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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 March 31, 2024

OR

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)

(617374-7580

(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 April 30, 2024: 62,616,902

TABLE OF CONTENTS

Page

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

4

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

4

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2024 and 2023

5

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023

6

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 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

50

Item 4. Controls and Procedures

51

Part II – OTHER INFORMATION

Item 1. Legal Proceedings

51

Item 1A. Risk Factors

51

Item 5. Other Information

102

Item 6. Exhibits

103

Signatures

103

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 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 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;
our expectations concerning the process with F. Hoffmann-La Roche Ltd and Genentech, Inc. for transitioning U.S. GAVRETO assets to Rigel Pharmaceuticals, Inc. (Rigel);
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;

2

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

3

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

    

2024

    

2023

Assets

Current assets:

Cash and cash equivalents

$

113,326

$

71,286

Marketable securities

534,575

639,355

Accounts receivable

60,047

42,827

Inventory

30,940

21,223

Prepaid expenses and other current assets

 

37,714

 

33,702

Total current assets

 

776,602

 

808,393

Marketable securities

 

87,703

56,530

Property and equipment, net

41,947

 

41,959

Operating lease right-of-use assets, net

71,222

73,691

Restricted cash

 

10,634

 

10,238

Equity investment

27,789

27,789

Other assets

 

22,578

 

30,650

Total assets

$

1,038,475

$

1,049,250

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

4,926

4,710

Accrued expenses

 

107,277

 

127,992

Current portion of operating lease liabilities

12,240

11,933

Current portion of deferred revenue

7,251

812

Current portion of liabilities related to the sale of future royalties and revenues

44,729

39,198

Current portion of term loan

30,180

30,278

Total current liabilities

 

206,603

 

214,923

Operating lease liabilities, net of current portion

78,489

81,751

Deferred revenue, net of current portion

4,635

4,792

Liabilities related to the sale of future royalties and revenues, net of current portion

223,090

402,427

Term loan, net of current portion

209,205

208,535

Other long-term liabilities

5,766

6,213

Total liabilities

727,788

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; 62,594,247 and 61,147,236 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

 

63

 

61

Additional paid-in capital

 

2,565,277

 

2,473,985

Accumulated other comprehensive loss

(3,847)

(3,495)

Accumulated deficit

 

(2,250,806)

 

(2,339,942)

Total stockholders’ equity

 

310,687

 

130,609

Total liabilities and stockholders’ equity

$

1,038,475

$

1,049,250

See accompanying notes to the unaudited condensed consolidated financial statements.

4

Blueprint Medicines Corporation

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share data)

(Unaudited)

Three Months Ended

March 31, 

2024

    

2023

Revenues:

Product revenue, net

$

92,525

$

39,069

Collaboration and license revenue

3,591

24,218

Total revenues

96,116

63,287

Cost and operating expenses:

Cost of sales

3,191

3,175

Collaboration loss sharing

1,296

Research and development

88,191

112,073

Selling, general and administrative

 

83,557

 

70,950

Total cost and operating expenses

 

174,939

 

187,494

Other income (expense):

Interest expense, net

 

(5,895)

 

(5,819)

Other income, net

 

376

 

986

Debt extinguishment gain

173,658

Total other income (expense), net

 

168,139

 

(4,833)

Income (loss) before income taxes

89,316

(129,040)

Income tax expense

180

520

Net income (loss)

$

89,136

$

(129,560)

Other comprehensive loss:

Unrealized gains (losses) on available-for-sale investments

(564)

5,819

Currency translation adjustments

212

22

Comprehensive income (loss)

$

88,784

$

(123,719)

Net income (loss) per share - basic

$

1.45

$

(2.15)

Net income (loss) per share - diluted

1.40

(2.15)

Weighted-average number of common shares used in net income (loss) per share - basic

61,580

60,126

Weighted-average number of common shares used in net income (loss) per share - diluted

 

63,802

 

60,126

See accompanying notes to the unaudited condensed consolidated financial statements.

5

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

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

See accompanying notes to the unaudited condensed consolidated financial statements.

6

Blueprint Medicines Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Three Months Ended

March 31, 

    

2024

    

2023

Cash flows from operating activities

Net income (loss)

$

89,136

$

(129,560)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

 

4,810

3,684

Non-cash lease expense

 

2,404

2,202

Stock-based compensation

24,225

23,196

Non-cash interest expense

793

4,635

Net (accretion of discount) amortization of premium on investments

(5,193)

(2,380)

Non-cash debt extinguishment gain

(173,658)

Other

(827)

1,683

Changes in assets and liabilities:

 

Accounts receivable

(17,339)

(4,949)

Inventory

2,696

78

Prepaid expenses and other current assets

1,016

15,640

Other assets

 

(4,332)

(417)

Accounts payable

 

313

7,806

Accrued expenses

(25,826)

(23,686)

Other long-term liabilities

(7,238)

Deferred revenue

 

3,158

(11,099)

Operating lease liabilities

(2,889)

(2,556)

Net cash used in operating activities

 

(101,513)

(122,961)

Cash flows from investing activities

 

Purchases of property and equipment

(1,104)

(2,584)

Purchases of investments

(200,165)

(132,875)

Maturities of investments

278,400

308,250

Net cash provided by investing activities

 

77,131

172,791

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

 

18,396

Principal payments for financing arrangements

(369)

Net cash provided by financing activities

 

66,963

Net increase in cash, cash equivalents, and restricted cash

42,581

49,830

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

(145)

197

Cash, cash equivalents and restricted cash at end of period

$

123,960

$

174,931

Supplemental cash flow information

Cash paid for interest

$

14,280

$

7,084

Property and equipment purchases unpaid at period end

$

1,834

$

Cash paid for taxes, net

$

520

$

311

See accompanying notes to the unaudited condensed consolidated financial statements.

7

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 board 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 March 31, 2024, the Company had cash, cash equivalents and marketable securities of $735.6 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 March 31, 2024, the results of its operations for the three months ended March 31, 2024 and 2023, stockholder’s equity for the three months ended March 31, 2024 and 2023 and cash flows for three months ended March 31, 2024 and 2023. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 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.

8

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 months ended March 31, 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.

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. 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.

Reclassification

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

 

 

 

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

9

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 March 31, 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 three months ended March 31, 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 March 31, 2024, the net carrying value of liability related to these agreements was $0.9 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 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

10

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 March 31, 2024, the Company’s estimate of this total interest expense resulted in an effective annual interest rate of 10.8%. These estimates contain assumptions that impact the amount recorded and the interest expense that will be recognized in future periods.

As of March 31, 2024, the net carrying value of the liability related to this arrangement was $266.9 million. The following table shows the activity within the liability account (in thousands):

Three Months Ended March 31, 

   

2024

   

2023

Beginning Balance at January 1

$

266,670

$

254,328

Interest expense recognized

7,096

7,089

Payments

(6,875)

(2,883)

Carrying value as of March 31

$

266,891

$

258,534

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.

As part of the Financing Agreement with Sixth Street Partners, the Company received gross proceeds of $150.0 million in July 2022 and incurred an aggregate of $12.2 million of debt discounts and transaction costs. In August 2023, the Company received the first tranche of the senior secured delayed draw term loan facility in the amount of $100.0 million in gross proceeds and incurred $2.1 million of transaction costs. 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 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 March 31, 2024, the Company’s estimate of the total interest expense resulted in an effective annual interest rate of 13.2%. The carrying amount of the debt as of March 31, 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):

Three Months Ended March 31, 

   

2024

   

2023

Beginning Balance at January 1

$

238,813

$

139,083

Interest expense recognized

7,977

4,630

Payments

(7,405)

(4,201)

Carrying value as of March 31

$

239,385

$

139,512

 

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

11

indebtedness. The Financing Agreement also requires the Company to maintain a consolidated liquidity of at least (i) $50.0 million during the period commencing from the date on which the term loans are funded to the date which is the day before the next term loans are funded and (ii) $80.0 million for each day thereafter. As of March 31, 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 March 31, 2024 and December 31, 2023 (in thousands):

    

Amortized

    

Unrealized

    

Unrealized

    

Fair

March 31, 2024

Cost

 

Gain

Losses

Value

Marketable securities, available-for-sale:

U.S. government agency securities 

$

120,099

$

4

$

(343)

$

119,760

U.S. treasury obligations

502,933

93

(508)

502,518

Total

$

623,032

$

97

$

(851)

$

622,278

    

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

 

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 March 31, 2024 and December 31, 2023 (in thousands):

    

March 31, 2024

    

December 31, 2023

    

Amortized

    

Fair

    

Amortized

    

Fair

    

Cost

    

value

    

Cost

    

value

Within one year

    

$

535,195

    

$

534,575

    

$

639,881

    

$

639,355

After one through five years

    

87,837

    

87,703

    

56,193

    

56,530

Total

    

$

623,032

    

$

622,278

    

$

696,074

    

$

695,885

 

As of March 31, 2024 and December 31, 2023, the Company held 84 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 March 31, 2024 and December 31, 2023 by the length of time the security has been in loss position (in thousands):

March 31, 2024

    

December 31, 2023

Fair

  

Unrealized

  

Fair

  

Unrealized

value

losses

value

losses

Debt securities in unrealized loss position for 12 months or less

$

439,535

$

(690)

$

267,917

    

$

(550)

Debt securities in unrealized loss position for more than 12 months

54,782

(161)

64,659

    

(254)

Total debt securities

$

494,317

$

(851)

$

332,576

    

$

(804)

 

The Company has the intent and ability to hold its debt securities until recovery of amortized cost basis. As a result, the Company did not recognize any differences between the fair value and amortized cost basis as a loss in its condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2024 and 2023. The Company did not record any credit-related impairments for its available-for-sale securities for the three months ended March 31, 2024 and 2023.

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The following table summarizes the proceeds from maturities of debt securities during the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31, 

2024

   

2023

Proceeds from maturities of debt securities

$

278,400

$

308,250

 

The Company did not realize any gains or losses from maturities of debt securities for the three months ended March 31, 2024 and 2023.

5. Fair Value of Financial Instruments

The following table summarizes the Company’s cash equivalents and marketable securities measured at fair value on a recurring basis as of March 31, 2024 (in thousands):

    

    

Active

    

Observable

    

Unobservable

March 31, 

Markets

Inputs

Inputs

Description

2024

(Level 1)

(Level 2)

(Level 3)

Cash equivalents:

Money market funds

$

100,072

$

100,072

$

$

Marketable securities, available-for-sale:

U.S. government agency securities 

119,760

119,760

U.S. treasury obligations

502,518

502,518

Total

$

722,350

$

602,590

$

119,760

$

The following table summarizes the Company’s cash equivalents and marketable securities measured at fair value on a recurring basis as of December 31, 2023 (in thousands):

    

    

Active

    

Observable

    

Unobservable

December 31, 

Markets

Inputs

Inputs

Description

2023

(Level 1)

(Level 2)

(Level 3)

Cash equivalents:

Money market funds

$

55,412

$

55,412

$

$

Marketable securities, available-for-sale:

U.S. government agency securities 

169,803

169,803

U.S. treasury obligations

526,082

526,082

Total

$

751,297

$

581,494

$

169,803

$

 

 

 

 

6. Product Revenue

The Company generates product revenue from the sales of AYVAKIT/AYVAKYT in the U.S. and Europe. The following table summarizes net revenue recognized from product sales for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended

March 31, 

2024

 

2023

United States

$

83,136

$

34,927

Rest of World

9,389

4,142

Total product revenue

$

92,525

$

39,069

 

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The Company primarily sells AYVAKIT/AYVAKYT through specialty distributors and specialty pharmacies. The following table summarizes the customers that represent 10% or greater of gross product revenue for the three months ended March 31, 2024, and 2023 (in thousands):

Three Months Ended March 31, 

2024

2023

Customer 1

39

%

44

%

Customer 2

*

%

10

%

 

The following table summarizes the customers with amounts due that represent 10% or greater of the accounts receivable associated with the Company’s product sales as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 

December 31, 

2024

2023

Customer 1

35

%

34

%

Customer 2

11

%

11

%

Customer 3

10

%

10

%

Customer 4

*

%

10

%

 

* Indicates the customer’s share is under 10%.

 

 

The following table summarizes activity in each of the product revenue allowance and reserve categories for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31, 

2024

2023

Beginning balance at January 1

$

19,274

$

9,788

Provision related to sales in the current period

 

16,926

8,502

Adjustment related to prior periods sales

 

(309)

(228)

Credits and payments made

 

(12,488)

(4,773)

Ending balance at March 31

$

23,403

$

13,289

 

The total reserves that are included in the Company’s unaudited condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, are summarized as follows (in thousands):

March 31, 

December 31, 

2024

2023

Reduction of accounts receivable, net

$

2,640

$

1,809

Component of accrued expenses

20,763

17,465

Total revenue-related reserves

$

23,403

$

19,274

 

 

 

7. Inventory

Capitalized inventory consists of the following at March 31, 2024 and December 31, 2023 (in thousands):

March 31, 

December 31, 

2024

    

2023

Raw materials

$

3,069

$

3,147

Work in process

30,777

29,132

Finished goods

 

3,001

 

4,823

Total

$

36,847

$

37,102

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Balance sheet classification

March 31, 

December 31, 

2024

    

2023

Inventory

$

30,940

$

21,223

Other assets

 

5,907

 

15,879

Total

$

36,847

$

37,102

 

Inventory amounts written down as a result of excess, obsolescence, unmarketability or other reasons are charged to cost of sales. The Company recognized an insignificant write-down and write-down of $1.5 million for the three months ended March 31, 2024 and 2023, respectively. Long-term inventory, which consists of work in process, is included in other assets in the unaudited condensed consolidated balance sheets.

8. Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company's condensed consolidated balance sheets for the three months ended March 31, 2024 and 2023 (in thousands):