SEC Filing | Blueprint Medicines Corp.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_____________________________

FORM 10-Q

_____________________________

(Mark One)

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

For the quarterly period ended June 30, 2024

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

Commission file number 001-37359

_____________________________

BLUEPRINT MEDICINES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

_____________________________

Delaware		26-3632015
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

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

(617) 374-7580

(Registrant’s Telephone Number, Including Area Code)

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

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

Large accelerated filer ☑

Non-accelerated filer ☐

Accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	BPMC	Nasdaq Global Select Market

Number of shares of the registrant’s common stock, $0.001 par value, outstanding on July 30, 2024: 63,345,465

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		Page
Part I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)		4
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	4
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2024 and 2023	5
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2024 and 2023	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
Item 3. Quantitative and Qualitative Disclosures About Market Risk		55
Item 4. Controls and Procedures		56

Part II – OTHER INFORMATION
Item 1. Legal Proceedings		57
Item 1A. Risk Factors		57
Item 5. Other Information		108
Item 6. Exhibits		109
Signatures		109

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Unless otherwise stated, all references to “us,” “our,” “Blueprint,” “Blueprint Medicines,” “we,” the “Company” and similar designations in this Quarterly Report on Form 10-Q refer to Blueprint Medicines Corporation and its consolidated subsidiaries. Blueprint Medicines, AYVAKIT^®, AYVAKYT^®, and associated logos are trademarks of Blueprint Medicines Corporation. GAVRETO^®and associated logos are trademarks of Blueprint Medicines Corporation outside of the United States.Other brands, names and trademarks contained in this Quarterly Report on Form 10-Q are the property of their respective owners.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “aim,” “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” or a variation or the negative of these words or other comparable terminology, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

●

the timing or likelihood of regulatory actions, filings and approvals for our current and future drug candidates, including our ability to obtain marketing approval for avapritinib in additional geographies;

●

our ability and plans in continuing to build out our commercial infrastructure and successfully launching, marketing and selling AYVAKIT^® (avapritinib) (marketed in Europe under the brand name AYVAKYT^®) and any current and future drug candidates for which we receive marketing approval;

●

our expectations regarding the potential benefits of AYVAKIT/AYVAKYT and any current and future drug candidates in treating patients with indolent systemic mastocytosis (SM) and advanced SM;

●

the rate and degree of market acceptance of AYVAKIT/AYVAKYT and any current and future drug candidates for which we receive marketing approval;

●

the pricing and reimbursement of AYVAKIT/AYVAKYT and any current and future drug candidates for which we receive marketing approval;

●

the initiation, timing, progress and results of our preclinical studies and clinical trials, including our ongoing clinical trials and any planned clinical trials for our current and future drug candidates and research and development programs;

●

our ability to advance drug candidates into, and successfully complete, clinical trials;

●

our ability to successfully develop manufacturing processes for any of our current and future drugs or drug candidates and to secure manufacturing, packaging and labeling arrangements for development activities and commercial production;

●

the implementation of our business model and strategic plans for our business, drugs, drug candidates, platform and technology;

●

the scope and length of protection we are able to establish and maintain for intellectual property rights covering our current and future drugs, drug candidates and technology;

●

the potential benefits of our collaboration with CStone Pharmaceuticals (CStone) to develop and commercialize avapritinib, pralsetinib and fisogatinib in the CStone Territory (as defined below), and our collaboration with VantAI, Inc. (VantAI), to research and advance novel targeted protein degrader therapies, as well as our ability to maintain these collaborations and establish additional strategic collaborations;

●

the potential benefits of our exclusive license agreement with Clementia Pharmaceuticals, Inc., a wholly-owned subsidiary of Ipsen S.A. (Clementia), to develop and commercialize BLU-782 for fibrodysplasia ossificans progressiva;

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●

the potential benefit of our strategic financing transactions with Garnich Adjacent Investments S.a.r.l. and Tao Talents, LLC, both affiliates of Sixth Street Partners;

●

our ability to find an alternative partner for future development and otherwise realize the benefits of the collaboration compounds retained by us following the mutual termination of our cancer immunotherapy collaboration with F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc.;

●

the potential benefits of our license agreement with IDRx, Inc. (IDRx) to develop our development candidate-stage KIT exon 13 inhibitor, IDRX-73, for the treatment of drug-resistant mutations of non-PDGFR-driven gastrointestinal stromal tumor (GIST);

●

our financial performance, estimates of our revenues, expenses and capital requirements and our needs for future financing, including our ability to achieve a self-sustainable financial profile;

●

developments relating to our competitors and our industry;

●

our expectations regarding litigation matters; and

●

the actual or potential benefits of designations granted by the U.S. Food and Drug Administration (FDA), such as orphan drug, fast track and breakthrough therapy designation or priority review.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section in Part II, Item 1A, that could cause actual results or events to differ materially from the forward-looking statements that we make. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results, performance or achievements may be materially different from what we expect. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

For purposes of this Quarterly Report on Form 10-Q, including the footnotes to our condensed consolidated financial statements, (i) with respect to the terminated collaboration for pralsetinib, Roche means F. Hoffmann-La Roche Ltd and Genentech, Inc., (ii) with respect to our terminated cancer immunotherapy collaboration, Roche means F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., (iii) with respect to our financing transactions with Sixth Street Partners, Sixth Street Partners means Garnich Adjacent Investments S.a.r.l. and/or Tao Talents, LLC, and (iv) with respect to our targeted protein degrader therapies collaboration, Proteovant means Oncopia Therapeutics, Inc., d/b/a SK Life Science Labs (formerly known as Proteovant Therapeutics, Inc.).

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Blueprint Medicines Corporation

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)


	June 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	54,771	$	71,286
Marketable securities		708,831		639,355
Accounts receivable		85,058		42,827
Inventory		14,789		21,223
Prepaid expenses and other current assets		40,095		33,702
Total current assets		903,544		808,393
Marketable securities		104,869		56,530
Property and equipment, net		40,167		41,959
Operating lease right-of-use assets, net		68,881		73,691
Restricted cash		10,623		10,238
Equity investment		27,789		27,789
Other assets		47,687		30,650
Total assets	$	1,203,560	$	1,049,250
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		4,858		4,710
Accrued expenses		120,539		127,992
Current portion of operating lease liabilities		12,658		11,933
Current portion of deferred revenue		3,748		812
Current portion of liabilities related to the sale of future royalties and revenues		53,741		39,198
Current portion of term loan		48,259		30,278
Total current liabilities		243,803		214,923
Operating lease liabilities, net of current portion		75,244		81,751
Deferred revenue, net of current portion		8,041		4,792
Liabilities related to the sale of future royalties and revenues, net of current portion		211,792		402,427
Term loan, net of current portion		338,655		208,535
Other long-term liabilities		5,784		6,213
Total liabilities		883,319		918,641
Commitments and Contingencies (Note 16)
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding		—		—
Common stock, $0.001 par value; 120,000,000 shares authorized; 63,165,725 and 61,147,236 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		63		61
Additional paid-in capital		2,624,868		2,473,985
Accumulated other comprehensive loss		(3,890)		(3,495)
Accumulated deficit		(2,300,800)		(2,339,942)
Total stockholders’ equity		320,241		130,609
Total liabilities and stockholders’ equity	$	1,203,560	$	1,049,250

See accompanying notes to the unaudited condensed consolidated financial statements.

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Blueprint Medicines Corporation

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share data)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenues:
Product revenue, net	$	114,115	$	39,876	$	206,641	$	78,945
Collaboration, license and other revenue		24,042		17,694		27,632		41,912
Total revenues		138,157		57,570		234,273		120,857
Cost and operating expenses:
Cost of sales		7,593		2,323		10,785		5,498
Collaboration loss sharing		—		1,234		—		2,530
Research and development		84,270		110,063		172,461		222,135
Selling, general and administrative		89,339		71,931		172,896		142,882
Total cost and operating expenses		181,202		185,551		356,142		373,045
Other income (expense):
Interest expense, net		(6,864)		(3,996)		(12,760)		(9,815)
Other income (expense), net		(1)		(626)		376		359
Debt extinguishment gain		18		—		173,676		—
Total other income (expense), net		(6,847)		(4,622)		161,292		(9,456)
Income (loss) before income taxes		(49,892)		(132,603)		39,423		(261,644)
Income tax expense		102		190		282		710
Net income (loss)	$	(49,994)	$	(132,793)	$	39,141	$	(262,354)
Other comprehensive loss:
Unrealized gains (losses) on available-for-sale investments		53		361		(511)		6,181
Currency translation adjustments		(96)		20		116		41
Comprehensive income (loss)	$	(50,037)	$	(132,412)	$	38,746	$	(256,132)
Net income (loss) per share - basic	$	(0.80)	$	(2.19)	$	0.63	$	(4.35)
Net income (loss) per share - diluted	$	(0.80)	$	(2.19)	$	0.61	$	(4.35)
Weighted-average number of common shares used in net income (loss) per share - basic		62,854		60,516		62,217		60,322
Weighted-average number of common shares used in net income (loss) per share - diluted		62,854		60,516		64,612		60,322

See accompanying notes to the unaudited condensed consolidated financial statements.

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Blueprint Medicines Corporation

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(Unaudited)


							Accumulated
				Additional			Other
	Common Stock			Paid-in		Comprehensive			Accumulated		Stockholders’
	Shares	Amount		Capital			Loss		Deficit		Equity

Balance at December 31, 2023	61,147,236	$	61	$	2,473,985		$	(3,495)	$	(2,339,942)	$	130,609
Issuance of common stock under stock plan	902,292		1		17,900			—		—		17,901
Stock-based compensation expense	—		—		24,457			—		—		24,457
At-the-market offerings, net of issuance costs	544,719		1		48,935			—		—		48,936
Other comprehensive loss	—		—		—			(352)		—		(352)
Net income	—		—		—			—		89,136		89,136
Balance at March 31, 2024	62,594,247	$	63	$	2,565,277		$	(3,847)	$	(2,250,806)	$	310,687

Issuance of common stock under stock plan and stock purchase plan	571,478	$	—	$	31,337		$	—	$	—	$	31,337
Stock-based compensation expense	—		—		28,275			—		—		28,275
Other comprehensive loss	—		—		—			(43)		—		(43)
Other	—		—		(21)			—		—		(21)
Net loss	—		—		—			—		(49,994)		(49,994)
Balance at June 30, 2024	63,165,725	$	63	$	2,624,868		$	(3,890)	$	(2,300,800)	$	320,241

Balance at December 31, 2022	59,958,919	$	60	$	2,358,018		$	(10,443)	$	(1,832,958)	$	514,677
Issuance of common stock under stock plan	457,416		—		—			—		—		—
Stock-based compensation expense	—		—		23,340			—		—		23,340
Other comprehensive income	—		—		—			5,841		—		5,841
Net loss	—		—		—			—		(129,560)		(129,560)
Balance at March 31, 2023	60,416,335	$	60	$	2,381,358		$	(4,602)	$	(1,962,518)	$	414,298

Issuance of common stock under stock plan and stock purchase plan	221,940	$	1	$	5,298		$	—	$	—		5,299
Stock-based compensation expense	—		—		23,945			—		—		23,945
Other comprehensive loss	—		—		—			381		—		381
Net loss	—		—		—			—		(132,793)		(132,793)
Balance at June 30, 2023	60,638,275	$	61	$	2,410,601		$	(4,221)	$	(2,095,311)	$	311,130

See accompanying notes to the unaudited condensed consolidated financial statements.

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Blueprint Medicines Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Six Months Ended
	June 30,
	2024		2023
Cash flows from operating activities
Net income (loss)	$	39,141	$	(262,354)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		8,427		7,262
Non-cash lease expense		4,858		4,457
Stock-based compensation		52,247		47,017
Non-cash interest expense		1,128		8,297
Net (accretion of discount) amortization of premium on investments		(10,838)		(6,090)
Non-cash debt extinguishment gain		(173,676)		—
Other		(861)		2,479
Changes in assets and liabilities:
Accounts receivable		(42,407)		(13,105)
Inventory		(1,990)		(8,112)
Prepaid expenses and other current assets		(6,731)		11,969
Other assets		(8,977)		(1,419)
Accounts payable		231		4,218
Accrued expenses		(5,058)		(25,694)
Other long-term liabilities		(1,874)		(7,238)
Deferred revenue		2,624		(9,963)
Operating lease liabilities		(5,829)		(5,160)
Net cash used in operating activities		(149,585)		(253,436)
Cash flows from investing activities
Purchases of property and equipment		(3,673)		(5,138)
Purchases of investments		(555,638)		(407,770)
Maturities of investments		448,150		617,765
Net cash provided by (used in) investing activities		(111,161)		204,857
Cash flows from financing activities
Proceeds from at-the-market offerings, net of issuance costs		48,936		—
Net proceeds from stock option exercises and employee stock purchase plan		49,607		5,298
Principal payments for financing arrangements		(541)		—
Net proceeds from term loan facility		146,973		—
Net cash provided by financing activities		244,975		5,298
Net increase in cash, cash equivalents, and restricted cash		(15,771)		(43,281)
Cash, cash equivalents and restricted cash at beginning of period		81,524		124,904
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(176)		256
Cash, cash equivalents and restricted cash at end of period	$	65,577	$	81,879
Supplemental cash flow information
Cash paid for interest	$	32,618	$	15,167
Property and equipment purchases unpaid at period end	$	40	$	2,603
Cash paid for taxes, net	$	554	$	676

See accompanying notes to the unaudited condensed consolidated financial statements.

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Blueprint Medicines Corporation

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Business

Blueprint Medicines Corporation (the Company), a Delaware corporation incorporated on October 14, 2008, is a global fully-integrated biopharmaceutical company that invents life-changing medicines in two core focus areas: allergy/inflammation and oncology/hematology. The Company’s approach targets the root causes of disease, using deep scientific knowledge in the Company’s core focus areas and drug discovery expertise across multiple therapeutic modalities.

The Company has a track record of success with two approved medicines, including AYVAKIT®/AYVAKYT® (avapritinib), which the Company is bringing to patients living with systemic mastocytosis (SM) and PDGFRA Exon 18 mutant GIST in the U.S. and Europe. Leveraging the Company’s established research, development, and commercial capability and infrastructure, the Company now aims to significantly scale its impact by advancing a broad pipeline of programs ranging from early science to advanced clinical trials in mast cell diseases including SM and chronic urticaria, breast cancer and other solid tumors.

As of June 30, 2024, the Company had cash, cash equivalents and marketable securities of $868.5 million. Based on the Company’s current operating plans, the Company anticipates that its existing cash, cash equivalents and marketable securities 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.

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 U.S. (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, 2023 and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 15, 2024 (2023 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, 2024, the results of its operations for the three and six months ended June 30, 2024 and 2023, stockholders’ equity for the three and six months ended June 30, 2024 and 2023 and cash flows for the six months ended June 30, 2024 and 2023. Such adjustments are of a normal and recurring nature. The results for the three and six months ended June 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or for any future period.

The accompanying unaudited interim 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.

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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, inventory, operating lease right-of-use assets, operating lease liabilities, stock-based compensation expense, accrued expenses, liabilities related to the sale of future royalties and future revenues, equity investment, and income taxes. 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, 2024 are consistent with those discussed in Note 2 to the consolidated financial statements in the 2023 Annual Report on Form 10-K, with the exception of the below new policy.

Modification of debt instruments

When the Company’s debt instrument, where the Company is the debtor, is modified or exchanged, the Company shall analyze whether the modification should be accounted for as a modification or an extinguishment. Modified terms are considered substantially different if, after an exchange or modification of debt instruments with the same creditor, the present value of cash flows under the terms of the new debt instrument differs by at least 10% from the present value of the remaining cash flows under the terms of the original debt instrument. If the modified instrument is considered substantially different from the original debt instrument, the modification or exchange is accounted for as an extinguishment. The new instrument is recorded at its fair value and that fair value is used to determine the extinguishment gain or loss.

Recent 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.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments will be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the disclosure requirements related to this new standard.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires entities to disclose disaggregated information about their effective tax rate reconciliation and income taxes paid. The disclosure requirements will be applied on a prospective basis, with the option to apply them retrospectively. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the disclosure requirements related to this new standard.

Reclassification

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

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3. Financing Arrangements

Royalty Pharma Purchase and Sale Agreement

On June 30, 2022, the Company entered into a purchase and sale agreement (Royalty Purchase Agreement) with Royalty Pharma Investments 2019 ICAV (Royalty Pharma). Pursuant to the Royalty Purchase Agreement, the Company received an upfront payment of $175.0 million in consideration for the Company’s rights to receive royalty payments on the net sales of GAVRETO worldwide, excluding the CStone Territory (as defined below) and the U.S., under the terms of the Roche pralsetinib collaboration agreement.

Despite selling all rights to receive royalties on GAVRETO net sales of the underlying territories to Royalty Pharma, the Company maintained its involvement in the global co-development of pralsetinib with Roche and was therefore involved in the generation of these future royalties. Due to the Company’s significant continued involvement, any royalties and development and commercialization milestones earned pertaining to the underlying territory under the Roche pralsetinib collaboration agreement were recognized as collaboration revenue on the consolidated statements of operations and comprehensive income (loss) throughout the contract term of the Roche pralsetinib collaboration agreement. The net proceeds received from the transaction were recorded as a liability related to sale of future royalties and revenues on the consolidated balance sheet on June 30, 2022.

In February 2023, the Company received written notice from Roche of their election to terminate for convenience the Roche pralsetinib collaboration agreement. The termination became effective February 2024 and the Company regained commercialization and development rights to GAVRETO from Roche worldwide excluding the CStone Territory. In January 2024, the Company decided to discontinue global development and marketing of GAVRETO in territories excluding the U.S. and the CStone Territory following the termination of the Roche pralsetinib collaboration. In connection with and effective upon the termination of the Roche pralsetinib collaboration agreement, on February 22, 2024 (the Royalty Pharma Termination Date), Royalty Pharma and the Company agreed to terminate the Royalty Purchase Agreement (Royalty Pharma Termination Agreement). Following the termination of the Royalty Purchase Agreement, the Company has no outstanding obligations under the Royalty Purchase Agreement, other than the remaining royalty payment obligation related to GAVRETO net sales through the termination effective date. As of June 30, 2024, the Company had no plan to enter into a new arrangement to commercialize GAVRETO outside of the U.S. and the CStone territory.

The Company has no material outstanding obligations under the Royalty Pharma Termination Agreement and it was accounted for as a debt extinguishment under ASC 470-50 as the terms and conditions of the Royalty Purchase Agreement had undergone a substantial modification and the modified terms are considered substantially different. As a result, during the six months ended June 30, 2024, the Company recorded a debt extinguishment gain of $173.7 million as other income in the unaudited condensed consolidated statements of operations and comprehensive income (loss). As of June 30, 2024, the net carrying value of the Company’s liability related to these agreements was $0.7 million, which was determined based on the fair value of the remaining cash flow associated with anticipated future payments outlined in the Royalty Pharma Termination Agreement.

Financing Arrangements with Sixth Street Partners

In July 2022, the Company closed two transactions pursuant to a purchase and sale agreement (Future Revenue Purchase Agreement) and a debt financing transaction for up to $660.0 million (as amended, Financing Agreement) with Sixth Street Partners. Because two transactions were entered into with the same parties and in contemplation of one another, the Company recorded these transactions based on the relative fair values of each freestanding financial instrument and allocated the proceeds in proportion to those fair value amounts.

Sixth Street Partners Purchase and Sale Agreement

Pursuant to the Future Revenue Purchase Agreement, the Company received gross proceeds of $250.0 million in exchange for future royalty payments at a rate of 9.75% on up to $900 million each year of (i) aggregate worldwide annual net product sales of AYVAKIT/AYVAKYT (avapritinib) and (ii), if it is approved, aggregate worldwide annual net product sales of BLU-263 (elenestinib), but excluding sales in Greater China, subject to a cumulative cap of 1.45 times the upfront invested capital or a total of $362.5 million. In the event that certain revenue targets are not achieved

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by specified dates, the royalty rate and cumulative cap shall be increased to 15% and 1.85 times the invested capital (or $462.5 million), respectively.

The Company continues to own the research, development, manufacturing and commercialization of AYVAKIT/AYVAKYT and if it is approved, elenestinib, and has significant continuing involvement in the generation of the cash flows under the Future Revenue Purchase Agreement. Therefore, the Company continues to account for any revenue earned from worldwide product sales of AYVAKIT/AYVAKYT and, if it is approved, elenestinib, on its consolidated statements of operations and comprehensive income (loss). Net proceeds received from the transaction were recorded as a liability related to sale of future royalties and revenues on the consolidated balance sheet. The Company accretes the $250.0 million, net of transaction costs of $5.4 million, to the total of these future payments as interest expense using the effective interest method over the estimated life of the arrangement.

As payments are made to Sixth Street Partners, the balance of the liability is effectively repaid over the life of the Future Revenue Purchase Agreement. In order to determine the amortization of the liability, the Company estimates the total amount of future revenue payments to be paid to Sixth Street Partners over the life of the arrangement. The exact amount of repayment is likely to change each reporting period. A significant increase or decrease in worldwide product sales of AYVAKIT/AYVAKYT and, if it is approved, elenestinib, will materially impact the liability related to this arrangement, interest expense and the time period for repayment. The Company periodically assesses the expected payments to Sixth Street Partners and prospectively adjusts the amortization of the liability related to this arrangement for material changes in such payments. As of June 30, 2024, the Company’s estimate of this total interest expense resulted in an effective annual interest rate of 10.6%. These estimates contain assumptions that impact the amount recorded and the interest expense that will be recognized in future periods.

As of June 30, 2024, the net carrying value of the liability related to this arrangement was $264.8 million. The following table shows the activity within the liability account (in thousands):


	Six Months Ended June 30,
	2024		2023
Beginning Balance at January 1	$	266,670	$	254,328
Interest expense recognized		13,971		14,021
Payments		(15,845)		(6,644)
Carrying value as of June 30	$	264,796	$	261,705

Sixth Street Partners Term Loan

The Financing Agreement entered into by the parties in connection with the transaction provides for (i) a senior secured term loan facility of up to $150.0 million and (ii) a senior secured delayed draw term loan facility of up to $250.0 million to be funded in two tranches at the Company’s choice subject to certain terms and conditions. The term loans will mature on June 30, 2028 and bear interest at a variable rate equal to either the Secured Overnight Financing Rate (SOFR) plus 6.50% or the base rate plus 5.50%, subject to a floor of 1% and 2% with respect to the SOFR and base rate, respectively.

The following table shows the proceeds the Company has received under the Financing Agreement with Sixth Street Partners (in thousands):


				Debt discount/
Term loan draw	Date	Gross proceeds		Transaction cost		Net proceeds
Senior Secured Term Loan Facility	July 2022	$	150,000	$	12,214	$	137,786
1st Senior Secured Delayed Draw Term Loan Facility	August 2023		100,000		2,067		97,933
2nd Senior Secured Delayed Draw Term Loan Facility	May 2024		150,000		3,027		146,973
		$	400,000	$	17,308	$	382,692

Debt discounts and transaction costs have been recorded as a reduction to the carrying amount of the debt on the Company’s consolidated balance sheet and are amortized as additional interest expenses using the effective interest

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rate method over the period from issuance through maturity. In addition, the Company may at any time request an incremental term loan in an amount not to exceed $260.0 million on terms to be agreed and subject to the consent of Sixth Street Partners providing such incremental term loan. As of June 30, 2024, the Company’s estimate of the total interest expense resulted in an effective annual interest rate of 13.0%. The carrying amount of the debt as of June 30, 2024 is subject to variable interest rates, which are based on current market rates, and as such, approximates fair value.

The following table shows the activity within the liability account (in thousands):


	Six Months Ended June 30,
	2024		2023
Beginning Balance at January 1	$	238,813	$	139,083
Net proceeds received from the delayed draw term loan		146,973		—
Interest expense recognized		17,901		9,443
Payments		(16,773)		(8,523)
Carrying value as of June 30	$	386,914	$	140,003

The Company’s obligations under the Financing Agreement are secured, subject to certain exceptions, by security interests in substantially all assets of the Company and certain of its subsidiaries. The Financing Agreement contains customary negative covenants that, among other things and subject to certain exceptions, could restrict the Company’s ability to incur additional liens, incur additional indebtedness, make investments, including acquisitions, engage in fundamental changes, sell or dispose of assets that constitute collateral, including certain intellectual property, pay dividends or make any distribution or payment on or redeem, retire or purchase any equity interests, amend, modify or waive certain material agreements or organizational documents and make payments of certain subordinated indebtedness. The Financing Agreement also requires the Company to maintain a consolidated liquidity of at least $80.0 million. As of June 30, 2024, the Company was in compliance with the applicable terms and conditions of the covenants under the Financing Agreement.

4. Marketable Securities

Marketable securities consisted of the following at June 30, 2024 and December 31, 2023 (in thousands):


	Amortized		Unrealized		Unrealized		Fair
June 30, 2024	Cost		Gain		Losses		Value
Marketable securities, available-for-sale:
U.S. government agency securities	$	122,010	$	6	$	(246)	$	121,770
U.S. treasury obligations		692,390		68		(528)		691,930
Total	$	814,400	$	74	$	(774)	$	813,700


	Amortized		Unrealized		Unrealized		Fair
December 31, 2023	Cost		Gain		Losses		Value
Marketable securities, available-for-sale:
U.S. government agency securities	$	170,194	$	27	$	(418)	$	169,803
U.S. treasury obligations		525,880		588		(386)		526,082
Total	$	696,074	$	615	$	(804)	$	695,885

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The following table summarizes the amortized cost basis and estimated fair value of the Company’s available-for-sale securities by contractual maturity as of June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024				December 31, 2023
	Amortized		Fair		Amortized		Fair
	Cost		value		Cost		value
Within one year	$	709,446	$	708,831	$	639,881	$	639,355
After one through five years		104,954		104,869		56,193		56,530
Total	$	814,400	$	813,700	$	696,074	$	695,885

As of June 30, 2024 and December 31, 2023, the Company held 118 and 62 debt securities, respectively, that were in an unrealized loss position. The following table summarizes the estimated fair value and the aggregate unrealized loss of the Company’s available-for-sale securities that are in loss position as of June 30, 2024 and December 31, 2023 by the length of time the security has been in loss position (in thousands):


	June 30, 2024				December 31, 2023
	Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses
Debt securities in unrealized loss position for 12 months or less	$	553,474	$	(530)	$	267,917	$	(550)
Debt securities in unrealized loss position for more than 12 months		106,490		(244)		64,659		(254)
Total debt securities	$	659,964	$	(774)	$	332,576