Table of Contents

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, 20172023
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file numbernumber: 001-36014

AGIOS PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware26-0662915
(State or Other Jurisdiction of

 Incorporation or Organization)
(I.R.S. Employer

 Identification No.)
88 Sidney Street, Cambridge, Massachusetts02139
(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 classTrading symbol(s)Name of each exchange on which registered
Common Stock, Par Value $0.001 per shareAGIONasdaq 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: 48,754,28927, 2023: 55,891,284


Table of Contents
AGIOS PHARMACEUTICALS, INC.
FORM 10-Q
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 20172023
TABLE OF CONTENTS
Page
No.
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited)
1
Condensed Consolidated Balance Sheets as of September30, 20172023 and December 31, 20162022
1
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 20172023 and 20162022
2
Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 20172023 and 20162022
3
Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2023 and 2022
4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended SeptemberSeptember 30, 20172023 and 20162022
46
Notes to Condensed Consolidated Financial Statements
57
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
1917
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
3126
Item 4.
Controls and Procedures
3226
PART II. OTHER INFORMATION
28
Item 1A.
Risk Factors
3328
Item 5.
58
Item 6.
Exhibits
6259
Signatures
6360




Table of Contents
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
Assets   
Current assets:   
Cash and cash equivalents$132,741
 $160,754
Marketable securities375,187
 380,560
Collaboration receivable – related party3,489
 4,886
Royalty receivable – related party715
 —
Tenant improvement and other receivables859
 3,428
Prepaid expenses and other current assets15,316
 10,264
Total current assets528,307
 559,892
Marketable securities133,804
 32,250
Property and equipment, net24,019
 25,337
Other non-current assets1,070
 1,615
Total assets$687,200
 $619,094
Liabilities and stockholders’ equity   
Current liabilities:   
Accounts payable$17,899
 $17,106
Accrued expenses30,760
 32,002
Deferred revenue – related party35,867
 35,913
Deferred rent3,586
 3,412
Total current liabilities88,112
 88,433
Deferred revenue, net of current portion – related party134,202
 154,297
Deferred rent, net of current portion15,080
 17,773
Total liabilities237,394
 260,503
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, respectively49
 42
Additional paid-in capital1,160,048
 842,013
Accumulated other comprehensive loss(515) (313)
Accumulated deficit(709,776) (483,151)
Total stockholders’ equity449,806
 358,591
Total liabilities and stockholders’ equity$687,200
 $619,094
(In thousands, except share and per share data)September 30,
2023		December 31,
2022
Assets
Current assets:
Cash and cash equivalents$64,333 $139,259 
Marketable securities583,155 643,860 
Accounts receivable, net1,176 2,206 
Inventory17,274 8,492 
Prepaid expenses and other current assets38,414 38,955 
Total current assets704,352 832,772 
Marketable securities224,902 313,874 
Operating lease assets57,162 65,129 
Property and equipment, net16,785 22,987 
Other non-current assets4,057 3,956 
Total assets$1,007,258 $1,238,718 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$13,271 $18,616 
Accrued expenses30,490 30,350 
Operating lease liabilities14,664 13,663 
Total current liabilities58,425 62,629 
Operating lease liabilities, net of current portion60,834 71,996 
Other non-current liabilities1,156 3,279 
Total liabilities120,415 137,904 
Stockholders’ equity:
Preferred stock, $0.001 par value; 25,000,000 shares authorized; no shares issued or outstanding at September 30, 2023 and December 31, 2022— — 
Common stock, $0.001 par value; 125,000,000 shares authorized; 72,100,384 shares issued and 55,883,973 shares outstanding at September 30, 2023, and 71,256,118 shares issued and 55,039,707 shares outstanding at December 31, 202272 71 
Additional paid-in capital2,421,862 2,386,325 
Accumulated other comprehensive loss(5,896)(12,535)
Treasury stock, at cost (16,216,411 shares at September 30, 2023 and December 31, 2022)(802,486)(802,486)
Accumulated deficit(726,709)(470,561)
Total stockholders’ equity886,843 1,100,814 
Total liabilities and stockholders’ equity$1,007,258 $1,238,718 
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,
(In thousands, except share and per share data)(In thousands, except share and per share data)2023202220232022
Revenues:Revenues:
Product revenue, netProduct revenue, net$7,399 $3,516 $19,720 $7,430 
Milestone revenueMilestone revenue— — — 2,500 
Total revenueTotal revenue7,399 3,516 19,720 9,930 
Operating expenses:Operating expenses:
Cost of salesCost of sales$633 $517 $2,295 $1,291 
Research and developmentResearch and development81,841 64,966 218,037 209,612 
Selling, general and administrativeSelling, general and administrative25,822 29,123 84,598 88,902 
Total operating expensesTotal operating expenses108,296 94,606 304,930 299,805 
Loss from operationsLoss from operations(100,897)(91,090)(285,210)(289,875)
Royalty income from gain on sale of oncology businessRoyalty income from gain on sale of oncology business— 4,443 — 9,851 
Interest income, netInterest income, net8,375 3,818 24,720 6,305 
Other income, netOther income, net1,198 1,082 4,342 5,392 
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 party715
 —
 715
 —
Total revenue11,358
 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 $18,754 of cost reimbursement from related party for the nine months ended September 30, 2017 and 2016, respectively)72,917
 60,643
 215,465
 155,485
General and administrative17,458
 11,854
 48,411
 35,335
Total operating expenses90,375
 72,497
 263,876
 190,820
Loss from operations(79,017) (63,512) (230,664) (143,576)
Interest income1,880
 678
 4,279
 1,591
Net loss$(77,137) $(62,834) $(226,385) $(141,985)Net loss$(91,324)$(81,747)$(256,148)$(268,327)
Net loss per share – basic and diluted$(1.59) $(1.63) $(4.94) $(3.72)
Net loss per share - basic and dilutedNet loss per share - basic and diluted$(1.64)$(1.49)$(4.61)$(4.90)
Weighted-average number of common shares used in computing net loss per share – basic and diluted48,459,424
 38,548,153
 45,851,203
 38,124,425
Weighted-average number of common shares used in computing net loss per share – basic and diluted55,803,663 54,844,579 55,559,766 54,734,301 
See accompanying Notes to Condensed Consolidated Financial Statements.

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AGIOS PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(Unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2017 2016 2017 2016
(In thousands)(In thousands)2023202220232022
Net loss$(77,137) $(62,834) $(226,385) $(141,985)Net loss$(91,324)$(81,747)$(256,148)$(268,327)
Other comprehensive income (loss)       Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale securities135
 (268) (202) 347
Unrealized gain (loss) on available-for-sale securities2,974 (4,581)6,639 (13,885)
Comprehensive loss$(77,002) $(63,102) $(226,587) $(141,638)Comprehensive loss$(88,350)$(86,328)$(249,509)$(282,212)
See accompanying Notes to Condensed Consolidated Financial Statements.



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AGIOS PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Cash FlowsStockholders' Equity
(in thousands)
(Unaudited)
Common StockAdditional
Paid-In
Capital		Accumulated
Other
Comprehensive
(Loss) Income		Accumulated
Deficit		Treasury StockTotal
Stockholders’
Equity
(in thousands, except share amounts)SharesAmountSharesAmount
Balance at December 31, 202271,256,118 $71 $2,386,325 $(12,535)$(470,561)(16,216,411)$(802,486)$1,100,814 
Unrealized gain on available-for-sale securities— — — 4,124 — — — 4,124 
Common stock issued under stock incentive plan and ESPP501,660 1 2,466 — — — — 2,467 
Stock-based compensation expense— — 10,139 — — — — 10,139 
Net loss— — — — (81,018)— — (81,018)
Balance at March 31, 202371,757,778 $72 $2,398,930 $(8,411)$(551,579)(16,216,411)$(802,486)$1,036,526 
Unrealized loss on available-for-sale securities— — — (459)— — — (459)
Common stock issued under stock incentive plan and ESPP193,408 — 238 — — — — 238 
Stock-based compensation expense— — 11,737 — — — — 11,737 
Net loss— — — — (83,806)— — (83,806)
Balance at June 30, 202371,951,186 $72 $2,410,905 $(8,870)$(635,385)(16,216,411)$(802,486)$964,236 
Unrealized gain on available-for-sale securities— — — 2,974 — — — 2,974 
Common stock issued under stock incentive plan and ESPP149,198 — 1,881 — — — — 1,881 
Stock-based compensation expense— — 9,076 — — — — 9,076 
Net loss— — — — (91,324)— — (91,324)
Balance at September 30, 202372,100,384 72 2,421,862 (5,896)(726,709)(16,216,411)(802,486)886,843 
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 Nine Months Ended
September 30,
 2017 2016
Operating activities   
Net loss$(226,385) $(141,985)
Adjustments to reconcile net loss cash (used in) provided by operating activities:   
Depreciation4,778
 3,986
Stock-based compensation expense35,128
 32,246
Net amortization of premium and discounts on investments25
 534
Loss on disposal of property and equipment40
 —
Changes in operating assets and liabilities:   
Collaboration receivable – related party1,397
 43
Royalty receivable – related party(715) —
Tenant improvement and other receivables2,558
 271
Prepaid expenses and other current and non-current assets(4,444) (2,464)
Accounts payable742
 1,668
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
Investing activities   
Purchases of marketable securities(604,525) (367,587)
Proceeds from maturities and sales of marketable securities508,116
 334,448
Purchases of property and equipment(3,347) (8,693)
Net cash used in investing activities(99,756) (41,832)
Financing activities   
Payment of public offering costs, net of reimbursements(89) (124)
Proceeds from public offering of common stock, net of commissions270,250
 162,150
Net proceeds from stock option exercises and employee stock purchase plan12,360
 3,759
Net cash provided by financing activities282,521
 165,785
Net change in cash and cash equivalents(28,013) 213,738
Cash and cash equivalents at beginning of the period160,754
 71,764
Cash and cash equivalents at end of the period$132,741
 $285,502
Supplemental disclosure of non-cash investing and financing transactions   
Additions to property and equipment in accounts payable and accrued expenses$226
 $497
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
Common StockAdditional
Paid-In
Capital		Accumulated
Other
Comprehensive
(Loss) Income		Accumulated
Deficit		Treasury StockTotal
Stockholders’
Equity
(in thousands, except share amounts)SharesAmountSharesAmount
Balance at December 31, 202170,550,631 $71 $2,334,348 $(1,198)$(238,760)(16,216,411)$(802,486)$1,291,975 
Unrealized loss on available-for-sale securities— — — (6,547)— — — (6,547)
Common stock issued under stock incentive plan and ESPP442,646 — 1,289 — — — — 1,289 
Stock-based compensation expense— — 15,510 — — — — 15,510 
Net loss— — — — (94,774)— — (94,774)
Balance at March 31, 202270,993,277 $71 $2,351,147 $(7,745)$(333,534)(16,216,411)$(802,486)$1,207,453 
Unrealized loss on available-for-sale securities— — — (2,757)— — — (2,757)
Common stock issued under stock incentive plan and ESPP38,515 — 15 — — — 15 
Stock-based compensation expense— — 11,165 — — — — 11,165 
Net loss— — — — (91,806)— — (91,806)
Balance at June 30, 202271,031,792 $71 $2,362,327 $(10,502)$(425,340)(16,216,411)$(802,486)$1,124,070 
Unrealized loss on available-for-sale securities— — — (4,581)— — — (4,581)
Common stock issued under stock incentive plan and ESPP78,650 — 1,272 — — — — 1,272 
Stock-based compensation expense— — 11,156 — — — — 11,156 
Net loss— — — — (81,747)— (81,747)
Balance at September 30, 202271,110,442 $71 $2,374,755 $(15,083)$(507,087)(16,216,411)$(802,486)$1,050,170 
See accompanying Notes to Condensed Consolidated Financial Statements.

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AGIOS PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
(In thousands)20232022
Operating activities
Net loss$(256,148)$(268,327)
Adjustments to reconcile net loss from operations to net cash used in operating activities:
Depreciation and amortization5,220 6,750 
Stock-based compensation expense30,952 37,831 
Net (accretion of discount) amortization of premium on marketable securities(4,658)721 
Loss on disposal of property and equipment278 29 
Non-cash operating lease expense7,967 7,432 
Expense associated with license agreement17,500 — 
Realized gain on investments(28)— 
Changes in operating assets and liabilities:
Accounts receivable, net1,030 (1,818)
Inventory(8,782)(5,176)
Other receivables— 604 
Prepaid expenses and other current and non-current assets440 (7,655)
Accounts payable(5,201)(4,628)
Accrued expenses and other current liabilities140 (2,211)
Operating lease liabilities(10,161)(7,646)
Other non-current liabilities(2,123)779 
Net cash used in operating activities(223,574)(243,315)
Investing activities
Purchases of marketable securities(327,490)(782,218)
Proceeds from maturities and sales of marketable securities488,492 947,296 
Payments associated with license agreement(17,500)— 
Purchases of property and equipment(765)(4,768)
Proceeds from sale of equipment1,325 — 
Net cash provided by investing activities144,062 160,310 
Financing activities
Payments on financing lease obligations— (248)
Net proceeds from stock option exercises and employee stock purchase plan4,586 2,576 
Net cash provided by financing activities4,586 2,328 
Net change in cash and cash equivalents(74,926)(80,677)
Cash and cash equivalents at beginning of the period139,259 203,126 
Cash and cash equivalents at end of the period$64,333 $122,449 
Supplemental disclosure of non-cash investing and financing transactions
Additions to property and equipment in accounts payable and accrued expenses$14 $21 
Net cash taxes paid$1,586 $1,940 

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 oftransforming patients’ lives through scientific leadership in the field of cellular metabolism, with the goal of making transformative, first- or best-in-class medicines. Our areascreating differentiated medicines for rare diseases. With a history of focus are cancerfocused study on cellular metabolism, rare genetic diseases, or RGDs, which are diseases that are directly caused by changes in genes or chromosomes, often passed from one generation to the next,we have a deep and metabolic immuno-oncology, or MIO,mature understanding of this biology, which is involved in the healthy functioning of nearly every system in the body. Building on this expertise, these learnings can be rapidly applied to our clinical trials with the goal of developing medicines that can have a developing field that aimssignificant impact for patients. We accelerate the impact of our portfolio by cultivating connections with patient communities, healthcare professionals, partners and colleagues 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 these areas, we are seeking to unlock the biology of cellular metabolism as a platform to create transformative therapies.discover, develop and deliver potential therapies for rare diseases. We are located in Cambridge, Massachusetts.

The lead product candidate in our portfolio, PYRUKYND® (mitapivat), is an activator of both wild-type and mutant pyruvate kinase, or PK, enzymes for the potential treatment of hemolytic anemias. In February 2022, the U.S. Food and Drug Administration, or FDA, approved PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency in the United States. In November 2022, we received marketing authorization from the European Commission for PYRUKYND® for the treatment of PK deficiency in adult patients in the European Union, or EU. In December 2022, we received marketing authorization in Great Britain for PYRUKYND® for the treatment of PK deficiency in adult patients under the European Commission Decision Reliance Procedure. In addition, we are currently evaluating PYRUKYND® in clinical trials for the treatment of thalassemia, sickle cell disease, or SCD, and in pediatric patients with PK deficiency. We are also developing AG-946, a novel PK activator, for the potential treatment of lower-risk myelodysplastic syndrome, or LR MDS, and hemolytic anemias.

In addition to the aforementioned development programs, we continue to invest in our late-stage research program focused on advancing a phenylalanine hydroxylase, or PAH, stabilizer for the treatment of phenylketonuria, or PKU. Also, in July 2023 we entered into a license agreement with Alnylam Pharmaceuticals, Inc., or Alnylam, for the development and commercialization of products containing or comprised of an siRNA development candidate discovered by Alnylam and targeting the transmembrane serine protease 6, or TMPRSS6, gene, and we intend to pursue development of a licensed product for the potential treatment of patients with polycythemia vera, or PV, a rare blood disorder. See below for more information on the license agreement with Alnylam.

We are subject to risks common to companies in our industry including, but not limited to, uncertainties relating to conducting preclinical and clinical research and development, the manufacture and supply of products for clinical and commercial use, obtaining and maintaining regulatory approvals and pricing and reimbursement for our products, market acceptance, managing global growth and operating expenses, availability of additional capital, competition, obtaining and enforcing patents, stock price volatility, dependence on collaborative relationships and third-party service providers, dependence on key personnel, potential litigation, potential product liability claims and potential government investigations.

Sale of our Oncology Business to Servier
On March 31, 2021, we completed the sale of our oncology business to Servier Pharmaceuticals, LLC, or Servier, which represented a discontinued operation. The transaction included the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs for a payment of approximately $1.8 billion in cash at the closing, subject to certain adjustments, and a payment of $200.0 million in cash, if, prior to January 1, 2027, vorasidenib is granted new drug application approval from the FDA with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an isocitrate dehydrogenase 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
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IDHIFA® and the right to receive a $25.0 million potential milestone payment under our prior collaboration agreement with Celgene Corporation, Servier is responsible for conducting certain clinical development activities within the IDHIFA® development program.
We recorded income from royalties of approximately $4.4 million and $9.9 million on U.S. net sales of TIBSOVO® by Servier in the royalty income from gain on sale of oncology business line item within the condensed consolidated statements of operations, for the three and nine months ended September 30, 2022, respectively.
Sale of Contingent Payments
The consideration for the sale of our oncology business to Servier included a royalty of 5% of U.S. net sales of TIBSOVO® from the close of the transaction through the loss of exclusivity, referred to as contingent payments. We recognized the contingent payments in the royalty income from gain on sale of oncology business line item in our consolidated statements of operations in the period when realizable. In October 2022, we sold our rights to future contingent payments to entities affiliated with Sagard Healthcare Partners, or Sagard, and recognized income of $127.9 million within the gain on sale of contingent payments line item in our consolidated statements of operations for the year ended December 31, 2022. We retain our rights to the potential milestone payment and royalties from Servier if vorasidenib is approved by the FDA.
Alnylam License Agreement
On July 28, 2023, Agios and Alnylam Pharmaceuticals, Inc., or Alnylam, entered into a license agreement under which Agios acquired the rights to develop and commercialize Alnylam’s novel preclinical siRNA targeting TMPRSS6, as a potential disease-modifying treatment for patients with PV. Because the acquired assets do not meet the definition of a business in accordance with ASC 805, Business Combinations, Agios will account for the agreement as an asset acquisition.
In accordance with the agreement, in the three months ended September 30, 2023, Agios made an up-front payment to Alnylam and recognized in-process research and development of $17.5 million which was recorded in research and development expense within our Consolidated Statements of Operations and classified as investing activities within our Consolidated Statements of Cash Flows. Agios will also pay Alnylam for certain expenses associated with the development of TMPRSS6 and these will be recorded in our Consolidated Statements of Operations as incurred. Additionally, Agios is responsible to pay up to $130.0 million in potential development and regulatory milestones, in addition to sales milestones as well as tiered royalties on annual net sales, if any, of licensed products, which may be subject to specified reductions and offsets.
Basis of presentationPresentation
The condensed consolidated balance sheet as of September 30, 2017, and2023, the condensed consolidated statements of operations, and comprehensive loss and stockholders' equity for the three and nine months ended September 30, 20172023 and 2016,2022, and the condensed consolidated statements of cash flows for the nine months ended September 30, 20172023 and 2016,2022 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, and2023, our results of operations and stockholders' equity for the three and nine months ended September 30, 20172023 and 2016,2022, and cash flows for the nine months ended September 30, 20172023 and 2016.2022. 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 periodperiods are also unaudited. The results of operations for the three and nine months ended September 30, 20172023 are not necessarily indicative of the results to be expected for the year ending December 31, 20172023 or for any other future annual or interim period. The year-end condensed consolidated balance sheet data as of December 31, 2022 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, theThe 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, 20162022 that was filed with the Securities and Exchange Commission, or the SEC, on February 16, 2017.23, 2023.
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.
LiquidityUse of Estimates
In April 2017,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 completed aevaluate 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 recent COVID-19 pandemic, or other pandemics or public offeringhealth emergencies, may in the future directly or indirectly impact our business, results of 5,050,505 sharesoperations and financial condition, including expenses, reserves and allowances, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are
8
Table of common stock at an offering price of $49.50 per share.Contents
highly uncertain. 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 of common stock, which was also exercised in April 2017, resulting in additional net proceeds to us of $35.2 million, after underwriting discounts and commissions. After giving effect to the full exercisehave made estimates of the over-allotment option,impact of the numberrecent COVID-19 pandemic within our financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates.
Liquidity
As of shares sold by us inSeptember 30, 2023, we had cash, cash equivalents and marketable securities of $872.4 million. 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 proceedsmarketable 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 and Recent Accounting Pronouncements
Significant accounting policies
In the quarter ended March 31, 2017, we adopted Accounting Standards Update, or ASU, 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, or ASU 2016-09, which simplifies several aspects of the accounting for employee share-based payment transactions. 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, 2016.2022.
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 FASBFinancial 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. Fair Value Measurements
We record cash equivalents and marketable securities at fair value. Accounting Standards Codification, or 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.
The following table summarizes theour cash equivalents and marketable securities measured at fair value and by level on a recurring basis as of September 30, 2017 (in thousands):
 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. Treasuries151,814
 —
 —
 151,814
Government securities53,131
 13,701
 —
 66,832
Corporate debt securities—
 279,160
 —
 279,160
Total cash equivalents and marketable securities$293,501
 $324,039
 $—
 $617,540
2023:
(In thousands)Level 1Level 2Level 3Total
Cash equivalents$5,187 $— $— $5,187 
Total cash equivalents5,187 — — 5,187 
Marketable securities:
U.S. Treasuries— 32,973 — 32,973 
Government securities— 363,542 — 363,542 
Corporate debt securities— 411,542 — 411,542 
Total marketable securities— 808,057 — 808,057 
Total cash equivalents and marketable securities$5,187 $808,057 $— $813,244 
Cash equivalents and marketable securities have been initially valued at the transaction price and are subsequently valued, at the end of each reporting period, utilizing third-party pricing services or other observable market observable data. The pricing services utilize industry standard valuation models, including both income and market basedmarket-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, 2017.2023.
There have been no changes to the valuation methods during the nine 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 12023, and Level 2 during the nine months ended September 30, 2017. We havewe had no financial assets or liabilities that were classified as Level 3 at any point during the nine months ended September 30, 2017.2023.
4. Marketable Securities
MarketableOur 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 securitiesclassified as available-for-sale pursuant to ASC 320, Investments – Debt and Equity Securities. Marketable securities, and are recorded at fair value, with unrealizedvalue. Unrealized gains and losses are included as a component of accumulated other comprehensive loss in the condensed consolidated balance sheets and statements of stockholders’ equity and a component of total
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comprehensive loss in the condensed consolidated statements of comprehensive 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 condensed consolidated balance sheets with a corresponding adjustment to earnings, and noncredit-related impairment is recognized in other comprehensive income, net of taxes. Realized gains and losses are included in investment income on a specific-identification basis. There were no material realized gains or losses on marketable securities for the three and 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.2023 or 2022.

Marketable securities at September 30, 2017 consist2023 consisted of the following (in thousands):
following:
(In thousands)(In thousands)Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Fair
Value
Current:Current:
Amortized
Cost		 Unrealized
Gains		 Unrealized
Losses		 Fair
Value
Current:       
Certificates of deposit$10,240
 $1
 $(10) $10,231
U.S Treasuries113,824
 4
 (45) 113,783
U.S. TreasuriesU.S. Treasuries$33,214 $— $(241)$32,973 
Government securities42,443
 —
 (32) 42,411
Government securities293,501 — (2,136)291,365 
Corporate debt securities208,850
 3
 (91) 208,762
Corporate debt securities260,658 — (1,841)258,817 
Total CurrentTotal Current587,373 — (4,218)583,155 
Non-current:       Non-current:
Certificates of deposit960
 —
 (6) 954
U.S Treasuries38,162
 —
 (131) 38,031
U.S. TreasuriesU.S. Treasuries— — — — 
Government securities24,492
 —
 (71) 24,421
Government securities72,630 — (453)72,177 
Corporate debt securities70,535
 2
 (139) 70,398
Corporate debt securities153,950 — (1,225)152,725 
$509,506
 $10
 $(525) $508,991
Total Non-currentTotal Non-current226,580 — (1,678)224,902 
Total marketable securitiesTotal marketable securities$813,953 $— $(5,896)$808,057 
Marketable securities at December 31, 2016 consist2022 consisted of the following (in thousands):
following:
(In thousands)(In thousands)Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Fair
Value
Current:Current:
Amortized
Cost		 Unrealized
Gains		 Unrealized
Losses		 Fair
Value
Current:       
Certificates of deposit$11,280
 $2
 $(3) $11,279
U.S. Treasuries141,678
 2
 (62) 141,618
U.S. Treasuries$68,175 $3 $(811)$67,367 
Government securities19,533
 —
 (23) 19,510
Government securities220,901 8 (5,289)215,620 
Corporate debt securities208,285
 3
 (135) 208,153
Corporate debt securities363,263 1 (2,391)360,873 
Total CurrentTotal Current652,339 12 (8,491)643,860 
Non-current:       Non-current:
Certificates of deposit7,600
 6
 (13) 7,593
U.S. TreasuriesU.S. Treasuries17,418 4 (193)17,229 
Government securities4,499
 —
 (21) 4,478
Government securities117,475 7 (1,659)115,823 
Corporate debt securities20,248
 —
 (69) 20,179
Corporate debt securities183,037 76 (2,291)180,822 
$413,123
 $13
 $(326) $412,810
Total Non-currentTotal Non-current317,930 87 (4,143)313,874 
Total marketable securitiesTotal marketable securities$970,269 $99 $(12,634)$957,734 
AtAs of September 30, 20172023 and December 31, 2016,2022, 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 valueAs 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, 20172023 and December 31, 2016,2022, we held 238233 and 158259 debt securities, respectively, that were in an unrealized loss position for less than one year, respectively.year. We did not record an allowance for credit losses as of September 30, 2023 and December 31, 2022 related to these securities. The aggregate fair value of debt securities in an unrealized loss position at September 30, 20172023 and December 31, 20162022 was $435.5$808.1 million and $335.4$868.2 million, respectively. There were no individual securities that were in a significant unrealized loss position as of September 30, 20172023 and December 31, 2016.2022. We evaluated our securities for other-than-temporary impairment and considered the decline in market value forregularly review the securities to be primarily attributable toin an unrealized loss position and evaluate the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic and market conditions. It is not more likely than not that we will be required to sell the securities, and weWe do not intend to do so prior to the recovery of the amortized cost basis. Based on this analysis,consider these marketable securities were not considered to be other-than-temporarily impaired as of September 30, 20172023 and December 31, 2016.2022.

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5. Collaboration AgreementsInventory
Celgene CorporationInventory, which consists of commercial supply of PYRUKYND®, consisted of the following:
To date,
(In thousands)September 30,
2023		December 31,
2022
Raw materials$470 $— 
Work-in-process15,743 7,550 
Finished goods1,061 942 
Total inventory$17,274 $8,492 
6. Leases
Our building leases are comprised of office and laboratory space under non-cancelable operating leases. These lease agreements have remaining lease terms of approximately four years and contain various clauses for renewal at our revenue has primarily been generated fromoption. 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.
The components of lease expense and other information related to leases were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(In thousands)2023202220232022
Operating lease costs$3,807 $3,807 $11,420 $11,420 
Cash paid for amounts included in the measurement of operating lease liabilities$4,550 $4,420 $13,614 $12,610 
We have not entered into any material short-term leases or financing leases as of September 30, 2023.
In arriving at the operating lease liabilities as of September 30, 2023 and December 31, 2022, we applied the weighted-average incremental borrowing rate of 5.7% for both periods over a weighted-average remaining lease term of 4.4 and 5.2 years, respectively.
As of September 30, 2023, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter were as follows:
(In thousands)
Remaining 2023$3,037 
202418,660 
202519,507 
202620,151 
202720,755 
20283,479 
Thereafter— 
Undiscounted minimum rental commitments$85,589 
Interest(10,091)
Operating lease liabilities$75,498 
We provided our collaboration agreements with Celgene, or collectively, the Collaboration Agreements. Celgenelandlord a security deposit of $2.9 million as security for our leases, which is a related party through ownership ofincluded within other non-current assets on our common stock. condensed consolidated balance sheet.
In April 2010,August 2021, we entered into a collaborationlong-term sublease agreement focused on cancer metabolism. The agreement was amended in October 2011 and July 2014, or collectivelyfor 13,000 square feet of the agreement togetheroffice space at 38 Sidney Street, Cambridge, Massachusetts, with the amendments,term of the 2010 Agreement. Onlease running through December 2024. In April 27, 2015,2022, we entered into a joint worldwide development and profit share collaboration and licenselong-term sublease agreement for 27,000 square feet of the office space at 64 Sidney Street, Cambridge, Massachusetts, 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 onterm of the development and commercialization of AG-881 products. Onlease running through April 2025. In May 17, 2016,2023, we entered into a master research and collaborationlong-term sublease agreement for 7,407 square feet of office space on the first floor of 64 Sidney Street, Cambridge, Massachusetts, 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,lease running through April 2025. We recorded operating sublease income of $1.7 million and may be extended$1.0 million 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 $8.0September 30, 2023 and 2022, respectively, and $4.5 million from Celgene upon the designation 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$2.7 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.
We are eligible to receive the following milestone-based payments associated with the 2016 Agreement:
ProgramMilestoneAmount
65/35 program in IO fieldSpecified clinical development event
$25.0 million
65/35 program in IO fieldSpecified regulatory milestone eventsUp to $183.8 million
50/50 program in IO fieldSpecified clinical development event
$20.0 million
50/50 program in IO fieldSpecified regulatory milestone eventsUp to $148.8 million
I&I fieldSpecified clinical development event
$25.0 million
I&I fieldSpecified regulatory milestone eventsUp to $236.3 million
I&I fieldSpecified commercial milestone eventsUp 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.
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 U.S. Food and Drug Administration, or FDA, granted Celgene approval of IDHIFA® for the treatment of adult patients with relapsed or refractory acute myeloid leukemia, or R/R AML, with an IDH2 mutation as detected by an FDA-approved test.
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 $0.72023 and 2022,
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respectively, in other income, net in the condensed consolidated statements of operations. We received security deposits from our sublessees of approximately $1.2 million in royalty revenuewhich is recorded within other non-current assets on our condensed consolidated balance sheet.

As of September 30, 2023, the future minimum lease payments to be received under the 2010 Agreement.long-term sublease agreements were as follows:
(In thousands)
Remaining 2023$1,247 
20245,078 
20251,310 
Total$7,635 
Unless terminated earlier by either party, the term
7. Accrued Expenses
Accrued expenses consisted of the 2010 Agreement will continue untilfollowing:
(In thousands)September 30,
2023		December 31,
2022
Accrued compensation$14,022 $18,105 
Accrued research and development costs12,528 8,425 
Accrued professional fees1,369 2,435 
Accrued other2,571 1,385 
Total accrued expenses$30,490 $30,350 
8. Product Revenue
We sell PYRUKYND®, our wholly owned product, to a limited number of specialty distributors and specialty pharmacy providers, or collectively, the expiration of all royalty termsCustomers. The Customers subsequently resell PYRUKYND® to pharmacies or dispense directly to patients. In addition to distribution agreements with Customers, we enter into arrangements with healthcare providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to IDHIFA®the purchase of PYRUKYND®. Celgene may terminate this agreement
The performance obligation related to the sale of PYRUKYND® is satisfied and revenue is recognized when the Customer obtains control of the product, which occurs at a point in time, typically upon delivery to the Customer.
Product revenue, net, were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2023202220232022
Product revenue, net$7,399 $3,516 $19,720 $7,430 
Reserves for convenience in its entirety upon ninety days written notice to us. If either party is in material breachVariable Consideration
Revenues from product sales are recorded at the net sales price, or transaction price, which includes estimates of variable consideration for which reserves are established and fails to cure such breachresult from contractual adjustments, government rebates, returns and other allowances that are offered within the specified curecontracts with our Customers, healthcare providers, payors and other indirect customers relating to the sale of our products.
Contractual Adjustments
We generally provide Customers with discounts, including prompt pay discounts, and allowances that are explicitly stated in the contracts and are recorded as a reduction of revenue in the period the other party may terminaterelated product revenue is recognized. In addition, we receive sales order management, data and distribution services from certain Customers.
Chargebacks and discounts represent the 2010 Agreement in its entirety. Either party may terminateestimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the agreementlist prices charged to Customers who directly purchase the product from us. Customers charge us for the difference between what they pay for the product and the ultimate selling price to the qualified healthcare providers. These reserves are estimated using the expected value method, based upon a range of possible outcomes that are probability-weighted for the estimated channel mix and are established in the eventsame period that the related revenue is recognized, resulting in a reduction of specified insolvency events involvingproduct revenue.
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Government Rebates
Government rebates include Medicare, TriCare, and Medicaid rebates, which we estimate using the other party.expected value method, based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue. For Medicare, we also estimate the number of patients in the prescription drug coverage gap for whom we will owe an additional liability under the Medicare Part D program.
Accounting analysisReturns / Replacement
We estimate the amount of product sales that may be returned by Customers or replaced by Agios and record this estimate as a reduction of revenue recognition – collaborationin the period the related product revenue is recognized. We currently estimate product return and replacement liabilities using the expected value method, based on available industry data, including our visibility into the inventory remaining in the distribution channel.
April 2015 modification: The AG-881 Agreements were determined to be a modificationfollowing table summarizes balances and activity in each 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 Agreementproduct revenue allowance 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,reserve categories 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 ElementBESPUnit(s) of AccountingPrincipal/AgentRecognition Method
April 2015 modification
AG-881 program licenses (1)
$33.2 million2PrincipalUpon 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 million4PrincipalProportionally as services are delivered over the performance period, expected to be through September 2017
On-going development services (2) (3)
$97.3 million4AgentProportionally as services are delivered over the performance period, expected to be through December 2017
On-going research and development (2)
$30.5 million1PrincipalRatably over the performance period, expected to be through April 2016
Committee participations (4)
$0.8 million1PrincipalRatably 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 million3PrincipalProportionally as services are delivered over the performance period, expected to be through December 2019
On-going development services (2) (3)
$22.4 million3AgentProportionally as services are delivered over the performance period, expected to be through December 2019
On-going research and development (2)
$207.0 million1PrincipalRatably over the performance period, expected to be through May 2022
Committee participations (4)
$1.5 million1PrincipalRatably over the performance period, expected to be through December 2022
Additional development services
$48.7 million1PrincipalProportionally 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 recognized2023:
(In thousands)Contractual AdjustmentsGovernment RebatesReturns/ ReplacementTotal
Balance at December 31, 2022$65 $573 $133 $771 
Current provisions relating to sales in the current year919 1,631 2,147 4,697 
Adjustments relating to prior years— (7)— (7)
Payments/returns relating to sales in the current year(793)(495)(1,958)(3,246)
Payments/returns relating to sales in the prior years(49)(306)(48)(403)
Balance at September 30, 2023$142 $1,396 $274 $1,812 
Total revenue-related reserves above, included in our condensed consolidated balance sheets, are summarized as collaboration revenue thefollows:
(In thousands)September 30, 2023December 31, 2022
Reduction of accounts receivable$137 $60 
Component of accrued expenses1,675 711 
Total revenue-related reserves$1,812 $771 
The following non-contingent consideration allocated to each undelivered element (in thousands):

 Three Months Ended September 30, Nine Months Ended September 30,
Undelivered Element2017 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 development6,425
 5,814
 19,479
 8,516
Committee participations41
 37
 124
 54
Total collaboration revenue - related party$9,749
 $8,985
 $30,498
 $21,052
During the three and nine months ended September 30, 2017 and 2016, we recognized as a reduction of research and development expenses the following non-contingent consideration allocated to each undelivered element (in thousands):
 Modification
Period		Three Months Ended September 30, Nine Months Ended September 30,
Undelivered Element2017 2016 2017 2016
On-going development services (agent)April 2015$—
 $—
 $—
 $7,456
On-going development services (agent)May 20161,078
 3,453
 6,329
 4,780
Total reduction of research and development expenses $1,078
 $3,453
 $6,329
 $12,236
Development and commercialization expenses that were not contemplated as of the modification dates due to the high level of uncertainty are recognized as collaboration revenue or a reduction of research and development expensestable presents changes in the period in which they are earned. For the three and nine months ended September 30, 2017 and 2016, we recognized the following collaboration revenue and reduction of research and development expenses related to such expenses (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Collaboration revenue - related party       
Development activities$—
 $—
 $—
 $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 and December 31, 2016, we recorded 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 earnedour contract assets during the nine months ended September 30, 2017 and 2016. The next potential milestones expected2023:
(In thousands)December 31, 2022AdditionsDeductionsSeptember 30, 2023
Contract assets(1)
Accounts receivable, net$2,206 $24,411 $(25,441)$1,176 
(1) Additions to be achieved under the Collaboration Agreementscontract assets relate to specified ex-U.S. regulatory events. Achievement of these events will result in milestone payments of upamounts billed 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 inhibitorsCustomers 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.deductions to contract assets primarily relate to collection of receivables during the reporting period.
The 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.
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. Accrued Expenses
Accrued expenses consist of the following (in thousands):
 September 30,
2017		 December 31,
2016
Accrued compensation$11,273
 $11,092
Accrued research and development costs16,043
 20,266
Accrued professional fees3,089
 476
Accrued other355
 168
Total accrued expenses$30,760
 $32,002
7.9. Share-Based Payments
20132023 Stock Incentive Plan and Inducement Grants
In June 2013, our Board of Directors adopted and, in July 20132023, our stockholders approved the 20132023 Stock Incentive Plan, or the 20132023 Plan. The 20132023 Plan became effective upon the closing of our initial public offering, or IPO, and provides for the grant of incentive stock options, non-qualifiednonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, or RSUs, performance-based stockshare units, or PSUs, and other stock-based awards. awards to employees, advisors, consultants and non-employee directors.
Following the adoption of the 2023 Plan, we ceased granting equity awards under the 2013 Stock Incentive Plan, or the 2013 Plan. Any outstanding equity awards that were previously granted under the 2013 Plan continue to be governed by their terms. Following adoption of the 2013 Plan, we granted no further stock options or otherceased granting equity awards under the 2007 Stock Incentive Plan, or the 2007 Plan. Any options orThere are no outstanding equity awards outstanding under the 2007 Plan atPlan.
In connection with the timestart of adoptionemployment of our Chief Executive Officer and Chief Financial Officer in 2022, and our Chief Commercial Officer in 2023, our board of directors granted each of them equity awards in the 2013 Plan remain outstandingform of stock options, RSUs and effective.
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PSUs, which awards were made outside our equity incentive plans as inducements material to their respective entry into employment with us in accordance with Nasdaq Listing Rule 5635(c)(4).
As of September 30, 2017,2023, the totalmaximum number of shares reserved under the 2007 Plan, and the 2013 Plan, are 7,407,798,the 2023 Plan and the inducement grants described above was 12,065,656, and we had 1,275,8134,762,423 shares available for future issuance under the 20132023 Plan.

Stock options
The following table presents stock option activity for the nine months ended September 30, 2017:
 
Number of
Stock Options
 
Weighted-
Average
Exercise
Price
Outstanding at December 31, 20165,218,880
 $46.79
Granted1,494,252
 50.61
Exercised(529,618) 19.31
Forfeited/expired(362,903) 72.43
Outstanding at September 30, 20175,820,611
 $48.68
Exercisable at September 30, 20172,969,761
 $41.87
Vested and expected to vest at September 30, 20175,820,611
 $48.68
2023:
Number of
Stock Options
Weighted-Average
Exercise Price
Outstanding at December 31, 20225,772,564 $48.81 
Granted870,924 25.88 
Exercised(188,591)11.52 
Forfeited/Expired(912,479)55.49 
Outstanding at September 30, 20235,542,418 $45.37 
Exercisable at September 30, 20233,485,110 $54.14 
Vested and expected to vest at September 30, 20235,542,418 $45.37 
At September 30, 2017, the2023, there was approximately $31.9 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 2.52.55 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 months ended September 30, 2017:
 
Number of
Stock Units
 
Weighted-Average
Grant Date Fair Value
Unvested shares at December 31, 201677,050
 $49.60
Granted60,750
 51.04
Vested(7,500) 122.22
Forfeited/expired(10,300) 39.76
Unvested shares at September 30, 2017120,000
 $46.63
2023:
Number of
Stock Units
Weighted-Average
Grant Date Fair 
Value
Unvested shares at December 31, 20221,117,921 $38.30 
Granted899,072 25.97 
Vested(450,586)41.42 
Forfeited(210,420)33.46 
Unvested shares at September 30, 20231,355,987 $29.84 
As of September 30, 2017,2023, there was approximately $2.8$27.5 million of total unrecognized compensation expense related to RSUs, which we expect to be recognizedrecognize over a weighted-average period of approximately 1.21.87 years.
Performance-based stock options
During the nine 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. Stock-based compensation expense associated with these performance-based stock options is recognized if the 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 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 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, 2016200,613
 $53.36
Granted16,391
 50.83
Vested—
 —
Forfeited/expired(25,630) 51.00
Unvested shares at September 30, 2017191,374
 $53.46
2023:
Number of
Stock Units
Weighted-Average
Grant Date Fair 
Value
Unvested shares at December 31, 2022430,243 $35.87 
Granted125,897 25.23 
Vested(92,257)30.18 
Forfeited(101,750)46.39 
Unvested shares at September 30, 2023362,133 $30.66 
Stock-based compensation expense associated with these PSUs is recognized if the underlying performance condition is considered probable of achievement using our management’s best estimates.
As of September 30, 2017,2023, there was approximately $10.2no unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered probable of achievement, and $11.1 million of total unrecognized compensation expense related to PSUs with performance-based vesting criteria that are considered not considered probable of achievement.
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Market-based stock units
The following table presents market-based stock unit, or MSU, activity for the nine months ended September 30, 2023:
Number of
Stock Units		Weighted-Average
Grant Date Fair
Value
Unvested shares at December 31, 202242,695 $41.50 
Granted— — 
Unvested shares at September 30, 202342,695 $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 September 30, 2023, there was no remaining unrecognized compensation expense related to MSUs.
2013 Employee Stock Purchase Plan
In June 2013, our Board of Directors adopted, and in July 2013 our stockholders approved, the 2013 Employee Stock Purchase Plan, or the 2013 ESPP. 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 112,832 and 104,867 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 months ended September 30, 20172023 and 2016,2022, respectively, under the 2013 ESPP. The 2013 ESPP provides participating employees with the opportunity to purchase up to an aggregate of 327,2722,363,636 shares of our common stock. As of September 30, 2017,2023, we had 213,7911,686,039 shares of common stock available for future issuance under the 2013 ESPP.
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
September 30,		Nine Months Ended
September 30,
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In thousands)(In thousands)2023202220232022
Stock options$11,330
 $11,425
 $32,315
 $30,288
Stock options$4,171 $5,864 $13,065 $17,720 
Restricted stock units634
 510
 2,104
 1,367
Restricted stock units4,735 5,115 14,436 16,512 
Performance-based stock options—
 —
 —
 46
Employee Stock Purchase Plan243
 208
 709
 545
Performance-based stock unitsPerformance-based stock units— — 2,784 2,919 
Employee stock purchase planEmployee stock purchase plan170 177 667 680 
Total stock-based compensation expense$12,207
 $12,143
 $35,128
 $32,246
Total stock-based compensation expense$9,076 $11,156 $30,952 $37,831 
Expenses related to equity-basedstock options and stock-based awards were allocated as follows in the condensed consolidated statements of operations (in thousands):operations:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(In thousands)2023202220232022
Research and development expense$3,635 $4,628 $12,530 $16,207 
Selling, general and administrative expense5,441 6,528 18,422 21,624 
Total stock-based compensation expense$9,076 $11,156 $30,952 $37,831 
 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 expense4,587
 4,240
 12,293
 12,254
Total stock-based compensation expense$12,207
 $12,143
 $35,128
 $32,246



8.10. Loss per Share
Basic net loss per share is calculated by dividing net loss by the weighted averageweighted-average shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted averageweighted-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 optionsshares are considered to be common stock equivalents. Furthermore, performance-based stock unitsequivalents, while PSUs and MSUs with performance and market vesting conditions, respectively, that were not metdeemed probable as of September 30, 20172023 are excluded asnot considered to be common stock equivalents.
We utilize the control number concept in the computation of diluted earnings per share to determine whether potential common stock equivalents are dilutive. The control number used is net loss from continuing operations. The control number 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
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we had a net loss for all periods presented, no dilutive effect has been recognized in the effectcalculation of all potentially dilutive securities is anti-dilutive. Accordingly, basicloss per share. Basic and diluted net loss per share was the same for all periods presented.
The following common stock equivalents were excluded from the calculation of diluted net loss per share applicable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:
Three and Nine Months Ended September 30,
20232022
Stock options5,542,418 5,909,087 
Restricted stock units1,355,987 1,264,377 
Employee stock purchase plan shares11,383 10,503 
Total common stock equivalents6,909,788 7,183,967 

16
 Three and Nine Months Ended September 30,
 2017 2016
Stock options5,820,611
 5,431,068
Restricted stock units120,000
 66,300
Employee Stock Purchase Plan options5,348
 5,977
Total common stock equivalents5,945,959
 5,503,345

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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 in conjunction with our unaudited condensed consolidated financial statements as of September 30, 2017 and 20162023 and for the three and nine months ended September 30, 20172023 and 2016,2022, 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, 20162022 filed with the Securities and Exchange Commission, or SEC on February 16, 2017.23, 2023. 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. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “target,” “potential,”“vision” “will,” “would,” “could,” “should,” “continue,” 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.statements, although not all forward-looking statements contain these identifying words. 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“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, 2022. 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 oftransforming patients’ lives through scientific leadership in the field of cellular metabolism, with the goal of making transformative, first- or best-in-class medicines. Our areascreating differentiated medicines for rare diseases. With a history of focus are cancerfocused study on cellular metabolism, rare genetic diseases, or RGDs, which are diseases that are directly caused by changes in genes or chromosomes, often passed from one generation to the next,we have a deep and metabolic immuno-oncology, or MIO,mature understanding of this biology, which is involved in the healthy functioning of nearly every system in the body. Building on this expertise, these learnings can be rapidly applied to our clinical trials with the goal of developing medicines that can have a developing field that aimssignificant impact for patients. We accelerate the impact of our portfolio by cultivating connections with patient communities, healthcare professionals, partners and colleagues to modulatediscover, develop and deliver potential therapies for rare diseases.

The lead product candidate in our portfolio, PYRUKYND® (mitapivat), is an activator of both wild-type and mutant pyruvate kinase, or PK, enzymes for the activitypotential treatment of relevant immune cells (or tumor microenvironment) by targeting critical metabolic nodes, thereby enhancing the immune mediated anti-tumor response.hemolytic anemias. In each of these areas, we are seeking to unlock the biology of cellular metabolism as a platform to create transformative therapies.

On August 1, 2017,February 2022, the U.S. Food and Drug Administration, or FDA, granted our collaboration partner Celgene Corporation, or Celgene, approval of IDHIFA®approved PYRUKYND® for the treatment of adult patientshemolytic anemia in adults with relapsed or refractory acute myeloid leukemia, or R/R AML, and an isocitrate dehydrogenase 2, or IDH2, mutation as detected by an FDA-approved test. IDHIFA®, an oral targeted inhibitor ofPK deficiency in the IDH2 enzyme, isUnited States. In November 2022, we received marketing authorization from the first and only FDA-approved therapyEuropean Commission 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, and AG-881, a brain-penetrant, pan-IDH mutant inhibitor, which provides added flexibility to our current portfolio of IDH mutant inhibitors.
The lead product candidate in our RGD program, AG-348, targets pyruvate kinase-RPYRUKYND® for the treatment of pyruvate kinase,PK deficiency in adult patients in the European Union, or EU. In December 2022, we received marketing authorization in Great Britain for PYRUKYND® for the treatment of PK deficiency in adult patients under the European Commission Decision Reliance Procedure. In addition, we are currently evaluating PYRUKYND® in clinical trials for the treatment of thalassemia, sickle cell disease, or SCD, and in pediatric patients with PK deficiency. We are also developing AG-946, a novel PK deficiency is a rare genetic disorder that often results in severeactivator, for the potential treatment of lower-risk myelodysplastic syndrome, or LR MDS, and 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.anemias.
2016 Agreement
In May 2016,addition to the aforementioned development programs, we continue to invest in our late-stage research program focused on advancing a phenylalanine hydroxylase, or PAH, stabilizer for the treatment of phenylketonuria, or PKU. Also, in July 2023 we entered into a master research 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 programs in the field of 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 discovery and development collaboration and license agreement with Celgene,Alnylam Pharmaceuticals, Inc., 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 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 extendedAlnylam, 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.
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 IDH1 program. The termination does not affect the AG-881 Agreements described below, which are directed to both the IDH1 target 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. Underproducts containing or comprised of an siRNA development candidate discovered by Alnylam and targeting the termstransmembrane serine protease 6, or TMPRSS6, gene, and we intend to pursue development of a licensed product for the AG-881 Agreements,potential treatment of patients with polycythemia vera, or PV, a rare blood disorder.
Sale of our Oncology Business to Servier
On March 31, 2021, we received an initial upfrontcompleted the sale of our oncology business to Servier Pharmaceuticals, LLC, or Servier, which represented a discontinued operation. The transaction included the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs for a payment of $10.0approximately $1.8 billion in cash at the closing, subject to certain adjustments, and a payment of $200.0 million in May 2015 and are eligiblecash, if, prior to receive upJanuary 1, 2027, vorasidenib is granted new drug application approval from the FDA with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an isocitrate
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dehydrogenase 1 or 2 mutation (and, to $70.0 million in milestone-based payments. The parties will split all worldwide development costs equally, subject to specified exceptions,the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval), as well as any profits from anya royalty of 5% of U.S. net sales of or commercialization losses related to, licensed AG-881 products. Either party may, at its own expense and withTIBSOVO® from the other party's permission, undertake additional development activities outsideclose of the scopetransaction through loss of exclusivity, and a royalty of 15% of U.S. net sales of vorasidenib from the development plan agreed upon withfirst commercial sale of vorasidenib through loss of exclusivity. Servier also acquired our co-commercialization rights for Bristol Myers Squibb’s IDHIFA® and 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 development 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® for the treatment of adult patients with R/R AML and an IDH2 mutation as detected by an FDA-approved test. We are eligible to receive up 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 potential milestone payment upon achievementunder our prior collaboration agreement with Celgene Corporation, or Celgene, Servier is responsible for conducting certain clinical development activities within the IDHIFA® development program.
Sale of Contingent Payments
The consideration for the sale of our oncology business to Servier included a specified commercial milestone event. Additionally, we are eligible to receive tiered royalties on anyroyalty of 5% of U.S. net sales of IDHIFA®.
Critical Accounting Policies and Estimates
Our critical accounting policies are those policies which requireTIBSOVO® from the most significant judgments and estimatesclose of the transaction through the loss of exclusivity, referred to as contingent payments. We recognized the contingent payments in the preparationroyalty income from gain on sale of oncology business line item in our 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 have been no significant changes to our critical accounting policies discussedstatements of operations in the Annual Reportperiod when realizable. In October 2022, we sold our rights to future contingent payments to entities affiliated with Sagard Healthcare Partners, or Sagard, and recognized income of $127.9 million within the gain on Form 10-Ksale of contingent payments line item in our consolidated statements of operations for the year ended December 31, 2016.2022. We retain our rights to the potential milestone payment and royalties from Servier if vorasidenib is approved by the FDA.
Alnylam License Agreement
On July 28, 2023, Agios and Alnylam Pharmaceuticals, Inc., or Alnylam, entered into a license agreement under which Agios acquired the rights to develop and commercialize Alnylam’s novel preclinical siRNA targeting TMPRSS6, as a potential disease-modifying treatment for patients with PV. Because the acquired assets do not meet the definition of a business in accordance with ASC 805, Business Combinations, Agios will account for the agreement as an asset acquisition.
In accordance with the agreement, in the three months ended September 30, 2023, Agios made an up-front payment to Alnylam and recognized in-process research and development of $17.5 million which was recorded in research and development expense within our Consolidated Statements of Operations and classified as investing activities within our Consolidated Statements of Cash Flows. Agios will also pay Alnylam for certain expenses associated with the development of TMPRSS6 and these will be recorded in our Consolidated Statements of Operations as incurred. Additionally, Agios is responsible to pay up to $130.0 million in potential development and regulatory milestones, in addition to sales milestones as well as tiered royalties on annual net sales, if any, of licensed products, which may be subject to specified reductions and offsets.

Financial Operations Overview
Impact of COVID-19 on our Business
As of September 30, 2023, we have not experienced a significant financial or supply chain impact directly related to the recent COVID-19 pandemic, but have experienced some disruptions to clinical operations and certain clinical and research activities at our contract research organizations, or CROs. Although the public health emergency declaration related to COVID-19 ended on May 11, 2023, the extent of the effect of any future pandemics or public health emergencies on our operational and financial performance will depend in large part on future developments, which cannot be predicted and are out of our control.
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, preparing for and executing on the commercial launch of PYRUKYND® and, prior to the sale of our oncology business to Servier on March 31, 2021, marketing TIBSOVO® and IDHIFA®. 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 have financed and expect to continue to finance our operations primarily through cash on hand, royalty payments from Servier with respect to U.S. net sales of TIBSOVO® prior to the sale of these contingent payments to Sagard, proceeds from the sale of contingent payments to Sagard, a potential milestone payment and royalties from Servier if vorasidenib is approved by the FDA, the actual and potential future sales of PYRUKYND® and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions.

Additionally, since inception, we have historically incurred significant operating losses. Our net losses were $226.4 million and $142.0 millionloss for the nine months ended September 30, 20172023 and 2016,2022 were $256.1 million and $268.3 million, respectively. As of September 30, 2017,2023, we had an accumulated deficit of $709.8$726.7 million. We expect to continue to incur significant expenses and operatingnet 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 anticipateexpect that ourwe will continue to incur significant expenses will increase significantly as we continue to advance and expand clinical development activities for our lead programs, IDHIFA®programs: PYRUKYND®, ivosidenib, AG-881 and AG-348;
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AG-946; continue to discover and validate novel targets and drug product candidates;prioritize advancement of our PAH stabilizer; initiate development of a licensed siRNA development candidate pursuant to our license agreement with Alnylam; expand and protect our intellectual property portfolio;portfolio, including by in-licensing or acquiring assets for pipeline growth; and hire additional commercial development and scientificdevelopment personnel.
Revenue
Through September 30, 2017,Revenues
Our wholly owned product, PYRUKYND®, received approval from the FDA on February 17, 2022, for the treatment of hemolytic anemia in adults with PK deficiency in the United States. Upon FDA approval of PYRUKYND® in the United States, we have not generated anybegan generating product revenue from product sales. Substantially allsales of PYRUKYND®. We sell PYRUKYND® to a limited number of specialty distributors and specialty pharmacy providers, or collectively, the Customers. These Customers subsequently resell PYRUKYND® to pharmacies or dispense directly to patients. In addition to distribution agreements with Customers, we enter into arrangements with healthcare providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of PYRUKYND®. For further discussion of our revenue recognition policy, see Note 8, Product Revenue, to date has been derived from our collaborations. the condensed consolidated financial statements in this Form 10-Q.

In the future, we expect to continue to generate revenue from a combination of product sales, upfront payments,royalties on product sales, cost reimbursements, milestone payments, and royaltiesupfront payments to the extent we enter into future collaborations or licensing agreements.

Cost of Sales
Cost of sales consists primarily of manufacturing costs for sales of PYRUKYND®. Based on futureour policy to expense costs associated with the manufacturing of our products prior to regulatory approval, certain of the manufacturing costs associated with product sales.shipments of PYRUKYND® recorded during the three and nine months ended September 30, 2023 and 2022 were expensed prior to February 17, 2022, and, therefore, are not included in costs of sales during the three and nine months ended September 30, 2023 and 2022.

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 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 predict when, if ever, materialthe amount of net cash inflows will commence from IDHIFA®, ivosidenib, AG-881, AG-348, AG-270PYRUKYND® 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, enablingNDA-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.
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
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•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 our most advanced current research and development programs:
IDHIFA®PYRUKYND® (mitapivat): First-in-Class PK Activator

IDHIFA® is an orally available, selective, potent inhibitor of the mutated IDH2 protein, making it a highly targeted therapeutic candidateWe are developing PYRUKYND® 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 AMLPK deficiency and an IDH2 mutationother hemolytic anemias such as detected by an FDA-approved test.

Celgene maintains worldwide developmentthalassemia 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-348SCD. PYRUKYND® is an orally available small molecule and a potent activator of the wild-type (normal) and mutated PKR enzyme, which has resultedPK enzymes.
In February 2022, the FDA approved PYRUKYND® for the treatment of hemolytic anemia in restorationadults with PK deficiency in the United States. In November 2022, we received marketing authorization from the European Commission for PYRUKYND® for the treatment of adenosine triphosphate, or ATP, levelsPK deficiency in adult patients in the EU. In December 2022, we received marketing authorization in Great Britain for PYRUKYND® for the treatment of PK deficiency in adult patients under the European Commission Decision Reliance Procedure. In addition, we are currently evaluating PYRUKYND® in clinical trials for the treatment of thalassemia, SCD, and a decrease in 2,3-diphosphoglycerate, or 2,3-DPG, levels in blood sampled frompediatric 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.deficiency. We have worldwide development and commercial rights to AG-348PYRUKYND® and expect to fund the future development and commercialization costs related to this program. The FDAPYRUKYND® has been granted us orphan drug designation for AG-348the treatment of PK deficiency by the FDA and the European Medicines Agency, or EMA. Additionally, PYRUKYND® has received orphan drug designation from the FDA for the treatment of thalassemia and SCD.

We have built our commercial infrastructure to support the commercial launch of PYRUKYND® in adult PK deficiency in the United States. In connection with our regulatory approvals in the EU and Great Britain, we are currently providing access to PYRUKYND® free of charge for eligible patients in those jurisdictions through a global managed access program. We may provide access to PYRUKYND® for adult patients with PK deficiency and granted us fast track designationin other jurisdictions upon request through the global managed access program, on either a free of charge or for charge basis. Beyond the global managed access program, we continue to AG-348evaluate options for the commercialization of PYRUKYND® outside of the United States, including through exploring potential partnership opportunities.
We are evaluating PYRUKYND® in the following clinical trials:
•ENERGIZE, a phase 3, double-blind, randomized, placebo-controlled multicenter study evaluating the efficacy and safety of PYRUKYND® as a potential treatment for adults with non-transfusion-dependent α- or β-thalassemia, defined as ≤5 red blood cell, or RBC, units during the 24-week period before randomization and no RBC transfusions ≤8 weeks before providing informed consent or during the screening period. The primary endpoint of the trial is percentage of patients with PK deficiency.hemoglobin response, defined as a ≥1.0 g/dL increase in average hemoglobin concentration from Week 12 through Week 24 compared with baseline. Secondary endpoints include markers of hemolysis and ineffective erythropoiesis, as well as patient-reported outcome measures. This trial has completed enrollment and we expect to announce topline data from this trial in the first half of 2024.
•ENERGIZE-T, a phase 3, double-blind, randomized, placebo-controlled multicenter study evaluating the efficacy and safety of PYRUKYND® as a potential treatment for adults with transfusion-dependent α- or β-thalassemia, defined as 6 to 20 RBC units transfused and ≤6-week transfusion-free period during the 24-week period before randomization. The primary endpoint of the trial is percentage of patients with transfusion reduction response, defined as a ≥50% reduction in transfused RBC units with a reduction of ≥2 units of transfused RBCs in any consecutive 12-week period through Week 48 compared with baseline. Secondary endpoints include additional transfusion reduction measures and percentage of participants with transfusion-independence. This trial has completed enrollment and we expect to announce topline data from this trial in the second half of 2024.
•RISE UP, a phase 2/3 study evaluating the efficacy and safety of PYRUKYND® in SCD patients who are 16 years of age or older, have had between two and 10 sickle cell pain crises in the past 12 months, and have hemoglobin within the range of 5.5 to 10.5 g/dL during screening. In December 2016,June 2023, we announced our decisionthe phase 2 portion of this trial had achieved its primary endpoint of hemoglobin response in patients in both 50 mg and 100 mg twice daily mitapivat arms. 46.2% of patients (n=12) in the 50 mg twice daily mitapivat arm and 50.0% of patients (n=13) in the 100 mg twice daily mitapivat arm achieved a hemoglobin response, compared to advance AG-348 into pivotal development as3.7% of patients (n=1) in the placebo arm (2-sided p=0.0003 and 0.0001, respectively). The safety profile for mitapivat observed in the phase 2 portion of the study was generally consistent with previously reported data in other studies of sickle cell disease and other hemolytic anemias, and there were no adverse events leading to discontinuation in either the mitapivat or the placebo arms. In October 2023, we enrolled the first patient in the phase 3 portion of this trial. The phase 3 portion includes a 52-week randomized, placebo-controlled period in which participants will be randomized in a 2:1 ratio to receive the recommended (100 mg twice daily) PYRUKYND® dose level or placebo. The primary endpoints are hemoglobin response, defined as ≥1 g/dL increase in average hemoglobin from baseline to Week 52, and annualized rate of sickle cell pain crises. Participants who complete either the phase 2 or phase 3 portion will have the option to move into a 216-week open-label extension period to continue to receive PYRUKYND®.
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•ACTIVATE-kids and ACTIVATE-kidsT, double-blind phase 3 studies evaluating the efficacy and safety of PYRUKYND® as a potential disease-modifying treatment for PK deficiency.deficiency in not regularly transfused and regularly transfused patients between one and 18 years old, respectively. The primary endpoint of ACTIVATE-kids is percentage of patients with hemoglobin response, defined as ≥1.5 g/dL increase in hemoglobin concentration from baseline that is sustained at two or more scheduled assessments at weeks 12, 16, and 20 during the double-blind period. The primary endpoint of ACTIVATE-kidsT is transfusion reduction response, defined as ≥33% reduction in total RBC transfusion volume from week 9 through week 32 of the double-blind period. ACTIVATE-kidsT has completed enrollment. ACTIVATE-kids is currently enrolling patients and we have enrolled more than half of the patients in this trial.
DRIVE•An extension study evaluating the long-term safety, tolerability and efficacy of treatment with PYRUKYND® in patients from ACTIVATE and ACTIVATE-T, our completed pivotal trials of PYRUKYND® in not regularly transfused and regularly transfused adult patients with PK deficiency.
In June 2015, we initiated•An extension study evaluating the long-term safety, tolerability and efficacy of treatment with PYRUKYND® in patients from DRIVE PK, aour completed global phase 2, first-in-patient, open-label safety and efficacy clinical trial of AG-348PYRUKYND® in adult, transfusion-independentnot regularly transfused patients with PK deficiency.
•An extension study evaluating the safety, tolerability and efficacy of treatment with PYRUKYND® in patients from our completed phase 2, open-label safety and efficacy clinical trial of PYRUKYND® in adults with non-transfusion-dependent α- and β-thalassemia.
•In collaboration with the Company, the National Institutes of Health, or NIH, is evaluating PYRUKYND® in a phase 1 trial in patients with SCD pursuant to a cooperative research and development agreement. The core trial period has completed, and the long-term extension study is ongoing. In June 2016, we reported the first2020, clinical data from DRIVE PK at the 21st Congress of EHA in Copenhagen, Denmark, establishing proof of concept was established based on a preliminary analysis of the data from this trial.
•In collaboration with the Company, UMC Utrecht is evaluating PYRUKYND® in patients with SCD pursuant to an investigator sponsored trial agreement. The trial has completed enrollment and patient follow-up is ongoing, and a 2-year extension study has been initiated for AG-348 aspatients who complete the follow-up period.
AG-946: Novel PK Activator
We are developing AG-946, a novel first-in-class, oralPK activator, for the potential treatment of both wild-typeLR MDS and mutated PKR enzymes. Thishemolytic anemias. We are evaluating AG-946 in a phase 1 trial of AG-946 in healthy volunteers and in patients with SCD. We have presented data from the healthy volunteer cohorts, and we have initiated the SCD patient cohort of this trial. We initiated a phase 2a study of AG-946 in adults with LR MDS in the third quarter of 2022, and the trial has reached target enrollment, and in June 2017 we presented updated clinical data from DRIVE PK at 2017 EHA.
We intend to initiate two global, pivotal trials of AG-348 in PK deficiency in the first 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, and we will be eligible for up to $168.8 million in clinical and regulatory milestone payments.completed enrollment. We expect to submit an IND for AG-270report the topline results of this trial by the end of 2017.2023.
MTAP isOther Programs
In addition to the aforementioned development programs, we are advancing our late-stage research program focused on a metabolic enzyme that is deletedPAH stabilizer for the treatment of PKU, for which we expect to file an IND by the end of 2023. Also, in approximately 15 percentJuly 2023, we entered into a license agreement with Alnylam for the development and commercialization of all cancers. This deletion is readily detectedproducts containing or comprised of an siRNA development candidate discovered by Alnylam and targeting the TMPRSS6 gene, and we intend to pursue development of a simple genomic or immunohistochemistry test, thus allowinglicensed product for the selectionpotential treatment 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.PV.
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 phase 1 integrated single ascending dose and multiple ascending dose clinical trial in healthy volunteers. In December 2016, we announced that we are no longer developing AG-519, and withdrew our IND for AG-519, following a verbal notification of a clinical hold from the FDA.
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.
GeneralSelling, general and administrative expenses
GeneralSelling, 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, information technology and human resources functions. Other significant costs include facilityfacility-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 potentialongoing and future commercialization activities related to our portfolio, including the ongoing commercialization of PYRUKYND® and any of our other 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.
Critical Accounting Estimates
Our critical accounting estimates are those 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 estimates are those relating to revenue recognition, accrued research and development expenses and stock-based compensation. As of September 30, 2023, there have been no material changes to our existing critical accounting estimates discussed in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.
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Results of Operations
Comparison of the three and nine months ended September 30, 20172023 and 20162022
Revenues
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2023202220232022
Revenues:
Product revenue, net$7,399 $3,516 $19,720 $7,430 
Milestone revenue— — — 2,500 
Total revenue$7,399 $3,516 $19,720 $9,930 
Total Revenue - Three Months Ended September 30, 2023 vs. Three Months Ended September 30, 2022 – The following table summarizes our resultsincrease in total revenue of operations$3.9 million for the three months ended September 30, 2017 and 2016 ($ 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 party715
 —
 715
 100%
Total revenue11,358
 8,985
 2,373
 26%
Operating expenses:       
Research and development (net of $1,078 and $4,038 of cost reimbursement from related party for the three months ended September 30, 2017 and 2016, respectively)72,917
 60,643
 12,274
 20%
General and administrative17,458
 11,854
 5,604
 47%
Loss from operations(79,017) (63,512) (15,505) 24%
Interest income1,880
 678
 1,202
 177%
Net loss$(77,137) $(62,834) $(14,303) 23%
Revenue. For2023 compared to the three months ended September 30, 2017, we2022 was due to increased product revenue associated with PYRUKYND®, which was approved by the FDA in February 2022.

Total Revenue - Nine Months Ended September 30, 2023 vs. Nine Months Ended September 30, 2022 – The increase in total revenue of $9.8 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was due to increased product revenue associated with PYRUKYND®, which was approved by the FDA in February 2022, partially offset by revenue recognized $11.4in the nine months ended September 30, 2022 associated with the licensing of intellectual property for our Friedreich's Ataxia preclinical program.
Total Operating Expenses
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2023202220232022
Operating expenses:
Cost of sales$633 $517 $2,295 $1,291 
Research and development81,841 64,966 218,037 209,612 
Selling, general and administrative25,822 29,123 84,598 88,902 
Total operating expenses$108,296 $94,606 $304,930 $299,805 
Total Operating Expenses - Three Months Ended September 30, 2023 vs. Three Months Ended September 30, 2022 –The increase in total operating expenses of $13.7 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.

Forfor the three months ended September 30, 2016, we recognized $9.0 million in revenue related2023 compared 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. Thethree months ended September 30, 2022 was primarily due to a increase in research and development expenses of $16.9 million which is described below under Research and Development Expenses, partially offset by a decrease in selling, general and administrative expenses of $3.3 million, driven by a decrease in stock-based compensation expense and external professional fees.
Total Operating Expenses - Nine Months Ended September 30, 2023 vs. Nine Months Ended September 30, 2022 –The increase in total operating expenses of $5.1 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was primarily attributabledue to net increases of $6.2 milliona increase in external services 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.
We use our employeeexpenses of $8.4 million which is described below under Research and infrastructure resources across multiple researchDevelopment Expenses, partially offset by a decrease of $4.3 million in selling, general and development programs, and we allocate internal employee-related and infrastructure costs, includingadministrative expenses driven by a decrease in stock-based compensation expense.
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Research and facilities costs, as well as certain third-party costs, net of reimbursements from Celgene, to our research and development programs based on the personnel resources allocated to such program. Development Expenses
Our allocated research and development expenses, by major program, are outlined in the table below ($below:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2023202220232022
PK activator (PYRUKYND®)$24,000 $20,906 $71,491 $57,036 
Novel PK activator (AG-946)4,220 2,943 11,817 11,517 
In-process research and development17,500 — 17,500 — 
Other research and platform programs1,250 4,945 6,775 20,669 
Total direct research and development expenses46,970 28,794 107,583 89,222 
Compensation and related expenses25,529 25,959 81,483 86,481 
Facilities and IT related expenses & other9,342 10,213 28,971 32,392 
Other expenses - transition services— — — 1,517 
Total indirect research and development expenses34,871 36,172 110,454 120,390 
Total research and development expense$81,841 $64,966 $218,037 $209,612 

Total Research and Development Expenses - Three Months Ended September 30, 2023 vs. Three Months Ended September 30, 2022 –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 programs17,944

11,173

6,771

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

$60,643

$12,274

20 %
The changes intotal research and development expense depicted inexpenses of $16.9 million for the table above were primarily attributablethree months ended September 30, 2023 compared to the following:
IDHIFA® costs decreased as a result of less internal and externalthree months ended September 30, 2022 was primarily due to an $18.2 million increase in our direct expenses. The increase in direct expenses relatedwas primarily due 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) otherin-process 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 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$17.5 million up-front payment associated with the agreement with Alnylam discussed above under Overview and an increase in the fourth quarter of 2016.
AG-270PYRUKYND® costs due to 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.
process development and medical affairs expenses. The increase in the costs ofdirect expenses was partially offset by a decrease in expenses related to our other research and platform programs include activities relatedas a result of our decision to evolve our approach to exploratory efforts, target validationresearch and leaddrug discovery to focus on our existing late-lead optimization for our discoveryprograms.

Total Research and follow-on programs, and our proprietary metabolomics platform.

General and Administrative Expense.Development Expenses - Nine Months Ended September 30, 2023 vs. Nine Months Ended September 30, 2022 –The increase in generaltotal research and administrativedevelopment expenses was primarily attributable to an increase of $5.7$8.4 million related to supporting our growing commercial organization for the launch of IDHIFA and the potential launch of ivosidenib in 2018.
Interest Income. The increase in interest income is attributable to higher investment balances driven by upfront fees received under our 2016 Agreement, funds received from our April 2017 and September 2016 follow-on public offerings and a more diversified investment portfolio, resulting in higher interest earned on investments.
Comparison of the nine months ended September 30, 2017 and 2016
The following table summarizes our results of operations for the nine months ended September 30, 2017 and 2016 ($ 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 party715

—

715

100 %
Total revenue33,212

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 administrative48,411

35,335

13,076

37 %
Loss from operations(230,664)
(143,576)
(87,088)
61 %
Interest income4,279

1,591

2,688

169 %
Net loss$(226,385)
$(141,985)
$(84,400)
59 %
Revenue. For2023 compared to the nine months ended September 30, 2017, we recognized $33.22022 was due to an $18.4 million increase in revenue, which includes $30.5our direct expenses, partially offset by a $9.9 million decrease in our indirect expenses. The increase in direct expenses was primarily due to in-process research and development as a result of the $17.5 million up-front payment associated with the agreement with Alnylam discussed above under Overviewandan increase in PYRUKYND® costs due to increased costs for the phase 3 trials of PYRUKYND® in patients with thalassemia, ENERGIZE and ENERGIZE-T, and increased process development and medical affairs expenses, partially offset by a decrease in expenses related to deliverables identified underour other research and platform programs as a result of our decision to evolve our approach to exploratory research and drug discovery to focus on our existing late-lead optimization programs. The decrease in indirect expenses was due to a $5.0 million decrease in compensation and related expenses as a result of lower stock-based compensation expense and reduced headcount related to the 2016 Agreementevolution of our research organization, a $3.4 million decrease in facilities and $0.7IT related expenses & other due to a reduction in facility expenses associated with the evolution of our research organization, and the $1.5 million of reimbursable transition related services we provided to Servier 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 $25.0 million milestone payment2022 related to the initiationsale of the Phase 3 IDHENTIFY trialoncology business for discovery, clinical development, technical operations, and related activities, which were completed during the three months ended March 31, 2022.
Other Income and Expense
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2023202220232022
Royalty income from gain on sale of oncology business$— $4,443 $— $9,851 
Interest income, net8,375 3,818 24,720 6,305 
Other income, net1,198 1,082 4,342 5,392 
Other Income and Expense - Three Months Ended September 30, 2023 vs. Three Months Ended September 30, 2022 – The increase in interest income, net was primarily attributable to an increase in interest rates. The decrease in royalty income from gain on sale of oncology business was due to the sale to Sagard in the fourth quarter of 2022 of our rights to future contingent payments associated with IDHIFA®royalties on U.S. net sales of TIBSOVO®. Other income, net in the three months ended September 30, 2023 was relatively consistent with the three months ended September 30, 2022.

Other Income and Expense - Nine Months Ended September 30, 2023 vs. Nine Months Ended September 30, 2022 – The increase in interest income, net was primarily attributable to an increase in interest rates. The decrease in royalty income from
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gain on sale of oncology business was due to the sale to Sagard in the fourth quarter of 2022 of our rights to future contingent payments associated with royalties on U.S. net sales of TIBSOVO®. The decrease in other income, net primarily relates to approximately $2.6 million of reimbursable transition related services and fees for the sale of the oncology business for the nine months ended September 30, 2022, partially offset by $1.8 million of additional sublease income recognized in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

Net Loss
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2023202220232022
Net loss$(91,324)$(81,747)$(256,148)$(268,327)
Net Loss - Three Months Ended September 30, 2023 vs. Three Months Ended September 30, 2022 – The increase in net loss for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 was primarily driven by the $17.5 million up-front payment associated with the agreement with Alnylam discussed above under Overview and the 2010 Agreement.decrease in royalty income from gain on sale of oncology business discussed above under Other Income and Expense, partially offset by the increase in interest income, net discussed above under Other Income and Expense and the increase in revenue discussed above under Revenues.
Research
Net Loss - Nine Months Ended September 30, 2023 vs. Nine Months Ended September 30, 2022 – The decrease in net loss for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was primarily driven by the increase in interest income, net discussed above under Other Income and Development Expense. The and the increase in revenue discussed above under Revenues, partially offset by the increase in research and development expenses was primarily attributable to net increases of $37.9discussed above under Research and Development Expenses, which includes the $17.5 million in external services and $22.1 million in internal expenses; both of these increases are inclusive of cost reimbursements recorded as a reduction of research and development expenses.
Our allocated research and development expenses, by major program, are outlined inup-front payment associated with the table below ($ 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 programs49,958

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 tableagreement with Alnylam discussed 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 ivosidenibunder Overview, and the IDH1 programdecrease in royalty income from gain on sale of oncology business discussed above under Other Income 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.Expense.
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 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 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 fundedfinanced our operations primarily through upfront, milestone, extension, cost reimbursement andproceeds from the sale of our royalty payments related torights, commercial sales of TIBSOVO®, funding received from our collaboration agreements, proceeds received fromprivate placements of our issuance of preferred stock, our IPOinitial public offering of our common stock and follow-on public offerings, and aconcurrent private placement of common stock to an affiliate of Celgene, which was completed concurrentlyand our follow-on public offerings. Following the sale of our oncology business to Servier on March 31, 2021, we have financed and expect to continue to finance our operations primarily through cash on hand, royalty payments from Servier with our IPO.
In April 2017, we completed a public offeringrespect to U.S. net sales of 5,050,505 sharesTIBSOVO® prior to the sale of common stock at an offering price of $49.50 per share. We received netthese contingent payments to Sagard, proceeds from this offeringthe sale of $235.0 million, after deducting underwriting discountscontingent payments to Sagard, a potential milestone payment and commissions paidroyalties from Servier if vorasidenib is approved by

us. the FDA, the actual and potential future sales of PYRUKYND® and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions. In addition, we may pursue opportunistic debt offerings, and equity or equity-linked offerings.

On March 31, 2021, we completed the sale of our oncology business to Servier. The transaction included the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs for a payment of approximately $1.8 billion in cash at the closing, subject to certain adjustments, and a payment of $200.0 million in cash, if, prior to January 1, 2027, vorasidenib is granted NDA approval from the underwritersFDA 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. The milestone payment for approval of vorasidenib and royalty payments related to vorasidenib and TIBSOVO® represent contingent consideration. Servier also acquired our co-commercialization rights for Bristol Myers Squibb's IDHIFA® and the right to purchase up to an additional 757,575 sharesreceive a $25.0 million potential milestone payment under our prior collaboration agreement with Celgene, and following the sale Servier is responsible for conducting certain clinical development activities within the IDHIFA® development program. As discussed above in Note 1, Overview and Basis of common stock, which was also exercisedPresentation, in April 2017, resulting in additional net proceeds to us of $35.2 million, after underwriting discounts and commissions. After giving effectOctober 2022, we sold our rights to the full exerciseroyalty on U.S. net sales of TIBSOVO® to Sagard for $131.8 million. We retained our rights to the over-allotment option,potential milestone payment and royalties from Servier if vorasidenib is approved by the number of shares sold by us in the public offering totaled 5,808,080 shares, and net proceeds to us totaled $270.2 million, after underwriting discounts and commissions.FDA.
In addition to our existingOur cash, cash equivalents and marketable securities we are eligible to earn a significant amount ofbalance was $872.4 million at September 30, 2023. The $200.0 million milestone payments, designation fees, license option fees and extension fees, and we are entitled to cost reimbursementspayment and royalty payments under our collaboration agreements with Celgene. Our ability to earn the milestone payments, cost reimbursements and royalty payments, and the timing of earning these amountsdiscussed above are dependent upon the timing and outcome of our development, regulatory and commercial activities, and is uncertain at this time. Our right to payments under our collaboration agreements with Celgene is our only committed potential external source of funds. Whether the regulatory approval milestone for vorasidenib will be achieved is subject to various risks and uncertainties, which are
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outside our control. Furthermore, we cannot predict what success, if any, Servier may have in the United States with respect to sales of vorasidenib, if approved, and consequently we cannot estimate the amount of royalty payments that we can expect to receive from Servier prior to the loss of exclusivity of vorasidenib.
Cash flows
The following table provides information regarding our cash flows for the nine months ended September 30, 20172023 and 2016 (in thousands):2022:
Nine Months Ended September 30,
(In thousands)20232022
Net cash used in operating activities$(223,574)$(243,315)
Net cash provided by investing activities144,062 160,310 
Net cash provided by financing activities4,586 2,328 
Net change in cash and cash equivalents$(74,926)$(80,677)
 Nine Months Ended September 30,
 2017 2016
Net cash (used in) provided by operating activities$(210,778) $89,785
Net cash used in investing activities(99,756) (41,832)
Net cash provided by financing activities282,521
 165,785
Net change in cash and cash equivalents$(28,013) $213,738
Net cash (used in) provided byused in operating activities. Cash used in operating activities. During of $223.6 million during the nine months ended September 30, 2017, we received $12.3 million in cost reimbursements related2023 was primarily due to our collaboration agreements with Celgene. These amounts wereoperating expenses driven by research and development costs described above under Research and Development Expenses, partially offset by increasedcash received from interest income of $23.6 million and product revenues of $22.9 million.
Cash used in 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 due to our expanding operations.
Duringactivities of $243.3 million during the nine months ended September 30, 2016, we received a $200.0 million upfront payment from Celgene related2022 was primarily due 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®,operating expenses driven by research and $4.4 million as reimbursement of tenant improvements. These amounts weredevelopment costs described above under Research and Development Expenses, partially offset by increased operating expenses which relate to increases in clinical study costs due to advancements in our most advanced product candidates, expanded facilitiescash received from revenues of $8.8 million and increased staffing needs due to our expanding operations.royalties on U.S. net sales of TIBSOVO® of $8.6 million.
Net cash used inprovided by investing activities. The cash used inCash provided by investing activities forof $144.1 million during the nine months ended September 30, 2017 and 20162023 was primarily the result ofdue to higher purchases of marketable securities than proceeds from maturities and sales of marketable securities and $3.3 million and $8.7 million inthan purchases of property and equipment, respectively.marketable securities, partially offset by the $17.5 million up-front payment associated with the Alnylam agreement discussed above under Overview.
Net cashCash provided by financinginvesting activities. The cash provided by financing activities for of $160.3 million during the nine months ended September 30, 20172022 was primarily due to higher proceeds from maturities and sales of marketable securities than purchases of marketable securities.
Net cash provided by financing activities. Cash provided by financing activities of $4.6 million during the nine months ended September 30, 2023, was the result of the $270.2 million net proceeds received from our public offering, as well as proceeds received from stock option exercises and stock purchases made pursuant to our employee stock purchase plan. The cash2013 Employee Stock Purchase Plan, or 2013 ESPP.

Cash provided by financing activities forof $2.3 million during the nine months ended September 30, 20162022 was primarily the result of the $162.1$2.6 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
We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research, development and clinical trials of, and seek additional marketing approvals for, and commercialize our product candidates.candidates in our portfolio, including as we continue to commercialize PYRUKYND®. If we obtain additional marketing approvalapprovals for PYRUKYND® in other indications or outside of the United States or 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, 2017,2023, together with anticipated product revenue, interest income anticipated expense reimbursements, and royalty payments under our collaboration agreements, but excluding any additional program-specificthe potential vorasidenib milestone payments, will enable us to fund our operating expenses and capital expenditure requirementsexpenditures through several value-creating milestones and at least into 2026. This guidance does not include cash inflows from potential royalties from vorasidenib, commercializing mitapivat outside of the end of 2019.U.S. through one or more partnerships, or other potential strategic business or financial agreements. Our future capital requirements will depend on many factors, including:
•the amount and timing of future revenue received from commercial sales of PYRUKYND® or any of our product candidates for which we may receive marketing approval;
•the amount of contingent consideration we ultimately receive from Servier;
•the costs and timing of our ongoing commercialization activities, including product manufacturing, sales, marketing and distribution for PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency in approved jurisdictions;
•the scope, progress, results and costs of drug discovery, preclinical development, laboratory testing and clinical trials for our product candidates;
•the successcosts associated with in-licensing or acquiring assets for pipeline growth, including the amount and timing of our collaborations;future milestone and royalty payments potentially payable to Alnylam pursuant to the license agreement;
the extent to which we acquire or in-license other medicines and technologies;
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•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 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;
•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 public health epidemics, including the recent COVID-19 pandemic; and
•operational delays, disruptions and/or increased costs associated with rising global energy prices or energy shortages or rationing.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs primarily through a combinationcash on hand, the potential milestone payment and royalties from Servier if vorasidenib is approved by the FDA, the actual and potential sales of equity offerings, debt financings,PYRUKYND® and, potentially, collaborations, strategic alliances, licensing arrangements and licensing arrangements.other nondilutive strategic transactions. In addition, we may pursue opportunistic debt offerings, and equity or equity-linked offerings. We do not have any committed external source of funds other than the potential milestone and royalty payments that we are eligible to receive with respect to vorasidenib under our collaborations.purchase agreement with Servier. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership 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 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 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 obligationsObligations
We haveIn July 2023, Agios entered into agreementsa license agreement with Alnylam as discussed above under Overview. Under the license agreement, Agios may be required to pay up to $130.0 million in the normal coursepotential development and regulatory milestones, in addition to sales milestones as well as tiered royalties on annual net sales, if any, of business with CROs for clinical trialslicensed products, which may be subject to specified reductions and clinical 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.offsets.
During the nine months ended September 30, 2017, there were no material changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Annual Report on Form 10-K for the year ended December 31, 2016.
Item 3.    Quantitative and Qualitative Disclosures Aboutabout Market Risk
We are exposed to market risk related to changes in interest rates. As of September 30, 20172023 and December 31, 2016,2022, we had cash, cash equivalents and marketable securities of $641.7$872.4 million and $573.6 million, respectively, consisting$1.1 billion, 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. Wecurrencies, 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, 20172023 and December 31, 2016, we had minimal or no2022, 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, 2017,2023, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures as of such date are effective at the
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reasonable assurance level. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or 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 areis 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 fileit files or submitsubmits under the Exchange Act is accumulated and communicated to ourits management, including ourits 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 changeChanges in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the fiscal quarter ended September 30, 20172023 that hashave 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, uncertaintiesThe following risk factors 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,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” 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 disclosedinformation included 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 mayshould be materially different from what we expect.carefully considered. The risks and uncertainties described below are not the only risks facing our company.and uncertainties we face. Additional risks and uncertainties not currentlypresently known to us or that we currentlypresently deem to be immaterialless significant may also may materially adversely affectimpair our business operations. Please see page 17 of this Quarterly Report on Form 10-Q for a discussion of some of the forward-looking statements that are qualified by these risk factors. If any of the following risks occur, our business, financial condition, and/or operating results. We do not assume any obligation to update any forward-looking statements, whether as a resultresults of new information,operations and 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.
Risks Related to Our Financial Position and Need for Additional Capital
We have incurred significant losses since inception. We expect to incur losses for 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 placements of our preferred stock, our initial public offering 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:
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 the value of our company 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 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 expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, initiate and continue clinical trials of, and seek marketing approvals for, our product candidates. For example, we expect to submit a new drug application, or NDA, for ivosidenib in IDH1 mutant-positive R/R AML by 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 any of our other product candidates, such as ivosidenib, 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. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.
We expect that our existing cash, cash equivalents and marketable securities as of September 30, 2017, together with anticipated interest income and the anticipated expense reimbursements under our collaboration agreements, but excluding any additional program-specific milestone payments, will fund our operating and capital expenditure requirements through at least the end of 2019. Our estimate as to how long we expect our existing cash and cash equivalents to be available to fund our operations is based on assumptions that may prove to 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 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 data or results required to obtain additional marketing approvals 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 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.

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 through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We do not have any committed external source of funds, other than our collaborations, which are limited in scope and duration. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interests 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 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 to grant licenses on terms that may not be favorable to us.
Our short operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
We were founded in the second half of 2007 and commenced operations in late 2008. Our operations to date have been limited to organizing and staffing our company, business planning, raising capital, acquiring and developing our technology, identifying potential product candidates, undertaking preclinical and clinical studies of our product candidates, and establishing a commercial infrastructure. All of our 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 other marketing approvals for our product candidates, manufacture a commercial scale medicine, or arrange for a third party to do so on 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 of research and development and achieves marketing approval, all of which is highly uncertain. Consequently, any predictions you make about our future success or viability may not be as accurate as theygrowth prospects could be if we had a longer operating history.
We may encounter unforeseen expenses, difficulties, complications, delaysmaterially and other known and unknown factors that may adversely affect our ability to successfully commercialize our product candidates. We will need to transition from a company 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 of which are beyond our control. Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance.affected.
Risks Related to the Discovery, Development, and Commercialization of our Products and Product Candidates
WeIf we do not know whethersuccessfully commercialize PYRUKYND® and other products for which we willreceive approval, our prospects may 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.substantially harmed.
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 thatIn February 2022, 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 obtainobtained marketing approval from the FDA 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 cellsPYRUKYND® (mitapivat) 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 successfulhemolytic anemia in identifying compounds that are useful in treating cancer or RGDs. In addition, our effortsadults with pyruvate kinase (PK) deficiency in the emerging fieldUnited States. In November 2022, we received marketing authorization from the European Commission for PYRUKYND® for the treatment of metabolic immuno-oncology may not be as successful asPK deficiency in adult patients in the European Union, or EU, and in December 2022 we received marketing authorization in Great Britain for PYRUKYND® for the treatment of PK deficiency in adult patients under the European Commission Decision Reliance Procedure. PYRUKYND® is the first product in 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 characteristicsrare disease portfolio that indicate that they are unlikely to be medicines that will receivehas received marketing approval and achieveis our first product following the sale of our oncology business to Servier in March 2021. Our ability to generate meaningful revenue from PYRUKYND® will depend heavily on our successful development and commercialization of the product.
The development and commercialization of PYRUKYND® could be unsuccessful if:
•the medical community and third-party payors do not accept PYRUKYND® as safe, efficacious and cost-effective for the treatment of adults with PK deficiency in the approved jurisdictions;
•we fail to maintain the necessary financial resources and expertise to manufacture, market acceptance.and sell PYRUKYND®;
Research programs•we fail to identify new product candidates require substantial technical, financialdevelop, implement and human resources. Wemaintain effective marketing, sales and distribution strategies and operations for the development and commercialization of PYRUKYND®;
•we fail to continue to develop, validate and maintain a commercially viable manufacturing process for PYRUKYND® that is compliant with current good manufacturing practices, or cGMP;
•we fail to successfully obtain third party reimbursement and generate commercial demand that results in expected sales of PYRUKYND®;
•PYRUKYND® may choosebecome subject to focus our effortsunfavorable pricing regulations and resourcesthird-party reimbursement practices;
•we encounter any third-party patent interference, derivation, inter partes review, post-grant review, reexamination or patent infringement claims with respect to PYRUKYND®;
•we fail to comply with regulatory and legal requirements applicable to the sale of PYRUKYND®;
•competing drug products are approved for the same indications as PYRUKYND®;
•significant safety, manufacturing and/or quality risks are identified;
•PYRUKYND® fails to gain and/or maintain sufficient market acceptance by physicians, patients, healthcare payors and others in the medical community;
•a significant number of eligible patients with PK deficiency are not prescribed PYRUKYND® and, if they are, such patients do not stay on a potential product candidate that ultimately proves to be unsuccessful.treatment; or
•PYRUKYND® does not demonstrate acceptable safety and efficacy in current or future clinical trials, or otherwise does not meet applicable regulatory standards for approval in other indications.
If we are unableexperience significant delays or an inability to identify suitable compounds for preclinicalsuccessfully develop and clinical development, we will notcommercialize PYRUKYND® our business would 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.materially harmed.
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We depend heavily on the success of IDHIFA® and also on our other most advancedclinical product candidates, which are stillincluding the potential approval of PYRUKYND® for use in clinical development.indications other than PK deficiency. 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 product candidates and development 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.programs, including PYRUKYND®. Our ability to generate meaningful product revenue will depend heavily on the successful clinical development and eventual commercialization of our current and any future product candidates, by our collaborators and us, including the successful commercializationPYRUKYND®. While we obtained marketing approval of IDHIFA®.
The success of our 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 profilePYRUKYND® for the medicines following approval;
enforcingtreatment of hemolytic anemia in adults with PK deficiency in the United States and defending intellectual property rights and claims; and
achieving desirable medicinal propertiesmarketing authorization of PYRUKYND® for the intended indications.
Manytreatment of these factors are beyond our control, including clinical development,adults with PK deficiency in the regulatory submission process, potential threats to our intellectual property rightsEU and the manufacturing,Great Britain, we cannot be certain that we will obtain marketing and sales effortsapproval of any collaborator, such as Celgene with respect to IDHIFA®. If we or our collaborators do not achieve one or more of these factorsPYRUKYND® 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.indications other than PK deficiency.
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 comparablerequirements 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 failuredevelopment. 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 failearlier stage testing for treating specific disease indications have later been found to detect toxicitycause 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 weunexpected characteristics or our collaborators are unableotherwise 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 authorizeunacceptable health risks, causing us, our collaborators or our investigators, regulators or institutional review boards or the data safety monitoring board for such trial to commencehalt, 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 trialrisk-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 RGDrare disease 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 PK 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 impairnot affect our ability,ongoing clinical trials for PYRUKYND®, our first PK activator, we cannot provide any assurances that there will not be other treatment-related severe adverse events in our other clinical trials, or that our other trials will not be placed on clinical hold in the ability of any collaborators,future.
Our failure to successfully

commercialize begin and complete clinical trials of our product candidates and may harm our businessto demonstrate the efficacy and results of operations. In addition, many of the factors that leadsafety necessary to clinical trial delays may ultimately leadobtain regulatory approval to the denial of marketing approval ofmarket 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 engage in in-licensing transactions or acquisitions that could disrupt our business, cause dilution to our stockholders or reduce our financial resources.
We have and may in the future enter into additional transactions to in-license products, technologies or assets or to acquire other products, technologies, assets or businesses. As part of the evolution of our research organization, we plan to prioritize in-licensing or acquiring assets for future pipeline growth. For example, in July 2023, we entered into a license agreement with Alnylam for the development and commercialization of products containing or comprised of an siRNA development candidate discovered by Alnylam and targeting the TMPRSS6 gene, and we intend to pursue development of a licensed product for the potential treatment of PV. Our ability to successfully in-license or acquire assets and develop product candidates following such transactions is unproven. If we do identify additional suitable candidates or assets for in-licensing transactions or acquisitions, we may not be able to make such transactions on favorable terms, or at all. Such transactions may require us to relinquish rights to develop product candidates in certain indications, limit our ability to pursue certain targets or require us to make significant milestone or royalty payments to third parties upon achievement of certain events. Any in-licensing transaction or acquisitions we undertake 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 an in-licensing transaction or issue our common stock or other equity securities to the stockholders of the counterparty, which would reduce the percentage ownership of our existing stockholders. We could incur losses resulting from undiscovered liabilities of the acquired business, product or technology 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. Such transactions 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 ensure that following any transaction we would achieve the expected synergies to justify the transactions. We cannot predict the number, timing or size of future transactions or the effect that any such transactions might have on our operating results.

Public health epidemics or pandemics may affect our ability to initiate or continue our planned, ongoing and future preclinical studies, clinical trials, disrupt regulatory activities, disrupt our ability to maintain a commercial infrastructure for our product or have other adverse effects on our business and operations.
Public health emergencies or pandemics could adversely affect our business, financial condition, results of operations, and prospects. We may face delays, disruptions or shortages as a result of such pandemics that may affect our ability to initiate and complete preclinical studies and clinical trials or impact our commercialization efforts. We experienced disruptions to certain clinical and research activities at our contract research organizations, or CROs, due to the recent COVID-19 pandemic, and any future pandemic or public health emergency could result in site initiation, participant recruitment and enrollment, participant dosing, distribution of clinical trial materials, study monitoring and data analysis being paused or delayed due to changes in hospital or university policies, federal, state or local regulations, diversion of hospital resources or other reasons related to a public health emergency. If a pandemic or public health emergency arises in the future, we may face difficulties recruiting or retaining patients in our ongoing clinical trials, and 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 may necessitate remote data verification. In addition, limitations on the ability to visit sites may 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 or reduced availability of CRO personnel may have an adverse impact on our clinical trial plans and timelines.
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We have been monitoring our supply chain network for disruptions due to the recent COVID-19 pandemic, and our third-party manufacturers, other than certain CROs based in China, remain largely unaffected, with any campaign delays experienced to date being limited to a few days in duration, and we have not experienced a supply impact.
The public health emergency declarations related to COVID-19 ended on May 11, 2023. The FDA ended 22 COVID-19-related policies when the public health emergency ended on May 11, 2023, and the FDA allowed 22 COVID-19-related policies to continue for 180 days. The FDA plans to retain 24 COVID-19-related policies with appropriate changes and four whose duration is not tied to the end of the public health emergency. As a result of these and other measures, we have faced and may in the future 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 product and product candidates.
We cannot be certain what the overall impact of future health emergencies or pandemics will be on our business.

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, continue or continuecomplete 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 may beFurthermore, enrollment had previously been particularly challenging for somein light of the orphan diseases we target in our RGD 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.recent COVID-19 pandemic.
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,December 2022, with the successful completionpassage of the Food and Drug Omnibus Reform Act, Congress required sponsors to develop and submit a diversity action plan for each phase 3 clinical trial or any other "pivotal study" of a new drug product. These plans are meant to encourage enrollment of more diverse patient populations in late-stage clinical trials of FDA-regulated products. If we are not able to adhere to these new requirements, our ability to conduct clinical trials may be delayed or halted.
In addition, some of our competitors may have ongoing or planned clinical development programtrials for AG-348product 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, Vertex Pharmaceuticals Incorporated, or Vertex, with CRISPR Therapeutics, or CRISPR, is developing gene therapies targeting SCD (for which they have a Prescription Drug User Fee Act goal date of December 8, 2023 for their Biologics License Application) and transfusion dependent beta thalassemia (for which they have a Prescription Drug User Fee Act goal date of March 30, 2024 for their Biologics License Application); bluebird bio, Inc., or bluebird, is developing gene therapies targeting SCD (for which they have a Prescription Drug User Fee Act goal date of December 20, 2023 for their Biologics License Application) and transfusion dependent beta thalassemia; Novo Nordisk is developing molecules for the treatment of PK deficiencyalpha and beta thalassemia, SCD and LR MDS; Pfizer is developing molecules for the treatment of SCD; Fulcrum Therapeutics Inc., or Fulcrum, is developing a treatment for SCD; Silence Therapeutics, or Silence, is developing a treatment for alpha and beta non-transfusion dependent upon our ability to enrollthalassemia; Merck & Co., Inc, or Merck, with Bristol-Myers Squibb Company, or BMS, are developing a sufficient numbertreatment for alpha thalassemia and LR MDS patients that are ESA naïve and non-transfusion dependent; Geron Corporation, or Geron, is developing imetelstat for the treatment of patients with PK deficiency. PK deficiencyLR MDS (for which they have a Prescription Drug User Fee Act goal date of June 16, 2024 for their New Drug Application); Roivant Sciences, or Roviant, is developing a rare disease with a small patient population. Further, there are only a limited number of specialist physicians that regularly treat patients with 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 difficulttreatment (licensed from Eisai Co., Ltd.) 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 trialstransfusion-dependent anemia in patients with IDH1 mutant positive-cancers,LR MDS; Keros Therapeutics, or Keros, is developing treatments for anemia in LR MDS; BioMarin Pharmaceutical Inc., or BioMarin, PTC Therapeutics, Inc., or PTC, Synlogic, Inc., or Synlogic, and these trialsJnana Therapeutics, Inc., or Jnana, are developing therapies to treat PKU; Homology Medicines Inc., or Homology, is developing a gene therapy targeting PKU; and other trials may compete with our clinical trialsProtagonist Therapeutics, or Protagonist, Ionis Pharmaceuticals, Inc., or Ionis, Silence and Merck are developing
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therapies to treat PV. Competition for theseeligible patients may make it particularly difficult for us to enroll enougha sufficient number of patients to complete our clinical trials for ivosidenib or AG-881our product candidates in a timely and cost-effective manner.
Furthermore,In addition, we have a small number of clinical trial sites for certain clinical trials in the Middle East, including in Lebanon and Israel, that could be affected by the current armed conflict in Israel and the Gaza Strip.
We rely on contract research organizations, 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 mayaltogether, or 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 futurelater-stage 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 stages of 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 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 futureany 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. While we obtained marketing approval of PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency in the United States and marketing authorization of PYRUKYND® for the treatment of adults with PK deficiency in the EU and Great Britain, we cannot be certain that we will obtain marketing approval of PYRUKYND® in other indications. The results of clinical trials of PYRUKYND® for the treatment of PK deficiency do not predict that PYRUKYND® will be efficacious in our ongoing clinical trials in other indications. 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. We have decided to evolve our approach to exploratory research and drug discovery to prioritize investment in advancing our late lead-optimization research, while continuing to progress our registration-enabling clinical programs in thalassemia, SCD and pediatric PK deficiency, our phase 2a trial in LR MDS, our IND-enabling studies for our PAH stabilizer for the treatment of PKU, and development of a licensed siRNA development candidate under our license agreement with Alnylam. 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 depend on Celgene for the development of companion diagnostics for some of our cancer therapeutic product candidates, including the FDA approved companion diagnostic for IDHIFA®. If any parties, including without limitation Celgene or us, or any third parties engaged by Celgene or us 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 PYRUKYND®, or any of our product candidates that may receive marketing approval in the productfuture, 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, itIt 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, including PYRUKYND®, we, or others, discover that the product is less effective
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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;
•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
PYRUKYND®, or any of our product candidates that may receive marketing approval theyin the future, 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®PYRUKYND®, or any of our product candidates that may receive marketing approval in the future, 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 PYRUKYND® or any of our product candidates that may receive marketing approval 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 PYRUKYND® and any 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 PYRUKYND® or our product candidates if and when they are approved.
We have littlelimited experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for any approved medicinemedicines 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 weWe have established sales and marketing capabilities to support our co-promotion effortscommercial launch of PYRUKYND® for IDHIFA®,the treatment of hemolytic anemia in adults with PK deficiency in the United States. In addition, in connection with our regulatory approvals in the EU and Great Britain, we are still buildingcurrently providing access to PYRUKYND® free of charge for eligible patients in those jurisdictions. We may provide access to PYRUKYND® for adult patients with PK deficiency in other jurisdictions upon request through the global managed access program, on either a free of charge or for charge basis. We may need to further build our sales and marketing infrastructure, either directly or with a third-party partner, to sell,maintain our ongoing commercialization efforts and to commercialize PYRUKYND® in other indications or participate in sales activities with our collaborators for,outside of the United States or to commercialize any of our other product candidates if and when they are approved.for which we obtain marketing approval.
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
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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.
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 PYRUKYND® or any of our product candidates.candidates for which we obtain marketing approval.

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 PYRUKYND® and our current 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, fromfuture. Potential competitors may 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 or our product candidates, such as AMLPK deficiency, thalassemia, SCD, LR MDS, PKU, and high risk myelodysplasia.PV. For example, Jazz Pharmaceuticals plc,Merck and BMS are marketing a therapy to treat beta thalassemia and LR MDS and are conducting clinical trials for alpha thalassemia and LR MDS patients that are ESA naïve and non-transfusion dependent; bluebird is marketing a gene therapy to treat transfusion dependent beta thalassemia and is developing a gene therapy to treat SCD (for which they have a Prescription Drug User Fee Act goal date of December 20, 2023 for their Biologics License Application); Novartis Seattle Genetics, Inc.International AG, or Novartis, Emmaus Life Sciences, and Abbvie Inc. (in collaborationPfizer are each marketing therapies to treat SCD, with Roche Holdings Inc.,Pfizer continuing to conduct clinical trials for therapies in SCD; BioMarin is marketing and conducting clinical trials for therapies to treat PKU; Novo Nordisk is conducting clinical trials for the treatment of alpha and beta thalassemia, SCD and LR MDS; Vertex, with CRISPR, is conducting clinical trials of gene therapies targeting SCD (for which they have a Prescription Drug User Fee Act goal date of December 8, 2023 for their Biologics License Application) and beta thalassemia (for which they have a Prescription Drug User Fee Act goal date of March 30, 2024 for their Biologics License Application); Fulcrum is conducting clinical trials for a potential treatment for SCD; Silence is conducting clinical trials for a potential treatment for alpha and beta non-transfusion dependent thalassemia and PV; Geron, Roivant and Keros are conducting clinical trials for potential treatments for LR MDS (for which Geron has a Prescription Drug User Fee Act goal date of June 16, 2024 for their New Drug Application); PTC, Synlogic, and Jnana are conducting clinical trials for potential treatments for PKU; Homology is conducting clinical trials for a gene therapy for PKU; PharmaEssentia Corp, or Roche)PharmaEssentia, and BayerIncyte Corporation, or Incyte, are eachmarketing therapies to treat PV, with Protagonist, Ionis, and Merck are developing therapies to treat AML. Some competitive productsPV; 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 areaa number 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.
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 ourbiotechnology companies have product candidates in combination with existing therapies or replacing existing therapies with our product candidates.clinical development in similar indications as ours.
We are also pursuing product candidates to treat patients with RGDs. There are a variety of treatment options available, including a number of marketed enzyme replacement therapies, for treating patients with RGDs.rare diseases. 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.rare diseases. 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 RGDsrare diseases by targeting cellular metabolism.similar mechanisms of action or target indications as our product candidates. These companies include large pharmaceutical companies, including AstraZeneca plc, Bayer, Eli Lillysuch as Novartis, Novo Nordisk, Pfizer, BMS, Merck and Company, Roche and its subsidiary Genentech, Inc., GlaxoSmithKline plc, Merck & Co., or Merck, Novartis with its IDH1 mutant inhibitor IDH305, Pfizer, Inc., and Genzyme, a Sanofi company. There are alsoVertex as well as biotechnology
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companies of various sizes, that are developing therapies to target cellular metabolism, including Alexion Pharmaceuticals, Inc.,such as BioMarin, Pharmaceutical Inc., Calithera Biosciences, Inc., Cornerstone Pharmaceuticals, Inc., Forma Therapeutics Holdings LLC with its IDH1 mutant inhibitor FT-2102, Shire Biochem Inc., Raze Therapeutics, Inc.bluebird, PTC 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.Rocket Pharma. Our competitors may develop products that are more effective, safer, more convenient or less costly than PYRUKYND® or any product candidates that we are developing or that would render PYRUKYND® or 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 globally 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 or in-licensing technologies complementary to, or necessary for, our programs.
Even
If the FDA does not grant our products, if weand when approved, appropriate periods of data exclusivity before approving generic or follow-on versions of our collaboratorsproducts, the sales of our products could be adversely affected.
With FDA approval of an NDA, the product covered by the application is specified as a “reference-listed drug” in the FDA’s publication, “Approved Drug Products with Therapeutic Equivalence Evaluations,” or the Orange Book. Manufacturers may seek approval of generic versions of reference-listed drugs through submission of abbreviated new drug applications, or ANDAs, in the United States.
In support of an ANDA, a generic manufacturer need not conduct clinical trials. Rather, the sponsor 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 the reference-listed drug, meaning it is absorbed in the body at the same rate and to the same extent. Generic products may be significantly less costly to bring to market than the reference-listed drug and companies that produce generic products are generally able to commercializeoffer 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.
A manufacturer may also submit an NDA under section 505(b)(2) of the Federal Food, Drug and Cosmetic Act, or FDCA, that references the FDA’s prior approval of the innovator product candidates, such productsor preclinical studies and/or clinical trials that were not conducted by, or for, the sponsor and for which the sponsor has not obtained a right of reference. A 505(b)(2) NDA product, or follow-product, may become subject to unfavorable pricing regulations, third-party reimbursement practicesbe for a new or healthcare reform initiatives, which would harm our business.improved version of the original reference listed drug.
The commercial successFDA may not approve an ANDA or 505(b)(2) NDA until any applicable period of our product candidates will depend substantially, both domestically and abroad, onnon-patent exclusivity for the extent to which the costsreference-listed drug has expired. The FDCA provides a period 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,five years of new chemical entity exclusivity for a new drug containing a new active moiety. Specifically, in cases where such exclusivity has been granted, an ANDA or reimbursement is available only to limited levels, we, or any future collaborators,a 505(b)(2) NDA 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, in which case the sponsor 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 a clinical trial is deemed by the FDA as essential for approval.
In the event that a generic or follow-on manufacturer is somehow able to successfully commercializeobtain FDA approval without adherence to these periods of data exclusivity, the competition that our product candidates. Even if coverage is provided, the approved reimbursement amountproducts may not be high enoughface from generic and follow-on versions could negatively impact our future revenue, profitability and cash flows and substantially limit our ability to allow us, or any future collaborators, to establish or maintain pricing sufficient to realizeobtain 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 use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtainedinvestments 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 orthose 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.candidates.
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 thanpatents listed for our drug products in the United States. An inabilityOrange Book, ANDAs and 505(b)(2) NDAs would be required to promptlyinclude a certification as to each listed patent indicating whether the sponsor intends to challenge the patent. We cannot predict which, if any, patents in our current portfolio or patents we may obtain coverage and adequate payment rates from both government-funded and private payorsin the future will be eligible for listing in the Orange Book, how any generic or follow-on competitor would address such patents, whether we would sue on any such patents or the outcome of our product candidates for which we, or any future collaborator, obtain marketing approval could significantly harm our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.such suit.
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Product liability lawsuits against us or ourany 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 ourany collaborators face an inherenta 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.including PYRUKYND®. If we or ourany 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 reputationdevelop, 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 advancecontract, 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 atsuffer security breaches, which could result in a reasonable cost or in an amount adequate to satisfy any liability that may arise. In addition, if onematerial 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. Attackers may use artificial intelligence and machine learning to launch more automated, targeted and coordinated attacks against targets. 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. TheFor 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.
We are subject to stringent privacy laws, information security laws, regulations, policies and contractual obligations related to data privacy and security and changes in such laws, regulations, policies, contractual obligations and 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.
We are subject to data privacy and protection laws and regulations that apply to the collection, transmission, storage and use of personally-identifying information, which among other things, impose certain requirements relating to the privacy, security and transmission of personal information, including comprehensive regulatory systems in the United States, EU and United Kingdom. The legislative and regulatory landscape for privacy and data protection continues to evolve in jurisdictions worldwide, and there has been an increasing focus on privacy and data protection issues with the potential to affect our business. Failure to comply with any of these laws and regulations could result in enforcement action against us, including fines, imprisonment of company officials and public censure, claims for damages by affected individuals, damage to our reputation and loss of goodwill, any of which could have a material adverse effect on our business, financial condition, results of operations or prospects.
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There are numerous U.S. federal and state laws and regulations related to the privacy and security of personal information. In particular, regulations promulgated pursuant to HIPAA establish privacy and security standards that limit the use and disclosure of individually identifiable health information, or protected health information, and require the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity and availability of electronic protected health information. Determining whether protected health information has been handled in compliance with applicable privacy standards and our contractual obligations can be complex and may be subject to changing interpretation. These obligations may be applicable to some or all of our business activities now or in the future.
If we are unable to properly protect the privacy and security of protected health information, we could be found to have breached our contracts. Further, if we fail to comply with applicable privacy laws, including applicable HIPAA privacy and security standards, we could face civil and criminal penalties. Enforcement activity by the U.S. Department of Health & Human Services, or HHS, can result in financial liability and reputational harm, and responses to such enforcement activity can consume significant internal resources. In addition, state attorneys general are authorized to bring civil actions seeking either injunctions or damages in response to violations that threaten the privacy of state residents. We cannot be sure how these regulations will be interpreted, enforced or applied to our operations. In addition to the risks associated with enforcement activities and potential contractual liabilities, our ongoing efforts to comply with evolving laws and regulations at the federal and state level may be costly and require ongoing modifications to our policies, procedures and systems.
In addition to potential enforcement by HHS, we are also potentially subject to privacy enforcement from the Federal Trade Commission, or FTC. The FTC has been particularly focused on the unpermitted processing of health and genetic data through its recent enforcement actions and is expanding the types of privacy violations that it interprets to be “unfair” under Section 5 of the FTC Act, as well as the types of activities it views to trigger the Health Breach Notification Rule (which the FTC also has the authority to enforce). The agency is also in the process of developing rules related to commercial surveillance and data security that may impact our business. We will need to account for the FTC’s evolving rules and guidance for proper privacy and data security practices in order to mitigate our risk for a potential enforcement action, which may be costly. If we are subject to a potential FTC enforcement action, we may be subject to a settlement order that requires us to adhere to very specific privacy and data security practices, which may impact our business. We may also be required to pay fines as part of a settlement (depending on the nature of the alleged violations). If we violate any consent order that we reach with the FTC, we may be subject to additional fines and compliance requirements.
States are also active in creating specific rules relating to the processing of personal information. In 2018, California passed into law the California Consumer Privacy Act, or CCPA, which took effect on January 1, 2020 and imposed many requirements on businesses that process the personal information of California residents. Many of the CCPA’s requirements are similar to those found in the General Data Protection Regulation, or GDPR, including requiring businesses to provide notice to data subjects regarding the information collected about them and how such information is used and shared, and providing data subjects the right to request access to such personal information and, in certain cases, request the erasure of such personal information. The CCPA also affords California residents the right to opt-out of “sales” of their personal information. The CCPA contains significant penalties for companies that violate its requirements. In November 2020, California voters passed a ballot initiative for the California Privacy Rights Act, or CPRA, which went into effect on January 1, 2023 and significantly expanded the CCPA to incorporate additional GDPR-like provisions including requiring that the use, retention, and sharing of personal information of California residents be reasonably necessary and proportionate to the purposes of collection or processing, granting additional protections for sensitive personal information, and requiring greater disclosures related to notice to residents regarding retention of information. The CPRA also created a new enforcement agency – the California Privacy Protection Agency – whose sole responsibility is to enforce the CPRA, which will further increase compliance risk. The provisions in the CPRA may apply to some of our business activities.
In addition to California, at least eleven other states have passed comprehensive privacy laws similar to the CCPA and CPRA. These laws are either in effect or will go into effect sometime before the end of 2026. Like the CCPA and CPRA, these laws create obligations related to the processing of personal information, as well as special obligations for the processing of “sensitive” data (which includes health data in some cases). Some of the provisions of these laws may apply to our business activities. There are also states that are strongly considering or have already passed comprehensive privacy laws during the 2023 legislative sessions that will go into effect in 2024 and beyond, including New York and New Jersey. Other states will be considering these laws in the future, and Congress has also been debating passing a federal privacy law. There are also states that are specifically regulating health information that may affect our business. For example, Washington state recently passed a health privacy law that will regulate the collection and sharing of health information, and the law also has a private right of action, which further increases the relevant compliance risk. Connecticut and Nevada have also passed similar laws regulating consumer health data. These laws may impact our business activities, including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our products.
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Similar to the laws in the United States, there are significant privacy and data security laws that apply in Europe and other countries. The collection, use, disclosure, transfer, or other processing of personal data, including personal health data, regarding individuals who are located in the EEA, and the processing of personal data that takes place in the EEA, is regulated by the GDPR, which went into effect in May 2018 and which imposes obligations on companies that operate in our industry with respect to the processing of personal data and the cross-border transfer of such data. The GDPR imposes onerous accountability obligations requiring data controllers and processors to maintain a record of their data processing and policies. If our or our partners’ or service providers’ privacy or data security measures fail to comply with the GDPR requirements, we may be subject to litigation, regulatory investigations, enforcement notices requiring us to change the way we use personal data and/or fines of up to 20 million Euros or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, as well as compensation claims by affected individuals, negative publicity, reputational harm and a potential loss of business and goodwill.
The GDPR places restrictions on the cross-border transfer of personal data from the EU to countries that have not been found by the European Commission to offer adequate data protection legislation, such as the United States. There are ongoing concerns about the ability of companies to transfer personal data from the EU to other countries. In July 2020, the Court of Justice of the European Union, or the CJEU, invalidated the EU-U.S. Privacy Shield, one of the mechanisms used to legitimize the transfer of personal data from the EEA to the U.S. The CJEU decision also drew into question the long-term viability of an alternative means of data transfer, the standard contractual clauses, for transfers of personal data from the EEA to the U.S.
Additionally, in October 2022, President Joe Biden signed an executive order to implement the EU-U.S. Data Privacy Framework, which would serve as a replacement to the EU-U.S. Privacy Shield. The European Commission initiated the process to adopt an adequacy decision for the EU-U.S. Data Privacy Framework in December 2022, and the European Commission adopted the adequacy decision on July 10, 2023. The adequacy decision will permit U.S. companies who self-certify to the EU-U.S. Data Privacy Framework to rely on it as a valid data transfer mechanism for data transfers from the EU to the U.S. However, some privacy advocacy groups have already suggested that they will be challenging the EU-U.S. Data Privacy Framework. If these challenges are successful, they may not only impact the EU-U.S. Data Privacy Framework, but also further limit the viability of the standard contractual clauses and other data transfer mechanisms. The uncertainty around this issue has the potential to impact our business internationally.
Following Brexit, the UK Data Protection Act 2018 applies to the processing of personal data that takes place in the United Kingdom and includes parallel obligations to those set forth by GDPR. In relation to data transfers, both the United Kingdom and the EU have determined, through separate “adequacy” decisions, that data transfers between the two jurisdictions are in compliance with the UK Data Protection Act and the GDPR, respectively. The UK and the US are also in discussions to develop a US-UK “data bridge”, which would function similarly to the EU-US Data Privacy Framework and provide an additional legal mechanism for companies to transfer data from the UK to the US. Any changes or updates to these developments have the potential to impact our business.
Beyond GDPR, there are privacy and data security laws in a growing number of countries around the world. While many loosely follow GDPR as a model, other laws contain different or conflicting provisions. These laws will impact our ability to conduct our business activities, including both our clinical trials and the sale and distribution of commercial products, through increased compliance costs, costs associated with contracting and potential enforcement actions.
While we continue to address the implications of the recent changes to data privacy regulations, data privacy remains an evolving landscape at both the domestic and international level, with new regulations coming into effect and continued legal challenges, and our efforts to comply with the evolving data protection rules may be unsuccessful. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our practices. We must devote significant resources to understanding and complying with this changing landscape. Failure to comply with laws regarding data protection would expose us to risk of enforcement actions taken by data protection authorities in the EEA and elsewhere and carries with it the potential for significant penalties if we are found to be non-compliant. Similarly, failure to comply with federal and state laws in the United States regarding privacy and security of personal information could expose us to penalties under such laws. Any such failure to comply with data protection and privacy laws could result in government-imposed fines or orders requiring that we change our practices, claims for damages or other liabilities, regulatory investigations and enforcement action, litigation and significant costs for remediation, any of which could adversely affect our business. 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 business, financial condition, results of operations or prospects.
Risks Related to Our Financial Position
We face new challenges as a smaller, less diversified company following the sale of our oncology business to Servier.
Following the sale of our oncology business to Servier in March 2021, we have focused our resources and efforts on product and product candidates for the treatment of rare diseases. The success of the rare disease business is subject to various risks and
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uncertainties, including the possibility that we may not be able to successfully commercialize PYRUKYND®, the possibility of adverse clinical and other developments in respect of PYRUKYND® or our other product candidates of the rare disease business, and unanticipated changes in applicable laws and regulations that may adversely affect the rare disease 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, including our approved products at the time of sale, TIBSOVO® and IDHIFA®, has resulted in us being a smaller, less diversified company with a more limited business concentrated on products and product candidates for the treatment of rare diseases. As a result, we may be more susceptible to changing market conditions, including fluctuations and risks particular to the markets for patients with rare diseases, than a more diversified company, which could adversely affect our business, financial condition and results of operations. In addition, even with the FDA approval of PYRUKYND®, the diversification of our revenues, costs and cash flows has diminished following the sale of our oncology business. 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.
Raising additional capital may restrict our operations, require us to relinquish rights to our technologies or product candidates or cause dilution to our stockholders.
Until such time, if ever, as we can generate substantial product revenue, including from sales of PYRUKYND®, we expect to finance our cash needs primarily through cash on hand, a potential milestone payment and royalties from Servier if vorasidenib is approved by the FDA and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions. In addition, we may pursue opportunistic debt offerings, and equity or equity-linked offerings. We do not have any committed external source of funds other than the potential milestone and royalty payments that we are eligible to receive with respect to vorasidenib under our purchase agreement with Servier. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership 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 raise funds through 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 to grant licenses on terms that may not be favorable to us.
If our existing capital is insufficient to fund our operating expenses and capital expenditures, we will need to raise capital, and if weare 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. Our estimate as to how long we expect our existing cash, cash equivalents, and marketable securities to be available to fund our operating expenses and capital expenditures is based on assumptions that may prove to 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 amount and timing of future revenue received from commercial sales of PYRUKYND® and any of our other product candidates for which we may receive marketing approval;
•the amount of contingent consideration we ultimately receive from Servier;
•the costs and timing of our ongoing commercialization activities, including product manufacturing, sales, marketing and distribution, for PYRUKYND® for the treatment of adults with PK deficiency in the approved jurisdictions;
•the anticipated cost-savings associated with the evolution of our research organization;
•the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our product candidates;
•the costs associated with in-licensing or acquiring assets for pipeline growth, including the amount and timing of future milestone and royalty payments payable to Alnylam pursuant to the license agreement;
•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;
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•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;
•our ability to establish and maintain collaborations on favorable terms, if at all;
•our ability to successfully execute on our strategic plans;
•operational delays due to public health epidemics, including the recent COVID-19 pandemic; and
•operational delays, disruptions and/or increased costs associated with rising global energy prices or energy shortages or rationing.
We have historically incurred operating losses. We expect to incur losses in the future and may never achieve or maintain profitability.
We have a history of incurring operating losses. Our net losses for the nine months ended September 30, 2023 and 2022 were $256.1 million and $268.3 million, respectively. As of September 30, 2023, we had an accumulated deficit of $726.7 million. Prior to the sale of our oncology business to Servier in March 2021, we had generated only modest revenue from sales of TIBSOVO® and, prior to our sale to Royalty Pharma of our royalty rights to IDHIFA®, from royalties on sales of IDHIFA®. Following receipt of marketing approval in February 2022, we have begun to commercialize PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency in the United States. We are currently providing access to PYRUKYND® free of charge for eligible patients in the EU and Great Britain through a global managed access program, and we may provide access to PYRUKYND® for adult patients with PK deficiency in other jurisdictions through the global managed access program on either a free of charge or for charge basis. PYRUKYND® is the first product we have received marketing approval for following the sale of our oncology business. We have neither obtained marketing approval for PYRUKYND® in any other indications nor have we obtained marketing approval for any of our other product candidates, all of which are in preclinical or clinical development stages.
Following the sale of our oncology business, we have financed and expect to continue to finance our operations primarily through cash on hand, royalty payments from Servier with respect to U.S. net sales of TIBSOVO® prior to the sale of these royalty rights to Sagard, proceeds from the sale of our rights to the royalty on U.S. net sales of TIBSOVO® to Sagard, a potential milestone payment and royalties from Servier if vorasidenib is approved by the FDA, the actual and potential future sales of PYRUKYND® and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions. In addition, we may pursue opportunistic debt offerings, and equity or equity-linked offerings. 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:
•commercially launch PYRUKYND® for approved indications in approved jurisdictions;
•continue to establish and maintain a sales, marketing and distribution infrastructure to commercialize PYRUKYND® and other product candidates for which we may obtain marketing approval;
•initiate and continue clinical trials for our products and product candidates, including PYRUKYND® in other indications;
•continue our research and preclinical development of our product candidates and seek to identify additional product candidates;
•seek marketing approvals for our product candidates that successfully complete clinical trials;
•require the manufacture of larger quantities of product candidates for clinical development and commercialization;
•maintain, expand and protect our intellectual property portfolio;
•add additional personnel to support our product research and 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 product candidates, medicines and technologies.
To become and remain profitable, we must develop and successfully commercialize 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. 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 the value of our company 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.
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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 of the oncology business at the time of closing of the transaction and amounts for a representation and warranty insurance policy.In addition, Servier agreed to pay to us:
•$200.0 million in cash if, prior to January 1, 2027, vorasidenib is granted approval for a new drug application, or 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 with Servier) of TIBSOVO® from the completion of the transaction through loss of exclusivity of TIBSOVO®, which we sold to Sagard in October 2022; and
•a royalty payment of 15% of the U.S. net sales (as defined in the purchase agreement with Servier) 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.
Prior to the sale to Sagard, we have received royalties from Servier on U.S. net sales of TIBSOVO®. We cannot however predict what success, if any, Servier may have in the United States with respect to future sales of vorasidenib, if approved, and, therefore, we cannot predict the amount of royalty payments that we can expect to receive from Servier prior to the loss of exclusivity of vorasidenib. The potential royalty payments with respect to vorasidenib 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 report. In addition, there is no guarantee that vorasidenib will be approved by the FDA, and that, as such we will receive the $200.0 million regulatory milestone payment.
Changes in tax laws or in their implementation or interpretation may adversely affect our 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 corporate taxation.
As part of Congress’ response to the recent COVID-19 pandemic, economic relief legislation was enacted in 2020 and 2021. Such legislation contains numerous tax provisions. In addition, the Inflation Reduction Act of 2022, or IRA, was signed into law in August 2022.The IRA introduced new tax provisions, including a 1% excise tax imposed on certain stock repurchases by publicly traded corporations. The 1% excise tax generally applies to any acquisition by the publicly traded corporation (or certain of its affiliates) of stock of the publicly traded corporation in exchange for money or other property (other than stock of the corporation itself), subject to a de minimis exception. Thus, the excise tax could apply to certain transactions that are not traditional stock repurchases. Regulatory guidance under the IRA, the Tax Act, and such additional legislation is and continues to be forthcoming, and such guidance could ultimately increase or lessen impact of these laws on our business and financial condition. In addition, it is uncertain if and to what extent various states will conform to the IRA, the Tax Act, and additional tax legislation.
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 for the development and commercialization of our product candidates. Our likely collaborators for any collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. If we enter into any such arrangements with any third parties, 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 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 ranging 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 on our product development or commercialization program under such collaboration could be delayed, diminished or terminated.
We may seek to establish additional collaborations, and, if we are not able 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.
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 similarsuch challenges or delays in the future and these challenges or delaysthat could have a material adverse impact on our business, financial condition and prospects.
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Our reliance on third parties for research and development activities will reducereduces our control over these activities but willdoes 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 productsproduct candidates 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. We are exposed to risk of fraud or other misconduct by such third parties.
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
If either we or any third parties on which we rely are adversely impacted by rising global energy costs or energy shortages or rationing, delays may occur in our product development activities, which delays could have a result,material adverse impact on our results of operationsbusiness, financial condition and the commercial prospects for our medicines would be harmed, our costs could increase and our ability to generate revenue could be delayed.prospects.
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.

We contract with third parties for the manufacture of our product candidates for preclinical and clinical testing and expect to continue to do so for late-stage clinical trials and for commercialization. This reliance on third parties increases the risk that we will not have sufficient quantities 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.
We do not have any manufacturing or supply chain related 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 for commercial supply of PYRUKYND® and any of these product candidatescandidate 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 anyentered into long-term supply agreements for commercial supply of PYRUKYND® with the third-party manufacturers, and we purchase our required drug supply on a purchase order basis.
We may be unable to establish anysimilar long-term supply agreements with third-party manufacturers with respect to our other product candidates 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 cGMPcGMPs, regulations or similar regulatory requirements on a global basis. Our failure, or the failure of our third-party manufacturers, to comply with currently applicable regulations, or regulations or specifications to which we become subject in the future, 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 thatIf either we or any third parties on which we rely are adversely impacted by restrictions resulting from the recent COVID-19 pandemic, the emergence of another public health epidemic, by rising global energy costs or energy shortages or rationing and/
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or the impacts of the Russia-Ukraine war, our supply chain may develop may compete with otherbe disrupted, limiting our ability to manufacture our product candidates for our clinical trials and productsresearch and development operations and our product for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us.commercialization.
Any performance failure on the part of our existing or future manufacturers could delay preclinical development, clinical development, marketing approval or marketing approval. Weour commercialization efforts. Due to the volatility of the supply networks globally, we have obtained regulatory approval for redundant supply of raw materials and active pharmaceutical ingredient for PYRUKYND®, and have an ongoing program to monitor supply, including establishing safety stocks. While we maintain a broad safety stock of drug product, we do not currently have arrangements in place for redundant supply for bulk drug substances.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 or 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.
We may depend on collaborations with 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 may seek collaborations for the development and commercialization of our product candidates with large and mid-size 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.
If we enter into any such arrangements with 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. 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. 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. 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. 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. In addition, our ability to enter into arrangements with collaborators in specific regions, such as the Middle East, may be affected by localized geopolitical unrest or military conflict, such as the current armed conflict in Israel and the Gaza Strip.
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.
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 expensivecostly 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 aspectsand/or file
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patent applications on every aspect of our research and development output before itthat is too late to obtainor may be eligible for patent protection. Although we enter into non-

disclosurenon-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 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 preissuancepre-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 exclusivitythe 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
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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,

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 and 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 and 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.

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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 wouldcould be harmed.
In addition to seeking patents for some of our technology and medicines, we also rely on trade secrets, includingmaintaining the confidentiality of unpatented know-how, technology and other proprietary information, to maintain our competitive position. With respectFor 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 secretsproperty 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 of journal articles describing the methodology, and the movement of personnel skilled in the art from academic to industry scientific positions.
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 secretproprietary 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 secretsproprietary 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 anyMoreover, we anticipate that with respect to this platform, at least some of our trade secrets werethis 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 IDHIFA®, 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 product candidates will prevent us from commercializing the 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
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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, ifDisruptions 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. For example, should the FDA determine that an inspection is necessary for approval of a regulatory submission and an inspection cannot be completed during the review cycle, and the FDA does not determine a remote interactive evaluation to be adequate, the FDA has stated that it generally intends to issue a complete response letter or defer action on the regulatory submission until an inspection can be completed.
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.
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 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.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 European Union, or 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. ApprovalMoreover, 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. WeAlthough we have received marketing authorization for PYRUKYND® for the treatment of adults with PK deficiency in the EU and Great Britain, we may not be able to file for additional marketing approvals and may not receive necessary approvals to commercialize our medicines in any other foreign market.
Additionally, on June 23, 2016, the electoratewe could face heightened risks with respect to seeking marketing approval in the United Kingdom voted in favoras a result of leaving the European Union,withdrawal of the United Kingdom from the EU on December 31, 2020, commonly referred to as Brexit. On March 29, 2017, the country formally notified the European Union of its intention to withdraw pursuant to Article 50 of the Lisbon Treaty. Since a significant proportion of the regulatory framework for pharmaceutical products in the United Kingdom covering the quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales, and distribution of pharmaceutical products is derived from European UnionEU directives and regulations, the referendum could materiallyconsequences of Brexit and the impact on the future regulatory regime with respectthat applies to products and the approval of our product candidates in the United Kingdom remains unclear. As of January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or the European Union.MHRA, became responsible for supervising medicines and medical devices in Great Britain, comprising England, Scotland and Wales under domestic law, whereas Northern Ireland will continue to be subject to EU rules under the Northern Ireland Protocol. The MHRA will rely on the Human Medicines Regulations 2012 (SI 2012/1916) (as amended), or the HMR, as the basis for regulating medicines. The HMR has incorporated into the domestic law the body of EU law instruments governing medicinal products that pre-existed Brexit. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, wouldmay prevent us from commercializing ourany product candidates in the United Kingdom and/or the European UnionEU and restrict our ability to generate revenue and achieve and sustain profitability. If any of these outcomes occur, we may be forcedforce us 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 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. In addition, we do not have experience commercializing products outside of the United States and such efforts may depend on our ability to find a suitable collaborator.
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Fast track designation and/or priority review designation by the FDA or PRIME designation in the EU may not actually lead to a faster development or regulatory review or approval process, nor does it assure approval of the product candidate by the FDA or the EMA.
We may seek fast track designation, priority review designation and/or PRIME designation for our product candidates.
If a product candidate is intended for the treatment of a serious or life-threatening disease or condition and the product candidate demonstrates the potential to address unmet medical needs for this disease or condition, the drug sponsor may apply for FDA fast track designation.
Further, if the FDA determines that a product candidate offers major advances in treatment or provides a treatment where no adequate therapy exists, the FDA may designate the product candidate for priority review. A priority review designation means that the goal for the FDA to review an application is six months, rather than the standard review period of ten months. Receiving priority review from the FDA does not guarantee approval within the six-month review cycle or thereafter.
The FDA has broad discretion on whether to grant fast track designation and/or priority review designation to a product candidate, so even if we believe a particular product candidate is eligible for such designation or status, the FDA may decide not to grant it. Even if our product candidates receive fast track designation and/or priority review 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.
In addition, in the EU, the PRIME designation program focuses on product candidates that target conditions for which there exists no satisfactory method of treatment in the EU or product candidates that may offer a major therapeutic advantage over existing treatments. The benefits of a PRIME designation include, among other things, the potential to qualify product for accelerated review, meaning reduction in the review time for an opinion on approvability to be issued earlier in the application process. PRIME designation enables a sponsor to request parallel EMA scientific advice and health technology assessment advice to facilitate timely market access. Even if our product candidates receive PRIME designation, we may not experience a faster development process, review or approval compared to conventional EMA procedures and it does not assure or increase the likelihood of the EMA’s grant of a marketing authorization.
We, or any collaborators, may not be able to obtain orphan drug designation or orphan drug exclusivity for our drug candidates and, even if we do, that exclusivity may not 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 orphan drug if it is a drug or biologic intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals annually in the United 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 marketing exclusivity, which precludes the EMA or the FDA from approving another marketing application for the same product for that time period. The applicable period is seven years in the United 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 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.
In addition, 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 and Congress may further reevaluate the Orphan Drug Act and its regulations and policies. This may be particularly true in light of a decision from the Court of Appeals for the 11th Circuit in September 2021 finding that, for the purpose of determining the scope of exclusivity, the term “same disease or condition” means the designated “rare disease or condition” and could not be interpreted by the FDA to mean the “indication or use.” Although there have been legislative proposals to overrule this decision, they have not been enacted into law. On January 23, 2023, the FDA announced that, in matters beyond the scope of that court order, the FDA will continue to apply its existing regulations tying orphan-drug exclusivity to the uses or indications for which the orphan drug was approved. We do not know if, when, or how the FDA or Congress may change the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect our business. Depending on what changes the FDA may make to its orphan drug regulations and policies, our business could be adversely impacted.
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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 ActFDCA 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 orresult 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 beare 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 PYRUKYND® and 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 PYRUKYND® and any other 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 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;hospitals and other covered recipients; 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
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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 and future legislation may increaseThe provision of benefits or advantages to physicians to induce or encourage the difficulty and cost for us and any future collaborators to obtain marketing approvalprescription, recommendation, endorsement, purchase, supply, order or use of our other product candidates and affect the prices we, or they, may obtain.
In the United States and 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 anymedicinal products for which we, or they, obtain marketing approval. We expect that current laws, as well as other healthcare reform measures that may be adoptedis also prohibited in the future, may result in more rigorous coverage criteria and additional downward pressure on the price that we,EU. The provision of benefits 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 amendedadvantages to physicians is governed by the Health Care and Education Affordability Reconciliationnational anti-bribery laws of EU Member States, such as the U.K. Bribery Act or collectively the ACA. Among the provisions2010. Infringement 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 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 abusethese 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 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;substantial fines and imprisonment.
a Center for MedicarePayments 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 Medicaid Innovation within CMSapproval 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 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 maycomply with these requirements could result in additional reductionsreputational risk, public reprimands, administrative penalties, fines or imprisonment.
PYRUKYND® or any product candidate that we commercialize may become subject to unfavorable pricing regulations and third-party reimbursement practices, which would harm our business.
We have built our commercial infrastructure to support the commercial launch of PYRUKYND® in Medicareadult PK deficiency in the United States. We are providing access to PYRUKYND® free of charge for eligible patients in the EU and other healthcare fundingGreat Britain through a global managed access program, and may otherwise affect the prices we may obtainprovide access to PYRUKYND® for adult patients with PK deficiency in other jurisdictions through the global managed access program on either a free of charge or for charge basis. The commercial success of PYRUKYND® or of any of our product candidates forwill depend substantially, both domestically and abroad, on the extent to which regulatory approval is obtained.
In addition, with the new Administration and Congress, there may be additional legislative changes, including potentially repeal and replacementcosts of certain provisions of the ACA. It remains to be seen, however, whether new legislationour product candidates will be enactedpaid by third-party payors, including government health administration authorities and if so, precisely whatprivate health coverage insurers. If coverage and reimbursement is not available, or reimbursement is available only to limited levels, we, or any new legislation will provide and what impact it will have on the availability of healthcare and containingcollaborators, may not be able to successfully commercialize PYRUKYND® 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 thatEven if coverage is provided, the ACA, as well as other healthcare reform measures thatapproved reimbursement amount may not be adopted in thehigh enough to allow us, or any future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressurecollaborators, to establish or maintain pricing sufficient to realize a sufficient return on the price that we receive for any approved product and/our 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 intheir investments. In the United States, has also beenno 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 subjectcoverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of considerable discussion,our products to each payor separately, with no assurance that coverage and membersadequate reimbursement will be applied consistently or obtained in the first instance.
There is significant uncertainty related to third-party payor coverage and reimbursement of Congressnewly approved drugs. Marketing approvals, pricing and reimbursement for new drug products vary widely from country to country. Some countries require approval of the Administration have stated that they will address such costs through new legislative and administrative measures. Thesale price of a drug before it can be marketed. In many countries, the pricing ofreview period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceuticals is alsopharmaceutical pricing remains subject to continuing governmental control outside the United States.even after initial approval is granted. In these countries, pricing negotiations with 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 effortsAs 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 Administrationproduct, possibly for lengthy time periods, which may negatively impact the revenue we are able to pursue regulatory reformgenerate from the sale of the product in that country. Adverse pricing limitations may limit FDA’shinder 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
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PYRUKYND® or 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 PYRUKYND® or 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 PYRUKYND® or any product candidate that we, or any collaborator, may 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 PYRUKYND® or any of our product candidates for which we, or any collaborator, may obtain marketing approval could significantly harm our operating results, our ability to engage in oversightraise capital needed to commercialize products and implementationour 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 PYRUKYND® or any other 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 impactbe 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 2031. However, pursuant to the CARES Act and subsequent legislation, these Medicare sequester reductions were suspended through the end of March 2022 and from April 2022 through June 2022, a 1% cut was in effect, with the full 2% cut having resumed thereafter. 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.
Indeed, under current legislation, the actual reductions in Medicare payments may vary up to 4%. The Consolidated Appropriations Act, which was signed into law by President Biden in December 2022, made several changes to sequestration of the Medicare program. Section 1001 of the Act delays the 4% Statutory Pay-As-You-Go Act of 2010 (PAYGO) sequester for two years, through the end of calendar year 2024. Triggered by enactment of the American Rescue Plan Act of 2021, the 4% cut to the Medicare program would have taken effect in January 2023. The Act’s health care offset title includes Section 4163, which extends the 2% Budget Control Act of 2011 Medicare sequester for six months into FY 2032 and lowers the payment reduction percentages in FYs 2030 and 2031.
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 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. On June 17, 2021, the Supreme Court struck down the lower court
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rulings, finding that the plaintiffs did not have standing to challenge the ACA’s minimum essential coverage provision at issue in the case.
The Trump Administration has takenalso took executive actions to undermine or delay implementation of the ACA, including directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. On January 28, 2021, however, President Biden revoked these Orders and 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 recent COVID-19 pandemic. We cannot predict how federal agencies will respond to such Executive Orders.
The prices of prescription pharmaceuticals in the United States and foreign jurisdictions are subject to considerable legislative and executive actions and could impact the prices we obtain for our drug products, if and when approved, and/or the sustainability of those prices.
The prices 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 pharmaceutical pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and Medicaid. To those ends, President Trump issued several executive actions,orders intended to lower the costs of prescription products. Certain provisions of these orders have been reflected in promulgated regulations, including an interim final rule implementing a most favored nation model for prices, which would tie Medicare Part B payments for certain physician-administered pharmaceuticals to the lowest price paid in other economically advanced countries. Such final rule has been subject to a nationwide preliminary injunction, and, on December 29, 2021, Centers for Medicare & Medicaid Services, or CMS, issued a final rule to rescind it. With the issuance of this rule, CMS stated it will explore all options to incorporate value into payments for Medicare Part B drugs and improve beneficiaries’ access to evidence-based care.
In addition, in October 2020, the United States Department of Health and Human Services, or HHS, and the FDA published a numberfinal rule allowing states and other entities to develop a Section 804 Importation Program, or SIP, to import certain prescription drugs from Canada into the United States. The final rule is currently the subject of executive orders, that could impose significant burdensongoing litigation, but at least six states (Vermont, Colorado, Florida, Maine, New Mexico and New Hampshire) have passed laws allowing for the importation of drugs from Canada with the intent of developing SIPs for review and approval by the FDA. Further, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or otherwise materially delay,through pharmacy benefit managers, unless the FDA’s abilityprice reduction is required by law. The final rule would eliminate the current safe harbor for Medicare drug rebates and create new safe harbors for beneficiary point-of-sale discounts and pharmacy benefit manager service fees. It originally was set to go into effect on January 1, 2022, but with passage of the IRA, has been delayed by Congress to January 1, 2032.
More recently, on August 16, 2022, the IRA was signed into law by President Biden. The IRA has implications for Medicare Part D, which is a program available to individuals who are entitled to Medicare Part A or enrolled in Medicare Part B to give them the option of paying a monthly premium for outpatient prescription drug coverage. Among other things, the IRA requires manufacturers of certain drugs to engage in routineprice negotiations with Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025). The IRA permits the Secretary of the HHS to implement many of these provisions through guidance, as opposed to regulation, for the initial years.
Specifically, with respect to price negotiations, Congress authorized Medicare to negotiate lower prices for certain costly single-source drug and biologic products that do not have competing generics or biosimilars and are reimbursed under Medicare Part B and Part D. CMS may negotiate prices for ten high-cost drugs paid for by Medicare Part D starting in 2026, followed by 15 Medicare Part D drugs in 2027, 15 Medicare Part B or Part D drugs in 2028, and 20 Medicare Part B or Part D drugs in 2029 and beyond. This provision applies to drug products that have been approved for at least 9 years and biologics that have been licensed for 13 years, but it does not apply to drugs and biologics that have been approved for a single rare disease or condition. Nonetheless, since CMS may establish a maximum price for these products in price negotiations, we would be fully at risk of government action if our products are the subject of Medicare price negotiations. Moreover, given the risk that could be the case, these provisions of the IRA may also further heighten the risk that we would not be able to achieve the expected return on our drug products or full value of our patents protecting our products if prices are set after such products have been on the market for nine years.
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Further, the legislation subjects drug manufacturers to civil monetary penalties and a potential excise tax for failing to comply with the legislation by offering a price that is not equal to or less than the negotiated “maximum fair price” under the law or for taking price increases that exceed inflation. The legislation also requires manufacturers to pay rebates for drugs in Medicare Part D whose price increases exceed inflation. The new law also caps Medicare out-of-pocket drug costs at an estimated $4,000 a year in 2024 and, thereafter beginning in 2025, at 2,000 a year. In addition, the IRA potentially raises legal risks with respect to individuals participating in a Medicare Part D prescription drug plan who may experience a gap in coverage if they required coverage above their initial annual coverage limit before they reached the higher threshold, or “catastrophic period” of the plan. Individuals requiring services exceeding the initial annual coverage limit and below the catastrophic period, must pay 100% of the cost of their prescriptions until they reach the catastrophic period. Among other things, the IRA contains many provisions aimed at reducing this financial burden on individuals by reducing the co-insurance and co-payment costs, expanding eligibility for lower income subsidy plans, and price caps on annual out-of-pocket expenses, each of which could have potential pricing and reporting implications.

Pharmaceutical companies and other parties have recently filed lawsuits in various courts with constitutional claims against HHS and CMS. We expect that litigation involving these and other provisions of the IRA will continue, with unpredictable and uncertain results.

Accordingly, while it is currently unclear how the IRA will be effectuated, we cannot predict with certainty what impact any federal or state health reforms will have on us, but such changes could impose new or more stringent regulatory requirements on our activities or result in reduced reimbursement for our products, any of which could adversely affect our business, results of operations and oversightfinancial condition.

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 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 included in their prescription drug and other health care programs. These measures could reduce the 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 adopted in the 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 or product candidates or additional pricing pressures.
In the EU, similar political, economic and regulatory developments may affect our ability to profitably commercialize our product candidates, if approved.
We are subject to U.S. and foreign export control, import, sanctions, 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 export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control, the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, and 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 recipients in the 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 as implementing statutes through rulemaking, issuanceactivities.
Noncompliance with such laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of guidance,profits, significant fines, damages, other civil and reviewcriminal penalties or injunctions, suspension and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage, and approvalother 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 marketingoperations 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 and resources and significant defense and
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compliance costs and other professional fees. In certain cases, enforcement authorities may even cause us to appoint an independent compliance monitor which can result in added costs and administrative burdens.
With the passage of the CREATES Act, we are exposed to possible litigation and damages by competitors who may claim that we are not providing sufficient quantities of our approved products on commercially reasonable, market-based terms for testing in support of their ANDAs and 505(b)(2) applications. On January 30, 2017,
In December 2019, former President Trump issuedsigned legislation intended to facilitate the development of generic and biosimilar products. The bill, previously known as the CREATES Act, authorizes sponsors of ANDAs and 505(b)(2) applications to file lawsuits against companies holding NDAs that decline to provide sufficient quantities of an executive order, applicable to all executive agencies, includingapproved reference drug on commercially reasonable, market-based terms. Drug products on FDA’s drug shortage list are exempt from these new provisions unless the product has been on the list for more than six continuous months or the FDA determines that requiresthe supply of the product will help alleviate or prevent a shortage. For the purposes of the statute, the term “commercially reasonable, market-based terms” is defined as (1) the nondiscriminatory price at or below the most recent wholesale acquisition cost for the product, (2) a delivery schedule that for each notice of proposed rulemakingmeets the statutorily defined timetable, and (3) no additional conditions on the sale.
To bring an action under the statute, an ANDA or final regulation505(b)(2) sponsor must take certain steps to be issued in fiscal year 2017,request the agency shall identify at least two existing regulations to 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 regulationsreference product, which, in the 2017 fiscal year, including repealed regulations,case of products covered by a Risk Evaluation and Mitigation Strategy with elements to assure safe use, include obtaining authorization from the FDA for the acquisition of the reference product. If the sponsor does bring an action for failure to provide a reference product, there are certain affirmative defenses available to the NDA holder, which must be no greater than zero, exceptshown by a preponderance of evidence. If the sponsor prevails in limited circumstances. For fiscal years 2018litigation, it is entitled to a court order directing the NDA holder to provide, without delay, sufficient quantities of the applicable product on commercially reasonable, market-based terms, plus reasonable attorney fees and beyond,costs.
Additionally, the executive order requires agenciesstatutory provisions authorize a federal court to identify regulationsaward the product developer an amount “sufficient to offset any incremental costdeter” the NDA holder from refusing to provide sufficient product quantities on commercially reasonable, market-based terms if the court finds, by a preponderance of a new regulation. In interim guidance issued by the Office of Information and Regulatory Affairs within OMB on February 2, 2017, the administration indicatesevidence, that the “two-for-one”NDA holder did not have a legitimate business justification to delay providing the product or failed to comply with the court’s order.
Although we intend to comply fully with the terms of these new statutory provisions, we are still exposed to potential litigation and damages by competitors who may applyclaim that we are not onlyproviding sufficient quantities of our approved products on commercially reasonable, market-based terms for testing in support of ANDAs and 505(b)(2) applications. Such litigation would subject us to agency regulations, but alsoadditional costs, damages and reputational harm, which could lead to significant agency guidance documents. It is difficult to predict how these requirements will be implemented,lower revenues. The CREATES Act may enable generic competition with PYRUKYND® and the extent toany of our product candidates, if approved, which they willcould impact the FDA’sour ability to exercise its regulatory authority. If these executive actions impose constraints on FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.maximize product revenue.
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
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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 onOur consultants and advisors, including our scientific and clinical advisors, toco-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. Furthermore, the recent COVID-19 pandemic and our flexible workplace policy allowing employees to work from home may make it difficult for us to maintain our corporate culture.
In the future we may experience growth in the number of our development, regulatory and sales and marketing personnel. To manage any 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 or regulations in other jurisdictions, provide accurate information to the FDA or other regulatory authorities, 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 or interactions with the FDA or other regulatory authorities, 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 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 boardBoard of directorsDirectors 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 boardBoard of directors.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 boardBoard of directors;Directors;
•limit the manner in which stockholders can remove directors from the board;our Board of Directors;

•establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our boardBoard of directors;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 boardBoard of directorsDirectors 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
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potential hostile acquirer, effectively preventing acquisitions that have not been approved by our boardBoard of directors;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, 20142015 the closing price of our common stock on the NASDAQNasdaq Global Select Market has ranged from $21.70$17.06 per share to $138.85$135.01 per share. The stock market in general and the market for biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. While the full extent of the economic impact of the recent COVID-19 pandemic or recent increases in inflation rates (particularly as it relates to clinical- or manufacturing-related costs) may be difficult to assess or predict, such impacts have already caused, and are 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. 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.
The market price for our common stock may be influenced by many factors, including:
•our success in launching and commercializing PYRUKYND®;
•the decision to focus our efforts on our rare disease business following the sale of our oncology business to Servier;
•the evolution of our research organization;
•announcements by us or our competitors of significant acquisitions, in-licensing arrangements, 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 or product candidates or our competitors’ products and product candidates;
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;
•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 products, product candidates or clinical development programs;
•the results of our efforts to develop additional product candidates orand 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;
•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 or pandemics, such as the recent COVID-19 pandemic and any recession, depression or sustained market event resulting from such epidemics or pandemics;
•market conditions in the pharmaceutical and biotechnology sectors;
•general economic, industry and market conditions; and
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•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'smanagements' attention and resources, which could seriously harm our business, financial condition, results of operations and prospects.
Sales of a substantial number ofWe 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 numberresults of sharesany 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, 2017,2023, our executive officers, directors and a small group ofprincipal 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 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.
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’scompany’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, weWe completed a review of our changes in ownership through December 31, 2011,2022, and determined that we had twodid not have a qualified ownership change since our last review as of December 31, 2021. Future ownership changes since inception. The changesunder 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 availablepotentially 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 NASDAQNasdaq 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
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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 to 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 risk that we will not be able to conclude, from time to time, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
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.


Item 5. Other Information

(c) Director and Officer Trading Arrangements
A significant portion of the compensation of our directors and officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is in the form of equity awards and, from time to time, directors and officers engage in open-market transactions with respect to the securities acquired pursuant to such equity awards or other of our securities, including to satisfy tax withholding obligations when equity awards vest or are exercised, and for diversification or other personal reasons.
Transactions in our securities by directors and officers are required to be made in accordance with our insider trading policy, which requires that the transactions be in accordance with applicable U.S. federal securities laws that prohibit trading while in possession of material nonpublic information. Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables directors and officers to prearrange transactions in our securities in a manner that avoids concerns about initiating transactions while in possession of material nonpublic information.
During the quarterly period covered by this report, Sarah Gheuens, M.D., Ph.D., our chief medical officer and head of research & development, entered into a Rule 10b5-1 trading arrangement that is intended to qualify as an “eligible sell-to-cover transaction” (as described in Rule 10b5-1(c)(1)(ii)(D)(3) under the Exchange Act). This sell-to-cover arrangement applies to restricted stock units, or RSUs, whether vesting is based on the passage of time and/or the achievement of performance goals, granted to Dr. Gheuens on July 1, 2023 and any RSUs that may be granted to her from time to time thereafter (other than those which by their terms require us to withhold shares for tax withholding obligations in connection with vesting and settlement). This arrangement provides for the automatic sale of shares of our common stock that would otherwise be issuable on each settlement date of a covered RSU in an amount necessary to satisfy the applicable withholding obligation, with the proceeds of the sale delivered to us in satisfaction of the applicable withholding obligation. The number of shares that will be sold under this arrangement is not currently determinable as the number will vary based on the extent to which vesting conditions are satisfied, the market price of our common stock at the time of settlement and the potential future grant of additional RSUs subject to this arrangement.
None of our directors or officers terminated a Rule 10b5-1 trading arrangement or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarterly period covered by this report.
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Item 6.    Exhibits
Incorporated by Reference
Exhibit
Number
Description of ExhibitFormFile NumberDate of Filing
Exhibit
Number
Filed
Herewith
3.18-K001-36014July 30, 20133.1
3.28-K001-36014March 3, 20233.1
31.1X
31.2X
32.1*X
32.2*X
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are not embedded within the Inline XBRL documentX
101.SCHXBRL Taxonomy Extension Schema DocumentX
101.CALXBRL Taxonomy Calculation Linkbase DocumentX
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentX
101.LABXBRL Taxonomy Label Linkbase DocumentX
101.PREXBRL Taxonomy Presentation Linkbase DocumentX
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS)X

* 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.
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   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.INSXBRL Instance Document         X
101.SCHXBRL Taxonomy Extension Schema Document         X
101.CALXBRL Taxonomy Calculation Linkbase Document         X
101.DEFXBRL Taxonomy Extension Definition Linkbase Document         X
101.LABXBRL Taxonomy Label Linkbase Document         X
101.PREXBRL 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.
November 2, 2023AGIOS PHARMACEUTICALS, INC.By:/s/ Brian Goff
Date: November 1, 2017By:/s/ David P. Schenkein
David P. SchenkeinBrian Goff
President and Chief Executive Officer
(principal executive officer)
Date: November 1, 20172, 2023By:/s/ Andrew HirschCecilia Jones
Andrew Hirsch
Cecilia Jones
Chief Financial Officer

(principal financial officer)


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