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Nature of Business

1. Nature of Business

Blueprint Medicines Corporation (the Company), a Delaware corporation incorporated on October 14, 2008, is a precision therapy company focused on genomically defined cancers, rare diseases and cancer immunotherapy. The Company’s approach is to leverage its novel target discovery engine to systematically and reproducibly identify kinases that are drivers of diseases and to craft highly selective and potent drug candidates that may provide significant and durable clinical responses for patients without adequate treatment options.

The Company’s first commercial product is approved by the U.S. Food and Drug Administration (FDA) under the brand name AYVAKIT^TM (avapritinib) for the treatment of adults with unresectable or metastatic gastrointestinal stromal tumor (GIST) harboring a platelet-derived growth factor receptor alpha (PDGFRA) exon 18 mutation, including PDGFRA D842V mutations. AYVAKIT is the first precision therapy approved to treat a genomically defined population of patients with GIST. The Company is devoting substantially all of its efforts to research and development for current and future drug candidates and commercialization of AYVAKIT and any current or future drug candidates that obtain marketing approval.

As of June 30, 2020, the Company had cash, cash equivalents and investments of $650.3 million. Based on the Company’s current operating plans, the Company anticipates that its existing cash, cash equivalents and investments will be sufficient to enable it to fund its current operations for at least the next twelve months from the issuance of the financial statements.

Summary of Significant Accounting Policies and Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2020

Summary of Significant Accounting Policies and Recent Accounting Pronouncements

2. Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of Presentation

The unaudited interim condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) as found in the Accounting Standards Codification (ASC), Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB) and the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these financial statements should be read in conjunction with the financial statements as of and for the year ended December 31, 2019 and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 13, 2020 (the 2019 Annual Report on Form 10-K).

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements, and updated, as necessary, in this report. In the opinion of the Company’s management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position as of June 30, 2020, the results of its operations for the three and six months ended June 30, 2020 and 2019, stockholder’s equity for the three and six months ended June 30, 2020 and 2019 and cash flows for the six months ended June 30, 2020 and 2019. Such adjustments are of a normal and recurring nature. The results for the three and six months ended June 30, 2020 are not necessarily indicative of the results for the year ending December 31, 2020 or for any future period.

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Blueprint Medicines Security Corporation, which is a Massachusetts subsidiary created to buy, sell and hold securities, Blueprint Medicines (Switzerland) GmbH, Blueprint Medicines (Netherlands) B.V., Blueprint Medicines (UK) Ltd, Blueprint Medicines (Germany) GmbH, Blueprint Medicines Spain, S.L., Blueprint Medicines (France) SAS and Blueprint Medicines (Italy) S.r.L. All intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and in developing the estimates and assumptions that are used in the preparation of the financial statements. Management must apply significant judgment in this process. Management’s estimation process often may yield a range of potentially reasonable estimates and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: revenue recognition, operating lease right-of-use assets, operating lease liabilities, stock-based compensation expense, accrued expenses, and income taxes. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impact thereof on local, regional, national and international customers and markets. The Company had made estimates of the impact of COVID-19 within its financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates.

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and six months ended June 30, 2020 are consistent with those discussed in Note 2 to the consolidated financial statements in the 2019 Annual Report on Form 10-K, except as noted below with respect to the Company’s accounting policies for product revenue, accounts receivable, and inventory.

Product Revenue

The Company generated product revenue from sales of AYVAKIT to specialty pharmacy providers in the U.S. These customers subsequently dispense the product directly to patients. In addition, the Company entered into arrangements with payors that provide for government mandated rebates, discounts and allowances with respect to the utilization of AYVAKIT.

Product revenue is recognized when the customer takes control of the product, typically upon delivery to the customer. Product revenue is recorded at the net sales price, or transaction price, which includes estimated reserves for variable consideration resulting from chargebacks, government rebates, trade discounts and allowances, product returns and other incentives that are offered within the contract with customers, healthcare providers, payors and other indirect customers relating to the sales of the Company’s product. Reserves are established based on the amounts earned or to be claimed on the related sales. Where appropriate, the Company utilizes the expected value method to determine the appropriate amount for estimates of variable consideration based on factors such as the Company’s current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of variable consideration that is included in the transaction price may be constrained and is included in net product revenues only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results vary from the Company’s estimates, the Company adjusts these estimates, which would affect net product revenue and earnings in the period such variances become known.

Chargebacks: Chargebacks for fees and discounts represent the estimated obligations resulting from contractual commitments to sell product to qualified healthcare providers and government agencies at prices lower than the list prices charged to the customers who directly purchase the product from the Company. The customers charge the Company for the difference between what they pay for the product and the ultimate contractually committed or government required lower selling price to the qualified healthcare providers. These reserves are estimated using the expected value method based upon a range of possible outcomes and are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue.

Government rebates: Government rebates consist of Medicare, Tricare and Medicaid rebates, which were estimated using the expected value method, based upon a range of possible outcomes 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, the Company also estimates the number of patients in the prescription drug coverage gap for whom it will owe a rebate under the Medicare Part D program.

Trade discounts and allowances: The Company provides the customers with discounts that are explicitly stated in the contracts and recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, the Company also receives sales order management, inventory management and data services from the customers in exchange for certain fees.

Product returns: The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities using expected value method based on available industry data and its visibility into the inventory remaining in the distribution channel.

Other deductions: Co-pay assistance relates to financial assistance provided to qualified patients, whereby the Company may assist them with prescription drug co-payments required by the patient’s insurance provider. Reserves for co-pay assistance are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue.

Accounts Receivable, net

Accounts receivable arise from product sales and amounts due from the Company’s collaboration partners. The amount from product sales represents amounts due from specialty pharmacy providers in the U.S. The Company monitors economic conditions to identify facts or circumstances that may indicate that its receivables are at risk of collection. The Company provides reserves against accounts receivable for estimated losses that may result from a customer’s inability to pay based on the composition of its accounts receivable, current economic conditions and historical credit loss activity. Amounts determined to be uncollectible are charged or written-off against the reserve. For the three and six months ended June 30, 2020, the Company did not record any expected credit losses related to outstanding accounts receivable.

Inventory

Inventories are stated at the lower of cost or estimated net realizable value with cost based on the first-in first-out method. Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified for use in clinical trials.

Prior to the regulatory approval of its drug candidates, the Company incurs expenses for the manufacture of drug product supplies to support clinical development that could potentially be available to support the commercial launch of those drugs. Until the date at which regulatory approval has been received or is otherwise considered probable, the Company records all such costs as research and development expenses.

The Company performs an assessment of the recoverability of capitalized inventories during each reporting period and writes down any excess and obsolete inventory to its net realizable value in the period in which the impairment is first identified. Such impairment charges, should they occur, are recorded as a component of cost of product sales in the condensed consolidated statements of operations and comprehensive loss. The determination of whether inventory costs will be realizable requires the use of estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed below, the Company does not

believe that the adoption of recently issued standards have or may have a material impact on its condensed consolidated financial statements and disclosures.

Credit Losses

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which had the same effective date and transition date of January 1, 2020. These standards require that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establish additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, these standards now require allowances to be recorded instead of reducing the amortized cost of the investment. This standard limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases.

The Company adopted the new standard on a prospective basis on January 1, 2020 and has completed the assessment of the standard based on the composition of its accounts receivable, investment portfolio of financial instruments, current and forecasted economic conditions and historical credit loss activity as of January 1, 2020. The adoption of this standard did not have a significant impact on the Company’s condensed consolidated financial statements and related disclosures.

Fair Value Measurements

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement. This standard modifies certain disclosure requirements on fair value measurements. The Company adopted the new standard on January 1, 2020 and the adoption of this standard did not have a material impact on related disclosures.

Collaborative Arrangements

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. This standard makes targeted improvements for collaborative arrangements as follows:

●

Clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606, Revenue from Contracts with Customers, when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in ASC 606 should be applied, including recognition, measurement, presentation and disclosure requirements;

●

Adds unit-of-account guidance to ASC 808, Collaborative Arrangements, to align with the guidance in ASC 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of ASC 606; and

●

Requires that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting that transaction together with revenue recognized under ASC 606 is precluded if the collaborative arrangement participant is not a customer.

The Company adopted the new standard on January 1, 2020. A retrospective transition approach is required for either all contracts or only for contracts that are not completed at the date of initial application of ASC 606, with a cumulative adjustment to opening retained earnings. The adoption of this standard did not have a material impact on its condensed consolidated financial position and results of operations.

Internal-Use Software

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That

Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements. The standard is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted, and can be adopted prospectively or retrospectively.

The Company adopted the new standard on January 1, 2020 on a prospective basis. The adoption of this standard did not have a significant impact on the Company’s condensed consolidated financial position and results of operations. However, the adoption of this standard will result in an increase in capitalized assets related to qualifying cloud computing arrangement implementation costs incurred after the adoption date.

Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in the accounting standards. The amendments in ASU 2019-12 eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. The amendments in ASU 2019-12 are effective for the fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in any interim period. The Company has early adopted this amendment as of January 1, 2020. The adoption of the standard did not have a material impact to the Company’s condensed consolidated financial position and results of operations as well as related income tax disclosures.

Reclassification

Certain items in the prior year’s condensed consolidated financial statements have been reclassified to conform to the current presentation.

Cash Equivalents and Investments

6 Months Ended

Jun. 30, 2020

Cash Equivalents and Investments

3. Cash Equivalents and Investments

Cash equivalents and investments, available-for-sale, consisted of the following at June 30, 2020 and December 31, 2019 (in thousands):


	Amortized		Unrealized		Unrealized		Fair
June 30, 2020	Cost		Gain		Losses		Value
Cash equivalents:
Money market funds	$	285,014	$	—	$	—	$	285,014
U.S. treasury obligations		—		—		—		—
Investments, available-for-sale:
U.S. government agency securities		168,474		730		(17)		169,187
U.S. treasury obligations		191,180		1,228				192,409
Total	$	644,668	$	1,958	$	(17)	$	646,609


	Amortized		Unrealized		Unrealized		Fair
December 31, 2019	Cost		Gain		Losses		Value
Cash equivalents:
Money market funds	$	98,946	$	—	$	—	$	98,946
U.S. treasury obligations		14,992		—		—		14,992
Investments, available-for-sale:
U.S. government agency securities		128,156		160		(4)		128,312
U.S. treasury obligations		305,360		358		(8)		305,710
Total	$	547,454	$	518	$	(12)	$	547,960

As of June 30, 2020 the Company held six securities that were in an unrealized loss position with an aggregate fair value of $32.0 million. As of December 31, 2019, the Company held 11 debt securities in an unrealized loss position with an aggregate fair value of $82.1 million.

As of June 30, 2020, 22 securities with an aggregate fair value of $128.5 million have remaining maturities between one year and five years. As of December 31, 2019, nine securities with an aggregate fair value of $64.4 million had remaining maturities greater than one year.

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2020

Fair Value of Financial Instruments

4. Fair Value of Financial Instruments

The following table summarizes cash equivalents and marketable securities measured at fair value on a recurring basis as of June 30, 2020 (in thousands):


			Active		Observable		Unobservable
	June 30,		Markets		Inputs		Inputs
Description	2020		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash equivalents:
Money market funds	$	285,014	$	285,014	$	—	$	—
U.S. treasury obligations		—		—		—		—
Investments, available-for-sale:
U.S. government agency securities		169,187		—		169,187		—
U.S. treasury obligations		192,409		192,409		—		—
Total	$	646,609	$	477,423	$	169,187	$	—

The following table summarizes cash equivalents and marketable securities measured at fair value on a recurring basis as of December 31, 2019 (in thousands):


			Active		Observable		Unobservable
	December 31,		Markets		Inputs		Inputs
Description	2019		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash equivalents:
Money market funds	$	98,946	$	98,946	$	—	$	—
U.S. treasury obligations		14,992		14,992		—		—
Investments, available-for-sale:
U.S. government agency securities		128,312		—		128,312		—
U.S. treasury obligations		305,710		305,710		—		—
Total	$	547,960	$	419,648	$	128,312	$	—

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

Product Revenue Reserves and Allowances

6 Months Ended

Jun. 30, 2020

Product Revenue Reserves and Allowances

5. Product Revenue Reserves and Allowances

In January 2020, the FDA approved AYVAKIT for the treatment of adults with unresectable or metastatic GIST harboring PDGFRA exon 18 mutation, including PDGFRA D842V mutations. To date, the Company’s only source of product revenue has been from the U.S. sales of AYVAKIT, and the total net product revenue was $5.7 million and $9.1 million for the three and six months ended June 30, 2020, respectively.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the six months ended June 30, 2020 (in thousands):


	Total
Beginning balance at January 1, 2020	$	—
Provision related to sales in the current period		1,230
Adjustment related to prior periods sales		—
Credits and payments made		(400)
Ending balance at June 30, 2020	$	830

The total reserves above, which are included in the Company’s condensed consolidated balance sheets, are summarized as follows (in thousands):


	June 30,
	2020
Reduction of accounts receivable, net	$	186
Component of accrued expenses		644
Total revenue-related reserves	$	830

Inventory

6 Months Ended

Jun. 30, 2020

Inventory

6. Inventory

Capitalized inventory consists of the following at June 30, 2020 (in thousands):


	June 30,		December 31,
	2020		2019
Work in process	$	4,221	$	—
Finished goods		138		—
Total	$	4,359	$	—

Inventory amounts written down as a result of excess, obsolescence, unmarketability or other reasons are charged to cost of sales was zero for the three and six months ended June 30, 2020.

Restricted Cash

6 Months Ended

Jun. 30, 2020

Restricted Cash

7. Restricted Cash

At June 30, 2020 and December 31, 2019, $5.2 million and $5.7 million, respectively, of the Company’s cash is restricted by a bank primarily related to security deposits for the Company’s building lease agreements.

Property and Equipment, Net

6 Months Ended

Jun. 30, 2020

Property and Equipment, Net

8. Property and Equipment, Net

Property and equipment and related accumulated depreciation are as follows (in thousands):


	Estimated
	Useful Life	June 30,			December 31,
	(Years)	2020		2019
Lab equipment	5	$	10,929	$	8,975
Furniture and fixtures	4		3,590		3,512
Computer equipment	3		1,571		1,558
Leasehold improvements	Term of lease		36,003		35,975
Software	3		408		417
Construction-in-progress			1,166		1,608
			53,667		52,045
Less: accumulated depreciation and amortization			(16,922)		(13,684)
Total		$	36,745	$	38,361

Property, plant and equipment are recorded at historical cost, net of accumulated depreciation. For the three and six months ended June 30, 2020, depreciation expense totaled $1.7 million and $3.2 million, respectively, compared to $1.2 million and $2.4 million, respectively, for the three and six months ended June 30, 2019.

Accrued Expenses

6 Months Ended

Jun. 30, 2020

Accrued Expenses

9. Accrued Expenses

Accrued expenses consist of the following (in thousands):


	June 30,		December 31,
	2020		2019
Research, development and commercial contract costs	$	56,183	$	59,420
Employee compensation		14,985		13,519
Accrued professional fees		10,475		12,042
Revenue-related reserves		644		—
Other		1,776		3,725
Total	$	84,062	$	88,706

Collaboration and License Agreements

6 Months Ended

Jun. 30, 2020

Collaboration and License Agreements

10. Collaboration and License Agreements

Clementia

On October 15, 2019, the Company entered into a license agreement (the Clementia agreement) with Clementia Pharmaceuticals, Inc. (Clementia), a wholly-owned subsidiary of Ipsen S.A. Under the Clementia agreement, the Company granted an exclusive, worldwide, royalty-bearing license to Clementia to develop and commercialize BLU-782, the Company’s oral, highly selective investigational ALK2 inhibitor in Phase 1 clinical development for the treatment of fibrodysplasia ossificans progressiva (FOP), as well as specified other compounds related to the BLU-782 program.

Under the Clementia agreement, the Company received an upfront cash payment of $25.0 million and a $20.0 million cash milestone payment in October 2019 and July 2020, respectively. Subject to the terms of the Clementia agreement, the Company is eligible to receive up to $490.0 million in additional potential development, regulatory and sales-based milestone payments for licensed products. In addition, Clementia is obligated to pay to the Company royalties on aggregate annual worldwide net sales of licensed products at tiered percentage rates ranging from the low- to mid-teens, subject to adjustment in specified circumstances under the Clementia agreement, and Clementia purchased specified manufacturing inventory from the Company for a total of $1.5 million.

Unless earlier terminated in accordance with the terms of the Clementia agreement, the agreement will expire on a country-by-country, licensed product-by-licensed product basis on the date when no royalty payments are or will become due. Clementia may terminate the agreement at any time on or after the second anniversary of the effective date of the agreement upon at least 12 months’ prior written notice to the Company, which cannot be delivered before the first anniversary of the effective date. Either party may terminate the agreement for the other party’s uncured material breach or insolvency and in certain other circumstances agreed to by the parties. In certain termination circumstances, the Company is entitled to retain specified licenses to be able to continue to exploit the Clementia licensed products.

The Company evaluated the Clementia agreement under ASC 606, as the agreement represented a transaction with a customer. The Company identified the following material promises under the agreement: (1) the exclusive license to develop, manufacture and commercialize BLU-782; (2) the technology transfer of BLU-782 program; (3) the transfer of existing manufacturing inventory; and (4) the transfer of in-process manufacturing inventory. In addition, the Company determined that the exclusive license and technology transfer were not distinct from each other, as the exclusive license has limited value without the corresponding technology transfer. As such, for the purposes of ASC 606, the Company determined that these four material promises, described above, should be combined into three performance obligations: (1) the exclusive license and the technology transfer; (2) the transfer of existing manufacturing inventory; and (3) the transfer of in-process manufacturing inventory.

The Company determined that the transaction price as of the outset of the arrangement was $46.5 million, which consists of the upfront amount of $25.0 million, the $20.0 million cash milestone payment received in July 2020, the purchase of existing manufacturing inventory of $1.2 million and the purchase of in-process manufacturing inventory of $0.3 million. The other potential milestone payments that the Company is eligible to receive were excluded from the transaction price, as all milestone amounts were fully constrained based on the probability of achievement. The transaction price was allocated to the three performance obligations on a relative stand-alone selling price basis. The

Company satisfies the performance obligations upon delivery of the license and completion of the technology transfer and inventory transfers.

During 2019, the Company completed the delivery of the license, the technology transfer and the transfer of existing manufacturing inventory and recognized a total of $46.2 million as revenue. The $20.0 million cash milestone payment subsequently received in July 2020 was recorded as unbilled accounts receivable as of June 30, 2020 and December 31, 2019, respectively.

During the three and six months ended June 30, 2020, the Company completed the transfer of the in-process manufacturing inventory and recognized revenue of $0.3 million accordingly. No revenue was recognized during the three and six months ended June 30, 2019. There was no revenue deferred as a contract liability associated with the Clementia agreement as of June 30, 2020 and December 31, 2019.

CStone Pharmaceuticals

On June 1, 2018, the Company entered into a collaboration and license agreement (the CStone agreement) with CStone pursuant to which the Company granted CStone exclusive rights to develop and commercialize the Company’s drug candidates avapritinib, pralsetinib and fisogatinib, including back-up forms and certain other forms thereof, in Mainland China, Hong Kong, Macau and Taiwan (each, a CStone region and collectively, the CStone territory), either as a monotherapy or as part of a combination therapy.

The Company received an upfront cash payment of $40.0 million, and subject to the terms of the CStone agreement, will be eligible to receive up to approximately $346.0 million in milestone payments, including $118.5 million related to development and regulatory milestones and $227.5 million related to sales-based milestones. In addition, CStone will be obligated to pay the Company tiered percentage royalties on a licensed product-by-licensed product basis ranging from the mid-teens to low twenties on annual net sales of each licensed product in the CStone territory, subject to adjustment in specified circumstances. CStone will be responsible for costs related to the development of the licensed products in the CStone territory, other than specified costs related to the development of fisogatinib as a combination therapy in the CStone territory that will be shared by the Company and CStone.

Pursuant to the terms of the CStone agreement, CStone will be responsible for conducting all development and commercialization activities in the CStone territory related to the licensed products, and the Company and CStone plan to conduct a proof-of-concept clinical trial in China evaluating fisogatinib in combination with CS1001, a clinical-stage anti-programmed death ligand-1 immunotherapy being developed by CStone, as a first-line therapy for the treatment of patients with hepatocellular carcinoma.

The CStone agreement will continue on a licensed product-by-licensed product and CStone region-by-CStone region basis until the later of (i) 12 years after the first commercial sale of a licensed product in a CStone region in the CStone territory and (ii) the date of expiration of the last valid patent claim related to the Company’s patent rights or any joint collaboration patent rights for the licensed product that covers the composition of matter, method of use or method of manufacturing such licensed product in such region. Subject to the terms of the CStone agreement, CStone may terminate the CStone agreement in its entirety or with respect to one or more licensed products for convenience by providing written notice to the Company after June 1, 2019, and CStone may terminate the CStone agreement with respect to a licensed product for convenience at any time by providing written notice to the Company following the occurrence of specified events. In addition, the Company may terminate the CStone agreement under specified circumstances if CStone or certain other parties challenges the Company’s patent rights or any joint collaboration patent rights or if CStone or its affiliates do not conduct any material development or commercialization activities with respect to one or more licensed products for a specified period of time, subject to specified exceptions. Either party may terminate the CStone agreement for the other party’s uncured material breach or insolvency. In certain termination circumstances, the parties are entitled to retain specified licenses to be able to continue to exploit the licensed products, and in the event of termination by CStone for the Company’s uncured material breach, the Company will be obligated to pay CStone a low single digit percentage royalty on a licensed product-by-licensed product basis on annual net sales of such licensed product in the CStone territory, subject to a cap and other specified exceptions.

The Company evaluated the CStone agreement to determine whether it is a collaborative arrangement for purposes of ASC 808. The Company determined that there were two material components of the CStone agreement:

(i) the CStone territory-specific license and related activities in the CStone territory, and (ii) the parties’ participation in global development of the licensed products. The Company concluded that the CStone territory-specific license and related activities in the CStone territory are not within the scope of ASC 808 because the Company is not exposed to significant risks and rewards. The Company concluded that CStone is a customer with regard to the component that includes the CStone territory-specific license and related activities in CStone territory, which include manufacturing. For the parties’ participation in global development of the licensed products, the Company concluded that the research and development activities and cost-sharing payments related to such activities are within the scope of ASC 808 as both parties are active participants exposed to the risk of the activities under the CStone agreement. The Company concluded that CStone is not a customer with regard to the global development component in the context of the CStone agreement. Therefore, payments received by the Company for global development activities under the CStone agreement, including manufacturing, will be accounted for as a reduction of related expenses.

A summary of manufacturing and research and development services related to the global development activities during the three and six months ended June 30, 2020 and 2019 is as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Manufacturing and research and development services related to global development activities	$	920	$	370	$	2,450	$	1,128

The Company evaluated the CStone territory-specific license and related activities in the CStone territory under ASC 606, as these transactions are considered transactions with a customer. The Company identified the following material promises under the arrangement: (1) the three exclusive licenses granted in the CStone territory to develop, manufacture and commercialize the three licensed products; (2) the initial know-how transfer for each licensed product; (3) manufacturing activities related to development and commercial supply of the licensed products; (4) participation in the joint steering committee (JSC) and joint project teams (JPT); (5) regulatory responsibilities; and (6) manufacturing technology and continuing know-how transfers. The Company determined that each licensed product is distinct from the other licensed products. In addition, the Company determined that the exclusive licenses and initial know-how transfers for each licensed product were not distinct from each other, as each exclusive license has limited value without the corresponding initial know-how transfer. For purposes of ASC 606, the Company determined that that participation on the JSC and JPTs, the regulatory responsibilities and the manufacturing technology and continuing know-how transfers are qualitatively and quantitatively immaterial in the context of the CStone agreement and therefore are excluded from performance obligations. As such, the Company determined that these six material promises, described above, should be combined into one performance obligation for each of the three candidates.

The Company evaluated the provision of manufacturing activities related to development and commercial supply of the licensed products as an option for purposes of ASC 606 to determine whether these manufacturing activities provide CStone with any material rights. The Company concluded that the manufacturing activities were not issued at a significant and incremental discount, and therefore do not provide CStone with any material rights. As such, the manufacturing activities are excluded as performance obligations at the outset of the arrangement.

Based on these assessments, the Company identified three distinct performance obligations at the outset of the CStone agreement, which consists of the following for each licensed product: (1) the exclusive license and (2) the initial know-how transfer.

Under the CStone agreement, in order to evaluate the transaction price for purposes of ASC 606, the Company determined that the upfront amount of $40.0 million constituted the entirety of the consideration to be included in the transaction price as of the outset of the arrangement, which was allocated to the three performance obligations. The potential milestone payments that the Company is eligible to receive were excluded from the transaction price, as all milestone amounts were fully constrained based on the probability of achievement. The Company satisfied the performance obligations upon delivery of the licenses, initial know-how transfers and product trademark and recognized the upfront payment of $40.0 million as revenue during the second quarter of 2018.

The Company will reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and if necessary, the Company will adjust its estimate of the transaction price, and any addition to the transaction price would be recognized as revenue when it becomes probable

that inclusion would not lead to a significant revenue reversal. During the six months ended June 30, 2020, one development and regulatory milestone was achieved and the associated aggregate cash consideration of $2.0 million for such milestone was added to the estimated transaction price for the CStone agreement.

A summary of revenue recognized under the CStone agreement during the three and six months ended June 30, 2020 and 2019 is as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
License milestone revenue	$	—	$	4,000	$	2,000	$	4,000
Manufacturing services related to territory-specific activities		1,263		144		1,397		144
Total CStone collaboration revenue	$	1,263	$	4,144	$	3,397	$	4,144

The following table presents the contract assets associated with the CStone agreement as of June 30, 2020 and December 31, 2019 (in thousands):


	June 30,			December 31,
	2020		2019
Accounts receivable, net	$	706	$	663
Unbilled accounts receivable	$	561	$	2,749

There was no revenue deferred as a contract liability associated with the CStone agreement as of June 30, 2020 and December 31, 2019.

Roche – Immunotherapy Collaboration

In March 2016, the Company entered into a collaboration and license agreement (as amended, the Roche immunotherapy agreement) with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. (collectively, Roche) for the discovery, development and commercialization of up to five small molecule therapeutics targeting kinases believed to be important in cancer immunotherapy (including the kinase target MAP4K1, which is believed to play a role in T cell regulation), as single products or possibly in combination with other therapeutics.

Under the Roche immunotherapy agreement, Roche was granted up to five option rights to obtain an exclusive license to exploit products derived from the collaboration programs in the field of cancer immunotherapy. Such option rights are triggered upon the achievement of Phase 1 proof-of-concept. As a result of an amendment to the Roche immunotherapy agreement in the fourth quarter of 2019, the parties are currently conducting activities for up to four programs under the collaboration. For up to two collaboration programs, if Roche exercises its option, Roche will receive worldwide, exclusive commercialization rights for the licensed products. For up to two collaboration programs, if Roche exercises its option, the Company will retain commercialization rights in the U.S. for the licensed products, and Roche will receive commercialization rights outside of the U.S. for the licensed products. The Company will also retain worldwide rights to any products for which Roche elects not to exercise its applicable option.

Prior to Roche’s exercise of an option, the Company will have the lead responsibility for drug discovery and pre-clinical development of all collaboration programs. In addition, the Company will have the lead responsibility for the conduct of all Phase 1 clinical trials other than those Phase 1 clinical trials for any product in combination with Roche’s portfolio of therapeutics, for which Roche will have the right to lead the conduct of such Phase 1 clinical trials. Pursuant to the Roche immunotherapy agreement, the parties will share the costs of Phase 1 development for each collaboration program. In addition, Roche will be responsible for post-Phase 1 development costs for each licensed product for which it retains global commercialization rights, and the Company and Roche will share post-Phase 1 development costs for each licensed product for which the Company retains commercialization rights in the U.S.

The Company received an upfront cash payment of $45.0 million in March 2016 upon execution of the Roche immunotherapy agreement, and subject to the terms of the Roche immunotherapy agreement, the Company will be

eligible to receive up to approximately $940.0 million in contingent option fees and milestone payments related to specified research, pre-clinical, clinical, regulatory and sales-based milestones. Of the total contingent payments, up to approximately $190.0 million are for option fees and milestone payments for research, pre-clinical and clinical development events prior to licensing across all four potential collaboration programs.

In addition, for any licensed product for which Roche retains worldwide commercialization rights, the Company will be eligible to receive tiered royalties ranging from low double-digits to high-teens on future net sales of the licensed product. For any licensed product for which the Company retains commercialization rights in the U.S., the Company and Roche will be eligible to receive tiered royalties ranging from mid-single-digits to low double-digits on future net sales in the other party’s respective territories in which it commercializes the licensed product. The upfront cash payment and any payments for milestones, option fees and royalties are non-refundable, non-creditable and not subject to set-off.

The Roche immunotherapy agreement will continue until the date when no royalty or other payment obligations are or will become due, unless earlier terminated in accordance with the terms of the Roche immunotherapy agreement. Prior to its exercise of its first option, Roche may terminate the Roche immunotherapy agreement at will, in whole or on a collaboration target-by-collaboration target basis, upon 120 days’ prior written notice to the Company. Following its exercise of an option, Roche may terminate the Roche immunotherapy agreement at will, in whole, on a collaboration target-by-collaboration target basis, on a collaboration program-by-collaboration program basis or, if a licensed product has been commercially sold, on a country-by-country basis, (i) upon 120 days’ prior written notice if a licensed product has not been commercially sold or (ii) upon 180 days’ prior written notice if a licensed product has been commercially sold. Either party may terminate the Roche immunotherapy agreement for the other party’s uncured material breach or insolvency and in certain other circumstances agreed to by the parties. In certain termination circumstances, the Company is entitled to retain specified licenses to be able to continue to exploit the licensed products.

The Company assessed this arrangement in accordance with ASC 606 upon the adoption of the new standard on January 1, 2018, and concluded that the contract counterparty, Roche, is a customer prior to the exercise, if any, of an option by Roche. The Company identified the following material promises under the arrangement: (1) a non-transferable, sub-licensable and non-exclusive license to use the Company’s intellectual property and collaboration compounds to conduct research activities; (2) research and development activities through Phase 1 clinical trials under the research plan; (3) five option rights for licenses to develop, manufacture, and commercialize the collaboration targets; (4) participation on a joint research committee (JRC) and joint development committee (JDC); and (5) regulatory responsibilities under Phase 1 clinical trials. The Company determined that the license and research and development activities were not distinct from another, as the license has limited value without the performance of the research and development activities. Participation on the JRC and JDC to oversee the research and development activities was determined to be quantitatively and qualitatively immaterial and therefore is excluded from performance obligations. The regulatory responsibilities related to filings and obtaining approvals related to the drugs that may result from each program do not represent separate performance obligations based on their dependence on the research and development efforts. As such, the Company determined that these promises should be combined into a single performance obligation.

The Company evaluated the option rights for licenses to develop, manufacture, and commercialize the collaboration targets to determine whether it provides Roche with any material rights. The Company concluded that the options were not issued at a significant and incremental discount, and therefore do not provide material rights. As such, they are excluded as performance obligations at the outset of the arrangement.

Based on these assessments, the Company identified one performance obligation at the outset of the Roche immunotherapy agreement, which consists of: (1) the non-exclusive license; (2) the research and development activities through Phase 1; and (3) regulatory responsibilities under Phase 1 clinical trials.

Under the Roche immunotherapy agreement, in order to evaluate the appropriate transaction price, the Company determined that as of January 1, 2018, the upfront amount of $45.0 million constituted the entirety of the consideration to be included in the transaction price as of the outset of the arrangement, which was allocated to the single performance obligation. The option exercise payments that may be received are excluded from the transaction price until each customer option is exercised as it was determined that the options are not material rights. The potential milestone payments that the Company is eligible to receive prior to the exercise of the options were initially excluded from the transaction price, as all milestone amounts were fully constrained based on the probability of achievement. The

Company will reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, and, if necessary, adjust its estimate of the transaction price.

In June 2018 and October 2019, the Company achieved and received a $10.0 million research milestone payment and an $8.0 million research milestone payment related to the Roche immunotherapy agreement, respectively. These amounts were added to the estimated transaction price and allocated to the existing performance obligation as it became probable that a significant reversal of cumulative revenue would not occur for each of the research milestones achieved.

The Company recognizes revenue associated with the performance obligation as the research and development services are provided using an input method, according to the costs incurred as related to the research and development activities on each program and the costs expected to be incurred in the future to satisfy the performance obligation. The transfer of control occurs over this time period and, in management’s judgment, is the best measure of progress towards satisfying the performance obligation. The amounts received that have not yet been recognized as revenue are deferred as a contract liability on the Company’s consolidated balance sheet and will be recognized over the remaining research and development period until the performance obligation is satisfied.

A summary of revenue recognized under the Roche immunotherapy agreement during the three and six months ended June 30, 2020 and 2019 is as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Roche collaboration research and development services revenue	$	1,109	$	966	$	1,684	$	1,697

During the three and six months ended June 30, 2020 and 2019, the Company recognized the following revenue due to the changes in the contract liability balances (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Amounts included in the contract liability at the beginning of the period	$	1,061	$	966	$	2,050	$	1,953

As of June 30, 2020, the Company had revenue deferred as a contract liability related to the Roche immunotherapy agreement of $44.7 million, of which $8.0 million was included in current liabilities, and the research and development services related to the performance obligation are expected to be performed over a remaining period of approximately 4.8 years.

Stock-based Compensation

6 Months Ended

Jun. 30, 2020

Stock-based Compensation

11. Stock-based compensation

2015 Stock Option and Incentive Plan

In 2015, the Company’s board of directors and stockholders approved the 2015 Stock Option and Incentive Plan (the 2015 Plan), which replaced the Company’s 2011 Stock Option and Grant Plan, as amended (the 2011 Plan). The 2015 Plan includes incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, performance share awards and cash-based awards. The Company initially reserved a total of 1,460,084 shares of common stock for the issuance of awards under the 2015 Plan. The 2015 Plan provides that the number of shares reserved and available for issuance under the 2015 Plan will be cumulatively increased on January 1 of each calendar year by 4% of the number of shares of common stock issued and outstanding on the immediately preceding December 31 or such lesser amount as specified by the compensation committee of the board of directors. For the calendar year beginning January 1, 2020, the number of shares reserved for issuance under the 2015 Plan was increased by 1,970,888 shares. In addition, the total number of shares reserved for issuance is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. As of June 30, 2020, there were 2,453,214 shares available for future grant under the 2015 Plan.

Stock options

The following table summarizes the stock option activity for the six months ended June 30, 2020:


		Weighted-Average
	Shares		Exercise Price
Outstanding at December 31, 2019	5,795,710	$	58.82
Granted	1,296,203		58.40
Exercised	(208,510)		18.93
Canceled	(222,413)		77.27
Outstanding at June 30, 2020	6,660,990	$	59.37
Exercisable at June 30, 2020	3,136,170	$	46.60

As of June 30, 2020, the total unrecognized compensation expense related to unvested stock option awards was $138.8 million, which is expected to be recognized over a weighted-average period of approximately 2.84 years.

Restricted stock units

The following table summarizes the restricted stock units activity for the six months ended June 30, 2020:


		Weighted-Average
		Grant Date
	Shares	Fair Value
Unvested shares at December 31, 2019	419,755	$	82.50
Granted	853,895		56.46
Vested	(76,606)		85.95
Forfeited	(45,633)		69.62
Unvested shares at June 30, 2020	1,151,411	$	63.47

As of June 30, 2020, the total unrecognized compensation expense related to unvested restricted stock units was $65.6 million, which is expected to be recognize over a weighted-average period of approximately 3.41 years.

2020 Inducement Plan

In March 2020, the Company’s board of directors adopted the 2020 Inducement Plan (the Inducement Plan), pursuant to which the Company may grant, subject to the terms of the Inducement Plan and Nasdaq rules, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The Company initially reserved a total of 1,000,000 shares of common stock for the issuance of awards under the Inducement Plan. The number of shares reserved and available for issuance under the Inducement Plan can be increased at any time with the approval of the Company’s board of directors. The Inducement Plan permits the board of directors or a committee thereof to use the stock-based awards available under the Inducement Plan to attract key employees for the growth of the Company. As of June 30, 2020, there were 68,726 shares issued under the Inducement Plan.

2015 Employee Stock Purchase Plan

In 2015, the Company’s board of directors and stockholders approved the 2015 Employee Stock Purchase Plan (the 2015 ESPP), which became effective upon the closing of the Company’s initial public offering in May 2015. The Company initially reserved a total of 243,347 shares of common stock for issuance under the 2015 ESPP. The 2015 ESPP provides that the number of shares reserved and available for issuance under the 2015 ESPP will be cumulatively increased on January 1 of each calendar year by 1% of the number of shares of common stock issued and outstanding on the immediately preceding December 31 or such lesser amount as specified by the compensation committee of the board of directors. For the calendar year beginning January 1, 2020, the number of shares reserved for issuance under the 2015 ESPP was increased by 492,722 shares. The Company issued 17,018 and 10,718 shares under the 2015 ESPP during the six months ended June 30, 2020 and 2019, respectively.

Stock-based compensation expense

The Company recognized stock-based compensation expense totaling $19.5 million and $36.4 million for the three and six months ended June 30, 2020, respectively. Stock-based compensation expense by award type included within the unaudited condensed consolidated statements of operations and comprehensive loss was as follows (in thousands):


	Three Months Ended				Six Months Ended
		June 30,				June 30,
		2020		2019		2020		2019
Stock options	$	14,629	$	12,016	$	28,344	$	21,595
Restricted stock units		4,844		1,544		7,998		2,168
Employee stock purchase plan		202		106		359		198
Subtotal		19,675		13,666		36,701		23,961
Capitalized stock-based compensation costs		(147)		—		(314)		—
Stock-based compensation expense included in total cost and operating expenses	$	19,528	$	13,666	$	36,387	$	23,961

Stock-based compensation expense by classification within the unaudited condensed consolidated statements of operations and comprehensive loss is as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Research and development	$	8,709	$	7,503	$	16,507	$	13,293
Selling, general and administrative		10,819		6,163		19,880		10,668
Total		19,528		13,666		36,387		23,961

Net Loss per Share

6 Months Ended

Jun. 30, 2020

Net Loss per Share

12. Net Loss per Share

Basic net loss per share is calculated by dividing net loss by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period. For purposes of the dilutive net loss per share calculation, stock options, unvested restricted stock units and ESPP shares are considered to be common stock equivalents but are excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive; therefore, basic and diluted net loss per share were the same for all periods presented as a result of the Company’s net loss.

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


	Six Months Ended
	June 30,
	2020	2019
Stock options	6,660,990	5,506,867
Restricted stock units	1,151,411	323,854
ESPP shares	25,576	11,641
Total	7,837,977	5,842,362

Income Taxes

6 Months Ended

Jun. 30, 2020

Income Taxes

13. Income Taxes

Coronavirus Aid, Relief and Economic Security Act

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (2017 Tax Act). Corporate taxpayers may carryback net operating losses (NOLs) originating during 2018 through 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for tax years beginning January 1, 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act.

In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to the Company’s income tax provision for the three and six months ended June 30, 2020, or to its net deferred tax assets and related allowances as of June 30, 2020.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

Leases

6 Months Ended

Jun. 30, 2020

Leases

14. Leases

The Company’s building leases are comprised of office and laboratory spaces under non-cancelable operating leases. The lease agreements have remaining lease terms of two to nine years and contain various clauses for renewal at the Company’s option. The renewal options were not included in the calculation of the operating lease assets and the operating lease as the renewal option is not reasonably certain of being exercised. The lease agreements do not contain residual value guarantees and the components of lease cost for the three and six months ended June 30, 2020 and 2019 were as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
Operating leases:	2020		2019		2020		2019
Lease cost	$	4,328	$	4,126	$	8,709	$	7,739
Sublease income		(730)		(708)		(1,451)		(1,409)
Net lease cost	$	3,598	$	3,418	$	7,258	$	6,330

The Company has not entered into any material short-term leases or financing leases as of June 30, 2020.

Supplemental cash flow information related to leases for the six months ended June 30, 2020 was as follows (in thousands):


	Six Months Ended
	June 30,
	2020		2019

Cash paid for amounts included in the measurement of lease liabilities:	$	7,172	$	5,242

Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	497	$	23,300

The weighted average remaining lease term and weighted average discount rate of the operating leases are as follows:


					Operating leases
Weighted average remaining lease term in years					8.9
Weighted average discount rate					8.2%

Commitments

6 Months Ended

Jun. 30, 2020

Commitments

15. Commitments

Manufacturing Agreements

In connection with the commercialization of AYVAKIT, the Company has negotiated manufacturing agreements with certain vendors that require the Company to meet minimum purchase obligations on an annual basis. The aggregate amount of future minimum purchase obligations under these manufacturing agreements is approximately $25.5 million as of June 30, 2020.

Subsequent Events

6 Months Ended

Jun. 30, 2020

Significant Accounting Policies

Subsequent Events

16. Subsequent Events

Roche – Pralsetinib Collaboration

Collaboration Agreement. On July 13, 2020, the Company entered into a collaboration agreement (the Roche collaboration agreement) with F. Hoffmann-La Roche Ltd and Genentech, Inc., a member of the Roche Group (collectively, Roche), pursuant to which the Company granted Roche exclusive rights to develop and commercialize the Company’s drug candidate pralsetinib worldwide, excluding the CStone territory, and a co-exclusive license in the U.S. to develop and commercialize pralsetinib. In addition, Roche will have the right to opt in to a next-generation RET compound co-developed by the Company and Roche.

Under the Roche collaboration agreement, the Company received an upfront cash payment of $675.0 million in the third quarter of 2020. In addition, the Company will be eligible to receive up to an additional $927.0 million in contingent payments, including specified development, regulatory and sales-based milestones for pralsetinib and any licensed product containing a next-generation RET compound.

In the U.S., the Company and Roche will work together to co-commercialize pralsetinib and will equally share responsibilities, profits and losses. In addition, the Company is eligible to receive tiered royalties ranging from high-teens to mid-twenties on annual net sales of pralsetinib outside the U.S., excluding the CStone territory. In addition, the Company and Roche have agreed to co-develop pralsetinib globally in RET-altered solid tumors, including non-small cell lung cancer, medullary thyroid carcinoma and other thyroid cancers, as well as other solid tumors. The Company and Roche will share global development costs for pralsetinib at a rate of 45 percent for the Company and 55 percent for Roche up to a specified amount of aggregate joint development costs, after which the Company’s share of global development costs for pralsetinib will be reduced by a specified percentage. The Company and Roche will also share specified global development costs for any next-generation RET compound co-developed under the collaboration in a similar manner.

Unless earlier terminated in accordance with its terms, the Roche collaboration agreement will expire on a licensed product-by-licensed product basis (i) in the U.S. upon the expiration of the gross profit sharing term for such licensed product and (ii) outside the U.S. on a country-by-country basis at the end of the applicable royalty term for such licensed product. Roche may terminate the agreement in its entirety or on a licensed product-by-licensed product or country-by-country basis subject to certain notice periods. Either party may terminate the Roche collaboration agreement for the other party’s uncured material breach or insolvency. Subject to the terms of the Roche collaboration agreement, effective upon termination of the agreement, the Company is entitled to retain specified licenses to be able to continue to exploit the licensed products.

The Company is currently evaluating the revenue recognized under the Roche collaboration agreement and expects to recognize revenue related to a majority of the $675.0 million upfront cash payment during the third quarter of 2020.

Stock Purchase Agreement. In connection with the Roche collaboration agreement, on July 13, 2020, the Company entered into a stock purchase agreement with Roche Holdings, Inc. (Roche Holdings) pursuant to which the Company issued and sold 973,386 of its shares of common stock to Roche Holdings in the third quarter of 2020 in a private placement at a purchase price of $96.57 per share and received approximately $94.0 million in gross proceeds. Under the stock purchase agreement, the Company will issue and sell an additional 62,133 of its shares of common stock to Roche Holdings in a private placement at a purchase price of $96.57 per share and will receive approximately $6.0

million in additional gross proceeds, subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions.

The Company is currently evaluating the accounting treatment for the stock purchase agreement and expects to recognize a majority of the investment within Stockholders’ Equity.

Clementia License Agreement

Under the Clementia agreement, the Company received a $20.0 million cash milestone payment in July 2020.

Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2020

Policy Text Blocks

Basis of Presentation

Use of Estimates

Product Revenue

Product Revenue

Accounts Receivable, net

Accounts Receivable, net

Inventory

Inventory

New Accounting Pronouncements

believe that the adoption of recently issued standards have or may have a material impact on its condensed consolidated financial statements and disclosures.

Credit Losses

Fair Value Measurements

Collaborative Arrangements

●

Internal-Use Software

Income Taxes

Reclassification

Certain items in the prior year’s condensed consolidated financial statements have been reclassified to conform to the current presentation.

Disclosure of inventory accounting policy for inventory classes, including, but not limited to, basis for determining inventory amounts, methods by which amounts are added and removed from inventory classes, loss recognition on impairment of inventories, and situations in which inventories are stated above cost.

Disclosure of accounting policy for revenue from contract with customer.

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Cash Equivalents and Investments (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of cash equivalents and investments, available-for-sale

Cash equivalents and investments, available-for-sale, consisted of the following at June 30, 2020 and December 31, 2019 (in thousands):


	Amortized		Unrealized		Unrealized		Fair
June 30, 2020	Cost		Gain		Losses		Value
Cash equivalents:
Money market funds	$	285,014	$	—	$	—	$	285,014
U.S. treasury obligations		—		—		—		—
Investments, available-for-sale:
U.S. government agency securities		168,474		730		(17)		169,187
U.S. treasury obligations		191,180		1,228				192,409
Total	$	644,668	$	1,958	$	(17)	$	646,609


	Amortized		Unrealized		Unrealized		Fair
December 31, 2019	Cost		Gain		Losses		Value
Cash equivalents:
Money market funds	$	98,946	$	—	$	—	$	98,946
U.S. treasury obligations		14,992		—		—		14,992
Investments, available-for-sale:
U.S. government agency securities		128,156		160		(4)		128,312
U.S. treasury obligations		305,360		358		(8)		305,710
Total	$	547,454	$	518	$	(12)	$	547,960

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of financial instruments measured at fair value

The following table summarizes cash equivalents and marketable securities measured at fair value on a recurring basis as of June 30, 2020 (in thousands):


			Active		Observable		Unobservable
	June 30,		Markets		Inputs		Inputs
Description	2020		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash equivalents:
Money market funds	$	285,014	$	285,014	$	—	$	—
U.S. treasury obligations		—		—		—		—
Investments, available-for-sale:
U.S. government agency securities		169,187		—		169,187		—
U.S. treasury obligations		192,409		192,409		—		—
Total	$	646,609	$	477,423	$	169,187	$	—

The following table summarizes cash equivalents and marketable securities measured at fair value on a recurring basis as of December 31, 2019 (in thousands):


			Active		Observable		Unobservable
	December 31,		Markets		Inputs		Inputs
Description	2019		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Cash equivalents:
Money market funds	$	98,946	$	98,946	$	—	$	—
U.S. treasury obligations		14,992		14,992		—		—
Investments, available-for-sale:
U.S. government agency securities		128,312		—		128,312		—
U.S. treasury obligations		305,710		305,710		—		—
Total	$	547,960	$	419,648	$	128,312	$	—

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

Product Revenue Reserves and Allowances (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of product revenue allowance and reserve categories

The following table summarizes activity in each of the product revenue allowance and reserve categories for the six months ended June 30, 2020 (in thousands):


	Total
Beginning balance at January 1, 2020	$	—
Provision related to sales in the current period		1,230
Adjustment related to prior periods sales		—
Credits and payments made		(400)
Ending balance at June 30, 2020	$	830

The total reserves above, which are included in the Company’s condensed consolidated balance sheets, are summarized as follows (in thousands):


	June 30,
	2020
Reduction of accounts receivable, net	$	186
Component of accrued expenses		644
Total revenue-related reserves	$	830

Inventory (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of capitalized inventory

Capitalized inventory consists of the following at June 30, 2020 (in thousands):


	June 30,		December 31,
	2020		2019
Work in process	$	4,221	$	—
Finished goods		138		—
Total	$	4,359	$	—

Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of property and equipment

Property and equipment and related accumulated depreciation are as follows (in thousands):


	Estimated
	Useful Life	June 30,			December 31,
	(Years)	2020		2019
Lab equipment	5	$	10,929	$	8,975
Furniture and fixtures	4		3,590		3,512
Computer equipment	3		1,571		1,558
Leasehold improvements	Term of lease		36,003		35,975
Software	3		408		417
Construction-in-progress			1,166		1,608
			53,667		52,045
Less: accumulated depreciation and amortization			(16,922)		(13,684)
Total		$	36,745	$	38,361

Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of accrued expenses

Accrued expenses consist of the following (in thousands):


	June 30,		December 31,
	2020		2019
Research, development and commercial contract costs	$	56,183	$	59,420
Employee compensation		14,985		13,519
Accrued professional fees		10,475		12,042
Revenue-related reserves		644		—
Other		1,776		3,725
Total	$	84,062	$	88,706

Collaboration and License Agreements (Tables)

6 Months Ended

Jun. 30, 2020

Summary of manufacturing and research and development services related to the global development activities


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Manufacturing and research and development services related to global development activities	$	920	$	370	$	2,450	$	1,128

Summary of revenue recognized


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
License milestone revenue	$	—	$	4,000	$	2,000	$	4,000
Manufacturing services related to territory-specific activities		1,263		144		1,397		144
Total CStone collaboration revenue	$	1,263	$	4,144	$	3,397	$	4,144


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Roche collaboration research and development services revenue	$	1,109	$	966	$	1,684	$	1,697


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Amounts included in the contract liability at the beginning of the period	$	1,061	$	966	$	2,050	$	1,953

Summary of receivables


	June 30,			December 31,
	2020		2019
Accounts receivable, net	$	706	$	663
Unbilled accounts receivable	$	561	$	2,749

Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

Summary of stock option activity


		Weighted-Average
	Shares		Exercise Price
Outstanding at December 31, 2019	5,795,710	$	58.82
Granted	1,296,203		58.40
Exercised	(208,510)		18.93
Canceled	(222,413)		77.27
Outstanding at June 30, 2020	6,660,990	$	59.37
Exercisable at June 30, 2020	3,136,170	$	46.60

Summary of restricted stock units activity


		Weighted-Average
		Grant Date
	Shares	Fair Value
Unvested shares at December 31, 2019	419,755	$	82.50
Granted	853,895		56.46
Vested	(76,606)		85.95
Forfeited	(45,633)		69.62
Unvested shares at June 30, 2020	1,151,411	$	63.47

Summary of stock-based compensation expense, allocation by type of awards and recognition in statements of operations


	Three Months Ended				Six Months Ended
		June 30,				June 30,
		2020		2019		2020		2019
Stock options	$	14,629	$	12,016	$	28,344	$	21,595
Restricted stock units		4,844		1,544		7,998		2,168
Employee stock purchase plan		202		106		359		198
Subtotal		19,675		13,666		36,701		23,961
Capitalized stock-based compensation costs		(147)		—		(314)		—
Stock-based compensation expense included in total cost and operating expenses	$	19,528	$	13,666	$	36,387	$	23,961

Stock-based compensation expense by classification within the unaudited condensed consolidated statements of operations and comprehensive loss is as follows (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Research and development	$	8,709	$	7,503	$	16,507	$	13,293
Selling, general and administrative		10,819		6,163		19,880		10,668
Total		19,528		13,666		36,387		23,961

Net Loss per Share (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of common stock equivalents excluded from calculation of diluted net loss per share applicable to common stockholders


	Six Months Ended
	June 30,
	2020	2019
Stock options	6,660,990	5,506,867
Restricted stock units	1,151,411	323,854
ESPP shares	25,576	11,641
Total	7,837,977	5,842,362

Leases (Tables)

6 Months Ended

Jun. 30, 2020

Summary of lease expenses and cash flow and weighted average information


	Three Months Ended				Six Months Ended
	June 30,				June 30,
Operating leases:	2020		2019		2020		2019
Lease cost	$	4,328	$	4,126	$	8,709	$	7,739
Sublease income		(730)		(708)		(1,451)		(1,409)
Net lease cost	$	3,598	$	3,418	$	7,258	$	6,330


	Six Months Ended
	June 30,
	2020		2019

Cash paid for amounts included in the measurement of lease liabilities:	$	7,172	$	5,242

Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	497	$	23,300


					Operating leases
Weighted average remaining lease term in years					8.9
Weighted average discount rate					8.2%

Nature of Business (Details) $ in Millions	Jun. 30, 2020 USD ($)
Cash, cash equivalents and investments
Cash, cash equivalents and investments	$ 650.3

Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Details)	Jun. 30, 2020
Accounting Standards Update 2016-13
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Change in Accounting Principle, Accounting Standards Update, Adopted	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2020
Change in Accounting Principle, Accounting Standards Update, Early Adoption	false
Accounting Standards Update 2018-13
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Change in Accounting Principle, Accounting Standards Update, Adopted	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2020
Change in Accounting Principle, Accounting Standards Update, Early Adoption	false
Accounting Standards Update 2018-18
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Change in Accounting Principle, Accounting Standards Update, Adopted	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2020
Change in Accounting Principle, Accounting Standards Update, Early Adoption	false
Accounting Standards Update 2018-15
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Change in Accounting Principle, Accounting Standards Update, Adopted	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2020
Change in Accounting Principle, Accounting Standards Update, Early Adoption	false
Accounting Standards Update 2019-12
Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Change in Accounting Principle, Accounting Standards Update, Adopted	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jan. 01, 2020
Change in Accounting Principle, Accounting Standards Update, Early Adoption	true

Indicates (true false) whether accounting standards update was adopted.

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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 20
-Section 65
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=121483254&loc=SL120254523-199619

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 10
-Section 65
-Paragraph 4
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121329987&loc=SL120154346-209984

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 65
-Paragraph 8
-Subparagraph (b)

Cash Equivalents and Investments - Tabular Disclosure - Cash Equivalents (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Money market funds
Cash equivalents:
Cash equivalents, Amortized Cost	$ 285,014	$ 98,946
Cash equivalents	$ 285,014	98,946
U.S. Treasury obligations
Cash equivalents:
Cash equivalents, Amortized Cost		14,992
Cash equivalents		$ 14,992

Cash Equivalents and Investments - Tabular Disclosure - Investments, Available-for-sale (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
U.S. government agency securities
Investments, available-for-sale:
Available-for-sale, Amortized Cost	$ 168,474	$ 128,156
Available-for-sale, Unrealized Gain	730	160
Available-for-sale, Unrealized Losses	(17)	(4)
Investments, available-for-sale	169,187	128,312
U.S. Treasury obligations
Investments, available-for-sale:
Available-for-sale, Amortized Cost	191,180	305,360
Available-for-sale, Unrealized Gain	1,228	358
Available-for-sale, Unrealized Losses		(8)
Investments, available-for-sale	$ 192,409	$ 305,710

Cash Equivalents and Investments - Tabular Disclosure - Total (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Cash Equivalents and Investments
Total, Amortized Cost	$ 644,668	$ 547,454
Total, Unrealized Gain	1,958	518
Total, Unrealized Losses	(17)	(12)
Total, Fair Value	$ 646,609	$ 547,960

Cash Equivalents and Investments - Unrealized Loss Position (Details) $ in Millions	Jun. 30, 2020 USD ($) security	Dec. 31, 2019 USD ($) security
Unrealized loss position, number of positions
Number of held securities in an unrealized loss position \| security	6	11
Unrealized loss position, aggregate fair value
Unrealized loss position \| $	$ 32.0	$ 82.1

Cash Equivalents and Investments - Remaining Maturities (Details) $ in Millions	Jun. 30, 2020 USD ($) security	Dec. 31, 2019 USD ($) security
Investments, available-for-sale
Securities with remaining maturities greater than one year \| security	22	9
Aggregate fair value with remaining maturities greater than one year \| $	$ 128.5	$ 64.4

Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
U.S. government agency securities
Fair Value of Financial Instruments
Investments, available-for-sale	$ 169,187	$ 128,312
U.S. Treasury obligations
Fair Value of Financial Instruments
Investments, available-for-sale	192,409	305,710
Money market funds
Fair Value of Financial Instruments
Cash equivalents	285,014	98,946
U.S. Treasury obligations
Fair Value of Financial Instruments
Cash equivalents		14,992
Recurring
Fair Value of Financial Instruments
Total	646,609	547,960
Recurring \| U.S. government agency securities
Fair Value of Financial Instruments
Investments, available-for-sale	169,187	128,312
Recurring \| U.S. Treasury obligations
Fair Value of Financial Instruments
Investments, available-for-sale	192,409	305,710
Recurring \| Money market funds
Fair Value of Financial Instruments
Cash equivalents	285,014	98,946
Recurring \| U.S. Treasury obligations
Fair Value of Financial Instruments
Cash equivalents		14,992
Recurring \| Active Markets (Level 1)
Fair Value of Financial Instruments
Total	477,423	419,648
Recurring \| Active Markets (Level 1) \| U.S. Treasury obligations
Fair Value of Financial Instruments
Investments, available-for-sale	192,409	305,710
Recurring \| Active Markets (Level 1) \| Money market funds
Fair Value of Financial Instruments
Cash equivalents	285,014	98,946
Recurring \| Active Markets (Level 1) \| U.S. Treasury obligations
Fair Value of Financial Instruments
Cash equivalents		14,992
Recurring \| Observable Inputs (Level 2)
Fair Value of Financial Instruments
Total	169,187	128,312
Recurring \| Observable Inputs (Level 2) \| U.S. government agency securities
Fair Value of Financial Instruments
Investments, available-for-sale	$ 169,187	$ 128,312

Product Revenue Reserves and Allowances - Product Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenues
Total revenues	$ 8,343	$ 5,110	$ 14,510	$ 5,840
Product revenue, net
Revenues
Total revenues	$ 5,680		$ 9,138

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130545-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 30
-Subparagraph (a)
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
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-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-Section 50
-Paragraph 4
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
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-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

Product Revenue Reserves and Allowances - Product Revenue Allowance - Roll Forward (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($)
Product revenue allowance
Beginning balance	$ 0
Provision related to sales in the current period	1,230
Credits and payments made	(400)
Ending balance	$ 830

Product Revenue Reserves and Allowances - Product Revenue Allowance - Location (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Product revenue allowance
Product revenue allowance	$ 830	$ 0
Accounts Receivable, Net
Product revenue allowance
Product revenue allowance	186
Accrued Expenses
Product revenue allowance
Product revenue allowance	$ 644

Inventory - Capitalized (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Inventory
Work in process	$ 4,221
Finished goods	138
Total	$ 4,359

Inventory - Write-down (Details) - USD ($)	3 Months Ended	6 Months Ended
Inventory - Write-down (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2020
Inventory
Inventory write-down	$ 0	$ 0

Restricted Cash (Details) - USD ($) $ in Millions	Jun. 30, 2020	Dec. 31, 2019
Restricted Cash
Restricted cash	$ 5.2	$ 5.7

Property and Equipment, Net - Estimated Useful Lives (Details)	6 Months Ended
	Jun. 30, 2020
Lab equipment
Property and Equipment, Net
Estimated Useful Life (Years)	5 years
Furniture and fixtures
Property and Equipment, Net
Estimated Useful Life (Years)	4 years
Computer equipment
Property and Equipment, Net
Estimated Useful Life (Years)	3 years
Leasehold improvements
Property and Equipment, Net
Estimated Useful Life	Term of lease
Software
Property and Equipment, Net
Estimated Useful Life (Years)	3 years

Property and Equipment, Net - Property and Equipment and Related Accumulated Depreciation (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Property and Equipment, Net
Gross property and equipment	$ 53,667	$ 52,045
Less: accumulated depreciation and amortization	(16,922)	(13,684)
Total	36,745	38,361
Lab equipment
Property and Equipment, Net
Gross property and equipment	10,929	8,975
Furniture and fixtures
Property and Equipment, Net
Gross property and equipment	3,590	3,512
Computer equipment
Property and Equipment, Net
Gross property and equipment	1,571	1,558
Leasehold improvements
Property and Equipment, Net
Gross property and equipment	36,003	35,975
Software
Property and Equipment, Net
Gross property and equipment	408	417
Construction-in-progress
Property and Equipment, Net
Gross property and equipment	$ 1,166	$ 1,608

Property and Equipment, Net - Depreciation Expense (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Depreciation expense
Depreciation expense	$ 1.7	$ 1.2	$ 3.2	$ 2.4

Accrued Expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accrued Expenses
Research, development and commercial contract costs	$ 56,183	$ 59,420
Employee compensation	14,985	13,519
Accrued professional fees	10,475	12,042
Revenue-related reserves	644
Other	1,776	3,725
Total	$ 84,062	$ 88,706

Collaboration and License Agreements - General Information (Details) $ in Thousands				1 Months Ended					3 Months Ended				6 Months Ended		12 Months Ended
	Jul. 13, 2020 USD ($)	Oct. 15, 2019 USD ($) item	Jun. 01, 2018 USD ($) item	Jul. 31, 2020 USD ($)	Oct. 31, 2019 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Mar. 31, 2016 USD ($) item	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($) item	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2020 USD ($) Milestone	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Collaboration Agreements
Collaboration revenue									$ 8,343		$ 5,110		$ 14,510	$ 5,840
Current portion of deferred revenue									$ 8,017	$ 6,160			$ 8,017		$ 6,160
Roche \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01
Collaboration Agreements
Research and development services, performance period									4 years 9 months 18 days				4 years 9 months 18 days
Collaboration \| Clementia
Collaboration Agreements
Non-refundable upfront payment received		$ 25,000
Milestone payment received					$ 20,000
Cash milestone payment		20,000							$ 20,000	20,000			$ 20,000		20,000
Milestone other payment		490,000
Purchase specified manufacturing inventory		$ 1,500
Number of performance obligations \| item		3
Purchase of existing manufacturing inventory		$ 1,200
Purchase of in-process manufacturing inventory		$ 300
Number of material promises \| item		4
Initial cash payment		$ 46,500
Collaboration revenue									300		0		300	0	46,200
Deferred revenue									0	0			0		0
Collaboration \| Clementia \| Subsequent Event
Collaboration Agreements
Milestone payment received				$ 20,000
Collaboration \| C Stone
Collaboration Agreements
Non-refundable upfront payment received			$ 40,000									$ 40,000
Eligible milestone payments			$ 346,000
Number of performance obligations \| item			3
Licensed product term from first commercial sale			12 years
Number of materials components \| item			2
Number of option rights to obtain exclusive license \| item			3
Number of potential collaboration programs \| item			3
Number of material promises \| item			6
Number of collaboration programs with exclusive commercialization rights for licensed products \| item			3
Initial cash payment			$ 40,000
Collaboration revenue									1,263		4,144		3,397	4,144
Deferred revenue									0	$ 0			$ 0		$ 0
Collaboration \| C Stone \| Development and regulatory milestones
Collaboration Agreements
Eligible milestone payments			118,500
Number of milestones acheived \| Milestone													1
Collaboration revenue													$ 2,000
Collaboration \| C Stone \| Sales-based milestones
Collaboration Agreements
Eligible milestone payments			$ 227,500
Collaboration \| Roche
Collaboration Agreements
Non-refundable upfront payment received								$ 45,000
Number of small molecule therapeutics targeting kinases \| item								5
Number of option rights to obtain exclusive license \| item								5
Number of potential collaboration programs \| item								4		4
Initial cash payment							$ 45,000	$ 45,000
Collaboration revenue									1,109		966		1,684	1,697
Deferred revenue									44,700				44,700
Total eligible contingent option fees and milestone payments								940,000
Eligible option fees and milestones prior to licensing for all potential collaboration programs								$ 190,000
Current portion of deferred revenue									8,000				8,000
Achieved research milestone payment received which will be recognized over period of performance					$ 8,000	$ 10,000
Revenue recognized, change in contract liability									$ 1,061		$ 966		$ 2,050	$ 1,953
Collaboration \| Roche \| Subsequent Event
Collaboration Agreements
Non-refundable upfront payment received	$ 675,000
Total eligible contingent option fees and milestone payments	$ 927,000
Collaboration \| Roche \| Prior To Exercise License Right Option
Collaboration Agreements
Written termination notice period								120 days
Collaboration \| Roche \| Exercise Of License Right Option
Collaboration Agreements
Number of collaboration programs with exclusive commercialization rights for licensed products \| item								2
Number of collaboration programs with specified commercial rights for each party \| item								2
Collaboration \| Roche \| Exercise Of License Option Product Not Commercially Sold
Collaboration Agreements
Written termination notice period								120 days
Collaboration \| Roche \| Exercise Of License Option Product Commercially Sold
Collaboration Agreements
Written termination notice period								180 days

Collaboration and License Agreements - Manufacturing Services (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Global development of the licensed product \| C Stone
Collaboration Agreements
Manufacturing and research and development services related to global development activities	$ 920	$ 370	$ 2,450	$ 1,128

Collaboration and License Agreements - Revenue Recognized - CStone (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Collaboration Agreements
Total CStone collaboration revenue	$ 8,343	$ 5,110	$ 14,510	$ 5,840
Collaboration \| C Stone
Collaboration Agreements
License milestone revenue		4,000	2,000	4,000
Manufacturing services related to territory-specific activities	1,263	144	1,397	144
Total CStone collaboration revenue	$ 1,263	$ 4,144	$ 3,397	$ 4,144

Collaboration and License Agreements - Contract Assets - CStone (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Collaboration Agreements
Accounts receivable, net	$ 3,403	$ 663
Unbilled accounts receivable	20,877	22,749
Collaboration \| C Stone
Collaboration Agreements
Accounts receivable, net	706	663
Unbilled accounts receivable	$ 561	$ 2,749

Collaboration and License Agreements - Revenue Recognized - Roche (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Collaboration Agreements
Total revenues	$ 8,343	$ 5,110	$ 14,510	$ 5,840
Collaboration \| Roche
Collaboration Agreements
Total revenues	1,109	966	1,684	1,697
Amounts included in the contact liability at the beginning of the period	$ 1,061	$ 966	$ 2,050	$ 1,953