0000950170-21-003566 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2021	Nov. 04, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Trading Symbol	EPZM
Security Exchange Name	NASDAQ
Title of 12(b) Security	Common stock, $0.0001 par value
Entity Registrant Name	EPIZYME, INC.
Entity Central Index Key	0001571498
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Document Quarterly Report	true
Document Transition Report	false
Entity Common Stock Shares Outstanding		103,895,022
Entity Shell Company	false
Entity File Number	001-35945
Entity Tax Identification Number	26-1349956
Entity Address, Address Line One	400 Technology Square, 4th Floor
Entity Address, City or Town	Cambridge
Entity Address, State or Province	MA
Entity Incorporation, State or Country Code	DE
Entity Address, Postal Zip Code	02139
City Area Code	617
Local Phone Number	229-5872

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 124,517	$ 168,215
Marketable securities	96,776	205,391
Accounts receivable, net	3,332	3,105
Inventory	1,521	10,461
Prepaid expenses and other current assets	21,455	17,921
Total current assets	247,601	405,093
Property and equipment, net	1,739	2,152
Operating lease assets	21,141	17,305
Intangible assets, net	43,887	47,002
Restricted cash and other assets	17,903	2,021
Total assets	332,271	473,573
Current liabilities:
Accounts payable	9,862	10,163
Accrued expenses	30,922	28,572
Current portion of operating lease obligation	3,951	4,665
Total current liabilities	44,735	43,400
Operating lease obligation, net of current portion	19,741	15,409
Related party long-term debt, net of debt discount	216,254	215,670
Other long-term liabilities	0	21
Deferred revenue	11,950	0
Related party liability related to sale of future royalties	15,581	14,176
Warrants to purchase common stock	8,630	0
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized; 338 shares issued and outstanding (equivalent to 3,378 shares of common stock upon conversion at a 10:1 ratio)	36,127	36,127
Common stock, $0.0001 par value; 225,000 shares and 150,000 shares authorized, respectively; 103,662 shares and 101,627 shares issued and outstanding, respectively	10	10
Additional paid-in capital	1,168,430	1,137,470
Accumulated other comprehensive income (loss)	(3)	3
Accumulated deficit	(1,189,184)	(988,713)
Total stockholders’ equity	15,380	184,897
Total liabilities and stockholders’ equity	$ 332,271	$ 473,573

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands	Sep. 30, 2021	Dec. 31, 2020
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued	338	338
Preferred stock, shares outstanding	338	338
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	225,000	150,000
Common stock, shares issued	103,662	101,627
Common stock, shares outstanding	103,662	101,627
Common stock conversion ratio	10.00%	10.00%
Common stock upon conversion	3,378	3,378

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenue:
Total revenue	$ 5,201	$ 3,566	$ 25,844	$ 7,387
Operating expenses:
Cost of revenue	1,999	1,608	7,345	3,244
Research and development	34,549	25,738	102,110	77,253
Selling, general and administrative	32,793	30,575	103,095	90,161
Total operating expenses	69,341	57,921	212,550	170,658
Operating loss	(64,140)	(54,355)	(186,706)	(163,271)
Other (expense) income, net:
Interest expense , net	(5,645)	(1,364)	(16,703)	(1,177)
Other expense, net	(24)	(42)	(70)	(105)
Change in fair value of warrants to purchase common stock	4,420		4,420
Related party non-cash interest expense related to sale of future royalties	(445)	(312)	(1,412)	(908)
Other expense, net	(1,694)	(1,718)	(13,765)	(2,190)
Net loss	(65,834)	(56,073)	(200,471)	(165,461)
Other comprehensive income (loss):
Unrealized (loss) gain on available-for-sale securities	(1)	(340)	(6)	101
Comprehensive loss	$ (65,835)	$ (56,413)	$ (200,477)	$ (165,360)
Net loss per share attributable to common stockholders:
Basic	$ (0.64)	$ (0.55)	$ (1.96)	$ (1.64)
Diluted	$ (0.64)	$ (0.55)	$ (1.96)	$ (1.64)
Weighted-average common shares outstanding used in net loss per share attributable to common stockholders:
Basic	102,513	101,512	102,123	100,747
Diluted	102,513	101,512	102,123	100,747
Product [Member]
Revenue:
Total revenue	$ 5,186	$ 3,445	$ 19,364	$ 6,963
Collaboration and Other Revenue [Member]
Revenue:
Collaboration and other revenue	$ 15	$ 121	$ 6,480	$ 424

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (200,471)	$ (165,461)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,915	2,674
Share-based compensation expense	19,903	21,188
Amortization of discount (premium) on investments	923	(262)
Amortization of debt discount	584	260
Change in fair value of warrant liability	(4,420)
Loss on disposal of property and equipment		19
Non-cash interest expense associated with the sale of future royalties	1,412	908
Changes in operating assets and liabilities:
Accounts receivable	(227)	(2,044)
Inventory, current and noncurrent	(6,483)	(8,157)
Prepaid expenses and other current assets	(3,267)	(2,987)
Accounts payable	(308)	(1,296)
Accrued expenses	2,300	263
Deferred revenue	11,950	7
Operating lease assets	(3,836)	2,791
Operating lease liabilities	3,618	(1,099)
Other assets and liabilities	(480)	(25)
Net cash used in operating activities	(174,887)	(153,221)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities	(203,895)	(156,938)
Maturities of available-for-sale securities	311,581	212,421
Purchase of intangible asset		(50,000)
Purchases of property and equipment	(387)	(594)
Net cash (used in) provided by investing activities	107,299	4,889
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of shares under employee stock purchase plan	8,261
Payment of offering costs	(217)	(79)
Proceeds from the issuance of debt		45,000
Proceeds from Issuance of Warrants	13,050
Payment of debt issuance costs		(93)
Proceeds from the issuance of common stock in connection with the exercise of the Put Option, net of financing costs		49,915
Proceeds from stock options exercised	916	6,275
Proceeds from the issuance of shares under employee stock purchase plan	1,880	1,254
Net cash provided by financing activities	23,890	102,272
Net decrease in cash, cash equivalents and restricted cash	(43,698)	(46,060)
Cash, cash equivalents and restricted cash, beginning of period	169,724	140,991
Cash, cash equivalents and restricted cash, end of period	126,026	94,931
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	16,266	3,635
Unpaid offering costs	50
Property and equipment included in accounts payable or accruals		$ 42

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Put Option [Member]	Common Stock [Member]	Common Stock [Member] Put Option [Member]	Common Stock [Member] Series A Convertible Preferred Stock [Member]	Preferred Stock [Member]	Preferred Stock [Member] Series A Convertible Preferred Stock [Member]	Additional Paid-In Capital [Member]	Additional Paid-In Capital [Member] Put Option [Member]	Additional Paid-In Capital [Member] Series A Convertible Preferred Stock [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]
Beginning Balance, Value at Dec. 31, 2019	$ 331,137		$ 10			$ 37,432		$ 1,050,695			$ (757,019)	$ 19
Beginning Balance, Shares at Dec. 31, 2019			97,783,476			350,000
Issuance of common stock, Value		$ 49,915							$ 49,915
Issuance of common stock, Shares				2,500,000
Issuance of Series A Convertible Preferred Stock, net of commissions and beneficial conversion charge, Value							$ (1,305)			$ 1,305
Issuance of Series A Convertible Preferred Stock, net of commissions and beneficial conversion charge, Shares					122,000		(12,200)
Exercise of stock options and vesting of restricted stock units, Value	3,140							3,140
Exercise of stock options and vesting of restricted stock units, Shares			579,919
Stock-based compensation	6,475							6,475
Issuance of shares under employee stock purchase plan, Value	646							646
Issuance of shares under employee stock purchase plan, Shares			60,576
Issuance of shares of common stock in lieu of board fees	35							35
Issuance of shares of common stock in lieu of board fees, Shares			1,404
Unrealized (loss) gain on available-for-sale securities	(94)											(94)
Net loss	(50,937)										(50,937)
Ending Balance, Value at Mar. 31, 2020	340,317		$ 10			$ 36,127		1,112,211			(807,956)	(75)
Ending Balance, Shares at Mar. 31, 2020			101,047,375			337,800
Beginning Balance, Value at Dec. 31, 2019	331,137		$ 10			$ 37,432		1,050,695			(757,019)	19
Beginning Balance, Shares at Dec. 31, 2019			97,783,476			350,000
Unrealized (loss) gain on available-for-sale securities	101
Net loss	(165,461)
Ending Balance, Value at Sep. 30, 2020	244,409		$ 10			$ 36,127		1,130,632			(922,480)	120
Ending Balance, Shares at Sep. 30, 2020			101,576,378			337,800
Beginning Balance, Value at Mar. 31, 2020	340,317		$ 10			$ 36,127		1,112,211			(807,956)	(75)
Beginning Balance, Shares at Mar. 31, 2020			101,047,375			337,800
Exercise of stock options and vesting of restricted stock units, Value	2,670							2,670
Exercise of stock options and vesting of restricted stock units, Shares			414,150
Stock-based compensation	8,257							8,257
Issuance of shares of common stock in lieu of board fees	35							35
Issuance of shares of common stock in lieu of board fees, Shares			2,229
Unrealized (loss) gain on available-for-sale securities	535											535
Net loss	(58,451)										(58,451)
Ending Balance, Value at Jun. 30, 2020	293,363		$ 10			$ 36,127		1,123,173			(866,407)	460
Ending Balance, Shares at Jun. 30, 2020			101,463,754			337,800
Exercise of stock options and vesting of restricted stock units, Value	465							465
Exercise of stock options and vesting of restricted stock units, Shares			55,417
Stock-based compensation	6,352							6,352
Issuance of shares under employee stock purchase plan, Value	608							608
Issuance of shares under employee stock purchase plan, Shares			55,055
Issuance of shares of common stock in lieu of board fees	34							34
Issuance of shares of common stock in lieu of board fees, Shares			2,152
Unrealized (loss) gain on available-for-sale securities	(340)											(340)
Net loss	(56,073)										(56,073)
Ending Balance, Value at Sep. 30, 2020	244,409		$ 10			$ 36,127		1,130,632			(922,480)	120
Ending Balance, Shares at Sep. 30, 2020			101,576,378			337,800
Beginning Balance, Value at Dec. 31, 2020	184,897		$ 10			$ 36,127		1,137,470			(988,713)	3
Beginning Balance, Shares at Dec. 31, 2020			101,627,070			337,800
Exercise of stock options and vesting of restricted stock units, Value	199							199
Exercise of stock options and vesting of restricted stock units, Shares			188,000
Stock-based compensation	6,943							6,943
Issuance of shares under employee stock purchase plan, Value	1,191							1,191
Issuance of shares under employee stock purchase plan, Shares			146,049
Issuance of shares of common stock in lieu of board fees	72							72
Issuance of shares of common stock in lieu of board fees, Shares			7,632
Unrealized (loss) gain on available-for-sale securities	3											3
Net loss	(70,274)										(70,274)
Ending Balance, Value at Mar. 31, 2021	123,031		$ 10			$ 36,127		1,145,875			(1,058,987)	6
Ending Balance, Shares at Mar. 31, 2021			101,968,751			337,800
Beginning Balance, Value at Dec. 31, 2020	184,897		$ 10			$ 36,127		1,137,470			(988,713)	3
Beginning Balance, Shares at Dec. 31, 2020			101,627,070			337,800
Unrealized (loss) gain on available-for-sale securities	(6)
Net loss	(200,471)
Ending Balance, Value at Sep. 30, 2021	15,380		$ 10			$ 36,127		1,168,430			(1,189,184)	(3)
Ending Balance, Shares at Sep. 30, 2021			103,661,881			337,800
Beginning Balance, Value at Mar. 31, 2021	123,031		$ 10			$ 36,127		1,145,875			(1,058,987)	6
Beginning Balance, Shares at Mar. 31, 2021			101,968,751			337,800
Issuance of common stock, Value	1,534							1,534
Issuance of common stock, Shares			182,866
Exercise of stock options and vesting of restricted stock units, Value	717							717
Exercise of stock options and vesting of restricted stock units, Shares			93,237
Stock-based compensation	6,679							6,679
Issuance of shares of common stock in lieu of board fees	39							39
Issuance of shares of common stock in lieu of board fees, Shares			4,663
Unrealized (loss) gain on available-for-sale securities	(8)											(8)
Net loss	(64,363)										(64,363)
Ending Balance, Value at Jun. 30, 2021	67,629		$ 10			$ 36,127		1,154,844			(1,123,350)	(2)
Ending Balance, Shares at Jun. 30, 2021			102,249,517			337,800
Issuance of common stock, Value	6,727							6,727
Issuance of common stock, Shares			1,247,599
Stock-based compensation	6,132							6,132
Issuance of shares under employee stock purchase plan, Value	689							689
Issuance of shares under employee stock purchase plan, Shares			157,195
Issuance of shares of common stock in lieu of board fees	38							38
Issuance of shares of common stock in lieu of board fees, Shares			7,570
Unrealized (loss) gain on available-for-sale securities	(1)											(1)
Net loss	(65,834)										(65,834)
Ending Balance, Value at Sep. 30, 2021	$ 15,380		$ 10			$ 36,127		$ 1,168,430			$ (1,189,184)	$ (3)
Ending Balance, Shares at Sep. 30, 2021			103,661,881			337,800

Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2020
Commissions And Offering Costs	$ 217	$ 49
Put Option [Member]
Financing Cost			$ 85

The Company

9 Months Ended

Sep. 30, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

The Company

1. The Company

Epizyme, Inc. (collectively referred to with its wholly owned, controlled subsidiary, Epizyme Securities Corporation, as “Epizyme” or the “Company”) is a commercial-stage biopharmaceutical company that is committed to rewriting treatment for people with cancer through the discovery, development, and commercialization of novel epigenetic medicines. The Company aspires to change the standard of care for patients and physicians by developing targeted medicines with fundamentally new mechanisms of action directed at specific causes of hematological malignancies and solid tumors.

Through September 30, 2021, in addition to revenues from product sales, the Company has raised an aggregate of $1,560.6 million to fund its operations. This includes $268.8 million of non-equity funding through its collaboration agreements, $368.1 million of funding, consisting of $150.0 million in equity funding received through agreements with RPI Finance Trust, or RPI, and $218.1 million in debt financing received through a loan agreement with BioPharma Credit Investments V (Master) LP and BPCR Limited Partnership (as transferee of BioPharma Credit Investments V (Master) LP’s interest as a lender) (the "Lenders"), $847.7 million from the sale of common stock and series A convertible preferred stock in the Company’s public offerings and at-the-market offerings and $76.0 million from the sale of redeemable convertible preferred stock in private financings prior to the Company’s initial public offering in May 2013. As of September 30, 2021, the Company had $221.3 million in cash, cash equivalents and marketable securities.

In 2020, the Company’s EZH2 inhibitor, tazemetostat, was approved in the United States as TAZVERIK for the treatment of epithelioid sarcoma, or ES, and follicular lymphoma, or FL. Commercial sales of TAZVERIK for the treatment of ES commenced in the first quarter of 2020 and commercial sales of TAZVERIK for the treatment of FL commenced near the end of the second quarter of 2020.

The Company commenced active operations in early 2008. Since its inception, the Company has generated an accumulated deficit of $1,189.2 million through September 30, 2021 and will require substantial additional capital to fund its research, development, and commercialization efforts. The Company is subject to risks common to companies in the biotechnology industry, including, but not limited to, risks of failure of commercialization, clinical trials and preclinical studies, the need to obtain additional financing to fund the future development and commercialization of tazemetostat and the rest of its pipeline, the need to obtain marketing approval for its product candidates, the need to successfully commercialize and gain market acceptance of TAZVERIK and of any product candidates that may be approved in the future, the impact of the COVID-19 pandemic on the Company’s business, results of operations, and financial condition, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations and ability to transition from clinical-stage manufacturing to commercial-stage production, marketing, and sale of products.

Operating Cost Reduction

On August 9, 2021, the Company announced a cross-functional reduction of approximately 11% of its then current workforce under a cost reduction plan. Affected employees were offered separation benefits, including severance payments along with temporary healthcare coverage assistance. The severance and termination-related costs total approximately $2.0 million, $1.6 million of which were recorded as selling general and administrative expenses and $0.4 million of which was recorded as research and development expenses in the third quarter of 2021. The Company expects that payments of these costs will be made through August 2022.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The condensed consolidated financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, or the Annual Report.

The unaudited condensed consolidated financial statements include the accounts of Epizyme, Inc. and its wholly owned, controlled subsidiary, Epizyme Securities Corporation. All intercompany transactions and balances of subsidiaries have been eliminated in consolidation. In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and

recurring nature, necessary for a fair presentation of the results for the reported interim periods. The Company considers events or transactions that occur after the balance sheet date but before the condensed consolidated financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The three months ended September 30, 2021 and 2020 are referred to as the third quarter of 2021 and 2020, respectively. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

Use of Estimates

The preparation of these condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, as of the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results and outcomes may differ materially from management’s estimates, judgments and assumptions.

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and nine months ended September 30, 2021 are consistent with those discussed in Note 2 to the consolidated financial statements in the Annual Report and are updated below as necessary.

Going Concern

At each reporting period, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company is required to make certain additional disclosures if it concludes substantial doubt exists about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued and such doubt is not alleviated by the Company’s plans or when the Company's plans alleviate substantial doubt about the Company’s ability to continue as a going concern. The Company’s evaluation entails analyzing prospective operating budgets and forecasts for expectations of the Company’s cash needs, and comparing those needs to its available cash, cash equivalents and marketable securities.

The Company has recurring losses and expects to have recurring losses for the foreseeable future with the continued commercialization of TAZVERIK in ES and FL, the development of tazemetostat in other indications, and the development of the Company’s other product candidates. In addition, the Company has experienced and continues to experience challenges in the continued commercialization of TAZVERIK resulting from the ongoing COVID-19 pandemic, which the Company believes has had an adverse impact on TAZVERIK revenues. In response to the challenges that the Company has continued to face since the Company commenced its launch of TAZVERIK in FL in June 2020, the Company implemented an operational cost reduction plan that was announced on August 9, 2021 and continues to evaluate its costs on an on-going basis with the intent to streamline such costs.

The analysis of the Company’s ability to continue as a going concern for the third quarter of 2021 included consideration of the Company’s current cash needs, including its research and development plans, commercialization activities associated with the continued commercialization of TAZVERIK in the ES and FL indications, its existing debt service obligations, anticipated cost savings resulting from the August 2021 operational cost reduction plan, including ongoing efforts to eliminate costs not related to the Company’s strategic focus. The analysis included forecasted product revenues from sales of TAZVERIK. Such estimates of future sales contain significant judgment as TAZVERIK was first launched in the first half of 2020 and there is little history with which to base such estimates. In addition, the Company’s ongoing efforts to eliminate costs not related to the Company’s strategic focus contains uncertainties as to whether the Company can attain such benefits. Based on the analysis, the Company concluded that its available cash, cash equivalents and marketable securities as of September 30, 2021 will be sufficient to fund current planned operations and capital expenditure requirements and pay our debt service obligations as they become due into the fourth quarter of 2022 which is at least 12 months from the filing date of this Quarterly Report on Form 10-Q with the SEC. The Company’s current operating plan is based on assumptions that may prove to be wrong, and the Company could use its capital resources sooner than it expects, in which case the Company would evaluate further reductions in its expenses or obtaining additional financing sooner than it otherwise would, which additional financing may not be available or may only be available on terms that are not acceptable to the Company.

Recently Adopted Accounting Pronouncements

Revenue Recognition – Collaboration Revenue

In November 2018, the FASB, issued ASU 2018-18, Collaborative Arrangements, or ASC 808, which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. The new standard is effective in the first quarter of fiscal 2021.

The Company adopted ASC 808 effective in the first quarter of fiscal 2021 and the Company’s adoption of this standard did not have a material effect on the Company’s condensed consolidated statements of operations and comprehensive loss or condensed consolidated statements of cash flows.

Income Taxes

In December 2019, the Financial Accounting Standards Board, or the FASB, issued ASU 2019-12, Income Taxes, or ASC 740, which simplifies the accounting for income taxes. The new standard is effective in the first quarter of fiscal 2021.

The Company adopted ASC 740 effective in the first quarter of fiscal 2021 and the Company’s adoption of this standard did not have a material effect on the Company’s condensed consolidated statements of operations and comprehensive loss or condensed consolidated statements of cash flows.

Revenue Recognition

The Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. For a further discussion of accounting for net product revenue see Note 3, Product Revenue, Net.

Other Revenue

Other revenue consists of revenue from the sales of tazemetostat active pharmaceutical ingredient (API) and drug product to the Company’s licensees or collaborators. The Company recognizes revenue on tazemetostat API and drug product when control has transferred under the terms of each agreement.

Cost of Revenues

Cost of revenues primarily consists of costs related to the sales of TAZVERIK and sales of tazemetostat API and drug product to the Company’s licensees or collaborators. These costs include materials, labor, manufacturing overhead, amortization of milestone payments, and royalties payable on net sales of TAZVERIK. Cost of revenues for the nine months ended September 30, 2021 included approximately $0.8 million related to sales of tazemetostat drug product. There were no sales of tazemetostat drug product during the three months ended September 30, 2021 or during the three and nine months ended September 30, 2020.

Accounts Receivable

The Company extends credit to customers based on its evaluation of the customer’s financial condition. The Company records receivables for all billings when amounts are due under standard terms. Accounts receivable are stated at amounts due net of applicable prompt pay discounts and other contractual adjustments as well as an allowance for doubtful accounts. The Company assesses the need for an allowance for doubtful accounts by considering a number of factors, including the length of time trade accounts receivable are past due, the customer’s ability to pay its obligation and the condition of the general economy and the industry as a whole. The Company will write off accounts receivable when the Company determines that they are uncollectible. In general, the Company has experienced no significant collection issues with its customers.

Inventory

The Company outsources the manufacturing of TAZVERIK and uses contract manufacturers to produce the raw and intermediate materials used in the production of TAZVERIK as well as the finished product. The Company currently has one supplier qualified for each step in the manufacturing process and is in the process of qualifying additional suppliers.

Inventory is composed of raw materials, intermediate materials, which are classified as work-in-process, and finished goods, which are goods that are available for sale. The Company states inventory at the lower of cost or net realizable value with the cost based on the first-in, first-out method. Inventory is classified as long-term when it is expected to be utilized beyond the Company’s normal operating cycle and is included in restricted cash and other assets on the Company's condensed consolidated balance sheets. If the Company identifies excess, obsolete or unsalable items, it writes down its inventory to its net realizable value in the period in which the impairment is identified. These adjustments are recorded based upon various factors related to the product, including the level of product manufactured by the Company, the level of product in the distribution channel, current and projected demand, the expected shelf-life of the product and firm inventory purchase commitments. Shipping and handling costs incurred for inventory purchases are included in inventory costs and costs incurred for product shipments are recorded as incurred in cost of revenue.

Prior to receiving its first approval from the U.S. Food and Drug Administration, or FDA, on January 23, 2020 to sell TAZVERIK, the Company expensed all costs incurred related to the manufacture of TAZVERIK as research and development expense because of the inherent risks associated with the development of a product candidate, the uncertainty about the regulatory approval process and the lack of history for the Company of regulatory approval of drug candidates.

Intangible Assets, Net

Intangible assets consist of capitalized milestone payments made to third parties under an in-license of patent rights upon receiving regulatory approval of TAZVERIK. The finite-lived intangible assets are being amortized on a straight-line basis over the expected time period the Company will benefit from the in-licensed rights, which is generally the patent life. Intangible assets are recorded at cost at the time of their acquisition and are stated in the Company’s condensed consolidated balance sheets net of accumulated amortization and impairments, if applicable. The amortization expense is recognized as cost of revenue in the Company’s condensed consolidated statement of operations and comprehensive loss. During the first quarter of 2020 the Company paid a $25.0 million milestone payment under its agreement with Eisai, Co., Ltd., or Eisai, upon regulatory approval of tazemetostat for ES. During the second quarter of 2020 the Company paid a $25.0 million milestone payment under its agreement with Eisai upon regulatory approval of tazemetostat for FL. Both regulatory milestones have been capitalized as intangible assets.

The following table presents intangible assets as of September 30, 2021 (in thousands):


	September 30, 2021			Estimated useful life (years)
In-licensed rights	$	50,000			12.2
Less: accumulated amortization		(6,113	)
Total intangible asset, net	$	43,887

The Company recorded approximately $1.0 million and $3.1 million in amortization expense related to intangible assets, using the straight-line methodology, during the three and nine months ended September 30, 2021, respectively. The Company recorded approximately $1.0 million and $2.0 million in amortization expense related to intangible assets, using the straight-line methodology, during the three and nine months ended September 30, 2020, respectively. Estimated future amortization expense for intangible assets for the remainder of the year ended December 31, 2021 is $1.0 million and approximately $4.2 million per year thereafter.

The Company assesses its intangible assets for impairment if indicators are present or changes in circumstance suggest that impairment may exist. Events that could result in an impairment, or trigger an interim impairment assessment, include the receipt of additional clinical or nonclinical data regarding one of the Company’s drug candidates or a potentially competitive drug candidate, changes in the clinical development program for a drug candidate, or new information regarding potential sales for the drug. If impairment indicators are present or changes in circumstance suggest that impairment may exist, the Company performs a recoverability test by comparing the sum of the estimated undiscounted cash flows of each intangible asset to its carrying value on the Company's condensed consolidated balance sheets. If the undiscounted cash flows used in the recoverability test are less than the carrying value, the Company would determine the fair value of the intangible asset and recognize an impairment loss if the carrying value of the intangible asset exceeds its fair value.

During the three months ended June 30, 2021, the Company concluded the lower than anticipated current and projected future revenue, due to the impact of the COVID-19 pandemic as well as other factors, was an indicator that impairment may exist related to its finite-lived intangible assets. As a result, the Company performed a recoverability test and determined that the finite-lived intangible assets were recoverable. The Company’s quantitative assessment considered significant assumptions related to estimates of future TAZVERIK sales, offset by direct costs to derive the sales. The estimates of future TAZVERIK sales and associated costs include estimates of significant growth, however, these estimates are uncertain as the product was first launched in the first half of 2020 and due to the uncertainties associated with the ongoing COVID-19 pandemic. Given the limited history of sales and the inherent difficulty in making a long-range forecast, such estimates contain significant uncertainty. If the assumptions regarding forecasted revenue or the costs to derive such revenues prove to be inaccurate, the Company may be required to perform future impairment analyses and record an impairment charge for its intangible assets in future periods.

Product Revenue Net

9 Months Ended

Sep. 30, 2021

TAZVERIK [Member]

Concentration Risk [Line Items]

Product Revenue Net

3. Product Revenue, Net

The Company sells TAZVERIK in the United States principally to a limited number of specialty pharmacies, which dispense the product directly to patients, and specialty distributors, which in turn sell the product to hospital pharmacies and community practice pharmacies (collectively, healthcare providers) for the treatment of patients. The specialty pharmacies and specialty distributors are referred to as the Company’s customers.

Product revenue is recognized by the Company in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services when the customer obtains control of the product, which occurs at a point in time, typically when the product is received by the Company’s customers. The Company provides a right of return to its customers for unopened product for a limited time before and after its expiration date, which right of return lapses upon shipment to a patient. Healthcare providers to whom specialty distributors sell TAZVERIK hold limited inventory that is designated for patients, and the Company monitors inventory levels in the distribution channel to limit the risk of return.

Reserves for Variable Consideration

Revenues from product sales are recorded as product revenue at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from discounts, returns, chargebacks, rebates, co-pay assistance and other allowances that are offered within contracts between the Company and its customers, health care providers, payors and other indirect customers relating to the Company’s product sales. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer). Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which the Company is entitled based on the terms of the contract(s). The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

Trade Discounts and Allowances: The Company generally provides customers with discounts that include incentive fees that are explicitly stated in customer contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, the Company receives sales order management, data and distribution services from certain customers. To the extent the services received are distinct from the Company’s sale of products to the customer, these payments are classified in selling, general and administrative expenses in the Company's condensed consolidated statements of operations and comprehensive loss.

Product Returns: Consistent with industry practice, the Company generally offers customers a limited right of return based on the product’s expiration date for product that has been purchased from the Company, which lapses upon shipment to a patient. The Company estimates the amount of product sales that may be returned by customers and records this estimate as a reduction of revenue in the period in which the related product revenue is recognized. The Company currently estimates product return liabilities using available industry data and the Company’s own historical sales information, including its visibility into the product remaining in the distribution channel.

Provider Chargebacks and Discounts: Chargebacks for fees and discounts to healthcare providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to customers who directly purchase the product from the Company. Customers charge the Company for the difference between what they

pay for the product and the ultimate selling price to the qualified healthcare providers. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider by customers, and the Company generally issues credits for such amounts within a few weeks of the customer’s notification to the Company of the resale. Reserves for chargebacks consist of credits that the Company expects to issue for units that remain in the distribution channel at each reporting period end that the Company expects will be sold to qualified healthcare providers, and chargebacks that customers have claimed but for which the Company has not yet issued a credit.

Government Rebates: The Company is subject to discount obligations under state Medicaid programs and Medicare. The Company estimates its Medicaid and Medicare rebates based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability that is included in accrued expenses on the Company’s condensed consolidated balance sheets. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the Company will owe an additional liability under the Medicare Part D program. The Company’s liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but remains in the distribution channel inventories at period end.

Payor Rebates: The Company may contract with various private payor organizations, primarily insurance companies and pharmacy benefit managers, for the payment of rebates with respect to utilization of the Company’s products. The Company estimates these rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability.

Other Incentives/Patient Assistance Programs: The Company also offers voluntary patient assistance programs such as co-pay assistance. Co-pay assistance programs are intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payors. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue, but remains in the distribution channel inventories at period end.

The following table summarizes activity in each of the above product revenue allowances and reserve categories for the nine months ended September 30, 2021:


	Chargebacks, Discounts, and			Government and Other
	Fees			Rebates			Returns			Total
	(In thousands)
Balance, January 1, 2021	$	133		$	428		$	67		$	628
Provision		1,344			2,152			252			3,748
Payments or credits		(1,294	)		(2,110	)		(199	)		(3,603	)
Balance, September, 2021	$	183		$	470		$	120		$	773

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist of accounts receivable from customers and cash held at financial institutions. The Company believes that such customers and financial institutions are of high credit quality.

For the three and nine months ended September 30, 2021 and 2020, net product revenue was primarily generated from four individual customers. Revenue earned from each customer as a percentage of net product revenue is as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Customer 1		27	%		42	%		34	%		48	%
Customer 2		19	%		10	%		13	%		12	%
Customer 3		19	%		18	%		32	%		15	%
Customer 4		35	%		23	%		21	%		18	%

As of September 30, 2021 and December 31, 2020, the four individual customers represented as a percentage of accounts receivable as follows:


	September 30, 2021			December 31, 2020
Customer 1		15	%		21	%
Customer 2		17	%		14	%
Customer 3		15	%		29	%
Customer 4		53	%		36	%

No other customer represented more than 10 percent of net product revenue or accounts receivable.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-Section 50
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

Cash

9 Months Ended

Sep. 30, 2021

Cash And Cash Equivalents [Abstract]

Cash

4. Cash

A reconciliation of cash, cash equivalents, and restricted cash reported within the Company's condensed consolidated balance sheets that sum to the total of the same such amounts shown in the Company's condensed consolidated statements of cash flows, is as follows:


	As of September 30,
	2021		2020
	(In thousands)
Cash and cash equivalents	$	124,517	$	93,422
Restricted cash, as part of other assets		1,509		1,509
Total cash, cash equivalents, and restricted cash
shown in the condensed consolidated statements of cash flows	$	126,026	$	94,931

The $1.5 million in restricted cash as of both September 30, 2021 and September 30, 2020 is comprised of $0.5 million in a letter of credit as a security deposit for the Company’s office and laboratory lease at Technology Square in Cambridge, Massachusetts and $1.0 million in a letter of credit as a security deposit for the Company’s office lease at Hampshire Street in Cambridge, Massachusetts. The Company has recorded cash held to secure these letters of credit as restricted cash in restricted cash and other assets on its condensed consolidated balance sheets. The restricted cash is classified as non-current based on the related lease terms.

Marketable Securities

9 Months Ended

Sep. 30, 2021

Investments Debt And Equity Securities [Abstract]

Marketable Securities

5. Marketable Securities

The following table summarizes the available-for-sale securities held at September 30, 2021 (in thousands):


Description	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Commercial paper	$	72,733	$	4	$	(2	)	$	72,735
Corporate notes		7,022		—		(4	)		7,018
U.S. government agency securities and U.S. Treasuries		17,023		—		—			17,023
Total	$	96,778	$	4	$	(6	)	$	96,776

The following table summarizes the available-for-sale securities held at December 31, 2020 (in thousands):


Description	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Commercial paper	$	158,907	$	14	$	(8	)	$	158,913
Corporate notes		33,437		3		(7	)		33,433
U.S. government agency securities and U.S. Treasuries		13,044		1		—			13,045
Total	$	205,388	$	18	$	(15	)	$	205,391

Certain short-term debt securities with original maturities of less than 90 days are included in cash and cash equivalents within the Company's condensed consolidated balance sheets and are not included in the tables above.

The amortized cost of available-for-sale securities is adjusted for amortization of premiums and accretion of discounts to maturity. At September 30, 2021, the balance in the Company’s accumulated other comprehensive loss was composed solely of activity related to the Company’s available-for-sale marketable securities. There were no realized gains or losses recognized on the sale or maturity of available-for-sale securities during the nine months ended September 30, 2021, and as a result, the Company did not reclassify any amounts out of accumulated other comprehensive loss for the same period.

The aggregate fair value of available-for-sale securities held by the Company in an unrealized loss position for less than twelve months as of September 30, 2021 was $33.5 million, which consisted of 13 commercial paper securities and 1 corporate note security. The aggregate unrealized loss for those securities in an unrealized loss position for less than twelve months as of September 30, 2021 was less than $0.1 million.

The Company does not intend to sell and it is unlikely that the Company will be required to sell the above investments before recovery of their amortized cost bases, which may be maturity. The Company has determined that there has been no material change in the credit risk of any of its investments. As a result, the Company determined it did not hold any investments that were impaired as of September 30, 2021. The Company reviews its portfolio of available-for-sale debt securities, using both quantitative and qualitative factors, to determine if declines in fair value below cost have resulted from a credit-related loss or other factors. If the decline in fair value is due to credit-related factors, a loss is recognized in net income, whereas if the decline in fair value is not due to credit-related factors, the loss is recorded in other comprehensive income (loss). The weighted-average maturity of the Company’s portfolio was approximately four months at September 30, 2021.

Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

6. Fair Value Measurements

The Company’s financial instruments as of September 30, 2021 and December 31, 2020 consisted primarily of cash and cash equivalents, marketable securities and accounts receivable and accounts payable. As of September 30, 2021 and December 31, 2020, the Company’s financial assets recognized at fair value consisted of the following:


	Fair Value as of September 30, 2021
	Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents	$	97,136	$	83,412	$	13,724	$	—
Marketable securities:
Commercial paper		72,735		—		72,735		—
Corporate notes		7,018		—		7,018		—
U.S. government agency securities and treasuries		17,023		—		17,023		—
Total	$	193,912	$	83,412	$	110,500	$	—


	Fair Value as of December 31, 2020
	Total		Level 1		Level 2		Level 3
	(In thousands)
Cash equivalents	$	163,264	$	113,505	$	49,759	$	—
Marketable securities:
Commercial paper		158,913		—		158,913		—
Corporate notes		33,433		—		33,433		—
U.S. government agency securities and treasuries		13,045		—		13,045		—
Total	$	368,655	$	113,505	$	255,150	$	—

Cash equivalents and marketable securities have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third-party pricing services or other market observable data.

The Company measures its cash equivalents at fair value on a recurring basis, which approximates the net asset value per share. The Company classifies some of its cash equivalents within Level 1 of the fair value hierarchy because they are valued using observable inputs that reflect quoted prices for identical assets in active markets. The Company measures its marketable securities at fair value on a recurring basis and classifies those instruments and some cash equivalents within Level 2 of the fair value hierarchy. The pricing services used by management utilize industry standard valuation models, including both income- and market- based approaches and observable market inputs to determine the fair value of marketable securities and those cash equivalents classified within Level 2 of the fair value hierarchy.

Inventory

9 Months Ended

Sep. 30, 2021

Inventory Disclosure [Abstract]

Inventory

7. Inventory

All of the Company’s inventories relate to the manufacturing of TAZVERIK. The following table sets forth the Company’s inventories as of September 30, 2021 and December 31, 2020:


	September 30, 2021		December 31, 2020
	(In thousands)
Raw materials	$	3,116	$	1,068
Work in process		11,591		8,564
Finished goods		2,237		829
Total	$	16,944	$	10,461

Balance sheet classification
Inventory	$	1,521	$	10,461
Restricted cash and other assets		15,423		—
Total	$	16,944	$	10,461

The Company’s active pharmaceutical ingredient has a long shelf life and the Company’s finished drug product has a three-year expiry, however the realizability of the inventory is subject to forecasted future sales of TAZVERIK. The Company’s forecasted sales currently support the realizability of the Company’s inventory but are uncertain and could change in the future, which would require the Company to write down the value of such inventory. Due to the revisions to the Company’s forecast of future TAZVERIK sales during the quarter ended June 30, 2021, the Company classified a portion of its inventory as long-term.

As of September 30, 2021 the Company has not capitalized inventory costs related to its other drug development programs.

Supplemental Balance Sheet Information

9 Months Ended

Sep. 30, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Supplemental Balance Sheet Information

8. Supplemental Balance Sheet Information

Accrued expenses consisted of the following:


	September 30, 2021		December 31, 2020
	(In thousands)
Employee compensation and benefits	$	10,578	$	11,921
Research and development expenses		18,804		10,664
Professional services and other		1,540		5,987
Accrued expenses	$	30,922	$	28,572

Income Taxes

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

The Company did not record a federal or state income tax provision or benefit for the three months ended September 30, 2021 and 2020 due to the expected and known loss before income taxes to be incurred, or incurred, as applicable, for the years ended December 31, 2021 and 2020, as well as the Company’s continued maintenance of a full valuation allowance against its net deferred tax assets.

- Definition

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

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
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-Section 50
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

10. Commitments and Contingencies

There have been no significant changes to the Company’s commitments and contingencies, other than the minimum lease payments as disclosed in Note 11, Leases, in the three and nine months ended September 30, 2021, as compared to those disclosed in Note 9, Commitments and Contingencies, included in the Company's Annual Report.

Leases

9 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

11. Leases

The Company enters into lease arrangements for its facilities as well as certain equipment. A summary of the arrangements is as follows:

Operating Leases

The Company leases office and laboratory space at Technology Square in Cambridge, Massachusetts under a Lease Agreement, dated as of June 15, 2012, as amended, or the Technology Square Lease, with ARE-TECH Square, LLC, a Delaware limited liability company.

In May 2017, the Company exercised its option to extend the term of the Technology Square Lease to November 30, 2022. Under the Technology Square Lease as amended, the Company agreed to pay a monthly base rent of approximately $0.2 million for the period commencing December 1, 2017 through May 31, 2018, with an increase on June 1, 2018 of approximately $33,000 and annual increases of approximately $9,000 on December 1 of each subsequent year until the last increase, which will occur on December 1, 2021.

On August 11, 2021, the Company, entered into a fifth amendment to the Technology Square Lease (the “Fifth Amendment”) with ARE-TECH Square, LLC. Under the Fifth Amendment, the Company extended the term of the Technology Square Lease through November 30, 2024. Under the Fifth Amendment, the Company will continue to pay the Landlord the current monthly base rent amount contemplated by the Technology Square Lease through November 30, 2022, with an increase commencing on December 1, 2022 and adjusting the monthly base rent amount to approximately $377,000 and an increase commencing on December 1, 2023 and adjusting the monthly base rent amount to approximately $388,000 through November 30, 2024. In addition, under the Fifth Amendment, the Landlord agreed to provide the Company with a tenant improvement allowance of up to approximately $430,000 if requested by the Company by August 11, 2022, subject to specified terms and conditions. In accordance with ASU 2016-02, Leases, or ASC 842, the Company accounted for the Fifth Amendment as a lease modification and remeasured the operating lease liability, resulting in an additional $7.0 million operating lease liability and right of use asset. Under the current terms of the Technology Square Lease, the Company does not have any further right to extend the term beyond November 30, 2024.

The Company has a $0.5 million letter of credit as a security deposit for the Technology Square Lease and has recorded cash held to secure this letter of credit as restricted cash and other assets on the Company's condensed consolidated balance sheets.

On August 16, 2019, the Company entered into a lease, or the Hampshire Street Lease, with BMR-Hampshire LLC, or BMR. The Hampshire Street Lease is for 33,525 rentable square feet of office space in Cambridge, Massachusetts. The Hampshire Street Lease commenced as of December 1, 2019. The Hampshire Street Lease has an initial term of seven years and four months from the commencement date and provides the Company with an option to extend the lease term for one additional five-year period. After a four-month period during which base rent was not payable, the Hampshire Street Lease provides for monthly rent payments starting at approximately $0.2 million and increasing 2.5% per year. In the event that the Company exercises its option to extend the lease term, the Hampshire Street Lease provides for monthly rent payments during the additional five-year period at the greater of the base rent rate at the end of the initial term or the then-current market rent.

The Company has a $1.0 million letter of credit in favor of BMR as a security deposit for the Hampshire Street Lease and has recorded cash held to secure this letter of credit as restricted cash and other assets on the Company's condensed consolidated balance sheets. In applying ASC 842, the Company determined the classification of the Hampshire Street Lease to be operating and recorded a lease liability and a right-of-use asset as of December 31, 2019.

The Company is required to pay certain variable costs to its landlords in addition to fixed rent. These costs include common area maintenance, real estate taxes, and parking and are included in lease expense.

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases for the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020

Lease cost
Operating lease cost	$