Document And Entity Information
Document And Entity Information - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Jun. 28, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Intercept Pharmaceuticals, Inc. | |
Entity Central Index Key | 0001270073 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Trading Symbol | ICPT | |
Entity Common Stock, Shares Outstanding | 32,853,066 | |
Entity Public Float | $ 2,027.8 | |
Document Type | 10-K | |
Amendment Flag | false | |
Document Period End Date | Dec. 31, 2019 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2019 | |
Entity Address, Address Line One | 10 Hudson Yards, 37th Floor | |
Entity Address, Postal Zip Code | 10001 | |
Entity Address, State or Province | NY | |
Entity Current Reporting Status | Yes | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Small Business | false | |
Entity Interactive Data Current | Yes | |
Security Exchange Name | NASDAQ | |
Entity File Number | 001-35668 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, City or Town | New York | |
Entity Tax Identification Number | 22-3868459 | |
City Area Code | 646 | |
Local Phone Number | 747-1000 | |
Document Annual Report | true | |
Document Transition Report | false | |
Title of 12(b) Security | Common Stock | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 70,055 | $ 43,248 |
Restricted cash | 4,725 | |
Investment debt securities, available-for-sale | 582,567 | 392,912 |
Accounts receivable | 38,044 | 25,694 |
Prepaid expenses and other current assets | 25,924 | 20,571 |
Total current assets | 721,315 | 482,425 |
Fixed assets, net | 5,202 | 10,411 |
Inventory | 8,462 | 7,108 |
Security deposits | 6,661 | 9,223 |
Other assets | 13,246 | |
Total assets | 754,886 | 509,167 |
Current liabilities: | ||
Accounts payable, accrued expenses and other liabilities | 153,968 | 105,109 |
Short-term interest payable | 8,037 | 7,475 |
Short-term portion of deferred revenue | 1,621 | |
Total current liabilities | 162,005 | 114,205 |
Long-term liabilities: | ||
Long-term debt | 532,078 | 371,250 |
Long-term other liabilities | 9,247 | 3,771 |
Long-term portion of deferred revenue | 811 | |
Total liabilities | 703,330 | 490,037 |
Stockholders' equity: | ||
Common stock par value $0.001 per share; 45,000,000 shares authorized; 32,853,066 and 29,693,876 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively | 33 | 30 |
Additional paid-in capital | 2,176,133 | 1,800,144 |
Accumulated other comprehensive loss, net | (1,144) | (2,259) |
Accumulated deficit | (2,123,466) | (1,778,785) |
Total stockholders' equity | 51,556 | 19,130 |
Total liabilities and stockholders' equity | $ 754,886 | $ 509,167 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Consolidated Balance Sheets | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 45,000,000 | 45,000,000 |
Common stock, shares, issued | 32,853,066 | 29,693,876 |
Common stock, shares, outstanding | 32,853,066 | 29,693,876 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | $ 252,002 | $ 179,804 | $ 130,956 |
Operating expenses: | |||
Cost of sales | 4,212 | 2,519 | 1,371 |
Selling, general and administrative | 317,418 | 255,474 | 273,698 |
Research and development | 242,799 | 207,301 | 191,499 |
Total operating expenses | 564,429 | 465,294 | 466,568 |
Operating loss | (312,427) | (285,490) | (335,612) |
Other income (expense): | |||
Interest expense | (41,144) | (30,523) | (29,271) |
Other income, net | 8,890 | 6,771 | 4,516 |
Total other income (expense), net | (32,254) | (23,752) | (24,755) |
Net loss | $ (344,681) | $ (309,242) | $ (360,367) |
Net loss per common and potential common share: | |||
Basic and diluted | $ (10.89) | $ (10.86) | $ (14.38) |
Weighted average common and potential common shares outstanding: | |||
Basic and diluted | 31,654 | 28,464 | 25,054 |
Product [Member] | |||
Revenue | $ 249,570 | $ 177,782 | $ 129,175 |
License [Member] | |||
Revenue | $ 2,432 | $ 2,022 | $ 1,781 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Comprehensive Loss | |||
Net loss | $ (344,681) | $ (309,242) | $ (360,367) |
Net changes related to available-for-sale investment debt securities: | |||
Unrealized gains on investment debt securities | 1,509 | 88 | 791 |
Reclassification adjustment for realized gains on investment debt securities included in other income, net | (8) | (8) | |
Net unrealized gains on investment debt securities | 1,501 | 80 | 791 |
Foreign currency translation gains (losses) | (379) | (1,553) | 1,225 |
Other comprehensive income (loss) | 1,122 | (1,473) | 2,016 |
Comprehensive loss | $ (343,559) | $ (310,715) | $ (358,351) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings [Member] | Total |
Balance at Dec. 31, 2016 | $ 25 | $ 1,426,168 | $ (2,801) | $ (1,108,460) | $ 314,932 |
Balance (in shares) at Dec. 31, 2016 | 24,820 | ||||
Stock-based compensation | 56,968 | 56,968 | |||
Net proceeds from exercise of stock options | 2,838 | 2,838 | |||
Net proceeds from exercise of stock options (in shares) | 353 | ||||
Other comprehensive income (loss) | 716 | 2,015 | (716) | 2,015 | |
Net loss | (360,367) | (360,367) | |||
Balance at Dec. 31, 2017 | $ 25 | 1,486,690 | (786) | (1,469,543) | 16,386 |
Balance (in shares) at Dec. 31, 2017 | 25,173 | ||||
Stock-based compensation | 49,914 | 49,914 | |||
Issuance of common stock from public and private placement offerings, net of underwriting fees and issuance costs | $ 5 | 261,357 | 261,362 | ||
Issuance of common stock from public and private placement offerings, net of underwriting fees and issuance costs (in shares) | 4,258 | ||||
Net proceeds from exercise of stock options | 4,363 | 4,363 | |||
Net proceeds from exercise of stock options (in shares) | 263 | ||||
Employee withholding taxes related to stock-based awards | (2,180) | (2,180) | |||
Other comprehensive income (loss) | (1,473) | (1,473) | |||
Net loss | (309,242) | (309,242) | |||
Balance at Dec. 31, 2018 | $ 30 | 1,800,144 | (2,259) | (1,778,785) | 19,130 |
Balance (in shares) at Dec. 31, 2018 | 29,694 | ||||
Stock-based compensation | 55,982 | 55,982 | |||
Recognition of debt discount on 2026 Convertible Notes | 85,915 | 85,915 | |||
Issuance of common stock from public and private placement offerings, net of underwriting fees and issuance costs | $ 3 | 227,257 | 227,260 | ||
Issuance of common stock from public and private placement offerings, net of underwriting fees and issuance costs (in shares) | 2,880 | ||||
Net proceeds from exercise of stock options | 8,993 | $ 8,993 | |||
Net proceeds from exercise of stock options (in shares) | 279 | 179 | |||
Employee withholding taxes related to stock-based awards | (2,158) | $ (2,158) | |||
Other comprehensive income (loss) | 1,115 | 1,115 | |||
Net loss | (344,681) | (344,681) | |||
Balance at Dec. 31, 2019 | $ 33 | $ 2,176,133 | $ (1,144) | $ (2,123,466) | $ 51,556 |
Balance (in shares) at Dec. 31, 2019 | 32,853 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net loss | $ (344,681) | $ (309,242) | $ (360,367) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Stock-based compensation | 55,982 | 49,914 | 56,968 |
(Accretion) amortization of (discount) premium on investment debt securities | (302) | (33) | 3,429 |
Amortization of deferred financing costs | 2,130 | 1,542 | 1,417 |
Realized loss on investments | 8 | ||
Depreciation | 3,663 | 4,582 | 4,601 |
Non-cash operating lease cost | 5,388 | ||
Gain on lease termination | (1,995) | ||
Loss on the disposal of fixed assets | 2,682 | 1,331 | 1,000 |
Accretion of debt discount | 21,189 | 14,031 | 12,904 |
Changes in operating assets: | |||
Accounts receivable | (12,350) | (9,193) | (7,375) |
Prepaid expenses and other current assets | (5,353) | (3,682) | (7,535) |
Inventory | (1,354) | (3,628) | (1,201) |
Security deposits | 2,562 | 7,153 | 1,438 |
Other assets | (24,665) | ||
Changes in operating liabilities: | |||
Accounts payable, accrued expenses and other current liabilities | 56,411 | 10,332 | 29,226 |
Operating lease liabilities | (6,767) | ||
Interest payable | 562 | 208 | |
Deferred revenue | (2,432) | (2,022) | (5,693) |
Long-term other liabilities | 12,717 | (1,807) | 5,578 |
Net cash used in operating activities | (236,613) | (240,714) | (265,402) |
Cash flows from investing activities: | |||
Purchases of investment debt securities | (603,014) | (436,071) | (231,107) |
Sales and maturities of investment debt securities | 415,162 | 388,168 | 529,274 |
Purchases of equipment, leasehold improvements, and furniture and fixtures | (1,136) | (167) | (10,392) |
Net cash (used in) provided by investing activities | (188,988) | (48,070) | 287,775 |
Cash flows from financing activities: | |||
Proceeds from issuance of 2026 Convertible Notes, net of issuance costs | 223,424 | ||
Proceeds from issuance of common stock, net of issuance costs | 227,260 | 261,362 | |
Proceeds from exercise of options, net | 8,993 | 4,363 | 2,838 |
Payments of employee withholding taxes related to stock-based awards | (2,158) | (2,180) | |
Net cash provided by financing activities | 457,519 | 263,545 | 2,838 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (386) | (1,526) | 1,127 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 31,532 | (26,765) | 26,338 |
Cash, cash equivalents and restricted cash at beginning of period | 43,248 | 70,013 | 43,675 |
Cash, cash equivalents and restricted cash at end of period | $ 74,780 | $ 43,248 | $ 70,013 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Reconciliation of cash, cash equivalents and restricted cash included in the consolidated balance sheets: | ||||
Cash and cash equivalents | $ 70,055 | $ 43,248 | $ 70,013 | |
Restricted cash | 4,725 | |||
Total cash, cash equivalents and restricted cash | $ 74,780 | $ 43,248 | $ 70,013 | $ 43,675 |
Overview of Business
Overview of Business | 12 Months Ended |
Dec. 31, 2019 | |
Overview of Business [Abstract] | |
Overview of Business | 1. Overview of Business Intercept Pharmaceuticals, Inc. (the “Company”) is a biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat progressive non-viral liver diseases, including primary biliary cholangitis (“PBC”) and nonalcoholic steatohepatitis (“NASH”). The Company currently has one marketed product, Ocaliva (obeticholic acid or “OCA”). Founded in 2002 in New York, the Company has operations in the United States, Europe and Canada. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company has no unconsolidated subsidiaries or investments accounted for under the equity method. Use of Estimates The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Foreign Currency The Company’s functional and reporting currency is the U.S. dollar. Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. The resulting monetary assets and liabilities are translated into U.S. dollars at exchange rates prevailing on the subsequent balance sheet date. Revenue and expense components are translated to U.S. dollars at weighted-average exchange rates in effect during the period. Foreign currency transaction gains and losses resulting from remeasurement are recognized in Other income, net within the consolidated statements of operations. Gains and losses as a result of foreign currency translation adjustments are recorded as a component of Accumulated other comprehensive loss, net in the equity section of our consolidated balance sheets and as Foreign currency translation gains (losses) within the accompanying consolidated statements of comprehensive loss. Cash and Cash Equivalents The Company considers all highly liquid securities with an original or remaining maturity of three months or less at acquisition to be cash equivalents. Restricted Cash Restricted cash consists of short-term bank guarantees held by our financial institutions to maintain operations of the Company’s subsidiaries in their respective countries. Investment Debt Securities, Available-for-Sale Investment debt securities are considered to be available-for-sale and are carried at fair market value. The estimated fair value of the available-for-sale investment debt securities is determined based on quoted market prices or rates for similar instruments. Unrealized gains and losses, if any, are reported in accumulated other comprehensive income (loss). The cost of investment debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in Other income, net. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are also included in Other income, net. Interest and dividends on available-for-sale securities are included in Other income, net. Fair Value of Financial Instruments The carrying amounts of certain financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other liabilities approximate fair value due to their short-term maturities. Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, principally consist of cash, cash equivalents, accounts receivables from customers and investment debt securities. The Company currently invests its excess cash primarily in money market funds, U.S. Treasury notes, and high quality, marketable debt instruments of corporations, financial institutions and government sponsored enterprises. The Company has adopted an investment policy that includes guidelines relative to credit quality, diversification and maturities to preserve principal and liquidity. On a consolidated basis, for the year ended December 31, 2019, the Company’s three largest customers (as discussed in more detail below under “Revenue Recognition”) accounted for 32%, 31% and 15%, of the Company’s net product sales, respectively. On a consolidated basis, for the year ended December 31, 2018, the Company’s three largest customers (as discussed in more detail below under “Revenue Recognition”) accounted for 38%, 28% and 16%, of the Company’s net product sales, respectively. On a consolidated basis, the Company’s three largest customers accounted for 27%, 28% and 7% of the December 31, 2019 accounts receivable balance, respectively. On a consolidated basis, the Company’s three largest customers accounted for 22%, 29% and 6% of the December 31, 2018 accounts receivable balance, respectively. We monitor our customers’ financial credit worthiness in order to assess and respond to any changes in their credit profile. 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. The Company has recorded $38.0 million and $25.7 million of accounts receivable as of December 31, 2019 and 2018, respectively, and has not Fixed Assets Fixed assets are stated at cost, and depreciated over the estimated useful life of the assets. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective assets, generally three disposed of and the related accumulated depreciation are removed from the balance sheets and any related gains or losses are reflected in the consolidated statements of operations. Impairment of Long-Lived Assets Long-lived assets consist of fixed assets and right-of-use assets. The Company evaluates long-lived assets for impairment when events and circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable. If indicators of impairment exist, the Company assesses the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted future operating cash flows. If the carrying amount is not recoverable, the Company measures the amount of any impairment by comparing the carrying value of the asset to the present value of the expected future cash flows associated with the use of the asset. There have been no impairments of any long-lived assets in the periods presented. Inventory Inventories are stated at the lower of cost or estimated realizable value. The Company determines the cost of inventory using the first-in, first-out (or FIFO) method. The Company capitalizes inventory costs associated with the Company's product after regulatory approval when, based on management's judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and writes-down such inventories as appropriate. In addition, the Company's product is subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company records a charge to cost of sales to write down such unmarketable inventory to zero. No such charges were recorded in the years ended December 31, 2019, 2018 or 2017. Leases Upon adoption of Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), the Company determines if an arrangement is a lease at inception and records right-of-use (“ROU”) assets and lease liabilities on the consolidated balance sheets at lease commencement based on the present value of remaining lease payments over the lease term. The Company only considers payments that are fixed and determinable at the time of commencement. Operating leases are included in other assets, accounts payable, accrued expenses and other liabilities and long-term other liabilities on the consolidated balance sheets. Operating lease liabilities are recognized based on the present value of the future minimum lease payments discounted by the Company’s incremental borrowing rate. The Company measures ROU assets based on the corresponding lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred and (iii) tenant incentives under the lease. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. For short-term leases, the Company records rent expense in its consolidated statements of operations on a straight-line basis over the lease term and records variable lease payments as incurred. Convertible Debt The Company accounts for convertible debt in accordance with Financial Accounting Standards Board (“FASB”) ASC Subtopic 470-20. The Company separately accounts for the liability (debt) and equity (conversion option) components of convertible debt instruments by allocating the proceeds from the issuance. The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar debt instrument without the conversion option. The amount of the equity component (and resulting debt discount) is calculated by deducting the fair value of the liability component from the principal amount of the convertible debt instrument. The resulting debt discount is amortized as additional non-cash interest expense over the expected life of the notes utilizing the effective interest method. For additional information, see Note 9 — Long-Term Debt. Revenue Recognition Product Revenue, Net The Company commenced its commercial launch of Ocaliva for the treatment of PBC in the United States in June 2016. In December 2016, the European Commission granted conditional approval for Ocaliva for the treatment of PBC and the Company commenced its European commercial launch in January 2017. Since January 2017, Ocaliva has also received regulatory approval in several of the Company’s target markets outside the United States and Europe, including Canada, Israel and Australia. The Company sells Ocaliva to a limited number of specialty pharmacies which dispense the product directly to patients. The specialty pharmacies are referred to as the Company’s customers. The Company provides the right of return to its customers for unopened product for a limited time before and after its expiration date. Prior to July 2017, given the Company’s limited sales history for Ocaliva and the inherent uncertainties in estimating product returns, the Company determined that the shipments of Ocaliva made to its customers did not meet the criteria for revenue recognition at the time of shipment. Accordingly, the Company recognized revenue when the product was sold through by its customers, provided all other revenue recognition criteria were met. The Company invoiced its customers upon shipment of Ocaliva to them and recorded accounts receivable, with a corresponding liability for deferred revenue equal to the gross invoice price. The Company then recognized revenue when Ocaliva was sold through as specialty pharmacies dispensed product directly to the patients (sell-through basis). The Company re-evaluated its revenue recognition policy in the third quarter of 2017, which included the accumulation and review of customer-related transactions since the Company’s commercial launch in the second quarter of 2016. The Company concluded it had accumulated sufficient data to reasonably estimate product returns and, therefore, began to recognize revenue at the time of shipment to its customers (sell-in basis). During the third quarter of 2017, the Company recorded an adjustment related to this change in estimate to recognize previously deferred revenue. The net effect was an increase in net sales of Ocaliva of $4.1 million for the year ended December 31, 2017. The Company also established a new reserve of $0.7 million during 2017 related to future returns from its customers. Effective January 1, 2018, the Company began recognizing revenue under ASC Topic 606, Revenue from Contracts with Customers ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: ● The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct). ● The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Under ASC 606, the Company has written contracts with each of its customers that have a single performance obligation — to deliver products upon receipt of a customer order — and these obligations are satisfied when delivery occurs and the customer receives Ocaliva. The Company evaluates the creditworthiness of each of its customers to determine whether collection is reasonably assured. The Company estimates variable revenue by calculating gross product revenues based on the wholesale acquisition cost that the Company charges its customers for Ocaliva, and then estimating its net product revenues by deducting (i) trade allowances, such as invoice discounts for prompt payment and customer fees, (ii) estimated government rebates and discounts related to Medicare, Medicaid and other government programs, and (iii) estimated costs of incentives offered to certain indirect customers including patients. Trade Allowances The Company provides invoice discounts on Ocaliva sales to certain of its customers for prompt payment and records these discounts as a reduction to gross product revenues. These discounts are based on contractual terms. Rebates and Discounts The Company contracts with the Centers for Medicare & Medicaid Services and other government agencies to make Ocaliva available to eligible patients. As a result, the Company estimates any rebates and discounts and deducts these estimated amounts from its gross product revenues at the time the revenues are recognized. The Company’s estimates of rebates and discounts are based on the government mandated discounts, which are statutorily-defined and applicable to these government funded programs and assumptions developed using historical experience along with actual payments and redemptions, government regulations, specific terms in individual agreements, product pricing, channels, and pipeline units. The Company recorded $20.3 million and $10.8 million in such estimates as of December 31, 2019 and December 31, 2018, respectively, in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. Other Incentives Other incentives that the Company offers to indirect customers include co-pay assistance cards provided by the Company for PBC patients who reside in states that permit co-pay assistance programs. The Company’s co-pay assistance program is intended to reduce each participating patient’s portion of the financial responsibility for Ocaliva purchase price to a specified dollar amount. The Company estimates the amount of co-pay assistance provided to eligible patients based on the terms of the program when product is dispensed by the specialty pharmacies to the patients. These estimates are based on redemption information provided by third-party claims processing organizations. The Company recorded $1.2 million and $0.9 million in such estimates as of December 31, 2019 and December 31, 2018, respectively, in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. Revenue Recognition Licensing Revenue The Company accounts for the development, regulatory and sales milestones within an arrangement as variable consideration that is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Because the achievement of the milestones triggering these payments is highly susceptible to factors outside the entity’s influence, and the uncertainty about the amount of consideration for some of the milestones is not expected to be resolved for a long period of time, the Company does not expect to record the associated revenue until achievement of each milestone is imminent or has already occurred. Adoption of ASC 606 did not result in any adjustment to licensing revenue previously recognized. Research and Development Expenses Research and development costs that do not have alternative future use are charged to expense as incurred. This includes the cost of conducting clinical trials, compensation and related overhead for employees and consultants involved in research and development and the cost of the Company’s manufacturing activities to supply ongoing and future clinical trials and preclinical studies as well as preparations for commercialization of OCA. The cost of a compound that is acquired prior to regulatory approval, does not constitute a business and has no alternative future use is charged to expense as incurred. For periods prior to commercial launch, all manufacturing costs for OCA were expensed as research and development expenses. The Company will continue to incur manufacturing costs for OCA for other indications such as NASH prior to their approval. Stock-based Compensation recognized on a straight-line basis over the requisite service period of the award. The Company accounts for all forfeitures when they occur. Net Loss Per Share Basic loss per share is computed by dividing net loss attributable to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options and vesting of restricted stock units. The Company accounts for the effect of the Convertible Notes on diluted net earnings per share using the if-converted method as they may be settled in cash or shares at the Company’s option. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive given our net losses. Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. The Company establishes a valuation allowance when it believes it is more likely than not that deferred tax assets will not be realized. The Company determines the need for a valuation allowance by assessing the probability of realizing deferred tax assets, taking into consideration all available positive and negative evidence, including historical operating results, expectations of future taxable income, carryforward periods available, various income tax strategies and other relevant factors. Significant judgment is required in making this assessment and to the extent future expectations change, the Company would have to assess the recoverability of its deferred assets at that time. At any one time the Company’s tax returns for numerous tax years are subject to examination by U.S. Federal, state, and foreign taxing jurisdictions. The impact of an uncertain tax position taken or expected to be taken on an income tax return must be recognized in the financial statements at the largest amount that is more likely than not to be sustained. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not to be sustained. Segments The Company operates in one segment focused on the development and commercialization of novel therapeutics to treat progressive non-viral liver diseases. Recently Adopted Accounting Pronouncements In February 2016, the FASB established ASC 842, by issuing ASU No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. ASC 842 was subsequently amended by ASU No. 2018-01, “Land Easement Practical Expedient for Transition to Topic 842”; ASU No. 2018-10, “Codification Improvements to Topic 842, Leases”; and ASU No. 2018-11, “Targeted Improvements”. The new standard establishes a right-of-use model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statements of operations. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company adopted the new standard on January 1, 2019 using the effective date as the date of initial application. Consequently, financial information was not updated and the disclosures required under the new standard was not provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients”, which permits the Company to not reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company did not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient to not separate lease and non-lease components for all of the Company’s leases. Upon adoption at January 1, 2019, the Company recognized additional operating liabilities of $25.4 million, with corresponding ROU assets of $19.6 million based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which replaces the incurred loss impairment methodology under current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 was subsequently updated by ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”, to clarify that entities should include recoveries when estimating the allowance for credit losses. The Company will be required to use a forward-looking expected credit loss model for accounts receivables, loans and other financial instruments. Credit losses relating to available-for-sale investment debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 and must be adopted using a modified retrospective approach, with certain exceptions. The Company adopted ASU 2016-13 on January 1, 2020 and its adoption will not have any material impact on the Company’s consolidated financial statements and related disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating ASC Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company adopted ASU 2017-11 on January 1, 2019 and its adoption did not have any impact on the Company’s consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU No. 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The changes take effect for public companies for fiscal years starting after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of ASC 606. The Company adopted ASU 2018-07 on January 1, 2019 and its adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance of the update. The Company adopted ASU 2018-13 on January 1, 2020 and its adoption did not have any impact on the Company’s consolidated financial statements and related disclosures. Recent Accounting Pronouncements to be Adopted In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. |
Significant Agreements
Significant Agreements | 12 Months Ended |
Dec. 31, 2019 | |
Significant Agreements [Abstract] | |
Significant Agreements | 3. Significant Agreements Sumitomo Dainippon Pharma Co., Ltd. In March 2011, the Company entered into an exclusive license agreement (the “Original Sumitomo Agreement”) with Sumitomo Dainippon Pharma Co., Ltd. (“Sumitomo Dainippon”), pursuant to which the Company granted to Sumitomo Dainippon an exclusive license to research, develop and commercialize OCA for the treatment of PBC and NASH in Japan and China (excluding Taiwan) and an option to research, develop and commercialize OCA in certain countries outside of such territories (the “Country Option”). The Company received an upfront payment from Sumitomo Dainippon of $15.0 million under the terms of the Original Sumitomo Agreement. In May 2014, Sumitomo Dainippon exercised the Country Option in part to add Korea as part of its licensed territories and paid the Company a $1.0 million upfront fee in connection therewith. In February 2018, the Company and Sumitomo Dainippon entered into Amendment No. 3 (the “Sumitomo Amendment”) to the Original Sumitomo Agreement (as amended, the “Sumitomo Agreement”), pursuant to which (i) Sumitomo Dainippon agreed to return the rights to develop and commercialize OCA in Japan and Korea and waived its rights to the Country Option, (ii) the Company agreed to forego any further milestone or royalty payments relating to the development and commercialization of OCA in Japan and Korea and (iii) certain milestone payment obligations with respect to the development and commercialization of OCA were adjusted. In October 2019, the Company and Sumitomo Dainippon mutually agreed to terminate with immediate effect the Sumitomo Agreement. In connection with the termination of the Sumitomo Agreement, Sumitomo Dainippon agreed to return to the Company the rights to develop and commercialize OCA in China and the Company agreed to forego any further milestone or royalty payments relating to the development and commercialization of OCA in China. No payment is due from the Company to Sumitomo Dainippon as a result of the termination of the Sumitomo Agreement. The Company has concluded that Sumitomo Dainippon does not represent a customer of the Company, and therefore the Sumitomo Agreement is outside of the scope of ASC 606. The Company has accounted for this agreement under the legacy accounting guidance. Under ASC 605, the Company evaluated this agreement and determined that it is a revenue arrangement with multiple deliverables, or performance obligations. The Company’s substantive performance obligations under this agreement include an exclusive license to its technology, technical and scientific support to the development plan and participation on a joint steering committee. The Company determined that these performance obligations represent a single unit of accounting, since, initially, the license does not have stand-alone value to Sumitomo Dainippon without the Company’s technical expertise and steering committee participation during the development of OCA. During the years ended December 31, 2019, 2018 and 2017, the Company recorded licensing revenue of approximately $2.4 million, $2.0 million and $1.8 million, respectively, under this agreement. Included in licensing revenue for the year ended December 31, 2019 is $1.2 million related to the accelerated recognition as a result of the termination of the Sumitomo Agreement. Included in licensing revenue for the year ended December 31, 2018 is $0.4 million related to the accelerated recognition, as a result of the Sumitomo Amendment, of the remaining portion of deferred revenue associated with the $1.0 million upfront payment that the Company received under the Original Sumitomo Agreement in connection with Sumitomo Dainippon’s exercise of the Country Option with respect to Korea. The Company recognizes milestone payments when the associated milestones are achieved. As of December 31, 2019, and 2018, the Company had recorded deferred revenues of $0 and $2.4 million, respectively, under this agreement. |
Cash, Cash Equivalents, and Inv
Cash, Cash Equivalents, and Investments | 12 Months Ended |
Dec. 31, 2019 | |
Cash, Cash Equivalents, and Investment Debt Securities [Abstract] | |
Cash, Cash Equivalents, and Investment Debt Securities | 4. Cash, Cash Equivalents and Investments The following table summarizes the Company’s cash, cash equivalents and investments as of December 31, 2019 and December 31, 2018: As of December 31, 2019 Gross Gross Unrealized Unrealized Amortized Cost Gains Losses Fair Value (in thousands) Cash and cash equivalents: Cash and money market funds $ 62,557 $ — $ — $ 62,557 Commercial paper 7,498 — — 7,498 Total cash and cash equivalents 70,055 — — 70,055 Investment debt securities: Commercial paper 42,806 43 (1) 42,848 Corporate debt securities 538,965 835 (81) 539,719 Total investment debt securities 581,771 878 (82) 582,567 Total cash, cash equivalents and investment debt securities $ 651,826 $ 878 $ (82) $ 652,622 As of December 31, 2018 Gross Gross Unrealized Unrealized Amortized Cost Gains Losses Fair Value (in thousands) Cash and cash equivalents: Cash and money market funds $ 43,248 $ — $ — $ 43,248 Investment debt securities: Commercial paper 34,353 — (26) 34,327 Corporate debt securities 349,854 27 (704) 349,177 U.S. government and agency securities 9,410 5 (7) 9,408 Total investment debt securities 393,617 32 (737) 392,912 Total cash, cash equivalents and investment debt securities $ 436,865 $ 32 $ (737) $ 436,160 The Company held zero and twenty-four positions that were in a continuous unrealized loss position for twelve months or longer as of December 31, 2019 and 2018, respectively. The Company believes that the unrealized losses generally are caused by increases in the risk premiums required by market participants rather than an adverse change in cash flows or a fundamental weakness in the credit quality of the issuer or underlying assets. Because the Company has the ability and intent to hold these investments until a recovery of fair value, which may be maturity, it did not consider the investments to be other-than-temporarily impaired at December 31, 2018. The fair value for the Company’s available-for-sale investment debt securities that have been in an unrealized loss position for less than twelve months or twelve months or longer is as follows: As of December 31, 2019 Less than 12 months 12 months or longer Total (in thousands) Gross Gross Gross Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses Commercial paper $ 50,346 $ (1) $ — $ — $ 50,346 $ (1) Corporate debt securities 539,719 (81) — — 539,719 (81) Total $ 590,065 $ (82) $ — $ — $ 590,065 $ (82) As of December 31, 2018 Less than 12 months 12 months or longer Total (in thousands) Gross Gross Gross Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses Commercial paper $ 34,327 $ (26) $ — $ — $ 34,327 $ (26) Corporate debt securities 260,547 (443) 56,626 (261) 317,173 (704) U.S. government and agency securities — — 1,991 (7) 1,991 (7) Total $ 294,874 $ (469) $ 58,617 $ (268) $ 353,491 $ (737) |
Fixed Assets, Net
Fixed Assets, Net | 12 Months Ended |
Dec. 31, 2019 | |
Fixed Assets, Net [Abstract] | |
Fixed Assets, Net | 5. Fixed Assets, Net Fixed assets are stated at cost and depreciated or amortized using the straight-line method based on useful lives as follows: Useful lives December 31, (Years) 2019 2018 (in thousands) Office equipment and software 3 $ 4,386 $ 3,986 Leasehold improvements Shorter of remaining lease term or useful life 10,489 14,464 Furniture and fixtures 7 4,032 3,907 Subtotal 18,907 22,357 Less: accumulated depreciation (13,705) (11,946) Fixed assets, net $ 5,202 $ 10,411 Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was approximately $3.7 million, $4.6 million and $4.6 million, respectively. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2019 | |
Inventory, Net [Abstract] | |
Inventory, Net | 6. Inventory Inventories are stated at the lower of cost or market. Inventories consisted of the following: December 31, 2019 2018 (in thousands) Work-in-process $ 8,302 $ 7,019 Finished goods 160 89 Inventory $ 8,462 $ 7,108 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | 7. Leases The Company leases various office spaces under non-cancelable operating leases with original lease periods expiring between the third quarter in 2020 and 2024. The Company subleases one of its office spaces to a third party. The Company also enters into leases for equipment. A number of the Company’s leases include one or more options to renew, with renewal terms that can extend the lease term. The exercise of lease renewal options is typically at the sole discretion of the Company; therefore, all renewals to extend the lease terms are not included in the ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates the renewal options and when they are reasonably certain of exercise, includes the renewal period in the lease term. These operating leases do not contain material variable rent payments, residual value guarantees, covenants, or other restrictions. The Company has elected the practical expedient to exclude short-term leases from its ROU assets and lease liabilities; therefore leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company elected the practical expedient not to separate non-lease components from all leases. As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company’s incremental borrowing rate is the estimated rate that would be required to pay for a collateralized borrowing equal to the total lease payment over the lease term. The Company estimates its incremental borrowing rate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to its own. Operating lease assets and liabilities are classified on the consolidated balance sheet as follows: Leases Classification December 31, 2019 Assets (in thousands) Operating lease assets Other assets $ 13,246 Total leased assets $ 13,246 Liabilities Current Operating lease liabilities Accounts payable, accrued expenses and other liabilities $ 6,456 Noncurrent Operating lease liabilities Long-term other liabilities 9,222 Total lease liabilities $ 15,678 Operating lease costs for the year ended December 31, 2019 are as follows: Year Ended Lease Cost Classification December 31, 2019 (in thousands) Operating lease cost Selling, general and administrative expenses $ 6,176 Short-term lease cost Selling, general and administrative expenses 2,203 Variable lease cost Selling, general and administrative expenses 829 Sublease income Other income, net (788) Net lease cost $ 8,420 The weighted-average remaining term of the Company’s operating leases was 2.7 years and the weighted-average discount rate used to measure the present value of the Company’s operating lease liabilities was 4.0% as of December 31, 2019. Maturities of the Company’s operating lease liabilities, which do not include short-term leases, as of December 31, 2019 are as follows: Maturity of Lease Liabilities Operating leases (in thousands) 2020 $ 6,949 2021 5,978 2022 2,269 2023 965 2024 402 Thereafter — Total lease payments 16,563 Less: Present value discount (885) Total operating lease liabilities $ 15,678 Cash payments included in the measurement of the Company’s lease liabilities were $7.5 million for the year ended December 31, 2019. |
Accounts Payable, Accrued Expen
Accounts Payable, Accrued Expenses and Other Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Accounts Payable, Accrued Expenses and Other Liabilities [Abstract] | |
Accounts Payable, Accrued Expenses and Other Liabilities | 8. Accounts Payable, Accrued Expenses and Other Liabilities Accounts payable, accrued expenses and other liabilities consisted of the following: December 31, 2019 2018 (in thousands) Accounts payable $ 18,975 $ 11,765 Accrued employee compensation 26,483 20,335 Accrued contracted services 74,486 54,681 Accrued rebates, discounts and other incentives 21,529 11,673 Operating lease liabilities 6,456 — Other liabilities 6,039 6,655 Accounts payable, accrued expenses and other liabilities $ 153,968 $ 105,109 Research & Development Tax Credit The Company benefits from the U.K. Small and Medium-sized Enterprise R&D Tax Credit scheme, or the SME scheme, under which it can obtain a refundable credit of up to 33.4% of eligible research and development expenses incurred by the Company in the U.K.. Eligible expenses generally include employment costs for research staff, consumables, software and certain internal overhead costs incurred as part of research projects. The Company submitted a claim seeking to obtain tax credits for qualifying R&D expenses incurred in the years ended December 31, 2015 and 2016. In September 2019, the Company received a partial payment of $10.5 million from Her Majesty’s Revenue and Customs, the U.K.’s government tax authority. Given the claim review has not been finalized, the credit received is recorded as a deferred liability within accounts payable, accrued expenses and other liabilities. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2019 | |
Long-Term Debt [Abstract] | |
Long-Term Debt | 9. Long-Term Debt Debt, net of discounts and deferred financing costs, consisted of the following: December 31, 2019 2018 (in thousands) 2023 Convertible Notes $ 460,000 $ 460,000 2026 Convertible Notes 230,000 — Long-term debt, gross 690,000 460,000 Less: Unamortized debt discounts and fees (157,922) (88,750) Long-term debt, net $ 532,078 $ 371,250 2019 Offering On May 14, 2019, the Company issued and sold $230.0 million aggregate principal amount of 2.00% Convertible Senior Notes due 2026 (the “2026 Convertible Notes”). The Company received net proceeds from the sale of the 2026 Convertible Notes of $223.4 million, after deducting underwriting discounts, commissions and estimated offering expenses of approximately $6.6 million. The 2026 Convertible Notes were issued pursuant to a Second Supplemental Indenture, dated as of May 14, 2019 (the “Second Supplemental Indenture”), which supplements the Indenture (the “Base Indenture”), as supplemented by a First Supplemental Indenture (the “First Supplemental Indenture” and collectively with the Base Indenture and the Second Supplemental Indenture, the “Indenture”), each dated as of July 6, 2016, by and between the Company and U.S. Bank National Association, as trustee. The 2026 Convertible Notes are senior unsecured obligations of the Company, bear interest at a fixed rate of 2.00% per annum (payable semi-annually on May 15 and November 15 of each year, beginning on November 15, 2019) and will mature on May 15, 2026, unless earlier repurchased, redeemed or converted. Holders may convert their 2026 Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding February 15, 2026 only under the following circumstances: (i) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ended on September 30, 2019, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period after any five consecutive trading day period in which the trading price (as defined in the Indenture) per $1,000 principal amount of 2026 Convertible Notes for each trading day of such five consecutive trading day period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; (iii) if the Company calls any or all of the 2026 Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (iv) upon the occurrence of specified corporate events. On or after February 15, 2026 until the close of business on the business day immediately preceding the maturity date, holders may convert their 2026 Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion of the 2026 Convertible Notes, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock (and cash in lieu of any fractional shares) or a combination of cash and shares of the Company’s common stock, at the Company’s election. The initial conversion rate of the 2026 Convertible Notes is 9.2123 shares of the Company’s common stock per $1,000 principal amount of 2026 Convertible Notes, which is equivalent to an initial conversion price of approximately $108.55 per share of the Company’s common stock. The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its 2026 Convertible Notes in connection with such a corporate event in certain circumstances. The Company may not redeem the 2026 Convertible Notes prior to May 20, 2023. The Company may redeem for cash all or any portion of the 2026 Convertible Notes, at the Company’s option, on or after May 20, 2023, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2026 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2026 Convertible Notes. If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to repurchase for cash all or any portion of their 2026 Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Indenture provides for customary events of default. In accordance with ASC Subtopic 470-20, “Debt with Conversion and Other Options” (“ASC 470-20”), the Company used an effective interest rate of 9.9% to determine the liability component of the 2026 Convertible Notes. This resulted in the recognition of $137.5 million as the liability component of the 2026 Convertible Notes and the recognition of the residual $85.9 million as the debt discount with a corresponding increase to additional paid-in capital for the equity component of the 2026 Convertible Notes. The underwriting discount and estimated offering expenses totaling $6.6 million were allocated between the debt and equity issuance costs in proportion to the allocation of the liability and equity components of the 2026 Convertible Notes. Accordingly, equity issuance costs of $2.5 million were recorded as an offset to additional paid-in capital and total debt issuance costs of $4.1 million were recorded on the issuance date and are reflected in the consolidated balance sheet as a direct deduction from the carrying value of the associated debt liability. The debt discount and debt issuance costs will be amortized as non-cash interest expense through May 15, 2026. The fair value of the 2026 Convertible Notes was approximately $294.9 million at December 31, 2019 and was determined using Level 2 inputs based on quoted market values. 2016 Offerings On July 6, 2016, the Company issued and sold $460.0 million aggregate principal amount of 3.25% Convertible Senior Notes due 2023 (the “2023 Convertible Notes”, and together with the 2026 Convertible Notes, the “Convertible Notes”). The Company received net proceeds from the sale of the 2023 Convertible Notes of $447.6 million, after deducting underwriting discounts, commissions and estimated offering expenses of approximately $12.4 million. The Company used approximately $38.4 million of such net proceeds to fund the cost of the Capped Call Transactions (as defined below) that were entered into in connection with the issuance of the 2023 Convertible Notes. The 2023 Convertible Notes were issued pursuant to the Base Indenture, as supplemented by the First Supplemental Indenture. The 2023 Convertible Notes are senior unsecured obligations of the Company, bear interest at a fixed rate of 3.25% per year (payable semi-annually on January 1 and July 1 of each year, beginning on January 1, 2017) and will mature on July 1, 2023, unless earlier repurchased, redeemed or converted. Holders may convert their 2023 Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding January 1, 2023 only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ended on September 30, 2016, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period after any five consecutive trading day period in which the trading price (as defined in the Indenture) per $1,000 principal amount of 2023 Convertible Notes for each trading day of such five consecutive trading day period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; (iii) if the Company calls any or all of the 2023 Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (iv) upon the occurrence of specified corporate events. On or after January 1, 2023 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2023 Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion of the 2023 Convertible Notes, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock (and cash in lieu of any fractional shares) or a combination of cash and shares of the Company’s common stock, at the Company’s election. The initial conversion rate of the 2023 Convertible Notes is 5.0358 shares of the Company’s common stock per $1,000 principal amount of 2023 Convertible Notes, which is equivalent to an initial conversion price of approximately $198.58 per share of the Company’s common stock. The conversion rate is subject to adjustment upon the occurrence of certain events but will not be adjusted for any accrued and unpaid interest. If the Company undergoes a fundamental change (as defined in the Indenture), holders may require the Company to repurchase for cash all or any portion of their 2023 Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2023 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if certain make-whole fundamental changes occur, the Company will, in certain circumstances, increase the conversion rate for any 2023 Convertible Notes converted in connection with such make-whole fundamental change. The Company may not redeem the 2023 Convertible Notes prior to July 6, 2021. The Company may redeem for cash all or part of the 2023 Convertible Notes, at its option, on or after July 6, 2021, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the 2023 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The Indenture provides for customary events of default. On June 30, 2016, in connection with the pricing of the 2023 Convertible Notes, the Company entered into privately-negotiated capped call transactions (the “Base Capped Call Transactions”) with each of Royal Bank of Canada, UBS AG, London Branch, and Credit Suisse Capital LLC (the “Option Counterparties”). On July 1, 2016, in connection with the underwriters’ exercise of their over-allotment option in full, the Company entered into additional capped call transactions (the “Additional Capped Call Transactions” and, together with the Base Capped Call Transactions, the “Capped Call Transactions”) with the Option Counterparties. The Capped Call Transactions are expected generally to reduce the potential dilution with respect to the Company’s common stock and/or offset the cash payments the Company would be required to make in excess of the principal amount of converted 2023 Convertible Notes, as the case may be, upon conversion of the 2023 Convertible Notes in the event that the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, is greater than the strike price of the Capped Call Transactions, which initially corresponds to the conversion price of the 2023 Convertible Notes and is subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the 2023 Convertible Notes. The cap price of the Capped Call Transactions is initially $262.2725 per share, and is subject to certain adjustments under the terms of the Capped Call Transactions. If, however, the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution and/or there would not be an offset of such potential cash payments, in each case, upon conversion of the Convertible Notes to the extent that such market price exceeds the cap price of the Capped Call Transactions. In accordance with ASC 470-20, the Company used an effective interest rate of 8.4% to determine the liability component of the 2023 Convertible Notes. This resulted in the recognition of $334.4 million as the liability component of the 2023 Convertible Notes and the recognition of the residual $113.1 million as the debt discount with a corresponding increase to additional paid-in capital for the equity component of the 2023 Convertible Notes. The fair value of the 2023 Convertible Notes was approximately $463.5 million and $410.9 million at December 31, 2019 and December 31, 2018, respectively, and was determined using Level 2 inputs based on quoted market values. Interest Expense on Convertible Notes Interest expense was $41.1 million, $30.5 million, and $29.3 million for the years ended December 31, 2019, 2018 and 2017, respectively, related to the Convertible Notes. Accrued interest on the Convertible Notes was approximately $8.1 million and $7.5 million as of December 31, 2019 and December 31, 2018, respectively. The Company recorded debt issuance costs of $19.0 million, which are being amortized using the effective interest method. As of December 31, 2019 and 2018, $13.2 million and $8.8 million, respectively, of debt issuance costs are recorded on the consolidated balance sheets in Long-term debt, in accordance with ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” As of December 31, 2019, $230.0 million aggregate principal amount of the 2026 Convertible Notes and $460.0 million aggregate principal amount of the 2023 Convertible Notes was outstanding, for a total of $690.0 million aggregate principal amount outstanding. |
Product Revenue, Net
Product Revenue, Net | 12 Months Ended |
Dec. 31, 2019 | |
Product Revenue, Net [Abstract] | |
Product Revenue, Net | 10. Product Revenue, Net The Company recognized net sales of Ocaliva of $249.6 million, $177.8 million and $129.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. The table below summarizes consolidated product revenue, net by region: Years Ended December 31, 2019 2018 2017 (in thousands) Product revenue, net: U.S. $ 187,436 $ 140,822 $ 115,807 ex-U.S. 62,134 36,960 13,368 Total product revenue, net $ 249,570 $ 177,782 $ 129,175 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 11. Fair Value Measurements The carrying amounts of the Company’s receivables and payables approximate their fair value due to their short maturities. Accounting principles provide guidance for using fair value to measure assets and liabilities. The guidance includes a three-level hierarchy of valuation techniques used to measure fair value, defined as follows: ● Unadjusted Quoted Prices — The fair value of an asset or liability is based on unadjusted quoted prices in active markets for identical assets or liabilities (Level 1). ● Pricing Models with Significant Observable Inputs — The fair value of an asset or liability is based on information derived from either an active market quoted price, which may require further adjustment based on the attributes of the financial asset or liability being measured, or an inactive market transaction (Level 2). ● Pricing Models with Significant Unobservable Inputs — The fair value of an asset or liability is primarily based on internally derived assumptions surrounding the timing and amount of expected cash flows for the financial instrument. Therefore, these assumptions are unobservable in either an active or inactive market (Level 3). The Company considers an active market as one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Conversely, the Company views an inactive market as one in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. Where appropriate, non-performance risk, or that of a counterparty, is considered in determining the fair values of liabilities and assets, respectively. The Company’s cash deposits and money market funds are classified within Level 1 of the fair value hierarchy because they are valued using bank balances or quoted market prices. Investments are classified as Level 2 instruments based on market pricing and other observable inputs. Financial assets carried at fair value are classified in the tables below in one of the three categories described above: Fair Value Measurements Using Total Level 1 Level 2 Level 3 (in thousands) December 31, 2019 Assets Cash and cash equivalents: Money market funds $ 19,376 $ 19,376 $ — $ — Commercial paper 7,498 — 7,498 — Available-for-sale investment debt securities: Commercial paper 42,848 — 42,848 — Corporate debt securities 539,719 — 539,719 — Total financial assets $ 609,441 $ 19,376 $ 590,065 $ — December 31, 2018 Assets Money market funds (included in cash and cash equivalents) $ 11,647 $ 11,647 $ — $ — Available-for-sale investment debt securities: Commercial paper 34,327 — 34,327 — Corporate debt securities 349,177 — 349,177 — U.S. government and agency securities 9,408 — 9,408 — Total financial assets $ 404,559 $ 11,647 $ 392,912 $ — The gross realized gains and losses on sales of available-for-sale investment debt securities were immaterial for the fiscal years ended December 31, 2019, 2018, and 2017. The estimated fair value of marketable debt securities (commercial paper, corporate debt securities and U.S. government and agency securities) as of December 31, 2019 and 2018, respectively, by contractual maturity, are as follows: Fair Value as of December 31, 2019 2018 (in thousands) Due in one year or less $ 473,602 $ 319,717 Due after one year through two years 116,463 73,195 Total investments in debt securities $ 590,065 $ 392,912 Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties. |
Stockholders' Equity and Prefer
Stockholders' Equity and Preferred Stock | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity and Preferred Stock | 12. Stockholders’ Equity and Preferred Stock 2019 Public Offering and Concurrent Private Placement On May 14, 2019, the Company issued and sold (i) 2,760,000 shares of common stock in a registered public offering (including 360,000 shares issued and sold upon the exercise in full of the underwriters’ option to purchase additional shares), at a price to the public of $83.50 per share (the “2019 Public Offering”) and (ii) 119,760 shares of common stock (the “2019 Private Placement Shares”) in a concurrent private placement of common stock (the “2019 Concurrent Private Placement”) exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), at a purchase price per share equivalent to the price to the public set in the 2019 Public Offering and pursuant to a securities purchase agreement (the “2019 Securities Purchase Agreement”) that the Company entered into with Samsara BioCapital, L.P. (“Samsara”), one of the Company’s existing stockholders. Pursuant to the 2019 Securities Purchase Agreement, the Company granted to Samsara certain registration rights requiring the Company, upon request of Samsara on or after July 9, 2019 and subject to certain terms and conditions, to register the resale by Samsara of its 2019 Private Placement Shares. Such registration rights expire upon the earlier of (i) May 8, 2020 and (ii) the date that all of the 2019 Private Placement Shares have been sold or can be sold publicly under Rule 144 of the Securities Act on a single day. As of the date of this Annual Report on Form 10-K, Samsara has not exercised any such registration rights. The net proceeds to the Company from the 2019 Public Offering and the 2019 Concurrent Private Placement were approximately $227.3 million, after deducting underwriting discounts, commissions and estimated offering expenses of approximately $13.9 million. 2018 Public Offering and Concurrent Private Placement On April 9, 2018, the Company issued and sold (i) 2,695,313 shares of common stock in a registered public offering (including 351,563 shares issued and sold upon the exercise in full of the underwriters’ option to purchase additional shares), at a price to the public of $64.00 per share (the “2018 Public Offering”) and (ii) 1,562,500 shares of common stock (the “2018 Private Placement Shares”) in a concurrent private placement (the “2018 Concurrent Private Placement”) exempt from the registration requirements of the Securities Act, at a purchase price per share equivalent to the price to the public set in the 2018 Public Offering and pursuant to a securities purchase agreement (the “2018 Securities Purchase Agreement”) that the Company entered into with the purchasers in the 2018 Concurrent Private Placement (the “Private Placement Purchasers”). Pursuant to the 2018 Securities Purchase Agreement, the Company granted to the Private Placement Purchasers certain registration rights which expired on April 4, 2019. Common Stock As of December 31, 2019 and 2018, the Company had 45,000,000 authorized shares of common stock, par value $0.001 per share. Dividends Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Company’s board of directors out of funds legally available for dividend payments. The Company has never declared or paid any cash dividends on its common stock, and does not anticipate paying any cash dividends on its common stock in the foreseeable future. The Company intends to retain all available funds and any future earnings to fund the development and expansion of its business. Any future determination to pay dividends will be at the discretion of the board of directors and will depend upon a number of factors, including the results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the board of directors deems relevant. Voting Holders of common stock are entitled to one vote for each share held with respect to all matters submitted to a vote of the stockholders and do not have cumulative voting rights. Preferred Stock As of December 31, 2019 and 2018, the Company had 5,000,000 authorized shares of preferred stock, par value $0.001 per share, of which none are issued. |
Stock Compensation
Stock Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Stock Compensation [Abstract] | |
Stock Compensation | 13. Stock Compensation The Company’s 2012 Equity Incentive Plan (“2012 Plan”) became effective upon the pricing of its initial public offering in October 2012 (the “IPO”). At the same time, the Company’s 2003 Stock Incentive Plan (“2003 Plan”) was terminated and 555,843 shares available under the 2003 Plan were added to the 2012 Plan. On January 1, 2019 and 2018, the number of shares available for issuance under the 2012 Plan increased by 1,187,599 and 1,010,693 shares, respectively, as a result of the automatic increase provisions thereof. The estimated fair value of the stock options granted in the year ended December 31, 2019 was determined utilizing a Black-Scholes option-pricing model at the date of grant. The fair value of the restricted stock units (“RSUs”) granted in the year ended December 31, 2019 was determined utilizing the closing price of the Company’s common stock on the date of grant. The fair value of the performance restricted stock units (“PRSUs”) granted in the year ended December 31, 2019 was determined utilizing the Monte Carlo simulation method. There were approximately 2.8 million and 2.2 million shares available for grant remaining under the 2012 Plan at December 31, 2019 and 2018, respectively. Stock Options and Performance-Based Stock Options The Company’s combined outstanding employee and non-employee option activity for the period from December 31, 2018 through December 31, 2019 is summarized as follows: Weighted Average Number Weighted Remaining Aggregate of Options Average Contractual Intrinsic Value (in thousands) Exercise Price Term (years) (in thousands) Outstanding at December 31, 2018 1,874 $ 97.64 7.5 $ 45,381 Granted 551 $ 101.85 — $ — Exercised (179) $ 37.82 — $ — Cancelled/forfeited (176) $ 92.35 — $ — Expired (89) $ 156.71 — $ — Outstanding at December 31, 2019 1,981 $ 99.87 7.4 $ 65,662 Expected to vest 885 $ 89.24 8.5 $ 32,201 Exercisable 1,096 $ 108.45 6.5 $ 33,460 The aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the deemed fair value of the Company’s common stock for those options that had exercise prices lower than the deemed fair value of the Company’s common stock. The weighted-average grant date fair value of options granted in the years ended December 31, 2019, 2018 and 2017 was $74.78, $41.18 and $63.65 per option, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2019, 2018 and 2017 was $10.2 million, $14.1 million and $9.4 million, respectively. As of December 31, 2019, the total compensation cost related to non-vested option awards not yet recognized is approximately $51.3 million with a weighted average remaining vesting period of 1.26 years. The Company estimated the fair value of stock options granted in the periods presented utilizing a Black-Scholes option-pricing model utilizing the following assumptions: Years Ended December 31, 2019 2018 2017 Volatility 86.9 - 89.9 % 62 - 73 % 61- 65 % Expected term (in years) 5.5 - 6.0 6.0 6.0 - 9.9 Risk-free rate 1.4 - 2.9 % 1.8 - 3.0 % 1.8 - 2.4 % Expected dividend yield — % — % — % Effective January 1, 2019, the Company changed its expected volatility assumption to be determined based on the actual historical stock price volatility of the Company over the expected term given the availability of sufficient historical trading data. In prior years, the expected volatility was estimated based on historical volatility information of publicly-traded peer companies. In April 2014, the Company issued 57,063 performance-based options to certain employees that will vest upon the achievement of certain regulatory milestones related to OCA at future dates. In November 2014, the Company issued an additional 10,839 performance-based options that will vest upon the achievement of the same regulatory milestones. As of both December 31, 2019 and 2018, the achievement of such milestones was not deemed to be probable and no stock-based compensation expense was recognized for these performance-based options. Restricted Stock Units and Awards & Performance-Based Restricted Stock Units and Awards The following table summarizes the aggregate RSU, RSA, PRSU and performance restricted share award (“PRSA”) activity for the year ended December 31, 2019: Weighted Number of Average Grant Date Awards Fair Value (in thousands) Non-vested awards at December 31, 2018 773 $ 76.10 Granted 395 $ 107.29 Vested (358) $ 83.45 Forfeited (101) $ 85.74 Non-vested awards at December 31, 2019 709 $ 88.39 For the years ended December 31, 2019, 2018 and 2017, the weighted-average grant date fair value of RSUs, RSAs, PRSUs and PRSAs granted was $107.29, $65.28 and $102.35, respectively. The total fair value of RSUs, RSAs, PRSUs and PRSAs that vested during the years ended December 31, 2019, 2018 and 2017 was $29.8 million, $24.0 million and $16.7 million, respectively. As of December 31, 2019, there was $48.3 million of unrecognized compensation expense related to unvested RSUs, RSAs, PRSUs, and PRSAs, which is expected to be recognized over a weighted average period of 1.33 years. During the years ended December 31, 2019 and 2018, the Company granted a total of 57,800 and 51,200 PRSUs to certain of the Company’s executive officers. During the year ended December 31, 2018, the Company granted a total of 4,300 PRSAs to certain of the Company’s executive officers. The performance criterion for such PRSUs and PRSAs is based on the Total Shareholder Return (“TSR”) of the Company’s common stock relative to the TSR of the companies comprising the S&P Biotechnology Select Industry Index (the “TSR Peer Group”) over a 3-year performance period and is accounted for as a market condition under ASC 718. The TSR for the Company or a member of the TSR Peer Group is calculated by dividing (a) the difference of the ending average stock price minus the beginning average stock price by (b) the beginning average stock price. The beginning average stock price equals the average closing stock price over the one calendar month period prior to the beginning of the performance period, after adjusting for dividends, as applicable. The ending average stock price equals the average closing price over the one calendar month period ending on the last day of the performance period, after adjusting for dividends, as applicable. The Company’s relative TSR is then used to calculate the payout percentage, which may range from zero percent (0%) to one hundred and fifty percent (150%) of the target award. The Company utilized a Monte Carlo Simulation to determine the grant date fair value of such PRSUs and PRSAs. The Company recorded approximately $4.0 million and $1.3 million of stock-based compensation related to such PRSUs and PRSAs during the years ended December 31, 2019 and 2018, respectively. The Company accounts for all forfeitures when they occur. Ultimately, the actual expense recognized over the vesting period will be for only those shares that vest and are not forfeited. The Company has in the past, and may in the future, grant performance-based awards with vesting terms based on the achievement of specified goals. To the extent such awards do not contain a market condition, the Company recognizes no expense until achievement of the performance requirement is deemed probable. Stock-based compensation expense has been reported in the Company’s statements of operations as follows: Years Ended December 31, 2019 2018 2017 (In thousands) Selling, general and administrative $ 43,170 $ 38,361 $ 40,004 Research and development 12,812 11,553 16,964 Total stock-based compensation $ 55,982 $ 49,914 $ 56,968 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefit Plans [Abstract] | |
Employee Benefit Plans | 14. Employee Benefit Plans The Company maintains a defined contribution plan, which is qualified under section 401(k) of the Internal Revenue Code for U.S. employees. Employees may make contributions by withholding a percentage of their salary up to the Internal Revenue Service annual limit of $19,000 and $25,000 in 2019 for employees under 50 years old and employees 50 years old or over, respectively. The Company’s matching contribution vests over four years from the start of employment. The Company made approximately $1.4 million, $1.9 million and $2.7 million in matching contributions for the years ended December 31, 2019, 2018 and 2017, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes [Abstract] | |
Income Taxes | 15. Income Taxes The components of loss before income taxes for the years ended December 31, 2019, 2018 and 2017 includes the following: Years Ended December 31, 2019 2018 2017 (in thousands) United States $ (95,708) $ (72,655) $ (102,586) Foreign (248,973) (236,587) (257,781) Total $ (344,681) $ (309,242) $ (360,367) Income tax expense (benefit) differed from the amounts computed by applying the statutory U.S. Federal income tax rate of 21% (21% for 2018 and 34% for 2017) to loss before income taxes as a result of the following: Years Ended December 31, 2019 2018 2017 (in thousands) Computed "expected" tax benefit $ (72,383) $ (64,941) $ (122,525) State taxes, net of U.S. Federal benefit — — — U.S. Federal rate reduction — — 84,787 U.S. Federal valuation allowance 14,786 9,352 282 Stock-based compensation 4,609 6,423 (49,391) Officer compensation 508 22 26 Foreign valuation allowance 19,349 44,896 52,521 Foreign tax rate differences 32,936 4,787 35,125 Other 195 (539) (825) Total $ — $ — $ — The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at December 31, 2019 and 2018 are presented below: December 31, 2019 2018 (in thousands) Deferred tax assets: U.S. and state net operating loss and other carryforwards $ 160,079 $ 151,416 Foreign net operating loss and other carryforwards 195,590 177,672 Stock compensation 13,626 13,228 Deferred revenue — 620 Accrued compensation 4,997 3,431 Accrued expense 1,750 2,340 Intangible property 2,088 — Interest limitation 5,183 2,913 Other 1,406 1,021 Deferred tax assets before valuation allowance 384,719 352,641 Valuation allowance (353,677) (338,852) Total deferred tax assets 31,042 13,789 Deferred tax liabilities: Convertible Notes (31,042) (13,789) Total deferred tax liabilities (31,042) (13,789) Net deferred tax asset (liability) $ — $ — Effects of the Tax Cuts and Jobs Act In late 2017, the United States enacted the TCJA, which significantly changed U.S. Federal income tax law by implementing a reduction in the Federal corporate income tax rate to 21%, moving from a worldwide tax system towards a territorial system and imposing new or additional limitations on the deductibility of interest expense and executive compensation. Given the significance of the legislation, the staff of the U.S. Securities and Exchange Commission (the “SEC”) issued Staff Accounting Bulletin No. 118 (“SAB 118”), which allowed registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. For the year ended December 31, 2017, amounts recorded principally related to the reduction in the U.S. corporate income tax rate to 21%, which resulted in the Company reducing its net deferred tax asset and associated valuation allowance. At December 31, 2018, the Company completed its accounting of SAB 118 for all of the enactment-date income tax effects of the TCJA. The Company did not make any measurement-period adjustments and there were no additional material adjustments related to the TCJA. Net Operating Loss and other carryforwards As of December 31, 2019, and 2018, the Company had net operating loss carryforwards (“NOLs”) for U.S. Federal income tax purposes of $693.3 million and $658.4 million, respectively, and other carryforwards of $0.5 million. The enactment of the TCJA modified the ability of companies to utilize NOLs arising in tax years beginning on or after January 1, 2018 by providing that such NOLs may be carried-forward indefinitely and used to offset up to 80 percent of taxable income in any given future year. Existing NOLs that arose in tax years beginning prior to January 1, 2018 were not affected by the TCJA and are generally eligible to be carried-forward for up to 20 years and used to fully offset taxable income in future years. If not utilized, the Company’s pre-2018 NOLs and other carryforwards will expire for U.S. Federal income tax purposes between 2024 and 2037. The Company also has certain state NOLs in varying amounts depending on the different state tax laws. As of December 31, 2019, and 2018, the Company had NOLs for foreign income tax purposes of $1.1 billion and $870.3 million, respectively. Of our $1.1 billion of foreign tax loss carryforwards, approximately $1.0 billion may be carried forward indefinitely and the remainder will expire during the next 18 years. In addition, the Company’s ability to utilize its NOLs may be limited under Section 382 of the Internal Revenue Code or applicable state and foreign tax law. The Section 382 limitations apply if an “ownership change” occurs. Generally, an ownership change occurs when certain shareholders increase their aggregate ownership by more than 50 percentage points over their lowest ownership percentage in a testing period (typically three years). The Company has evaluated whether one or more ownership changes under Section 382 have occurred since its inception and has determined that there have been at least two such changes. Although the Company believes that these ownership changes have not resulted in material limitations on its ability to use these NOLs, its ability to utilize these NOLs may be limited due to future ownership changes or for other reasons. As a result, the Company may not be able to take full advantage of its carryforwards for U.S. Federal, state, and foreign tax purposes. Valuation Allowance At December 31, 2019 and 2018, the Company maintained a full valuation allowance on its deferred tax assets since it has not yet achieved sustained profitable operations. As a result, the Company has not recorded any income tax benefit since its inception. In 2019, the valuation allowance for deferred tax assets increased by approximately $14.8 million. This includes an increase of $14.8 million, $2.6 million and $19.3 million for U.S. Federal, state and foreign tax, respectively, partially offset by a decrease of $21.9 million to equity. The decrease to equity primarily related to the U.S. Federal and state impact of the equity component associated with the 2026 Convertible Notes. In 2018, the valuation allowance for deferred tax assets increased by approximately $56.1 million. This includes an increase of $9.4 million, $1.9 million and $44.9 million for U.S. Federal, state and foreign tax, respectively, partially offset by a decrease of $0.1 million to equity. Unrecognized Tax Benefits At December 31, 2019 and 2018, the Company had no reserves for unrecognized tax benefits. The Company and its subsidiaries are subject to taxation in the United States and various foreign jurisdictions. Of the major jurisdictions, the Company is subject to examination in: the United States for U.S. Federal purposes for 2016 and forward and generally for state purposes for 2015 and forward; and the United Kingdom for 2017 and forward. However, NOLs are subject to audit in any tax year in which those losses are utilized, notwithstanding the year of origin. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 16. Commitments and Contingencies Facility Leases In May 2014, the Company entered into a lease agreement with respect to office space in San Diego, California. The Company leases approximately 47,000 square feet. The lease covering this property is scheduled to expire in July 2020. The Company will lease and occupy approximately 34,000 square feet of office space in San Diego under a separate lease that is expected to commence in August 2020 and scheduled to expire 60 months from the commencement date. In January 2016, Intercept Pharma Europe Ltd. (“IPEL”), a wholly owned subsidiary of the Company, entered into an underlease with respect to office space in London, United Kingdom. The Company is the guarantor to the underlease. IPEL leases approximately 8,600 square feet. The lease covering this property is scheduled to expire in May 2024. In November 2019, the Company entered into an amendment to the lease agreement with respect to office space at 10 Hudson Yards in New York, New York, where the Company’s corporate headquarters are located. The Company leases an aggregate of approximately 45,600 square feet of office space at this property. The lease covering this property is scheduled to expire in March 2022. The Company also leases office space in several other locations. Licenses The Company acquired a license from a third party to support the portfolio of product candidates. Under the license agreement with Aralez Pharmaceuticals Canada Inc. (“Aralez”) the Company has rights to develop and commercialize bezafibrate in the United States. The Company may pay up to $4.5 million upon the achievement of certain milestones, none of which is owed as of December 31, 2019. The Company is obligated to pay royalties to at a mid-single digit percentage of net product sales. Legal Proceedings The Company is involved in various disputes, governmental inquiries and investigations, legal proceedings and litigation in the course of its business, including the matters described below and, from time to time, intellectual property, employment and other litigation. These matters, which could result in damages, fines or other administrative, civil or criminal remedies, liabilities or penalties, are often complex and the outcome of such matters is often uncertain. The Company may from time to time enter into settlements to resolve such matters. On September 27, 2017, a purported shareholder class action, initially styled DeSmet v. Intercept Pharmaceuticals, Inc., et al, was filed in the United States District Court for the Southern District of New York, naming the Company and certain of its officers as defendants. The Court appointed lead plaintiffs in the lawsuit on June 1, 2018, and the lead plaintiffs filed an amended complaint on July 31, 2018, captioned Hou Liu and Amy Fu v. Intercept Pharmaceuticals, Inc., et al., naming the Company and certain of its current and former officers as defendants. The lead plaintiffs claim to be suing on behalf of anyone who purchased or otherwise acquired the Company’s common stock between June 9, 2016 and September 20, 2017. This lawsuit alleges that material misrepresentations and/or omissions of material fact were made in the Company’s public disclosures during the period from June 9, 2016 to September 20, 2017, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder. The alleged improper disclosures relate to statements regarding Ocaliva dosing, use and pharmacovigilance-related matters, as well as the Company’s operations, financial performance and prospects. The plaintiffs seek unspecified monetary damages on behalf of the putative class, an award of costs and expenses, including attorney’s fees, and rescissory damages. On September 14, 2018, the Company filed a motion to dismiss the amended complaint. Separately, on January 5, 2018, a follow-on derivative suit, styled Davis v. Pruzanski et al., was filed in New York state court by shareholder Gregg Davis based on substantially the same allegations as those set forth in the securities case. On December 1, 2017, a purported shareholder demand was made on the Company based on substantially the same allegations as those set forth in the securities case. While the Company believes that it has a number of valid defenses to the claims described above and intends to vigorously defend itself, the matters are in the early stages of litigation and no assessment can be made as to the likely outcome of the matters or whether they will be material to the Company. Accordingly, an estimate of the potential loss, or range of loss, if any, to the Company relating to the matters is not possible at this time. In May 2018, the Company received a subpoena from the SEC requesting information in connection with the Company’s patient assistance program and certain of the Company’s commercial activities. The Company cooperated fully with the SEC in this matter and in late 2019 the SEC staff informed the Company that they had concluded the investigation and did not intend to recommend an enforcement action against the Company. |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Net loss per common and potential common share: | |
Net Loss Per Share | 17. Net Loss Per Share Basic loss per share is computed by dividing net loss attributable to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. For the years ended December 31, 2019, 2018 and 2017, as the Company was in a net loss position, the diluted loss per share computations for such periods did not assume the exercise of stock options or vesting of RSUs as they would have had an anti-dilutive effect on loss per share. The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as of December 31, 2019, 2018 and 2017 as the inclusion thereof would have been anti-dilutive: December 31, 2019 2018 2017 (in thousands) Shares issuable upon conversion of Conversion Notes 4,435 2,316 — Options 1,981 1,874 1,808 Unvested restricted stock units 556 441 493 Total 6,972 4,631 2,301 |
Quarterly Financial Data (unaud
Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Data [Abstract] | |
Quarterly Financial Data | 18. Quarterly Financial Data (unaudited) The following table summarizes the unaudited quarterly financial data for the years ended December 31, 2019 and 2018: Quarters Ended March 31, June 30, September 30, December 31, Total (in thousands, except for per share amounts) 2019 Total revenue $ 52,252 $ 66,300 $ 61,950 $ 71,500 $ 252,002 Operating loss (83,945) (63,659) (75,533) (89,290) (312,427) Net loss (90,270) (71,420) (84,833) (98,158) (344,681) Net loss per common share - basic and diluted $ (3.03) $ (2.28) $ (2.59) $ (2.99) 2018 Total revenue $ 35,963 $ 43,575 $ 46,986 $ 53,280 $ 179,804 Operating loss (75,456) (69,777) (58,286) (81,971) (285,490) Net loss (81,590) (75,193) (64,454) (88,005) (309,242) Net loss per common share - basic and diluted $ (3.22) $ (2.58) $ (2.18) $ (2.97) |
Restructuring Charges
Restructuring Charges | 12 Months Ended |
Dec. 31, 2019 | |
Restructuring Charges [Abstract] | |
Restructuring Charges | 19. Restructuring Charges In December 2017, the Company initiated a 15% reduction in the workforce and concurrently notified the affected employees. The reduction in force supports the Company’s strategy to fund its development organization with strategic collaborations and to focus the Company’s resources to progress its development and commercialization initiatives. The actions associated with the reductions were substantially completed during the fourth quarter of 2017 and, as a result of the reductions, the Company recorded a one-time restructuring charge of $5.2 million for termination benefits in the same period. Of this charge, $3.9 million was recorded in selling, general and administrative expense and $1.3 million was recorded in research and development expense. The restructuring charge associated with cash payments of $5.2 million were paid out in the first quarter of 2018. No restructuring charges were incurred for the years ended December 31, 2019 and 2018. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company has no unconsolidated subsidiaries or investments accounted for under the equity method. |
Use of Estimates | Use of Estimates The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. |
Foreign Currency | Foreign Currency The Company’s functional and reporting currency is the U.S. dollar. Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. The resulting monetary assets and liabilities are translated into U.S. dollars at exchange rates prevailing on the subsequent balance sheet date. Revenue and expense components are translated to U.S. dollars at weighted-average exchange rates in effect during the period. Foreign currency transaction gains and losses resulting from remeasurement are recognized in Other income, net within the consolidated statements of operations. Gains and losses as a result of foreign currency translation adjustments are recorded as a component of Accumulated other comprehensive loss, net in the equity section of our consolidated balance sheets and as Foreign currency translation gains (losses) within the accompanying consolidated statements of comprehensive loss. |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents The Company considers all highly liquid securities with an original or remaining maturity of three months or less at acquisition to be cash equivalents. Restricted Cash Restricted cash consists of short-term bank guarantees held by our financial institutions to maintain operations of the Company’s subsidiaries in their respective countries. |
Investment Debt Securities, Available-for-Sale | Investment Debt Securities, Available-for-Sale Investment debt securities are considered to be available-for-sale and are carried at fair market value. The estimated fair value of the available-for-sale investment debt securities is determined based on quoted market prices or rates for similar instruments. Unrealized gains and losses, if any, are reported in accumulated other comprehensive income (loss). The cost of investment debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in Other income, net. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are also included in Other income, net. Interest and dividends on available-for-sale securities are included in Other income, net. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of certain financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other liabilities approximate fair value due to their short-term maturities. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, principally consist of cash, cash equivalents, accounts receivables from customers and investment debt securities. The Company currently invests its excess cash primarily in money market funds, U.S. Treasury notes, and high quality, marketable debt instruments of corporations, financial institutions and government sponsored enterprises. The Company has adopted an investment policy that includes guidelines relative to credit quality, diversification and maturities to preserve principal and liquidity. On a consolidated basis, for the year ended December 31, 2019, the Company’s three largest customers (as discussed in more detail below under “Revenue Recognition”) accounted for 32%, 31% and 15%, of the Company’s net product sales, respectively. On a consolidated basis, for the year ended December 31, 2018, the Company’s three largest customers (as discussed in more detail below under “Revenue Recognition”) accounted for 38%, 28% and 16%, of the Company’s net product sales, respectively. On a consolidated basis, the Company’s three largest customers accounted for 27%, 28% and 7% of the December 31, 2019 accounts receivable balance, respectively. On a consolidated basis, the Company’s three largest customers accounted for 22%, 29% and 6% of the December 31, 2018 accounts receivable balance, respectively. We monitor our customers’ financial credit worthiness in order to assess and respond to any changes in their credit profile. |
Accounts Receivable | 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. The Company has recorded $38.0 million and $25.7 million of accounts receivable as of December 31, 2019 and 2018, respectively, and has not |
Fixed Assets | Fixed Assets Fixed assets are stated at cost, and depreciated over the estimated useful life of the assets. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective assets, generally three disposed of and the related accumulated depreciation are removed from the balance sheets and any related gains or losses are reflected in the consolidated statements of operations. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets consist of fixed assets and right-of-use assets. The Company evaluates long-lived assets for impairment when events and circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable. If indicators of impairment exist, the Company assesses the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted future operating cash flows. If the carrying amount is not recoverable, the Company measures the amount of any impairment by comparing the carrying value of the asset to the present value of the expected future cash flows associated with the use of the asset. There have been no impairments of any long-lived assets in the periods presented. |
Inventory | Inventory Inventories are stated at the lower of cost or estimated realizable value. The Company determines the cost of inventory using the first-in, first-out (or FIFO) method. The Company capitalizes inventory costs associated with the Company's product after regulatory approval when, based on management's judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and writes-down such inventories as appropriate. In addition, the Company's product is subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company records a charge to cost of sales to write down such unmarketable inventory to zero. No such charges were recorded in the years ended December 31, 2019, 2018 or 2017. |
Leases | Leases Upon adoption of Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), the Company determines if an arrangement is a lease at inception and records right-of-use (“ROU”) assets and lease liabilities on the consolidated balance sheets at lease commencement based on the present value of remaining lease payments over the lease term. The Company only considers payments that are fixed and determinable at the time of commencement. Operating leases are included in other assets, accounts payable, accrued expenses and other liabilities and long-term other liabilities on the consolidated balance sheets. Operating lease liabilities are recognized based on the present value of the future minimum lease payments discounted by the Company’s incremental borrowing rate. The Company measures ROU assets based on the corresponding lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred and (iii) tenant incentives under the lease. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. For short-term leases, the Company records rent expense in its consolidated statements of operations on a straight-line basis over the lease term and records variable lease payments as incurred. |
Convertible Senior Notes | Convertible Debt The Company accounts for convertible debt in accordance with Financial Accounting Standards Board (“FASB”) ASC Subtopic 470-20. The Company separately accounts for the liability (debt) and equity (conversion option) components of convertible debt instruments by allocating the proceeds from the issuance. The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar debt instrument without the conversion option. The amount of the equity component (and resulting debt discount) is calculated by deducting the fair value of the liability component from the principal amount of the convertible debt instrument. The resulting debt discount is amortized as additional non-cash interest expense over the expected life of the notes utilizing the effective interest method. For additional information, see Note 9 — Long-Term Debt. |
Revenue Recognition | Revenue Recognition Product Revenue, Net The Company commenced its commercial launch of Ocaliva for the treatment of PBC in the United States in June 2016. In December 2016, the European Commission granted conditional approval for Ocaliva for the treatment of PBC and the Company commenced its European commercial launch in January 2017. Since January 2017, Ocaliva has also received regulatory approval in several of the Company’s target markets outside the United States and Europe, including Canada, Israel and Australia. The Company sells Ocaliva to a limited number of specialty pharmacies which dispense the product directly to patients. The specialty pharmacies are referred to as the Company’s customers. The Company provides the right of return to its customers for unopened product for a limited time before and after its expiration date. Prior to July 2017, given the Company’s limited sales history for Ocaliva and the inherent uncertainties in estimating product returns, the Company determined that the shipments of Ocaliva made to its customers did not meet the criteria for revenue recognition at the time of shipment. Accordingly, the Company recognized revenue when the product was sold through by its customers, provided all other revenue recognition criteria were met. The Company invoiced its customers upon shipment of Ocaliva to them and recorded accounts receivable, with a corresponding liability for deferred revenue equal to the gross invoice price. The Company then recognized revenue when Ocaliva was sold through as specialty pharmacies dispensed product directly to the patients (sell-through basis). The Company re-evaluated its revenue recognition policy in the third quarter of 2017, which included the accumulation and review of customer-related transactions since the Company’s commercial launch in the second quarter of 2016. The Company concluded it had accumulated sufficient data to reasonably estimate product returns and, therefore, began to recognize revenue at the time of shipment to its customers (sell-in basis). During the third quarter of 2017, the Company recorded an adjustment related to this change in estimate to recognize previously deferred revenue. The net effect was an increase in net sales of Ocaliva of $4.1 million for the year ended December 31, 2017. The Company also established a new reserve of $0.7 million during 2017 related to future returns from its customers. Effective January 1, 2018, the Company began recognizing revenue under ASC Topic 606, Revenue from Contracts with Customers ● Step 1: Identify the contract with the customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when the company satisfies a performance obligation In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: ● The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct). ● The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract). If a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that is distinct. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate. Under ASC 606, the Company has written contracts with each of its customers that have a single performance obligation — to deliver products upon receipt of a customer order — and these obligations are satisfied when delivery occurs and the customer receives Ocaliva. The Company evaluates the creditworthiness of each of its customers to determine whether collection is reasonably assured. The Company estimates variable revenue by calculating gross product revenues based on the wholesale acquisition cost that the Company charges its customers for Ocaliva, and then estimating its net product revenues by deducting (i) trade allowances, such as invoice discounts for prompt payment and customer fees, (ii) estimated government rebates and discounts related to Medicare, Medicaid and other government programs, and (iii) estimated costs of incentives offered to certain indirect customers including patients. Trade Allowances The Company provides invoice discounts on Ocaliva sales to certain of its customers for prompt payment and records these discounts as a reduction to gross product revenues. These discounts are based on contractual terms. Rebates and Discounts The Company contracts with the Centers for Medicare & Medicaid Services and other government agencies to make Ocaliva available to eligible patients. As a result, the Company estimates any rebates and discounts and deducts these estimated amounts from its gross product revenues at the time the revenues are recognized. The Company’s estimates of rebates and discounts are based on the government mandated discounts, which are statutorily-defined and applicable to these government funded programs and assumptions developed using historical experience along with actual payments and redemptions, government regulations, specific terms in individual agreements, product pricing, channels, and pipeline units. The Company recorded $20.3 million and $10.8 million in such estimates as of December 31, 2019 and December 31, 2018, respectively, in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. Other Incentives Other incentives that the Company offers to indirect customers include co-pay assistance cards provided by the Company for PBC patients who reside in states that permit co-pay assistance programs. The Company’s co-pay assistance program is intended to reduce each participating patient’s portion of the financial responsibility for Ocaliva purchase price to a specified dollar amount. The Company estimates the amount of co-pay assistance provided to eligible patients based on the terms of the program when product is dispensed by the specialty pharmacies to the patients. These estimates are based on redemption information provided by third-party claims processing organizations. The Company recorded $1.2 million and $0.9 million in such estimates as of December 31, 2019 and December 31, 2018, respectively, in accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. Revenue Recognition Licensing Revenue The Company accounts for the development, regulatory and sales milestones within an arrangement as variable consideration that is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Because the achievement of the milestones triggering these payments is highly susceptible to factors outside the entity’s influence, and the uncertainty about the amount of consideration for some of the milestones is not expected to be resolved for a long period of time, the Company does not expect to record the associated revenue until achievement of each milestone is imminent or has already occurred. Adoption of ASC 606 did not result in any adjustment to licensing revenue previously recognized. |
Research and Development Expenses | Research and Development Expenses Research and development costs that do not have alternative future use are charged to expense as incurred. This includes the cost of conducting clinical trials, compensation and related overhead for employees and consultants involved in research and development and the cost of the Company’s manufacturing activities to supply ongoing and future clinical trials and preclinical studies as well as preparations for commercialization of OCA. The cost of a compound that is acquired prior to regulatory approval, does not constitute a business and has no alternative future use is charged to expense as incurred. For periods prior to commercial launch, all manufacturing costs for OCA were expensed as research and development expenses. The Company will continue to incur manufacturing costs for OCA for other indications such as NASH prior to their approval. |
Stock-Based Compensation | Stock-based Compensation recognized on a straight-line basis over the requisite service period of the award. The Company accounts for all forfeitures when they occur. |
Net Loss Per Share | Net Loss Per Share Basic loss per share is computed by dividing net loss attributable to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options and vesting of restricted stock units. The Company accounts for the effect of the Convertible Notes on diluted net earnings per share using the if-converted method as they may be settled in cash or shares at the Company’s option. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive given our net losses. |
Income Taxes | Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. The Company establishes a valuation allowance when it believes it is more likely than not that deferred tax assets will not be realized. The Company determines the need for a valuation allowance by assessing the probability of realizing deferred tax assets, taking into consideration all available positive and negative evidence, including historical operating results, expectations of future taxable income, carryforward periods available, various income tax strategies and other relevant factors. Significant judgment is required in making this assessment and to the extent future expectations change, the Company would have to assess the recoverability of its deferred assets at that time. At any one time the Company’s tax returns for numerous tax years are subject to examination by U.S. Federal, state, and foreign taxing jurisdictions. The impact of an uncertain tax position taken or expected to be taken on an income tax return must be recognized in the financial statements at the largest amount that is more likely than not to be sustained. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not to be sustained. |
Segments | Segments The Company operates in one segment focused on the development and commercialization of novel therapeutics to treat progressive non-viral liver diseases. |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the FASB established ASC 842, by issuing ASU No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. ASC 842 was subsequently amended by ASU No. 2018-01, “Land Easement Practical Expedient for Transition to Topic 842”; ASU No. 2018-10, “Codification Improvements to Topic 842, Leases”; and ASU No. 2018-11, “Targeted Improvements”. The new standard establishes a right-of-use model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statements of operations. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company adopted the new standard on January 1, 2019 using the effective date as the date of initial application. Consequently, financial information was not updated and the disclosures required under the new standard was not provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients”, which permits the Company to not reassess under the new standard the Company’s prior conclusions about lease identification, lease classification and initial direct costs. The new standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company did not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient to not separate lease and non-lease components for all of the Company’s leases. Upon adoption at January 1, 2019, the Company recognized additional operating liabilities of $25.4 million, with corresponding ROU assets of $19.6 million based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which replaces the incurred loss impairment methodology under current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 was subsequently updated by ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”, to clarify that entities should include recoveries when estimating the allowance for credit losses. The Company will be required to use a forward-looking expected credit loss model for accounts receivables, loans and other financial instruments. Credit losses relating to available-for-sale investment debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 and must be adopted using a modified retrospective approach, with certain exceptions. The Company adopted ASU 2016-13 on January 1, 2020 and its adoption will not have any material impact on the Company’s consolidated financial statements and related disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating ASC Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company adopted ASU 2017-11 on January 1, 2019 and its adoption did not have any impact on the Company’s consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU No. 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The changes take effect for public companies for fiscal years starting after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of ASC 606. The Company adopted ASU 2018-07 on January 1, 2019 and its adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance of the update. The Company adopted ASU 2018-13 on January 1, 2020 and its adoption did not have any impact on the Company’s consolidated financial statements and related disclosures. Recent Accounting Pronouncements to be Adopted In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. |
Fair Value Measurements (Policy
Fair Value Measurements (Policy) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of certain financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other liabilities approximate fair value due to their short-term maturities. |
Cash, Cash Equivalents, and I_2
Cash, Cash Equivalents, and Investments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Cash, Cash Equivalents, and Investment Debt Securities [Abstract] | |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | The fair value for the Company’s available-for-sale investment debt securities that have been in an unrealized loss position for less than twelve months or twelve months or longer is as follows: As of December 31, 2019 Less than 12 months 12 months or longer Total (in thousands) Gross Gross Gross Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses Commercial paper $ 50,346 $ (1) $ — $ — $ 50,346 $ (1) Corporate debt securities 539,719 (81) — — 539,719 (81) Total $ 590,065 $ (82) $ — $ — $ 590,065 $ (82) As of December 31, 2018 Less than 12 months 12 months or longer Total (in thousands) Gross Gross Gross Unrealized Unrealized Unrealized Fair Value Losses Fair Value Losses Fair Value Losses Commercial paper $ 34,327 $ (26) $ — $ — $ 34,327 $ (26) Corporate debt securities 260,547 (443) 56,626 (261) 317,173 (704) U.S. government and agency securities — — 1,991 (7) 1,991 (7) Total $ 294,874 $ (469) $ 58,617 $ (268) $ 353,491 $ (737) |
Cash, Cash Equivalents and Investment Debt Securities | The following table summarizes the Company’s cash, cash equivalents and investments as of December 31, 2019 and December 31, 2018: As of December 31, 2019 Gross Gross Unrealized Unrealized Amortized Cost Gains Losses Fair Value (in thousands) Cash and cash equivalents: Cash and money market funds $ 62,557 $ — $ — $ 62,557 Commercial paper 7,498 — — 7,498 Total cash and cash equivalents 70,055 — — 70,055 Investment debt securities: Commercial paper 42,806 43 (1) 42,848 Corporate debt securities 538,965 835 (81) 539,719 Total investment debt securities 581,771 878 (82) 582,567 Total cash, cash equivalents and investment debt securities $ 651,826 $ 878 $ (82) $ 652,622 As of December 31, 2018 Gross Gross Unrealized Unrealized Amortized Cost Gains Losses Fair Value (in thousands) Cash and cash equivalents: Cash and money market funds $ 43,248 $ — $ — $ 43,248 Investment debt securities: Commercial paper 34,353 — (26) 34,327 Corporate debt securities 349,854 27 (704) 349,177 U.S. government and agency securities 9,410 5 (7) 9,408 Total investment debt securities 393,617 32 (737) 392,912 Total cash, cash equivalents and investment debt securities $ 436,865 $ 32 $ (737) $ 436,160 |
Fixed Assets, Net (Tables)
Fixed Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fixed Assets, Net [Abstract] | |
Fixed Assets, Net | Fixed assets are stated at cost and depreciated or amortized using the straight-line method based on useful lives as follows: Useful lives December 31, (Years) 2019 2018 (in thousands) Office equipment and software 3 $ 4,386 $ 3,986 Leasehold improvements Shorter of remaining lease term or useful life 10,489 14,464 Furniture and fixtures 7 4,032 3,907 Subtotal 18,907 22,357 Less: accumulated depreciation (13,705) (11,946) Fixed assets, net $ 5,202 $ 10,411 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory, Net [Abstract] | |
Schedule of Inventory | Inventories are stated at the lower of cost or market. Inventories consisted of the following: December 31, 2019 2018 (in thousands) Work-in-process $ 8,302 $ 7,019 Finished goods 160 89 Inventory $ 8,462 $ 7,108 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of operating lease assets and liabilities | Leases Classification December 31, 2019 Assets (in thousands) Operating lease assets Other assets $ 13,246 Total leased assets $ 13,246 Liabilities Current Operating lease liabilities Accounts payable, accrued expenses and other liabilities $ 6,456 Noncurrent Operating lease liabilities Long-term other liabilities 9,222 Total lease liabilities $ 15,678 |
Schedule of operating lease costs | Year Ended Lease Cost Classification December 31, 2019 (in thousands) Operating lease cost Selling, general and administrative expenses $ 6,176 Short-term lease cost Selling, general and administrative expenses 2,203 Variable lease cost Selling, general and administrative expenses 829 Sublease income Other income, net (788) Net lease cost $ 8,420 |
Schedule of maturities of the company's operating lease liabilities | Maturity of Lease Liabilities Operating leases (in thousands) 2020 $ 6,949 2021 5,978 2022 2,269 2023 965 2024 402 Thereafter — Total lease payments 16,563 Less: Present value discount (885) Total operating lease liabilities $ 15,678 |
Accounts Payable, Accrued Exp_2
Accounts Payable, Accrued Expenses and Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounts Payable, Accrued Expenses and Other Liabilities [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable, accrued expenses and other liabilities consisted of the following: December 31, 2019 2018 (in thousands) Accounts payable $ 18,975 $ 11,765 Accrued employee compensation 26,483 20,335 Accrued contracted services 74,486 54,681 Accrued rebates, discounts and other incentives 21,529 11,673 Operating lease liabilities 6,456 — Other liabilities 6,039 6,655 Accounts payable, accrued expenses and other liabilities $ 153,968 $ 105,109 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Long-Term Debt [Abstract] | |
Schedule of Long-term Debt Instruments | Debt, net of discounts and deferred financing costs, consisted of the following: December 31, 2019 2018 (in thousands) 2023 Convertible Notes $ 460,000 $ 460,000 2026 Convertible Notes 230,000 — Long-term debt, gross 690,000 460,000 Less: Unamortized debt discounts and fees (157,922) (88,750) Long-term debt, net $ 532,078 $ 371,250 |
Product Revenue, Net (Tables)
Product Revenue, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Product Revenue, Net [Abstract] | |
Product Revenues | The table below summarizes consolidated product revenue, net by region: Years Ended December 31, 2019 2018 2017 (in thousands) Product revenue, net: U.S. $ 187,436 $ 140,822 $ 115,807 ex-U.S. 62,134 36,960 13,368 Total product revenue, net $ 249,570 $ 177,782 $ 129,175 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements [Abstract] | |
Fair Value, Marketable Securities Measured on Recurring and Nonrecurring Basis | Financial assets carried at fair value are classified in the tables below in one of the three categories described above: Fair Value Measurements Using Total Level 1 Level 2 Level 3 (in thousands) December 31, 2019 Assets Cash and cash equivalents: Money market funds $ 19,376 $ 19,376 $ — $ — Commercial paper 7,498 — 7,498 — Available-for-sale investment debt securities: Commercial paper 42,848 — 42,848 — Corporate debt securities 539,719 — 539,719 — Total financial assets $ 609,441 $ 19,376 $ 590,065 $ — December 31, 2018 Assets Money market funds (included in cash and cash equivalents) $ 11,647 $ 11,647 $ — $ — Available-for-sale investment debt securities: Commercial paper 34,327 — 34,327 — Corporate debt securities 349,177 — 349,177 — U.S. government and agency securities 9,408 — 9,408 — Total financial assets $ 404,559 $ 11,647 $ 392,912 $ — |
Schedule of Available for Sale Securities Debt Maturities | The estimated fair value of marketable debt securities (commercial paper, corporate debt securities and U.S. government and agency securities) as of December 31, 2019 and 2018, respectively, by contractual maturity, are as follows: Fair Value as of December 31, 2019 2018 (in thousands) Due in one year or less $ 473,602 $ 319,717 Due after one year through two years 116,463 73,195 Total investments in debt securities $ 590,065 $ 392,912 |
Stock Compensation (Tables)
Stock Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock Compensation [Abstract] | |
Schedule of Share Based Compensation Stock Options Activities | The Company’s combined outstanding employee and non-employee option activity for the period from December 31, 2018 through December 31, 2019 is summarized as follows: Weighted Average Number Weighted Remaining Aggregate of Options Average Contractual Intrinsic Value (in thousands) Exercise Price Term (years) (in thousands) Outstanding at December 31, 2018 1,874 $ 97.64 7.5 $ 45,381 Granted 551 $ 101.85 — $ — Exercised (179) $ 37.82 — $ — Cancelled/forfeited (176) $ 92.35 — $ — Expired (89) $ 156.71 — $ — Outstanding at December 31, 2019 1,981 $ 99.87 7.4 $ 65,662 Expected to vest 885 $ 89.24 8.5 $ 32,201 Exercisable 1,096 $ 108.45 6.5 $ 33,460 |
Schedule of Share Based Compensation Arrangement By Share Based Payment Award Grants in Period Fair Value Assumptions | The Company estimated the fair value of stock options granted in the periods presented utilizing a Black-Scholes option-pricing model utilizing the following assumptions: Years Ended December 31, 2019 2018 2017 Volatility 86.9 - 89.9 % 62 - 73 % 61- 65 % Expected term (in years) 5.5 - 6.0 6.0 6.0 - 9.9 Risk-free rate 1.4 - 2.9 % 1.8 - 3.0 % 1.8 - 2.4 % Expected dividend yield — % — % — % |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | The following table summarizes the aggregate RSU, RSA, PRSU and performance restricted share award (“PRSA”) activity for the year ended December 31, 2019: Weighted Number of Average Grant Date Awards Fair Value (in thousands) Non-vested awards at December 31, 2018 773 $ 76.10 Granted 395 $ 107.29 Vested (358) $ 83.45 Forfeited (101) $ 85.74 Non-vested awards at December 31, 2019 709 $ 88.39 |
Schedule of Stock Based Compensation Expense | Stock-based compensation expense has been reported in the Company’s statements of operations as follows: Years Ended December 31, 2019 2018 2017 (In thousands) Selling, general and administrative $ 43,170 $ 38,361 $ 40,004 Research and development 12,812 11,553 16,964 Total stock-based compensation $ 55,982 $ 49,914 $ 56,968 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | The components of loss before income taxes for the years ended December 31, 2019, 2018 and 2017 includes the following: Years Ended December 31, 2019 2018 2017 (in thousands) United States $ (95,708) $ (72,655) $ (102,586) Foreign (248,973) (236,587) (257,781) Total $ (344,681) $ (309,242) $ (360,367) |
Schedule of Components of Income Tax Expense (Benefit) | Income tax expense (benefit) differed from the amounts computed by applying the statutory U.S. Federal income tax rate of 21% (21% for 2018 and 34% for 2017) to loss before income taxes as a result of the following: Years Ended December 31, 2019 2018 2017 (in thousands) Computed "expected" tax benefit $ (72,383) $ (64,941) $ (122,525) State taxes, net of U.S. Federal benefit — — — U.S. Federal rate reduction — — 84,787 U.S. Federal valuation allowance 14,786 9,352 282 Stock-based compensation 4,609 6,423 (49,391) Officer compensation 508 22 26 Foreign valuation allowance 19,349 44,896 52,521 Foreign tax rate differences 32,936 4,787 35,125 Other 195 (539) (825) Total $ — $ — $ — |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at December 31, 2019 and 2018 are presented below: December 31, 2019 2018 (in thousands) Deferred tax assets: U.S. and state net operating loss and other carryforwards $ 160,079 $ 151,416 Foreign net operating loss and other carryforwards 195,590 177,672 Stock compensation 13,626 13,228 Deferred revenue — 620 Accrued compensation 4,997 3,431 Accrued expense 1,750 2,340 Intangible property 2,088 — Interest limitation 5,183 2,913 Other 1,406 1,021 Deferred tax assets before valuation allowance 384,719 352,641 Valuation allowance (353,677) (338,852) Total deferred tax assets 31,042 13,789 Deferred tax liabilities: Convertible Notes (31,042) (13,789) Total deferred tax liabilities (31,042) (13,789) Net deferred tax asset (liability) $ — $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Maturity of Lease Liabilities Operating leases (in thousands) 2020 $ 6,949 2021 5,978 2022 2,269 2023 965 2024 402 Thereafter — Total lease payments 16,563 Less: Present value discount (885) Total operating lease liabilities $ 15,678 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Net loss per common and potential common share: | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as of December 31, 2019, 2018 and 2017 as the inclusion thereof would have been anti-dilutive: December 31, 2019 2018 2017 (in thousands) Shares issuable upon conversion of Conversion Notes 4,435 2,316 — Options 1,981 1,874 1,808 Unvested restricted stock units 556 441 493 Total 6,972 4,631 2,301 |
Quarterly Financial Data (una_2
Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Data [Abstract] | |
Schedule of Quarterly Financial Data | The following table summarizes the unaudited quarterly financial data for the years ended December 31, 2019 and 2018: Quarters Ended March 31, June 30, September 30, December 31, Total (in thousands, except for per share amounts) 2019 Total revenue $ 52,252 $ 66,300 $ 61,950 $ 71,500 $ 252,002 Operating loss (83,945) (63,659) (75,533) (89,290) (312,427) Net loss (90,270) (71,420) (84,833) (98,158) (344,681) Net loss per common share - basic and diluted $ (3.03) $ (2.28) $ (2.59) $ (2.99) 2018 Total revenue $ 35,963 $ 43,575 $ 46,986 $ 53,280 $ 179,804 Operating loss (75,456) (69,777) (58,286) (81,971) (285,490) Net loss (81,590) (75,193) (64,454) (88,005) (309,242) Net loss per common share - basic and diluted $ (3.22) $ (2.58) $ (2.18) $ (2.97) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Narrative) (Details) | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 01, 2019USD ($) | |
Product revenue, net | $ 71,500,000 | $ 61,950,000 | $ 66,300,000 | $ 52,252,000 | $ 53,280,000 | $ 46,986,000 | $ 43,575,000 | $ 35,963,000 | $ 252,002,000 | $ 179,804,000 | $ 130,956,000 | |
Accounts receivable | 38,044,000 | 25,694,000 | 38,044,000 | 25,694,000 | ||||||||
Allowance for doubtful accounts receivable, current | 0 | $ 0 | ||||||||||
Property, plant and equipment, depreciation methods | straight-line method | |||||||||||
Deferred revenue, current | 1,621,000 | 1,621,000 | ||||||||||
Number of operating segments | segment | 1 | |||||||||||
Operating lease liabilities | 15,678,000 | $ 15,678,000 | ||||||||||
Right of use asset | 13,246,000 | 13,246,000 | ||||||||||
Deferred Tax Assets, Other | 1,406,000 | 1,021,000 | 1,406,000 | 1,021,000 | ||||||||
Inventory write-down | 0 | 0 | $ 0 | |||||||||
Accrued Marketing Costs, Current | 21,529,000 | 11,673,000 | 21,529,000 | $ 11,673,000 | ||||||||
Impairment of Long-Lived Assets Held-for-use | $ 0 | |||||||||||
Accounting Standards Update 2016-02 [Member] | ||||||||||||
Operating lease liabilities | $ 25,400,000 | |||||||||||
Right of use asset | $ 19,600,000 | |||||||||||
Minimum [Member] | ||||||||||||
Property, plant and equipment, useful life | 3 years | |||||||||||
Maximum [Member] | ||||||||||||
Property, plant and equipment, useful life | 7 years | |||||||||||
Stock Options [Member] | ||||||||||||
Vesting period | 4 years | |||||||||||
Expected term (in years) | 10 years | 6 years | ||||||||||
Stock Options [Member] | Minimum [Member] | ||||||||||||
Expected term (in years) | 5 years 6 months | 6 years | ||||||||||
Stock Options [Member] | Maximum [Member] | ||||||||||||
Expected term (in years) | 6 years | 9 years 10 months 24 days | ||||||||||
Product [Member] | ||||||||||||
Product revenue, net | $ 249,570,000 | $ 177,782,000 | $ 129,175,000 | |||||||||
Ocaliva [Member] | ||||||||||||
Reserves related to future returns | 700,000 | |||||||||||
Accrued Marketing Costs, Current | 20,300,000 | 10,800,000 | 20,300,000 | 10,800,000 | ||||||||
Co payment assistance program | $ 1,200,000 | $ 900,000 | $ 1,200,000 | $ 900,000 | ||||||||
Ocaliva [Member] | Accounting Standards Update 2014-09 [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | ||||||||||||
Product revenue, net | $ 4,100,000 | |||||||||||
Accounts Receivable [Member] | Customer Concentration Risk One [Member] | ||||||||||||
Concentration risk, percentage | 27.00% | 22.00% | ||||||||||
Accounts Receivable [Member] | Customer Concentration Risk Two [Member] | ||||||||||||
Concentration risk, percentage | 28.00% | 29.00% | ||||||||||
Accounts Receivable [Member] | Customer Concentration Risk Three [Member] | ||||||||||||
Concentration risk, percentage | 7.00% | 6.00% | ||||||||||
Sales Gross [Member] | Customer Concentration Risk One [Member] | ||||||||||||
Concentration risk, percentage | 32.00% | 38.00% | ||||||||||
Sales Gross [Member] | Customer Concentration Risk Two [Member] | ||||||||||||
Concentration risk, percentage | 31.00% | 28.00% | ||||||||||
Sales Gross [Member] | Customer Concentration Risk Three [Member] | ||||||||||||
Concentration risk, percentage | 15.00% | 16.00% | ||||||||||
Leasehold Improvements [Member] | ||||||||||||
Property, plant and equipment, depreciation methods | amortized over the shorter of the asset’s useful life or the life of the lease term |
Significant Agreements (Narrati
Significant Agreements (Narrative) (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
May 31, 2014 | Mar. 31, 2011 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Significant Agreements [Line Items] | |||||||||||||
License arrangement, deferred revenue, recognized | $ 1,200 | $ 400 | |||||||||||
Revenue | $ 71,500 | $ 61,950 | $ 66,300 | $ 52,252 | $ 53,280 | $ 46,986 | $ 43,575 | $ 35,963 | 252,002 | 179,804 | $ 130,956 | ||
License [Member] | |||||||||||||
Significant Agreements [Line Items] | |||||||||||||
Revenue | 2,432 | 2,022 | 1,781 | ||||||||||
Product [Member] | |||||||||||||
Significant Agreements [Line Items] | |||||||||||||
Revenue | 249,570 | 177,782 | 129,175 | ||||||||||
Dainippon Sumitomo Pharma Co Ltd [Member] | |||||||||||||
Significant Agreements [Line Items] | |||||||||||||
License agreement payment | $ 15,000 | ||||||||||||
Intellectual Property [Member] | License [Member] | |||||||||||||
Significant Agreements [Line Items] | |||||||||||||
Revenue | 2,400 | 2,000 | $ 1,800 | ||||||||||
Milestone Payment [Member] | Dainippon Sumitomo Pharma Co Ltd [Member] | |||||||||||||
Significant Agreements [Line Items] | |||||||||||||
License arrangement, deferred revenue, recognized | $ 0 | $ 2,400 | |||||||||||
Korea [Member] | Up-front Payment [Member] | Dainippon Sumitomo Pharma Co Ltd [Member] | |||||||||||||
Significant Agreements [Line Items] | |||||||||||||
License agreement payment | $ 1,000 |
Cash, Cash Equivalents, and I_3
Cash, Cash Equivalents, and Investments (Narrative) (Details) - security | Dec. 31, 2019 | Dec. 31, 2018 |
Cash, Cash Equivalents, and Investment Debt Securities [Abstract] | ||
Number of positions that were in a continuous unrealized loss position for more than twelve months | 0 | 24 |
Cash, Cash Equivalents, and I_4
Cash, Cash Equivalents, and Investments (Cash, Cash Equivalents and Investment Debt Securities) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Amortized Cost | $ 70,055 | |
Cash and cash equivalents, Fair Value | 70,055 | |
Investment Debt Securities Abstract | ||
Total investments, Amortized Cost | 581,771 | $ 393,617 |
Total cash and cash equivalents and investment debt securities, Amortized Cost | 651,826 | 436,865 |
Total investments, Gross Unrealized Gains | 878 | 32 |
Total cash and cash equivalents and investment debt securities, Gross Unrealized Gains | 878 | 32 |
Total investments, Gross Unrealized Losses | (82) | (737) |
Total cash and cash equivalents and investment debt securities, Gross Unrealized Losses | (82) | (737) |
Total investments, Fair Value | 590,065 | 392,912 |
Total Investments, Fair Value | 582,567 | |
Total cash and cash equivalents and investment debt securities, Fair Value | 652,622 | 436,160 |
Commercial Paper [Member] | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Amortized Cost | 7,498 | |
Cash and cash equivalents, Fair Value | 7,498 | |
Investment Debt Securities Abstract | ||
Total investments, Amortized Cost | 42,806 | 34,353 |
Total investments, Gross Unrealized Gains | 43 | |
Total investments, Gross Unrealized Losses | (1) | (26) |
Total investments, Fair Value | 42,848 | 34,327 |
Corporate Debt Securities [Member] | ||
Investment Debt Securities Abstract | ||
Total investments, Amortized Cost | 538,965 | 349,854 |
Total investments, Gross Unrealized Gains | 835 | 27 |
Total investments, Gross Unrealized Losses | (81) | (704) |
Total investments, Fair Value | 539,719 | 349,177 |
US Government Agencies Debt Securities [Member] | ||
Investment Debt Securities Abstract | ||
Total investments, Amortized Cost | 9,410 | |
Total investments, Gross Unrealized Gains | 5 | |
Total investments, Gross Unrealized Losses | (7) | |
Total investments, Fair Value | 9,408 | |
Cash and Money Market Funds [Member] | ||
Cash and cash equivalents: | ||
Cash and Cash Equivalents, Amortized Cost | 62,557 | 43,248 |
Cash and cash equivalents, Fair Value | $ 62,557 | $ 43,248 |
Cash, Cash Equivalents, and I_5
Cash, Cash Equivalents, and Investments (Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Total available for sale securities, Less than 12 months, Fair Value | $ 590,065 | $ 294,874 |
Total available for sale securities Less than 12 months, Gross Unrealized Holding Losses | (82) | (469) |
Total available for sale securities, More than 12 months, Fair Value | 58,617 | |
Total available for sale securities more than 12 months, Gross Unrealized Holding Losses | (268) | |
Available-for-sale securities, Total Fair Value | 590,065 | 353,491 |
Available-for-sale securities, Total Gross Unrealized Losses | (82) | (737) |
Commercial Paper [Member] | ||
Total available for sale securities, Less than 12 months, Fair Value | 50,346 | 34,327 |
Total available for sale securities Less than 12 months, Gross Unrealized Holding Losses | (1) | (26) |
Available-for-sale securities, Total Fair Value | 50,346 | 34,327 |
Available-for-sale securities, Total Gross Unrealized Losses | (1) | (26) |
Corporate Debt Securities [Member] | ||
Total available for sale securities, Less than 12 months, Fair Value | 539,719 | 260,547 |
Total available for sale securities Less than 12 months, Gross Unrealized Holding Losses | (81) | (443) |
Total available for sale securities, More than 12 months, Fair Value | 56,626 | |
Total available for sale securities more than 12 months, Gross Unrealized Holding Losses | (261) | |
Available-for-sale securities, Total Fair Value | 539,719 | 317,173 |
Available-for-sale securities, Total Gross Unrealized Losses | $ (81) | (704) |
US Government Agencies Debt Securities [Member] | ||
Total available for sale securities, More than 12 months, Fair Value | 1,991 | |
Total available for sale securities more than 12 months, Gross Unrealized Holding Losses | (7) | |
Available-for-sale securities, Total Fair Value | 1,991 | |
Available-for-sale securities, Total Gross Unrealized Losses | $ (7) |
Fixed Assets, Net (Narrative) (
Fixed Assets, Net (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Fixed Assets, Net [Abstract] | |||
Depreciation | $ 3,663 | $ 4,582 | $ 4,601 |
Fixed Assets, Net (Fixed Assets
Fixed Assets, Net (Fixed Assets Stated at Cost) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fixed assets | $ 18,907 | $ 22,357 |
Less: accumulated depreciation | (13,705) | (11,946) |
Fixed assets, net | 5,202 | 10,411 |
Office Equipment [Member] | ||
Fixed assets | $ 4,386 | 3,986 |
Property, Plant and Equipment, Useful Life | 3 years | |
Leasehold Improvements [Member] | ||
Fixed assets | $ 10,489 | 14,464 |
Property, Plant and Equipment, Estimated Useful Lives | Shorter of remaining lease term or useful life | |
Furniture and Fixtures [Member] | ||
Fixed assets | $ 4,032 | $ 3,907 |
Property, Plant and Equipment, Useful Life | 7 years |
Inventory (Schedule of Inventor
Inventory (Schedule of Inventory) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory, Net [Abstract] | ||
Work-in-process | $ 8,302 | $ 7,019 |
Finished goods | 160 | 89 |
Inventory | $ 8,462 | $ 7,108 |
Leases (Details)
Leases (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Operating lease, existence of option to extend | true |
Leases (Assets and Liabilities)
Leases (Assets and Liabilities) (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
Operating lease assets | $ 13,246 |
Other assets | us-gaap:OtherAssetsNoncurrent |
Total leased assets | $ 13,246 |
Operating lease liabilities, current | $ 6,456 |
Accounts payable, accrued expenses and other liabilities | us-gaap:AccountsPayableAndOtherAccruedLiabilities |
Operating lease liabilities, Noncurrent | $ 9,222 |
Long-term other liabilities | us-gaap:LongTermDebtNoncurrent |
Total lease liabilities | $ 15,678 |
Leases (Lease Cost, Term and Di
Leases (Lease Cost, Term and Discount Rate) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lease Cost | |
Net lease cost | $ 8,420 |
Operating leases, weighted-average remaining term | 2 years 8 months 12 days |
Operating leases, weighted-average discount rate | 0.04% |
Selling, General and Administrative Expenses [Member] | |
Lease Cost | |
Operating lease cost | $ 6,176 |
Short-term lease cost | 2,203 |
Variable lease cost | 829 |
Other income, net | |
Lease Cost | |
Sublease income | $ (788) |
Leases (Maturities of Operating
Leases (Maturities of Operating Lease Liabilities and lease payments) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Maturity of Lease Liabilities | |
2020 | $ 6,949 |
2021 | 5,978 |
2022 | 2,269 |
2023 | 965 |
2024 | 402 |
Total lease payments | 16,563 |
Less: Present value discount | (885) |
Total operating lease liabilities | 15,678 |
Cash payments included in the measurement of the Company's lease liabilities | $ 7,500 |
Accounts Payable, Accrued Exp_3
Accounts Payable, Accrued Expenses and Other Liabilities (Narrative) (Details) - Foreign Tax Authority [Member] - Her Majesty's Revenue and Customs (HMRC) [Member] - USD ($) $ in Millions | 1 Months Ended | 24 Months Ended |
Sep. 30, 2019 | Dec. 31, 2016 | |
Percentage of credit eligible from tax authority | 33.40% | |
Investment tax credit | $ 10.5 |
Accounts Payable, Accrued Exp_4
Accounts Payable, Accrued Expenses and Other Liabilities (Schedule of Accounts Payable and Accrued Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts Payable, Accrued Expenses and Other Liabilities [Abstract] | ||
Accounts payable | $ 18,975 | $ 11,765 |
Accrued employee compensation | 26,483 | 20,335 |
Accrued contracted services | 74,486 | 54,681 |
Accrued rebates, discounts and other incentives | 21,529 | 11,673 |
Operating lease liabilities | 6,456 | |
Other liabilities | 6,039 | 6,655 |
Accounts payable, accrued expenses and other liabilities | $ 153,968 | $ 105,109 |
Long-Term Debt (Narrative) (Det
Long-Term Debt (Narrative) (Details) $ / shares in Units, $ in Thousands | May 14, 2019USD ($)$ / shares | Jul. 06, 2016USD ($)$ / shares | Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 30, 2016$ / shares |
Proceeds from convertible debt | $ 223,424 | |||||
Cap price of capped call transaction | $ / shares | $ 262.2725 | |||||
Long-term debt | 532,078 | $ 371,250 | ||||
Interest expense | 41,144 | 30,523 | $ 29,271 | |||
Convertible Debt [Member] | ||||||
Debt issuance costs | $ 19,000 | |||||
Convertible debt, outstanding | $ 690,000 | |||||
Convertible Senior Notes 3.25% [Member] | Convertible Debt [Member] | ||||||
Debt instrument, face amount | 460,000 | |||||
Debt instrument, interest rate, stated percentage | 3.25% | |||||
Proceeds from convertible debt | 447,600 | |||||
Debt issuance costs | 12,400 | |||||
Payments for capped call transactions and associated costs | $ 38,400 | |||||
Debt instrument convertible, percentage of conversion price | 130.00% | |||||
Average percentage of closing sale price of common stock | 98.00% | |||||
Debt instrument, convertible, conversion ratio | 5.0358 | |||||
Debt instrument, convertible, conversion price | $ / shares | $ 198.58 | |||||
Percentage of repurchase price is equal to principal amount of convertible notes | 100.00% | |||||
Debt instrument liability component effective interest rate | 8.40% | |||||
Long-term debt | $ 334,400 | |||||
Debt instrument, unamortized discount, noncurrent | 113,100 | |||||
Interest expense | 41,100 | 30,500 | $ 29,300 | |||
Interest payable, current | 8,100 | 7,500 | ||||
Convertible debt, outstanding | 460,000 | |||||
Debt issuance costs | 13,200 | 8,800 | ||||
Fair value of the Convertible Notes | $ 463,500 | $ 410,900 | ||||
Convertible Senior Notes 3.25% [Member] | Convertible Debt [Member] | One Hundred Thirty Percent Applicable Conversion Price [Member] | Maximum [Member] | ||||||
Debt instrument convertible consecutive trading days | item | 30 | |||||
Convertible Senior Notes 3.25% [Member] | Convertible Debt [Member] | One Hundred Thirty Percent Applicable Conversion Price [Member] | Minimum [Member] | ||||||
Debt instrument convertible consecutive trading days | item | 20 | |||||
Convertible Senior Notes 3.25% [Member] | Convertible Debt [Member] | Ninety Eight Percent Applicable Conversion Price [Member] | ||||||
Debt instrument convertible consecutive trading days | item | 5 | |||||
Convertible Senior Notes 2.00% Due 2026 [Member] | Convertible Debt [Member] | ||||||
Debt instrument, face amount | $ 230,000 | |||||
Debt instrument, interest rate, stated percentage | 2.00% | |||||
Proceeds from convertible debt | 223,400 | |||||
Debt issuance costs | $ 6,600 | |||||
Debt instrument convertible, percentage of conversion price | 130.00% | |||||
Average percentage of closing sale price of common stock | 98.00% | |||||
Debt instrument, convertible, conversion ratio | 9.2123 | |||||
Debt instrument, convertible, conversion price | $ / shares | $ 108.55 | |||||
Percentage of repurchase price is equal to principal amount of convertible notes | 100.00% | |||||
Debt instrument liability component effective interest rate | 9.90% | |||||
Long-term debt | $ 137,500 | |||||
Debt instrument, unamortized discount, noncurrent | 85,900 | |||||
Convertible debt, outstanding | 230,000 | |||||
Underwriting discounts and estimated offering expenses | 6,600 | |||||
Equity issuance cost | 2,500 | |||||
Debt issuance costs | 4,100 | |||||
Fair value of the Convertible Notes | $ 294,900 | |||||
Convertible Senior Notes 2.00% Due 2026 [Member] | Convertible Debt [Member] | One Hundred Thirty Percent Applicable Conversion Price [Member] | Maximum [Member] | ||||||
Debt instrument convertible consecutive trading days | item | 30 | |||||
Convertible Senior Notes 2.00% Due 2026 [Member] | Convertible Debt [Member] | One Hundred Thirty Percent Applicable Conversion Price [Member] | Minimum [Member] | ||||||
Debt instrument convertible consecutive trading days | item | 20 | |||||
Convertible Senior Notes 2.00% Due 2026 [Member] | Convertible Debt [Member] | Ninety Eight Percent Applicable Conversion Price [Member] | ||||||
Debt instrument convertible consecutive trading days | item | 5 |
Long-Term Debt (Schedule of Lon
Long-Term Debt (Schedule of Long-term Debt Instruments) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Long-term debt, gross | $ 690,000 | $ 460,000 |
Less: Unamortized debt discounts and fees | (157,922) | (88,750) |
Long-term Debt, Total | 532,078 | 371,250 |
Long-term debt outstanding | 532,078 | 371,250 |
Convertible Senior Notes 3.25% [Member] | ||
Long-term debt, gross | 460,000 | $ 460,000 |
Convertible Senior Notes 2.00% Due 2026 [Member] | ||
Long-term debt, gross | $ 230,000 |
Product Revenue, Net (Narrative
Product Revenue, Net (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Product revenue, net | $ 71,500 | $ 61,950 | $ 66,300 | $ 52,252 | $ 53,280 | $ 46,986 | $ 43,575 | $ 35,963 | $ 252,002 | $ 179,804 | $ 130,956 |
Product [Member] | |||||||||||
Product revenue, net | $ 249,570 | $ 177,782 | $ 129,175 |
Product Revenue, Net (Schedule
Product Revenue, Net (Schedule of Product Revenue, Net) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Product revenue, net | $ 71,500 | $ 61,950 | $ 66,300 | $ 52,252 | $ 53,280 | $ 46,986 | $ 43,575 | $ 35,963 | $ 252,002 | $ 179,804 | $ 130,956 |
Product [Member] | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Product revenue, net | 249,570 | 177,782 | 129,175 | ||||||||
Product [Member] | United States [Member] | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Product revenue, net | 187,436 | 140,822 | 115,807 | ||||||||
Product [Member] | Non-US [Member] | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Product revenue, net | $ 62,134 | $ 36,960 | $ 13,368 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value, Marketable Securities Measured on Recurring and Nonrecurring Basis) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Cash and cash equivalents, fair value disclosure | $ 70,055 | |
Available-for-sale securities, fair value disclosure | 590,065 | $ 392,912 |
Total financial assets | 609,441 | 404,559 |
Fair Value, Inputs, Level 1 [Member] | ||
Total financial assets | 19,376 | 11,647 |
Fair Value, Inputs, Level 2 [Member] | ||
Total financial assets | 590,065 | 392,912 |
Money Market Funds [Member] | ||
Cash and cash equivalents, fair value disclosure | 19,376 | 11,647 |
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Cash and cash equivalents, fair value disclosure | 19,376 | 11,647 |
Commercial Paper [Member] | ||
Cash and cash equivalents, fair value disclosure | 7,498 | |
Available-for-sale securities, fair value disclosure | 42,848 | 34,327 |
Commercial Paper [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Cash and cash equivalents, fair value disclosure | 7,498 | |
Available-for-sale securities, fair value disclosure | 42,848 | 34,327 |
Corporate Debt Securities [Member] | ||
Available-for-sale securities, fair value disclosure | 539,719 | 349,177 |
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Available-for-sale securities, fair value disclosure | $ 539,719 | 349,177 |
US Government Agencies Debt Securities [Member] | ||
Available-for-sale securities, fair value disclosure | 9,408 | |
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Available-for-sale securities, fair value disclosure | $ 9,408 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Available for Sale Securities Debt Maturities) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value Measurements [Abstract] | ||
Due in one year or less | $ 473,602 | $ 319,717 |
Due after one year through two years | 116,463 | 73,195 |
Total investments in debt securities | $ 590,065 | $ 392,912 |
Stockholders' Equity and Pref_2
Stockholders' Equity and Preferred Stock (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | May 14, 2019 | Apr. 09, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Common stock, authorized | 45,000,000 | 45,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||
Stock issued during period, shares, new issues | 2,760,000 | 2,695,313 | ||
Shares issued, price per share | $ 83.50 | $ 64 | ||
Proceeds from issuance of common stock | $ 227,260 | $ 261,362 | ||
Issuance cost | $ 13,900 | |||
Preferred stock, authorized | 5,000,000 | 5,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||
Preferred stock, shares issued | 0 | 0 | ||
Private Placement [Member] | ||||
Stock issued during period, shares, new issues | 119,760 | 1,562,500 | ||
Underwriters [Member] | ||||
Stock issued during period, shares, new issues | 360,000 | 351,563 |
Stock Compensation (Narrative)
Stock Compensation (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 01, 2019 | Jan. 01, 2018 | Nov. 30, 2014 | Apr. 30, 2014 | Oct. 31, 2012 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Granted - Number of Shares | 551,000 | |||||||
Weighted-average grant date fair value | $ 74.78 | $ 41.18 | $ 63.65 | |||||
Exercised aggregate intrinsic value | $ 10,200 | $ 14,100 | $ 9,400 | |||||
Granted - Weighted Average Fair Value | $ 107.29 | |||||||
Net proceeds from exercise of stock options | $ 8,993 | $ 4,363 | $ 2,838 | |||||
Share-based compensation not yet recognized | $ 51,300 | |||||||
Granted - Shares | 395,000 | |||||||
2012 Stock Plan [Member] | ||||||||
Additional shares available | 1,187,599 | 1,010,693 | 555,843 | |||||
Shares available for grant | 2,800,000 | 2,200,000 | ||||||
Stock Options [Member] | ||||||||
Share-based compensation not yet recognized, period | 1 year 3 months 3 days | |||||||
Restricted and Performance Stock Units and Awards [Member] | ||||||||
Share-based compensation not yet recognized, other than options | $ 48,300 | |||||||
Share-based compensation not yet recognized, period | 1 year 3 months 29 days | |||||||
Performance Stock Units and Awards [Member] | ||||||||
Performance period | 3 years | |||||||
Share based compensation expenses | $ 4,000 | $ 1,300 | ||||||
Performance Stock Units and Awards [Member] | Minimum [Member] | ||||||||
Payout percentage | 0.00% | |||||||
Performance Stock Units and Awards [Member] | Maximum [Member] | ||||||||
Payout percentage | 150.00% | |||||||
Performance Stock Units (PSUs) [Member] | ||||||||
Granted - Shares | 57,800 | 51,200 | ||||||
Performance Shares [Member] | Employees and Directors [Member] | ||||||||
Stock issued during period, shares, share-based compensation, gross | 10,839 | 57,063 | ||||||
Restricted Stock Units and Awards [Member] | ||||||||
Granted - Weighted Average Fair Value | $ 107.29 | $ 65.28 | $ 102.35 | |||||
Vested - aggregate fair value | $ 29,800 | $ 24,000 | $ 16,700 | |||||
Performance Stock Awards (PSAs) [Member] | ||||||||
Granted - Shares | 4,300 |
Stock Compensation (Schedule of
Stock Compensation (Schedule of Share Based Compensation Arrangement By Share Based Payment Award Grants in Period Fair Value Assumptions) (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Volatility, maximum | 89.90% | ||
Stock Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Volatility, minimum | 86.90% | 62.00% | 61.00% |
Volatility, maximum | 73.00% | 65.00% | |
Expected term (in years) | 10 years | 6 years | |
Risk-free interest rate, minimum | 1.40% | 1.80% | 1.80% |
Risk-free interest rate, maximum | 2.90% | 3.00% | 2.40% |
Stock Options [Member] | Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 5 years 6 months | 6 years | |
Stock Options [Member] | Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 6 years | 9 years 10 months 24 days |
Stock Compensation (Schedule _2
Stock Compensation (Schedule of Share Based Compensation Stock Options Activities) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock Compensation [Abstract] | ||
Beginning Outstanding, Number of Shares | 1,874 | |
Granted - Number of Shares | 551 | |
Exercised - Number of Shares | (179) | |
Forfeited - Number of Shares | (176) | |
Expired - Number of Shares | (89) | |
Ending Outstanding, Number of Shares | 1,981 | 1,874 |
Expected to vest - Number of shares | 885 | |
Exercisable - Number of Shares | 1,096 | |
Beginning Outstanding, Weighted Average Exercise Price | $ 97.64 | |
Granted - Weighted Average Exercise Price | 101.85 | |
Exercised - Weighted Average Exercise Price | 37.82 | |
Forfeited - Weighted Average Exercise Price | 92.35 | |
Expired - Weighted Average Exercise Price | 156.71 | |
Ending Outstanding, Weighted Average Exercise Price | 99.87 | $ 97.64 |
Expected to vest - Weighted Average Exercise Price | 89.24 | |
Exercisable - Weighted Average Exercise Price | $ 108.45 | |
Options Outstanding - Weighted Average Remaining Life | 7 years 4 months 24 days | 7 years 6 months |
Expected to vest - Weighted Average Remaining Term | 8 years 6 months | |
Exercisable - Weighted Average Remaining Term | 6 years 6 months | |
Options Outstanding - Aggregate Intrinsic Value | $ 65,662 | $ 45,381 |
Expected to vest - Aggregate Intrinsic Value | 32,201 | |
Exercisable - Aggregate Intrinsic Value | $ 33,460 |
Stock Compensation (Schedule _3
Stock Compensation (Schedule of Share-based Compensation, Restricted Stock Units and Award Activity) (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Stock Compensation [Abstract] | |
Outstanding, December 31, 2018 | shares | 773 |
Granted - Shares | shares | 395 |
Vested - Shares | shares | (358) |
Forfeited - Shares | shares | (101) |
Outstanding, September 30, 2019 | shares | 709 |
Outstanding - Weighted Average Fair Value, December 31, 2018 | $ / shares | $ 76.10 |
Granted - Weighted Average Fair Value | $ / shares | 107.29 |
Vested - Weighted Average Fair Value | $ / shares | 83.45 |
Forfeited - Weighted Average Fair Value | $ / shares | 85.74 |
Outstanding - Weighted Average Fair Value, September 30, 2019 | $ / shares | $ 88.39 |
Stock Compensation (Schedule _4
Stock Compensation (Schedule of Stock Based Compensation Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Allocated stock-based compensation | $ 55,982 | $ 49,914 | $ 56,968 |
Selling, General and Administrative Expenses [Member] | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Allocated stock-based compensation | 43,170 | 38,361 | 40,004 |
Research and Development Expense [Member] | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Allocated stock-based compensation | $ 12,812 | $ 11,553 | $ 16,964 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Vesting period | 4 years | ||
Employer matching contribution recognized | $ 1,400,000 | $ 1,900,000 | $ 2,700,000 |
Employees Under 50 Years [Member] | |||
Employee maximum contribution | 19,000 | ||
Employees 50 Years Old and Over [Member] | |||
Employee maximum contribution | $ 25,000 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 21, 2017 |
Valuation Allowance [Line Items] | ||||
Operating Loss Carryforwards | $ 693.3 | $ 658.4 | ||
Other operating loss carryforwards | 0.5 | |||
Valuation allowance, deferred tax asset, increase (decrease), amount | $ 14.8 | $ 56.1 | ||
Federal statutory income tax rate | 21.00% | 21.00% | 21.00% | 34.00% |
Domestic Tax Authority [Member] | ||||
Valuation Allowance [Line Items] | ||||
Valuation allowance, deferred tax asset, increase (decrease), amount | $ 14.8 | $ 9.4 | ||
State and Local Jurisdiction [Member] | ||||
Valuation Allowance [Line Items] | ||||
Valuation allowance, deferred tax asset, increase (decrease), amount | 2.6 | 1.9 | ||
Foreign Tax Authority [Member] | ||||
Valuation Allowance [Line Items] | ||||
Operating Loss Carryforwards | 1,100 | 870.3 | ||
Valuation allowance, deferred tax asset, increase (decrease), amount | 19.3 | 44.9 | ||
Operating loss carryforwards with indefinite use | $ 1,000 | |||
Remainder of operating lease carryforwards period of use | 18 years | |||
Convertible Debt [Member] | Convertible Senior Notes 3.25% [Member] | ||||
Valuation Allowance [Line Items] | ||||
Valuation allowance, deferred tax asset, increase (decrease), amount | $ (21.9) | $ 0.1 |
Income Taxes (Schedule of Incom
Income Taxes (Schedule of Income before Income Tax, Domestic and Foreign) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes [Abstract] | |||
United States | $ (95,708) | $ (72,655) | $ (102,586) |
Foreign | (248,973) | (236,587) | (257,781) |
Components of loss before taxes | $ (344,681) | $ (309,242) | $ (360,367) |
Income Taxes (Schedule of Compo
Income Taxes (Schedule of Components of Income Tax Expense (Benefit)) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes [Abstract] | |||
Computed "expected" tax benefit | $ (72,383) | $ (64,941) | $ (122,525) |
State taxes, net of U.S. Federal benefit | |||
U.S. Federal rate reduction | 84,787 | ||
U.S. Federal valuation allowance | 14,786 | 9,352 | 282 |
Stock-based compensation | 4,609 | 6,423 | (49,391) |
Officer compensation | 508 | 22 | 26 |
Foreign valuation allowance | 19,349 | 44,896 | 52,521 |
Foreign tax rate differences | 32,936 | 4,787 | 35,125 |
Other | 195 | (539) | (825) |
Income Tax Expense (Benefit), Total |
Income Taxes (Schedule of Defer
Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
U.S. and state net operating loss and other carryforwards | $ 160,079 | $ 151,416 |
Foreign net operating loss and other carryforwards | 195,590 | 177,672 |
Stock compensation | 13,626 | 13,228 |
Deferred revenue | 620 | |
Accrued compensation | 4,997 | 3,431 |
Accrued expense | 1,750 | 2,340 |
Intellectual property | 2,088 | |
Interest limitation | 5,183 | 2,913 |
Other | 1,406 | 1,021 |
Deferred tax assets before valuation allowance | 384,719 | 352,641 |
Valuation allowance | (353,677) | (338,852) |
Total deferred tax liabilities | 31,042 | 13,789 |
Deferred tax liabilities: | ||
Convertible Note | (31,042) | (13,789) |
Deferred tax liabilities | (31,042) | (13,789) |
Net deferred tax asset (liability) |
Commitments and Contingencies_2
Commitments and Contingencies (Narrative) (Details) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2019USD ($)ft² | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Nov. 30, 2019ft² | Jan. 31, 2016ft² | May 31, 2014ft² | |
Cost of revenue | $ | $ 4,212 | $ 2,519 | $ 1,371 | |||
Arrangement Other than Collaborative [Member] | Aralez Pharmaceuticals Canada Incorporated [Member] | License [Member] | ||||||
Cost of revenue | $ | $ 4,500 | |||||
United Kingdom [Member] | Intercept Pharma Europe Limited [Member] | Subsidiaries [Member] | ||||||
Area of real estate property | 8,600 | |||||
California [Member] | ||||||
Area of real estate property | 34,000 | 47,000 | ||||
Term of lease | 60 months | |||||
New York [Member] | Intercept Pharma Europe Limited [Member] | ||||||
Area of real estate property | 45,600 |
Net Loss Per Share (Schedule of
Net Loss Per Share (Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share) (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Antidilutive securities excluded from computation of earnings per share, amount | 6,972 | 4,631 | 2,301 |
Convertible Notes [Member] | |||
Antidilutive securities excluded from computation of earnings per share, amount | 4,435 | 2,316 | |
Stock Options [Member] | |||
Antidilutive securities excluded from computation of earnings per share, amount | 1,981 | 1,874 | 1,808 |
Restricted Stock Units (RSUs) [Member] | |||
Antidilutive securities excluded from computation of earnings per share, amount | 556 | 441 | 493 |
Quarterly Financial Data (Sched
Quarterly Financial Data (Schedule of Quarterly Financial Information) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Data [Abstract] | |||||||||||
Revenue | $ 71,500 | $ 61,950 | $ 66,300 | $ 52,252 | $ 53,280 | $ 46,986 | $ 43,575 | $ 35,963 | $ 252,002 | $ 179,804 | $ 130,956 |
Operating loss | (89,290) | (75,533) | (63,659) | (83,945) | (81,971) | (58,286) | (69,777) | (75,456) | (312,427) | (285,490) | (335,612) |
Net loss | $ (98,158) | $ (84,833) | $ (71,420) | $ (90,270) | $ (88,005) | $ (64,454) | $ (75,193) | $ (81,590) | $ (344,681) | $ (309,242) | $ (360,367) |
Net loss per common share-basic and diluted (in dollars per share) | $ (2.99) | $ (2.59) | $ (2.28) | $ (3.03) | $ (2.97) | $ (2.18) | $ (2.58) | $ (3.22) | $ (10.89) | $ (10.86) | $ (14.38) |
Restructuring Charges (Narrativ
Restructuring Charges (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Workforce reduction percent | 15.00% | |||
Restructuring charges | $ 5,200,000 | $ 0 | $ 0 | |
Restructuring charge associated with cash payments | $ 5,200,000 | |||
Research and Development Expense [Member] | ||||
Restructuring charges | 1,300,000 | |||
Selling, General and Administrative Expenses [Member] | ||||
Restructuring charges | $ 3,900,000 |