UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended ~~September 30, 2017~~March 31, 2021



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

Commission file ~~number~~number: 001-36014

AGIOS PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in Its Charter)



Delaware									26-0662915
(State or Other Jurisdiction of Incorporation or Organization)									(I.R.S. Employer Identification No.)

88 Sidney Street, Cambridge, Massachusetts									02139
(Address of Principal Executive Offices)									(Zip Code)

(617) 649-8600

(Registrant’s Telephone Number, Including Area Code)

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

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


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

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

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

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



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~Yes ☐ No~~ ☐

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

Number of shares of the registrant’s Common Stock, $0.001 par value, outstanding on ~~October 30, 2017: 48,754,289~~April 23, 2021: 69,937,607

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AGIOS PHARMACEUTICALS, INC.

FORM 10-Q

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2021

TABLE OF CONTENTS



		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 3 1 , 202 1 and December 31, ~~2016~~20 20	1
	Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 202 1 and ~~2016~~20 20	2
	Condensed Consolidated Statements of Comprehensive Incom e (Loss ) for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 3 1 , 202 1 and ~~2016~~20 20	3
	Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 3 1 , 202 1 and 20 20	4
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 3 1 , 202 1 and ~~2016~~20 20	45
	Notes to Condensed Consolidated Financial Statements	56
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1917
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3124
Item 4.	Controls and Procedures	3224
PART II. OTHER INFORMATION		26
Item 1A.	Risk Factors	3326
Item 6.	Exhibits	6252
	Signatures	6353

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Balance Sheets

~~(in thousands, except share and per share data)~~

(Unaudited)


	September 30, 2017			December 31, 2016
(In thousands, except share and per share data)							(In thousands, except share and per share data)	March 31, 2021		December 31, 2020
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	132,741		$	160,754		Cash and cash equivalents	$	1,888,025	$	127,436
Marketable securities	375,187			380,560			Marketable securities	447,578		445,493
Collaboration receivable – related party	3,489			4,886
Royalty receivable – related party	715			—
Tenant improvement and other receivables	859			3,428

Prepaid expenses and other current assets	15,316			10,264			Prepaid expenses and other current assets	19,511		15,889
Current assets of discontinued operations							Current assets of discontinued operations	0		47,859
Total current assets	528,307			559,892			Total current assets	2,355,114		636,677
Marketable securities	133,804			32,250			Marketable securities	21,598		97,608
Operating lease assets							Operating lease assets	82,244		84,661
Property and equipment, net	24,019			25,337			Property and equipment, net	28,976		30,815
Other non-current assets	1,070			1,615
Financing lease assets							Financing lease assets	502		590

Non-current assets of discontinued operations							Non-current assets of discontinued operations	0		2,601
Total assets	$	687,200		$	619,094		Total assets	$	2,488,434	$	852,952
Liabilities and stockholders’ equity							Liabilities and stockholders’ equity
Current liabilities:							Current liabilities:

Accounts payable	$	17,899		$	17,106		Accounts payable	$	51,224	$	17,724
Accrued expenses	30,760			32,002			Accrued expenses	23,601		30,801
Deferred revenue – related party	35,867			35,913
Deferred rent	3,586			3,412

Operating lease liabilities							Operating lease liabilities	7,988		7,093
Financing lease liabilities							Financing lease liabilities	321		317
Taxes payable							Taxes payable	13,370		0
Current liabilities of discontinued operations							Current liabilities of discontinued operations	0		38,459

Total current liabilities	88,112			88,433			Total current liabilities	96,504		94,394
Deferred revenue, net of current portion – related party	134,202			154,297
Deferred rent, net of current portion	15,080			17,773

Operating lease liabilities, net of current portion							Operating lease liabilities, net of current portion	95,052		97,458
Financing lease liabilities, net of current portion							Financing lease liabilities, net of current portion	248		331

Non-current liabilities of discontinued operations							Non-current liabilities of discontinued operations	0		261,269
Total liabilities	237,394			260,503			Total liabilities	191,804		453,452
Stockholders’ equity:							Stockholders’ equity:
Preferred stock, $0.001 par value; 25,000,000 shares authorized; no shares issued or outstanding at September 30, 2017 and December 31, 2016	—			—
Common stock, $0.001 par value; 125,000,000 shares authorized; 48,617,989 and 42,220,444 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	49			42
Preferred stock, $0.001 par value; 25,000,000 shares authorized; 0 shares issued or outstanding at March 31, 2021 and December 31, 2020							Preferred stock, $0.001 par value; 25,000,000 shares authorized; 0 shares issued or outstanding at March 31, 2021 and December 31, 2020	0		0
Common stock, $0.001 par value; 125,000,000 shares authorized; 69,812,205 and 69,293,920 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively							Common stock, $0.001 par value; 125,000,000 shares authorized; 69,812,205 and 69,293,920 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	70		69
Additional paid-in capital	1,160,048			842,013			Additional paid-in capital	2,265,713		2,242,801
Accumulated other comprehensive loss	(515		)	(313		)
Accumulated deficit	(709,776		)	(483,151		)
Accumulated other comprehensive (loss) income							Accumulated other comprehensive (loss) income	(3)		105
Retained earnings (Accumulated deficit)							Retained earnings (Accumulated deficit)	30,850		(1,843,475)
Total stockholders’ equity	449,806			358,591			Total stockholders’ equity	2,296,630		399,500
Total liabilities and stockholders’ equity	$	687,200		$	619,094		Total liabilities and stockholders’ equity	$	2,488,434	$	852,952

See accompanying Notes to Condensed Consolidated Financial Statements.

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AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Operations

~~(in thousands, except share and per share data)~~

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Collaboration revenue – related party $ 10,643
$ 8,985
$ 32,497
$ 47,244
Royalty revenue – related party 715
—
715
—
Total revenue 11,358
8,985
33,212
47,244
Operating expenses:
Research and development (net of $1,078 and $4,038 of cost reimbursement from related party for the three months ended September 30, 2017 and 2016, respectively, and $6,343 and $18,754 of cost reimbursement from related party for the nine months ended September 30, 2017 and 2016, respectively) 72,917
60,643
215,465
155,485
General and administrative 17,458
11,854
48,411
35,335
Total operating expenses 90,375
72,497
263,876
190,820
Loss from operations (79,017 ) (63,512 ) (230,664 ) (143,576 )
Interest income 1,880
678
4,279
1,591
Net loss $ (77,137 ) $ (62,834 ) $ (226,385 ) $ (141,985 )
Net loss per share – basic and diluted $ (1.59 ) $ (1.63 ) $ (4.94 ) $ (3.72 )
Weighted-average number of common shares used in computing net loss per share – basic and diluted 48,459,424
38,548,153
45,851,203
38,124,425


	Three Months Ended March 31,
(In thousands, except share and per share data)	2021		2020






Cost and expenses:

Research and development	$	57,667	$	55,358
Selling, general and administrative	33,550		31,672
Total cost and expenses	91,217		87,030
Loss from operations	(91,217)		(87,030)
Interest income, net	340		2,936

Net loss from continuing operations	(90,877)		(84,094)
Net income from discontinued operations, net of tax	1,965,202		43,838
Net income (loss)	$	1,874,325	$	(40,256)
Net loss from continuing operations per share - basic and diluted	$	(1.31)	$	(1.23)
Net income from discontinued operations per share - basic and diluted	$	28.26	$	0.64

Net income (loss) per share - basic and diluted	$	26.95	$	(0.59)

Weighted-average number of common shares used in computing net income (loss) per share from continuing operations and discontinued operations and net income (loss) per share – basic and diluted	69,543,510		68,608,279

See accompanying Notes to Condensed Consolidated Financial Statements.

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AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Comprehensive ~~Loss~~

~~(in thousands)~~Income (Loss)

(Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net loss $ (77,137 ) $ (62,834 ) $ (226,385 ) $ (141,985 )
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale securities 135
(268 ) (202 ) 347
Comprehensive loss $ (77,002 ) $ (63,102 ) $ (226,587 ) $ (141,638 )


	Three Months Ended March 31,
(In thousands)	2021		2020
Net income (loss)	$	1,874,325	$	(40,256)
Other comprehensive loss
Unrealized loss on available-for-sale securities	(108)		(128)
Comprehensive income (loss)	$	1,874,217	$	(40,384)

See accompanying Notes to Condensed Consolidated Financial Statements.

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AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Total Stockholders’ Equity
(in thousands, except share amounts)	Shares	Amount
Balance at December 31, 2020	69,293,920	$	69	$	2,242,801	$	105	$	(1,843,475)	$	399,500

Common stock issued under stock incentive plan and ESPP	518,285	1		7,346		—		—		7,347
Stock-based compensation expense	—	—		14,854		—		—		14,854
Other comprehensive loss	—	—		—		(108)		—		(108)
Net income	—	—		—		—		1,874,325		1,874,325
Disposition of oncology business	—	—		712		—		—		712
Balance at March 31, 2021	69,812,205	$	70	$	2,265,713	$	(3)	$	30,850	$	2,296,630


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Total Stockholders’ Equity
(in thousands, except share amounts)	Shares	Amount
Balance at December 31, 2019	68,401,105	$	68	$	2,156,363	$	202	$	(1,516,105)	$	640,528
Common stock issued under stock incentive plan and ESPP	388,820	1		5,464		—		—		5,465
Stock-based compensation expense	—	—		15,670		—		—		15,670
Other comprehensive loss	—	—		—		(128)		—		(128)

Net loss	—	—		—		—		(40,256)		(40,256)
Disposition of oncology business	—	—		4,020		—		—		4,020
Balance at March 31, 2020	68,789,925	$	69	$	2,181,517	$	74	$	(1,556,361)	$	625,299

See accompanying Notes to Condensed Consolidated Financial Statements.

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AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Cash Flows

~~(in thousands)~~

(Unaudited)


								Three Months Ended March 31,
(In thousands)							(In thousands)	2021		2020
Operating activities							Operating activities
Net income (loss)							Net income (loss)	$	1,874,325	$	(40,256)
Less: Net Income from discontinued operations							Less: Net Income from discontinued operations	1,965,202		43,838
Net loss from continuing operations							Net loss from continuing operations	(90,877)		(84,094)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:							Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Depreciation and amortization							Depreciation and amortization	2,479		2,474
Stock-based compensation expense							Stock-based compensation expense	14,854		15,670
Net amortization of premium (accretion of discount) on marketable securities							Net amortization of premium (accretion of discount) on marketable securities	1,664		126

Non-cash operating lease expense							Non-cash operating lease expense	2,417		2,203

	Nine Months Ended September 30,
	2017			2016
Operating activities
Net loss	$	(226,385	)	$	(141,985	)
Adjustments to reconcile net loss cash (used in) provided by operating activities:
Depreciation	4,778			3,986
Stock-based compensation expense	35,128			32,246
Net amortization of premium and discounts on investments	25			534
Loss on disposal of property and equipment	40			—

Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Collaboration receivable – related party	1,397			43
Royalty receivable – related party	(715		)	—
Tenant improvement and other receivables	2,558			271

Prepaid expenses and other current and non-current assets	(4,444		)	(2,464		)	Prepaid expenses and other current and non-current assets	(3,621)		(1,076)
Accounts payable	742			1,668			Accounts payable	(2,941)		(883)
Accrued expenses	(1,242		)	7,328
Deferred revenue – related party	(20,141		)	185,992
Deferred rent	(2,519		)	2,166
Net cash (used in) provided by operating activities	(210,778		)	89,785
Accrued expenses and other current liabilities							Accrued expenses and other current liabilities	(12,697)		(10,972)

Operating lease liabilities							Operating lease liabilities	(1,504)		(2,229)

Net cash used in operating activities - continuing operations							Net cash used in operating activities - continuing operations	(90,226)		(78,781)
Net cash used in operating activities - discontinued operations							Net cash used in operating activities - discontinued operations	(30,523)		(26,577)
Net cash used in operating activities							Net cash used in operating activities	(120,749)		(105,358)
Investing activities							Investing activities
Purchases of marketable securities	(604,525		)	(367,587		)	Purchases of marketable securities	(61,863)		(54,911)
Proceeds from maturities and sales of marketable securities	508,116			334,448			Proceeds from maturities and sales of marketable securities	134,016		167,501
Purchases of property and equipment	(3,347		)	(8,693		)	Purchases of property and equipment	(1,012)		(4,196)
Net cash used in investing activities	(99,756		)	(41,832		)
Net cash provided by investing activities - continuing operations							Net cash provided by investing activities - continuing operations	71,141		108,394
Net cash provided by (used in) investing activities - discontinued operations							Net cash provided by (used in) investing activities - discontinued operations	1,802,936		(259)
Net cash provided by investing activities							Net cash provided by investing activities	1,874,077		108,135
Financing activities							Financing activities
Payment of public offering costs, net of reimbursements	(89		)	(124		)
Proceeds from public offering of common stock, net of commissions	270,250			162,150
Payments on financing lease obligations							Payments on financing lease obligations	(86)		(80)

Net proceeds from stock option exercises and employee stock purchase plan	12,360			3,759			Net proceeds from stock option exercises and employee stock purchase plan	7,347		5,465
Net cash provided by financing activities - continuing operations							Net cash provided by financing activities - continuing operations	7,261		5,385
Net cash provided by financing activities - discontinued operations							Net cash provided by financing activities - discontinued operations	0		0
Net cash provided by financing activities	282,521			165,785			Net cash provided by financing activities	7,261		5,385
Net change in cash and cash equivalents	(28,013		)	213,738			Net change in cash and cash equivalents	1,760,589		8,162
Cash and cash equivalents at beginning of the period	160,754			71,764			Cash and cash equivalents at beginning of the period	127,436		80,931
Cash and cash equivalents at end of the period	$	132,741		$	285,502		Cash and cash equivalents at end of the period	$	1,888,025	$	89,093
Supplemental disclosure of non-cash investing and financing transactions							Supplemental disclosure of non-cash investing and financing transactions
Additions to property and equipment in accounts payable and accrued expenses	$	226		$	497		Additions to property and equipment in accounts payable and accrued expenses	$	6	$	5,444
Proceeds from stock option exercises in other receivables	$	95		$	—
Public offering costs in other receivables, net of amounts in accounts payable and accrued expenses	$	318		$	124

Operating lease liabilities arising from obtaining operating lease assets							Operating lease liabilities arising from obtaining operating lease assets	$	0	$	0

See accompanying Notes to Condensed Consolidated Financial Statements.

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AGIOS PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Overview and Basis of Presentation

References to Agios

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

Overview

We are a biopharmaceutical company committed to ~~the fundamental transformation of~~transforming patients’ lives through scientific leadership in the field of cellular metabolism and adjacent areas of biology, with the goal of ~~making transformative, first- or best-in-class medicines. Our areas of focus are cancer metabolism, rare genetic~~creating differentiated, small molecule medicines for genetically defined diseases, or ~~RGDs, which are diseases that are directly caused by changes in genes or chromosomes, often passed from one generation~~GDDs, and, prior to the ~~next,~~completion of the sale of our oncology business to Servier Pharmaceuticals LLC, or Servier, as described below, hematologic malignancies and metabolic immuno-oncology, or MIO, which is a developing field that aims to modulate the activity of relevant immune cells (or tumor microenvironment) by targeting critical metabolic nodes, thereby enhancing the immune mediated anti-tumor response. In each of thesesolid tumors. To address our focus areas, we ~~are seeking~~take a systems biology approach to ~~unlock~~deeply understand disease states, drive the ~~biology~~discovery and validation of ~~cellular metabolism as a platform to create transformative therapies.~~novel therapeutic targets, and define patient selection strategies, thereby increasing the probability that our experimental medicines will have the desired therapeutic effect. We are located in Cambridge, Massachusetts.

Sale of our Oncology Business to Servier

On March 31, 2021, we completed the sale of our oncology business to Servier. We entered into a Purchase and Sale Agreement, or the Purchase Agreement, with Servier on December 20, 2020. The transaction included the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs for a payment of approximately $1.8 billion in cash at the closing, subject to certain adjustments, and a payment of $200 million in cash, if, prior to January 1, 2027, vorasidenib is granted new drug application, or NDA, approval from the U.S. Food and Drug Administration, or FDA, with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an isocitrate dehydrogenase 1 or 2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval), as well as a royalty of 5% of U.S. net sales of TIBSOVO® from the close of the transaction through loss of exclusivity, and a royalty of 15% of U.S. net sales of vorasidenib from the first commercial sale of vorasidenib through loss of exclusivity. Servier also acquired our co-commercialization rights for Bristol Myers Squibb’s IDHIFA® and the right to receive a $25.0 million potential milestone payment under our prior collaboration agreement with Celgene Corporation, and following the sale Servier will conduct certain clinical development activities within the IDHIFA® development program.

Basis of presentation

The condensed consolidated balance sheet as of ~~September 30, 2017,~~March 31, 2021, the condensed consolidated statements of operations, comprehensive income (loss) and stockholders' equity for the three months ended March 31, 2021 and 2020, and the condensed consolidated statements of ~~operations and comprehensive loss for the three and nine months ended September 30, 2017 and 2016, and~~ cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of our management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state our financial position as of ~~September 30, 2017, and~~March 31, 2021, our results of operations and stockholders' equity for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, and cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020. The financial data and the other financial information disclosed in these notes to the condensed consolidated financial statements related to the ~~three and nine-month period~~three-month periods are also unaudited. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2017~~2021 or for any other future annual or interim period. The ~~year-end~~ condensed consolidated balance sheet data as of December 31, 2020 was derived from our audited financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles, or U.S. GAAP. ~~Accordingly, the~~The condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 that was filed with the Securities and Exchange Commission, or the SEC, on February ~~16, 2017.~~25, 2021.

In late March 2021, our oncology business met all the conditions to be classified as held for sale and, because we consider the disposal of the oncology business to be a strategic shift that will have a major effect on our operations and financial results, represented a discontinued operation. All assets and liabilities associated with our oncology business were therefore classified as assets and liabilities of discontinued operations in our condensed consolidated balance sheets for the periods presented. Further, all historical operating results for our oncology business are reflected within discontinued operations in the condensed

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consolidated statements of operations for all periods presented. For additional information, see Note 3, Discontinued Operations.

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

Reclassifications

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

Use of estimates

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

Liquidity

~~In April 2017,~~On March 31, 2021 we completed ~~a public offering~~the sale of ~~5,050,505 shares~~our oncology business to Servier, and received approximately $1.8 billion in cash at closing. In connection with the sale, on March 25, 2021, we announced that our board of ~~common stock at an offering price~~directors authorized the repurchase of $49.50 per share. We received net proceeds from this offering of $235.0 million, after deducting underwriting discounts and commissions paid by us. In addition, we granted the underwriters the right to purchase up to ~~an additional 757,575 shares~~$1.2 billion of ~~common stock, which was also exercised in April 2017, resulting in additional net proceeds~~our outstanding shares. We expect to ~~us of $35.2 million, after underwriting discounts and commissions. After giving effect to~~conduct the ~~full exercise~~share repurchases over the next 12—18 months, including executing a meaningful portion of the ~~over-allotment option,~~planned repurchases by the ~~number~~end of ~~shares sold by us in~~2021 through a combination of 10b5-1 plans, open market purchases and privately negotiated block sales.

As of March 31, 2021, we had cash, cash equivalents and marketable securities of $2.4 billion. Although we have incurred recurring losses and expect to continue to incur losses for the ~~public offering totaled 5,808,080 shares,~~foreseeable future, we expect our cash, cash equivalents and ~~net proceeds~~marketable securities will be sufficient to ~~us totaled $270.2 million, after underwriting discounts and commissions.~~fund current operations for at least the next twelve months from the issuance date of these financial statements.

2. Summary of Significant Accounting Policies

Discontinued Operations

We accounted for the sale of our oncology business in accordance with Accounting Standards Codification, ASC, 205 Discontinued Operations and ~~Recent Accounting Pronouncements~~

~~Significant accounting policies~~

~~In the quarter ended March 31, 2017, we adopted~~ Accounting Standards Update, ASU, No. 2014-08, Reporting of Discontinued Operations and Disclosures of Disposals of Components of an Entity. We followed the held-for-sale criteria as defined in ASC 306 and ASC 205. ASC 205 requires that a component of an entity that has been disposed of or ~~ASU, 2016-09,~~ ~~Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, or ASU 2016-09, which simplifies several aspects~~is classified as held for sale and has operations and cash flows that can be clearly distinguished from the rest of the ~~accounting~~entity be reported as assets held for ~~employee share-based payment transactions.~~ sale and discontinued operations. In the period a component of an entity has been disposed of or classified as held for sale, the results of operations for the periods presented are reclassified into separate line items in the unaudited condensed consolidated statements of operations. Assets and liabilities are also reclassified into separate line items on the related condensed consolidated balance sheets for the periods presented. The statements of cash flows for the periods presented are also reclassified to reflect the results of discontinued operations as separate line items. ASU 2014-08 requires that only a disposal of a component of an entity, or a group of components of an entity, that represents a strategic shift that has, or will have, a major effect on the reporting entity’s operations and financial results be reported in the financial statements as discontinued operations. ASU 2014-08 also provides guidance on the financial statement presentations and disclosures of discontinued operations.

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

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There have been no other material changes to the significant accounting policies previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

Recent accounting pronouncements

~~Revenue from Contracts with Customers~~

~~In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606), or ASU 2014-09. Subsequently, the FASB issued ASU 2015-14,~~ ~~Revenue from Contracts with Customers (Topic 606), which adjusted the effective date of ASU 2014-09; ASU No. 2016-08,~~ ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which amends the principal-versus-agent implementation guidance and illustrations in ASU 2014-09; ASU No. 2016-10,~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,~~ ~~which clarifies identifying performance obligations and licensing implementation guidance and illustrations in ASU 2014-09; ASU No. 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which addresses implementation issues and is intended to reduce the cost and complexity of applying the new revenue standard in ASU 2014-09; and ASU No. 2017-13,~~ Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments (SEC Update)~~, which codifies recent announcements by the SEC staff, or collectively, the Revenue ASUs.~~

The Revenue ASUs provide an accounting standard for a single comprehensive model for use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The accounting standard is effective for interim and annual periods beginning after December 15, 2017, with an option to early adopt for interim and annual periods beginning after December 15, 2016. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (the full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). We will adopt the new standard effective January 1, 2018 under the modified retrospective method. We have allocated internal resources to the implementation and are in the process of determining the impact of the Revenue ASUs on our financial statements; however, the adoption of the Revenue ASUs may have a material impact on revenue recognition, our notes to consolidated financial statements and our internal controls over financial reporting. As discussed further in detail within Note 5, ~~Collaboration Agreements, our collaboration agreements with Celgene Corporation, or Celgene, are currently our sole source of revenue and the only arrangements impacted by the adoption of the Revenue ASUs.~~

~~Other Recent Accounting Pronouncements~~

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting,~~ or ASU 2017-09, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in the Accounting Standards Codification, or ASC, 718. ASU 2017-09 is effective for us for annual periods beginning after December 15, 2017, and interim periods therein, with early adoption permitted. We are currently in the process of evaluating the impact of the guidance on our consolidated financial statements.

~~In October 2016, the FASB issued ASU No. 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, or ASU 2016-16, which removes the prohibition in ASC 740,~~ ~~Income Taxes~~, against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. ASU 2016-16 is effective for us for annual periods beginning after December 15, 2017, and interim periods therein, with early adoption permitted. We are currently in the process of evaluating the impact of the guidance on our consolidated financial statements.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842),~~ or ASU 2016-02, which establishes principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease. ASU 2016-02 is effective for us for annual periods beginning after December 15,

~~2018 and interim periods therein, with early adoption permitted. We are currently in the process of evaluating the impact of the guidance on our consolidated financial statements.~~

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

3. Discontinued Operations

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

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


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

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


(in thousands)	March 31, 2021
Assets
Current assets:
Accounts receivable, net	$	25,386
Collaboration receivable – related party	2,253
Collaboration receivable – other	2,438
Inventory	16,190
Prepaid expenses and other current assets	7,125
Total current assets of discontinued operations	53,392
Other non-current assets	2,234
Total assets of discontinued operations	$	55,626

Liabilities
Current liabilities:
Accounts payable	$	4,245
Accrued expenses	30,288
Total current liabilities of discontinued operations	34,533
Liability related to the sale of future revenue, net of debt issuance costs	264,281
Total liabilities of discontinued operations	298,814
Net liabilities distributed to Servier	$	(243,188)

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


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

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


	Three Months Ended March 31,
(in thousands)	2021		2020
Revenues:
Product revenue, net	$	36,909	$	22,674
Collaboration revenue – related party	1,350		60,097
Collaboration revenue – other	491		993
Royalty revenue – related party	2,659		3,334
Total revenue	41,409		87,098
Cost and expenses:
Cost of sales	706		533
Research and development	41,357		35,897
Selling, general and administrative	8,131		6,830
Total cost and expenses	50,194		43,260
(Loss) income from discontinued operations	(8,785)		43,838
Non-cash interest expense for the sale of future revenue	(5,697)		0
Gain on the sale of the oncology business	1,992,551		0
Income from discontinued operations, pre-tax	1,978,069		43,838
Income tax expense	(12,867)		0
Net income from discontinued operations	$	1,965,202	$	43,838

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

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

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

4. Fair Value Measurements

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

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

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

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

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The following table summarizes ~~the~~our cash equivalents and marketable securities measured at fair value on a recurring basis as of ~~September 30, 2017 (in thousands):~~March 31, 2021:


(In thousands)									(In thousands)	Level 1		Level 2		Level 3		Total
Cash equivalents									Cash equivalents	$	55,058	$	0	$	0	$	55,058
Total cash equivalents									Total cash equivalents	55,058		0		0		55,058

Marketable securities:									Marketable securities:
	Level 1		Level 2		Level 3		Total
Cash equivalents	$	88,556	$	19,993	$	—	$	108,549
Marketable securities:
Certificates of deposit	—		11,185		—		11,185
U.S. Treasuries	151,814		—		—		151,814		U.S. Treasuries	0		121,759		0		121,759
Government securities	53,131		13,701		—		66,832		Government securities	0		101,285		0		101,285
Corporate debt securities	—		279,160		—		279,160		Corporate debt securities	0		246,132		0		246,132
Total marketable securities									Total marketable securities	0		469,176		0		469,176
Total cash equivalents and marketable securities	$	293,501	$	324,039	$	—	$	617,540	Total cash equivalents and marketable securities	$	55,058	$	469,176	$	0	$	524,234

Cash equivalents and marketable securities have been initially valued at the transaction price and subsequently, ~~valued,~~ at the end of each reporting period, valued utilizing third-party pricing services or other observable market ~~observable~~ data. The pricing services utilize industry standard valuation models, including both income and ~~market based~~market-based approaches, and observable market inputs to determine value. After completing our validation procedures, we did not adjust or override any fair value measurements provided by the pricing services as of ~~September 30, 2017.~~March 31, 2021.

There have been no changes to the valuation methods during the ~~nine~~three months ended September 30, 2017. We evaluate transfers between levels at the end of each reporting period. Due to the lack of an active market, there were $4.0 million in transfers from Level 1 to Level 2 during the nine months ended September 30, 2017; due to the existence of an active market, there were $10.0 million in transfers of assets from Level 2 to Level 1 during the nine months ended September 30, 2017. There were no transfers of financial liabilities between Level 1 and Level 2 during the nine months ended September 30, 2017.March 31, 2021. We have no0 financial assets or liabilities that were classified as Level 3 at any point during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2021.

4.5. Marketable Securities

~~Marketable~~Our marketable securities at September 30, 2017 and December 31, 2016 consisted of investments in certificates of deposit, U.S. Treasuries, government securities and corporate debt securities. We determine the appropriate classification of the securities at the time they are ~~acquired and evaluate the appropriateness of such classifications at each balance sheet date. We classify our marketable securities~~classified as available-for-sale pursuant to ASC 320, Investments – Debt and Equity Securities~~. Marketable securities~~, and are recorded at fair ~~value, with unrealized~~value. Unrealized gains ~~and losses~~are included as a component of accumulated other comprehensive ~~loss~~(loss) income in the condensed consolidated balance sheets and statements of stockholders’ equity and a component of total comprehensive loss in the condensed consolidated statements of comprehensive ~~loss,~~income (loss), until realized. Unrealized losses are evaluated for impairment under ASC 326, Financial Instruments - Credit Losses, to determine if the impairment is credit-related or noncredit-related. Credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings, and noncredit-related impairment is recognized in other comprehensive income, net of taxes. Realized gains and losses are included in investment income on a specific-identification basis. There were no0 material realized gains or losses on marketable securities for the three ~~and nine~~ months ended ~~September 30, 2017 and 2016 and, as a result, there were no reclassifications of any amounts out of accumulated other comprehensive loss for those periods.~~March 31, 2021 or 2020.

Marketable securities at ~~September 30, 2017 consist~~March 31, 2021 consisted of the ~~following (in thousands):~~following:


(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Current:

U.S. Treasuries	$	111,508	$	34	$	(7)	$	111,535
Government securities	96,481		19		0		96,500
Corporate debt securities	239,590		34		(81)		239,543
Total Current	447,579		87		(88)		447,578

Non-current:


U.S. Treasuries	10,227		0		(3)		10,224
Government securities	4,779		6		0		4,785
Corporate debt securities	6,594		0		(5)		6,589
Total Non-current	21,600		6		(8)		21,598
Total marketable securities	$	469,179	$	93	$	(96)	$	469,176

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Amortized
Cost Unrealized
Gains Unrealized
Losses Fair
Value
Current:
Certificates of deposit $ 10,240
$ 1
$ (10 ) $ 10,231
U.S Treasuries 113,824
4
(45 ) 113,783
Government securities 42,443
—
(32 ) 42,411
Corporate debt securities 208,850
3
(91 ) 208,762
Non-current:
Certificates of deposit 960
—
(6 ) 954
U.S Treasuries 38,162
—
(131 ) 38,031
Government securities 24,492
—
(71 ) 24,421
Corporate debt securities 70,535
2
(139 ) 70,398
$ 509,506
$ 10
$ (525 ) $ 508,991

Marketable securities at December 31, ~~2016 consist~~2020 consisted of the ~~following (in thousands):~~

following:


	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
(In thousands)										(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Current:										Current:
Certificates of deposit	$	11,280	$	2	$	(3	)	$	11,279
U.S. Treasuries	141,678		2		(62		)	141,618		U.S. Treasuries	$	113,559	$	134	$	(21)	$	113,672
Government securities	19,533		—		(23		)	19,510		Government securities	108,263		37		(8)		108,292
Corporate debt securities	208,285		3		(135		)	208,153		Corporate debt securities	223,461		140		(72)		223,529
Total Current										Total Current	445,283		311		(101)		445,493

Non-current:										Non-current:
Certificates of deposit	7,600		6		(13		)	7,593

U.S. Treasuries										U.S. Treasuries	15,147		0		(10)		15,137
Government securities	4,499		—		(21		)	4,478		Government securities	26,831		8		0		26,839
Corporate debt securities	20,248		—		(69		)	20,179		Corporate debt securities	55,735		2		(105)		55,632
	$	413,123	$	13	$	(326	)	$	412,810
Total Non-current										Total Non-current	97,713		10		(115)		97,608
Total marketable securities										Total marketable securities	$	542,996	$	321	$	(216)	$	543,101

~~At September 30, 2017~~As of March 31, 2021 and December 31, ~~2016,~~2020, we held both current and non-current investments. Investments classified as current have maturities of less than one year. Investments classified as non-current are those that: (i) have a maturity of greater than one ~~to two years,~~year, and (ii) we do not intend to liquidate within the next twelve months, although these funds are available for use and, therefore, are classified as available-for-sale.

~~We review marketable securities for other-than-temporary impairment whenever the fair value~~As of a marketable security is less than the amortized cost and evidence indicates that a marketable security’s carrying amount is not recoverable within a reasonable period of time. Other-than-temporary impairments of investments are recognized in the condensed consolidated statements of operations if we experience a credit loss, have the intent to sell the marketable security, or if it is more likely than not that we will be required to sell the marketable security before recovery of the amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, compliance with our investment policy, the severity and the duration of the impairment, and changes in value subsequent to the end of the period.

~~At September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, we held ~~238~~78 and ~~158~~87 debt securities, respectively, that were in an unrealized loss position for less than one ~~year, respectively.~~year. We did 0t record an allowance for credit losses as of March 31, 2021 and December 31, 2020 related to these securities. The aggregate fair value of debt securities in an unrealized loss position at ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020 was ~~$435.5~~$248.3 million and ~~$335.4~~$299.0 million, respectively. There were no0 individual securities that were in a significant unrealized loss position as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016.~~2020. We ~~evaluated our~~regularly review the securities ~~for other-than-temporary impairment~~in an unrealized loss position and ~~considered~~evaluate the ~~decline in~~current expected credit loss by considering factors such as historical experience, market ~~value for the~~data, issuer-specific factors, and current economic conditions. We do not consider these marketable securities to be primarily attributable to current economic and market conditions. It is not more likely than not that we will be required to sell the securities, and we do not intend to do so prior to the recovery of the amortized cost basis. Based on this analysis, these marketable securities were not considered to be other-than-temporarily impaired as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016.~~2020.

~~5. Collaboration Agreements~~6. Leases

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

~~To date, our revenue has primarily been generated from our collaboration agreements with Celgene, or collectively, the Collaboration Agreements. Celgene is a~~The components of lease expense and other information related ~~party through ownership of our common stock. In April 2010, we~~to leases were as follows:


	Three Months Ended March 31,
(In millions)	2021		2020
Operating lease costs	$	3.8	$	3.8
Cash paid for amounts included in the measurement of operating lease liabilities	$	3.6	$	3.9

We have not entered into ~~a collaboration agreement focused on cancer metabolism. The agreement was amended in October 2011 and July 2014,~~any material short-term leases or collectively the agreement together with the amendments, the 2010 Agreement. On April 27, 2015, we entered into a joint worldwide development and profit share collaboration and license agreement with Celgene, and our wholly owned subsidiary, Agios International Sarl, entered into a collaboration and license agreement with Celgene International II Sarl, or collectively, the AG-881 Agreements, to establish a worldwide collaboration focused on the development and commercializationfinancing leases as of ~~AG-881 products. On May 17, 2016, we entered into a master research and collaboration agreement with Celgene, or the 2016 Agreement.~~

~~2016 Agreement~~

In May 2016, we entered into the 2016 Agreement focused on MIO. In addition to new programs identified under the 2016 Agreement, both parties also agreed that all future development and commercialization of two remaining cancer metabolism programs discovered under the 2010 Agreement, including AG-270, a program focused on methylthioadenosine phosphorylase, or MTAP, deleted cancers, will now be governed by the 2016 Agreement.

During the research term of the 2016 Agreement, we plan to conduct research programs focused on discovering compounds that are active against metabolic targets in the immuno-oncology, or IO, field. The initial four-year research term will expire on May 17, 2020, and may be extended for up to two, or in specified cases, up to four additional one-year terms.

For each program under the 2016 Agreement, we may nominate compounds that meet specified criteria as development candidates and, in limited circumstances, Celgene may also nominate compounds as development candidates for each such program. Celgene may designate the applicable program for further development following any such nomination, after which we may conduct, at our expense, additional preclinical and clinical development for such program through the completion of an initial phase 1 dose escalation study.

At the end of the research term, Celgene may designate for continued development up to three research programs for which development candidates have yet to be nominated, which are referred to as continuation programs. We may conduct further research and preclinical and clinical development activities on any continuation program, at our expense, through the completion of an initial phase 1 dose escalation study.

We granted Celgene the right to obtain exclusive options for development and commercialization rights for each program that Celgene has designated for further development, and for each continuation program. Celgene may exercise each such option beginning on the designation of a development candidate for such program (or on the designation of such program as a continuation program) and ending on the earlier of: (i) the end of a specified period after we have furnished Celgene with specified information about the initial phase 1 dose escalation study for such program, or (ii) January 1, 2030. Research programs that have applications in the inflammation or autoimmune, or I&I, field that may result from the 2016 Agreement will also be subject to the exclusive options described above.

~~We will retain rights to any program that Celgene does not designate for further development or as to which it does not exercise its option.~~

Under the terms of the 2016 Agreement, following Celgene’s exercise of its option with respect to a program, the parties will enter into either a co-development and co-commercialization agreement if such program is in the IO field, or a license agreement if such program is in the I&I field. Under each co-development and co-commercialization agreement, the two parties will co-develop and co-commercialize licensed products worldwide. Either we or Celgene will lead development and commercialization of licensed products for the United States, and Celgene will lead development and commercialization of licensed products outside of the United States. Depending on the country, the parties will each have the right to provide a portion of field-based marketing activities. Under each license agreement, Celgene will have the sole right to develop and commercialize licensed products worldwide.

~~Co-development and co-commercialization agreements~~

Under each co-development and co-commercialization agreement entered into under the 2016 Agreement, the parties will split all post-option exercise worldwide development costs, subject to specified exceptions, as well as any profits from any net sales of, or commercialization losses related to, licensed products in the IO field. Celgene has the option to designate one program in the IO field as the 65/35 program, for which Celgene will be the lead party for the United States and will have a 65% profit or loss share. For programs in the IO field other than the 65/35 program, we and Celgene will alternate, on a program-by-program basis, being the lead party for the United States, with us having the right to be the lead party for the first such program, and each party will have a 50% profit or loss share. The lead party for the United States will book commercial sales of licensed products, if any, in the United States, and Celgene will book commercial sales of licensed products, if any, outside of the United States.

~~License agreements~~

Under each license agreement under the 2016 Agreement, Celgene will be responsible for all post-option exercise worldwide development and associated costs, subject to specified exceptions, as well as worldwide commercialization and associated costs, for licensed products.

~~Financial terms~~

Under the terms of the 2016 Agreement, we received an initial upfront payment in the amount of $200.0 million. The 2016 Agreement provides specified rights to extend the research term for up to two, or in specified cases, up to four, additional years by paying a $40.0 million per-year extension fee. Celgene will pay an $8.0 million designation fee for each program that Celgene designates for further development and for each continuation program. During the three months ended March 31, ~~2017, we received $8.0 million from Celgene upon the designation~~2021.

Table of AG-270, our program focused on MTAP-deleted cancers, as a development candidate. For each program as to which Celgene exercises its option to develop and commercialize, subject to antitrust clearance, Celgene will pay an option exercise fee of at least $30.0 million for any designated development program and at least $35.0 million for any continuation programs. In certain cases, Celgene may exercise its option to develop and commercialize two early-stage I&I programs, prior to Celgene designating the program for further development, by paying an option exercise fee of $10.0 million.Contents

~~We are eligible to receive the following milestone-based payments associated with the 2016 Agreement:~~



~~Program~~	~~Milestone~~	~~Amount~~
~~65/35 program in IO field~~	~~Specified clinical development event~~		~~$25.0~~	~~million~~
~~65/35 program in IO field~~	~~Specified regulatory milestone events~~	~~Up to $183.8~~		~~million~~
~~50/50 program in IO field~~	~~Specified clinical development event~~		~~$20.0~~	~~million~~
~~50/50 program in IO field~~	~~Specified regulatory milestone events~~	~~Up to $148.8~~		~~million~~
~~I&I field~~	~~Specified clinical development event~~		~~$25.0~~	~~million~~
~~I&I field~~	~~Specified regulatory milestone events~~	~~Up to $236.3~~		~~million~~
~~I&I field~~	~~Specified commercial milestone events~~	~~Up to $125.0~~		~~million~~

~~Additionally, for each licensed program in the I&I field, we are eligible to receive royalties at tiered, low double-digit percentage rates on Celgene’s net sales, if any.~~

~~Opt-out right~~

Under the 2016 Agreement, we may elect to opt out of the cost and profit share under any co-development and co-commercialization agreement, subject to specified exceptions. Upon opting out, Celgene will have the sole right to develop, manufacture and commercialize the applicable licensed products throughout the world, at its cost, and we will undertake transitional activities reasonably necessary to transfer the development, manufacture and commercialization of such licensed products to Celgene, at our expense. Further, in lieu of the profit or loss sharing described above, we would be eligible to receive royalties at tiered, low double-digit percentage rates on Celgene’s net sales, if any, of the applicable licensed products. However, we would continue to be eligible to receive the developmental and regulatory milestone-based payments described above.

~~Term~~

The term of the 2016 Agreement commenced on May 17, 2016 and, if not terminated earlier, will expire upon the later of the last-to-expire of the research term and all option exercise periods, or, if an option is exercised by Celgene for one or more programs in the collaboration, upon the termination or expiration of the last-to-exist co-development and co-commercialization agreement or license agreement, as applicable, for any such program.

~~Termination~~

Subject to specified exceptions, Celgene may terminate the 2016 Agreement in its entirety for any reason by providing us with prior written notice if there are no active co-development and co-commercialization agreements or license agreements in place or on a program-by-program basis if there are no active co-development and co-commercialization agreements or license agreements in place for the terminated program(s). Either party may terminate the 2016 Agreement for the insolvency of the other party. On a program-by-program basis, prior to the exercise of an option, either party may terminate the 2016 Agreement either in its entirety or with respect to one or more programs on prior written notice to the other party in the case of an uncured material breach by the other party that frustrates the fundamental purpose of the 2016 Agreement. Following the exercise of an option for a program, either party may terminate the 2016 Agreement with respect to such program if such party terminates the co-development and co-commercialization agreement or license agreement for such program for an uncured material breach by the other party that frustrates the fundamental purpose of such agreement. Either party may terminate a co-development and co-commercialization agreement or a license agreement upon the bankruptcy or insolvency of the other party. Either party also has the right to terminate the co-development and co-commercialization agreement or license agreement if the other party or any of their affiliates challenges the validity, scope or enforceability of or otherwise opposes, any patent included within the intellectual property rights licensed to the other party under such agreement.

~~Exclusivity~~

While any of Celgene’s options remain available under the 2016 Agreement, subject to specified exceptions, we may not directly or indirectly develop, manufacture or commercialize, outside of the 2016 Agreement, any therapeutic modality in the IO or I&I field with specified activity against a metabolic target.

During the term of each co-development and co-commercialization agreement and license agreement, subject to specified exceptions, neither we nor Celgene may directly or indirectly develop, manufacture or commercialize outside of such agreement any therapeutic modality in any field with specified activity against the metabolic target that is the focus of the program licensed under such agreement.

~~AG-120 Letter Agreement~~

On May 17, 2016, we entered into a letter agreement with Celgene regarding ivosidenib, or the AG-120 Letter Agreement. Under the AG-120 Letter Agreement, the parties agreed to terminate the 2010 Agreement, effective as of August 15, 2016, as to the program directed to the isocitrate dehydrogenase 1, or IDH1, target, for which ivosidenib is the lead development candidate. Under the 2010 Agreement, Celgene had held development and commercialization rights to the IDH1 program outside of the United States, and we held such rights inside the United States. As a result of the termination, we obtained global rights to ivosidenib and the IDH1 program. Neither party will have any further financial obligation, including royalties or milestone payments, to the other concerning ivosidenib or the IDH1 program. Under the terms of the termination, the parties also agreed to conduct specified transitional activities in connection with the termination. In addition, pursuant to the AG-120 Letter Agreement, the parties are released from their exclusivity obligations under the 2010 Agreement with respect to the IDH1 program. The termination does not affect the AG-881 Agreements, which are directed to both the IDH1 target and the isocitrate dehydrogenase 2, or IDH2, target.

~~AG-881 Agreements~~

On April 27, 2015, we entered into the AG-881 Agreements. The AG-881 Agreements establish a joint worldwide collaboration focused on the development and commercialization of AG-881 products. Under the terms of the AG-881 Agreements, we received an initial upfront payment of $10.0 million in May 2015 and are eligible to receive milestone-based payments described below. The parties will split all worldwide development costs equally, subject to specified exceptions, as well as any profits from any net sales of, or commercialization losses related to, licensed AG-881 products. Either party may, at its own expense and with the other party's permission, undertake additional development activities outside of the scope of the development plan agreed upon with the other party.

We are eligible to receive up to $70.0 million in potential milestone payments under the AG-881 Agreements. The potential milestone payments are comprised of: (i) a $15.0 million milestone payment for filing of a first new drug application, or NDA, in a major market, and (ii) up to $55.0 million in milestone payments upon achievement of specified regulatory milestone events. We may also receive royalties at tiered, low-double digit to mid-teen percentage rates on net sales if we elect not to participate in the development and commercialization of AG-881.

~~Termination~~

Celgene may terminate the AG-881 Agreements in their entirety for any reason upon ninety days written notice to us. Either party may terminate the AG-881 Agreements for the insolvency of the other party. Either party may terminate the AG-881 Agreements in their entirety or with respect to one of the agreements upon prior written notice to the other party in the case of an uncured material breach by the other party that frustrates the fundamental purpose of the AG-881 Agreements. If one of the AG-881 Agreements terminates, the other will terminate automatically.

~~2010 Agreement~~

In April 2010, we entered into the 2010 Agreement, which was amended in October 2011 and July 2014. The goal of the collaboration was to discover, develop and commercialize disease-altering therapies in oncology based on our cancer metabolism research platform. We initially led discovery, preclinical and early clinical development for all cancer metabolism programs under the collaboration. The discovery phase of the 2010 Agreement expired in April 2016.

Under the remaining terms of the 2010 Agreement, we are eligible to receive up to $95.0 million in potential milestone payments for the IDHIFA® program. The potential milestone payments are comprised of: (i) up to $70.0 million in milestone payments upon achievement of specified ex-U.S. regulatory milestone events, and (ii) a $25.0 million milestone payment upon achievement of a specified commercial milestone event.

Under the 2010 Agreement, we may also receive royalties at tiered, low-double digit to mid-teen percentage rates on net sales of IDHIFA®. Assuming all other revenue recognition criteria are met, royalty payments will be recognized as revenue in the period in which they are earned. During the three and nine months ended September 30, 2017, we earned $0.7 million in royalty revenue under the 2010 Agreement.

Unless terminated earlier by either party, the term of the 2010 Agreement will continue until the expiration of all royalty terms with respect to IDHIFA®. Celgene may terminate this agreement for convenience in its entirety upon ninety days written notice to us. If either party is in material breach and fails to cure such breach within the specified cure period, the other party may terminate the 2010 Agreement in its entirety. Either party may terminate the agreement in the event of specified insolvency events involving the other party.

~~Accounting analysis and revenue recognition – collaboration revenue~~

~~April 2015 modification:~~ ~~The AG-881 Agreements were determined to be a modification of the 2010 Agreement because they govern AG-881, a compound originally identified within the 2010 Agreement.~~

~~May 2016 modification:~~ The 2016 Agreement was determined to be a modification of the 2010 Agreement and the AG-881 Agreements because it governs compounds originally identified within the 2010 Agreement, including AG-270. All undelivered elements identified under the April 2015 modification that remained undelivered at the time of the May 2016 modification are supplanted by the undelivered elements identified under the May 2016 modification.

~~Upon the modifications, under the provisions of ASC 605-25,~~ ~~Multiple Element Arrangements,~~ we identified the remaining deliverables under the modified arrangement, and determined the best estimate of selling price, or BESP, for the undelivered elements as of the modification date. We then allocated the total arrangement consideration, which included the remaining deferred revenue balance at the modification date, any upfront payments received upon modification and other consideration

under the modified arrangement that were deemed to be determinable at the modification date, to each unit of accounting relative to our BESP for each unit of accounting. The undelivered elements at the time of the modification, which are each considered by us to have stand-alone value and therefore were determined to be separate units of accounting, the related BESP, the method of recognizing the allocated consideration, and the period through which it is expected to be recognized at the time of each modification are as follows:

Undelivered Element BESP Unit(s) of Accounting Principal/Agent Recognition Method
April 2015 modification
AG-881 program licenses (1)
$33.2 million 2 Principal Upon delivery of the licenses to Celgene, which occurred immediately upon the execution of the AG-881 Agreements
On-going development services (2) (3)
$12.7 million 4 Principal Proportionally as services are delivered over the performance period, expected to be through September 2017
On-going development services (2) (3)
$97.3 million 4 Agent Proportionally as services are delivered over the performance period, expected to be through December 2017
On-going research and development (2)
$30.5 million 1 Principal Ratably over the performance period, expected to be through April 2016
Committee participations (4)
$0.8 million 1 Principal Ratably over the performance period, expected to be through December 2016
May 2016 modification (supplants undelivered elements of April 2015 modification)
On-going development services (2) (3)
$67.8 million 3 Principal Proportionally as services are delivered over the performance period, expected to be through December 2019
On-going development services (2) (3)
$22.4 million 3 Agent Proportionally as services are delivered over the performance period, expected to be through December 2019
On-going research and development (2)
$207.0 million 1 Principal Ratably over the performance period, expected to be through May 2022
Committee participations (4)
$1.5 million 1 Principal Ratably over the performance period, expected to be through December 2022
Additional development services
$48.7 million 1 Principal Proportionally as services are delivered over the performance period, expected to begin in September 2020

~~(1)~~

The BESP was developed by probability weighting multiple cash flow scenarios using the income approach. Our management estimates within the models include the expected, probability-weighted net profits from estimated future sales, an estimate of the direct cost incurred to generate future cash flows, a discount rate and other business forecast factors. There are significant judgments and estimates inherent in the determination of the BESP of these units of accounting. These judgments and estimates include assumptions regarding future operating performance, the timelines of the clinical trials and regulatory approvals, and other factors. If different reasonable assumptions are utilized, the BESP and revenue recognized would vary.


~~(2)~~	~~The BESP was developed using our management’s best estimate of the cost of obtaining these services at arm’s length from a third-party provider.~~


~~(3)~~	~~The BESP was developed using internal full time equivalent costs to support the development services.~~


~~(4)~~	~~The BESP was developed using our management’s best estimate of the anticipated participation hours and the market rate for comparable participants.~~

The total estimated arrangement consideration, as well as the expected timing of revenue recognition, is adjusted based on changes in estimated arrangement consideration as a result of changes in estimates for on-going development services. The allocable consideration will increase as we perform certain services for which we are eligible to receive additional consideration. These amounts are recognized on a cumulative catch-up basis for any in-process units of accounting or immediately for any fully delivered units of accounting. The estimated arrangement consideration may decrease if we receive less reimbursement than initially estimated.

During the three and nine months ended September 30, 2017 and 2016, we recognized as collaboration revenue the following non-contingent consideration allocated to each undelivered element (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
Undelivered Element 2017 2016 2017 2016
April 2015 modification
AG-881 program licenses $ —
$ —
$ —
$ 1,356
On-going development services (principal) —
—
—
1,656
On-going research and development —
—
—
4,584
Committee participations —
—
—
89
May 2016 modification
On-going development services (principal) 3,283
3,134
10,895
4,797
On-going research and development 6,425
5,814
19,479
8,516
Committee participations 41
37
124
54
Total collaboration revenue - related party $ 9,749
$ 8,985
$ 30,498
$ 21,052

During the three and nine months ended September 30, 2017 and 2016, we recognized as a reduction of research and development expenses the following non-contingent consideration allocated to each undelivered element (in thousands):

Modification
Period Three Months Ended September 30, Nine Months Ended September 30,
Undelivered Element 2017 2016 2017 2016
On-going development services (agent) April 2015 $ —
$ —
$ —
$ 7,456
On-going development services (agent) May 2016 1,078
3,453
6,329
4,780
Total reduction of research and development expenses $ 1,078
$ 3,453
$ 6,329
$ 12,236

Development and commercialization expenses that were not contemplated as of the modification dates due to the high level of uncertainty are recognized as collaboration revenue or a reduction of research and development expenses in the period in which they are earned. For the three and nine months ended September 30, 2017 and 2016, we recognized the following collaboration revenue and reduction of research and development expenses related to such expenses (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Collaboration revenue - related party
Development activities $ —
$ —
$ —
$ 1,192
Commercialization activities $ 894
$ —
$ 1,999
$ —
Reduction of research and development expenses
Development activities $ —
$ 585
$ 14
$ 6,518

~~For the three and nine months ended September 30, 2017 and 2016, we recognized the following totals of collaboration revenue and reduction of research and development expenses (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Collaboration revenue - related party $ 10,643
$ 8,985
$ 32,497
$ 22,244
Reduction of research and development expenses $ 1,078
$ 4,038
$ 6,343
$ 18,754

As of ~~September 30, 2017~~March 31, 2021, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter were as follows:


(In thousands)
Remaining 2021	$	9,640
2022	16,773
2023	18,126
2024	18,660
2025	19,507
Thereafter	44,385
Undiscounted minimum rental commitments	$	127,091
Interest	(24,051)
Operating lease liabilities	$	103,040

In arriving at the operating lease liabilities as of March 31, 2021 and December 31, ~~2016,~~2020, we ~~recorded~~applied the weighted-average incremental borrowing rate of 5.7% for both periods over a ~~collaboration receivable of $3.5 million and $4.9 million, respectively, related to reimbursable development costs.~~

We consider the total consideration expected to be earned in the next twelve months for services to be performed as current deferred revenue, and consideration that is expected to be earned subsequent to twelve months from the balance sheet date as noncurrent deferred revenue.

~~Accounting analysis and revenue recognition – milestone revenue~~

In January 2016, upon the initiation of the IDHENTIFY phase 3 study of IDHIFA®, we earned and received a milestone payment of $25.0 million, which was recognized as revenue during the three months ended March 31, 2016. No other milestones were earned during the nine months ended September 30, 2017 and 2016. The next potential milestones expected to be achieved under the Collaboration Agreements relate to specified ex-U.S. regulatory events. Achievement of these events will result in milestone payments of up to $70.0 million. Additionally, the next potential payment we expect to receive under the Collaboration Agreements is related to Celgene’s exercise of its option to develop and commercialize AG-270, the program focused on MTAP-deleted cancers. This potential exercise will result in a license fee of at least $30.0 million.

~~Aurigene Discovery Technologies Limited~~

In April 2017, we entered into a new global license agreement with Aurigene Discovery Technologies Limited, or Aurigene, to research, develop and commercialize small molecule inhibitors for an undisclosed cancer metabolism target, or the Aurigene Agreement.

Under the terms of the Aurigene Agreement, Aurigene will provide to us exclusive rights to its portfolio of novel small molecules for the undisclosed target. Financial terms of the Aurigene Agreement include a $3.0 million upfront payment and potential future milestone payments of up to $17.0 million if we achieve certain development and regulatory milestones. Aurigene is also eligible to receive low single-digit royalties on product sales, if any. We will conduct preclinical studies and, if successful, fund further global research and development, as well as regulatory and commercial activities.

~~The~~weighted-average remaining lease term of the Aurigene Agreement will continue until the earlier of: (a) termination for convenience at our sole discretion upon 90 days prior written notice, (b) termination by either party for material breach, or (c) the expiration of the last-to-expire of all payment obligations hereunder with respect to all licensed products under the Aurigene Agreement.6.9 years and 7.2 years, respectively.

~~Accounting analysis~~

The $3.0 million upfront payment was incurred in May 2017 and recorded as research and development expense. Costs incurred and milestones payments due to Aurigene prior to regulatory approval are recognized as expenses in the period incurred. Payments due to Aurigene upon or subsequent to regulatory approval will be capitalized and amortized over the shorter of the remaining license or product patent life.

6.7. Accrued Expenses

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


(In thousands)	March 31, 2021		December 31, 2020
Accrued compensation	$	7,348	$	20,345
Accrued research and development costs	5,335		5,444
Accrued professional fees	2,486		2,897
Accrued other	8,432		2,115
Total accrued expenses	$	23,601	$	30,801

September 30,
2017 December 31,
2016
Accrued compensation $ 11,273
$ 11,092
Accrued research and development costs 16,043
20,266
Accrued professional fees 3,089
476
Accrued other 355
168
Total accrued expenses $ 30,760
$ 32,002

7.8. Share-Based Payments

2013 Stock Incentive Plan

In June 2013, our Board of Directors adopted and, in July 2013 our stockholders approved, the 2013 Stock Incentive Plan, or the 2013 Plan. The 2013 Plan became effective upon the closing of our initial public offering ~~or IPO,~~ and provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, or RSUs, performance-based ~~stock~~share units, or PSUs, and other stock-based ~~awards.~~awards to employees, non-employees and non-employee directors. Following the adoption of the 2013 Plan, we granted no further stock options or other awards under the 2007 Stock Incentive Plan, or the 2007 Plan. Any options or awards outstanding under the 2007 Plan at the time of adoption of the 2013 Plan remain outstanding and effective. As of ~~September 30, 2017,~~March 31, 2021, the total number of shares reserved under the 2007 Plan and the 2013 Plan ~~are 7,407,798,~~was 12,082,101, and we had ~~1,275,813~~4,382,070 shares available for future issuance under the 2013 Plan.

Stock options

The following table presents stock option activity for the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2021:


	Number of Stock Options	Weighted-Average Exercise Price
Outstanding at December 31, 2020	6,143,046	$	58.46
Granted	872,672	56.17
Exercised	(122,422)	41.06
Forfeited/Expired	(711,343)	56.04
Outstanding at March 31, 2021	6,181,953	$	58.76
Exercisable at March 31, 2021	4,050,765	$	61.02
Vested and expected to vest at March 31, 2021	6,181,953	$	58.76

Number of
Stock Options

Weighted-
Average
Exercise
Price
Outstanding at December 31, 2016 5,218,880
$ 46.79
Granted 1,494,252
50.61
Exercised (529,618 ) 19.31
Forfeited/expired (362,903 ) 72.43
Outstanding at September 30, 2017 5,820,611
$ 48.68
Exercisable at September 30, 2017 2,969,761
$ 41.87
Vested and expected to vest at September 30, 2017 5,820,611
$ 48.68

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At ~~September 30, 2017, the~~March 31, 2021, there was approximately $67.9 million of total unrecognized compensation expense related to unvested stock option awards, ~~was $95.7 million,~~ which we expect to recognize over a weighted-average period of approximately ~~2.5~~2.7 years.

Restricted stock units

We may grant awards of RSUs to non-employee directors and employees on a discretionary basis pursuant to the 2013 Plan. Each RSU entitles the holder to receive, at the end of each vesting period, a specified number of shares of our common stock.

The following table presents RSU activity for the ~~nine~~three months ended ~~September 30, 2017:~~

March 31, 2021:

Number of
Stock Units

Weighted-Average
Grant Date Fair Value
Unvested shares at December 31, 2016 77,050
$ 49.60
Granted 60,750
51.04
Vested (7,500 ) 122.22
Forfeited/expired (10,300 ) 39.76
Unvested shares at September 30, 2017 120,000
$ 46.63


	Number of Stock Units	Weighted-Average Grant Date Fair Value
Unvested shares at December 31, 2020	1,284,378	$	50.78
Granted	701,314	56.08
Vested	(336,462)	58.16
Forfeited	(386,136)	52.15
Unvested shares at March 31, 2021	1,263,094	$	51.34

As of ~~September 30, 2017,~~March 31, 2021, there was approximately ~~$2.8~~$54.6 million of total unrecognized compensation expense related to RSUs, which we expect to ~~be recognized~~recognize over a weighted-average period of approximately ~~1.2~~2.2 years.

Performance-based stock ~~options~~units

~~During~~The following table presents PSU activity for the ~~nine~~three months ended September 30, 2017 and 2016, no options to purchase shares of common stock that contain performance-based or a combination of performance-based and service-based vesting criteria were granted by us. However, certain performance-based stock options issued in prior periods were still outstanding as of September 30, 2017. Performance-based vesting criteria for options primarily relate to milestone events specific to our corporate goals, including but not limited to certain preclinical, clinical and regulatory development milestones related to our product candidates. March 31, 2021:


	Number of Stock Units	Weighted-Average Grant Date Fair Value
Unvested shares at December 31, 2020	142,229	$	54.28
Granted	121,000	56.68
Vested	0	0
Forfeited	(10,850)	61.93
Unvested shares at March 31, 2021	252,379	$	55.10

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

As of ~~September 30, 2017, all performance-based milestones had been achieved and all~~March 31, 2021, there was 0 unrecognized compensation expense related to ~~these options has been recorded.~~

~~Performance-based stock units~~

~~We may grant awards of~~ PSUs ~~to non-employee directors and employees on a discretionary basis pursuant to the 2013 Plan. Each PSU entitles the holder to receive, at the achievement of the~~with performance-based ~~and service-based~~ vesting criteria a specified number of shares of our common stock. Performance-based vesting criteria primarily relate to milestone events specific to our corporate goals, specifically regulatory milestones related to our product candidates.

~~The following table presents PSU activity for the nine months ended September 30, 2017:~~

Number of
Stock Units

Weighted-Average
Grant Date Fair Value
Unvested shares at December 31, 2016 200,613
$ 53.36
Granted 16,391
50.83
Vested —
—
Forfeited/expired (25,630 ) 51.00
Unvested shares at September 30, 2017 191,374
$ 53.46

~~Stock-based compensation expense associated with these PSUs is recognized if the performance condition is~~that are considered probable of achievement, ~~using our management’s best estimates. As of September 30, 2017, there was approximately $10.2~~and $13.9 million of total unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered not ~~considered~~ probable of achievement.

Market-based stock units

The following table presents market-based stock unit, or MSU, activity for the three months ended March 31, 2021:


	Number of Stock Units	Weighted-Average Grant Date Fair Value
Unvested shares at December 31, 2020	42,695	$	41.50
Granted	0	0


Unvested shares at March 31, 2021	42,695	$	41.50

The fair value of MSUs are estimated using a Monte Carlo simulation model. Assumptions and estimates utilized in the model include the risk-free interest rate, dividend yield, expected stock volatility and the estimated period to achievement of the market condition. As of March 31, 2021, there was 0 remaining unrecognized compensation expense related to MSUs.

2013 Employee Stock Purchase Plan

In June 2013, our Board of Directors adopted, and in July 2013 our stockholders approved, the 2013 Employee Stock Purchase Plan, or the 2013 ESPP. The 2013 ESPP is administered by our Board of Directors or by a committee appointed by our Board of Directors. Under the 2013 ESPP, each offering period is six months, at the end of which employees may purchaseWe issued and sold 59,401 and 62,694 shares of common stock through payroll deductions made over the term of the offering period. The per-share purchase price at the end of each offering period is equal to 85% of the closing price of one share of our common stock at the beginning or end of the offering period, whichever is lower, subject to Internal Revenue Service limits. We issued 59,651 shares and 36,680 shares during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively, under the 2013 ESPP. The 2013 ESPP provides participating employees with the opportunity to purchase up to an aggregate of ~~327,272~~1,345,454 shares of our common stock. As of ~~September 30, 2017,~~March 31, 2021, we had ~~213,791~~921,043 shares of common stock available for future issuance under the 2013 ESPP.

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Stock-based compensation expense

During the three and nine months ended September 30, 2017 and 2016, we recorded stock-based compensation expense for employee and non-employee stock options, RSUs, performance-based stock options and ESPP shares. Stock-based compensation expense by award type included within the condensed consolidated statements of operations is as ~~follows (in thousands):~~

follows:


										Three Months Ended March 31,
	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
(In thousands)									(In thousands)	2021		2020
Stock options	$	11,330	$	11,425	$	32,315	$	30,288	Stock options	$	8,396	$	9,309
Restricted stock units	634		510		2,104		1,367		Restricted stock units	6,205		4,459
Performance-based stock options	—		—		—		46
Employee Stock Purchase Plan	243		208		709		545
Performance-based stock units									Performance-based stock units	0		1,335
Employee stock purchase plan									Employee stock purchase plan	253		297
Other stock awards									Other stock awards	0		270
Total stock-based compensation expense	$	12,207	$	12,143	$	35,128	$	32,246	Total stock-based compensation expense	$	14,854	$	15,670

Expenses related to ~~equity-based~~stock options and stock-based awards were allocated as follows in the condensed consolidated statements of ~~operations (in thousands):~~operations:


	Three Months Ended March 31,
(In thousands)	2021		2020
Research and development expense	$	6,973	$	6,999
Selling, general and administrative expense	7,881		8,671
Total stock-based compensation expense	$	14,854	$	15,670

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Research and development expense $ 7,620
$ 7,903
$ 22,835
$ 19,992
General and administrative expense 4,587
4,240
12,293
12,254
Total stock-based compensation expense $ 12,207
$ 12,143
$ 35,128
$ 32,246

8.9. Loss per Share

Basic net loss per share is calculated by dividing net loss by the ~~weighted average~~weighted-average shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury stock method. For purposes of the dilutive net loss per share calculation, stock options, RSUs, PSUs and MSUs for which the performance and market vesting conditions, respectively, have been deemed probable, and 2013 ESPP ~~options~~shares are considered to be common stock ~~equivalents. Furthermore, performance-based stock units~~equivalents, while PSUs and MSUs with performance and market vesting conditions, respectively, that were not ~~met~~deemed probable as of ~~September 30, 2017~~March 31, 2021 are ~~excluded as~~not considered to be common stock equivalents.

We utilize the control number concept in the computation of diluted earnings per share to determine whether potential common stock equivalents are dilutive. The control number used is loss from continuing operations. The control number concept requires that the same number of potentially dilutive securities applied in computing diluted earnings per share from continuing operations be applied to all other categories of income or loss, regardless of their anti-dilutive effect on such categories. Since we had a net loss for continuing operations for all periods presented, no dilutive effect has been recognized in the ~~effect~~calculation of ~~all potentially dilutive securities is anti-dilutive. Accordingly, basic~~income from discontinued operations per share. Basic and diluted net loss per share was the same for all periods presented.

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


	Three Months Ended March 31,
	2021	2020
Stock options	6,181,953	6,749,373
Restricted stock units	1,263,094	1,290,875
Performance-based stock units	0	78,920
Employee stock purchase plan shares	7,384	13,430
Total common stock equivalents	7,452,431	8,132,598

10. Income Taxes

We recorded a provision for income taxes of $12.9 million for the three months ended March 31, 2021 and 0 income tax provision for the three months ended March 31, 2020. The tax provision has been recorded within discontinued operations as it

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Three and Nine Months Ended September 30,
2017 2016
Stock options 5,820,611
5,431,068
Restricted stock units 120,000
66,300
Employee Stock Purchase Plan options 5,348
5,977
Total common stock equivalents 5,945,959
5,503,345
relates to the income tax impact on the sale of its oncology business to Servier. There is 0 income tax expense recorded in continuing operations for the three months ended March 31, 2021 and 2020, respectively.

11. Subsequent Events

On March 25, 2021, we announced that our board of directors authorized the repurchase of up to $1.2 billion of our outstanding shares of common stock, or the Repurchase Program, using the proceeds from the sale of our oncology business to Servier. On March 31, 2021, in connection with the Repurchase Program, we entered into a definitive share repurchase agreement with Bristol-Myers Squibb Company, or BMS, to repurchase 7,121,658 shares of our common stock held by certain subsidiaries of BMS for an aggregate purchase price of $344.5 million, or $48.3785 per share. This repurchase was completed on April 5, 2021.

Further, on April 2, 2021, in connection with the Repurchase Program, we entered into a Rule 10b5-1 repurchase plan pursuant to which we may repurchase up to $600 million of shares of our common stock.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Information

The following discussion of our financial condition and results of operations should be read with our unaudited condensed consolidated financial statements as of ~~September 30, 2017 and 2016~~March 31, 2021 and for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, and related notes included in Part I.I, Item 1.1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 filed with the ~~Securities and Exchange Commission, or~~ SEC on February ~~16, 2017.~~25, 2021. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates, forecasts and projections, and the beliefs and assumptions of our management, and include, without limitation, statements with respect to our expectations regarding our research, development and commercialization plans and prospects, results of operations, selling, general and administrative expenses, research and development expenses, ~~and~~ the sufficiency of our cash for future ~~operations.~~operations and business activity disruption due to the COVID-19 pandemic. Words such as “anticipate,” “believe,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “predict,” “project,” “strategy,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “vision” and similar statements or variation of these terms or the negative of those terms and similar expressions are intended to identify these forward-looking statements. Readers are cautioned that these forward-looking statements are predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by our forward-looking statements are those discussed under the heading “Risk Factors” in Part II, Item ~~1A.~~1A and elsewhere in this report, and in our Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2020. We undertake no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

Overview

We are a biopharmaceutical company committed to ~~the fundamental transformation of~~transforming patients’ lives through scientific leadership in the field of cellular metabolism and adjacent areas of biology, with the goal of ~~making transformative, first- or best-in-class medicines. Our areas of focus are cancer metabolism, rare genetic~~creating differentiated, small molecule medicines for genetically defined diseases, or ~~RGDs, which are diseases that are directly caused by changes in genes or chromosomes, often passed from one generation~~GDDs, and, prior to the ~~next,~~completion of the sale of our oncology business to Servier Pharmaceuticals LLC, or Servier, as described below, hematologic malignancies and metabolic immuno-oncology, or MIO, which is a developing field that aims to modulate the activity of relevant immune cells (or tumor microenvironment) by targeting critical metabolic nodes, thereby enhancing the immune mediated anti-tumor response. In each of thesesolid tumors. To address our focus areas, we ~~are seeking~~take a systems biology approach to ~~unlock~~deeply understand disease states, drive the ~~biology~~discovery and validation of ~~cellular metabolism as a platform~~novel therapeutic targets, and define patient selection strategies, thereby increasing the probability that our experimental medicines will have the desired therapeutic effect.

Sale of our Oncology Business to ~~create transformative therapies.~~

Servier

On ~~August~~March 31, 2021, we completed the sale of our oncology business to Servier. We entered into a Purchase and Sale Agreement, or the Purchase Agreement, with Servier on December 20, 2020. The transaction included the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs for a payment of approximately $1.8 billion in cash at the closing, subject to certain adjustments, and a payment of $200 million in cash, if, prior to January 1, ~~2017,~~2027, vorasidenib is granted new drug application, or NDA, approval from the U.S. Food and Drug Administration, or FDA, ~~granted our collaboration partner Celgene Corporation, or Celgene, approval of IDHIFA®~~with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of ~~adult~~ patients with ~~relapsed or refractory acute myeloid leukemia, or R/R AML, and~~Grade 2 glioma that have an isocitrate dehydrogenase 2, or IDH2, mutation as detected by an FDA-approved test. IDHIFA®, an oral targeted inhibitor of the IDH2 enzyme, is the first and only FDA-approved therapy for patients with R/R AML and an IDH2 mutation.

~~Our most advanced cancer product candidates are ivosidenib, which targets mutated~~ isocitrate dehydrogenase 1 or ~~IDH1,~~2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval), as well as a royalty of 5% of U.S. net sales of TIBSOVO® from the close of the transaction through loss of exclusivity, and ~~AG-881,~~ a ~~brain-penetrant, pan-IDH mutant inhibitor, which provides added flexibility~~royalty of 15% of U.S. net sales of vorasidenib from the first commercial sale of vorasidenib through loss of exclusivity. Servier also acquired our co-commercialization rights for Bristol Myers Squibb’s IDHIFA® and the right to receive a $25.0 million potential milestone payment under our prior collaboration agreement with Celgene Corporation, and following the sale Servier will conduct certain clinical development activities within the IDHIFA® development program.

The oncology business met the criteria within Accounting Standards Codification 205-20 to be reported as discontinued operations because the transaction was a strategic shift in business that had a major effect on our operations and financial results. Therefore, we have reported the historical results of the oncology business including the results of operations and cash flows as discontinued operations, and related assets and liabilities were retrospectively reclassified as assets and liabilities of discontinued operations for all periods presented herein. Unless otherwise noted, applicable amounts in the prior year have been recast to conform to this discontinued operations presentation. Refer to Note 3 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information. Unless otherwise indicated, the following information relates to our ~~current portfolio~~continuing operations following the sale to Servier. A more complete description of ~~IDH mutant inhibitors.~~our business prior to the consummation of the transaction is included in Item 1. “Business”, in Part I of the Annual Report on Form

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10-K for the year ended December 31, 2020 that was previously filed with the Securities and Exchange Commission (“SEC”) on February 25, 2021.

GDDs

Our primary focus in the GDD area relates to therapeutic categories where we believe we have differentiated expertise and demonstrated capabilities (e.g-enzyme stabilizers, pyruvate kinase, phenylalanine hydroxylase). As a result, we expect the new therapies that we plan to advance through the discovery, development and commercialization stages to be in the areas of non-malignant hematology and inborn errors of metabolism, though our future efforts may not be limited to these categories.

The lead product candidate in our ~~RGD program, AG-348,~~GDD portfolio, mitapivat, targets pyruvate kinase-R, or PKR, for the treatment of pyruvate kinase, or PK, ~~deficiency.~~deficiency and other hemolytic anemias including thalassemia and sickle cell disease, or SCD. Mitapivat is an orally available small molecule and a potent activator of the wild-type (normal) and mutated PKR enzymes, which has resulted in restoration of adenosine triphosphate levels and a decrease in 2,3-diphosphoglycerate levels in blood sampled from patients with PK deficiency and treated ex-vivo with mitapivat. PK deficiency is a rare genetic disorder that often results in severe hemolytic anemia, jaundice and lifelong conditions associated with chronic anemia and secondary complications due to inherited mutations in the pyruvate kinase enzyme within red blood cells.

~~2016 Agreement~~

~~In May 2016, we entered into a master research~~ We are currently developing mitapivat for the treatment of patients with PK deficiency, thalassemia and collaboration agreement, or the 2016 Agreement, with Celgene, and Celgene RIVOT Ltd., a wholly owned subsidiary of Celgene. The 2016 Agreement focuses on the discovery and development of cancer programsSCD in the ~~field~~following ongoing or planned pivotal clinical trials:

Pyruvate Kinase Deficiency:

•ACTIVATE-T, a single arm, global, pivotal trial of ~~MIO. In addition~~mitapivat in regularly-transfused patients with PK deficiency.

•ACTIVATE, a 1:1 randomized, placebo-controlled, global, pivotal trial of mitapivat in patients with PK deficiency who do not receive regular transfusions.

Thalassemia:

•ENERGIZE and ENERGIZE-T, phase 3 trials of mitapivat in not regularly transfused and regularly transfused adults with thalassemia, which we expect to ~~new programs identified under~~initiate in the ~~2016 Agreement, both parties also agreed that all~~second half of 2021.

SCD:

•A phase 2/3 trial of mitapivat in patients with SCD, which we expect to initiate by the end of 2021.

We have worldwide development and commercial rights to mitapivat and expect to fund the future development and commercialization of two remaining cancer metabolism programs discovered under the 2010 discovery and development collaboration and license agreement with Celgene, or the 2010 Agreement, including AG-270, a program focused on methylthioadenosine phosphorylase, or MTAP, deleted cancers, will now be governed by the 2016 Agreement.

~~During the research term of the 2016 Agreement, we plan~~costs related to conduct research programs focused on discovering compounds that are active against metabolic targets in the immuno-oncology, or IO, field. The initial four-year research term will expire on May 17, 2020, and may be extended for up to two, or in specified cases, up to four additional one-year terms.

~~We will retain rights to any program that Celgene does not designate for further development or as to which it does not exercise its option.~~

~~AG-120 Letter Agreement~~

On May 17, 2016, we entered into a letter agreement with Celgene regarding ivosidenib, or the AG-120 Letter Agreement. Under the AG-120 Letter Agreement, the parties agreed to terminate the 2010 Agreement, effective as of August 15, 2016, as to the program directed to the IDH1 target, for which ivosidenib is the lead development candidate. Under the 2010 Agreement, Celgene had held development and commercialization rights to the IDH1 program outside of the United States, and we held such rights inside the United States. As a result of the termination, we obtained global rights to ivosidenib and the IDH1 program. Neither party will have any further financial obligation, including royalties or milestone payments, to the other concerning ivosidenib or the IDH1 program. Under the terms of the termination, the parties also agreed to conduct specified transitional activities in connection with the termination. In addition, pursuant to the AG-120 Letter Agreement, the parties are released from their exclusivity obligations under the 2010 Agreement with respect to the IDH1this program. The ~~termination does not affect the AG-881 Agreements described below, which are directed to both the IDH1 target~~FDA and ~~the IDH2 target.~~

~~AG-881 Agreements~~

On April 27, 2015, we entered into a joint worldwide development and profit share collaboration and license agreement with Celgene, and our wholly owned subsidiary, Agios International Sarl, entered into a collaboration and license agreement with Celgene International II Sarl. Both of these agreements are collectively referred to as the AG-881 Agreements. The AG-881 Agreements establish a joint worldwide collaboration focused on the development and commercialization of AG-881 products. Under the terms of the AG-881 Agreements, we received an initial upfront payment of $10.0 million in May 2015 and are eligible to receive up to $70.0 million in milestone-based payments. The parties will split all worldwide development costs equally, subject to specified exceptions, as well as any profits from any net sales of,European Medicines Agency, or commercialization losses related to, licensed AG-881 products. Either party may, at its own expense and with the other party's permission, undertake additional development activities outside of the scope of the development plan agreed upon with the other party.

~~2010 Agreement~~

In April 2010, we entered into the 2010 Agreement, which was amended in October 2011 and July 2014. The goal of the collaboration was to discover, develop and commercialize disease-altering therapies in oncology based on our cancer metabolism research platform. We initially led discovery, preclinical and early clinical developmentEMA, granted orphan drug designations for ~~all cancer metabolism programs under the collaboration. The discovery phase of the 2010 Agreement expired in April 2016.~~

Upon agreement to terminate the 2010 Agreement, effective as of August 15, 2016, as to the program directed to the IDH1 target, for which ivosidenib is the lead development candidate, the sole program remaining under the 2010 Agreement is IDHIFA®, a co-commercialized licensed program for which Celgene leads and funds global development and commercialization activities. We have exercised our right to participate in a portion of commercialization activities in the United States for IDHIFA® in accordance with the applicable commercialization plan. On August 1, 2017, the FDA granted Celgene approval of IDHIFA®mitapivat for the treatment of ~~adult~~ patients with ~~R/R AML~~PK deficiency, and ~~an IDH2 mutation as detected by an FDA-approved test.~~the FDA granted orphan drug designation for mitapivat for the treatment of patients with thalassemia. We anticipate filing for regulatory approval for mitapivat in adults with PK deficiency in the U.S. in the second quarter of 2021 and in the European Union in mid-2021, with a potential commercial launch in both geographies in 2022 if we receive regulatory approvals. We also expect to continue to grow our U.S. commercial infrastructure and evaluate all options to maximize the patient impact and value of mitapivat globally, including strategic transactions. We are ~~eligible~~also developing AG-946, a next-generation activator of both the PKR and PKM2 isoforms of pyruvate kinase. PKR activation is specific to ~~receive up~~red blood cells and hemolytic anemias, while PKM2 activation occurs in other tissues which express this isoform, and is potentially important in a variety of disease indications.

In addition to $95.0 million in potential milestone-based payments for the IDHIFA® program, which are comprised of: (i) up to $70.0 million in milestone payments upon achievement of specified ex-U.S. regulatory milestone events and (ii) a $25.0 million milestone payment upon achievement of a specified commercial milestone event. Additionally,these development programs, we are ~~eligible~~seeking to ~~receive tiered royalties on any net sales~~advance a number of ~~IDHIFA®.~~early-stage discovery programs for GDDs. Drug candidates for PK activation and other mechanisms, while primarily targeting GDD may also have utility in nongenetically defined disease indications. Where differentiated, nonclinical proof of concept emerges for these non-GDD indications, appropriate partnership may be used to drive the best patient benefit.

Critical Accounting Policies and Estimates

Our critical accounting policies are those policies which require the most significant judgments and estimates in the preparation of our condensed consolidated financial statements. We have determined that our most critical accounting policies are those relating to ~~revenue recognition,~~ accrued research and development expenses and stock-based compensation. ~~There~~Except those that have been disclosed in Note 2, Summary of Significant Accounting Policies, of the notes to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no significant changes to our existing critical accounting policies discussed in ~~the~~our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

Financial Operations Overview

Impact of COVID-19 on our Business

As of March 31, 2021, we have not experienced a significant financial or supply chain impact directly related to the COVID-19 pandemic but have experienced some disruptions to clinical operations, including timelines to complete patient enrollment in some of our clinical trials, as further described below. We are continuing to serve our customers while taking precautions to

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provide a safe work environment for our employees and customers. Our lab-based employees who need to be onsite to fulfill their job responsibilities have been onsite since late May 2020, and since September 2020 we have opened our Cambridge office to limited numbers of employees who prefer to work onsite. Our field-based employees engage with healthcare providers and other third parties remotely and, where local regulations allow, on a limited in-person basis. We are conducting our return to work program under strict guidelines as required by federal, state, and local authorities. We have been monitoring our supply chain network for disruptions due to the COVID-19 pandemic, and our third-party manufacturers remain largely unaffected, with any campaign delays experienced to date being limited to a few days in duration. Although global shipping continues to be disrupted due to the pandemic, we have not experienced a supply impact.

The extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time. Future developments include changes in the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact, the impact on governmental programs and budgets, the supply and distribution of vaccines, and the resumption of widespread economic activity. Any prolonged material disruption of our employees, suppliers, manufacturing, or customers could negatively impact our consolidated financial position, consolidated results of operations and consolidated cash flows. As a result, we may have to take further actions that we determine are in the best interests of our employees or as required by federal, state, or local authorities.

General

Since inception, our operations have primarily focused on organizing and staffing our company, business planning, raising capital, assembling our core capabilities in cellular metabolism, identifying potential product candidates, undertaking preclinical studies, ~~and~~ conducting clinical ~~trials. To date,~~trials, establishing a commercial infrastructure and, prior to the sale of our oncology business to Servier on March 31, 2021, marketing our approved products. Through March 31, 2021, we have financed our operations primarily through proceeds from the sale of our royalty rights, commercial sales of TIBSOVO®, funding received from ~~the 2010 Agreement, the AG-881 Agreements, the 2016 Agreement,~~our collaboration agreements, private placements of our preferred stock, our initial public offering of our common stock and concurrent private placement of common stock to an affiliate of Celgene, and our follow-on public offerings. Following the sale of our oncology business to Servier on March 31, 2021, we expect to finance our operations primarily through cash on hand, and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions.

~~Additionally, since inception, we~~We have historically incurred ~~significant~~ operating losses. Our net ~~losses were $226.4 million and $142.0 million~~income for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 was $1.9 billion and ~~2016, respectively.~~our net loss for the three months ended March 31, 2020 was $40.3 million. As of ~~September 30, 2017,~~March 31, 2021, we had ~~an accumulated deficit~~retained earnings of ~~$709.8~~$30.9 million. WeThe net income we generated in the three months ended March 31, 2021 was primarily due to the sale of our oncology business to Servier, which was consummated on March 31, 2021. Following the consummation of the sale of our oncology business, we expect ~~to continue~~ to incur significant expenses and ~~operating~~net losses ~~over the next several years.~~until such time we are able to report profitable results. Our net losses may fluctuate significantly from year to year. We ~~anticipate~~expect that ~~our~~we will continue to incur significant expenses ~~will increase significantly~~ as we continue to advance and expand clinical development activities for our lead ~~programs, IDHIFA®, ivosidenib, AG-881~~programs: mitapivat, and ~~AG-348;~~AG-946; continue to discover and validate novel targets and drug product candidates; expand and protect our intellectual property portfolio; and hire additional commercial, development and scientific personnel.

~~Revenue~~

Through September 30, 2017, we have not generated any revenue from product sales. Substantially all of our revenue to date has been derived from our collaborations. In the future, we expect to generate revenue from a combination of product sales, upfront payments, cost reimbursements, milestone payments, and royalties on future product sales.

Research and development expenses

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect research and development costs related to our GDD portfolio to increase significantly for the foreseeable future as our product candidate development programs progress. However, the successful development of our product candidates is highly uncertain. As such, at this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the remainder of the development and to commercialize these product candidates. We are also unable to positively predict when ~~if ever, material~~future net cash inflows will commence from ~~IDHIFA®, ivosidenib, AG-881, AG-348, AG-270~~mitapivat, AG-946 or any of our other product candidates. This is due to the numerous risks and uncertainties associated with developing medicines, including the uncertainty of:

•establishing an appropriate safety profile with an investigational new drug application, or IND, and/or ~~new drug application, or~~ NDA enabling toxicology and clinical ~~studies;~~trials;

•the successful enrollment in, and completion of, clinical trials;

•the receipt of marketing approvals from applicable regulatory authorities;

•establishing compliant commercial manufacturing capabilities or making arrangements with third-party manufacturers;

•obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;

•launching commercial sales of the products, if and when approved, whether alone or in collaboration with others; and

•maintaining an acceptable safety profile of the products following approval.

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A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs and timing associated with the development of that product candidate.

Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include:

•employee-related expenses, including salaries, benefits and stock-based compensation expense;

•expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research and development and both preclinical and clinical activities on our behalf, and the cost of consultants;

•the cost of lab supplies and acquiring, developing and manufacturing preclinical and clinical study materials; and

•facilities, depreciation, and other expenses, which include direct and allocated expenses for rent and the maintenance of facilities, insurance and other operating costs.

The following summarizes the clinical development activities related to our most advanced ~~current research~~programs. The timing of trial and ~~development programs:~~

~~IDHIFA®~~

~~IDHIFA® is an orally available, selective, potent inhibitor~~site initiations, enrollment and data readouts may be impacted depending on the duration, scope and severity of the mutated IDH2 protein, making it a highly targeted therapeutic candidate for the treatment of patients with cancers that harbor IDH2 mutations, including those with AML, who have a historically poor prognosis. On August 1, 2017, the FDA granted Celgene approval of IDHIFA® for the treatment of adult patients with R/R AML and an IDH2 mutation as detected by an FDA-approved test.COVID-19 pandemic:

Mitapivat: PK Activator

Celgene maintains worldwide development and commercial rights to IDHIFA® and will fund the future development and commercialization costs related to this program. Under the 2010 Agreement, Celgene is responsible for all development costs for IDHIFA®, and we are eligible to receive up to $95.0 million in milestone payments, which are comprised of: (i) up to $70.0 million in milestone payments upon achievement of specified ex-U.S. regulatory milestone events and (ii) a $25.0 million milestone payment upon achievement of a specified commercial milestone event. Additionally, we are eligible to receive tiered royalties on any net sales of IDHIFA®. In January 2016, we earned a $25.0 million milestone payment upon initiation of the IDHENTIFY clinical trial, as described below. In addition to contributing our scientific and translational expertise, we will continue to conduct some clinical development and regulatory activities within the IDHIFA® development program under the 2010 Agreement. We also have co-commercialization rights to provide up to one third of the commercialization efforts and will be reimbursed for those efforts.

We continue to evaluate IDHIFA® in clinical trials evaluating hematological cancers with IDH2 mutations, which are led and funded by Celgene. To date, all clinical data reported by us and our collaborators in hematological cancers highlights that the mechanism of response is consistent with preclinical studies, including substantial reduction of plasma 2-hydroxygluturate, or 2HG, levels, as well as evidence of cellular differentiation and normalization of cell counts in the bone marrow and blood. This differentiation effect is distinct from that seen with traditional chemotherapeutics commonly used to treat AML. The FDA has

granted orphan drug designation for IDHIFA® for treatment of patients with AML and fast track designation for treatment of patients with AML that harbor an IDH2 mutation, and the European Medicines Agency, or EMA, granted orphan drug designation for IDHIFA® for the treatment of AML.

~~We and Celgene are evaluating IDHIFA® in the following clinical trials:~~

~~Phase 1/2 clinical trial~~

IDHIFA® is being evaluated in a phase 1/2 multicenter, open-label, clinical trial, initially conducted by us but which Celgene has assumed primary responsibility for, to assess the safety, clinical activity, and tolerability of IDHIFA® in patients with advanced hematologic malignancies with an IDH2 mutation.

Together with Celgene, we presented clinical data from a subset of patients with myelodysplastic syndromes, or MDS, from the dose-escalation and expansion portions of this trial at the 2016 American Society of Hematology Annual Meeting and Exposition in San Diego, California, or ASH 2016, in December 2016.

In June 2017, we and Celgene presented clinical data from the phase 1 dose-escalation and expansion portions of this trial in R/R AML at the American Society of Clinical Oncology, or ASCO 2017, in Chicago, Illinois. Also in June 2017, we and Celgene presented updated clinical data from this trial, including data from the phase 2 portion of the trial, at the 22nd Congress of the European Hematology Association, or 2017 EHA, in Madrid, Spain.

~~Phase 1 frontline combination trial (ivosidenib also being evaluated)~~

IDHIFA® is being evaluated in a phase 1, multicenter, international, open-label clinical trial, conducted by us, to evaluate the safety and clinical activity of IDHIFA® or ivosidenib in combination with induction and consolidation therapy in patients with newly diagnosed AML with an IDH2 or IDH1 mutation who are eligible for intensive chemotherapy using a primary endpoint of safety and tolerability of IDHIFA® or ivosidenib when administered with induction and consolidation therapy. The trial is currently enrolling patients.

~~Phase 1/2 frontline combination trial (ivosidenib also being evaluated)~~

~~IDHIFA® is being evaluated in a phase 1/2 frontline combination clinical trial, conducted by Celgene, of either IDHIFA® or ivosidenib in combination with VIDAZA~~® (azacitidine) in newly diagnosed AML patients not eligible for intensive chemotherapy, with a phase 1 component to determine the safety of the combinations, followed by a phase 2 randomized component evaluating the safety and clinical activity of each investigational combination versus single-agent VIDAZA® ~~using a primary endpoint of overall response rate. The trial has completed the phase 1 component and is currently enrolling in the phase 2 component.~~

~~IDHENTIFY~~

IDHIFA® is being evaluated in IDHENTIFY, an international phase 3, multi-center, open-label, randomized clinical trial, conducted by Celgene, designed to compare the efficacy and safety of IDHIFA® versus conventional care regimens in patients 60 years or older with IDH2 mutant-positive AML that is refractory to or relapsed after second- or third-line therapy. In January 2016, in conjunction with the initiation of the IDHENTIFY clinical trial, we received a milestone payment of $25.0 million from Celgene pursuant to the 2010 Agreement. The trial is currently enrolling patients.

~~Ivosidenib~~

Ivosidenib is an orally available, selective, potent inhibitor of the mutated IDH1 protein, making it a highly targeted therapeutic candidate for the treatment of patients with cancers that harbor IDH1 mutations. We hold worldwide development and commercial rights to ivosidenib and will fund the future development and commercialization costs related to this program. Mutations in IDH1 have been identified in difficult to treat hematologic and solid tumor cancers, including AML, chondrosarcoma, cholangiocarcinoma, and glioma, where both the treatment options and prognosis for patients are poor. The FDA granted fast track designation to ivosidenib for treatment of patients with AML that harbor an IDH1 mutation, and granted us orphan drug designation for ivosidenib for treatment of patients with AML. Additionally, the FDA granted fast track designation to ivosidenib for treatment of patients with previously treated, unresectable or metastatic cholangiocarcinoma with an IDH1 mutation, and granted orphan drug designation for ivosidenib for the treatment of cholangiocarcinoma. In January 2017, we announced that we intend to submit an NDA to the FDA for ivosidenib in R/R AML by the end of 2017.

~~We are evaluating ivosidenib in the following clinical trials:~~

~~Phase 1 clinical trial (advanced hematologic malignancies)~~

Ivosidenib is being evaluated in a phase 1 multicenter, open-label, dose-escalation and expansion clinical trial, designed to assess its safety, clinical activity and tolerability as a single agent in patients with advanced hematologic malignancies with an IDH1 mutation. Four expansion cohorts have been added to the trial.

In December 2016, we presented clinical data from 78 patients treated with ivosidenib in the completed dose escalation portion of the ongoing phase 1 study of ivosidenib in advanced hematologic malignancies at ASH 2016.

~~Phase 1 frontline combination trial~~

As discussed above, ivosidenib and IDHIFA® are also being evaluated in a phase 1, multicenter, international, open-label clinical trial, in combination with induction and consolidation therapy. The trial is currently enrolling patients.

~~Phase 1/2 frontline combination trial~~

~~As discussed above, ivosidenib and IDHIFA® are also being evaluated in a phase 1/2 frontline clinical trial in combination with VIDAZA~~®, ~~conducted by Celgene. The trial has completed the phase 1 component and is currently enrolling in the phase 2 component.~~

~~AGILE~~

~~Ivosidenib is being evaluated in AGILE, a global, registration-enabling phase 3 clinical trial, combining ivosidenib and VIDAZA~~® ~~in newly diagnosed AML patients with an IDH1 mutation who are ineligible for intensive chemotherapy. The trial is currently open for enrollment.~~

~~Phase 1 clinical trial (advanced solid tumors)~~

Ivosidenib is being evaluated in a phase 1 multicenter, open-label, dose-escalation and expansion clinical trial, designed to assess its safety, clinical activity and tolerability as a single agent in patients with advanced solid tumors with an IDH1 mutation, including glioma, intrahepatic cholangiocarcinoma, or IHCC, and chondrosarcomas.

In November 2016, we reported initial data from the dose expansion cohort of our ongoing phase 1 clinical trial evaluating ivosidenib in patients with IDH1 mutant-positive glioma at the Society for Neuro-Oncology Annual Meeting in Scottsdale, Arizona, and initial data from the dose expansion cohort of our ongoing phase 1 clinical trial evaluating ivosidenib in patients with IDH1 mutant-positive chondrosarcoma at the annual meeting of the Connective Tissue Oncology Society, or CTOS, in Lisbon, Portugal.

In June 2017, we presented updated clinical data from the dose-escalation and expansion cohorts of our ongoing phase 1 study evaluating ivosidenib in patients with IDH1 mutant-positive cholangiocarcinoma at ASCO 2017.

~~ClarIDHy~~

Ivosidenib is being evaluated in ClarIDHy, a registration-enabling phase 3, multicenter, randomized, double-blind, placebo-controlled clinical trial of ivosidenib in previously-treated patients with nonresectable or metastatic cholangiocarcinoma with an IDH1 mutation. The trial was initiated in December 2016 and is currently enrolling patients.

~~AG-881: brain penetrant pan-IDH program~~

AG-881 is an orally available, selective, brain-penetrant, pan-IDH mutant inhibitor, which provides added flexibility to our current portfolio of IDH mutant inhibitors. Given the clinical data generated with IDHIFA® and ivosidenib in AML, AG-881 will remain a back-up molecule in hematologic malignancies, and we are focusing our development efforts for AG-881 in glioma.

We and Celgene are jointly collaborating on a worldwide development program for AG-881, wherein we share worldwide development costs, subject to specified exceptions, and profits and Celgene would book any worldwide commercial sales. Either party may, at its own expense and with the other party's permission, undertake additional development activities outside

of the scope of the development plan agreed upon with the other party. We will lead commercialization in the United States with both companies sharing equally in field-based commercial activities, and Celgene will lead commercialization outside of the United States with us providing one third of field-based commercial activities in the major EU markets. Under the AG-881 Agreements, we are eligible to receive up to $70.0 million in potential milestone payments related to AG-881. We may also receive royalties at tiered, low-double digit to mid-teen percentage rates on net sales if we elect not to participate in the development and commercialization of AG-881.

We are conducting two phase 1 multi-center, open-label clinical trials of AG-881, one in patients with advanced IDH1 or IDH2 mutant-positive solid tumors, including glioma, and the other in patients with advanced IDH1 or IDH2 mutant-positive hematologic malignancies whose cancer has progressed on a prior IDH inhibitor therapy. The goal of these trials is to evaluate the safety, pharmacokinetics, pharmacodynamics and clinical activity of AG-881 in advanced solid tumors and hematologic malignancies, respectively.

The phase 1 trial in patients with advanced IDH1 or IDH2 mutant-positive hematologic malignancies has completed its dose escalation portion, establishing proof of mechanism as measured by reductions in 2HG levels, and is now closed for enrollment. No maximum tolerable dose, or MTD, was reached. In the phase 1 trial in IDH1 or IDH2 mutant-positive advanced solid tumors, including glioma, the dose escalation portion has completed enrollment. Although MTD has not been reached for this trial, additional patients will be enrolled for additional safety, pharmacokinetics and pharmacodynamics analyses.

In October 2017, we presented the first preclinical data of AG-881 in IDH mutant-positive solid and hematologic malignancies at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics in Philadelphia, Pennsylvania.

In the first half of 2018, we intend to initiate a perioperative study with ivosidenib and AG-881 in low grade glioma to further investigate their effects on brain tumor tissue. Pursuant to the AG-881 Agreements, Celgene has elected not to participate in this clinical trial and, as a result, we will fund the trial ourselves. Celgene will continue to co-fund the ongoing phase 1 trials of AG-881 described above.

~~AG-348: PKR activator~~

AG-348 is an orally available small molecule and a potent activator of the wild-type (normal) and mutated PKR enzyme, which has resulted in restoration of adenosine triphosphate, or ATP, levels and a decrease in 2,3-diphosphoglycerate, or 2,3-DPG, levels in blood sampled from patients with PK deficiency and treated ex-vivo with AG-348. The wild-type PKR activity of AG-348 allowed the study of enzyme activation in healthy volunteers, providing an opportunity to understand the safety, dosing and pharmacodynamic activity of AG-348 prior to entering a proof-of-concept study in patients. We have worldwide development and commercial rights to AG-348 and expect to fund the future development and commercialization costs related to this program. The FDA granted us orphan drug designation for AG-348 for treatment of patients with PK deficiency and granted us fast track designation to AG-348 for the treatment of patients with PK deficiency. In December 2016, we announced our decision to advance AG-348 into pivotal development as the first potential disease-modifying treatment for PK deficiency.

~~DRIVE PK~~

~~In June 2015, we initiated~~ •DRIVE PK, a global phase 2, first-in-patient, open-label safety and efficacy clinical trial of ~~AG-348~~mitapivat in adult, transfusion-independent patients with PK deficiency. In June 2016, we reported the first clinical data from DRIVE PK at the 21st Congress of EHA in Copenhagen, Denmark, establishing proof of concept for AG-348 as a novel, first-in-class, oral activator of both wild-type and mutated PKR enzymes. This trial has ~~reached target enrollment,~~completed enrollment.

•ACTIVATE-T, a single arm, global, pivotal trial of mitapivat in regularly-transfused patients with PK deficiency. The trial has completed enrollment. We reported in January 2021 that this trial met its primary endpoint of a statistically significant and clinically meaningful reduction in ~~June 2017 we presented updated clinical~~transfusion burden.

•ACTIVATE, a 1:1 randomized, placebo-controlled, global, pivotal trial of mitapivat in patients with PK deficiency who do not receive regular transfusions. The trial has completed enrollment. We reported in December 2020 that this trial met its primary endpoint of a statistically significant, sustained increase in hemoglobin compared to placebo. In addition, data from ~~DRIVE PK at 2017 EHA.~~the trial demonstrated that treatment with mitapivat showed statistically significant improvement in key pre-specified secondary endpoints including patient reported outcomes.

•A phase 2, open-label safety and efficacy clinical trial of mitapivat in adult patients with non-transfusion-dependent α- and β-thalassemia. The trial has completed enrollment.

•In collaboration with the National Institutes of Health, or NIH, we are evaluating mitapivat in a phase 1 trial in patients with SCD pursuant to a cooperative research and development agreement. The trial is ongoing and enrolling patients, although the NIH experienced disruptions related to the COVID-19 pandemic.

•In collaboration with UMC Utrecht, or UMC, we are evaluating mitapivat in patients with SCD pursuant to an investigator sponsored trial agreement. The trial is ongoing and enrolling patients, although UMC experienced disruptions related to the COVID-19 pandemic.

We ~~intend~~expect to initiate two ~~global, pivotal~~phase 3 trials of ~~AG-348~~mitapivat, ENERGIZE and ENERGIZE-T, in ~~PK deficiency~~not regularly transfused and regularly transfused adults with thalassemia in the ~~first~~second half of ~~2018.~~

~~AG-270: Targeting MTAP-deleted cancers~~

AG-270 is our development candidate focused on MTAP-deleted cancers. In March 2017, we announced that Celgene designated AG-270 as a development candidate under the 2016 Agreement. Pursuant to the 2016 Agreement, Celgene paid us an $8.0 million designation fee for AG-270. Exploratory research, drug discovery and early development of AG-270 is led by us, and Celgene will have an opt-in right on AG-270 up through phase 1 dose escalation for at least a $30.0 million fee. Upon opt-in, we and Celgene will have global co-development and co-commercialization rights with a worldwide 50/50 cost and

~~profit share on AG-270,~~2021, and we ~~will be eligible for up to $168.8 million in clinical and regulatory milestone payments. We~~ expect to ~~submit an IND for AG-270~~initiate a phase 2/3 trial of mitapivat in patients with SCD by the end of ~~2017.~~2021.

MTAP is a metabolic enzyme that is deleted in approximately 15 percent of all cancers. This deletion is readily detected by a simple genomic or immunohistochemistry test, thus allowing the selection of patients predicted to be sensitive to the therapy. We have discovered a novel pathway comprised of multiple targets with a shared vulnerability in MTAP-deleted tumors and have demonstrated that this pathway can be modulated by small molecule inhibitors, resulting in robust anti-tumor activity in animal models.AG-946: Next-generation PKR Activator

~~AG-519~~

AG-519 is an orally available small molecule and a potent activator of the PKR enzyme, with comparable biochemical, cellular and in-vivo activity to AG-348, and was developed as our second PKR activator. We were evaluating AG-519 in a placebo-controlled•A phase 1 ~~integrated single ascending dose and multiple ascending dose clinical~~ trial of AG-946 in healthy ~~volunteers. In December 2016, we announced that we are no longer developing AG-519,~~volunteers and ~~withdrew our IND for AG-519, following a verbal notification of a clinical hold from the FDA.~~in patients with SCD. The trial is currently enrolling healthy volunteers.

Other research and platform programs

Other research and platform programs include activities related to exploratory efforts, target validation and lead optimization for our discovery and follow-on programs, and our proprietary metabolomics platform.

~~General~~Selling, general and administrative expenses

~~General~~Selling, general and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, ~~accounting,~~ business development, commercial, legal and human resources functions. Other significant costs include facility related costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters, and fees for accounting and consulting services.

We anticipate that our selling, general and administrative expenses will increase in the future to support continued research and development activities and future commercialization activities related to our GDD portfolio, including the potential

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commercialization of our product candidates. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, lawyers and accountants, among other expenses.

Results of Operations

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

Comparison of the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020

Total Operating Expenses


	Three Months Ended March 31,
(In thousands)	2021		2020
Cost and expenses:

Research and development	$	57,667	$	55,358
Selling, general and administrative	33,550		31,672
Total Operating Expenses	$	91,217	$	87,030

Total Operating Expenses - First Quarter of 2021 vs. First Quarter of 2020 - The ~~following table summarizes our results~~increase in total operating expenses of ~~operations~~$4.2 million for the three months ended ~~September 30, 2017 and 2016 ($ in thousands):~~

Three Months Ended September 30,
2017 2016 $ Change % Change
Collaboration revenue – related party $ 10,643
$ 8,985
$ 1,658
18 %
Royalty revenue – related party 715
—
715
100 %
Total revenue 11,358
8,985
2,373
26 %
Operating expenses:
Research and development (net of $1,078 and $4,038 of cost reimbursement from related party for the three months ended September 30, 2017 and 2016, respectively) 72,917
60,643
12,274
20 %
General and administrative 17,458
11,854
5,604
47 %
Loss from operations (79,017 ) (63,512 ) (15,505 ) 24 %
Interest income 1,880
678
1,202
177 %
Net loss $ (77,137 ) $ (62,834 ) $ (14,303 ) 23 %

~~Revenue. For~~March 31, 2021 compared to the three months ended September 30, 2017, we recognized $11.4 million in revenue, which includes $9.7 million related to deliverables identified under the 2016 Agreement and $0.7 million in royalty revenue earned under the 2010 Agreement.

For the three months ended September 30, 2016, we recognized $9.0 million in revenue related to deliverables identified under the 2016 Agreement and does not include any revenue associated with the ivosidenib program after the May 2016 modification date.

~~Research and Development Expense. The~~March 31, 2020 was primarily due an increase in research and development expenses of $2.3 million which is described below under Research and Development Expenses, and an increase in selling, general and administrative expenses of $1.9 million was ~~primarily attributable~~due to ~~net increases of $6.2 million in external services~~ex-U.S. workforce related expenses.

Research and ~~$6.1 million in internal expenses; both of these increases are inclusive of cost reimbursements recorded as a reduction of research and development expenses.~~Development Expenses

We use our employee and infrastructure resources across multiple research and development programs, and we allocate internal employee-related and infrastructure costs, including stock-based compensation and facilities costs, as well as certain third-party costs, net of reimbursements from Celgene, to our research and development programs based on the personnel resources allocated to such program. Our ~~allocated~~ research and development expenses, by major program, are outlined in the table ~~below ($~~below:


	Three Months Ended March 31,
(In thousands)	2021		2020



Mitapivat (PKR activator)	$	12,364	$	9,720


AG-946 (Next-Gen PKR activator)	1,771		2,406
Other research and platform programs	4,214		3,175
Total direct research and development expenses	18,349		15,301
Compensation and related expenses	26,753		26,935
Facilities and IT related expenses & other	12,565		13,122
Total indirect research and development expenses	39,318		40,057
Total research and development expense	$	57,667	$	55,358

Total Research and Development Expenses - First Quarter of 2021 vs. First Quarter of 2020 - The increase in ~~thousands):~~

Three Months Ended September 30,

2017
2016
$ Change
% Change
IDH2 inhibitor (IDHIFA®)
$ 1,558

$ 3,744

$ (2,186 )
(58 )%
IDHIFA® reduction of R&D expenses
—

(585 )
585

(100 )%
IDH1 inhibitor (ivosidenib) 34,496

26,222

8,274

32 %
Pan-IDH inhibitor (AG-881) 3,309

5,713

(2,404 )
(42 )%
AG-881 reduction of R&D expenses (1,078 )
(3,453 )
2,375

(69 )%
PKR activator (AG-348) 10,882

4,442

6,440

145 %
MTAP-deleted cancers program (AG-270) 5,748

4,275

1,473

34 %
Discontinued backup PKR activator (AG-519) 58

9,112

(9,054 )
(99 )%
Other research and platform programs 17,944

11,173

6,771

61 %
Total research and development expenses, net $ 72,917

$ 60,643

$ 12,274

20 %

~~The changes in~~total research and development ~~expense depicted~~expenses of $2.3 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 was primarily due to a $2.6 million increase in mitapivat costs due to start up costs for the ~~table above were~~planned phase 3 trials of mitapivat, ENERGIZE and ENERGIZE-T, and the planned phase 2/3 trial of mitapivat in patients with SCD.

Interest Income and Expense


	Three Months Ended March 31,
(In thousands)	2021		2020
Interest income, net	$	340	$	2,936

Interest Income and Expense- First Quarter of 2021 vs. First Quarter of 2020 - The decrease in interest income, net is primarily attributable to the ~~following:~~

~~IDHIFA® costs decreased as a result~~decrease in interest rates at the end of ~~less internal~~the first quarter of 2020, which reduced the interest rates earned by 0.50% to 1.50% from prior periods and ~~external expenses related to ongoing translational work on clinical and preclinical biomarkers.~~

~~R&D costs reimbursed for IDHIFA® decreased as a result of Celgene assuming~~ the ~~primary development responsibilities. The reimbursements are only representative of third-party costs.~~

~~Ivosidenib costs increased as a result of: (i) start-up costs~~decrease in our outstanding marketable securities balance for the ~~AGILE clinical trial; (ii) initiation~~three months ended March 31, 2021.

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Loss from Operations and Net Income (Loss)


	Three Months Ended March 31,
(In thousands)	2021		2020
Net loss from continuing operations	$	(90,877)	$	(84,094)
Net income from discontinued operations	1,965,202		43,838
Net income (loss)	1,874,325		(40,256)

Loss from Operations and Net Income (Loss) – First Quarter of 2021 vs. First Quarter of 2020 – The increase in loss from continuing operations for the ~~ClarIDHy clinical trial; (iii)~~three months ended March 31, 2021 compared to the ~~ongoing enrollment in~~three months ended March 31, 2020 was primarily driven by the ~~expansion portion of the phase 1 clinical trial evaluating single agent ivosidenib in patients with IDH1 mutant-positive advanced hematologic malignancies; and (iv) other~~higher research and development ~~activities, including manufacturing-related activities, needed to prepare for a potential NDA submission in 2017.~~

~~AG-881 costs decreased as our phase 1 trial in patients with advanced IDH1 or IDH2 mutant-positive hematologic malignancies~~expenses discussed above under Research and our phase 1 trial in IDH1 or IDH2 mutant-positive advanced solid tumors, including glioma, both completed their dose escalation portions. However, we continue to incur costs related to patients still on both studiesDevelopment Expenses, and ~~planning for future development.~~

~~As AG-881 development cost decreases, the R&D costs reimbursed for AG-881 will also decrease.~~

~~AG-348 costs increased as a result of the selection of AG-348 instead of AG-519, which occurred in the fourth quarter of 2016.~~

~~AG-270 costs increased as we prepare for a potential IND filing in 2017.~~

~~AG-519 costs decreased as a result of the selection of AG-348 instead of AG-519, which occurred in the fourth quarter of 2016.~~

The increase in the costs of other research and platform programs include activities related to exploratory efforts, target validation and lead optimization for our discovery and follow-on programs, and our proprietary metabolomics platform.

~~General and Administrative Expense.~~ ~~The increase in~~higher selling, general and administrative expenses discussed above under Total Operating Expenses. The change in net income from discontinued operations and net income (loss) for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 was primarily ~~attributable to an increase of $5.7 million related to supporting our growing commercial organization for the launch of IDHIFA and the potential launch of ivosidenib in 2018.~~

~~Interest Income. The increase in interest income is attributable to higher investment balances~~ driven by ~~upfront fees received under~~the sale of our ~~2016 Agreement, funds received from our April 2017 and September 2016 follow-on public offerings and a more diversified investment portfolio, resulting~~oncology business to Servier for approximately $1.8 billion in ~~higher interest earned on investments.~~

~~Comparison of the nine months ended September 30, 2017 and 2016~~

~~The following table summarizes our results of operations for the nine months ended September 30, 2017 and 2016 ($ in thousands):~~

Nine Months Ended September 30,

2017
2016
$ Change
% Change
Collaboration revenue – related party $ 32,497

$ 47,244

$ (14,747 )
(31 )%
Royalty revenue – related party 715

—

715

100 %
Total revenue 33,212

47,244

(14,032 )
(30 )%
Operating expenses:

Research and development (net of $6,343 and $18,754 of cost reimbursement from related party for the nine months ended September 30, 2017 and 2016, respectively) 215,465

155,485

59,980

39 %
General and administrative 48,411

35,335

13,076

37 %
Loss from operations (230,664 )
(143,576 )
(87,088 )
61 %
Interest income 4,279

1,591

2,688

169 %
Net loss $ (226,385 )
$ (141,985 )
$ (84,400 )
59 %

~~Revenue~~. For the nine months ended September 30, 2017, we recognized $33.2 million in revenue, which includes $30.5 million related to deliverables identified under the 2016 Agreement and $0.7 million in royalty revenue earned under the 2010 Agreement.

For the nine months ended September 30, 2016, we recognized $47.2 million in revenue, which includes a $25.0 million milestone payment related to the initiation of the Phase 3 IDHENTIFY trial with IDHIFA® under the 2010 Agreement.

~~Research and Development Expense~~. The increase in research and development expenses was primarily attributable to net increases of $37.9 million in external services and $22.1 million in internal expenses; both of these increases are inclusive of cost reimbursements recorded as a reduction of research and development expenses.

~~Our allocated research and development expenses, by major program, are outlined~~cash in the ~~table below ($ in thousands):~~

Nine Months Ended September 30,

2017
2016
$ Change
% Change
IDH2 inhibitor (IDHIFA®)
$ 5,023

$ 9,260

$ (4,237 )
(46 )%
IDHIFA® reduction of R&D expenses
(14 )
(1,824 )
1,810

(99 )%
IDH1 inhibitor (ivosidenib) 104,157

69,794

34,363

49 %
Ivosidenib reduction of R&D expenses (1) —

(9,873 )
9,873

(100 )%
Pan-IDH inhibitor (AG-881) 14,517

15,448

(931 )
(6 )%
AG-881 reduction of R&D expenses (6,329 )
(7,057 )
728

(10 )%
PKR activator (AG-348) 29,172

14,633

14,539

99 %
MTAP-deleted cancers program (AG-270) 15,381

12,336

3,045

25 %
Discontinued backup PKR activator (AG-519) 3,600

18,654

(15,054 )
(81 )%
Other research and platform programs 49,958

34,114

15,844

46 %
Total research and development expenses, net $ 215,465

$ 155,485

$ 59,980

39 %

~~(1)~~

Celgene and we agreed to terminate the 2010 Agreement, effective as of August 15, 2016, as to the program directed to the IDH1 target, for which ivosidenib is the lead development candidate. As a result of the termination, we obtained global development and commercial rights to ivosidenib and the IDH1 program and expect to fund all the future development and commercialization costs related to the program. For the ~~nine months ended September 30, 2016,~~ ~~we recognized a reduction in R&D expenses of~~ ~~$9.9 million~~ ~~for ivosidenib related to the 2010 Agreement. As a result of the termination of the 2010 Agreement, we did not recognize a reduction in R&D expenses for the~~ ~~nine months ended September 30, 2017~~ ~~and do not expect to recognize reductions in the future.~~

~~The changes in research and development expense depicted in the table above were primarily attributable to the following:~~

~~IDHIFA® costs decreased as a result of less internal and external expenses related to ongoing translational work on clinical and preclinical biomarkers.~~

~~R&D costs reimbursed for IDHIFA® decreased as a result of Celgene assuming the primary development responsibilities. The reimbursements are only representative of third-party costs.~~

Ivosidenib costs increased as a result of: (i) start-up costs for the AGILE clinical trial; (ii) initiation of the ClarIDHy clinical trial; (iii) the ongoing enrollment in the expansion portion of the phase 1 clinical trial evaluating single agent ivosidenib in patients with IDH1 mutant-positive advanced hematologic malignancies; and (iv) research and development activities, including manufacturing-related activities, needed to prepare for a potential NDA submission in 2017.

R&D costs reimbursed for ivosidenib decreased as a result of our obtaining global development and commercial rights to ivosidenib and the IDH1 program and the responsibility for funding all of the costs related to the program, upon terminating the 2010 Agreement with respect to the program, effective August 15, 2016.

AG-881 costs decreased as our phase 1 trial in patients with advanced IDH1 or IDH2 mutant-positive hematologic malignancies and our phase 1 trial in IDH1 or IDH2 mutant-positive advanced solid tumors, including glioma, both completed their dose escalation portions. However, we continue to incur costs related to patients still on both studies and planning for future development.

~~As AG-881 development cost decreases, the R&D costs reimbursed for AG-881 will also decrease.~~

~~AG-348 costs increased as a result of the selection of AG-348 instead of AG-519, which occurred in the fourth~~first quarter of ~~2016.~~

2021, which is included within net income from discontinued operations.

~~AG-270 costs increased as we prepare for a potential IND filing in 2017.~~

~~AG-519 costs decreased as a result of the selection of AG-348 instead of AG-519, which occurred in the fourth quarter of 2016.~~

~~General and Administrative Expense.~~ The increase in general and administrative expenses was primarily attributable to an increase of $13.0 million related to supporting our growing commercial organization for the launch of IDHIFA and the potential launch of ivosidenib in 2018.

~~Interest Income~~. The increase in interest income is attributable to higher investment balances driven by upfront fees received under our 2016 Agreement, funds received from our April 2017 and September 2016 follow-on public offerings and a more diversified investment portfolio, resulting in higher interest earned on investments.

Liquidity and Capital Resources

Sources of liquidity

Since our inception, and through ~~September 30, 2017,~~March 31, 2021, we have funded our operations through commercial sales of TIBSOVO®, upfront, milestone, extension, cost reimbursement and royalty payments related to our collaboration agreements, product sales, proceeds from the sale of our royalty rights, proceeds received from our issuance of preferred stock, our ~~IPO~~initial public offering and ~~follow-on public offerings, and a~~concurrent private placement of common stock to an affiliate of Celgene, and our follow-on public offerings.

As of March 31, 2021, we had cash, cash equivalents and marketable securities of $2.4 billion, which ~~was completed concurrently with~~includes the $1.8 billion in cash received from the completion of the sale of our ~~IPO.~~

~~In April 2017,~~oncology business to Servier. On March 25, 2021, we ~~completed a public offering~~announced that our board of ~~5,050,505~~directors authorized the repurchase of up to $1.2 billion of our outstanding shares of common stock, ator the Repurchase Program, using the proceeds from the sale of our oncology business to Servier. On March 31, 2021, in connection with the Repurchase Program, we entered into a definitive share repurchase agreement with Bristol-Myers Squibb Company, or BMS, to repurchase 7,121,658 shares of our common stock held by certain subsidiaries of BMS for an ~~offering~~aggregate purchase price of ~~$49.50~~$344.5 million, or $48.3785 per share. ~~We received net proceeds from this offering of $235.0 million, after deducting underwriting discounts and commissions paid by~~

~~us. In addition,~~This repurchase was completed on April 5, 2021. Further, on April 2, 2021, in connection with the Repurchase Program, we ~~granted the underwriters the right~~entered into a Rule 10b5-1 repurchase plan pursuant to ~~purchase~~which we may repurchase up to ~~an additional 757,575~~$600 million of shares of our common ~~stock, which was also exercised in April 2017, resulting in additional net proceeds~~stock. We expect to ~~us of $35.2 million, after underwriting discounts and commissions. After giving effect to~~conduct the ~~full exercise~~remaining repurchases under the Repurchase program over 12—18 months, including executing a meaningful portion of the ~~over-allotment option,~~planned repurchases by the ~~number~~end of ~~shares sold by us in the public offering totaled 5,808,080 shares,~~2021 through a combination of 10b5-1 plans, open market purchases and ~~net proceeds to us totaled $270.2 million, after underwriting discounts and commissions.~~privately negotiated block sales.

In addition to our existing cash, cash equivalents and marketable securities, under the Purchase Agreement we are eligible to ~~earn~~receive a ~~significant amount~~$200 million milestone payment upon regulatory approval of ~~milestone payments, designation fees, license option fees and extension fees, and we are entitled to cost reimbursements~~vorasidenib and royalty payments ~~under our collaboration agreements~~ with ~~Celgene. Our ability~~respect to ~~earn the milestone payments, cost reimbursements~~U.S. net sales of TIBSOVO® and, ~~royalty payments, and the timing of earning these amounts are dependent upon the timing and outcome of our development, regulatory and commercial activities, and is uncertain at this time.~~if approved, vorasidenib. Our right to such payments ~~under our collaboration agreements with Celgene~~from Servier is our only committed potential external source of funds. Whether the regulatory approval milestone for vorasidenib will be achieved is subject to various risks and uncertainties, many of which are outside our control, including adverse clinical developments with respect to vorasidenib. Furthermore, we cannot predict what success, if any, Servier may have in the United States with respect to sales of TIBSOVO® and, if approved, vorasidenib and consequently we cannot estimate the amount of royalty payments that we can expect to receive from Servier under the Purchase Agreement prior to the loss of exclusivity of these products.

Cash flows

The following table provides information regarding our cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016 (in thousands):~~2020:


	Three Months Ended March 31,
(In thousands)	2021		2020
Net cash used in operating activities	$	(120,749)	$	(105,358)
Net cash provided by investing activities	1,874,077		108,135
Net cash provided by financing activities	7,261		5,385
Net change in cash and cash equivalents	$	1,760,589	$	8,162

Nine Months Ended September 30,
2017 2016
Net cash (used in) provided by operating activities $ (210,778 ) $ 89,785
Net cash used in investing activities (99,756 ) (41,832 )
Net cash provided by financing activities 282,521
165,785
Net change in cash and cash equivalents $ (28,013 ) $ 213,738

Net cash ~~(used in) provided by~~used in operating activities. Cash used in operating activities~~. During~~ of $120.7 million during the ~~nine~~three months ended ~~September 30, 2017, we~~March 31, 2021, of which $90.2 million was used by continuing operations and $30.5 million was used by discontinued operations,

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was primarily due to cash received ~~$12.3~~of $39.5 million from sales of TIBSOVO®, and $1.2 million in cost reimbursements related to our ~~collaboration agreements~~Collaboration Agreements with ~~Celgene.~~Celgene, These amounts were offset by operating expenses driven by research and development costs described above under Research and Development Expenses and selling, general and administrative costs described above under Total Operating Expenses.

Cash used in operating activities of $105.4 million during the three months ended March 31, 2020, of which $78.8 million was used by continuing operations and $26.6 million was used by discontinued operations, was primarily due to cash received $22.1 million from sales of TIBSOVO®, $5.2 million in cost reimbursements and royalty payments under our Collaboration Agreements with Celgene, $2.9 million in interest received, and $0.9 million in cost reimbursement related to our Collaboration agreement with CStone. These amounts were offset by increased operating expenses ~~which~~that relate to ~~increases in clinical study costs due to advancements in our most advanced product candidates, expanded facilities and~~ increased staffing needs due to our expanding ~~operations.~~

During the nine months ended September 30, 2016, we received a $200.0 million upfront payment from Celgene related to our 2016 Agreement, $26.5 million in cost reimbursements related to our collaboration agreements, a $25.0 million milestone payment upon the initiation of the IDHENTIFY phase 3 study of IDHIFA®,operations and $4.4 million as reimbursement of tenant improvements. These amounts were offset by increased operating expenses which relate to increases in clinical study costs due to advancements in our most advanced product candidates, expanded facilities and ~~increased staffing needs~~IT related costs.

Net cash provided by investing activities. Cash provided by investing activities of $1.9 billion for the three months ended March 31, 2021, of which $71.1 million was provided by operating activities and $1.8 billion was provided by discontinued operations, was primarily due to the approximately $1.8 billion in cash proceeds received from the sale of our ~~expanding operations.~~

~~Net cash used in investing activities. The cash used in investing activities for the nine months ended September 30, 2017 and 2016~~oncology business to Servier that was ~~primarily the result of~~completed on March 31, 2021. We also received higher ~~purchases of marketable securities than~~ proceeds from maturities and sales of marketable securities than purchases of marketable securities. Cash provided by investing activities of $108.1 million for three months ended March 31, 2020, of which $108.4 million was provided by operating activities and ~~$3.3~~$0.3 million was used by discontinued operations, was primarily the result of higher proceeds from maturities and ~~$8.7~~sales of marketable securities than purchases of marketable securities, offset by $4.5 million in purchases of property and ~~equipment, respectively.~~equipment.

Net cash provided by financing activities. ~~The cash~~Cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 was primarily the result of the ~~$270.2~~$7.3 million ~~net proceeds received from our public offering, as well as~~of proceeds received from stock option exercises and ~~stock~~ purchases made pursuant to our ~~employee stock purchase plan. The cash~~2013 ESPP. Cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2020 was primarily the result of the ~~$162.1~~$5.5 million ~~proceeds from the September 2016 follow-on public offering~~ of ~~our common stock, net of underwriting discounts and commissions, as well as~~ proceeds received from stock option exercises and ~~stock~~ purchases made pursuant to our ~~employee stock purchase plan.~~2013 ESPP.

Funding requirements

WeAlthough we expect our expenses to ~~increase in connection with~~decrease following the completion of the sale of our ~~ongoing activities,~~oncology business to Servier on March 31, 2021, we anticipate that this decrease will be offset as we transition our operations to focus solely on GDDs, particularly as we continue the research, development and clinical trials of, ~~and~~ seek ~~additional~~ marketing approvals for, and commercialize our product candidates. If we obtain ~~additional~~ marketing approval for any of our ~~other~~ product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution to the extent that such sales, marketing, manufacturing and distribution are not the responsibility of Celgene or other collaborators. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.

distribution.

We expect that our existing cash, cash equivalents and marketable securities as of ~~September 30, 2017,~~March 31, 2021, together with anticipated interest income, ~~anticipated expense reimbursements,~~future product sales and ~~royalty payments under our collaboration agreements,~~TIBSOVO® royalties, but excluding any ~~additional program-specific~~transaction-specific milestone payments, will ~~enable us~~be sufficient to fund ~~our operating expenses~~operations through major catalysts and ~~capital expenditure requirements through at least~~to cash-flow positivity without the ~~end of 2019.~~need to raise additional equity. Our future capital requirements will depend on many factors, including:

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

•the scope, progress, results and costs of drug discovery, preclinical development, laboratory testing and clinical trials for our product candidates;

~~the success of our collaborations;~~

~~the extent to which we acquire or in-license other medicines and technologies;~~

•the costs, timing and outcome of regulatory review of our product candidates;

~~the costs associated with preparation for the potential commercial launch of one or more of our product candidates;~~

•the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;

•the amount and timing of revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

•our ability to establish and maintain ~~additional~~ collaborations on favorable terms, if at ~~all.~~all;

•our ability to successfully execute on our strategic plans;

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

•the extent to which we acquire or in-license, or monitor or out-license, other medicines and technologies.

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common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise funds through ~~additional~~ collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed or on attractive terms, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

~~Off-balance~~Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

Contractual ~~obligations~~Obligations

We have entered into agreements in the normal course of business with CROs for clinical trials and ~~clinical~~contract manufacturing organizations for supply manufacturing and with vendors for preclinical research studies and other services and products for operating purposes. These contractual obligations are cancelable at any time by us, generally upon ~~30 days’~~ prior written notice to the vendor.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, there were no ~~material~~significant changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in ~~the~~our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

Item 3. Quantitative and Qualitative Disclosures ~~About~~about Market Risk

We are exposed to market risk related to changes in interest rates. As of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, we had cash, cash equivalents and marketable securities of ~~$641.7~~$2.4 billion and $670.5 million, ~~and $573.6 million, respectively, consisting~~respectively. Our marketable securities consist primarily of investments in ~~certificates of deposit,~~ U.S. Treasuries, government securities and corporate debt securities. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments are primarily in short-term marketable securities. Our marketable securities are subject to interest rate risk and could fall in value if market interest rates increase. Due to the short-term duration of our investment portfolio and

the low risk profile of our investments, we do not believe an immediate ~~10%~~and uniform 100 basis point change in interest rates would have a material effect on the fair market value of our investment portfolio. We have the ability to hold our marketable securities until maturity, and therefore we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a 10% change in market interest rates on our investments.

We are also exposed to market risk related to changes in foreign currency exchange rates. We have contracts with CROs located in Asia and Europe that are denominated in foreign ~~currencies. We~~currencies, and we are subject to fluctuations in foreign currency rates in connection with these agreements. We do not currently hedge our foreign currency exchange rate risk. As of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016, we had minimal or no~~2020, liabilities denominated in foreign ~~currencies.~~currencies were immaterial.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures. Based on that evaluation of our disclosure controls and procedures as of ~~September 30, 2017,~~March 31, 2021, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act ~~are~~is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by usa company in the reports ~~we file~~it files or ~~submit~~submits under the Exchange Act is accumulated and communicated to ~~our~~its management, including ~~our~~its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

~~No change~~

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Changes in Internal Control Over Financial Reporting

On March 31, 2021 we completed the sale of our oncology business to Servier under the Purchase Agreement entered into as of December 20, 2020. As a result, during the fiscal quarter ended March 31, 2021, we made the following modifications to our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, including changes to accounting policies and procedures, operational processes, and documentation practices that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting:

•updated our policies and procedures related to identification of accounts related to the sale and added documentation processes related to accounting for the discontinued operation;

•added internal controls over the accounting for the discontinued operation; and

•added controls to address related disclosures for the discontinued operation

Other than the items described above, there were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended ~~September 30, 2017~~March 31, 2021 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1A. Risk Factors

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained herein, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of our management are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “predict,” “project,” “strategy,” “target,” “potential,” “will,” “would,” “could,” “should,” ~~“continue”~~“continue,” “vision” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The risks described are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. These risk factors restate and supersede the risk factors set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

~~Risks Related~~Summary Risk Factors

Our business is subject to a number of risks that if realized could materially affect our business, financial condition, results of operations, cash flows and access to liquidity. These risks are discussed more fully below. Our ~~Financial Position and Need for Additional Capital~~principal risks include the following:

~~We have incurred significant losses since inception. We expect to incur losses for~~•The amount of contingent consideration we will receive from the ~~foreseeable future and may never achieve or maintain profitability.~~

Since inception, we have incurred significant operating losses. Our net losses were $198.5 million, $117.7 million and $53.5 million for the years ended December 31, 2016, 2015 and 2014, respectively, and $226.4 million for the nine months ended September 30, 2017. As of September 30, 2017, we had an accumulated deficit of $709.8 million. Other than revenue from royalties on sales of IDHIFA®, we have not generated any revenue from product sales. Our most advanced product candidates are in clinical development stages and we have not yet obtained marketing approval for a product candidate, other than U.S. Food and Drug Administration's, or FDA, approval of IDHIFA® on August 1, 2017 for the treatment of adult patients with relapsed or refractory acute myeloid leukemia, or R/R AML, and an IDH2 mutation as detected by an FDA-approved test. We have financed our operations primarily through private placementssale of our ~~preferred stock, our initial public offering~~oncology business to Servier is subject to various risks and the concurrent private placement, our follow-on public offerings and our collaboration agreements with Celgene Corporation and its subsidiaries, or Celgene, focused on cancer metabolism and metabolic immuno-oncology. We have devoted substantially all of our efforts to research and development. Although we may from time to time report profitable results, we expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase substantially if and as we:uncertainties.

~~initiate and continue clinical trials for our product candidates, including: ivosidenib, AG-881 and AG-348;~~

~~continue our research and preclinical development of our product candidates;~~

~~seek to identify additional product candidates;~~

~~seek marketing approvals for our product candidates that successfully complete clinical trials;~~

~~establish a sales, marketing and distribution infrastructure to commercialize any medicines for which we may obtain marketing approval;~~

~~require the manufacture of larger quantities of product candidates for clinical development and, potentially, commercialization;~~

~~maintain, expand and protect our intellectual property portfolio;~~

~~hire additional clinical, quality control and scientific personnel;~~

~~add additional personnel to support our product development and planned future commercialization efforts and our operations;~~

~~add equipment and physical infrastructure to support our research and development; and~~

~~acquire or in-license other medicines and technologies.~~

To become and remain profitable, we must develop and eventually commercialize a medicine or medicines with significant market potential. This will require us to be successful in a range of challenging activities, including completing preclinical testing and clinical trials of our product candidates, obtaining marketing approval for these product candidates, manufacturing, marketing and selling those medicines for which we may obtain marketing approval and satisfying any post-marketing requirements. •We ~~may never succeed in these activities and, even if we do, may never generate revenue that are significant or large enough to achieve profitability. If we do achieve profitability, we~~ may not be able to ~~sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease~~realize the ~~value~~anticipated benefits of the recent sale of our ~~company~~oncology business to Servier and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company could also cause our stockholders to lose all or part of their investment.we may face new challenges as a smaller, less diversified company.

~~We will need substantial additional funding.~~ •If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

•We have historically incurred operating losses. We expect to incur losses in the future and may never achieve or maintain profitability. Our net income for the three months ended March 31, 2021 was $1.9 billion and our ~~expenses~~net loss for the three months ended March 31, 2020 was $40.3 million. The net income we generated in the three months ended March 31, 2021 was primarily due to ~~increase~~the sale of our oncology business to Servier, which was consummated on March 31, 2021. As of March 31, 2021, we had retained earnings of $30.9 million.

•We depend heavily on the success of our clinical product candidates, including our lead product candidate mitapivat. Clinical trials of our product candidates may not be successful for a number of important reasons. If we or our collaborators are unable to commercialize our product candidates or experience significant delays in ~~connection with~~doing so, our business will be materially harmed.

•The COVID-19 pandemic has and may continue to affect our ability to initiate or continue our planned, ongoing and future clinical trials, disrupt regulatory activities, ~~particularly as~~or have other adverse effects on our business and operations.

•We may not be successful in our efforts to identify or discover potential product candidates or to develop medicines of commercial value and we ~~continue~~may not achieve our goals included in our strategic vision.

•Even if any of our product candidates receives marketing approval, we or others may later discover that the ~~research~~product is less effective than previously believed or causes undesirable side effects that were not previously identified, which could compromise our ability, or that of any collaborators, to market the product.

•Even if any of our product candidates receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community necessary for commercial success.

•We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of ~~initiate and continue clinical trials~~products for the treatment of ~~and seek marketing approvals~~the disease indications for which we are developing our product candidates. ~~For example,~~

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•We currently rely, and expect to continue to rely, on third-party manufacturers for the materials and manufacture of our product candidates for preclinical and clinical testing and we expect to ~~submit a new drug application,~~rely on third-party manufacturers for commercial supply of any product candidate for which we or ~~NDA, for ivosidenib in IDH1 mutant-positive R/R AML by~~our collaborators obtain marketing approval. Any performance failure on the end of 2017. Pursuant to the 2010 Agreement, we have certain co-promotion rights to IDHIFA® in the U.S. Although Celgene will reimburse us for our co-promotion efforts for IDHIFA® under the 2010 Agreement, if we obtain additional marketing approvals for anypart of our ~~other product candidates, such as ivosidenib, we expect to incur significant commercialization expenses related to product sales,~~existing or future third-party manufacturers could delay clinical development or marketing manufacturing and distribution to the extent that such sales, marketing, manufacturing and distribution are not the responsibility of Celgene or other collaborators. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. approval.

•If we are unable to ~~raise~~obtain and maintain patent or trade secret protection for our medicines and technology, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize medicines and technology similar or identical to ours, and our ability to successfully commercialize our medicines and technology may be adversely affected. If we do not, or are unable to, obtain or maintain any issued patents for any of our lead product candidates, it could have a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects.

Risks Related to Our Financial Position

The amount of contingent consideration we will receive from the sale of our oncology business to Servier is subject to various risks and uncertainties.

Upon closing of the sale of our oncology business to Servier, Servier assumed certain liabilities with respect to the oncology business and paid to us: approximately $1.8 billion in cash, net of certain adjustments for the working capital ~~when needed~~of the oncology business at the time of closing of the transaction and amounts for a representation and warranty insurance policy. In addition, Servier will pay to us:

•$200 million in cash if, prior to January 1, 2027, vorasidenib is granted approval for an NDA from the FDA with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an IDH1 or IDH2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval);

•a royalty payment of 5% of the U.S. net sales (as defined in the Purchase Agreement) of TIBSOVO® from the completion of the transaction through loss of exclusivity of TIBSOVO®; and

•a royalty payment of 15% of the U.S. net sales (as defined in the Purchase Agreement) of vorasidenib from its first commercial sale through loss of exclusivity of vorasidenib.

The contingent consideration described above is subject to various risks and uncertainties.

Whether the regulatory approval milestone will be achieved prior to January 1, 2027 is subject to various risks and uncertainties, many of which are outside of the control of the parties, including adverse clinical developments with respect to vorasidenib.

In addition, the parties cannot predict what success, if any, Servier may have in the United States with respect to sales of TIBSOVO® and vorasidenib and, therefore, the amount of royalty payments that we can expect to receive from Servier under the terms of the Purchase Agreement prior to the loss of exclusivity of these products. The royalty payments are also subject to deductions and other adjustments under the terms of the Purchase Agreement, the amounts of which are uncertain as of the date of this Quarterly Report on ~~attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.~~Form 10-Q.

We ~~expect~~may not be able to realize the anticipated benefits of the recent sale of our oncology business to Servier and we may face new challenges as a smaller, less diversified company.

We may not be able to realize the anticipated benefits from the recent sale of our oncology business to Servier, including potentially deploying the proceeds from the transaction to expand our GDD business. Our ability to realize the anticipated benefits of the transaction and the success of the remaining company is subject to various risks and uncertainties, including the possibility of adverse clinical and other developments in respect of mitapivat or other pipeline products of the GDD business, the possibility that we may not be able to successfully develop and commercialize products based on PK activation and cellular metabolism and unanticipated changes in applicable laws and regulations that may adversely affect the GDD business.

We developed most of our initial products and product candidates for the treatment of various types of cancer. The sale of our oncology business to Servier resulted in us being a smaller, less diversified company with a more limited business concentrated on GDDs. As a result, we may be more susceptible to changing market conditions, including fluctuations and risks particular to the markets for patients with GDDs, than a more diversified company, which could adversely affect our business, financial condition and results of operations. In addition, the diversification of our revenues, costs and cash flows will diminish following the transaction, such that our results of operations, cash flows, working capital and financing requirements may be subject to increased volatility and our ability to fund capital expenditures and investments or satisfy other financial commitments may be diminished.

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We may also face new challenges with maintaining employee morale, retaining key management and other employees and attracting new employees and retaining existing ~~cash, cash equivalents~~business and ~~marketable securities as of September 30, 2017, together~~operational relationships, including with ~~anticipated interest income~~third parties, employees and ~~the anticipated expense reimbursements under our collaboration agreements, but excluding any additional program-specific milestone payments,~~other counterparties that otherwise prefer to transact with larger companies (or will ~~fund our operating and capital expenditure requirements through at least the end of 2019. Our estimate~~only transact with smaller companies on less favorable terms).

We will have broad discretion as to ~~how long we expect~~the use of the proceeds from the sale of our ~~existing cash~~oncology business to Servier, and ~~cash equivalents~~may not use the proceeds effectively.

We will have broad discretion with respect to ~~be available~~the use of proceeds of the sale of our oncology business to ~~fund~~Servier. The results and effectiveness of the use of proceeds, including the repurchase of up to $1.2 billion of our ~~operations is based on assumptions that may prove to be wrong,~~outstanding share of common stock, are uncertain, and we could ~~use~~spend the proceeds in ways that do not improve our available capital resources sooner than we currently expect. Further, changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors, including:

~~the scope, progress, results and costs of drug discovery, preclinical development, laboratory testing and clinical trials for our product candidates;~~

~~the success of, and developments regarding, our collaborations;~~

~~the costs, timing and outcome of regulatory review of our product candidates;~~

~~the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;~~

~~our ability to establish and maintain additional collaborations on favorable terms, if at all; and~~

~~the extent to which we acquire or in-license other medicines and technologies.~~

Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary dataremaining business, financial condition or results ~~required~~of operations. Our failure to ~~obtain additional marketing approvals~~apply these funds effectively could have an adverse effect on its business, financial condition and ~~achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Even if we succeed in developing and commercializing one or more~~results of our product candidates, we may never achieve sufficient sales revenue to achieve or maintain profitability. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.

operations.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs primarily through ~~a combination of equity offerings, debt financings,~~cash on hand and, potentially, collaborations, strategic alliances, licensing arrangements and ~~licensing arrangements.~~other nondilutive strategic transactions. In addition, in connection with potential future strategic transactions, we may pursue opportunistic debt offerings, and equity or equity-linked offerings. We do not have any committed potential external source of funds other than the potential milestone and royalty payments that we are eligible to receive under our ~~collaborations, which are limited in scope and duration.~~Purchase Agreement with Servier. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership ~~interests~~interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may require us to enter into agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. In addition, securing financing could require a substantial amount of time and attention from our management and may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely affect our management’s ability to oversee the development of our product candidates.

If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

We expect to incur significant expenses as we continue to advance our ongoing activities. Following the completion of the the share repurchase from subsidiaries of BMS and the other anticipated repurchases from our stockholders, we expect to have sufficient capital to fund operations through major catalysts and to cash-flow positivity without the need to raise additional equity. Our ~~short operating history~~estimate as to how long we expect our existing cash, cash equivalents, and marketable securities to be available to fund our operations is based on assumptions that may ~~make it difficult for you~~prove to ~~evaluate~~ be wrong, and we could use our available capital resources sooner than we currently expect. Further, changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds. Our future capital requirements will depend on many factors, including:

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

•the scope, progress, results and costs of drug discovery, preclinical development, laboratory testing and clinical trials for our product candidates;

•the costs, timing and outcome of regulatory review of our product candidates;

•the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;

•the costs and timing of future commercialization activities, including product manufacturing, sales, marketing and distribution, for any of our product candidates for which we may receive marketing approval;

•the amount and timing of revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

•our ability to ~~assess~~ establish and maintain additional collaborations on favorable terms, if at all;

•our ~~future viability.~~ability to successfully execute on our strategic plans;

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

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•the extent to which we acquire or in-license, or monitor or out-license, other medicines and technologies.

We ~~were founded~~have historically incurred operating losses. We expect to incur losses in the ~~second half~~future and may never achieve or maintain profitability.

We have historically incurred operating losses. Our net income for the three months ended March 31, 2021 was $1.9 billion and our net loss for the three months ended March 31, 2020 was $40.3 million. The net income we generated in the three months ended March 31, 2021 was primarily due to the sale of ~~2007~~our oncology business to Servier, which was consummated on March 31, 2021. As of March 31, 2021, we had retained earnings of $30.9 million. Prior to the sale of our oncology business to Servier, we had generated only modest revenue from sales of TIBSOVO® and, ~~commenced operations in late 2008. Our operations~~prior to ~~date~~our sale to Royalty Pharma, or RPI, of our royalty rights to IDHIFA®, royalties on sales of IDHIFA®. Other than the FDA approvals of TIBSOVO® (for the treatment of IDH1 mutant-positive adult patients with relapsed or refractory acute myeloid leukemia, R/R AML, or newly diagnosed AML who are at least 75 years old or who have ~~been limited~~comorbidities that preclude use of intensive induction chemotherapy) and IDHIFA® (for the treatment of IDH2 mutant-positive adult patients with R/R AML), the rights to ~~organizing and staffing~~both of which we have sold to Servier, we have not obtained marketing approval for any of our ~~company, business planning, raising capital, acquiring and developing our technology, identifying potential~~ product candidates, ~~undertaking~~all of which are in preclinical or clinical development stages. We have financed our operations primarily through public offerings of our common stock and our collaboration agreements with Celgene and have devoted substantially all of our efforts to research and development. Following the sale of our oncology business to Servier on March 31, 2021, we expect to finance our operations primarily through cash on hand. We expect to continue to incur significant expenses and net losses until such time as we are able to report profitable results. The net losses we incur may fluctuate significantly from quarter to quarter. We anticipate that we will incur significant expenses if and as we:

•initiate and continue clinical ~~studies~~trials for our products and product candidates; continue our research and preclinical development of our product candidates and ~~establishing a commercial infrastructure. All of our~~seek to identify additional product candidates are still in preclinical and clinical development, with the exception of IDHIFA®. We have not yet demonstrated our ability to successfully complete any large-scale or pivotal clinical trials, obtain othercandidates;

•seek marketing approvals for our product candidates that successfully complete clinical trials;

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

•require the manufacture ~~a commercial scale medicine, or arrange~~of larger quantities of product candidates for ~~a third party~~clinical development and, potentially, commercialization;

•maintain, expand and protect our intellectual property portfolio;

•add additional personnel to ~~do so on~~support our behalf, or conduct sales and marketing activities necessary for successful commercialization. Typically, it takes about 10 to 15 years to develop one new medicine from the time it is discovered to when it is available for treating patients, assuming that it successfully completes all stages ofproduct research and development and ~~achieves~~planned future commercialization efforts and our operations;

•add equipment and physical infrastructure to support our research and development; and

•acquire or in-license other medicines and technologies.

To become and remain profitable, we must develop and eventually commercialize one or more medicines with significant market potential. This will require us to be successful in a range of challenging activities, including completing preclinical testing and clinical trials of our product candidates, obtaining marketing approval ~~all~~for these product candidates, manufacturing, marketing and selling those medicines for which we may obtain marketing approval and satisfying any post-marketing requirements. Notwithstanding the extent to which we may succeed in any of ~~which is highly uncertain. Consequently, any predictions you make about our future success~~these activities, we may never generate revenues that are significant or ~~viability~~large enough to achieve profitability. If we do achieve profitability, we may not be ~~as accurate as they~~able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could ~~be if we had a longer operating history.~~impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company could also cause our stockholders to lose all or part of their investment.

~~We may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors that~~Changes in tax laws or in their implementation or interpretation may adversely affect our ~~ability~~business and financial condition.

Changes in tax law may adversely affect our business or financial condition. On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act, or the Tax Act, which significantly reformed the U.S. Internal Revenue Code of 1986, as amended, or the Code. The Tax Act, among other things, contained significant changes to ~~successfully commercialize~~corporate taxation.

As part of Congress’ response to the COVID-19 pandemic, the Families First Coronavirus Response Act, or FFCR Act, was enacted on March 18, 2020, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was enacted on March 27, 2020, and COVID-19 relief provisions were included in the Consolidated Appropriations Act, 2021, or CAA, which was enacted on December 27, 2020. All contain numerous tax provisions. Regulatory guidance under the Tax Act, the FFCR Act, the CARES Act, and the CAA is and continues to be forthcoming, and such guidance could ultimately increase or lessen impact of these laws on our ~~product candidates. We~~business and financial condition. It is also possible that Congress will ~~need to transition from a company~~enact additional legislation in

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connection with ~~a research focus to a company capable of supporting commercial activities. We may not be successful in such a transition.~~

~~We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many~~the COVID-19 pandemic, some of which ~~are beyond~~could have an impact on our ~~control. Accordingly, you should not rely upon~~company. In addition, it is uncertain if and to what extent various states will conform to the ~~results of any quarterly~~Tax Act, the FFCR Act, the CARES Act, or ~~annual periods as indications of future operating performance.~~the CAA.

Risks Related to the Discovery, Development, and Commercialization of our Product Candidates

We ~~do not know whether we will be able to develop any medicines of commercial value, based on our approach to the discovery and development of product candidates that target cellular metabolism.~~

Our scientific approach focuses on using our proprietary technology to identify key metabolic enzymes in cancer, rare genetic diseases, or RGDs, or other diseased cells in the laboratory and then using these key enzymes to screen for and identify product candidates targeting cellular metabolism. We are also focused on metabolic immuno-oncology, an emerging field of cancer research focused on altering the metabolic state of immune cells to enhance the body’s immune response to cancer.

Our focus on using our proprietary technology to screen for and identify product candidates targeting cellular metabolism may not result in the discovery and development of commercially viable medicines to treat cancer or RGDs. Any medicines that we develop may not effectively correct metabolic pathways or alter the metabolic state of immune cells. If we are able to develop a product candidate that targets cellular metabolism in preclinical studies, we may not succeed in demonstrating safety and efficacy of the product candidate in human clinical trials. In addition, even if we obtain marketing approval for one of our product candidates, we can provide no assurance that commercialization of such product candidate will be successful.

~~We may not be successful in our efforts to identify or discover potential product candidates.~~

A key element of our strategy is to identify and test compounds that target cellular metabolism in a variety of different types of cancer and RGDs, as well as in immune cells for the treatment of cancer. A significant portion of the research that we are conducting involves new compounds and drug discovery methods, including our proprietary technology. The drug discovery that we are conducting using our proprietary technology may not be successful in identifying compounds that are useful in treating cancer or RGDs. In addition, our efforts in the emerging field of metabolic immuno-oncology may not be as successful as our efforts to date in cancer metabolism and RGDs. Furthermore, our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons, including:

~~the research methodology used may not be successful in identifying appropriate biomarkers or potential product candidates; or~~

potential product candidates may, on further study, be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be medicines that will receive marketing approval and achieve market acceptance.

Research programs to identify new product candidates require substantial technical, financial and human resources. We may choose to focus our efforts and resources on a potential product candidate that ultimately proves to be unsuccessful.

If we are unable to identify suitable compounds for preclinical and clinical development, we will not be able to obtain product revenue in future periods, which likely would result in significant harm to our financial position and adversely impact our stock price.

We depend heavily on the success of ~~IDHIFA~~® ~~and also on~~ our ~~other most advanced~~clinical product candidates, ~~which are still in clinical development.~~including our lead product candidate mitapivat. Clinical trials of our product candidates may not be ~~successful.~~successful for a number of important reasons. If we or our collaborators are unable to commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed.

We have invested a significant portion of our efforts and financial resources in the identification of our most advanced product candidates, IDHIFA®, ivosidenib and AG-881 for the treatment of hematological and solid tumors and AG-348 for the treatment of pyruvate kinase, or PK, deficiency. We or our collaborator have initiated clinical trials for these product candidates. We have not commenced clinical trials for any of our other product candidates. Although IDHIFA® has received FDA approval in R/R AML, we and Celgene are still evaluating IDHIFA® in other clinical trials. Our ability to generate product revenue will depend heavily on the successful clinical development and eventual commercialization of our current and any future product candidates, byincluding our ~~collaborators and us, including the successful commercialization of IDHIFA®.~~

~~The success of our~~lead product ~~candidates will depend on many factors, including the following:~~

~~successful enrollment in, and completion of, clinical trials;~~

~~safety, tolerability and efficacy profiles that are satisfactory to the U.S. Food and Drug Administration, or FDA, or any comparable foreign regulatory authority for marketing approval;~~

~~timely receipt of marketing approvals from applicable regulatory authorities;~~

~~establishing both clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers;~~

~~the performance of our collaborators;~~

~~obtaining and maintaining patent and trade secret protection and non-patent exclusivity for our medicines;~~

~~launching commercial sales of the medicines, if and when approved, whether alone or in collaboration with others;~~

~~acceptance of the medicines, if and when approved, by patients, the medical community and third-party payors;~~

~~effectively competing with other therapies;~~

~~continuing acceptable safety profile for the medicines following approval;~~

~~enforcing and defending intellectual property rights and claims; and~~

~~achieving desirable medicinal properties for the intended indications.~~

Many of these factors are beyond our control, including clinical development, the regulatory submission process, potential threats to our intellectual property rights and the manufacturing, marketing and sales efforts of any collaborator, such as Celgene with respect to IDHIFA®. If we or our collaborators do not achieve one or more of these factors in a timely manner or at all, we or our collaborators could experience significant delays or an inability to successfully commercialize our most advanced product candidates, which would materially harm our business.

If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.candidate mitapivat.

We, and any collaborators, are not permitted to commercialize, market, promote or sell any product candidate in the United States without obtaining marketing approval from the FDA. Foreign regulatory authorities, such as the ~~European Medicines Agency, or the~~ EMA, impose similar ~~requirements. We have not previously submitted an NDA to the FDA or similar drug approval filings to comparable~~requirements in foreign ~~regulatory authorities for any of our product candidates.~~jurisdictions. Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. On August 1, 2017, the FDA approved IDHIFA® for the treatment of adult patients with R/R AML and an IDH2 mutation, on the basis of an NDA submitted by Celgene. We plan to explore a similar regulatory pathway for ivosidenib, and we expect to submit an NDA for ivosidenib in IDH1 mutant-positive R/R AML by the end of 2017. However, we can provide no assurance that we will successfully submit an NDA for ivosidenib, or such an NDA, once submitted, will receive regulatory approval on the timeframe we expect, or at all.

Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. The clinical development of our product candidates is susceptible to the risk of failure inherent at any stage of product ~~development, including failure~~development. Moreover, we, or any collaborators, may experience any of a number of possible unforeseen adverse events in connection with clinical trials, many of which are beyond our control, including:

•we, or our collaborators, may fail to demonstrate efficacy in a clinical trial or across a broad population of patients, the occurrence of adverse events that are severe or medically or commercially unacceptable, failure to comply with protocols or applicable regulatory requirements and determination by the FDA or any comparable foreign regulatory authority that a product candidate may not continue development or is not approvable. For instance, in December 2016, we withdrew our investigational new drug application for AG-519, our second PKR activator, following verbal notification of a clinical hold from the FDA relating to a previously disclosed case of drug-induced cholestatic hepatitis which occurred in our phase 1 clinical trial of AG-519 in healthy volunteers. Although these decisions and this hepatic adverse event finding do not affect our ongoing global phase 2 clinical trial, also known as DRIVE PK, for AG-348, our first PKR activator, we cannot provide any assurances that there will not be similar or other treatment-related severe adverse events in DRIVE PK or our other clinical trials, that our other trials will not be placed on clinical hold in the future, or that patient recruitment for DRIVE PK or our other trials will not be adversely impacted.patients;

It•it is possible that even if one or more of our product candidates has a beneficial effect, that effect will not be detected during clinical evaluation as a result of one or more of a variety of factors, including the size, duration, design, measurements, conduct or analysis of our clinical trials. Conversely, as a result of the same factors, our clinical trials may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any. ~~Similarly,~~For example, many compounds that initially showed promise in ~~our clinical trials we may fail~~earlier stage testing for treating specific disease indications have later been found to ~~detect toxicity~~cause side effects that prevented further development of ~~or intolerability caused by~~ the compound;

•our product candidates ~~or mistakenly believe that our product candidates are toxic or not well tolerated when that is not in fact the case.~~

Any inability to successfully complete preclinical and clinical development could result in additional costs to us, or any future collaborators, and impair our ability to generate revenue from product sales, regulatory and commercialization milestones and royalties. Moreover, if we or our collaborators are required to conduct additional clinical trialsmay have undesirable side effects or other ~~testing of our product candidates beyond those that we currently contemplate, if we~~unexpected characteristics or ~~our collaborators are unable~~otherwise expose participants to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we or our collaborators may:

~~be delayed in obtaining marketing approval for our product candidates;~~

~~not obtain marketing approval at all;~~

~~obtain approval for indications or patient populations that are not as broad as intended or desired;~~

~~obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed warnings;~~

~~be subject to additional post-marketing testing requirements; or~~

~~have the medicine removed from the market after obtaining marketing approval.~~

Our failure to successfully complete clinical trials of our product candidates and to demonstrate the efficacy and safety necessary to obtain regulatory approval to market any of our product candidates would significantly harm our business.

If we, or any collaborators, experience any of a number of possible unforeseen events in connection with clinical trials of our product candidates, potential clinical development, marketing approval or commercialization of our product candidates could be delayed or prevented.

We or our collaborators may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including:

~~regulators or institutional review boards may not authorize~~unacceptable health risks, causing us, our collaborators or our investigators, regulators or institutional review boards or the data safety monitoring board for such trial to ~~commence~~halt, delay, interrupt, suspend or terminate the trials or cause us, or any collaborators, to abandon development or limit development of that product candidate to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a ~~clinical trial~~risk-benefit perspective;

•if our product candidates have undesirable side effects, it could result in a more restrictive label, or ~~conduct a clinical trial at a prospective trial site;~~it could result in the delay or denial of marketing approval by the FDA or comparable foreign regulatory authorities;

~~we or our collaborators may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;~~

•clinical trials of our product candidates may produce negative or inconclusive results, and we, or our collaborators, may decide, or regulators may require us, to conduct additional clinical trials, including testing in more subjects, or abandon product development programs;

•regulators or institutional review boards may not authorize us, our collaborators or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

•we or our collaborators may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;

•the number of patients required for clinical trials of our product candidates may be larger than we anticipate; enrollment in these clinical trials, which may be particularly challenging for some of the orphan diseases we target in our ~~RGD~~GDD programs, may be slower than we anticipate; or participants may drop out of these clinical trials at a higher rate than we anticipate;

•third-party contractors used by us or our collaborators may fail to comply with regulatory requirements or meet their contractual obligations in a timely manner, or at all;

we or our collaborators might have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks;

regulators, institutional review boards, or the data safety monitoring board for such trials may require that we, our collaborators or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

~~the cost of clinical trials of our product candidates may be greater than anticipated;~~

~~the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; and~~

our product candidates may have undesirable side effects or other unexpected characteristics, causing us, our collaborators or our investigators, regulators or institutional review boards to suspend or terminate the trials.

Product development costs for us, or any collaborators, will increase if we, or they, experience delays in testing or pursuing marketing approvals and we, or they, may be required to obtain additional funds to complete clinical trials and prepare for possible commercialization of our product candidates. We do not know whether any preclinical tests or clinical trials will begin as planned, will need to be restructured, or will be completed on schedule or at all. Significant•significant preclinical study or clinical trial delays ~~also~~ could shorten any periods during which we, or any ~~future~~ collaborators, may have the exclusive right to commercialize our product candidates or allow our competitors, or the competitors of any collaborators, to bring products to market before we, or any collaborators, do;

•the cost of clinical trials of our product candidates may be greater than anticipated; and,

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•the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate.

In December 2016, we withdrew our IND for AG-519, our second PKR activator, following verbal notification of a clinical hold from the FDA relating to a previously disclosed case of drug-induced cholestatic hepatitis which occurred in our phase 1 clinical trial of AG-519 in healthy volunteers. Although these decisions and this hepatic adverse event finding do ~~and impair~~not affect our ~~ability,~~ongoing clinical trials for mitapivat, our first PKR activator, we cannot provide any assurances that there will not be similar or other treatment-related severe adverse events in our other clinical trials of mitapivat, that our other trials will not be placed on clinical hold in the ~~ability of any collaborators,~~future, or that patient recruitment for our other trials will not be adversely impacted.

Our failure to successfully

~~commercialize~~ begin and complete clinical trials of our product candidates and ~~may harm our business~~to demonstrate the efficacy and ~~results of operations. In addition, many of the factors that lead~~safety necessary to ~~clinical trial delays may ultimately lead~~obtain regulatory approval to ~~the denial of marketing approval of~~market any of our product candidates could result in additional costs to us, or any collaborators, would impair our ability to generate revenue from product sales, regulatory and commercialization milestones and royalties and would significantly harm our business.

We may not be successful in our efforts to identify or discover potential product candidates or to develop medicines of commercial value and we may not achieve our goals included in our strategic vision.

A key element of our strategy is to identify and test compounds that target cellular metabolism and adjacent areas of biology in a variety of different types of GDDs. A significant portion of the research that we are conducting involves new compounds and drug discovery methods, including our proprietary technology. The drug discovery that we are conducting using our proprietary technology may not be successful in identifying compounds in our therapeutic areas. In addition, our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for a number of reasons, including:

•the research methodology used may not be successful in identifying appropriate biomarkers or potential product candidates; or

•potential product candidates may, on further study, be shown to have harmful side effects or other characteristics that indicate that they are unlikely to be medicines that will receive marketing approval and achieve market acceptance.

If we are unable to identify suitable compounds for preclinical and clinical development, or any medicines we develop do not effectively correct metabolic pathways or alter the metabolic state of immune cells, we will not be able to achieve our strategic vision and our specific long-term goals and will not be able generate product revenue in future periods, which likely would result in significant harm to our financial position and adversely impact our stock price.

The COVID-19 pandemic has and may continue to affect our ability to initiate or continue our planned, ongoing and future clinical trials, disrupt regulatory activities, or have other adverse effects on our business and operations. In addition, this pandemic may continue to adversely impact economies worldwide, which could result in adverse effects on our business and operations.

In response to the COVID-19 pandemic, we were required to close our facilities except for a limited number of essential facilities and laboratory staff. We recently opened our Cambridge office to an additional, limited number of employees who prefer to work onsite, and our field-based employees engage with healthcare providers and other third parties remotely and, where local regulations allow, on a limited in-person basis.

We may face disruptions that may affect our ability to initiate and complete clinical trials including disruptions in procuring items that are essential for our research and development activities, including, for example, raw materials used in the manufacturing of our product candidates and laboratory supplies for planned and ongoing clinical trials, in each case, for which there may be shortages because of ongoing efforts to address the outbreak. We have enrolled, and seek to enroll, patients in our clinical trials at sites located both in the United States and internationally. Site initiation, participant recruitment and enrollment, participant dosing, distribution of clinical trial materials, study monitoring and data analysis has been and may continue to be paused or delayed due to changes in hospital or university policies, federal, state or local regulations, prioritization of hospital resources toward pandemic efforts, or other reasons related to the pandemic. We have faced and expect to continue to face difficulties recruiting or retaining patients in our ongoing clinical trials because of the pandemic. Patients enrolled in our clinical trials may be unable or unwilling to visit clinical trial sites which may impact the collection of important clinical trial data and has, and may continue to, necessitate remote data verification. In addition limitations in the ability to visit sites has affected, and may continue to adversely affect, our enrollment timelines for our clinical trials, and may adversely affect the timing of completion of our clinical trials or our ability to complete clinical trials in a fully compliant manner. Additionally, the potential suspension of clinical trial activity at clinical trial sites may have an adverse impact on our clinical trial plans and timelines.

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We have faced and may continue to face disruptions in our ability to prepare and submit applications to regulatory authorities for drug approvals and to build and maintain a commercial infrastructure for our products and product candidates. We may face manufacturing disruptions or disruptions related to the ability to obtain necessary institutional review board or other necessary site approvals, as well as other delays at clinical trial sites.

The response to the COVID-19 pandemic may redirect resources with respect to regulatory and intellectual property matters in a way that would adversely impact our ability to progress regulatory approvals and protect our intellectual property. In addition, we may face impediments to regulatory meetings and approvals due to measures intended to limit in-person interactions.

The COVID-19 pandemic may continue to significantly impact economies and financial markets worldwide, which could result in adverse effects on our business and operations, impact our ability to raise additional funds through public offerings and impact the volatility of our stock price and trading in our stock. We cannot be certain what the overall impact of the COVID-19 pandemic will be on our business and it has the potential to adversely affect our business, financial condition, results of operations, and prospects.

If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

We or our collaborators may not be able to initiate or continue clinical trials for our product candidates if we or they are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or analogous regulatory authorities outside the United States. ~~Enrollment~~Furthermore, enrollment has been and may continue to be particularly challenging in light of the ongoing COVID-19 pandemic and even more so for some of the orphan diseases we target in our ~~RGD~~GDD programs. In addition, some of our competitors may have ongoing clinical trials for product candidates that would treat the same indications as our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates.

Patient enrollment is also affected by other factors including:

•prevalence and severity of the disease under investigation;

•availability and efficacy of approved medications for the disease under investigation;

•eligibility criteria for the study in question;

•perceived risks and benefits of the product candidate under study;

•efforts to facilitate timely enrollment in clinical trials;

•patient referral practices of physicians;

•the ability to monitor patients adequately during and after treatment; and

•proximity and availability of clinical trial sites for prospective patients.

Utilizing our precision medicine approach, we generally focus our development activities on genetically or biomarker defined patients most likely to respond to our therapies. As a result, the potential patient populations for our clinical trials are narrowed, and we may experience difficulties in identifying and enrolling a sufficient number of patients in our clinical trials.

In ~~particular, the successful completion~~addition, some of our competitors may have ongoing or planned clinical ~~development program~~trials for ~~AG-348~~product candidates that would treat the same indications as our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates. For example, Rocket Pharma LTD, or Rocket Pharma, is developing a gene therapy targeting PK deficiency; Vertex Pharmaceuticals Incorporated, or Vertex, is developing a gene therapy targeting SCD; Imara Inc., or Imara, is developing molecules for the treatment of ~~PK deficiency~~beta thalassemia and SCD; and Forma Therapeutics Holdings, LLC, or Forma, is ~~dependent upon our ability to enroll~~developing a ~~sufficient number~~PKR activator for the treatment of ~~patients with PK deficiency. PK deficiency is a rare disease with a small patient population. Further, there are only a limited number of specialist physicians that regularly treat patients with~~hemolytic anemias, including PK deficiency and major clinical centers that support PK deficiency are concentrated in a few geographic regions. The small population of patients, the nature of the disease and limited trial sites may make it difficult for us to enroll enough patients to complete our clinical trials for AG-348 for PK deficiency in a timely and cost-effective manner.

In addition, other companies are conducting clinical trials, or may in the future conduct clinical trials, which may have similar eligibility criteria as our current or future clinical trials. For example, both Daiichi Sankyo Company, Ltd., with DS-1001b, and Bayer AG, or Bayer, with BAY1436032, are currently conducting clinical trials in patients with IDH1 mutant positive-cancers, and these trials and other trials may compete with our clinical trials of ivosidenib and/or AG-881 for eligible patients with malignancies harboring an IDH1 mutation.SCD. Competition for ~~these~~eligible patients may make it particularly difficult for us to enroll enough patients to complete our clinical trials for ~~ivosidenib or AG-881~~our product candidates in a timely and cost-effective manner.

~~Furthermore, we~~We rely on contract research ~~organizations,~~organization, or CROs, and clinical trial sites to ensure the proper and timely conduct of our clinical trials and while we have agreements governing their committed activities, we have limited influence over their actual performance. Our or our collaborators’ inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause the value of our company to decline and limit our ability to obtain additional financing.

If serious adverse side effects or unexpected characteristics are identified during the development of our product candidates, we may need to abandon or limit our development of some of our product candidates.

With the exception of IDHIFA®, all of our most advanced product candidates are still in clinical stage development and their risk of failure is high. It is impossible to predict when or if any of our product candidates will prove effective or safe in humans or will receive marketing approval. Adverse events or undesirable side effects caused by, or other unexpected properties of, our

product candidates could cause us, any future collaborators, an institutional review board or regulatory authorities to interrupt, delay or halt clinical trials of one or more of our product candidates and could result in a more restrictive label, or the delay or denial of marketing approval by the FDA or comparable foreign regulatory authorities. If adverse effects were to arise in patients being treated with any of our product candidates, it could require us to halt, delay or interrupt clinical trials of such product candidate or adversely affect our ability to obtain requisite approvals to advance the development and commercialization of such product candidate. If any of our product candidates is associated with adverse events or undesirable side effects or has properties that are unexpected, we, or any future collaborators, may need to abandon development or limit development of that product candidate to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promise in earlier stage testing for treating cancer, RGDs or other diseases have later been found to cause side effects that prevented further development of the compound. For instance, in December 2016, we withdrew our investigational new drug application for AG-519, our second PKR activator, following verbal notification of a clinical hold from the FDA relating to a previously disclosed case of drug-induced cholestatic hepatitis which occurred in our phase 1 clinical trial of AG-519 in healthy volunteers. Although these decisions and this hepatic adverse event finding do not affect our ongoing global phase 2 clinical trial (DRIVE PK) for AG-348, our first PKR activator, we cannot provide any assurances that there will not be similar or other treatment-related severe adverse events in DRIVE PK or our other clinical trials, that our other trials will not be placed on clinical hold in the future, or that patient recruitment for DRIVE PK or our other trials will not be adversely impacted.

Results of preclinical studies and early clinical trials may not be predictive of results of future clinical trials.

The outcome of preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of clinical trials do not necessarily predict success in future clinical trials. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in earlier development, and we could face similar setbacks. The design of a clinical trial can determine whether its results will support approval of a product and flaws in the design of a clinical trial may not become apparent until the clinical trial is well

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advanced. We have limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support marketing approval. In addition, preclinical and clinical data are often susceptible to varying interpretations and analyses. Many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for the product candidates. Even if we, or ~~future~~any collaborators, believe that the results of clinical trials for our product candidates warrant marketing approval, the FDA or comparable foreign regulatory authorities may disagree and may not grant marketing approval of our product candidates.

In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the dosing regimen and other clinical trial protocols and the rate of dropout among clinical trial participants. If we fail to receive positive results in clinical trials of our product candidates, the development timeline and regulatory approval and commercialization prospects for our most advanced product candidates, and, correspondingly, our business and financial prospects would be negatively impacted.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we focus on research programs and product candidates that we identify for specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial medicines or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable medicines. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

If we are unable to successfully develop companion diagnostics for our ~~therapeutic~~ product candidates, or experience significant delays in doing so, we may not realize the full commercial potential of our therapeutics.

Because we are focused on precision medicine, in which predictive biomarkers will be used to identify the right patients for our drug candidates, we believe that our success will depend, in part, on our ability to develop companion diagnostics, which are assays or tests to identify an appropriate patient population for these drug candidates. There has been limited success to date industry-wide in developing these types of companion diagnostics. To be successful, we need to address a number of scientific,

technical and logistical challenges. We have little experience in the development of diagnostics and may not be successful in developing appropriate diagnostics to pair with any of our therapeutic product candidates that receive marketing approval. Companion diagnostics are subject to regulation by the FDA and similar regulatory authorities outside the United States as medical devices and require separate regulatory approval prior to commercialization. Given our limited experience in developing diagnostics, we rely and expect to continue to rely in part or in whole on third parties for their design and manufacture. We also may in the future depend on ~~Celgene~~other third parties for the development of other companion diagnostics for ~~some of~~ our ~~cancer~~ therapeutic product ~~candidates, including the FDA approved companion diagnostic for IDHIFA®.~~candidates. If ~~any parties, including without limitation Celgene~~we or ~~us, or any third parties engaged by Celgene or us~~our collaborators are unable to successfully develop companion diagnostics for our therapeutic product candidates, or experience delays in doing so:

•the development of our therapeutic product candidates may be adversely affected if we are unable to appropriately select patients for enrollment in our clinical trials;

•our therapeutic product candidates may not receive marketing approval if safe and effective use of a therapeutic product candidate depends on an in vitro diagnostic; and

•we may not realize the full commercial potential of any therapeutics that receive marketing approval if, among other reasons, we are unable to appropriately select patients who are likely to benefit from therapy with our medicines.

As a result of any of these events, our business would be harmed, possibly materially.

~~We may be unable to obtain, or may be delayed in obtaining, marketing approval for our product candidates.~~

On August 1, 2017, the FDA approved IDHIFA® for the treatment of adult patients with R/R AML and an IDH2 mutation, on the basis of an NDA submitted by Celgene. We plan to explore a similar regulatory pathway for ivosidenib, and we expect to submit an NDA for ivosidenib in IDH1 mutant-positive R/R AML by the end of 2017. It is possible that the FDA may refuse to accept for substantive review any future NDAs that we submit for our product candidates, including the NDA that we plan to submit for ivosidenib, or may conclude after review of our data that our application is insufficient to obtain marketing approval of such product candidates. If the FDA does not accept or approve our NDAs for any of our product candidates, it may require that we conduct additional clinical trials, preclinical studies or manufacturing validation studies and submit that data before it will reconsider our applications. Depending on the extent of these or any other FDA-required trials or studies, approval of any NDA or application that we submit may be delayed by several years, or may require us to expend more resources than we have available. It is also possible that additional trials or studies, if performed and completed, may not be considered sufficient by the FDA to approve our NDAs. Any delay in obtaining, or an inability to obtain, marketing approvals would prevent us from commercializing our product candidates, generating revenue and achieving and sustaining profitability. If any of these outcomes occur, we may be forced to abandon our development efforts for our product candidates, which could significantly harm our business.

Even if any of our product candidates receives marketing approval, we or others may later discover that the product is less effective than previously believed or causes undesirable side effects that were not previously identified, which could compromise our ability, or that of any ~~future~~ collaborators, to market the product.

~~Clinical trials of our product candidates are conducted in carefully defined sets of patients who have agreed to enter into clinical trials. Consequently, it~~It is possible that our clinical trials, or those of any ~~future collaborator,~~collaborators, may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable side effects. If, following approval of a product candidate, we, or others, discover that the product is less effective than previously believed or causes undesirable side effects that were not previously identified, any of the following adverse events could occur:

•regulatory authorities may withdraw their approval of the product or seize the product;

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•we, or any ~~future~~ collaborators, may be required to recall the product, change the way the product is administered or conduct additional clinical trials;

•additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the particular product;

•we may be subject to fines, injunctions or the imposition of civil or criminal penalties;

•regulatory authorities may require the addition of labeling ~~statements, such as a “black box” warning or a contraindication, including, for example, the black box warning for differentiation syndrome on the label for IDHIFA®;~~statements;

•we, or any ~~future~~ collaborators, may be required to create a Medication Guide outlining the risks of the previously unidentified side effects for distribution to patients;

•we, or any ~~future~~ collaborators, could be sued and held liable for harm caused to patients;

•the product may become less competitive; and

•our reputation may suffer.

Even if any of our product candidates receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community necessary for commercial success.

~~IDHIFA®, or~~Even if any of our product candidates ~~that~~ receive marketing approval in the future, they may ~~nonetheless~~ fail to gain and/or maintain sufficient market acceptance by physicians, patients, healthcare payors and others in the medical community. ~~For example, current cancer treatments like chemotherapy and radiation therapy are well established in the medical community, and doctors may continue to rely on these treatments.~~ If our product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenue and we may not become profitable. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

•efficacy and potential advantages compared to alternative treatments;

•the approval, availability, market acceptance and reimbursement for the companion diagnostic;

•the ability to offer our medicines for sale at competitive prices;

•convenience and ease of administration compared to alternative treatments;

•the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

•ensuring uninterrupted product supply;

•the strength of marketing and distribution support;

•sufficient third-party coverage or reimbursement; and

•the prevalence and severity of any side effects.

If we are unable to establish and maintain sales and marketing capabilities or enter into agreements with third parties to sell and market our product candidates, we may not be successful in commercializing our product candidates if and when they are approved.

We have ~~little~~limited experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for ~~any~~ approved ~~medicine~~medicines for which we retain sales and marketing responsibilities, we must either develop a sales and marketing organization or outsource these functions to other third parties. Although we ~~have~~had established sales and marketing capabilities to support our co-promotion efforts for IDHIFA®, and our sales of TIBSOVO® prior to the sale of our oncology business to Servier, we ~~are still building a~~will need to further build our sales and marketing infrastructure to sell, or participate in sales activities with ~~our~~any collaborators for, our other product candidates if and when they are approved.

There are risks involved with both establishing our own sales and marketing capabilities and entering into arrangements with third parties to perform these services. For example, recruiting and training a sales force is expensive and time consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

Factors that may inhibit our efforts to commercialize our medicines on our own include:

•our inability to recruit and retain adequate numbers of effective sales and marketing personnel;

•the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future medicines;

•the lack of complementary medicines to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and

•unforeseen costs and expenses associated with creating an independent sales and marketing organization.

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If we enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenue or the profitability of product revenue to us are likely to be lower than if we were to market and sell any medicines that we develop ourselves. In addition, we may not be successful in entering into arrangements with third parties to sell and market our product candidates or may be unable to do so on terms that are favorable to us. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our medicines effectively. If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates.

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

~~The development and commercialization of new drug products is highly competitive.~~ We face competition with respect to our current products and product candidates, and we and our collaborators will face competition with respect to any product candidates that we or they may seek to develop or commercialize in the ~~future, from~~future. Potential competitors include major pharmaceutical companies, specialty pharmaceutical companies, ~~and~~ biotechnology companies, ~~worldwide.~~academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we are developing our product candidates, such as ~~AML~~PK deficiency, thalassemia and ~~high risk myelodysplasia.~~SCD. For example, ~~Jazz Pharmaceuticals plc, Novartis, Seattle Genetics,~~Acceleron Pharma Inc. and ~~Abbvie Inc. (in collaboration with Roche Holdings~~bluebird bio, Inc., or ~~Roche) and Bayer~~bluebird, are each ~~developing~~marketing therapies to treat ~~AML.~~beta thalassemia, Novartis International AG and Global Blood Therapeutics are each marketing therapies to treat SCD, Rocket Pharma is conducting a clinical trial of a gene therapy targeting PK deficiency, and a number of other biotechnology companies have product candidates in clinical development in similar indications as ours. Some competitive products and therapies are based on scientific approaches that are the same as or similar to our approach, and others are based on entirely different approaches, for example, in the area of RGDs. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.GDDs.

We are developing most of our initial product candidates for the treatment of cancer. There are a variety of available drug therapies marketed for cancer. In many cases, these drugs are administered in combination to enhance efficacy, and cancer drugs are frequently prescribed off-label by healthcare professionals. Some of the currently approved drug therapies are branded and subject to patent protection, and others are available on a generic basis. Many of these approved drugs are well established therapies and are widely accepted by physicians, patients and third-party payors. Insurers and other third-party payors may also encourage the use of generic products. We expect that IDHIFA®, and other of our product candidates, if approved, will be priced at a significant premium over competitive generic products. This may make it difficult for us to achieve our business strategy of using our product candidates in combination with existing therapies or replacing existing therapies with our product candidates.

~~We are also pursuing~~ product candidates to treat patients with ~~RGDs.~~GDDs. There are a variety of treatment options available, including a number of marketed enzyme replacement therapies, for treating patients with ~~RGDs.~~GDDs. In addition to currently marketed therapies, there are also a number of products that are either enzyme replacement therapies, or gene therapies or PK activators in various stages of clinical development to treat ~~RGDs.~~GDDs. These products in development may provide efficacy, safety, convenience and other benefits that are not provided by currently marketed ~~therapies.~~therapies or for which there are no approved treatments. As a result, they may provide significant competition for any of our product candidates for which we obtain marketing approval.

There are also a number of product candidates in preclinical or clinical development by third parties to treat ~~cancer and RGDs~~GDDs by targeting ~~cellular metabolism.~~similar mechanisms of action as our product candidates. These companies include large pharmaceutical companies, ~~including AstraZeneca plc, Bayer, Eli Lilly and Company, Roche and its subsidiary Genentech, Inc., GlaxoSmithKline plc, Merck & Co., or Merck,~~such as Novartis, ~~with its IDH1 mutant inhibitor IDH305, Pfizer, Inc., and Genzyme, a Sanofi company. There are also~~as well as biotechnology companies of various sizes, ~~that are developing therapies to target cellular metabolism, including Alexion Pharmaceuticals, Inc., BioMarin Pharmaceutical Inc., Calithera Biosciences, Inc., Cornerstone Pharmaceuticals, Inc.,~~such as bluebird, Forma, ~~Therapeutics Holdings LLC with its IDH1 mutant inhibitor FT-2102, Shire Biochem Inc., Raze Therapeutics, Inc.~~IMARA, Rocket Pharma, and Selvita S.A. In addition, there are several companies developing immunotherapies, including metabolic immunotherapies, targeting cancer, including AstraZeneca PLC, Merck, Bristol-Myers Squibb Company and Novartis.Vertex. Our competitors may develop products that are more effective, safer, more convenient or less costly than any that we are developing or that would render our product candidates obsolete or ~~non-~~

~~competitive.~~non-competitive. In addition, our competitors may discover biomarkers that more efficiently measure metabolic pathways than our methods, which may give them a competitive advantage in developing potential products. Our competitors may also obtain marketing approval from the FDA or other regulatory authorities for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market.

Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other clinical stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

~~Even if we or~~If the FDA does not grant our ~~collaborators are able to commercialize any product candidates, such~~ products ~~may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which would harm our business.~~

~~The commercial success~~appropriate periods of our product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of our product candidates will be paid by third-party payors, including government health administration authorities and private health coverage insurers. If coverage and reimbursement is not available, or reimbursement is available only to limited levels, we, or any future collaborators, may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us, or any future collaborators, to establish or maintain pricing sufficient to realize a sufficient return on our or their investments. In the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors and coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the usedata exclusivity before approving generic versions of our products, ~~to each payor separately, with no assurance that coverage and adequate reimbursement will~~the sales of our products could be ~~applied consistently or obtained~~adversely affected.

With FDA approval of an NDA, the product covered by the application is specified as a “reference-listed drug” in the ~~first instance.~~

~~There is significant uncertainty related to third-party payor coverage and reimbursement~~FDA’s publication, “Approved Drug Products with Therapeutic Equivalence Evaluations,” or the Orange Book. Manufacturers may seek approval of ~~newly approved drugs. Marketing approvals, pricing and reimbursement for~~generic versions of reference-listed drugs through submission of abbreviated new drug ~~products vary widely from country to country. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing~~applications, or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we, or any future collaborators, might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay commercial launch of the product, possibly for lengthy time periods, which may negatively impact the revenue we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability or the ability of any future collaborators to recoup our or their investment in one or more product candidates, even if our product candidates obtain marketing approval.

Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Therefore, our ability, and the ability of any future collaborators, to commercialize any of our product candidates will depend in part on the extent to which coverage and reimbursement for these products and related treatments will be available from third-party payors. Third-party payors decide which medications they will cover and establish reimbursement levels. The healthcare industry is acutely focused on cost containment, both in the United States and elsewhere. Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, which could affect our ability or that of any future collaborators to sell our product candidates profitably. These payors may not view our products, if any, as cost-effective, and coverage and reimbursement may not be available to our customers, or those of any future collaborators, or may not be sufficient to allow our products, if any, to be marketed on a competitive basis. Cost-control initiatives could cause us, or any future collaborators, to decrease the price we, or they, might establish for products, which could result in lower than anticipated product revenue. If the prices for our products, if any, decrease or if governmental and other third-party payors do not provide coverage or adequate reimbursement, our prospects for revenue and profitability will suffer.

There may also be delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the indications for which the drug is approved by the FDA or comparable foreign regulatory authorities. Moreover, eligibility for reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Reimbursement rates may vary, by way of example,

according to the use of the product and the clinical setting in which it is used. Reimbursement rates may also be based on reimbursement levels already set for lower cost drugs or may be incorporated into existing payments for other services.

In addition, increasingly, third-party payors are requiring higher levels of evidence of the benefits and clinical outcomes of new technologies and are challenging the prices charged. We cannot be sure that coverage will be available for any product candidate that we, or any future collaborator, commercialize and, if available, that the reimbursement rates will be adequate. Further, the net reimbursement for drug products may be subject to additional reductions if there are changes to laws that presently restrict imports of drugs from countries where they may be sold at lower prices thanANDAs, in the United States. ~~An inability~~In support of an ANDA, a generic manufacturer need not conduct clinical trials. Rather, the applicant generally must show that its product has the same active ingredient(s), dosage form, strength, route of administration and conditions of use or labeling as the reference-listed drug and that the generic version is bioequivalent to ~~promptly obtain coverage~~the reference-listed drug, meaning it is absorbed in the body at the same rate and ~~adequate payment rates from both government-funded~~to the same extent. Generic products may be significantly less costly to bring to market than the reference-listed drug and ~~private payors~~companies that produce generic products are generally able to offer

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them at lower prices. Thus, following the introduction of a generic drug, a significant percentage of the sales of any reference-listed drug may be typically lost to the generic product.

The FDA may not approve an ANDA for a generic product until any applicable period of ~~our~~non-patent exclusivity for the reference-listed drug has expired. The Federal Food, Drug, and Cosmetic Act, or FDCA, provides a period of five years of non-patent exclusivity for a new drug containing a new chemical entity. Specifically, in cases where such exclusivity has been granted, an ANDA may not be filed with the FDA until the expiration of five years unless the submission is accompanied by a Paragraph IV certification that a patent covering the reference-listed drug is either invalid or will not be infringed by the generic product, ~~candidates~~in which case the applicant may submit its application four years following approval of the reference-listed drug. The FDCA also provides a period of three years of new clinical investigation data exclusivity in connection with the approval of a supplemental indication for the product for which ~~we, or any~~a clinical trial is essential for approval.

In the event that a generic manufacturer is somehow able to obtain FDA approval without adherence to these periods of data exclusivity, the competition that our approved products may face from generic versions could negatively impact our future ~~collaborator, obtain marketing approval could significantly harm our operating results,~~revenue, profitability and cash flows and substantially limit our ability to ~~raise capital needed to commercialize products and~~obtain a return on our ~~overall financial condition.~~investments in those product candidates.

Product liability lawsuits against us or ~~our~~any collaborators could cause us or our collaborators to incur substantial liabilities and could limit commercialization of any medicines that we or they may develop.

We and ~~our~~any collaborators face ~~an inherent~~a risk of product liability exposure related to ~~the testing of~~ our product candidates in human clinical trials and will face an even greater risk as we or they commercially sell any ~~medicines that we or they may develop.~~medicines. If we or ~~our~~any collaborators cannot successfully defend ourselves or themselves against claims that our product candidates or medicines caused injuries, we or they could incur substantial costs and liabilities. Regardless of merit or eventual outcome, liability claims may also result ~~in:~~

in, among other thing, decreased demand for any product candidates or medicines that we may ~~develop;~~

~~injury to our reputation~~develop, reputational harm and ~~significant negative media attention;~~

~~withdrawal of clinical trial participants;~~

~~significant costs to defend the related litigation;~~

~~substantial monetary awards to trial participants or patients;~~

~~loss of revenue;~~

~~reduced resources of our management to pursue our business strategy; and~~

~~the inability to commercialize any medicines that we may develop.~~lost revenue.

Although we maintain product liability insurance coverage, it may not be adequate to cover all liabilities that we may incur. ~~We anticipate that~~

Our internal computer systems, or those of any third parties with which we ~~will need to increase our insurance coverage as we advance~~contract, may fail or ~~expand our clinical trials and if we successfully commercialize any medicine. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at~~suffer security breaches, which could result in a ~~reasonable cost or in an amount adequate to satisfy any liability that may arise. In addition, if one~~material disruption of our ~~collaboration partners were to become subject to~~ product liability claims or were unable to successfully defend themselves against such claims, any such collaboration partner could be more likely to terminate such relationship with us and therefore substantially limit the commercial potential of our products.

We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cyber security incidents, could harm our ability to operate our business effectively.development programs.

Despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage from ~~cyber-attacks,~~ computer viruses, worms and other destructive or disruptive software, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Such systems are also vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees, third-party vendors and/or business partners, or from cyber incidents by malicious third parties. Cyber incidents are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyber incidents could include the deployment of harmful malware, ransomware, denial-of-service attacks, unauthorized access to or deletion of files, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information. Cyber incidents also could include phishing attempts or e-mail fraud to cause payments or information to be transmitted to an unintended recipient. We could be subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of information maintained in the information systems and networks of our company, including personal information of our employees.

System failures, accidents, cyber incidents or security breaches could cause interruptions in our operations, and could result in a material disruption of our clinical and commercialization activities and business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions, in addition to possibly requiring substantial expenditures of resources to remedy. ~~The~~For example, the loss of clinical trial data from completed or future trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and our product research, development and commercialization efforts could be delayed. In addition, we may not have adequate insurance coverage to provide compensation for any losses associated with such events.

If a material breach of our security or that of our vendors occurs, the market perception of the effectiveness of our security measures could be harmed, we could lose business and our reputation and credibility could be damaged. We could be required to expend significant amounts of money and other resources to repair or replace information systems or networks. Although we develop and maintain systems and controls designed to prevent these events from occurring, and we have a process to identify and mitigate threats, the development and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. Moreover, despite our efforts, the possibility of these events occurring cannot be eliminated entirely.

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Compliance with global privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and the failure to comply with such requirements could subject us to significant fines and penalties, which may have a material adverse effect on our business, financial condition or results of operations.

The regulatory framework for the collection, use, safeguarding, sharing, transfer and other processing of information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Globally, virtually every jurisdiction in which we operate has established its own data security and privacy frameworks with which we must comply. For example, the collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European Union, including personal health data, is subject to EU General Data Protection Regulation, or the GDPR, which applies to all member states of the European Economic Area, or EEA. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data. The GDPR imposes significant obligations on us with respect to clinical trials conducted in the EEA. In addition, the GDPR also imposes strict rules on the transfer of personal data to countries outside the EU, including the United States and, as a result, increases the scrutiny that clinical trial sites located in the EEA should apply to transfers of personal data from such sites to countries that are considered to lack an adequate level of data protection, such as the United States. The GDPR also permits data protection authorities to require destruction of improperly gathered or used personal information and/or impose substantial fines for violations of GDPR, and it also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages resulting from violations of GDPR. In addition, the GDPR provides that EU member states may make their own further laws and regulations limiting the processing of personal data, including genetic, biometric or health data.

Given the breadth and depth of changes in data protection obligations, preparing for and complying with the GDPR’s requirements is rigorous and time intensive and requires significant resources and a review of our technologies, systems and practices, as well as those of any third-party collaborators, service providers, contractors or consultants that process or transfer personal data collected in the EU. The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as healthcare data or other personal information from our clinical trials, could require us to change our business practices and put in place additional compliance mechanisms, may interrupt or delay our development, regulatory and commercialization activities and increase our cost of doing business, and could lead to government enforcement actions, private litigation and significant fines and penalties against us and could have a material adverse effect on our business, financial condition or results of operations. Similarly, failure to comply with federal and state laws regarding privacy and security of personal information could expose us to fines and penalties under such laws. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our reputation and our business.

Similar privacy and data security requirements are either in place or underway in the United States. There are a broad variety of data protection laws that are applicable to our activities, and a wide range of enforcement agencies at both the state and federal levels that can review companies for privacy and data security concerns based on general consumer protection laws. The Federal Trade Commission and state Attorneys General all are aggressive in reviewing privacy and data security protections for consumers. New laws also are being considered at both the state and federal levels. For example, the California Consumer Privacy Act, which went into effect on January 1, 2020, is creating similar risks and obligations as those created by GDPR, though the California Consumer Privacy Act does exempt certain information collected as part of a clinical trial subject to the Federal Policy for the Protection of Human Subjects (the Common Rule). Many other states are considering similar legislation. A broad range of legislative measures also have been introduced at the federal level. Accordingly, failure to comply with current and any future federal and state laws regarding privacy and security of personal information could expose us to fines and penalties. We also face a threat of consumer class actions related to these laws and the overall protection of personal data. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our reputation and our business.

Risks Related to Our Dependence on Third Parties

We ~~depend on our collaborations and~~ may depend on collaborations with ~~additional~~ third parties for the development and commercialization of our product candidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates.

We are party to several collaboration agreements, including the 2010 Agreement, the AG-881 Agreements and the 2016 Agreement. These collaborations involve complex allocations of rights, provide for milestone payments to us based on the achievement of specified clinical development, regulatory and commercial milestones, provide us with royalty-based revenue if certain product candidates are successfully commercialized and provide for cost reimbursements of certain development activities. We cannot predict the success of these collaborations.

We may seek ~~other third-party collaborators~~collaborations for the development and commercialization of our product ~~candidates. Our likely collaborators for any collaboration arrangements include~~candidates with large and mid-size pharmaceutical companies ~~regional and national pharmaceutical companies~~ and biotechnology companies. We face significant competition in seeking appropriate collaborators. Collaborations are complex and time-consuming to negotiate and document. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. Collaborators may have rights that restrict us from entering into future agreements on certain terms with potential collaborators.

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If we enter into any such arrangements with ~~any third parties,~~collaborators, we will likely have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates. ~~Our ability to generate revenue from these arrangements will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.~~

~~Collaborations involving our product candidates, including our collaborations, pose the following risks to us:~~

Collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations. Under the 2010 Agreement, the AG-881 Agreements and programs under a co-development and co-commercialization agreement pursuant to the 2016 Agreement, development and commercialization plans and strategies for licensed programs, such as IDHIFA®, will be conducted in accordance with a plan and budget approved by a joint committee comprised of equal numbers of representatives from each of us and Celgene, as to which Celgene may have final decision-making authority. For example, Celgene has elected not to participate in our planned perioperative study of ivosidenib and AG-881 in patients with low grade glioma and, pursuant to the AG-881 Agreements, we will fund the trial ourselves.

. Collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an acquisition that diverts resources or creates competing priorities. For example, under the 2016 Agreement, it is possible for Celgene to elect not to progress into preclinical development a product candidate that we have nominated and the joint research committee confirmed, without triggering a termination of the collaboration arrangement.

Collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing, which may result in a need for additional capital to pursue further development or commercialization of the applicable product candidate. For example, under the 2010 Agreement and the 2016 Agreement, it is possible for Celgene to terminate the agreement, upon 90 days prior written notice, with respect to any product candidate at any point in the research, development and clinical trial process, without triggering a termination of the remainder of the collaboration arrangement.

Collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our medicines or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours.

~~Collaborators with marketing and distribution rights to one or more medicines may not commit sufficient resources to the marketing and distribution of such medicine or medicines.~~

Collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation. For example, under specified circumstances Celgene has the first right to maintain or defend our intellectual property rights with respect to IDHIFA® under the 2010 Agreement and, although we may have the right to assume the maintenance and defense of

~~our intellectual property rights if Celgene does not, our ability to do so may be compromised by Celgene’s actions.~~

Disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our medicines or product candidates or that result in costly litigation or arbitration that diverts management attention and resources.

~~We may lose certain valuable rights under circumstances identified in our collaborations, including, in the case of our agreements with Celgene, if we undergo a change of control.~~

~~Collaborations may be terminated and, if terminated, may result in a need for additional capital~~Our ability to pursue further development or commercialization of the applicable product candidates. For example, Celgene can terminate its agreements with us, in their entirety or with respect to IDHIFA® under the 2010 Agreement or any program under the 2016 Agreement, upon 90 days’ notice and can terminate each entire agreement with us in connection with a material breach of the agreement by us that remains uncured for a period ranginggenerate revenue from ~~60 to 90 days.~~

~~Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all.~~

~~If a present or future collaborators of ours were to be involved in a business combination, the continued pursuit and emphasis~~these arrangements will depend on our ~~product development or commercialization program under such collaboration could be delayed, diminished or terminated.~~

~~We may seek~~collaborators’ abilities to ~~establish additional collaborations, and, if we are not able~~successfully perform the functions assigned to ~~establish~~ them ~~on commercially reasonable terms, we may have to alter our development and commercialization plans.~~

Our drug development programs and the potential commercialization of our product candidates will require substantial additional cash to fund expenses. For some of our product candidates, we may decide to collaborate with additional pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates.

~~We face significant competition~~ in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge, and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such collaboration could be more attractive than the one with us for our product candidate.

We may also be restricted under existing collaboration agreements from entering into future agreements on certain terms with potential collaborators. For example, during the discovery phase of the 2016 Agreement, we may not directly or indirectly develop, manufacture or commercialize, except pursuant to the agreement, any medicine or product candidate with specified activity against certain metabolic targets except in connection with certain third-party collaborations or with respect to certain targets the rights to which have reverted back to us pursuant to the terms of the 2016 Agreement. Following the discovery phase until termination or expiration of the 2010 Agreement, either in its entirety or with respect to the relevant program, we may not directly or indirectly develop, manufacture or commercialize, outside of the collaboration, any medicine or product candidate with specified activity against any collaboration target that is within a licensed program or against any former collaboration target against which Celgene is conducting an independent program under the agreement. Following the discovery phase of the 2016 Agreement until termination or expiration of the applicable co-development and co-commercialization agreement or license agreement under the 2016 Agreement, we may not directly or indirectly develop, manufacture or commercialize, outside of the collaboration, any medicine or product candidate with specified activity against the collaboration target that is the subject of such co-development and co-commercialization agreement or license agreement, except in connection with certain third-party collaborations or with respect to certain targets the rights to which have reverted back to us pursuant to the terms of the 2016 Agreement.

Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.

We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate product revenue.these arrangements.

We rely and expect to continue to rely on third parties to conduct our clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.

We do not independently conduct clinical trials of any of our product candidates. We rely and expect to continue to rely on third parties, such as CROs, clinical data management organizations, medical institutions and clinical investigators, to conduct our clinical trials. In addition, we currently rely and expect to continue to rely on third parties to conduct some aspects of our research and preclinical testing. Any of these third parties may terminate their engagements with us, some in the event of an uncured material breach and some at any time. If any of our relationships with these third parties terminate, we may not be able to enter into similar arrangements with alternative third-parties or to do so on commercially reasonable terms. Switching or adding additional third parties involves additional cost and requires management time and focus. ~~In addition, there is a natural transition period when a new third party commences work.~~ As a result, delays may occur in our product development activities. Although we seek to carefully manage our relationships with our CROs, we could encounter ~~similar~~such challenges or delays ~~in the future and these challenges or delays~~that could have a material adverse impact on our business, financial condition and prospects.

Our reliance on third parties for research and development activities ~~will reduce~~reduces our control over these activities but ~~will~~does not relieve us of our responsibilities. For example, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, and legal, regulatory and scientific standards, and our reliance on third parties does not relieve us of our responsibility to comply with any such standards. We and these third parties are required to comply with current good clinical practices, or cGCP, which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities for all of our products in clinical development. Regulatory authorities enforce these cGCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of these third parties fail to comply with applicable cGCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA, the EMA, or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you ~~that upon inspection by~~ a given ~~regulatory authority, such~~ regulatory authority will determine that any of our clinical trials comply with cGCP regulations. In addition, our clinical trials must be conducted with product produced under current good manufacturing practices, or cGMP, regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a U.S. government-sponsored database, clinicaltrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.

Furthermore, third parties on whom we rely may also have relationships with other entities, some of which may be our competitors. In addition, these third parties are not our employees, and except for remedies available to us under our agreements with such third parties, we cannot control whether or not they devote sufficient time and resources to our on-going clinical, nonclinical and preclinical programs.

If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised, ~~due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons,~~ our clinical trials may be extended, delayed or terminated and we may not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our medicines. ~~As a result, our results of operations and the commercial prospects for our medicines would be harmed, our costs could increase and our ability to generate revenue could be delayed.~~

We also rely and expect to continue to rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of our medicines, producing additional losses and depriving us of potential product revenue.

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We contract with third parties for the manufacture of our product candidates for preclinical and clinical testing and we expect to ~~continue to do so for late-stage clinical trials and for commercialization. This reliance on~~contract with third parties ~~increases~~for the ~~risk that we will not have sufficient quantities~~manufacture of our product candidates ~~or medicines or that such supply will not be available to us at an acceptable cost, which could delay, prevent or impair our development or commercialization efforts.~~for commercialization.

We do not have any manufacturing facilities. We currently rely, and expect to continue to rely, on third-party manufacturers for the materials and manufacture of our product candidates for preclinical and clinical testing and expect to rely on third-party manufacturers for commercial supply of any ~~of these~~ product ~~candidates~~candidate for which we or our collaborators obtain marketing approval. ~~To date,~~

Although we ~~have obtained materials for our product candidates for our ongoing preclinical and clinical testing from third-party manufacturers. We do not have any~~had long-term supply agreements in place for commercial supply of TIBSOVO® with ~~the~~ third-party manufacturers ~~and~~prior to the sale of our oncology business to Servier, we ~~purchase our required drug supply on a purchase order basis.~~

We may be unable to establish ~~any~~similar long-term supply agreements with respect to our GDD product candidates with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:

•reliance on the third party for regulatory compliance, quality assurance, environmental and ~~quality assurance;~~safety and pharmacovigilance reporting;

•the possible breach of the manufacturing agreement by the third party; and

•the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for ~~us; and~~

~~reliance on the third party for regulatory compliance, quality assurance, environmental and safety and pharmacovigilance reporting.~~us.

Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements on a global basis. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or medicines, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our medicines and harm our business and results of operations.

~~Any medicines that~~We have been monitoring our supply chain network for any disruptions due to the COVID-19 pandemic, and our manufacturers have remained largely unaffected, with any campaign delays experienced to date being limited to a few days in duration. Although global shipping continues to be disrupted due to the pandemic, we have not yet experienced a supply impact. If either we or any third parties on which we rely are adversely impacted by restrictions resulting from the COVID-19 pandemic, our supply chain may ~~develop may compete with other~~be disrupted, limiting our ability to manufacture our product candidates for our clinical trials and ~~products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations~~research and ~~that might be capable of manufacturing for us.~~development operations.

Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. We do not currently have arrangements in place for redundant supply for bulk drug ~~substances.~~substance or drug product. If any one of our current contract manufacturers cannot perform as agreed, we may be required to replace that manufacturer. Although we believe that there are several potential alternative manufacturers who could manufacture our product candidates, we may incur added costs and delays in identifying and qualifying any such replacement.

Our current and anticipated future dependence upon others for the manufacture of our product candidates or medicines may adversely affect our future profit margins and our ability to commercialize any medicines that receive marketing approval on a timely and competitive basis.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain patent or trade secret protection for our medicines and technology, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize medicines and technology similar or identical to ours, and our ability to successfully commercialize our medicines and technology may be adversely affected.

Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our proprietary medicines and technology. We seek to protect our proprietary position by filing patent applications in the United States and abroad related to our novel technologies and medicines that are important to our business. We do not yet have issued patents for all our most advanced product candidates in all markets in which we intend to ~~commercialize.~~commercialize but we continue to actively pursue patent protection for our assets around the world.

The patent prosecution process is ~~expensive~~costly and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify ~~patentable aspects~~and/or file patent applications on every aspect of our research and development output ~~before it~~that is ~~too late to obtain~~or may be eligible for patent protection. Although we enter into ~~non-~~

~~disclosure~~non-disclosure and confidentiality agreements with parties who may have access to patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, contract research organizations, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek

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patent protection. There is also the possibility that loss or theft of data or records may jeopardize the ability to seek patent protection or impede the progress or drafting of patent applications.

We have licensed patent rights, and in the future may license additional patent rights, from third parties. Such licenses may be accompanied by milestone and/or royalty payment obligations. These licensed patent rights may be valuable to our business, and we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology or medicines underlying such licenses. We cannot be certain that these patents and applications will be prosecuted and enforced in a manner consistent with the best interests of our business. If any such licensors fail to maintain such patents, or lose rights to those patents, the rights we have licensed may be reduced or eliminated and our right to develop and commercialize any of our products that are the subject of such licensed rights could be adversely affected. In addition to the foregoing, the risks associated with patent rights that we license from third parties also apply to patent rights we own.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued that protect our technology or medicines or that effectively prevent others from commercializing competitive technologies and medicines. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. The laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore we cannot be certain that we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions.

Assuming the other requirements for patentability are met, prior to March 2013, in the United States, the first to make the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. Beginning in March 2013, the United States transitioned to a first inventor to file system in which, assuming the other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent. We may be subject to a third-party ~~preissuance~~pre-issuance submission of prior art to the U.S. Patent and Trademark Office, or ~~PTO,~~USPTO, or become involved in opposition, derivation, revocation, reexamination, post-grant and inter partes review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize medicines without infringing third-party patent rights.

Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us or otherwise provide us with any competitive advantage. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of ~~exclusivity~~the patent or in one or more patent claims being narrowed ~~invalidated~~ or ~~held unenforceable,~~invalidated, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and medicines. Given the significant amount of time required for the discovery, development, preclinical and clinical testing and regulatory review and approval of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. In such circumstances we would be relying primarily on regulatory or marketing exclusivity to exclude others from commercializing a generic version of our products.

We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive, time consuming and unsuccessful.

Competitors may infringe our patents and other intellectual property rights. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. Furthermore,

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because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

Third parties may initiate legal proceedings alleging that we or our collaborators are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights. Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture, market and sell our product candidates and use our proprietary technologies without infringing the proprietary rights and intellectual property of third parties. ~~The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights.~~ We have in the past and may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our medicines and technology, including opposition, derivation, revocation, reexamination, post-grant and inter partes review or interference proceedings before the ~~PTO.~~USPTO or other patent offices around the world. For example, in 2011, The Leonard and Madlyn Abramson Family Cancer Research Institute at the Abramson Cancer Center of the University of Pennsylvania initiated a lawsuit against us, one of our founders, Craig B. Thompson, M.D., and Celgene, alleging misappropriation of intellectual property and, in 2012, the Trustees of the University of Pennsylvania initiated a similar lawsuit against us and Dr. Thompson. Each of these lawsuits was settled in 2012. We are not aware of any other legal proceedings having been filed against us to date. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future. If we or one of our collaborators are found to infringe a third party’s intellectual property rights, we or they could be required to obtain a license from such third party to continue developing and marketing our medicines and technology. However, we or our collaborators may not be able to obtain any required license on commercially reasonable terms or at all. Even if we or our collaborators were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us. We or our collaborators could be forced, including by court order, to cease developing and commercializing the infringing technology or medicine. In addition, we or our collaborators could be found liable for monetary damages. A finding of infringement could prevent us or our collaborators from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we or our collaborators have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.

We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

Many of our employees, consultants or advisors are currently or were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to our ~~management.~~organization.

Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

If we are unable to protect the confidentiality of our ~~trade secrets,~~confidential information related to our proprietary platforms and technology, our business and competitive position ~~would~~could be harmed.

In addition to seeking patents for some of our technology and medicines, we also rely on ~~trade secrets, including~~maintaining the confidentiality of unpatented know-how, technology and other proprietary information, to maintain our competitive position. ~~With respect~~For example, we consider the confidential information and know-how related to our ~~proprietary~~ cellular metabolism technology platform ~~we consider trade secrets and know-how~~ to be our primary intellectual ~~property. Trade secrets~~property assets in this space. Unpatented proprietary technical information and know-how can be difficult to protect. ~~In particular, we anticipate that with respect to this technology~~

~~platform, these trade secrets and know-how will over time be disseminated within the industry through independent development, the publication~~

Table of ~~journal articles describing the methodology, and the movement of personnel skilled in the art from academic to industry scientific positions.~~Contents

We seek to protect ~~these trade secrets,~~this proprietary technical information and know-how, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract research organizations, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, ~~including our trade secrets,~~ and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated ~~a trade secret~~proprietary information is difficult, expensive and time-consuming, and the outcome is unpredictable. ~~In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets.~~ If any of our ~~trade secrets~~proprietary technical information and know-how were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us. ~~If any~~Moreover, we anticipate that with respect to this platform, at least some of ~~our trade secrets were~~this technical information and know-how will, over time, be disseminated within the industry through independent development, the publication of journal articles describing the methodology, and the movement of personnel skilled in the art from academic to ~~be disclosed to or independently developed by a competitor or other third party, our competitive position would be harmed.~~industry scientific positions.

Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters

Even if we complete ~~the~~ necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of some or all of our product candidates. If we or our collaborators are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we or they will not be able to commercialize, or will be delayed in commercializing, our product candidates, and our ability to generate revenue will be materially impaired.

Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, ~~recordkeeping,~~record keeping, labeling, storage, approval, advertising, promotion, sale and distribution, export and import, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by the EMA and comparable regulatory authorities in other countries. ~~Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate.~~ With the exception of the FDA approvals of IDHIFA® and TIBSOVO®, the rights of which we have sold to Servier, we and our collaborators have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction. We have only limited experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party contract research organizations to assist us in this process.

Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use.

The FDA, EMA and other foreign regulatory authorities have substantial discretion in the approval process. Accordingly, it is possible that the FDA or EMA may refuse to accept for substantive review any NDA, sNDA or MAA that we submit for our product candidates, or may conclude after review of our data that our marketing application is insufficient to obtain marketing approval of our product candidates. If the FDA or EMA does not accept or approve our applications for any of our product candidates, the applicable regulator may require that we conduct additional clinical trials, preclinical studies or manufacturing validation studies and submit that data before reconsidering our applications. Depending on the extent of these or any other FDA- or EMA-required trials or studies, approval of any marketing applications that we submit may be delayed by several years, or may require us to expend more resources than we planned. It is also possible that additional trials or studies, if performed and completed, may not be considered sufficient by the FDA or EMA to approve any marketing applications. We may not be successful in obtaining FDA or EMA approval of our product candidates on a timely basis, or ever. We have limited experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party contract research organizations to assist us in this process, and failure to obtain marketing approval for our products or product candidates will prevent us from commercializing the product or product candidate in the applicable jurisdictions.

Further, the process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate. Any marketing approval we or our collaborators ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved medicine not commercially viable.

~~Accordingly, if~~In addition, the COVID-19 pandemic may continue to disrupt the U.S. and international healthcare and regulatory systems. These disruptions could materially delay the review of, and/or decision making with respect to, marketing approvals for our

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product candidates. Any delay in regulatory review or decision making resulting from such disruptions could materially affect the development of our product candidates.

Disruptions at the FDA and other agencies may prolong the time necessary for regulatory submissions to be reviewed and/or new drugs to be approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities. If a prolonged government shutdown were to occur, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. The Trump Administration also took several executive actions that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities.

If we or our collaborators experience delays in obtaining approval or if we or they fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenue will be materially impaired.

Failure to obtain marketing approval in foreign jurisdictions would prevent our medicines from being marketed in such jurisdictions and any of our medicines that are approved for marketing in such jurisdiction will be subject to risk associated with foreign operations.

In order to market and sell our medicines in the EU and many other foreign jurisdictions, we or our collaborators must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, a product must be approved for reimbursement before the product can be approved for sale in that country. We or our collaborators may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Moreover, approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our medicines in any market.

Additionally, we could face heightened risks with respect to seeking marketing approval in the United Kingdom as a result of the recent withdrawal of the United Kingdom from the EU on December 31, 2020, commonly referred to as Brexit. On December 24, 2020, the United Kingdom and EU entered into a Trade and Cooperation Agreement, which sets out certain procedures for approval and recognition of medical products in each jurisdiction. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, would prevent us from commercializing any product candidates in the United Kingdom and/or the EU and restrict our ability to generate revenue and achieve and sustain profitability. If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the United Kingdom and/or EU for any product candidates, which could significantly and materially harm our business.

We expect that we will be subject to additional risks in commercializing any of our product candidates that receive marketing approval outside the United States, including tariffs, trade barriers and regulatory requirements; economic weakness, including inflation, or political instability in particular foreign economies and markets; compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; and workforce uncertainty in countries where labor unrest is more common than in the United States.

A fast track designation by the FDA may not actually lead to a faster development or regulatory review or approval process, nor does it assure approval of the product candidate ~~product~~ by FDA.

~~In the United States, IDHIFA® and ivosidenib received fast track designation for treatment of patients with AML that harbor an IDH2 and IDH1 mutation, respectively.~~ If a drug is intended for the treatment of a serious or life-threatening disease or condition and the drug demonstrates the potential to address unmet medical needs for this disease or condition, the drug sponsor may apply for FDA fast track designation. The FDA has broad discretion whether or not to grant fast track designation, so even if we believe a particular product candidate is eligible for such designation, the FDA may decide not to grant it. Even if our product candidates receive fast track designation, we may not experience a faster development process, review or approval, if at all, compared to conventional FDA procedures. The FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development program.

~~Failure to obtain marketing approval in foreign jurisdictions would prevent our medicines from being marketed in such jurisdictions.~~

In order to market and sell our medicines in the European Union, or EU, and many other jurisdictions, we or our collaborators must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, a product must be approved for reimbursement before the product can be approved for sale in that country. We, or ~~our~~any collaborators, may not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. We may not be able to ~~file~~obtain orphan drug designation or orphan drug exclusivity for ~~marketing approvals~~our drug candidates and, even if we do, that exclusivity may not ~~receive necessary approvals~~prevent the FDA or the EMA from approving competing drugs.

Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs and biologics for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an

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orphan drug if it is a drug or biologic intended to ~~commercialize our medicines in any market.~~

~~Additionally, on June 23, 2016, the electorate~~treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United ~~Kingdom voted in favor~~States.

Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of ~~leaving~~marketing exclusivity, which precludes the ~~European Union, commonly referred to as Brexit. On March 29, 2017,~~EMA or the ~~country formally notified~~FDA from approving another marketing application for the ~~European Union of its intention to withdraw pursuant to Article 50 of the Lisbon Treaty. Since a significant proportion of the regulatory framework~~same product for that time period. The applicable period is seven years in the United ~~Kingdom~~States and ten years in Europe. The European exclusivity period can be reduced to six years if a product no longer meets the criteria for orphan drug designation or if the product is ~~derived from European Union directives~~sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition. Moreover, even after an orphan drug is approved, the FDA can subsequently approve a different product for the same condition if the FDA concludes that the later product is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.

Moreover, even after an orphan drug is approved, the FDA can subsequently approve a different product for the same condition if the FDA concludes that the later product is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. The FDA may reevaluate the Orphan Drug Act and its regulations and policies. We do not know if, when, or how the ~~referendum could materially impact~~FDA may change the ~~regulatory regime with respect to the approval of our product candidates~~orphan drug regulations and policies in the ~~United Kingdom or the European Union. Any delay in obtaining, or an inability to obtain,~~future, and it is uncertain how any marketing approvals, as a result of Brexit or otherwise, would prevent us from commercializing our product candidates in the United Kingdom and/or the European Union and restrict our ability to generate revenue and achieve and sustain profitability. If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the United Kingdom and/or European Union for our product candidates, which could significantly and materially harmchanges might affect our business.

Any product or product candidate for which we or our collaborators obtain marketing approval could be subject to restrictions or withdrawal from the market and we may be subject to substantial penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our medicines, when and if any of them are approved.

Any product or product candidate for which we or our collaborators obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities for such medicine, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to quality control and manufacturing, quality assurance and corresponding maintenance of records and documents, and requirements regarding the distribution of samples to physicians and ~~recordkeeping.~~record keeping. Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the medicine may be marketed or to the conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the medicine, including the requirement to implement a risk evaluation and mitigation strategy.

The FDA and other agencies, including the Department of Justice, or the DOJ, closely regulate and monitor the post-approval marketing and promotion of products to ensure that they are marketed and distributed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA and DOJ impose stringent restrictions on manufacturers’ communications regarding off-label use and if we ~~do not~~ market our medicines for uses other than their respective approved indications, we may be subject to enforcement action for off-label marketing. Violations of the ~~Federal Food, Drug, and Cosmetic Act~~FDCA and other statutes, including the False Claims Act, relating to the promotion and advertising of prescription drugs may lead to investigations and enforcement actions alleging violations of federal and state health care fraud and abuse laws, as well as state consumer protection ~~laws.~~

~~In addition, later discovery of previously unknown adverse events or other problems with our medicines, manufacturers or manufacturing processes, or failure to comply with regulatory requirements,~~laws, which violations may ~~yield various results, including:~~

~~restrictions on such medicine, manufacturers or manufacturing processes;~~

~~restrictions on the labeling or marketing of a medicine;~~

~~restrictions on distribution or use of a medicine;~~

~~requirements to conduct post-marketing studies or clinical trials;~~

~~warning letters or untitled letters;~~

~~withdrawal of the medicine from the market;~~

~~refusal to approve pending applications or supplements to approved applications that we submit;~~

~~recall of medicines;~~

~~damage to relationships with any potential collaborators;~~

~~unfavorable press coverage and damage to our reputation;~~

~~fines, restitution or disgorgement of profits or revenue;~~

~~suspension or withdrawal of marketing approvals;~~

~~refusal to permit the import or export of our medicines;~~

~~product seizure;~~

~~injunctions or~~result in the imposition of significant administrative, civil orand criminal ~~penalties; and~~

~~litigation involving patients using our medicines.~~

Non-compliance with EU requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can also result in significant financial penalties. ~~Similarly, failure to comply with the EU requirements regarding the protection of personal information can also lead to significant penalties and sanctions.~~

Our relationships with healthcare providers, physicians and third-party payors ~~will be~~are subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which, in the event of a violation, could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our future arrangements with healthcare providers, physicians and third-party payors may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute any medicines for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations include the following:

•the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid;

•the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment

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of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim ~~penalties, currently set at $10,781.40 to $21,562.80 per false claim;~~penalties;

•the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

•HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

•the federal Physician Payments Sunshine Act requires applicable manufacturers of covered drugs to report payments and other transfers of value to physicians and teaching hospitals; and

•analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws and transparency statutes, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.

Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures. State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other healthcare providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

~~Current~~The provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products is also prohibited in the EU. The provision of benefits or advantages to physicians is governed by the national anti-bribery laws of EU Member States, such as the U.K. Bribery Act 2010. Infringement of these laws could result in substantial fines and ~~future legislation~~imprisonment.

Payments made to physicians in certain EU Member States must be publicly disclosed. Moreover, agreements with physicians often must be the subject of prior notification and approval by the physician’s employer, his or her competent professional organization and/or the regulatory authorities of the individual EU Member States. These requirements are provided in the national laws, industry codes or professional codes of conduct, applicable in the EU Member States. Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.

Even if we or any collaborators are able to commercialize any product candidates, such products may ~~increase~~become subject to unfavorable pricing regulations and third-party reimbursement practices, which would harm our business.

The commercial success of our product candidates will depend substantially, both domestically and abroad, on the ~~difficulty~~extent to which the costs of our product candidates will be paid by third-party payors, including government health administration authorities and ~~cost for~~private health coverage insurers. If coverage and reimbursement is not available, or reimbursement is available only to limited levels, we, or any collaborators, may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us, ~~and~~or any future collaborators, to ~~obtain marketing approval of~~establish or maintain pricing sufficient to realize a sufficient return on our ~~other product candidates and affect the prices we,~~ or ~~they, may obtain.~~

their investments. In the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors and coverage and reimbursement for products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved drugs. Marketing approvals, pricing and reimbursement for new drug products vary widely from country to country. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could, among other things, prevent or delay marketing approval of our other product candidates, restrict or regulate post-approval activities and affect our ability, or the ability of any future collaborators, to profitably sell any products for which we, or they, obtain marketing approval. We expect that current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and additional downward pressure on the price that we, or any future collaborators, may receive for any approved products.

For example, in March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively the ACA. Among the provisions of the ACA of potential importance to our business and our product candidates are the following:

~~an annual, non-deductible fee on any entity that manufactures or imports specified branded~~markets, prescription ~~drugs and biologic agents;~~

~~an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;~~

~~a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;~~

~~expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance;~~

a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

~~extension of manufacturers’ Medicaid rebate liability to individuals enrolled in Medicaid managed care organizations;~~

~~expansion of eligibility criteria for Medicaid programs;~~

~~expansion of the entities eligible for discounts under the Public Health Service~~ pharmaceutical pricing ~~program;~~

~~new requirements~~remains subject to ~~report certain financial arrangements with physicians and teaching hospitals;~~

~~a new requirement to annually report drug samples that manufacturers and distributors provide to physicians;~~

~~a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;~~

a new Independent Payment Advisory Board, or IPAB, which has authority to recommend certain changes to the Medicare program to reduce expenditures by the program that could result in reduced payments for prescription drugs; and

~~a Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models.~~

Other legislative changes have been proposed and adopted since the ACA was enacted. These changes include the Budget Control Act of 2011, which, among other things, led to aggregate reductions to Medicare payments to providers of up to 2% per fiscal year that started in 2013 and, due to subsequent legislation, will continue until 2025. In addition, the American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding and may otherwise affect the prices we may obtain for any of our product candidates for which regulatorycontinuing governmental control even after initial approval is ~~obtained.~~

In addition, with the new Administration and Congress, there may be additional legislative changes, including potentially repeal and replacement of certain provisions of the ACA. It remains to be seen, however, whether new legislation will be enacted and, if so, precisely what any new legislation will provide and what impact it will have on the availability of healthcare and containing or lowering the cost of healthcare. For example, it is possible that repeal and replacement initiatives, if enacted into law, could ultimately result in fewer individuals having health insurance coverage or in individuals having insurance coverage with less generous benefits. While the timing and scope of any potential future legislation to repeal and replace ACA provisions is highly uncertain in many respects, it is also possible that some of the ACA provisions that generally are not favorable for the research-based pharmaceutical industry could also be repealed along with ACA coverage expansion provisions.

Accordingly, such reforms, if enacted, could have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which we may obtain marketing approval and may affect our overall financial condition and ability to develop or commercialize product candidates. We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product and/or the level of reimbursement physicians receive for administering any approved product we might bring to market. Reductions in reimbursement levels may negatively impact the prices we receive or the frequency with which our products are prescribed or administered. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

The costs of prescription pharmaceuticals in the United States has also been the subject of considerable discussion, and members of Congress and the Administration have stated that they will address such costs through new legislative and administrative measures. The pricing of prescription pharmaceuticals is also subject to governmental control outside the United States.granted. In these countries, pricing negotiations with

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governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost effectiveness of our product candidates to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our ability to generate revenues and become profitable could be impaired.

~~The efforts~~As a result, we, or any collaborators, might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay commercial launch of the ~~Administration~~product, possibly for lengthy time periods, which may negatively impact the revenue we are able to ~~pursue regulatory reform~~generate from the sale of the product in that country. Adverse pricing limitations may ~~limit FDA’s~~hinder our ability or the ability of any collaborators to recoup our or their investment in one or more product candidates, even if our product candidates obtain marketing approval.

Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Therefore, our ability, and the ability of any collaborators, to commercialize any of our product candidates will depend in part on the extent to which coverage and reimbursement for these products and related treatments will be available from third-party payors. Third-party payors decide which medications they will cover and establish reimbursement levels. The healthcare industry is acutely focused on cost containment, both in the United States and elsewhere. Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, which could affect our ability or that of any collaborators to sell our product candidates profitably. These payors may not view our products, if any, as cost-effective, and coverage and reimbursement may not be available to our customers, or those of any collaborators, or may not be sufficient to allow our products, if any, to be marketed on a competitive basis. Cost-control initiatives could cause us, or any collaborators, to decrease the price we, or they, might establish for products, which could result in lower than anticipated product revenue. If the prices for our products, if any, decrease or if governmental and other third-party payors do not provide coverage or adequate reimbursement, our prospects for revenue and profitability will suffer.

In addition, increasingly, third-party payors are requiring higher levels of evidence of the benefits and clinical outcomes of new technologies and are challenging the prices charged. We cannot be sure that coverage will be available for any product candidate that we, or any collaborator, commercialize and, if available, that the reimbursement rates will be adequate. Further, the net reimbursement for drug products may be subject to additional reductions if there are changes to laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. An inability to promptly obtain coverage and adequate payment rates from both government-funded and private payors for any of our product candidates for which we, or any collaborator, obtain marketing approval could significantly harm our operating results, our ability to ~~engage in oversight~~raise capital needed to commercialize products and ~~implementation~~our overall financial condition.

Current and future healthcare reform legislation may increase the difficulty and cost for us and any collaborators to obtain reimbursement and commercialize our drug candidates.

In the United States and foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability, or the ability of any collaborators, to profitably sell any product for which we, or they, obtain marketing approval. We expect that current laws, as well as other healthcare reform measures that may be adopted in the ~~normal course,~~future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we, or any collaborators, may receive for any approved products. If reimbursement of our products is unavailable or limited in scope, our business could ~~negatively impact~~be materially harmed.

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively the ACA. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. This legislation resulted in aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which will remain in effect through 2030 under the CARES Act. The American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These laws may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any of our ~~business.~~product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.

Since enactment of the ACA, there have been, and continue to be, numerous legal challenges and Congressional actions to repeal and replace provisions of the law. For example, in 2017, Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019. On November 10, 2020, the Supreme Court heard oral arguments as to whether the individual mandate portion of the ACA is an essential and inseverable feature of the ACA, and therefore because the mandate was repealed as part of the Tax Cuts and Jobs

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Act, the remaining provisions of the ACA are invalid as well. On February 10, 2021, the Biden Administration withdrew the federal government’s support for overturning the ACA. A ruling by the Supreme Court is expected sometime this year.

The Trump Administration ~~has taken several~~also took executive actions to undermine or delay implementation of the ACA, including directing federal agencies with authorities and responsibilities under the ~~issuance of a number of executive orders, that could impose significant burdens on,~~ACA to waive, defer, grant exemptions from, or ~~otherwise materially~~ delay the ~~FDA’s ability to engage in routine~~implementation of any provision of the ACA that would impose a fiscal or regulatory ~~and oversight activities such as implementing statutes through rulemaking, issuance~~burden on states, individuals, healthcare providers, health insurers, or manufacturers of ~~guidance, and review and approval of marketing applications.~~pharmaceuticals or medical devices. On January ~~30, 2017,~~28, 2021, however, President Biden issued a new Executive Order which directs federal agencies to reconsider rules and other policies that limit Americans’ access to health care, and consider actions that will protect and strengthen that access. This Executive Order also directs the U.S. Department of Health and Human Services to create a special enrollment period for the Health Insurance Marketplace in response to the COVID-19 pandemic. We cannot predict how federal agencies will respond to such Executive Orders.

The costs of prescription pharmaceuticals in the United States and foreign jurisdictions is subject to considerable legislative and executive actions and could impact the prices we obtain for our drug products, if and when approved.

The costs of prescription pharmaceuticals have also been the subject of considerable discussion in the United States.

To date, there have been several recent U.S. congressional inquiries, as well as proposed and enacted state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for products. To those ends, President Trump issued several executive orders intended to lower the costs of prescription drug products. Certain of these orders are reflected in recently promulgated regulations, including an ~~executive order, applicable~~interim final rule implementing President Trump’s most favored nation model, but such final rule is currently subject to ~~all executive agencies, including~~a nationwide preliminary injunction. It remains to be seen whether these orders and resulting regulations will remain in force during the Biden Administration. Further, on September 24, 2020, the Trump Administration finalized a rulemaking allowing states or certain other non-federal government entities to submit importation program proposals to the FDA for review and approval. Applicants are required to demonstrate that ~~requires~~their importation plans pose no additional risk to public health and safety and will result in significant cost savings for consumers. The FDA has issued draft guidance that would allow manufacturers to import their own FDA-approved drugs that are authorized for ~~each notice of proposed rulemaking~~sale in other countries (multi-market approved products).

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or ~~final regulation~~patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be ~~issued~~included in ~~fiscal year 2017,~~their prescription drug and other health care programs. These measures could reduce the ~~agency shall identify at least two existing regulations to~~ultimate demand for our products, once approved, or put pressure on our product pricing. We expect that additional state and federal healthcare reform measures will be repealed, unless prohibited by law. These requirements are referred to as the “two-for-one” provisions. This executive order includes a budget neutrality provision that requires the total incremental cost of all new regulationsadopted in the ~~2017 fiscal year, including repealed regulations,~~future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

We are subject to ~~be no greater than zero, except~~U.S. and foreign anti-corruption and anti-money laundering laws with respect to our operations and non-compliance with such laws can subject us to criminal and/or civil liability and harm our business.

We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in ~~limited circumstances. For fiscal years 2018~~18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, and ~~beyond, the executive order requires agencies~~other state and national anti-bribery and anti-money laundering laws in countries in which we conduct activities. Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, third-party intermediaries, joint venture partners and collaborators from authorizing, promising, offering, or providing, directly or indirectly, improper payments or benefits to identify regulations to offset any incremental cost of a new regulation. In interim guidance issued by the Office of Information and Regulatory Affairs within OMB on February 2, 2017, the administration indicates that the “two-for-one” provisions may apply not only to agency regulations, but also to significant agency guidance documents. It is difficult to predict how these requirements will be implemented, and the extent to which they will impact the FDA’s ability to exercise its regulatory authority. If these executive actions impose constraints on FDA’s ability to engage in oversight and implementation activitiesrecipients in the ~~normal course,~~public or private sector. We may have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations. In addition, we may engage third party intermediaries to promote our clinical research activities abroad and/or to obtain necessary permits, licenses, and other regulatory approvals. We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize or have actual knowledge of such activities.

Noncompliance with anti-corruption and anti-money laundering laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage, and other collateral consequences. If any subpoenas, investigations, or other enforcement actions are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention

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and resources and significant defense and compliance costs and other professional fees. In certain cases, enforcement authorities may ~~be negatively impacted.~~even cause us to appoint an independent compliance monitor which can result in added costs and administrative burdens.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological and radioactive materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Risks Related to Employee Matters and Managing Growth

Our future success depends on our ability to retain our key executives and scientific leadership and to attract, retain and motivate qualified personnel.

We are highly dependent on the principal members of our management and scientific teams, each of whom is employed “at will,” meaning we or they may terminate the employment relationship at any time. We do not maintain “key person” insurance for any of our executives or other employees. The loss of the services of any of these persons could impede the achievement of our research, development and commercialization objectives. We cannot predict the likelihood, timing or effect of future transitions among our executive leadership.

Recruiting and retaining qualified scientific, clinical, manufacturing, regulatory and sales and marketing personnel will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies and universities and research institutions for similar personnel. ~~We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on~~Our consultants and advisors, including our scientific ~~and clinical advisors, to~~co-founders, who assist us in formulating our research and development and commercialization ~~strategy. Our consultants and advisors, including our scientific co-founders,~~strategy may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. We also cannot be sure of the effect that the recent sale of our oncology business to Servier will have on our ability to retain and hire key personnel. Our current and prospective employees may feel uncertain about their roles with us now that we are a smaller company focused on GDDs, which may have an adverse effect on our ability to attract or retain key management personnel or other key employees. Furthermore, the ongoing COVID-19 pandemic and our associated work from home policy may make it difficult for us to maintain our corporate culture.

We expect to continue to experience growth in the number of our employees as we expand our development, regulatory and future sales and marketing capabilities. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards we have established, comply with federal and state healthcare fraud and abuse laws and regulations, report financial information or data accurately, disclose unauthorized activities to us, or comply with securities laws. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, including for illegal insider trading activities, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a Code of Business Conduct and Ethics, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental

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investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.

~~We expect to expand our development, regulatory and future sales and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.~~

We expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of drug development, regulatory affairs and sales and marketing. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expected expansion of our operations or recruit and train additional qualified personnel. Moreover, the expected physical expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

We may engage in acquisitions that could disrupt our business, cause dilution to our stockholders or reduce our financial resources.

In the future, we may enter into transactions to acquire other businesses, products or technologies. Because we have not made any acquisitions to date, our ability to do so successfully is unproven. If we do identify suitable candidates, we may not be able to make such acquisitions on favorable terms, or at all. Any acquisitions we make may not strengthen our competitive position, and these transactions may be viewed negatively by customers or investors. We may decide to incur debt in connection with an acquisition or issue our common stock or other equity securities to the stockholders of the acquired company, which would reduce the percentage ownership of our existing stockholders. We could incur losses resulting from undiscovered liabilities of the acquired business that are not covered by the indemnification we may obtain from the seller. In addition, we may not be able to successfully integrate the acquired personnel, technologies and operations into our existing business in an effective, timely and non-disruptive manner. Acquisitions may also divert management attention from day-to-day responsibilities, increase our expenses and reduce our cash available for operations and other uses. We cannot predict the number, timing or size of future acquisitions or the effect that any such transactions might have on our operating results.

Risks Related to Our Common Stock and Other Matters

Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our corporate charter and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:

•establish a classified board of directors such that not all members of the board are elected at one time;

•allow the authorized number of our directors to be changed only by resolution of our board of directors;

•limit the manner in which stockholders can remove directors from the board;

•establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors;

•require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;

•limit who may call stockholder meetings;

•authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a shareholder rights plan, or so-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and

•require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

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 relies in part on the research and reports that industry or financial analysts publish about us or our business. If one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price and trading volume to decline.

~~An active trading market for our common stock may not be sustained.~~

Although our common stock is listed on the NASDAQ Global Select Market, an active trading market for our shares may not be sustained. If an active market for our common stock does not continue, it may be difficult for our stockholders to sell their shares without depressing the market price for the shares or to sell their shares at all. An inactive trading market for our common stock may also impair our ability to raise capital to continue to fund our operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.

The price of our common stock is likely to be volatile, which could result in substantial losses for purchasers of our common stock.

The trading price of our common stock has been, and may continue to be, volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. For example, since January 1, ~~2014~~2015 the price of our common stock on the ~~NASDAQ~~Nasdaq Global Select Market has ranged from ~~$21.70~~$27.77 per share to $138.85 per share. The stock market in general and the market for biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated

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to the operating performance of particular companies. While the full extent of the economic impact and the duration of the COVID-19 pandemic may be difficult to assess or predict, it has already caused, and is likely to result in further, significant disruption of global financial markets, which may reduce our ability to access capital either at all or on favorable terms.

The market price for our common stock may be influenced by many factors, including:

~~regulatory actions with respect~~•the impacts of the recent sale of our oncology business to Servier on our ~~product candidates or~~business;

•the impact of our ~~competitors’ products and product candidates;~~repurchases of shares of common stock from our stockholders;

•announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;

•the timing and results of clinical trials of product candidates, or our competitors’ product candidates;

•regulatory actions with respect to our product candidates or our competitors’ products and product candidates;

•commencement or termination of collaborations for our development programs;

•failure or discontinuation of any of our development programs;

~~results of clinical trials of product candidates of our competitors;~~

•regulatory or legal developments in the United States and other countries;

•developments or disputes concerning patent applications, issued patents or other proprietary rights;

•the recruitment or departure of key personnel;

•the level of expenses related to any of our product candidates or clinical development programs;

•the results of our efforts to develop additional product candidates or products;

•actual or anticipated changes in estimates as to financial results or development timelines;

•announcement or expectation of additional financing efforts;

•sales of our common stock by us, our insiders or other ~~stockholders;~~stockholders, including shares issuable upon exercise of outstanding stock options and upon vesting of stock units under our stock incentive plans;

•variations in our financial results ~~including levels of royalties on sales of IDHIFA®,~~ or results of companies that are perceived to be similar to us;

•whether an active trading market for our shares is sustained;

•changes in estimates, evaluations or recommendations by securities analysts, ~~if any,~~ that cover our stock or the failure by one or more securities analysts to continue to cover our stock;

•changes in the structure of healthcare payment systems;

•the societal and economic impact of public health epidemics, such as the ongoing COVID-19 pandemic and any recession, depression or sustained market event resulting from the pandemic;

•market conditions in the pharmaceutical and biotechnology sectors;

•general economic, industry and market conditions; and

•the other factors described in this “Risk Factors” section.

~~If any of the forgoing matters were to occur, or if our operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially.~~ In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation often has been instituted against that company. Such litigation, if instituted against us, could cause us to incur substantial costs to defend such claims and divert ~~management's~~managements' attention and resources, which could seriously harm our business, financial condition, results of operations and prospects.

~~Sales of a substantial number of~~We also cannot guarantee that an active trading market for our shares ofwill be sustained. An inactive trading market for our common stock inmay impair our ability to raise capital to continue to fund our operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.

Our financial condition and operating results also may fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the ~~public market could cause our stock price to fall.~~

~~Certain stockholders hold a substantial number~~results of ~~shares~~any quarterly or annual periods as indications of ~~our common stock. If such stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline.~~

~~In addition, shares of common stock that are either subject to outstanding options or reserved for~~ future issuance under our stock incentive plans will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701 under the Securities Act of 1933, as amended, or the Securities Act, and, in any event, we have filed a registration statement permitting shares of common stock issued on exercise of options to be freely sold in the public market. If these additional shares of common stock are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

Certain holders of our common stock are entitled to rights with respect to the registration of their shares under the Securities Act. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by affiliates. Any sales of securities by these stockholders who have exercised registration rights could have a material adverse effect on the trading price of our common stock.operating performance.

Our executive officers, directors and principal stockholders maintain the ability to significantly influence all matters submitted to stockholders for approval.

As of ~~September 30, 2017,~~March 31, 2021, our executive officers, directors and ~~a small group of~~principal stockholders, in the aggregate, beneficially owned shares representing a significant percentage of our capital stock. As a result, if these stockholders were to choose to act together, they would be able to significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these persons ~~if they choose to act together,~~ could significantly influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of voting power could delay or prevent an acquisition of our company on terms that other stockholders may desire.

~~Future sales and issuances~~

Table of ~~our common stock or rights to purchase common stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.~~Contents

We expect that significant additional capital will be needed in the future to continue our planned operations. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to those of holders of our common stock.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

Under Section 382 of the ~~Internal Revenue~~ Code and corresponding provisions of ~~1986, as amended,~~state law, if a company undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership by certain stockholders over a three-year period, the ~~corporation’s~~company’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change taxable income ~~or taxes~~ may be limited. Our prior equity offerings and other changes in our stock ownership, some of which are outside of our control, may have resulted or could in the future result in an ownership change. ~~For example, in 2012, we~~We completed a review of our changes in ownership through December 31, ~~2011,~~2019, and determined that we ~~had two~~did not have a qualified ownership change since our last review as of December 31, 2018. Future ownership changes ~~since inception. The changes~~under Section 382 may limit the amount of ownership will result in net operating loss and research and development credit carryforwards that we expect to expire unutilized. If additional limitations were to apply, utilization of a portion of our net operating loss and tax credit carryforwards that we could ~~be further limited in future periods and a portion of the carryforwards could expire before being available~~potentially utilize to reduce future tax liabilities.

There is also a risk that due to regulatory changes, such as suspensions on the use of net operating losses, or other unforeseen reasons, our existing net operating losses could expire or otherwise become unavailable to offset future income tax liabilities. The Tax Act, as amended by the CARES Act, includes changes to U.S. federal tax rates and the rules governing net operating loss carryforwards that may significantly impact our ability to utilize our net operating losses to offset taxable income in the future. In addition, state net operating losses generated in one state cannot be used to offset income generated in another state. For these reasons we may be unable to use a material portion of our net operating losses and other tax attributes.

Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of accrued amounts.

We are subject to taxation in numerous U.S. states and territories. As a result, our effective tax rate is derived from a combination of applicable tax rates in the various places that we operate. In preparing our financial statements, we estimate the amount of tax that will become payable in each of such places. Nevertheless, our effective tax rate may be different from previous periods or our current expectations due to numerous factors, including as a result of changes in the mix of our profitability from state to state, the results of examinations and audits of our tax filings, our inability to secure or sustain acceptable agreements with tax authorities, changes in accounting for income taxes and changes in tax laws. Any of these factors may result in tax obligations in excess of amounts accrued in our financial statements.

We incur costs as a result of operating as a public company, and our management is required to devote substantial time to ~~new~~ compliance initiatives and corporate governance practices.

We have incurred and will continue to incur significant legal, accounting and other expenses as a public company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The ~~NASDAQ~~Nasdaq Global Select Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations. Our management and other personnel devote, and will need to continue to devote, a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we are required to furnish with our periodic Exchange Act reports a report by our management on our internal control over financial reporting and are required to include with our annual report an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To maintain compliance with Section 404, we engaged in a process to document and evaluate our internal control over financial reporting, which has been, and will continue toThere can be both costly and challenging. In this regard, we will need to continue to dedicate internal resources, engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a riskno assurance that we will ~~not be able~~repurchase shares of our common stock or that we will repurchase shares at favorable prices.

In March 2021, our board of directors authorized a share repurchase program to ~~conclude,~~purchase up to $1.2 billion of our common stock. Following our repurchase of approximately $344.5 million of shares of our common stock from ~~time~~affiliated of BMS in April 2021, we had remaining available approximately $855.5 million to ~~time, that our internal control over financial reporting is effective as required by Section 404. If~~repurchase additional shares pursuant to this program, of which we ~~identify one or more material weaknesses, it could result in an adverse reaction~~committed up to $600 million in the ~~financial markets due~~form of a Rule 10b5-1 repurchase plan. The amount and timing of share repurchases are subject to ~~a loss of confidence~~capital availability, our cash balances and future capital requirements and our determination that share repurchases are in the ~~reliability~~best interest of our ~~financial statements.~~shareholders and are in compliance with all respective laws and our applicable agreements. A reduction in repurchases under, or the completion of, our share repurchase programs could have a negative effect on our stock price. We can provide no assurance that we will repurchase shares at favorable prices, if at all.

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be the sole source of gain for our stockholders.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. ~~In addition, the terms of any future debt agreements may preclude us from paying dividends.~~ As a result, capital appreciation, if any, of our common stock will be the sole source of gain for our stockholders for the foreseeable future.

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Item 6. Exhibits

Incorporated by Reference

Exhibit

Number

Description of Exhibit

Form

File Number

Date of Filing

Exhibit

Number

Filed

Herewith

3.1

Restated Certificate of Incorporation

8-K

001-36014

July 30, 2013

3.1

3.2

Second Amended and Restated By-Laws

8-K

001-36014

December 19, 2018

3.1

10.1

Share Repurchase Agreement, dated as of March 31, 2021, by and between Agios Pharmaceuticals, Inc. and Bristol-Myers Squibb Company

8-K

001-36014

April 2, 2021

10.1

31.1

Certification of principal executive officer pursuant to Rule 13a 14(a)/15d 14(a) of the Securities Exchange Act of 1934, as amended

31.2

Certification of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1*

Certification of principal executive officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*

Certification of principal financial officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are not embedded within the Inline XBRL document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Label Linkbase Document

101.PRE

XBRL Taxonomy Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS)




* This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.

Incorporated by Reference
Exhibit
Number
Description of Exhibit Form File Number Date of Filing
Exhibit
Number

Filed
Herewith
3.1
Restated Certificate of Incorporation
8-K 001-36014 July 29, 2013 3.1

3.2
Amended and Restated By-Laws
8-K 001-36014 July 29, 2013 3.2

31.1
Certification of principal executive officer pursuant to Rule 13a 14(a)/15d 14(a) of the Securities Exchange Act of 1934, as amended
X
31.2
Certification of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
X
32.1
Certification of principal executive officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2
Certification of principal financial officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
101.INS XBRL Instance Document X
101.SCH XBRL Taxonomy Extension Schema Document X
101.CAL XBRL Taxonomy Calculation Linkbase Document X
101.DEF XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB XBRL Taxonomy Label Linkbase Document X
101.PRE XBRL Taxonomy Presentation Linkbase Document X

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		AGIOS PHARMACEUTICALS, INC.

April 29, 2021		~~AGIOS PHARMACEUTICALS, INC.~~By:	/s/ Jacqualyn A. Fouse

~~Date: November 1, 2017~~	~~By:~~	~~/s/ David P. Schenkein~~
		~~David P. Schenkein~~Jacqualyn A. Fouse, Ph.D. ~~President and~~ Chief Executive Officer (principal executive officer)

~~Date: November 1, 2017~~April 29, 2021		By:	/s/ ~~Andrew Hirsch~~Jonathan Biller
			~~Andrew Hirsch~~ Jonathan Biller Chief Financial Officer and Head of Legal and Corporate Affairs (principal financial officer)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net loss	$	(77,137	)	$	(62,834	)	$	(226,385	)	$	(141,985	)
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale securities	135			(268		)	(202		)	347
Comprehensive loss	$	(77,002	)	$	(63,102	)	$	(226,587	)	$	(141,638	)



Undelivered Element	BESP			Unit(s) of Accounting	Principal/Agent	Recognition Method
April 2015 modification
AG-881 program licenses (1)		$33.2	million	2	Principal	Upon delivery of the licenses to Celgene, which occurred immediately upon the execution of the AG-881 Agreements
On-going development services (2) (3)		$12.7	million	4	Principal	Proportionally as services are delivered over the performance period, expected to be through September 2017
On-going development services (2) (3)		$97.3	million	4	Agent	Proportionally as services are delivered over the performance period, expected to be through December 2017
On-going research and development (2)		$30.5	million	1	Principal	Ratably over the performance period, expected to be through April 2016
Committee participations (4)		$0.8	million	1	Principal	Ratably over the performance period, expected to be through December 2016
May 2016 modification (supplants undelivered elements of April 2015 modification)
On-going development services (2) (3)		$67.8	million	3	Principal	Proportionally as services are delivered over the performance period, expected to be through December 2019
On-going development services (2) (3)		$22.4	million	3	Agent	Proportionally as services are delivered over the performance period, expected to be through December 2019
On-going research and development (2)		$207.0	million	1	Principal	Ratably over the performance period, expected to be through May 2022
Committee participations (4)		$1.5	million	1	Principal	Ratably over the performance period, expected to be through December 2022
Additional development services		$48.7	million	1	Principal	Proportionally as services are delivered over the performance period, expected to begin in September 2020



	Modification Period	Three Months Ended September 30,				Nine Months Ended September 30,
Undelivered Element	Modification Period	2017		2016		2017		2016
On-going development services (agent)	April 2015	$	—	$	—	$	—	$	7,456
On-going development services (agent)	May 2016	1,078		3,453		6,329		4,780
Total reduction of research and development expenses		$	1,078	$	3,453	$	6,329	$	12,236



	Number of Stock Options		Weighted- Average Exercise Price
Outstanding at December 31, 2016	5,218,880		$	46.79
Granted	1,494,252		50.61
Exercised	(529,618	)	19.31
Forfeited/expired	(362,903	)	72.43
Outstanding at September 30, 2017	5,820,611		$	48.68
Exercisable at September 30, 2017	2,969,761		$	41.87
Vested and expected to vest at September 30, 2017	5,820,611		$	48.68



	Number of Stock Units		Weighted-Average Grant Date Fair Value
Unvested shares at December 31, 2016	77,050		$	49.60
Granted	60,750		51.04
Vested	(7,500	)	122.22
Forfeited/expired	(10,300	)	39.76
Unvested shares at September 30, 2017	120,000		$	46.63