercept pricing will be determined by mutual agreement of the Company and ~~Celgene~~BMS in the ~~Joint Commercialization Committee.~~JCC.

The Restated Sotatercept Agreement will expire on a country-by-country basis on the occurrence of the latest to occur of the following: (1) the expiration of the royalty term with respect to all ~~license~~licensed products outside the PH field in such country, (2) the expiration of the royalty term with respect to all sotatercept licensed products in the PH field in such country, and (3) the exercise or forfeiture by ~~Celgene~~BMS of its option with regard to each option compound. In the PH field, the royalty term for each licensed product in each country is the period commencing with first commercial sale of the applicable licensed product in the applicable country and ending on the latest of expiration of specified patent coverage or a specified period of years. Outside the PH field, the royalty term for each licensed product in each country outside North America is the period commencing with first commercial sale of the applicable licensed product in the applicable country and ending on the latest of expiration of specified patent coverage or a specified period of years, and the royalty term for each licensed product in North America is the period commencing with the first commercial sale in North America and ending, on a licensed product and country-by-country basis on the date which commercialization of such licensed product has ceased. The term for each option compound runs for a specified period of years unless ~~Celgene~~BMS exercises its option, in which case the compound becomes a licensed product, or forfeits its option by failing to make certain payments following the achievement of certain milestones in early clinical development of the option compound.

The Restated Sotatercept Agreement is terminable by either party upon a breach that is uncured and continuing or by ~~Celgene~~BMS for convenience on a country-by-country or product-by-product basis, or in its entirety. ~~Celgene~~BMS may also terminate the Restated Sotatercept Agreement, in its entirety or on a product-by-product basis, for failure of a product to meet a development or clinical trial endpoint. Termination for cause by the Company or termination by ~~Celgene~~BMS for convenience or failure to meet an endpoint will have the effect of terminating the applicable license to ~~Celgene~~BMS and the rights granted to the Company with respect to the development of sotatercept in the PH field shall become irrevocable. Termination for cause by either party shall result in reducing the remaining royalties due to the breaching party by a certain percentage. Upon termination by ~~Celgene~~BMS for convenience or for failure to meet an endpoint, the Company and ~~Celgene~~BMS will enter into a termination agreement pursuant to which, among other things, ~~Celgene~~BMS will continue to be eligible to receive a royalty in the low 20% range on global net sales of sotatercept in the PH field.

The Company was not required to make any upfront payments to Celgene upon execution of the Restated Sotatercept Agreement, and is not be required to make any milestone payments to Celgene in connection with its development and commercialization of sotatercept in the PH field.

~~F-21~~F-22


(Mark One)

~~(Mark One)~~
☒
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended			December 31, ~~2017~~2020

OR

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

For the Transition Period from to
Commission File Number:			001-36065



		Page
	PART I
Item 1.	Business	2
Item 1A.	Risk Factors	2425
Item 1B.	Unresolved Staff Comments	4651
Item 2.	Properties	4651
Item 3.	Legal Proceedings	4651
Item 4.	Mine Safety Disclosures	4651
	PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	4752
Item 6.	Selected Financial Data	4853
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	5154
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	6468
Item 8.	Financial Statements and Supplementary Data	6468
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	6468
Item 9A.	Controls and Procedures	6468
Item 9B.	Other Information	6670
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	6771
Item 11.	Executive Compensation	6771
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	6771
Item 13.	Certain Relationships and Related Transactions, and Director Independence	6771
Item 14.	Principal Accounting Fees and Services	6771
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	6872
Item 16.	Form 10-K Summary	6872


Treatment*	% Reduction in PVR	P-Value
Sotatercept 0.3 mg/kg (n=32)	20.5%	0.0027
Sotatercept 0.7 mg/kg (n=42)	33.9%	<0.0001
Placebo (n=32)	2.1%


	Year Ended December 31,
(in thousands)	2020		2019		2018
Net cash (used in) provided by:
Operating activities	$	(130,327)	$	(93,804)	$	(94,706)
Investing activities	25,596		(71,291)		122,927
Financing activities	538,006		258,720		16,146
Net increase in cash, cash equivalents and restricted cash	$	433,275	$	93,625	$	44,367



	Year Ended December 31,
(in thousands)	2017			2016			2015
Net cash (used in) provided by:
Operating activities	$	(76,730	)	$	(44,695	)	$	(44,211	)
Investing activities	(64,366		)	(108,805		)	(108,971		)
Financing activities	220,296			146,667			4,505
Net increase (decrease) in cash and cash equivalents	$	79,200		$	(6,833	)	$	(148,677	)


◦	~~Announce MEDALIST Phase 3 clinical trial top-line results in mid-2018.~~


◦	~~Initiate the COMMANDS Phase 3 clinical trial in the first half of 2018.~~


◦	~~Announce BELIEVE Phase 3 clinical trial top-line results in mid-2018.~~


◦	~~Advance the enrollment and treatment of patients in the "BEYOND" Phase 2 clinical trial.~~


◦	~~Announce preliminary results from part 1 of the Phase 2 clinical trial in FSHD and CMT in all dose-escalation cohorts in the second half of 2018.~~


◦	~~Initiate part 2 of the Phase 2 clinical trial in FSHD in the second quarter of 2018.~~


◦	~~Initiate a Phase 2 clinical trial in pulmonary arterial hypertension in the first half of 2018.~~


•	~~Red blood cell transfusions, which are used to treat anemia in patients with MDS, and iron chelation therapy, such as Novartis's oral iron chelating agents Exjade® and Jadenu~~^TM~~, which are used to treat iron overload in patients with MDS.~~


•	Myelofibrosis •Red blood cell transfusions, which are ~~used to treat anemia in patients with beta-thalessemia, and iron chelation therapy, such as Novartis's oral iron chelating agents Exjade® and Jadenu~~^TM~~, which are used to treat iron overload in patients with beta-thalessemia.~~



	Common Stock Price
	2017				2016
	High		Low		High		Low
First Quarter	$	32.57	$	23.07	$	48.05	$	22.67
Second Quarter	$	34.91	$	24.37	$	37.67	$	25.49
Third Quarter	$	40.35	$	29.57	$	40.70	$	28.29
Fourth Quarter	$	43.68	$	33.37	$	41.69	$	24.77



	Year Ended December 31,
(in thousands, except per share data)	2017			2016			2015			2014			2013
Consolidated Statements of Operations Data:
Revenue:
Collaboration revenue:
License and milestone	$	541		$	15,550		$	1,184		$	1,673		$	43,948
Cost-sharing, net	12,940			12,221			16,913			12,959			13,282
Total revenue	13,481			27,771			18,097			14,632			57,230
Costs and expenses:
Research and development	89,726			68,580			58,404			50,897			36,051
Litigation settlement	—			—			—			5,000			—
General and administrative	33,738			25,297			20,572			14,199			14,227
Total costs and expenses	123,464			93,877			78,976			70,096			50,278
(Loss) income from operations	(109,983		)	(66,106		)	(60,879		)	(55,464		)	6,952
Total other income (expense), net	1,561			9,116			(3,015		)	4,205			(28,850		)
Loss before income taxes	(108,422		)	(56,990		)	(63,894		)	(51,259		)	(21,898		)
Income tax provision	(32		)	(24		)	—			—			—
Net loss	$	(108,454	)	$	(57,014	)	$	(63,894	)	$	(51,259	)	$	(21,898	)
Reconciliation of net loss to net loss applicable to common stockholders:
Net loss	$	(108,454	)	$	(57,014	)	$	(63,894	)	$	(51,259	)	$	(21,898	)
Accretion of dividends, interest, redemption value and issuance costs on redeemable convertible preferred stock	—			—			—			—			(19,870		)
Gain on extinguishment of redeemable convertible preferred stock	—			—			—			—			2,765
Net loss applicable to common stockholders-basic and diluted	$	(108,454	)	$	(57,014	)	$	(63,894	)	$	(51,259	)	$	(39,003	)

Net loss per share applicable to common stockholders-basic and diluted(1)	$	(2.68	)	$	(1.52	)	$	(1.92	)	$	(1.63	)	$	(4.15	)

Weighted-average number of common shares used in computing net loss per share applicable to common stockholders-basic and diluted	40,420			37,430			33,303			31,515			9,407



	As of December 31,
(in thousands)	2017		2016		2015		2014		2013
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	100,150	$	20,950	$	27,783	$	176,460	$	113,163
Short and long-term investments	272,800		213,432		108,198		—		—
Total assets	389,177		247,647		146,337		186,296		123,732
Total current liabilities	16,745		16,149		14,491		9,253		18,162
Long-term deferred revenue	3,161		3,704		4,239		4,816		5,620
Long-term deferred rent	1,818		953		1,157		1,818		2,337
Long-term notes payable	—		—		—		—		9,048
Warrants to purchase common stock	2,236		1,244		17,187		14,124		30,753
Total stockholder's equity	365,217		225,597		109,263		156,285		57,812


(in thousands)	Total			2018			2019 through 2020		2021 through 2022		After 2022		(in thousands)	Total		2021		2022 through 2023		2024 through 2025		After 2025
Operating lease obligations(1)	$	35,536		$	5,551		$	12,826	$	12,398	$	4,761
Less: sublease income(2)	(704		)	(704		)	—		—		—
Operating lease obligations (1)													Operating lease obligations (1)	$	27,584	$	8,926	$	16,531	$	1,754	$	373
Total	$	34,832		$	4,847		$	12,826	$	12,398	$	4,761	Total	$	27,584	$	8,926	$	16,531	$	1,754	$	373


~~(2)~~	In July 2017, we entered into a sublease for 11,825 square feet of office and lab space at 99 Erie Street in Cambridge Massachusetts that expires in July 2018. On January 8, 2018, the sublessee exercised its right to extend the sublease by an additional five months through December 31, 2018.


~~(a)~~			~~The following documents are filed as part of this report:~~



	Page number in this Report
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets at December 31, ~~2017~~2020 and ~~2016~~2019		F-34
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018		F-45
Consolidated Statements of Stockholders' Equity for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018		F-56
Consolidated Statements of Cash Flows for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018		F-67
Notes to Consolidated Financial Statements		F-78


~~(b)~~	~~The list of Exhibits filed as a part of this Annual Report on Form 10-K is set forth on the Exhibit Index immediately preceding such Exhibits and is incorporated herein by this reference.~~



	Pages
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-34
Consolidated Statements of Operations and Comprehensive Loss		F-45
Consolidated Statements of Stockholders' Equity		F-56
Consolidated Statements of Cash Flows		F-67
Notes to Consolidated Financial Statements		F-78



			Accrued and Prepaid Clinical Trial Expenses
Description of the Matter			The Company’s total accrued expenses were $44.7 million at December 31, 2020, which included the estimated obligation for clinical trial expenses incurred as of December 31, 2020 but not paid as of that date. In addition, the Company’s total prepaid expenses were $17.3 million at December 31, 2020, which included amounts that were paid in advance of services incurred pursuant to clinical trials. As discussed in Note 2 of the consolidated financial statements, the Company’s clinical trial expenses are based on the Company’s estimates of the services received and efforts expended pursuant to quotes and contracts with third parties that conduct research and development on the Company’s behalf, which results in an accrual or prepaid at period end. Auditing the Company’s accrued and prepaid clinical trial expenses was especially challenging due to the application of significant management judgment over the estimate of services provided but not yet invoiced. Specifically, the amount of accrued and prepaid clinical trial expenses recognized is sensitive to the availability of information to make the estimate, including the estimate of the period over which services will be performed, the level of effort expended as of the balance sheet date and the associated cost of such services. Additionally, due to the long duration of clinical trials and the timing of invoicing received from third parties, the actual amounts incurred are not typically known by the report date.
How We Addressed the Matter in Our Audit			We evaluated and tested the design and operating effectiveness of internal controls related to the accounting for accrued and prepaid clinical trial expenses. For example, we tested management’s review controls related to the review of the underlying data used in the clinical accrual and prepaid calculations, the significant assumptions used to develop its estimates, and the clerical accuracy of the related schedules. To evaluate the Company’s estimate of services incurred as of period end pursuant to its clinical trials, our audit procedures included, among others, testing the accuracy and completeness of the underlying data used in the estimates and evaluating the significant assumptions stated above that are used by management to estimate the recorded amounts.To assess the reasonableness of the significant assumptions, we obtained information regarding the nature and extent of progress of clinical trials from the Company’s research and development personnel that oversee the clinical trials and obtained information directly from third parties which indicated the third parties’ estimate of costs incurred to date.To evaluate the completeness and valuation of the accrual or prepaid clinical trial expenses, we compared invoices received by the Company subsequent to December 31, 2020 to the amounts recognized by the Company as of that date.We inspected the Company’s contracts with third parties and any pending change orders to assess the impact to the amounts recorded.We also independently estimated the services incurred by the third party and compared it to the amount recognized by the Company.


																	Common Stock
																	Number of Shares	$0.001 Par Value		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity
	Common Stock
	Number of Shares	$0.001 Par Value		Additional Paid-In Capital			Accumulated Deficit			Comprehensive Loss			Total Stockholders' Equity
Balance at December 31, 2014	32,432,025	$	33	$	399,835		$	(243,583	)	$	—		$	156,285
Balance at December 31, 2017																Balance at December 31, 2017	45,261,175	$	46	$	839,090	$	(473,024)	$	(895)	$	365,217
Stock-based compensation	—	—		12,075			—			—			12,075			Stock-based compensation	—	—		24,569		—		—		24,569
Exercise of stock options	837,361	1		3,962			—			—			3,963			Exercise of stock options	779,711	1		15,930		—		—		15,931
Vesting of restricted stock units, net of shares withheld for taxes																Vesting of restricted stock units, net of shares withheld for taxes	170,516	—		(731)		—		—		(731)
Issuance of common stock related to ESPP	23,787	—		589			—			—			589			Issuance of common stock related to ESPP	30,896	—		1,085		—		—		1,085
Net exercise of warrants to purchase common stock	20,182	—		465			—			—			465			Net exercise of warrants to purchase common stock	18,449	—		797		—		—		797
Unrealized loss on available-for-sale securities	—	—		—			—			(220		)	(220		)
Unrealized gain on available-for-sale securities, net of tax																Unrealized gain on available-for-sale securities, net of tax	—	—		—		—		335		335
Effect of adoption of ASU 606																Effect of adoption of ASU 606	—	—		—		3,705		—		3,705
Effect of adoption of ASU 2018-07																Effect of adoption of ASU 2018-07	—	—		(1,641)		1,641		—		0
Net loss	—	—		—			(63,894		)	—			(63,894		)	Net loss	—	—		—		(118,871)		—		(118,871)
Balance at December 31, 2015	33,313,355	34		416,926			(307,477		)	(220		)	109,263
Balance at December 31, 2018																Balance at December 31, 2018	46,260,747	47		879,099		(586,549)		(560)		292,037
Stock-based compensation	—	—		18,557			—			—			18,557			Stock-based compensation	—	—		22,995		—		—		22,995
Issuance of common stock, net of expense $665	3,750,000	4		140,340			—			—			140,344
Issuance of common stock, net of expense $500																Issuance of common stock, net of expense $500	6,151,163	6		248,124		—		—		248,130
Exercise of stock options	885,075	1		5,311			—			—			5,312			Exercise of stock options	344,257	—		10,096		—		—		10,096
Vesting of restricted stock units, net of shares withheld for taxes																Vesting of restricted stock units, net of shares withheld for taxes	334,141	—		(802)		—		—		(802)
Issuance of common stock related to ESPP																Issuance of common stock related to ESPP	33,259	—		1,295		—		—		1,295
Unrealized gain on available-for-sale securities, net of tax																Unrealized gain on available-for-sale securities, net of tax	—	—		—		—		583		583
Net loss																Net loss	—	—		—		(124,858)		—		(124,858)
Balance at December 31, 2019																Balance at December 31, 2019	53,123,567	53		1,160,807		(711,407)		23		449,476
Stock-based compensation																Stock-based compensation	—	—		30,237		—		—		30,237
Issuance of common stock, net of expense $505																Issuance of common stock, net of expense $505	5,594,593	6		492,408		—		—		492,414
Exercise of stock options																Exercise of stock options	1,455,899	1		46,297		—		—		46,298
Vesting of restricted stock units, net of shares withheld for taxes																Vesting of restricted stock units, net of shares withheld for taxes	137,062	—		(2,370)		—		—		(2,370)
Issuance of common stock related to ESPP	30,671	—		658			—			—			658			Issuance of common stock related to ESPP	35,673	—		1,664		—		—		1,664
Net exercise of warrants to purchase common stock	272,725	—		8,682			—			—			8,682			Net exercise of warrants to purchase common stock	37,073	—		3,729		—		—		3,729
Unrealized loss on available-for-sale securities	—	—		—			—			(205		)	(205		)
Unrealized loss on available-for-sale securities, net of tax																Unrealized loss on available-for-sale securities, net of tax	—	—		—		—		(311)		(311)
Net loss	—	—		—			(57,014		)	—			(57,014		)	Net loss	—	—		—		(166,030)		—		(166,030)
Balance at December 31, 2016	38,251,826	39		590,474			(364,491		)	(425		)	225,597
Stock-based compensation	—	—		28,248			—			—			28,248
Issuance of common stock, net of expenses of $397	6,216,216	6		215,796			—			—			215,802
Exercise of stock options	474,056	1		3,892			—			—			3,893
Vesting of restricted stock units	282,158	—		(226		)	—			—			(226		)
Issuance of common stock related to ESPP	33,698	—		827			—			—			827
Net exercise of warrants to purchase common stock	3,221	—		—			—			—			—
Unrealized loss on available-for-sale securities	—	—		—			—			(470		)	(470		)
Effect of adoption of ASU 2016-09	—	—		79			(79		)	—			—
Net loss	—	—		—			(108,454		)	—			(108,454		)
Balance at December 31, 2017	45,261,175	$	46	$	839,090		$	(473,024	)	$	(895	)	$	365,217
Balance at December 31, 2020																Balance at December 31, 2020	60,383,867	$	60	$	1,732,772	$	(877,437)	$	(288)	$	855,107


	Less than 12 months
	Fair Value		Unrealized Losses
Corporate obligations	54,724		(13)
U.S. Treasury securities	72,289		(7)
Mortgage and other asset backed securities	4,998		(2)
Total available-for sale securities in an unrealized loss position	$	132,012	$	(22)


	December 31, 2020
	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	266,562	$	0	$	0	$	266,562
Corporate obligations	0		60,982		0		60,982
U.S. Treasury securities	0		215,310		0		215,310
Certificates of deposit	0		246		0		246
Mortgage and other asset backed securities	0		4,998		0		4,998
Total assets	$	266,562	$	281,536	$	0	$	548,098



	December 31, 2017
	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	90,702	$	—	$	—	$	90,702
Corporate obligations	—		158,849		—		158,849
U.S. Treasury securities	—		37,813		—		37,813
Certificates of deposit	—		12,244		—		12,244
Mortgage and other asset backed securities	—		67,888		—		67,888
Restricted cash	1,132		—		—		1,132
Total assets	$	91,834	$	276,794	$	—	$	368,628
Liabilities:
Warrants to purchase common stock	$	—	$	—	$	2,236	$	2,236
Total liabilities	$	—	$	—	$	2,236	$	2,236



	December 31, 2016
	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	19,818	$	—	$	—	$	19,818
Corporate obligations	—		88,492		—		88,492
U.S. Treasury securities	—		33,968		—		33,968
Certificates of deposit	—		23,373		—		23,373
Mortgage and other asset backed securities	—		67,599		—		67,599
Restricted cash	946		—		—		946
Total assets	$	20,764	$	213,432	$	—	$	234,196
Liabilities:
Warrants to purchase common stock	$	—	$	—	$	1,244	$	1,244
Total liabilities	$	—	$	—	$	1,244	$	1,244



Asset			Estimated Useful Life
Computer equipment and software			3 years
Office and laboratory equipment			3 years
Leasehold improvements			Shorter of the useful life or remaining lease term


									Number of Shares (in thousands)	Weighted- Average Exercise Price Per Share		Weighted- Average Contractual Life (in years)	Aggregate Intrinsic Value(1)
	Number of Grants		Weighted- Average Exercise Price Per Share		Weighted- Average Contractual Life (in years)	Aggregate Intrinsic Value(1)
Outstanding at December 31, 2016	3,316		$	25.96
Outstanding at December 31, 2019								Outstanding at December 31, 2019	3,820	$	36.26
Granted	701		$	30.78				Granted	1,206	$	69.80
Exercised	(474	)	$	8.21				Exercised	(1,456)	$	31.80
Canceled or forfeited	(91	)	$	34.85				Canceled or forfeited	(192)	$	42.94
Outstanding at December 31, 2017	3,452		$	29.14	6.72	$	46,115
Exercisable at December 31, 2017	2,110		$	26.78	5.52	$	33,208
Outstanding at December 31, 2020								Outstanding at December 31, 2020	3,378	$	49.78	7.35	$	264,046
Exercisable at December 31, 2020								Exercisable at December 31, 2020	1,732	$	39.10	6.15	$	153,852


~~(1)~~	The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in the money at December 31, 2017 and 2016.


						Number of Stock Units (in thousands)	Weighted- Average Grant Date Fair Value Per Share
	Number of Stock Units		Weighted- Average Grant Date Fair Value Per Share
Unvested balance at December 31, 2016	182		$	31.50
Unvested balance at December 31, 2019					Unvested balance at December 31, 2019	397	$	39.20
Granted	156		$	32.89	Granted	304	$	71.87
Vested	(57	)	$	30.52	Vested	(164)	$	38.62
Forfeited	(14	)	$	33.21	Forfeited	(43)	$	43.00
Unvested balance at December 31, 2017	267		$	32.44
Unvested balance at December 31, 2020					Unvested balance at December 31, 2020	494	$	59.16


														For the Three Months Ended (1)
	For the Three Months Ended(1)													March 31		June 30		September 30		December 31
	March 31			June 30			September 30			December 31				(in thousands except per share data)
	(in thousands except per share data)
2017
2020													2020
Total revenue	$	3,705		$	3,057		$	3,014		$	3,705		Total revenue	$	4,344	$	39,752	$	22,561	$	25,866
Total costs and expenses	29,563			32,968			28,592			32,341			Total costs and expenses	55,916		58,665		61,789		83,461
Loss from operations	(25,858		)	(29,911		)	(25,578		)	(28,636		)	Loss from operations	(51,572)		(18,913)		(39,228)		(57,595)
Net loss	(25,407		)	(29,669		)	(25,451		)	(27,926		)	Net loss	(50,939)		(18,451)		(39,245)		(57,396)
Basic net loss per share	$	(0.66	)	$	(0.77	)	$	(0.65	)	$	(0.62	)
Diluted net loss per share	$	(0.66	)	$	(0.77	)	$	(0.65	)	$	(0.62	)
2016
Net loss per share- basic and diluted													Net loss per share- basic and diluted	$	(0.95)	$	(0.34)	$	(0.66)	$	(0.95)
2019													2019
Total revenue	$	18,201		$	3,195		$	3,005		$	3,369		Total revenue	$	2,780	$	27,666	$	4,208	$	39,338
Total costs and expenses	22,157			22,850			23,513			25,355			Total costs and expenses	43,585		48,802		53,131		64,919
Loss from operations	(3,956		)	(19,655		)	(20,508		)	(21,986		)	Loss from operations	(40,805)		(21,136)		(48,923)		(25,581)
Net income (loss)	5,061			(22,016		)	(20,770		)	(19,288		)	Net income (loss)	(38,053)		(17,862)		(45,369)		(23,575)
Basic net income (loss) per share	$	0.14		$	(0.59	)	$	(0.55	)	$	(0.51	)
Diluted net income (loss) per share	$	0.13		$	(0.59	)	$	(0.55	)	$	(0.51	)
Net loss per share- basic and diluted													Net loss per share- basic and diluted	$	(0.74)	$	(0.34)	$	(0.86)	$	(0.44)


~~(1)~~	~~The amounts were computed independently for each quarter, and the sum of the quarters may not total the annual amounts.~~