Full Press Release Details
Agios Pharmaceuticals, Inc.
to Consolidated Financial Statements
| Report of Independent Registered Public Accounting Firm | F-2 | |||
| Consolidated Balance Sheets | F-4 | |||
| Consolidated Statements of Operations | F-5 | |||
| Consolidated Statements of Comprehensive Loss | F-6 | |||
| Consolidated Statements of Stockholders Equity | F-7 | |||
| Consolidated Statements of Cash Flows | F-8 | |||
| Notes to Consolidated Financial Statements | F-9 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Agios Pharmaceuticals, Inc.
Opinion on the Financial Statements
audited the accompanying consolidated balance sheets of Agios Pharmaceuticals, Inc. and its subsidiaries (the Company ) as of December 31, 2019 and 2018, and the related consolidated statements of operations, of comprehensive loss,
of stockholders equity and of cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements ). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
Changes in Accounting Principles
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which
it accounts for revenue from contracts with customers in 2018.
These consolidated financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on the
Company s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter
communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are
material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue recognition Celgene Collaboration Agreement Research and Development Services Recognized Under an Input Method
As described in Notes 2 and 11 to the consolidated financial statements, the Company recognizes revenue arising from collaboration agreements with Celgene. A
significant portion of revenue generated from the Company s collaboration agreements with Celgene relates to the provision of research and development services whereby revenue is recognized under an input method using the ratio of effort
incurred to date compared to the total estimated effort required to complete the performance obligation. The calculation of the total estimated effort includes the total amount of forecasted costs associated with the completion of discovery, pre-clinical or clinical trials, as well as the assumed timing of these activities and estimated patient populations. Such cost estimates include forecasted direct labor and material costs, subcontractor costs, and
external contract research organization costs. Research and development services revenue recognized from the collaboration with Celgene were $36.0 million during the year-ended December 31, 2019.
The principal considerations for our determination that performing procedures relating to revenue recognition Celgene collaboration agreement research
and development services recognized under an input method is a critical audit matter are there was significant judgment and estimation by management in determining the total estimated effort required to complete the performance obligation,
specifically the estimation of forecasted direct labor and material costs, and external contract research organization costs. This in turn led to a high degree of auditor judgment, effort and
subjectivity in performing procedures and in evaluating audit evidence relating to the cost estimates made by management.
Addressing the matter involved
performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process,
including controls over the revenue recognized for research and development services, controls over the costs incurred to date for each performance obligation, and controls over the inputs and assumptions used to estimate the total effort required
to complete each performance obligation. These procedures also included, among others, testing the actual costs incurred to date for each identified performance obligation, and evaluating and testing management s process for estimating total
costs to complete each performance obligation which included evaluating the reasonableness of management s estimates of total forecasted direct labor and materials costs and total external contract research organization costs. Evaluating the
reasonableness of the assumptions used involved evaluating the appropriateness of changes to management s estimates of total costs to complete and performing a comparison of management s prior period cost estimates to actual costs
/s/ PricewaterhouseCoopers LLP
We have served as the
Company s auditor since 2017.
Agios Pharmaceuticals, Inc.
Consolidated Balance Sheets
| (In thousands) December 31: | 2019 | 2018 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 80,931 | $ | 70,502 | ||||
| Marketable securities | 483,946 | 514,800 | ||||||
| Accounts receivable, net | 8,952 | 5,076 | ||||||
| Collaboration receivable related party | 1,539 | 2,462 | ||||||
| Collaboration receivable other | 1,928 | 670 | ||||||
| Royalty receivable related party | 2,900 | 2,234 | ||||||
| Inventory | 7,331 | 869 | ||||||
| Prepaid expenses and other current assets | 24,177 | 17,167 | ||||||
| Total current assets | 611,704 | 613,780 | ||||||
| Marketable securities | 152,929 | 220,119 | ||||||
| Operating lease assets | 93,643 | |||||||
| Property and equipment, net | 31,472 | 24,320 | ||||||
| Financing lease assets | 993 | |||||||
| Other non-current assets | 238 | |||||||
| Total assets | $ | 890,741 | $ | 858,457 | ||||
| Liabilities and stockholders equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 21,896 | $ | 17,880 | ||||
| Accrued expenses | 53,142 | 42,147 | ||||||
| Deferred revenue related party | 10,933 | 32,710 | ||||||
| Operating lease liabilities | 6,642 | |||||||
| Deferred rent | 766 | |||||||
| Financing lease liabilities | 273 | |||||||
| Total current liabilities | 92,886 | 93,503 | ||||||
| Deferred revenue, net of current portion related party | 50,580 | 59,809 | ||||||
| Operating lease liabilities, net of current portion | 106,074 | |||||||
| Deferred rent, net of current portion | 17,608 | |||||||
| Financing lease liabilities, net of current portion | 673 | |||||||
| Total liabilities | 250,213 | 170,920 | ||||||
| Commitments and contingent liabilities (Note 9) | ||||||||
| Stockholders equity: | ||||||||
| Preferred stock, $0.001 par value; 25,000,000 shares authorized, no shares issued and outstanding at December 31, 2019 and 2018 | ||||||||
| Common stock, $0.001 par value; 125,000,000 shares authorized and 68,401,105 and 58,218,653 shares issued and outstanding at December 31, 2019 and 2018, respectively | 68 | 58 | ||||||
| Additional paid-in capital | 2,156,363 | 1,794,283 | ||||||
| Accumulated other comprehensive income (loss) | 202 | (2,171 | ) | |||||
| Accumulated deficit | (1,516,105 | ) | (1,104,633 | ) | ||||
| Total stockholders equity | 640,528 | 687,537 | ||||||
| Total liabilities and stockholders equity | $ | 890,741 | $ | 858,457 |
See accompanying Notes to Consolidated Financial Statements.
Agios Pharmaceuticals, Inc.
Consolidated Statements of Operations
| (In thousands, except share and per share data) Years Ended December 31: | 2019 | 2018 | ||||||
| Revenues: | ||||||||
| Product revenue, net | $ | 59,851 | $ | 13,841 | ||||
| Collaboration revenue related party | 39,257 | 60,661 | ||||||
| Collaboration revenue other | 8,262 | 12,670 | ||||||
| Royalty revenue related party | 10,542 | 7,215 | ||||||
| Total revenue | 117,912 | 94,387 | ||||||
| Cost and expenses: | ||||||||
| Cost of sales | 1,317 | 1,397 | ||||||
| Research and development | 410,894 | 341,324 | ||||||
| Selling, general and administrative | 132,034 | 114,145 | ||||||
| Total cost and expenses | 544,245 | 456,866 | ||||||
| Loss from operations | (426,333 | ) | (362,479 | ) | ||||
| Interest income, net | 14,861 | 16,451 | ||||||
| Net loss | $ | (411,472 | ) | $ | (346,028 | ) | ||
| Net loss per share basic and diluted | $ | (6.86 | ) | $ | (6.03 | ) | ||
| Weighted-average number of common shares used in computing net loss per share basic and diluted | 59,994,539 | 57,418,300 |
See accompanying Notes to Consolidated Financial Statements.
Agios Pharmaceuticals, Inc.
Consolidated Statements of Comprehensive Loss
| (In thousands) Years Ended December 31: | 2019 | 2018 | ||||||
| Net loss | $ | (411,472 | ) | $ | (346,028 | ) | ||
| Other comprehensive income (loss): | ||||||||
| Unrealized gain (loss) on available-for-sale securities | 2,373 | (782 | ) | |||||
| Comprehensive loss | $ | (409,099 | ) | $ | (346,810 | ) |
See accompanying Notes to Consolidated Financial Statements.
Agios Pharmaceuticals, Inc.
Consolidated Statements of Stockholders Equity
| Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders Equity | ||||||||||||||||||||
| (In thousands, except share amounts) | Shares | Amount | ||||||||||||||||||||||
| Balance at December 31, 2017 | 48,826,153 | $ | 49 | $ | 1,174,904 | $ | (1,389 | ) | $ | (798,061 | ) | $ | 375,503 | |||||||||||
| Unrealized loss on available-for-sale securities | (782 | ) | (782 | ) | ||||||||||||||||||||
| Net loss | (346,028 | ) | (346,028 | ) | ||||||||||||||||||||
| Adjustment to beginning accumulated deficit resulting from adoption of ASC 606 | 39,456 | 39,456 | ||||||||||||||||||||||
| Stock-based compensation expense | 73,357 | 73,357 | ||||||||||||||||||||||
| Issuance of common stock under stock incentive and employee stock purchase plans | 1,239,514 | 1 | 30,215 | 30,216 | ||||||||||||||||||||
| Issuance of common stock for follow-on offering | 8,152,986 | 8 | 516,198 | 516,206 | ||||||||||||||||||||
| Other | (391 | ) | (391 | ) | ||||||||||||||||||||
| Balance at December 31, 2018 | 58,218,653 | $ | 58 | $ | 1,794,283 | $ | (2,171 | ) | $ | (1,104,633 | ) | $ | 687,537 | |||||||||||
| Unrealized gain on available-for-sale securities | 2,373 | 2,373 | ||||||||||||||||||||||
| Net loss | (411,472 | ) | (411,472 | ) | ||||||||||||||||||||
| Stock-based compensation expense | 72,373 | 72,373 | ||||||||||||||||||||||
| Issuance of common stock under stock incentive and employee stock purchase plans | 694,952 | 1 | 12,515 | 12,516 | ||||||||||||||||||||
| Issuance of common stock for follow-on offering | 9,487,500 | 9 | 277,192 | 277,201 | ||||||||||||||||||||
| Other | ||||||||||||||||||||||||
| Balance at December 31, 2019 | 68,401,105 | $ | 68 | $ | 2,156,363 | $ | 202 | $ | (1,516,105 | ) | $ | 640,528 |
See accompanying Notes to Consolidated Financial Statements.
Agios Pharmaceuticals, Inc.
Consolidated Statements of Cash Flows
| (In thousands) Years Ended December 31: | 2019 | 2018 | ||||||
| Operating activities | ||||||||
| Net loss | $ | (411,472 | ) | $ | (346,028 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 8,087 | 7,172 | ||||||
| Stock-based compensation expense | 72,373 | 73,357 | ||||||
| Net accretion of discount on marketable securities | (3,195 | ) | (3,837 | ) | ||||
| Loss on disposal of property and equipment | 1,052 | 20 | ||||||
| Non-cash operating lease expense | 8,532 | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (3,876 | ) | (5,076 | ) | ||||
| Collaboration receivable related party | 923 | (14 | ) | |||||
| Collaboration receivable other | (1,258 | ) | (670 | ) | ||||
| Royalty receivable related party | (666 | ) | (1,012 | ) | ||||
| Inventory | (6,462 | ) | (869 | ) | ||||
| Prepaid expenses and other current and non-current assets | (7,742 | ) | 1,148 | |||||
| Accounts payable | 3,716 | (5,488 | ) | |||||
| Accrued expenses | 7,233 | 8,623 | ||||||
| Deferred revenue related party | (31,006 | ) | (31,665 | ) | ||||
| Operating lease liabilities | (6,861 | ) | ||||||
| Deferred rent | (82 | ) | ||||||
| Net cash used in operating activities | (370,622 | ) | (304,421 | ) | ||||
| Investing activities | ||||||||
| Purchases of marketable securities | (488,566 | ) | (933,320 | ) | ||||
| Proceeds from maturities and sales of marketable securities | 592,177 | 666,481 | ||||||
| Purchases of property and equipment | (12,171 | ) | (6,986 | ) | ||||
| Net cash provided by (used in) investing activities | 91,440 | (273,825 | ) | |||||
| Financing activities | ||||||||
| Payments on financing lease obligations | (113 | ) | ||||||
| Proceeds from public offering of common stock, net of reimbursements | 277,201 | 516,206 | ||||||
| Reimbursement (payment) of public offering costs | (391 | ) | ||||||
| Net proceeds from stock option exercises and employee stock purchase plan | 12,523 | 30,209 | ||||||
| Net cash provided by financing activities | 289,611 | 546,024 | ||||||
| Net change in cash and cash equivalents | 10,429 | (32,222 | ) | |||||
| Cash and cash equivalents at beginning of the period | 70,502 | 102,724 | ||||||
| Cash and cash equivalents at end of the period | $ | 80,931 | $ | 70,502 | ||||
| Supplemental disclosure of non-cash investing and financing transactions: | ||||||||
| Additions to property and equipment in accounts payable and accrued expenses | $ | 5,168 | $ | 1,106 | ||||
| Proceeds from stock option exercises in other current assets | $ | $ | 7 | |||||
| Operating lease liabilities arising from obtaining operating lease assets | $ | 42,322 | $ | |||||
| Financing lease liabilities arising from obtaining financing lease assets | $ | 1,052 | $ |
See accompanying Notes to Consolidated Financial Statements.
Agios Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
Note 1. Nature of Business
Throughout these financial statements as filed on Form 8-K, 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.
biopharmaceutical company committed to the fundamental transformation of patients lives through scientific leadership in the field of cellular metabolism and adjacent areas of biology, with the goal of creating differentiated, small molecule
medicines for patients in the areas of hematologic malignancies, solid tumors and rare genetic diseases, or RGDs. To address these focus areas, we take a systems biology approach to deeply understand disease states, drive the discovery and
validation of novel therapeutic targets, and define patient selection strategies, thereby increasing the probability that our experimental medicines will have the desired therapeutic effect. We are located in Cambridge, Massachusetts.
Our wholly-owned product, TIBSOVO (ivosidenib) is an oral targeted inhibitor of the mutated
isocitrate dehydrogenase 1, or IDH1 enzyme. TIBSOVO is the first and only U.S. Food and Drug Administration, or FDA-approved therapy for the treatment
of adult patients with (i) relapsed or refractory acute myeloid leukemia, or R/R AML, with a susceptible IDH1 mutation as detected by an FDA-approved test (approved by the FDA in July 2018) and
(ii) newly diagnosed AML with a susceptible IDH1 mutation as detected by an FDA-approved test who are at least 75 years old or who have comorbidities that preclude use of intensive induction chemotherapy
(approved by the FDA in May 2019). In December 2018, we submitted a Marketing Authorization Application, or MAA, to the European Medicines Agency, or EMA, for TIBSOVO for the treatment of
adult patients with R/R AML with an IDH1 mutation.
Our other marketed product is IDHIFA
(enasidenib), an oral targeted inhibitor of the mutated isocitrate dehydrogenase 2, or IDH2 enzyme and the first and only FDA-approved therapy for patients with R/R AML and an IDH2 mutation. In August 2017,
the FDA granted our collaboration partner 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 royalties at tiered low-double digit to mid-teen percentage rates on any net sales
of IDHIFA and have exercised our rights to provide up to one-third of the field-based commercialization efforts in the United States. In June 2018,
Celgene submitted an MAA to the EMA for IDHIFA for IDH2 mutant-positive AML which it subsequently withdrew in December 2019.
Our pre-commercial clinical cancer product candidates are vorasidenib, AG-270,
Vorasidenib is an orally available, selective brain-penetrant
pan-IDH mutant inhibitor. We are developing vorasidenib for the treatment of IDH mutant-positive low grade glioma and are currently evaluating vorasidenib in clinical trials.
AG-270 is an orally available selective potent inhibitor of methionine adenosyltransferase 2a, or MAT2A. We are
currently evaluating AG-270 in a phase 1 dose-escalation and expansion trial in multiple tumor types carrying a methylthioadenosine phosphorylase, or MTAP, deletion.
AG-636 is an inhibitor of the metabolic enzyme dihydroorotate dehydrogenase, or DHODH. We are currently evaluating AG-636 in the phase 1 dose-escalation trial in lymphoma.
The lead product candidate in our RGD portfolio, mitapivat, is
an activator of both wild-type and mutant pyruvate kinase-R for the potential treatment of hemolytic anemias. We are currently evaluating mitapivat for the treatment of pyruvate kinase, or PK, deficiency,
thalassemia and sickle cell disease, or SCD, in clinical trials.
In addition to the aforementioned development programs, we are seeking to advance a
number of early-stage discovery programs in our focus areas of malignant hematology, solid tumors and RGDs based on our scientific leadership in the field of cellular metabolism and adjacent areas of biology.
We are subject to risks common to companies in our industry including, but not limited to, uncertainties relating to conducting 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, product
liability claims and government investigations.