UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_____________________________
FORM
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(Mark One)
For the quarterly period ended
OR
Commission file number
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(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of |
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(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.
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).
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.
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. ☐
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Securities registered pursuant to Section 12(b) of the Act:
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Number of shares of the registrant’s common stock, $
TABLE OF CONTENTS
1
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®, GAVRETO® and associated logos are trademarks of Blueprint Medicines Corporation. 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 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 and pralsetinib for additional indications or in additional geographies; |
● | our ability and plans in continuing to expand out our commercial infrastructure and successfully launching, marketing and selling AYVAKIT® (avapritinib) (marketed in Europe under the brand name AYVAKYT®), GAVRETO® (pralsetinib) and any current and future drug candidates for which we receive marketing approval; |
● | the rate and degree of market acceptance of AYVAKIT/AYVAKYT, GAVRETO and any current and future drug candidates for which we receive marketing approval; |
● | the pricing and reimbursement of AYVAKIT/AYVAKYT, GAVRETO 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 as monotherapies or in combination with other agents 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 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 F. Hoffmann-La Roche Ltd and Genentech, Inc. to develop and commercialize pralsetinib globally (excluding Greater China), our cancer immunotherapy collaboration with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., our collaboration with CStone Pharmaceuticals to develop and commercialize avapritinib, pralsetinib and fisogatinib in Greater China, our collaboration with Zai Lab to develop and commercialize BLU-701 and BLU-945 as inhibitors of epidermal growth factor receptor (EGFR), and our collaboration with Proteovant Therapeutics to discover and advance novel targeted protein degrader therapies, as well as our ability to maintain these collaborations and establish additional strategic collaborations; |
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● | the potential benefits of our exclusive license agreement with Clementia Pharmaceuticals, Inc. to develop and commercialize BLU-782 for fibrodysplasia ossificans progressiva; |
● | the development of companion diagnostic tests for our current or future drugs or drug candidates; |
● | 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; |
● | 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; and |
● | the impact and scope of the ongoing COVID-19 pandemic on our business, operations, strategy, goals and anticipated milestones, including our ongoing and planned research and discovery activities, ability to conduct ongoing and planned clinical trials, clinical supply of current or future drug candidates, and the launch, marketing, sale and commercial supply of AYVAKIT/AYVAKYT, GAVRETO and any current or future drug candidates for which we receive marketing approval. |
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, 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 our collaboration for pralsetinib, Roche means F. Hoffmann-La Roche Ltd and Genentech, Inc., and (ii) with respect to our cancer immunotherapy collaboration, Roche means F. Hoffmann-La Roche Ltd and Hoffmann-La Roche 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)
March 31, | December 31, | |||||
| 2022 |
| 2021 | |||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Marketable securities | | | ||||
Accounts receivable | | | ||||
Unbilled accounts receivable | | | ||||
Inventory | | | ||||
Prepaid expenses and other current assets |
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Total current assets |
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Marketable securities |
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Property and equipment, net | |
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Operating lease right-of-use assets, net | | | ||||
Restricted cash |
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Other assets |
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Total assets | $ | | $ | | ||
Liabilities and stockholders’ equity | ||||||
Current liabilities: | ||||||
Accounts payable | | | ||||
Accrued expenses |
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Current portion of operating lease liabilities | | | ||||
Current portion of deferred revenue | | | ||||
Total current liabilities |
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Operating lease liabilities, net of current portion | | | ||||
Deferred revenue, net of current portion | | | ||||
Other long-term liabilities | | | ||||
Total liabilities | | | ||||
Commitments and Contingencies (Note 14) | ||||||
Stockholders’ equity: | ||||||
Preferred stock, $ | ||||||
Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss | ( | ( | ||||
Accumulated deficit |
| ( |
| ( | ||
Total stockholders’ equity |
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Total liabilities and stockholders’ equity | $ | | $ | |
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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 | ||||||
March 31, | ||||||
2022 |
| 2021 | ||||
Revenues: | ||||||
Product revenue, net | $ | | $ | | ||
Collaboration revenue | | | ||||
Total revenues | | | ||||
Cost and operating expenses: | ||||||
Cost of sales | | | ||||
Collaboration loss sharing | | — | ||||
Research and development | | | ||||
Selling, general and administrative |
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Total cost and operating expenses |
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Other income (expense): | ||||||
Interest income, net |
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Other expense, net |
| ( |
| ( | ||
Total other income (expense) |
| ( |
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Loss before income taxes | ( | ( | ||||
Income tax expense | | — | ||||
Net loss | $ | ( | $ | ( | ||
Other comprehensive income (loss): | ||||||
Unrealized losses on available-for-sale investments | ( | ( | ||||
Currency translation adjustments | | | ||||
Comprehensive loss | $ | ( | $ | ( | ||
Net loss per share - basic and diluted | $ | ( | $ | ( | ||
Weighted-average number of common shares used in net loss per share - basic and diluted | | |
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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, 2021 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Issuance of common stock under stock plan | | | | — | — |
| | ||||||||||
Stock-based compensation expense | — | — | | — | — |
| | ||||||||||
Other comprehensive income | — | — | — | ( | — | ( | |||||||||||
Net loss | — | — | — | — | ( |
| ( | ||||||||||
Balance at March 31, 2022 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Balance at December 31, 2020 |
| | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Issuance of common stock under stock plan | | — | | — | — |
| | ||||||||||
Stock-based compensation expense | — | — | | — | — |
| | ||||||||||
Other comprehensive income | — | — | — | | — | | |||||||||||
Net loss | — | — | — | — | ( |
| ( | ||||||||||
Balance at March 31, 2021 | | $ | | $ | | $ | ( | $ | ( | $ | |
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Blueprint Medicines Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Three Months Ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 | |||
Cash flows from operating activities | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Depreciation and amortization |
| | | |||
Noncash lease expense |
| | | |||
Stock-based compensation | | | ||||
Other | | | ||||
Changes in assets and liabilities: |
| |||||
Accounts receivable | ( | ( | ||||
Unbilled accounts receivable | | | ||||
Inventory | ( | ( | ||||
Prepaid expenses and other current assets | ( | ( | ||||
Other assets |
| ( | ( | |||
Accounts payable |
| | ( | |||
Accrued expenses | ( | ( | ||||
Other long-term liabilities | | | ||||
Deferred revenue |
| ( | ( | |||
Operating lease liabilities | ( | ( | ||||
Net cash provided used in operating activities |
| ( | ( | |||
Cash flows from investing activities |
| |||||
Purchases of property and equipment | ( | ( | ||||
Purchases of investments | ( | ( | ||||
Maturities of investments | — | | ||||
Net cash provided by (used in) investing activities |
| ( | | |||
Cash flows from financing activities |
| |||||
Net proceeds from stock option exercises and employee stock purchase plan |
| | | |||
Net cash provided by financing activities |
| | | |||
Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | | ||||
Cash, cash equivalents and restricted cash at beginning of period | | | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ( | ||||
Cash, cash equivalents and restricted cash at end of period | $ | | $ | | ||
Supplemental cash flow information | ||||||
Property and equipment purchases unpaid at period end | $ | | $ | | ||
Cash paid for taxes, net | $ | | $ | |
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands).
March 31, | March 31, | |||||
2022 | 2021 | |||||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash | | | ||||
Total cash, cash equivalents, and restricted cash shown in condensed consolidated statements of cash flows | $ | | $ | |
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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 precision therapy company focused on genomically defined cancers and blood disorders. The Company’s approach is to leverage its novel research engine to systematically and reproducibly identify drivers of diseases in genomically defined patient populations, and to craft highly selective and potent drug candidates that are intended to provide significant and durable clinical responses to patients.
The Company has two approved precision therapies and is globally advancing multiple programs for systemic mastocytosis, lung cancer and other genomically defined cancers, and cancer immunotherapy. The Company is devoting substantially all of its efforts to research and development for current and future drug candidates and commercialization of AYVAKIT/AYVAKYT, GAVRETO and any current or future drug candidates that obtain marketing approval.
As of March 31, 2022, the Company had cash, cash equivalents and marketable securities of $
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, 2021 and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 17, 2022 (the 2021 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 March 31, 2022, the results of its operations for the three months ended March 31, 2022 and 2021, stockholder’s equity for the three months ended March 31, 2022 and 2021 and cash flows for three months ended March 31, 2022 and 2021. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 2022 are not necessarily indicative of the results for the year ending December 31, 2022 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, Blueprint Medicines (Italy) S.r.L., and Lengo Therapeutics, Inc. (Lengo), which was acquired on December 30, 2021. 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, and income taxes. The length of time and full extent to which the ongoing COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including revenues, expenses, reserves and allowances, manufacturing, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, subject to change and difficult to predict, including as a result of new information that may emerge concerning COVID-19, including the identification and spread of new variants, 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 considers the impact of COVID-19 while making the estimates within its consolidated financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates. The Russian invasion of Ukraine has not had a material impact on the Company’s business, results of operations and financial condition.
Significant Accounting Policies
The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, 2022 are consistent with those discussed in Note 2 to the consolidated financial statements in the 2021 Annual Report on Form 10-K.
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.
Government assistance
In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance to add annual disclosure requirements related to transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. The standard is effective for annual periods beginning after December 15, 2021, with
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. Marketable securities
Marketable securities consisted of the following at March 31, 2022 and December 31, 2021 (in thousands):
Amortized | Unrealized | Unrealized | Fair | |||||||||
March 31, 2022 | Cost |
| Gain | Losses | Value | |||||||
Marketable securities, available-for-sale: | ||||||||||||
U.S. government agency securities | $ | $ | — | ( | $ | | ||||||
U.S. treasury obligations | | ( | | |||||||||
Total | $ | | $ | | $ | ( | $ | |
Amortized | Unrealized | Unrealized | Fair | |||||||||
December 31, 2021 | Cost |
| Gain | Losses | Value | |||||||
Marketable securities, available-for-sale: | ||||||||||||
U.S. government agency securities | $ | | $ | | $ | ( | $ | | ||||
U.S. treasury obligations | | — | ( | | ||||||||
Total | $ | | $ | | $ | ( | $ | |
As of March 31, 2022, the Company held
As of March 31, 2022,
The Company did receive any proceeds from maturities of debt securities for the three months ended March 31, 2022 and received proceeds of $
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 March 31, 2022 (in thousands):
|
| Active |
| Observable |
| Unobservable | ||||||
March 31, | Markets | Inputs | Inputs | |||||||||
Description | 2022 | (Level 1) | (Level 2) | (Level 3) | ||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | | $ | | $ | — | $ | — | ||||
Marketable securities, available-for-sale: | ||||||||||||
U.S. government agency securities | | — | | — | ||||||||
U.S. treasury obligations | | | — | — | ||||||||
Total | $ | | $ | | $ | | $ | — |
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The following table summarizes cash equivalents and marketable securities measured at fair value on a recurring basis as of December 31, 2021 (in thousands):
|
| Active |
| Observable |
| Unobservable | ||||||
December 31, | Markets | Inputs | Inputs | |||||||||
Description | 2021 | (Level 1) | (Level 2) | (Level 3) | ||||||||
Cash equivalents: | ||||||||||||
Money market funds | $ | | $ | | $ | — | $ | — | ||||
Marketable securities, available-for-sale: | ||||||||||||
U.S. government agency securities | | — | | — | ||||||||
U.S. treasury obligations | | | — | — | ||||||||
Total | $ | | $ | | $ | | $ | — |
5. Product Revenue Reserves and Allowances
In January 2020, the U.S. Food and Drug Administration (FDA) approved AYVAKIT for the treatment of adults with unresectable or metastatic gastrointestinal stromal tumor (GIST) harboring a PDGFRA exon 18 mutation, including PDGFRA D842V mutations. In September 2020, the European Commission granted conditional marketing authorization to AYVAKYT as a monotherapy for the treatment of adult patients with unresectable or metastatic GIST harboring the PDGFRA D842V mutation. In June 2021, the FDA granted a subsequent approval for AYVAKIT, expanding the labeled indications to include adult patients with advanced systemic mastocytosis (Advanced SM), including aggressive SM (ASM), SM with an associated hematological neoplasm (SM-AHN) and mast cell leukemia (MCL). In March 2022, the European Commission expanded the marketing authorization for AYVAKYT to include the treatment of adult patients with ASM, SM-AHN, or MCL, after at least one systemic therapy.
In September 2020, the FDA granted accelerated approval of GAVRETO for the treatment of adult patients with metastatic RET fusion-positive non-small cell lung cancer (NSCLC) as detected by an FDA approved test. In December 2020, the FDA granted a subsequent accelerated approval for GAVRETO, expanding the labeled indications to include adult and pediatric patients 12 years of age and older with advanced or metastatic RET-mutant medullary thyroid cancer (MTC) who require systemic therapy, or with advanced or metastatic RET fusion-positive thyroid cancer who require systemic therapy and who are radioactive iodine-refractory (if radioactive iodine is appropriate).
The Company recorded net product revenue from the U.S. product sales of GAVRETO in 2021 until it transferred, on July 1, 2021, certain responsibilities associated with product sales to customers, pricing and distribution matters related to U.S. product sales of GAVRETO to its collaboration partner. The Company did not record any net product revenue from product sales of GAVRETO subsequent to this transition date. For additional information, see Note 9, Collaboration and License Agreements.
The following table summarizes revenue recognized from product sales for the three months ended March 31, 2022 and 2021 (in thousands):
Three Months Ended | ||||||
March 31, | ||||||
2022 |
| 2021 | ||||
AYVAKIT/AYVAKYT | $ | | $ | | ||
GAVRETO | — | | ||||
Total product revenue | $ | | $ | |
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The following table summarizes activity in each of the product revenue allowance and reserve categories for the three months ended March 31, 2022 and 2021 (in thousands):
Three Months Ended March 31 | |||||
2022 | 2021 | ||||
Beginning balance at January 1 | $ | | $ | | |
Provision related to product sales |
| | | ||
Adjustment related to prior periods sales |
| ( | — | ||
Credits and payments made |
| ( | ( | ||
Ending balance at March 31 | $ | | $ | |
The total reserves that are included in the Company’s unaudited condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, are summarized as follows (in thousands):
March 31, |
| December 31, | |||
2022 |
| 2021 | |||
Reduction of accounts receivable, net | $ | | $ | | |
Component of accrued expenses | | | |||
Total revenue-related reserves | $ | | $ | |
6. Inventory
Capitalized inventory consists of the following at March 31, 2022 and December 31, 2021 (in thousands):
March 31, | December 31, | |||||
2022 |
| 2021 | ||||
Raw materials | $ | | $ | | ||
Work in process | | | ||||
Finished goods |
| |
| | ||
Total | $ | | $ | |
Balance sheet classification
March 31, | December 31, | |||||
2022 |
| 2021 | ||||
Inventory | $ | $ | | |||
Other assets |
| |
| | ||
Total | $ | | $ | |
Inventory amounts written down as a result of excess, obsolescence, unmarketability or other reasons are charged to cost of sales. The Company did
recognize any such for the three months ended March 31, 2022 and 2021. Long-term inventory, which primarily consists of work in process and raw materials, is included in other assets in the unaudited condensed consolidated balance sheets.7. Restricted Cash
At March 31, 2022 and December 31, 2021, $
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8. Accrued Expenses
Accrued expenses consist of the following (in thousands):
March 31, | December 31, | |||||
| 2022 |
| 2021 | |||
Research, development and commercial contract costs | $ | | $ | | ||
Employee compensation | | | ||||
Accrued professional fees |
| |
| | ||
Revenue-related reserves | | | ||||
Other | | | ||||
Total | $ | | $ | |
9. Collaboration and License Agreements
Proteovant
On February 26, 2022, the Company entered into an exclusive collaboration agreement (the Proteovant collaboration agreement) with Oncopia Therapeutics, Inc., d/b/a Proteovant Therapeutics, Inc., (Proteovant), pursuant to which the parties will jointly research and advance up to two novel protein degrader therapies into development candidates, as well as up to two additional novel protein degrader target programs as may be mutually agreed to by the Company and Proteovant (each a target program). On a target program-by-target program basis, the Company will have an exclusive option to obtain a worldwide, exclusive license to develop and commercialize any licensed compound and licensed product under each target program. Proteovant will have the right to opt into the global development and U.S. commercialization of certain licensed compounds and licensed products under the second target program that the Company options, and if the parties add additional target programs, Proteovant will have the same opt-in right for the fourth target program that the Company options.
The Company paid Proteovant an upfront payment of $
The Company concluded that Proteovant is providing the Company with research services throughout the period until the Company can exercise its option to obtain a worldwide, exclusive license to develop and commercialize any licensed compound. Therefore, the Company recorded the $
Zai Lab
On November 8, 2021, the Company entered into a collaboration (the Zai Lab agreement) with Zai Lab (Shanghai) Co., Ltd., (Zai Lab), pursuant to which the Company granted Zai Lab exclusive rights to develop and commercialize the Company’s drug candidates BLU-701 and BLU-945 for the treatment of EGFR-driven non-small cell lung cancer in Greater China, including Mainland China, Hong Kong, Macau and Taiwan (collectively, the Zai Lab territory), either as a monotherapy or as part of a combination therapy. The Company retains exclusive rights to the licensed products outside the Zai Lab territory.
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Under the Zai Lab agreement, the Company received an upfront cash payment of $
Pursuant to the terms of the Zai Lab agreement, Zai Lab is responsible for conducting all development and commercialization activities in the Zai Lab territory related to the licensed drug candidates. In addition, under the Zai Lab agreement, each party has granted the other party specified intellectual property licenses to enable the other party to perform its obligations and exercise its rights under the Zai Lab agreement, including license grants to enable each party to conduct research, development and commercialization activities pursuant to the terms of the Zai Lab agreement.
The Zai Lab agreement will continue on a licensed product-by-product and region-by-region basis until the later of (i) the 12th anniversary of the date of the first commercial sale of a licensed product in the Zai Lab territory, (ii) the date of expiration of the last valid patent claim related to the Company’s patent rights of the product in the Zai Lab territory, and (iii) the expiration of the last regulatory exclusivity for that product in a region in the Zai Lab territory. Zai Lab may terminate the agreement for convenience by giving a written notice after the
The Company evaluated the Zai Lab agreement to determine whether it is a collaborative arrangement in the scope of ASC 808. The Company concluded that the Zai Lab agreement is a collaborative agreement under ASC 808 as both parties are active participants in the clinical trials and are exposed to significant risks and rewards of those activities under the Zai Lab agreement. The Company determined that the Zai Lab agreement contained
The Company evaluated the Zai Lab territory specific licenses and related activities under ASC 606 as these transactions are considered transactions with a customer and identified
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The Company evaluated the license under ASC 606 and concluded that the license is a functional intellectual property license. The Company determined that Zai Lab benefited from the license along with the initial know-how transfer at the time of grant, and therefore the related performance obligation is satisfied at a point in time. Additionally, the Company is entitled to sales milestones and royalties from Zai Lab upon future sales of the licensed products in the Zai Lab territory, and revenue will be recognized when the related sales occur. Costs that are incurred associated with Zai Lab territory specific activities are reimbursable from Zai and are recognized as revenue. During the three months ended March 31, 2022, no material revenue was recorded related to Zai Lab territory specific activities in the unaudited condensed consolidated financial statements.
For the purposes of ASC 606, the transaction price of the Zai Lab agreement as of the outset of the arrangement was determined to be $
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.
Roche – Pralsetinib Collaboration
On July 13, 2020, the Company entered into a collaboration agreement (the Roche pralsetinib 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 (as defined below), and a co-exclusive license in the U.S. to develop and commercialize pralsetinib. In addition, Roche has the right to opt in to a next-generation RET compound co-developed by the Company and Roche.
Under the Roche pralsetinib collaboration agreement, the Company received an upfront cash payment of $
In the U.S., the Company and Roche agreed to work together to co-commercialize pralsetinib and 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 Greater China (the Roche territory). The Company and Roche have also 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
Unless earlier terminated in accordance with its terms, the Roche pralsetinib 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 pralsetinib collaboration agreement for the other party’s uncured material breach or insolvency. Subject to the terms of the Roche pralsetinib 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.
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In connection with the Roche collaboration agreement, on July 13, 2020, the Company also entered into a stock purchase agreement with Roche Holdings, Inc. (Roche Holdings) pursuant to which the Company issued and sold an aggregate of
The Company considered the ASC 606 criteria for combining contracts and determined that the Roche pralsetinib collaboration agreement and stock purchase agreement should be combined into a single contract because they were negotiated and entered into in contemplation of one another. The Company accounted for the common stock issued to Roche Holdings based on the fair market value of the common stock on the dates of issuance. The fair market value of the common stock issued to Roche Holdings was $
The Company determined that the Roche pralsetinib collaboration agreement contained
The Company evaluated the Roche pralsetinib license under ASC 606 and concluded that the pralsetinib license is a functional intellectual property license and is a distinct performance obligation. The Company determined that Roche benefited from the pralsetinib license at the time of grant, and therefore the related performance obligation is satisfied at a point in time.
The Company evaluated the Roche territory activities under ASC 606 and identified
For the purposes of ASC 606, the transaction price of the Roche collaboration agreement at the outset of the arrangement was determined to be $
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to the transaction price would be recognized as revenue when it becomes probable that inclusion would not lead to a significant revenue reversal.
The following table summarizes revenue recognized under the Roche pralsetinib collaboration during the three months ended March 31, 2022 and 2021 (in thousands):
| Three Months Ended | |||||
| March 31, | |||||
| 2022 |
| 2021 | |||
Manufacturing and research and development services related to Roche territory-specific activities |
| |
| | ||
Royalty revenue | | — | ||||
Total Roche pralsetinib collaboration revenue |
| $ | |
| $ | |
For the parties’ participation in global development for pralsetinib and the U.S. commercialization activities for GAVRETO, the Company concluded that those activities and cost-sharing payments related to such activities are within the scope of ASC 808, as both parties are active participants in the development, manufacturing and commercialization activities and are exposed to significant risks and rewards of those activities under the Roche pralsetinib collaboration agreement. Payments to or reimbursements from Roche related to the global development activities are accounted for as an increase to or reduction of research and development expenses. Prior to July 1, 2021, the Company was the principal for product sales to customers in the U.S. and recognized revenues on sales to third parties in product revenue, net in its consolidated statements of operations and comprehensive loss. On July 1, 2021, Roche took over certain responsibilities associated with product sales to customers, pricing and distribution matters for GAVRETO in the U.S. and became the principal for recording product sales to customers in the U.S., and the Company recognized its portion of the commercial losses sharing as collaboration loss sharing in its consolidated statements of operations and comprehensive loss.
The following table summarizes the amount recognized from collaboration loss sharing after Roche became the principal for product sales of GAVRETO to customers in the U.S. (in thousands):
Three Months Ended | ||||||
March 31, | ||||||
2022 |
| 2021 | ||||
The Company's share of loss in the U.S. for pralsetinib | $ | | $ | — |
The following table summarizes the amounts recognized as reductions to selling, general and administrative expenses related to the commercialization of GAVRETO in the U.S., and reductions to research and development expenses related to global development activities for pralsetinib under the Roche pralsetinib collaboration during the three months ended March 31, 2022 and 2021 (in thousands):
Three Months Ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 | |||
Reductions to selling, general and administrative expenses |
| $ | | $ | | |
Reductions to research and development expenses |
| $ | | $ | |
The following table summarizes the contract assets associated with the Roche pralsetinib collaboration as of March 31, 2022 and December 31, 2021 (in thousands):
March 31, | December 31, | |||||
2022 | 2021 | |||||
Accounts receivable, net | $ | |
| $ | | |
Unbilled accounts receivable | $ | |
| $ | |
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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 $
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
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
The Company determined that the transaction price as of the outset of the arrangement was $
During the three months ended March 31, 2022, cash consideration associated with an achieved development milestone of $
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During the three months ended March 31, 2021, no material revenue was recognized from the Clementia collaboration. There was
CStone Pharmaceuticals
On June 1, 2018, the Company entered into a collaboration and license agreement (the CStone agreement) with CStone Pharmaceuticals (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 $
Pursuant to the terms of the CStone agreement, CStone is responsible for conducting all development and commercialization activities in the CStone territory related to the licensed products. Subject to specified exceptions, during the term of the CStone agreement, each party has agreed that neither it nor its affiliates will conduct specified development and commercialization activities in the CStone territory related to selective inhibitors of FGFR4, KIT, PDGFRA and RET. In addition, under the CStone agreement, each party has granted the other party specified intellectual property licenses to enable the other party to perform its obligations and exercise its rights under the CStone agreement, including license grants to enable each party to conduct research, development and commercialization activities pursuant to the terms of the CStone agreement.
The CStone agreement will continue on a licensed product-by-licensed product and CStone region-by-CStone region basis until the later of (i)
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
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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, are accounted for as a reduction of related expenses.
A summary of manufacturing and research and development services related to the global development activities, net of expenses payable to CStone during the three months ended March 31, 2022 and 2021 is as follows (in thousands):
Three Months Ended | ||||||
March 31, | ||||||
2022 |
| 2021 | ||||
Manufacturing and research and development services related to global development activities, net of expenses payable to CStone | $ | |
| $ | |
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
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
Under the CStone agreement, in order to evaluate the transaction price for purposes of ASC 606, the Company determined that the upfront amount of $
During the three months ended March 31, 2022 and 2021, cash consideration associated with achieved regulatory and development milestones of $
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the transaction price would be recognized as revenue when it becomes probable that inclusion would not lead to a significant revenue reversal.
In 2021, the Company entered into commercial supply agreements and an avapritinib manufacturing technology transfer agreement with CStone related to supply of drug substance of avapritinib and drug product of avapritinib and pralsetinib to assist CStone’s commercialization activities conducted specifically for the CStone territory. During the three months ended March 31, 2022, the Company entered into a pralsetinib manufacturing technology transfer agreement with CStone related to supply of drug substance of pralsetinib. The manufacturing activities in these agreements were considered as distinct performance obligations from the CStone collaboration agreement and collaboration revenue is recognized upon delivery of the drug substance and drug product to CStone.
A summary of revenue recognized under the CStone agreement during the three months ended March 31, 2022 and 2021 is as follows (in thousands):
Three Months Ended | ||||||
March 31, | ||||||
2022 |
| 2021 | ||||
License milestone revenue | $ | |
| $ | | |
Manufacturing services and royalty revenue related to CStone territory-specific activities | | | ||||
Total CStone collaboration revenue | $ | | $ | |
The following table presents the contract assets associated with the CStone collaboration as of March 31, 2022 and December 31, 2021 (in thousands):
March 31, | December 31, | |||||
2022 | 2021 | |||||
Accounts receivable, net | $ | |
| $ | | |
Unbilled accounts receivable | $ | |
| $ | |
As of March 31, 2022, the Company had $
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 small molecule therapeutics targeting kinases believed to be important in cancer immunotherapy (including BLU-852, a development candidate for 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 originally granted up to
Prior to Roche’s exercise of an option, the Company will have the lead responsibility for drug discovery and preclinical development of all collaboration programs. In addition, the Company will have the lead responsibility for the
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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 $
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
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)
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
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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 $
Through March 31, 2022, the Company has achieved an aggregate of $
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. During the three months ended March 31, 2022, a reduction in the costs expected to be incurred in the future to satisfy certain performance obligations under the collaboration became probable as a result of Roche and the Company endorsing the Phase 1 clinical development plan for one of the ongoing programs in combination with Roche’s product.
Because of the revision to the cost expected to be incurred to satisfy the performance obligation and the reduction of the $
Three Months Ended | ||||||
March 31, | ||||||
2022 |
| 2021 | ||||
Roche collaboration research and development services revenue | $ | ( |
| $ | |
During the three months ended March 31, 2022 and 2021, the Company recognized the following revenue due to the changes in the contract liability balances (in thousands):
Three Months Ended | ||||||
March 31, | ||||||
2022 |
| 2021 | ||||
Amounts included in the contract liability at the beginning of the period | $ | |
| $ | |
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