Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 01, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-33451 | |
Entity Registrant Name | Albireo Pharma, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 90-0136863 | |
Entity Address, Address Line One | 53 State Street | |
Entity Address, Address Line Two | 19th Floor | |
Entity Address, City or Town | Boston | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02109 | |
City Area Code | 857 | |
Local Phone Number | 254-5555 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | ALBO | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 20,701,283 | |
Entity Central Index Key | 0001322505 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 222,476 | $ 248,107 |
Accounts receivable, net | 2,029 | 3,272 |
Inventory | 3,149 | 194 |
Prepaid expenses | 8,516 | 5,261 |
Other current assets | 2,666 | 12,096 |
Total current assets | 238,836 | 268,930 |
Restricted cash | 50,000 | |
Property and equipment, net | 1,303 | 668 |
Goodwill | 17,260 | 17,260 |
Other assets | 13,823 | 15,193 |
Total assets | 321,222 | 302,051 |
Current liabilities: | ||
Accounts payable | 6,950 | 6,516 |
Accrued expenses | 25,365 | 35,951 |
Other current liabilities | 5,504 | 2,880 |
Total current liabilities | 37,819 | 45,347 |
Liability related to sale of future royalties | 62,053 | 60,132 |
Revenue interest liability, net | 111,644 | |
Note payable, net of discount | 10,004 | |
Other long-term liabilities | 9,635 | 10,960 |
Total liabilities | 221,151 | 126,443 |
Stockholders' Equity: | ||
Preferred stock, $0.01 par value per share - 50,000,000 shares authorized at September 30, 2022 and December 31, 2021; 0 and 0 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | ||
Common stock, $0.01 par value per share - 60,000,000 shares authorized at September 30, 2022 and December 31, 2021; 20,700,458 and 20,692,698 shares issued and outstanding at September 30, 2022, respectively, and 19,304,312 and 19,296,552 shares issued and outstanding at December 31, 2021, respectively | 207 | 193 |
Additional paid-in capital | 512,915 | 475,390 |
Accumulated other comprehensive income | 8,212 | 1,105 |
Accumulated deficit | (421,033) | (300,850) |
Treasury stock at cost, 7,760 shares at September 30, 2022 and December 31 2021, respectively | (230) | (230) |
Total stockholders' equity | 100,071 | 175,608 |
Total liabilities and stockholders' equity | $ 321,222 | $ 302,051 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Condensed Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 20,700,458 | 19,304,312 |
Common stock, shares outstanding | 20,692,698 | 19,296,552 |
Treasury stock at cost, shares | 7,760 | 7,760 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue: | ||||
Revenue | $ 9,832 | $ 3,664 | $ 24,870 | $ 8,058 |
Cost and operating expenses: | ||||
Cost of product revenue | 612 | 431 | 1,622 | 431 |
Research and development | 23,312 | 21,083 | 68,103 | 61,920 |
Selling, general and administrative | 20,564 | 17,612 | 59,019 | 49,825 |
Other operating expense, net | 1 | 3,719 | 7,544 | 7,873 |
Total cost and operating expenses | 44,489 | 42,845 | 136,288 | 120,049 |
Operating loss | (34,657) | (39,181) | (111,418) | (111,991) |
Other (loss) income: | ||||
Gain from sale of priority review voucher, net of transaction costs | 103,387 | 103,387 | ||
Loss on extinguishment of debt | (613) | (613) | ||
Interest expense, net | (2,530) | (3,331) | (8,152) | (10,675) |
Net (loss) income before income taxes | (37,800) | 60,875 | (120,183) | (19,279) |
Provision for income taxes | 0 | 3,789 | 0 | 3,789 |
Net (loss) income | $ (37,800) | $ 57,086 | $ (120,183) | $ (23,068) |
Net (loss) income per share attributable to holders of common stock: | ||||
Basic (in dollars per share) | $ (1.92) | $ 2.96 | $ (6.15) | $ (1.20) |
Diluted (in dollars per share) | $ (1.92) | $ 2.90 | $ (6.15) | $ (1.20) |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 19,655,350 | 19,258,905 | 19,541,044 | 19,197,536 |
Diluted (in shares) | 19,655,350 | 19,651,243 | 19,541,044 | 19,197,536 |
Product | ||||
Revenue: | ||||
Revenue | $ 7,543 | $ 1,060 | $ 18,090 | $ 1,060 |
Royalty | ||||
Revenue: | ||||
Revenue | $ 2,289 | $ 2,604 | $ 6,780 | $ 6,998 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Condensed Consolidated Statements of Comprehensive (Loss) Income | ||||
Net (loss) income | $ (37,800) | $ 57,086 | $ (120,183) | $ (23,068) |
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustment | (40) | 3,657 | 7,107 | 7,890 |
Total other comprehensive (loss) income | (40) | 3,657 | 7,107 | 7,890 |
Total comprehensive (loss) income | $ (37,840) | $ 60,743 | $ (113,076) | $ (15,178) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Treasury Stock At Cost | Total |
Balance at beginning of period at Dec. 31, 2020 | $ 191 | $ 456,472 | $ (8,612) | $ (266,820) | $ 181,231 | |
Balance (in shares) at Dec. 31, 2020 | 19,107,040 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation expense | 3,062 | 3,062 | ||||
Exercise of options and vesting of RSUs | $ 1 | 403 | 404 | |||
Exercise of options and vesting of RSUs (in shares) | 85,765 | |||||
Other comprehensive (loss) income | 6,954 | 6,954 | ||||
Net (loss) income | (43,733) | (43,733) | ||||
Balance at end of period at Mar. 31, 2021 | $ 192 | 459,937 | (1,658) | (310,553) | 147,918 | |
Balance (in shares) at Mar. 31, 2021 | 19,192,805 | |||||
Balance at beginning of period at Dec. 31, 2020 | $ 191 | 456,472 | (8,612) | (266,820) | 181,231 | |
Balance (in shares) at Dec. 31, 2020 | 19,107,040 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Other comprehensive (loss) income | 7,890 | |||||
Net (loss) income | (23,068) | |||||
Balance at end of period at Sep. 30, 2021 | $ 193 | 472,363 | (722) | (289,888) | $ (230) | 181,716 |
Balance (in shares) at Sep. 30, 2021 | 19,283,269 | (7,760) | ||||
Balance at beginning of period at Mar. 31, 2021 | $ 192 | 459,937 | (1,658) | (310,553) | 147,918 | |
Balance (in shares) at Mar. 31, 2021 | 19,192,805 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation expense | 3,504 | 3,504 | ||||
Exercise of options and vesting of RSUs | 1,224 | 1,224 | ||||
Exercise of options and vesting of RSUs (in shares) | 47,490 | |||||
Other comprehensive (loss) income | (2,721) | (2,721) | ||||
Net (loss) income | (36,421) | (36,421) | ||||
Balance at end of period at Jun. 30, 2021 | $ 192 | 464,665 | (4,379) | (346,974) | 113,504 | |
Balance (in shares) at Jun. 30, 2021 | 19,240,295 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation expense | 6,706 | 6,706 | ||||
Exercise of options and vesting of RSUs | $ 1 | 751 | 752 | |||
Exercise of options and vesting of RSUs (in shares) | 35,466 | |||||
Issuance of common stock, net of costs | 241 | 241 | ||||
Issuance of common stock, net of costs (in shares) | 7,508 | |||||
Other comprehensive (loss) income | 3,657 | 3,657 | ||||
Purchases of treasury stock, at cost | $ (230) | (230) | ||||
Purchases of treasury stock, at cost (in shares) | (7,760) | |||||
Net (loss) income | 57,086 | 57,086 | ||||
Balance at end of period at Sep. 30, 2021 | $ 193 | 472,363 | (722) | (289,888) | $ (230) | 181,716 |
Balance (in shares) at Sep. 30, 2021 | 19,283,269 | (7,760) | ||||
Balance at beginning of period at Dec. 31, 2021 | $ 193 | 475,390 | 1,105 | (300,850) | $ (230) | 175,608 |
Balance (in shares) at Dec. 31, 2021 | 19,304,312 | (7,760) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation expense | 3,508 | 3,508 | ||||
Exercise of options and vesting of RSUs | $ 2 | 4,378 | 4,380 | |||
Exercise of options and vesting of RSUs (in shares) | 223,683 | |||||
Other comprehensive (loss) income | 7,124 | 7,124 | ||||
Net (loss) income | (42,434) | (42,434) | ||||
Balance at end of period at Mar. 31, 2022 | $ 195 | 483,276 | 8,229 | (343,284) | $ (230) | 148,186 |
Balance (in shares) at Mar. 31, 2022 | 19,527,995 | (7,760) | ||||
Balance at beginning of period at Dec. 31, 2021 | $ 193 | 475,390 | 1,105 | (300,850) | $ (230) | 175,608 |
Balance (in shares) at Dec. 31, 2021 | 19,304,312 | (7,760) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Other comprehensive (loss) income | 7,107 | |||||
Net (loss) income | (120,183) | |||||
Balance at end of period at Sep. 30, 2022 | $ 207 | 512,915 | 8,212 | (421,033) | $ (230) | 100,071 |
Balance (in shares) at Sep. 30, 2022 | 20,700,742 | (7,760) | ||||
Balance at beginning of period at Mar. 31, 2022 | $ 195 | 483,276 | 8,229 | (343,284) | $ (230) | 148,186 |
Balance (in shares) at Mar. 31, 2022 | 19,527,995 | (7,760) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation expense | 3,616 | 3,616 | ||||
Exercise of options and vesting of RSUs | $ 1 | 1,800 | 1,801 | |||
Exercise of options and vesting of RSUs (in shares) | 82,565 | |||||
Other comprehensive (loss) income | 23 | 23 | ||||
Net (loss) income | (39,949) | (39,949) | ||||
Balance at end of period at Jun. 30, 2022 | $ 196 | 488,692 | 8,252 | (383,233) | $ (230) | 113,677 |
Balance (in shares) at Jun. 30, 2022 | 19,610,560 | (7,760) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation expense | 3,547 | 3,547 | ||||
Exercise of options and vesting of RSUs | 70 | 70 | ||||
Exercise of options and vesting of RSUs (in shares) | 17,872 | |||||
Issuance of common stock, net of costs | $ 11 | 20,606 | 20,617 | |||
Issuance of common stock, net of costs (in shares) | 1,072,310 | |||||
Other comprehensive (loss) income | (40) | (40) | ||||
Net (loss) income | (37,800) | (37,800) | ||||
Balance at end of period at Sep. 30, 2022 | $ 207 | $ 512,915 | $ 8,212 | $ (421,033) | $ (230) | $ 100,071 |
Balance (in shares) at Sep. 30, 2022 | 20,700,742 | (7,760) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (120,183) | $ (23,068) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Gain from sale of priority review voucher, net of transaction costs | (103,387) | |
Accretion of liability related to sale of future royalties | 8,250 | 9,428 |
Accretion of revenue interest liability, net | 403 | |
Accretion of debt discount and amortization of issuance costs | 178 | 308 |
Depreciation and amortization | 322 | 167 |
Extinguishment of debt | 613 | |
Share based compensation expense | 10,671 | 13,272 |
Foreign currency adjustments | 7,010 | 7,776 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 1,018 | (1,307) |
Inventory | (3,103) | (196) |
Prepaid expenses and other current assets | 5,946 | 2,765 |
Other assets | 93 | 293 |
Accounts payable | 654 | 2,023 |
Accrued expenses | (9,832) | 2,068 |
Other current and long-term liabilities | (3,471) | (3,810) |
Net cash used in operating activities | (101,431) | (93,668) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (960) | (465) |
Proceeds from sale of priority review voucher, net of transaction costs | 103,387 | |
Net cash (used in) provided by investing activities | (960) | 102,922 |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock, net of issuance costs | 20,633 | 241 |
Proceeds from royalty agreement, net of issuance costs | 111,577 | |
Payment of principal on borrowings | (10,795) | |
Proceeds from exercise of options | 6,251 | 2,378 |
Payments related to repurchases of common stock | (230) | |
Net cash provided by financing activities | 127,666 | 2,389 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (906) | (303) |
Net increase in cash, cash equivalents and restricted cash | 24,369 | 11,340 |
Cash, cash equivalents and restricted cash-beginning of period | 248,107 | 251,272 |
Cash, cash equivalents and restricted cash-end of period | 272,476 | $ 262,612 |
Supplemental disclosures of cash and non-cash activities | ||
Unpaid transaction cost of royalty agreement | 250 | |
Unpaid royalty interest included in accrued expenses | 87 | |
Unpaid issuance costs related to common stock | $ 16 |
Summary of significant accounti
Summary of significant accounting policies and basis of presentation | 9 Months Ended |
Sep. 30, 2022 | |
Summary of significant accounting policies and basis of presentation | |
Summary of significant accounting policies and basis of presentation | 1. Summary of significant accounting policies and basis of presentation Organization Albireo Pharma, Inc. (the Company), is a commercial-stage biopharmaceutical company focused on the development and commercialization of novel bile acid modulators to treat orphan pediatric liver diseases and other liver and gastrointestinal diseases and disorders. The Company’s product pipeline includes Bylvay (odevixibat) approved in the United States and Europe, elobixibat, approved in Japan and Thailand for the treatment of chronic constipation, A3907, our Phase 1 lead candidate for the treatment of adult liver diseases, A2342, our lead preclinical candidate for the treatment of adult viral and liver diseases, and multiple other preclinical candidates. Bylvay was approved by the U.S. Food and Drug Administration (FDA) on July 20, 2021 for the treatment of pruritus in patients with progressive familial intrahepatic cholestasis (PFIC) ages 3 months or older, and authorized by the European Medicines Agency on July 16, 2021 for the treatment of PFIC in patients 6 months or older. Bylvay was also granted marketing authorization by the UK Medicines and Healthcare Products Regulatory Agency (MHRA) in September 2021 for the treatment of PFIC in patients 6 months or older. In October 2022 the Company announced positive results from its Phase 3 trial of Bylvay for the treatment of patients with Alagille syndrome (ALGS), and Bylvay is also in Phase 3 development for the treatment of biliary atresia. ALGS and biliary atresia are each a rare, life-threatening disorder affecting young children. Since its inception, the Company has devoted substantially all of its resources to its research and development efforts, including activities to develop its product candidates, to commercialize Bylvay in PFIC, to prepare for the commercialization of Bylvay in other indications, if approved, and to provide general and administrative support for these operations. The Company has primarily funded its operations with proceeds from the sales of common stock, the sale of future royalties, upfront and milestone payments for regional agreements, proceeds from the issuance of debt, and the sale of a Priority Review Voucher (PRV). As of September 30, 2022, the Company has raised an aggregate of $377.5 million through the issuance of common stock, net of issuance costs, $59.3 million from the sale of its future royalties, net of issuance costs, $111.3 million from the revenue interest liability, net of issuance costs, and net proceeds of $103.4 million, after deducting commission costs, from the sale of the PRV. The Company has incurred significant operating losses and negative cash flows from operations since inception. The Company expects to continue to incur significant expenses and operating losses for the foreseeable future. In addition, the Company anticipates that its expenses will increase significantly in connection with ongoing activities to support the commercialization of Bylvay for PFIC, and if approved, for ALGS and the advancement of Bylvay in clinical trials and providing administrative support. As a result, the Company will need substantial additional funding to support its continued operations and growth strategy. Until such a time as the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operations through the sale of equity, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. The Company may be unable to raise additional funds or enter into such other agreements on favorable terms, or at all. If the Company fails to raise capital or enter into such agreements as, and when, needed, the Company may have to significantly delay, scale back or discontinue the development and commercialization of one or more of its product candidates or delay its pursuit of potential in-licenses or acquisitions. As of September 30, 2022, the Company had cash, cash equivalents and restricted cash of $272.5 million. Management believes that its unrestricted cash and cash equivalents at September 30, 2022 will be sufficient to allow the Company to fund its current operating plan through at least the next twelve months from the issuance of these financial statements. The Company is subject to those risks associated with any biopharmaceutical company that has substantial expenditures for research and development. There can be no assurance that the Company’s research and development projects will be successful, that products developed will obtain necessary regulatory approval, or that any approved product will be commercially viable. In addition, the Company operates in an environment of rapid technological change and is largely dependent on the services of its employees and consultants. If the Company fails to become profitable or is unable to sustain profitability on a continuing basis, then it may be unable to continue its operations at planned levels and be forced to reduce its operations. Basis of presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information, and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. In the opinion of management, all adjustments (including normal recurring adjustments) considered necessary for fair presentation have been included in the Condensed Consolidated Financial Statements. The results of operations for the three and nine months ended September 30, 2022 and 2021 are not necessarily indicative of the results that may be expected for the full fiscal year, any other interim period or any future fiscal year. The Condensed Consolidated Financial Statements are prepared on a basis consistent with prior periods. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB). Principles of consolidation The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its direct or indirect wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Foreign currency translation Functional and presentation currency Items included in the financial statements of each subsidiary are measured using the currency of the primary economic environment in which the entity operates (the functional currency). Transactions and balances Foreign currency transactions in each entity comprising the Company are remeasured into the functional currency of the entity using the exchange rates prevailing at the respective transaction dates. Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized within other operating expense, net except for changes in the liability related to the sale of future royalties which are recorded in interest expense, net in the Condensed Consolidated Statements of Operations. The results and financial position of the Company’s subsidiaries’ that have a functional currency different from the USD are translated into the presentation currency as follows: a. assets and liabilities presented are translated at the closing exchange rate as of September 30, 2022 and December 31, 2021; b. income and expenses for the statement of operations and comprehensive loss are translated at the average exchange rates that are relevant for the respective periods for which the income and expenses occur; and c. significant transactions use the exchange rate on the date of the transaction. All resulting exchange differences arising from such translations are recognized directly in accumulated other comprehensive income and presented as a separate component of equity. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes. Management must apply significant judgment in this process. On an ongoing basis, the Company evaluates its estimates and assumptions, including but not limited to accruals, including its clinical trial accruals and revenue deductions related to rebates, chargebacks and other discounts, realizability of deferred tax assets and the accretion of interest on the monetization liability. Actual results could materially differ from these estimates. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments that are readily convertible into cash without penalty and with original maturities of 90 days or less at the date of purchase to be cash equivalents. Restricted cash consists of deposits placed in a segregated bank account required under the terms of the Company’s Purchase Agreement with Sagard Healthcare Partners (Delaware) LP (“Sagard”) The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets that together reflect the same amounts shown in the unaudited condensed consolidated statements of cash flows (in thousands): September 30, 2022 December 31, 2021 Cash and cash equivalents $ 222,476 $ 248,107 Restricted cash 50,000 — Total cash, cash equivalents and restricted cash $ 272,476 $ 248,107 Revenue recognition The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services in accordance with ASC 606 Revenue from Contracts with Customers assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Product Revenue, net The Company recognizes revenue on sales of Bylvay when a customer obtains control of the product, which occurs at a point in time and upon delivery. The Company sells Bylvay to a limited number of specialty pharmacies and a specialty distributor in the United States which dispense the product directly to patients. The specialty pharmacies and specialty distributor are referred to as the Company’s customers. The Company also sells Bylvay to its customers in the European Union, which includes a limited number of pharmacies. The Company provides the right of return to its customers for unopened product for a limited time before and after its expiration date. We currently estimate product returns using available industry data as well as the Company’s visibility into the inventory remaining in the distribution channel. 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 Bylvay. The Company evaluates creditworthiness of each of its customers to determine whether collection is reasonably assured. The wholesale acquisition cost that the Company charges its customers for Bylvay is adjusted to arrive at the Company’s estimated net product revenues by deducting components of variable consideration which include (i) estimated government rebates and discounts related to Medicaid and other government programs, (ii) estimated costs of incentives offered to certain indirect customers including patients, (iii) trade allowances, such as invoice discounts for prompt payment and customer fees, and (iv) allowance for sales returns. Product revenue, net was $4.1 million in the United States and $3.4 million in international markets for the three months ended September 30, 2022. Product revenue, net was $10.4 million in the United States and $7.7 million in international markets for the nine months ended September 30, 2022. Product revenue, net was $0.8 million in the United States and $0.3 million in international markets for the three and nine months ended September 30, 2021. Rebates and Discounts The Company contracts with the Centers for Medicare & Medicaid Services and other government agencies in the U.S. to make Bylvay available to eligible patients. As a result, the Company estimates any rebates and discounts, including chargebacks related to Section 340B of the Public Health Service Act, 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 with actual payments and redemptions. The Company recorded $1.1 million and $0.7 million in such estimates as of September 30, 2022 and December 31, 2021, respectively, in accounts receivable, net and other current liabilities on the consolidated balance sheets. The Company contracts with national authorities in Europe to make Bylvay available to eligible patients. In jurisdictions in which final pricing is subject to ongoing negotiations with the government, the Company estimates the rebate expected to be due and deducts these estimated amounts from its gross product revenues at the time the revenues are recognized. The Company’s estimates of such liabilities are based on current invoice pricing and total prior units sold and assumptions developed using benchmarks of Bylvay pricing approved in other relevant European jurisdictions. The Company recorded $0.6 million and $0.2 million in such estimates as of September 30, 2022 and December 31, 2021, respectively, in other current 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 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 Bylvay’s 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 funds this incentive program through upfront payments. There were no upfront payments made during the quarter ended September 30, 2022. The Company recorded less than $0.1 million in such estimates as of September 30, 2022 and December 31, 2021 in prepaid expenses on the consolidated balance sheets. Trade Allowances The Company provides invoice discounts on Bylvay sales to its customers for prompt payment and records these discounts as a reduction to gross product revenues. These discounts are based on contractual terms. The Company also pays fees to its distributors for their services as well as data that they provide to the Company. Prompt payment allowances are recorded in accounts receivable, net on the consolidated balance sheets. Prompt payment allowances were less than $0.1 million at September 30, 2022 and December 31, 2021. The other distributor fees are recorded as other current liabilities on the consolidated balance sheets and was $0.1 million as of September 30, 2022 and December 31, 2021. Milestone Payments At the inception of each arrangement that includes development milestone payments or upfront payment, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price, which includes any upfront payments, using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Once the estimated transaction price is established, the associated consideration is allocated to the performance obligations that have been identified in the respective agreement. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. Royalties For arrangements that include sales-based royalties, including milestone payments based on a level of sales, and in which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). In 2012, the Company entered into a license agreement (the Agreement) with EA Pharma Co., Ltd. (EA Pharma, formerly Ajinomoto Pharmaceuticals Co., Ltd.) to develop a select product candidate (elobixibat) for registration and subsequent commercialization in select markets. In conjunction with the Agreement, the Company granted EA Pharma an exclusive license to its intellectual property for development and commercialization activities in the designated field and territories. The Company has completed all of its performance obligations under the Agreement. As of September 30, 2022, the Company is eligible to receive an additional regulatory-based milestone payment under the Agreement of $4.2 million if a specified regulatory event is achieved for elobixibat. The cash payments and any other payments for milestones and royalties from EA Pharma are non-refundable, non-creditable and not subject to set-off. The Agreement will continue until the last royalty period for any product in the territory, which is defined as the period when there are no remaining patent rights or regulatory exclusivity in place for any products subject to royalties. EA Pharma may terminate the Agreement upon 180 days’ prior written notice to the Company. Either party may terminate the Agreement for the other party’s uncured material breach or insolvency and in certain other circumstances agreed to by the parties. Monetization of Future Royalties Royalty Interest Acquisition Agreement with HCR In December 2017, the Company entered into a royalty interest acquisition agreement (RIAA) with HealthCare Royalty Partners III, L.P. (HCR) pursuant to which it sold to HCR the right to receive all royalties from sales in Japan and sales milestones achieved from any covered territory potentially payable to the Company under the Agreement, up to a specified maximum “cap” amount of $78.8 million, based on the funds the Company received from HCR. In January 2018, the Company received $44.5 million from HCR, net of certain transaction expenses, under the RIAA. On June 8, 2020, the parties entered into an amendment to the RIAA pursuant to which HCR agreed to pay the Company an additional $14.8 million, net of certain transaction expenses, in exchange for the elimination of (i) the $78.8 million cap amount on HCR’s rights to receive royalties on sales in Japan and sales milestones for elobixibat in certain other territories that may become payable by EA Pharma and (ii) the $15.0 million payable to the Company if a specified sales milestone is achieved for elobixibat in Japan. The Company is obligated to make royalty interest payments to HCR under the RIAA only to the extent it receives future Japanese royalties, sales milestones or other specified payments from EA Pharma. Although the Company sold its rights to receive royalties from the sales of elobixibat in Japan, as a result of its ongoing involvement in the cash flows related to these royalties, the Company will continue to account for these royalties and milestones as revenue. Upon receipt of the payments from HCR the Company recorded net cash totaling $59.3 million as a liability related to sale of future royalties (royalty obligation). The royalty obligation will be amortized using the effective interest rate method. The following table shows the activity within the liability account for the nine-month period ended September 30, 2022: September 30, 2022 (in thousands) Liability related to sale of future royalties—beginning balance $ 71,667 Accretion of interest expense on liability related to royalty monetization 8,250 Repayment of the liability (15,595) Liability related to sale of future royalties—ending balance $ 64,322 Less current portion classified within accrued expenses (2,269) Long-term liability related to sale of future royalties $ 62,053 The Company records estimated royalties due for the current period in accrued expenses until the payment is received from EA Pharma at which time the Company then remits payment to HCR. As royalties are remitted to HCR, the balance of the royalty obligation will be effectively repaid over the life of the RIAA. In order to determine the accretion of the royalty obligation, the Company is required to estimate the total amount of future royalty payments to be received and submitted to HCR. The sum of these amounts less the $59.3 million proceeds the Company received will be recorded as interest expense over the life of the royalty obligation. At September 30, 2022, the Company’s estimate of its total interest expense resulted in an annual effective interest rate of approximately 18.0%. The Company periodically assesses the estimated royalty payments to HCR and to the extent such payments are greater or less than its initial estimates or the timing of such payments is materially different than its original estimates, the Company will prospectively adjust the accretion of interest on the royalty obligation. There are a number of factors that could materially affect the amount and the timing of royalty payments, most of which are not within the Company’s control. Such factors include, but are not limited to, the rate of elobixibat prescriptions, the number of doses administered, the introduction of competing products, manufacturing or other delays, patent protection, adverse events that result in governmental health authority imposed restrictions on the use of the drug products, significant changes in foreign exchange rates as the royalties remitted to HCR are in U.S. dollars while sales of elobixibat are in Japanese yen, and sales never achieving forecasted numbers, which would result in reduced royalty payments and reduced non-cash interest expense over the life of the royalty obligation. To the extent future royalties result in an amount less than the liability, the Company is not obligated to fund any such shortfall. Purchase Agreement with Sagard In September 2022, the Company and Albireo AB entered into a purchase and sale agreement with Sagard Healthcare Partners (Delaware) LP (Sagard) for the sale of a revenue interest generated from Bylvay (odevixibat) (the Purchase Agreement) for an aggregate purchase price of $115.0 million payable upon the closing of the transaction, which occurred on September 22, 2022. In consideration for the payment of such purchase price, the Company is obligated to pay to Sagard a revenue interest on the worldwide annual consolidated net revenues of Bylvay (the Included Product Revenue) at a rate of (A) 12.5% for Included Product Revenue up to and including $250.0 million, (B) 5% for Included Product Revenue in excess of $250.0 million but less than or equal to $350.0 million, and (C) prior to approval of a New Drug Application by the U.S. Food and Drug Administration of Bylvay for the treatment of biliary atresia (the Marketing Approval), 5% for Included Product Revenue in excess of $350.0 million and, from and after Marketing Approval, the rate is decreased to 1% for Included Product Revenue in excess of $350.0 million (such payments, collectively, the Revenue Interest Payments). These obligations payable to Sagard are capped at $184.0 million, but the cap will be increased to $230.0 million if Sagard has not received aggregate Revenue Interest Payments of $184.0 million by December 31, 2028 (the applicable cap, the Revenue Interest Cap). In addition, if the aggregate amount of Revenue Interest Payments received by Sagard as of December 31, 2036 is less than $230.0 million, the Company has agreed to pay Sagard the difference between the Revenue Interest Cap and the aggregate amount of all Revenue Interest Payments received by Sagard as of December 31, 2036 (such difference, the True-Up Payment). In addition, the Company has the right, but not the obligation (the Call Option), to buy out Sagard’s interest in the Revenue Interest Payments at a repurchase price (the Put/Call Payment) equal to the difference between (a) a specified amount ranging from $149.5 million up to $230.0 million, based on the period of time between the Closing and the exercise of the Call Option, and (b) the aggregate amount of Revenue Interest Payments that have been received by Sagard. Further, Sagard has the right, but not the obligation, to require the Company to make the Put/Call Payment at any time during the 180 days following the occurrence of certain specified events, including, but not limited to, a sale or merger of the Company resulting in a change of control, certain uncured material breaches of the Purchase Agreement by the Company, the withdrawal or suspension of marketing approval for Bylvay, or any sale or other disposition of Bylvay by the Company within the United States. The Company has also agreed that the Put/Call Payment will be automatically payable upon the occurrence of a bankruptcy event. As of September 30, 2022 $111.6 million, was recorded as a revenue interest liability, net of issuance costs on the accompanying unaudited condensed consolidated balance sheet. The Company imputes interest expense associated with this liability using the effective interest rate method. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement. The interest rate on this liability may vary during the term of the agreement depending on a number of factors, including changes in the estimated level of forecasted product sales and the amount of product sales, net. The Company evaluates the interest rate quarterly based on its current product sales, net forecasts utilizing the prospective method. A significant increase or decrease in product sales, net will materially impact the revenue interest liability, interest expense and the time period for repayment. The Company recorded interest expense related to this arrangement of $0.4 million for three months ended September 30, 2022. The Company incurred $3.4 million of issuance costs in connection with the purchase and sale agreement with Sagard, which reduced the carrying amount of the revenue interest liability and will be amortized to interest expense over the estimated term of the debt. Revenue Interest Payments made as a result of the Company’s product sales, net reduce the revenue interest liability. The following table shows the activity within the revenue interest liability account for the nine-month period ended September 30, 2022: September 30, 2022 (in thousands) Revenue interest liability—beginning balance $ 111,327 Interest expense recognized 403 Revenue interest liability—ending balance $ 111,730 Less current portion classified within accrued expenses (86) Long-term revenue interest liability $ 111,644 Trade Receivables, net Accounts receivable, net related to product sales, which are recorded in accounts receivable, net on the consolidated balance sheets, were approximately $2.0 million and $3.3 million as of September 30, 2022 and December 31, 2021, respectively. As of September 30, 2022 and December 31, 2021, we had no allowance for doubtful accounts. An allowance for doubtful accounts is determined based on the Company’s assessment of the credit worthiness and financial condition of its customers, aging of receivables, as well as the general economic environment. Any allowance would reduce the net receivables to the amount that is expected to be collected. Payment terms for U.S. customers are typically 31 Inventory The Company commenced capitalizing inventory for Bylvay upon FDA approval on July 20, 2021. All commercial manufacturing expenses were expensed as research and development expenses prior to FDA approval. Manufacturing costs incurred prior to FDA approval totaled approximately $1.6 million and were not capitalized, and instead were expensed as research and development expenses from 2020 to 2021. Recent accounting pronouncements There are no recently issued accounting pronouncements the Company has not yet adopted that will materially impact the Company’s consolidated financial statements. |
Fair value of financial instrum
Fair value of financial instruments | 9 Months Ended |
Sep. 30, 2022 | |
Fair value of financial instruments | |
Fair value of financial instruments | 2. Fair Value of financial instruments When measuring the fair value of financial instruments, the Company evaluates valuation techniques such as the market approach, the income approach and the cost approach. A three-level valuation hierarchy, which prioritizes the inputs to valuation techniques that are used to measure fair value, is based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows: Level 1—Observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; Level 2—Observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-derived valuations whose significant inputs are observable for substantially the full term of the assets or liabilities; and Level 3—Unobservable inputs that reflect the reporting entity’s estimate of assumptions that market participants would use in pricing the asset or liability. The following tables represent information about the Company’s financial assets that are measured at fair value on a recurring basis (in thousands): September 30, 2022 Level 1 Level 2 Level 3 Cash Equivalents: Money market funds $ 214,999 $ — $ — Total $ 214,999 $ — $ — December 31, 2021 Level 1 Level 2 Level 3 Cash Equivalents: Money market funds $ 243,180 $ — $ — Total $ 243,180 $ — $ — The Company’s financial instruments consist mainly of cash, cash equivalents and restricted cash, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities. The carrying amounts of cash, cash equivalents, prepaid expenses and other current assets, accounts payable, accrued expenses, and other current liabilities approximate their estimated fair value due to their short-term maturities. The carrying amount of restricted cash as of September 30, 2022 approximates its fair value based on the contractual terms of the purchase and sale agreement with Sagard. The carrying amount of the revenue interest liability, net as of September 30, 2022 approximates its fair value and is based on the Company’s contractual repayment obligation based on the current estimates of future revenues, over the life of the purchase and sale agreement with Sagard. The carrying amount of liability related to sale of future royalties as of September 30, 2022 and December 31, 2021 approximates its fair value and is based on the Company’s contractual repayment obligation based on the current estimates of future revenues, over the life of the RIAA. |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and contingencies | |
Commitments and contingencies | 3. Commitments and contingencies Agreements with CROs and CMOs As of September 30, 2022, the Company had various agreements with CROs and CMOs for the conduct of specified research and development activities and based on the terms of the respective agreements, the Company is contractually obligated to make future payments of up to $13.0 million upon the completion of contracted work. |
Net (loss) income per share
Net (loss) income per share | 9 Months Ended |
Sep. 30, 2022 | |
Net (loss) income per share | |
Net (loss) income per share | 4. Net (loss) income per share Basic net (loss) income per share, is calculated by dividing the net (loss) income attributable to holders of common stock by the weighted average number of shares of common stock outstanding. When the Company is in a net loss position, diluted net loss per share is calculated by dividing the net loss attributable to holders of common stock by the weighted average number of shares of common stock outstanding, excluding common stock equivalents outstanding. When the Company is in a net income position, diluted net income per share would be calculated by dividing the net income attributable to holders of common stock by the weighted-average number of shares of common stock plus dilutive common stock equivalents outstanding. The following table sets forth the computation of basic and diluted net (loss) income per share (in thousands, except for share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Basic and Diluted net (loss) income per share: Numerator Net (loss) income $ (37,800) $ 57,086 $ (120,183) $ (23,068) Denominator Number of shares used for basic EPS computation 19,655,350 19,258,905 19,541,044 19,197,536 Effect of dilutive securities Dilutive options — 380,934 — — Dilutive stock units — 11,404 — — Number of shares used for diluted EPS computation 19,655,350 19,651,243 19,541,044 19,197,536 Basic net (loss) income per share $ (1.92) $ 2.96 $ (6.15) $ (1.20) Basic and Diluted net loss (income) per share $ (1.92) $ 2.90 $ (6.15) $ (1.20) For purposes of a dilutive net loss per share calculation, stock options, restricted stock units (RSUs) and warrants are considered to be common stock equivalents but are excluded from the calculation of diluted net loss per share in the periods where the Company has incurred a net loss, as their effect would be anti-dilutive given the Company’s net loss. Common stock equivalents may also be excluded from the calculation of diluted net income per share if the exercise prices exceed the average market price for the reporting period. The following outstanding common stock equivalents were excluded from the computation of diluted net loss per share for the three and nine months ended September 30, 2022 and 2021 because including them would have been anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Options to purchase common stock, RSUs and warrants 3,593,074 2,779,257 3,593,074 3,171,596 |
Income taxes
Income taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income taxes | |
Income taxes | 5. Income taxes The Company did not record a tax provision or benefit for the three and nine months ended September 30, 2022. The Company recorded a tax provision of $3.8 million for the three and nine months ended September 30, 2021, related to the sale of the PRV as it was considered a discrete event pursuant to ASC 740-270, offset by a tax benefit from the Company’s ordinary losses. The Company expects to maintain a full valuation allowance against its net deferred tax assets for the year. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2022 | |
Inventory | |
Inventory | 6. Inventory Inventory consists of the following (in thousands): September 30, 2022 December 31, 2021 Raw materials $ 953 $ — Work-in-process 147 — Finished goods 2,049 194 Total inventory $ 3,149 $ 194 There were no write downs for excess and obsolete inventory during the three and nine months ended September 30, 2022 based on the finished goods inventory shelf life of 24 months, and an analysis over the future demand for Bylvay relative to the remaining shelf life of inventory as of September 30, 2022. |
Note Payable
Note Payable | 9 Months Ended |
Sep. 30, 2022 | |
Note Payable | |
Note Payable | 7. Note Payable 2020 Loan and Security Agreement On June 8, 2020, the Company entered into a Loan and Security Agreement with several banks and other financial institutions or entities from time to time parties to the Loan and Security Agreement (the Loan and Security Agreement), as lenders, (collectively, referred to as the Lender), and Hercules Capital, Inc., in its capacity as administrative agent and collateral agent for itself and Lender (in such capacity, the Agent or Hercules), which provided for term loans up to an aggregate principal amount of $80.0 million (the Term Loans) to the Company. The Loan and Security Agreement provided for (i) an initial term loan advance of $10.0 million, which closed on June 8, 2020, (ii) subject to the achievement of certain initial performance milestones (Performance Milestone I), the Company had the right to request that the Lender make additional term loan advances to the Company in an aggregate principal amount of up to $20.0 million from January 1, 2021 through December 15, 2021 in minimum increments of $10.0 million, which Company did not exercise, and (iii) subject to the Lender’s investment committee’s sole discretion, the Company had the right to request that the Lender make additional term loan advances to the Company in an aggregate principal amount of up to $45.0 million through March 31, 2022 in minimum increments of $5.0 million, which the Company did not exercise. During the term of the Loan and Security Agreement, the Company had borrowed an aggregate principal amount of $10.0 million. The Company was required to pay an end of term fee (the End of Term Charge) equal to 6.95% of the aggregate principal amount of the Term Loans advances upon repayment. The Term Loans had a maturity date of January 1, 2024, which was extended to July 1, 2024 upon achievement of Performance Milestone I (the Maturity Date). The Term Loan bore interest at an annual rate equal to the greater of 10.65% and 10.65% plus the prime rate of interest minus 4.75%. Borrowings under the Loan and Security Agreement were repayable in monthly interest-only payments through January 1, 2022, which was extended to (i) July 1, 2022 upon the Company’s achievement of Performance Milestone I and (ii) July 1, 2023 upon the Company’s achievement of certain additional performance milestones. After the interest-only payment period, borrowings under the Loan and Security Agreement were repayable in equal monthly payments of principal and accrued interest until the Maturity Date. At the Company’s option, the Company could elect to prepay all, but not less than all, of the outstanding term loan by paying the entire principal balance and all accrued and unpaid interest thereon plus a prepayment charge equal to the following percentage of the principal amount being prepaid: 2.0% of the principal amount outstanding if the prepayment occurred after the first nine months following the Closing Date, but on or prior to 24 months following the Closing Date, and 1.0% of the principal amount outstanding at any time thereafter but prior to the Maturity Date (the Prepayment Charge). In connection with the Loan and Security Agreement, the Company granted Agent a security interest senior to any current and future debts and to any security interest, in all of the Company’s right, title, and interest in, to and under all of Company’s property and other assets, and certain equity interests and accounts of Albireo AB, subject to limited exceptions including the Company’s intellectual property. The Loan and Security Agreement also contains certain events of default, representations, warranties and non-financial covenants of the Company. On July 27, 2022, the Loan and Security Agreement was terminated upon the receipt by Hercules of a payoff amount of $10.9 million from the Company; provided that the Company continues to be bound by certain indemnification obligations under the Loan and Security Agreement. The payoff amount paid by the Company in connection with the termination of the Loan and Security Agreement was pursuant to a payoff letter with Hercules and included payment of (a) $0.7 million as an End of Term Charge and (b) $0.1 million as a Prepayment Charge. As a result of this payoff we recognized a loss on extinguishment on the note payable, net of discount of $0.6 million for the three and nine months ended September 30, 2022 within the condensed consolidated statements of operations. During the three months ended September 30, 2022 and 2021, the Company recognized $0.1 million and $0.3 million, respectively, of interest expense related to the Loan and Security Agreement. During the nine months ended September 30, 2022 and 2021, the Company recognized $0.7 million and $1.0 million, respectively, of interest expense related to the Loan and Security Agreement. Warrants Under the Loan and Security Agreement, the Company agreed to issue to Hercules warrants (the Warrants) to purchase a number of shares of common stock equal to 1% of the aggregate amount of the Term Loans that are funded, as such amounts are funded. On the Closing Date, the Company issued a Warrant for 5,311 shares of common stock. The Warrants are exercisable for a period of seven years from the date of the issuance of each Warrant at a per-share exercise price equal to $18.83, subject to certain adjustments as specified in the Warrants. In addition, the Company has granted to the holders of the Warrants certain registration rights. Specifically, the Company agreed to use its commercially reasonable efforts to (i) file registration statements with the U.S. Securities and Exchange Commission within 60 days following the date of the issuance of each Warrant for purposes of registering the shares of common stock issuable upon exercise of the Warrants for resale by Hercules, and (ii) cause the registration statement to be declared effective as soon as practicable after filing, and in any event no later than 180 days after the date of the issuance of each Warrant. The Company accounted for the Warrants as equity instruments since they were indexed to the Company’s common stock and met the criteria for classification in stockholders’ equity. The relative fair value of the Warrants related to the first tranche funding was approximately $0.1 million, and was treated as a discount to the Term Loans. This amount is being amortized to interest expense using the effective interest method over the life of the Term Loans. The Company estimated the fair value of the Warrants using the Black-Scholes option-pricing model. |
Equity Financings
Equity Financings | 9 Months Ended |
Sep. 30, 2022 | |
Equity Financings | |
Stockholders' equity | 8. Equity Financings 2021 At-the-Market Offering Program Sales Agreement In February 2021 the Company filed an automatic shelf registration statement on Form S-3 with the SEC (the 2021 Form S-3), which became effective upon filing, pursuant to which the Company registered for sale an unlimited amount of any combination of its common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that the Company may determine, so long as the Company continued to satisfy the requirements of a “well-known seasoned issuer” under SEC rules. In Because the Company no longer qualified as a well- known seasoned issuer following the filing of the Annual Report on Form 10-K for the year ended December 31, 2021, the 2021 Form S-3 was no longer available for the Company to offer and sell securities pursuant to the 2021 Form S-3. August 2022 in connection with the Company entering into the 2022 Sales Agreement (as defined below) with Cowen. In August 2022, the Company filed a new universal shelf registration on Form S-3 with the SEC, which was declared effective on August 25, 2022 (the 2022 Form S-3), pursuant to which the Company registered for sale up to $400.0 million of any combination of its common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that the Company may determine. In August 2022, the Company entered into a new sales agreement with Cowen with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at the Company’s sole discretion, shares of common stock having an aggregate offering price of up to $100.0 million (the 2022 Sales Agreement). Subsequently in the third quarter of 2022, the Company sold 1,072,310 shares of common stock for net proceeds of approximately $20.8 million pursuant to the 2022 Sales Agreement. |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Stock-based Compensation | |
Stock-based Compensation | 9. Stock-based Compensation For the nine months ended September 30, 2022, the Company granted 329,700 options at a weighted average exercise price per share of $25.89. For the nine months ended September 30, 2022, the Company granted 688,300 RSUs. The Company recorded the following stock-based compensation expense: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (in thousands) Employee awards: Cost of product revenue $ 88 $ — $ 265 $ — Research and development expense 1,179 2,817 4,154 5,330 Selling, general and administrative expense 2,280 3,889 6,252 7,942 Total stock-based compensation expense $ 3,547 $ 6,706 $ 10,671 $ 13,272 |
Summary of significant accoun_2
Summary of significant accounting policies and basis of presentation (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Summary of significant accounting policies and basis of presentation | |
Basis of presentation | Basis of presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information, and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. In the opinion of management, all adjustments (including normal recurring adjustments) considered necessary for fair presentation have been included in the Condensed Consolidated Financial Statements. The results of operations for the three and nine months ended September 30, 2022 and 2021 are not necessarily indicative of the results that may be expected for the full fiscal year, any other interim period or any future fiscal year. The Condensed Consolidated Financial Statements are prepared on a basis consistent with prior periods. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB). |
Principles of consolidation | Principles of consolidation The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its direct or indirect wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Foreign currency translation | Foreign currency translation Functional and presentation currency Items included in the financial statements of each subsidiary are measured using the currency of the primary economic environment in which the entity operates (the functional currency). Transactions and balances Foreign currency transactions in each entity comprising the Company are remeasured into the functional currency of the entity using the exchange rates prevailing at the respective transaction dates. Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized within other operating expense, net except for changes in the liability related to the sale of future royalties which are recorded in interest expense, net in the Condensed Consolidated Statements of Operations. The results and financial position of the Company’s subsidiaries’ that have a functional currency different from the USD are translated into the presentation currency as follows: a. assets and liabilities presented are translated at the closing exchange rate as of September 30, 2022 and December 31, 2021; b. income and expenses for the statement of operations and comprehensive loss are translated at the average exchange rates that are relevant for the respective periods for which the income and expenses occur; and c. significant transactions use the exchange rate on the date of the transaction. All resulting exchange differences arising from such translations are recognized directly in accumulated other comprehensive income and presented as a separate component of equity. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes. Management must apply significant judgment in this process. On an ongoing basis, the Company evaluates its estimates and assumptions, including but not limited to accruals, including its clinical trial accruals and revenue deductions related to rebates, chargebacks and other discounts, realizability of deferred tax assets and the accretion of interest on the monetization liability. Actual results could materially differ from these estimates. |
Cash and cash equivalents | Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments that are readily convertible into cash without penalty and with original maturities of 90 days or less at the date of purchase to be cash equivalents. Restricted cash consists of deposits placed in a segregated bank account required under the terms of the Company’s Purchase Agreement with Sagard Healthcare Partners (Delaware) LP (“Sagard”) The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets that together reflect the same amounts shown in the unaudited condensed consolidated statements of cash flows (in thousands): September 30, 2022 December 31, 2021 Cash and cash equivalents $ 222,476 $ 248,107 Restricted cash 50,000 — Total cash, cash equivalents and restricted cash $ 272,476 $ 248,107 |
Revenue recognition | Revenue recognition The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services in accordance with ASC 606 Revenue from Contracts with Customers assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Product Revenue, net The Company recognizes revenue on sales of Bylvay when a customer obtains control of the product, which occurs at a point in time and upon delivery. The Company sells Bylvay to a limited number of specialty pharmacies and a specialty distributor in the United States which dispense the product directly to patients. The specialty pharmacies and specialty distributor are referred to as the Company’s customers. The Company also sells Bylvay to its customers in the European Union, which includes a limited number of pharmacies. The Company provides the right of return to its customers for unopened product for a limited time before and after its expiration date. We currently estimate product returns using available industry data as well as the Company’s visibility into the inventory remaining in the distribution channel. 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 Bylvay. The Company evaluates creditworthiness of each of its customers to determine whether collection is reasonably assured. The wholesale acquisition cost that the Company charges its customers for Bylvay is adjusted to arrive at the Company’s estimated net product revenues by deducting components of variable consideration which include (i) estimated government rebates and discounts related to Medicaid and other government programs, (ii) estimated costs of incentives offered to certain indirect customers including patients, (iii) trade allowances, such as invoice discounts for prompt payment and customer fees, and (iv) allowance for sales returns. Product revenue, net was $4.1 million in the United States and $3.4 million in international markets for the three months ended September 30, 2022. Product revenue, net was $10.4 million in the United States and $7.7 million in international markets for the nine months ended September 30, 2022. Product revenue, net was $0.8 million in the United States and $0.3 million in international markets for the three and nine months ended September 30, 2021. Rebates and Discounts The Company contracts with the Centers for Medicare & Medicaid Services and other government agencies in the U.S. to make Bylvay available to eligible patients. As a result, the Company estimates any rebates and discounts, including chargebacks related to Section 340B of the Public Health Service Act, 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 with actual payments and redemptions. The Company recorded $1.1 million and $0.7 million in such estimates as of September 30, 2022 and December 31, 2021, respectively, in accounts receivable, net and other current liabilities on the consolidated balance sheets. The Company contracts with national authorities in Europe to make Bylvay available to eligible patients. In jurisdictions in which final pricing is subject to ongoing negotiations with the government, the Company estimates the rebate expected to be due and deducts these estimated amounts from its gross product revenues at the time the revenues are recognized. The Company’s estimates of such liabilities are based on current invoice pricing and total prior units sold and assumptions developed using benchmarks of Bylvay pricing approved in other relevant European jurisdictions. The Company recorded $0.6 million and $0.2 million in such estimates as of September 30, 2022 and December 31, 2021, respectively, in other current 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 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 Bylvay’s 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 funds this incentive program through upfront payments. There were no upfront payments made during the quarter ended September 30, 2022. The Company recorded less than $0.1 million in such estimates as of September 30, 2022 and December 31, 2021 in prepaid expenses on the consolidated balance sheets. Trade Allowances The Company provides invoice discounts on Bylvay sales to its customers for prompt payment and records these discounts as a reduction to gross product revenues. These discounts are based on contractual terms. The Company also pays fees to its distributors for their services as well as data that they provide to the Company. Prompt payment allowances are recorded in accounts receivable, net on the consolidated balance sheets. Prompt payment allowances were less than $0.1 million at September 30, 2022 and December 31, 2021. The other distributor fees are recorded as other current liabilities on the consolidated balance sheets and was $0.1 million as of September 30, 2022 and December 31, 2021. Milestone Payments At the inception of each arrangement that includes development milestone payments or upfront payment, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price, which includes any upfront payments, using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Once the estimated transaction price is established, the associated consideration is allocated to the performance obligations that have been identified in the respective agreement. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. Royalties For arrangements that include sales-based royalties, including milestone payments based on a level of sales, and in which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). In 2012, the Company entered into a license agreement (the Agreement) with EA Pharma Co., Ltd. (EA Pharma, formerly Ajinomoto Pharmaceuticals Co., Ltd.) to develop a select product candidate (elobixibat) for registration and subsequent commercialization in select markets. In conjunction with the Agreement, the Company granted EA Pharma an exclusive license to its intellectual property for development and commercialization activities in the designated field and territories. The Company has completed all of its performance obligations under the Agreement. As of September 30, 2022, the Company is eligible to receive an additional regulatory-based milestone payment under the Agreement of $4.2 million if a specified regulatory event is achieved for elobixibat. The cash payments and any other payments for milestones and royalties from EA Pharma are non-refundable, non-creditable and not subject to set-off. The Agreement will continue until the last royalty period for any product in the territory, which is defined as the period when there are no remaining patent rights or regulatory exclusivity in place for any products subject to royalties. EA Pharma may terminate the Agreement upon 180 days’ prior written notice to the Company. Either party may terminate the Agreement for the other party’s uncured material breach or insolvency and in certain other circumstances agreed to by the parties. |
Monetization of Future Royalties | Monetization of Future Royalties Royalty Interest Acquisition Agreement with HCR In December 2017, the Company entered into a royalty interest acquisition agreement (RIAA) with HealthCare Royalty Partners III, L.P. (HCR) pursuant to which it sold to HCR the right to receive all royalties from sales in Japan and sales milestones achieved from any covered territory potentially payable to the Company under the Agreement, up to a specified maximum “cap” amount of $78.8 million, based on the funds the Company received from HCR. In January 2018, the Company received $44.5 million from HCR, net of certain transaction expenses, under the RIAA. On June 8, 2020, the parties entered into an amendment to the RIAA pursuant to which HCR agreed to pay the Company an additional $14.8 million, net of certain transaction expenses, in exchange for the elimination of (i) the $78.8 million cap amount on HCR’s rights to receive royalties on sales in Japan and sales milestones for elobixibat in certain other territories that may become payable by EA Pharma and (ii) the $15.0 million payable to the Company if a specified sales milestone is achieved for elobixibat in Japan. The Company is obligated to make royalty interest payments to HCR under the RIAA only to the extent it receives future Japanese royalties, sales milestones or other specified payments from EA Pharma. Although the Company sold its rights to receive royalties from the sales of elobixibat in Japan, as a result of its ongoing involvement in the cash flows related to these royalties, the Company will continue to account for these royalties and milestones as revenue. Upon receipt of the payments from HCR the Company recorded net cash totaling $59.3 million as a liability related to sale of future royalties (royalty obligation). The royalty obligation will be amortized using the effective interest rate method. The following table shows the activity within the liability account for the nine-month period ended September 30, 2022: September 30, 2022 (in thousands) Liability related to sale of future royalties—beginning balance $ 71,667 Accretion of interest expense on liability related to royalty monetization 8,250 Repayment of the liability (15,595) Liability related to sale of future royalties—ending balance $ 64,322 Less current portion classified within accrued expenses (2,269) Long-term liability related to sale of future royalties $ 62,053 The Company records estimated royalties due for the current period in accrued expenses until the payment is received from EA Pharma at which time the Company then remits payment to HCR. As royalties are remitted to HCR, the balance of the royalty obligation will be effectively repaid over the life of the RIAA. In order to determine the accretion of the royalty obligation, the Company is required to estimate the total amount of future royalty payments to be received and submitted to HCR. The sum of these amounts less the $59.3 million proceeds the Company received will be recorded as interest expense over the life of the royalty obligation. At September 30, 2022, the Company’s estimate of its total interest expense resulted in an annual effective interest rate of approximately 18.0%. The Company periodically assesses the estimated royalty payments to HCR and to the extent such payments are greater or less than its initial estimates or the timing of such payments is materially different than its original estimates, the Company will prospectively adjust the accretion of interest on the royalty obligation. There are a number of factors that could materially affect the amount and the timing of royalty payments, most of which are not within the Company’s control. Such factors include, but are not limited to, the rate of elobixibat prescriptions, the number of doses administered, the introduction of competing products, manufacturing or other delays, patent protection, adverse events that result in governmental health authority imposed restrictions on the use of the drug products, significant changes in foreign exchange rates as the royalties remitted to HCR are in U.S. dollars while sales of elobixibat are in Japanese yen, and sales never achieving forecasted numbers, which would result in reduced royalty payments and reduced non-cash interest expense over the life of the royalty obligation. To the extent future royalties result in an amount less than the liability, the Company is not obligated to fund any such shortfall. Purchase Agreement with Sagard In September 2022, the Company and Albireo AB entered into a purchase and sale agreement with Sagard Healthcare Partners (Delaware) LP (Sagard) for the sale of a revenue interest generated from Bylvay (odevixibat) (the Purchase Agreement) for an aggregate purchase price of $115.0 million payable upon the closing of the transaction, which occurred on September 22, 2022. In consideration for the payment of such purchase price, the Company is obligated to pay to Sagard a revenue interest on the worldwide annual consolidated net revenues of Bylvay (the Included Product Revenue) at a rate of (A) 12.5% for Included Product Revenue up to and including $250.0 million, (B) 5% for Included Product Revenue in excess of $250.0 million but less than or equal to $350.0 million, and (C) prior to approval of a New Drug Application by the U.S. Food and Drug Administration of Bylvay for the treatment of biliary atresia (the Marketing Approval), 5% for Included Product Revenue in excess of $350.0 million and, from and after Marketing Approval, the rate is decreased to 1% for Included Product Revenue in excess of $350.0 million (such payments, collectively, the Revenue Interest Payments). These obligations payable to Sagard are capped at $184.0 million, but the cap will be increased to $230.0 million if Sagard has not received aggregate Revenue Interest Payments of $184.0 million by December 31, 2028 (the applicable cap, the Revenue Interest Cap). In addition, if the aggregate amount of Revenue Interest Payments received by Sagard as of December 31, 2036 is less than $230.0 million, the Company has agreed to pay Sagard the difference between the Revenue Interest Cap and the aggregate amount of all Revenue Interest Payments received by Sagard as of December 31, 2036 (such difference, the True-Up Payment). In addition, the Company has the right, but not the obligation (the Call Option), to buy out Sagard’s interest in the Revenue Interest Payments at a repurchase price (the Put/Call Payment) equal to the difference between (a) a specified amount ranging from $149.5 million up to $230.0 million, based on the period of time between the Closing and the exercise of the Call Option, and (b) the aggregate amount of Revenue Interest Payments that have been received by Sagard. Further, Sagard has the right, but not the obligation, to require the Company to make the Put/Call Payment at any time during the 180 days following the occurrence of certain specified events, including, but not limited to, a sale or merger of the Company resulting in a change of control, certain uncured material breaches of the Purchase Agreement by the Company, the withdrawal or suspension of marketing approval for Bylvay, or any sale or other disposition of Bylvay by the Company within the United States. The Company has also agreed that the Put/Call Payment will be automatically payable upon the occurrence of a bankruptcy event. As of September 30, 2022 $111.6 million, was recorded as a revenue interest liability, net of issuance costs on the accompanying unaudited condensed consolidated balance sheet. The Company imputes interest expense associated with this liability using the effective interest rate method. The effective interest rate is calculated based on the rate that would enable the debt to be repaid in full over the anticipated life of the arrangement. The interest rate on this liability may vary during the term of the agreement depending on a number of factors, including changes in the estimated level of forecasted product sales and the amount of product sales, net. The Company evaluates the interest rate quarterly based on its current product sales, net forecasts utilizing the prospective method. A significant increase or decrease in product sales, net will materially impact the revenue interest liability, interest expense and the time period for repayment. The Company recorded interest expense related to this arrangement of $0.4 million for three months ended September 30, 2022. The Company incurred $3.4 million of issuance costs in connection with the purchase and sale agreement with Sagard, which reduced the carrying amount of the revenue interest liability and will be amortized to interest expense over the estimated term of the debt. Revenue Interest Payments made as a result of the Company’s product sales, net reduce the revenue interest liability. The following table shows the activity within the revenue interest liability account for the nine-month period ended September 30, 2022: September 30, 2022 (in thousands) Revenue interest liability—beginning balance $ 111,327 Interest expense recognized 403 Revenue interest liability—ending balance $ 111,730 Less current portion classified within accrued expenses (86) Long-term revenue interest liability $ 111,644 |
Trade Receivables, net | Trade Receivables, net Accounts receivable, net related to product sales, which are recorded in accounts receivable, net on the consolidated balance sheets, were approximately $2.0 million and $3.3 million as of September 30, 2022 and December 31, 2021, respectively. As of September 30, 2022 and December 31, 2021, we had no allowance for doubtful accounts. An allowance for doubtful accounts is determined based on the Company’s assessment of the credit worthiness and financial condition of its customers, aging of receivables, as well as the general economic environment. Any allowance would reduce the net receivables to the amount that is expected to be collected. Payment terms for U.S. customers are typically 31 |
Inventory | Inventory The Company commenced capitalizing inventory for Bylvay upon FDA approval on July 20, 2021. All commercial manufacturing expenses were expensed as research and development expenses prior to FDA approval. Manufacturing costs incurred prior to FDA approval totaled approximately $1.6 million and were not capitalized, and instead were expensed as research and development expenses from 2020 to 2021. |
Recent accounting pronouncements | Recent accounting pronouncements There are no recently issued accounting pronouncements the Company has not yet adopted that will materially impact the Company’s consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Summary of significant accounting policies and basis of presentation | |
Schedule of cash, cash equivalents and restricted cash | September 30, 2022 December 31, 2021 Cash and cash equivalents $ 222,476 $ 248,107 Restricted cash 50,000 — Total cash, cash equivalents and restricted cash $ 272,476 $ 248,107 |
Schedule of Activity within Liability Account from Inception of Royalty Transaction | September 30, 2022 (in thousands) Liability related to sale of future royalties—beginning balance $ 71,667 Accretion of interest expense on liability related to royalty monetization 8,250 Repayment of the liability (15,595) Liability related to sale of future royalties—ending balance $ 64,322 Less current portion classified within accrued expenses (2,269) Long-term liability related to sale of future royalties $ 62,053 |
Schedule of activity within revenue interest liability account | September 30, 2022 (in thousands) Revenue interest liability—beginning balance $ 111,327 Interest expense recognized 403 Revenue interest liability—ending balance $ 111,730 Less current portion classified within accrued expenses (86) Long-term revenue interest liability $ 111,644 |
Fair value of financial instr_2
Fair value of financial instruments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair value of financial instruments | |
Schedule of financial assets measured at fair value on a recurring basis | The following tables represent information about the Company’s financial assets that are measured at fair value on a recurring basis (in thousands): September 30, 2022 Level 1 Level 2 Level 3 Cash Equivalents: Money market funds $ 214,999 $ — $ — Total $ 214,999 $ — $ — December 31, 2021 Level 1 Level 2 Level 3 Cash Equivalents: Money market funds $ 243,180 $ — $ — Total $ 243,180 $ — $ — |
Net (loss) income per share (Ta
Net (loss) income per share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Net (loss) income per share | |
Summary of Computation of Basic EPS and Diluted EPS | The following table sets forth the computation of basic and diluted net (loss) income per share (in thousands, except for share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Basic and Diluted net (loss) income per share: Numerator Net (loss) income $ (37,800) $ 57,086 $ (120,183) $ (23,068) Denominator Number of shares used for basic EPS computation 19,655,350 19,258,905 19,541,044 19,197,536 Effect of dilutive securities Dilutive options — 380,934 — — Dilutive stock units — 11,404 — — Number of shares used for diluted EPS computation 19,655,350 19,651,243 19,541,044 19,197,536 Basic net (loss) income per share $ (1.92) $ 2.96 $ (6.15) $ (1.20) Basic and Diluted net loss (income) per share $ (1.92) $ 2.90 $ (6.15) $ (1.20) |
Summary of Outstanding Shares Excluded from Computation of Diluted EPS | Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Options to purchase common stock, RSUs and warrants 3,593,074 2,779,257 3,593,074 3,171,596 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Inventory | |
Schedule of inventory | Inventory consists of the following (in thousands): September 30, 2022 December 31, 2021 Raw materials $ 953 $ — Work-in-process 147 — Finished goods 2,049 194 Total inventory $ 3,149 $ 194 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Stock-based Compensation | |
Summary of stock-based compensation expense | Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (in thousands) Employee awards: Cost of product revenue $ 88 $ — $ 265 $ — Research and development expense 1,179 2,817 4,154 5,330 Selling, general and administrative expense 2,280 3,889 6,252 7,942 Total stock-based compensation expense $ 3,547 $ 6,706 $ 10,671 $ 13,272 |
Summary of significant accoun_4
Summary of significant accounting policies and basis of presentation - Organization (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 69 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash and cash equivalents | |||||||
Issuance of common stock, net of costs | $ 20,617 | $ 241 | $ 377,500 | ||||
Proceeds from sale of future royalties, net | $ 111,577 | 59,300 | |||||
Proceeds from sale of priority review voucher, net of transaction costs | $ 103,387 | 103,400 | |||||
Cash and cash equivalents | 222,476 | 222,476 | 222,476 | $ 248,107 | |||
Restricted Cash | 50,000 | 50,000 | 50,000 | ||||
Cash, cash equivalents and restricted cash | $ 272,476 | $ 262,612 | $ 272,476 | $ 262,612 | 272,476 | $ 248,107 | $ 251,272 |
Loan and Security Agreement, Term Loans | |||||||
Cash and cash equivalents | |||||||
Proceeds from issuance of debt, net of issuance costs | $ 111,300 |
Summary of significant accoun_5
Summary of significant accounting policies and basis of presentation - Revenue recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Revenue | |||||
Revenue | $ 9,832 | $ 3,664 | $ 24,870 | $ 8,058 | |
Upfront payments for incentive program | 0 | ||||
Distributor fees | 100 | $ 100 | |||
Product | |||||
Revenue | |||||
Revenue | 7,543 | 1,060 | 18,090 | 1,060 | |
Maximum | |||||
Revenue | |||||
Prepaid amounts for incentive program | 100 | 100 | 100 | ||
Prompt payment allowances | 100 | 100 | 100 | ||
United States | |||||
Revenue | |||||
Rebates and discounts | 1,100 | 1,100 | 700 | ||
United States | Product | |||||
Revenue | |||||
Revenue | 4,100 | 800 | 10,400 | 800 | |
International markets | Product | |||||
Revenue | |||||
Revenue | 3,400 | $ 300 | 7,700 | $ 300 | |
Europe | |||||
Revenue | |||||
Rebates and discounts | 600 | 600 | $ 200 | ||
EA Pharma | License Agreement | |||||
Revenue | |||||
Milestone payment receivable | $ 4,200 | $ 4,200 | |||
Period of written notice required prior to termination of agreement | 180 days |
Summary of significant accoun_6
Summary of significant accounting policies and basis of presentation - Monetization of future royalties (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 30 Months Ended | 69 Months Ended | ||||
Jun. 08, 2020 | Jan. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2022 | Sep. 30, 2021 | Jun. 08, 2020 | Sep. 30, 2022 | Dec. 31, 2021 | |
Summary Of Significant Accounting Policies | ||||||||
Proceeds from sale of future royalties, net | $ 111,577 | $ 59,300 | ||||||
Liability related to sale of future royalties activity | ||||||||
Accretion of interest expense on liability related to royalty monetization | 8,250 | $ 9,428 | ||||||
Long-term liability related to sale of future royalties | 62,053 | 62,053 | $ 60,132 | |||||
HCR | Royalty Interest Acquisition Agreement | ||||||||
Summary Of Significant Accounting Policies | ||||||||
Maximum royalties under monetization agreement | $ 78,800 | |||||||
Proceeds from sale of future royalties, net | $ 14,800 | $ 44,500 | $ 59,300 | |||||
Milestone payment receivable | $ 15,000 | $ 15,000 | ||||||
Liability related to sale of future royalties activity | ||||||||
Liability related to the sale of future royalties - beginning balance | 71,667 | |||||||
Accretion of interest expense on liability related to royalty monetization | 8,250 | |||||||
Repayment of the liability | (15,595) | |||||||
Liability related to sale of future royalties - ending balance | 64,322 | 64,322 | ||||||
Less current portion classified within accrued expenses | (2,269) | (2,269) | ||||||
Long-term liability related to sale of future royalties | $ 62,053 | $ 62,053 | ||||||
Annual effective interest rate (as a percent) | 18% | 18% |
Summary of significant accoun_7
Summary of significant accounting policies and basis of presentation - Purchase Agreement with Sagard (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
Purchase Agreement | |||
Revenue interest liability, net | $ 111,644 | $ 111,644 | $ 111,644 |
Interest expense recognized | 403 | ||
Purchase Agreement | Sagard | |||
Purchase Agreement | |||
Aggregate purchase price | 115,000 | 115,000 | 115,000 |
Royalty cap | 184,000 | 184,000 | 184,000 |
Increase in royalty cap | $ 230,000 | ||
Term of put or call payment | 180 days | ||
Revenue interest liability, net | $ 111,644 | 111,644 | 111,644 |
Interest expense recognized | 400 | 403 | |
Issuance costs amortized to interest expense | 3,400 | ||
Purchase Agreement | Sagard | Minimum | |||
Purchase Agreement | |||
Specified amount of call option of royalty payments | 149,500 | 149,500 | 149,500 |
Purchase Agreement | Sagard | Maximum | |||
Purchase Agreement | |||
Specified amount of call option of royalty payments | $ 230,000 | $ 230,000 | $ 230,000 |
Purchase Agreement | Sagard | Up to $ 250 Million | |||
Purchase Agreement | |||
Royalty rate (as a percent) | 12.50% | 12.50% | 12.50% |
Royalty amount | $ 250,000 | $ 250,000 | $ 250,000 |
Purchase Agreement | Sagard | Greater than $250 Million and Less than $350 Million | |||
Purchase Agreement | |||
Royalty rate (as a percent) | 5% | 5% | 5% |
Purchase Agreement | Sagard | Greater than $250 Million and Less than $350 Million | Minimum | |||
Purchase Agreement | |||
Royalty amount | $ 250,000 | $ 250,000 | $ 250,000 |
Purchase Agreement | Sagard | Greater than $250 Million and Less than $350 Million | Maximum | |||
Purchase Agreement | |||
Royalty amount | $ 350,000 | $ 350,000 | $ 350,000 |
Purchase Agreement | Sagard | Greater than $350 Million | |||
Purchase Agreement | |||
Royalty rate (as a percent) | 5% | 5% | 5% |
Royalty amount | $ 350,000 | $ 350,000 | $ 350,000 |
Decrease in royalty rate (as a percent) | 1% |
Summary of significant accoun_8
Summary of significant accounting policies and basis of presentation - Revenue Interest Liability (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
Purchase Agreement | ||
Interest expense recognized | $ 403 | |
Revenue interest liability, net | $ 111,644 | 111,644 |
Purchase Agreement | Sagard | ||
Purchase Agreement | ||
Revenue interest liability-beginning balance | 111,327 | |
Interest expense recognized | 400 | 403 |
Revenue interest liability-ending balance | 111,730 | 111,730 |
Less current portion classified within accrued expenses | (86) | (86) |
Revenue interest liability, net | $ 111,644 | $ 111,644 |
Summary of significant accoun_9
Summary of significant accounting policies and basis of presentation - Trade Receivables (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Trade Receivables | ||
Accounts receivable, net | $ 2,029 | $ 3,272 |
Allowance for doubtful accounts | $ 0 | $ 0 |
Europe | ||
Trade Receivables | ||
Payment terms | 45 days | |
Minimum | United States | ||
Trade Receivables | ||
Payment terms | 31 days | |
Maximum | United States | ||
Trade Receivables | ||
Payment terms | 36 days |
Summary of significant accou_10
Summary of significant accounting policies and basis of presentation - Inventory (Details) $ in Millions | 24 Months Ended |
Dec. 31, 2021 USD ($) | |
Research and development expense | |
Inventory | |
Manufacturing costs | $ 1.6 |
Fair value of financial instr_3
Fair value of financial instruments (Details) - Recurring - Fair Value Level 1 - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value | ||
Cash Equivalents | $ 243,180 | |
Total | $ 214,999 | $ 243,180 |
Money market funds | ||
Fair Value | ||
Cash Equivalents | $ 214,999 |
Commitments and contingencies -
Commitments and contingencies - Agreements with CROs (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Commitments and contingencies | |
Maximum future payable under agreements with CROs | $ 13 |
Net (loss) income per share - B
Net (loss) income per share - Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Basic and Diluted net (loss) income per share - Numerator | ||||
Net income (loss), Basic | $ (37,800) | $ 57,086 | $ (120,183) | $ (23,068) |
Net income (loss), Diluted | $ (37,800) | $ 57,086 | $ (120,183) | $ (23,068) |
Denominator | ||||
Number of shares used for basic EPS computation | 19,655,350 | 19,258,905 | 19,541,044 | 19,197,536 |
Number of shares used for diluted EPS computation | 19,655,350 | 19,651,243 | 19,541,044 | 19,197,536 |
Basic net income (loss) per share (in dollars per share) | $ (1.92) | $ 2.96 | $ (6.15) | $ (1.20) |
Diluted net income (loss) per share (in dollars per share) | $ (1.92) | $ 2.90 | $ (6.15) | $ (1.20) |
Employee Stock Option | ||||
Denominator | ||||
Dilutive options | 380,934 | |||
RSUs | ||||
Denominator | ||||
Dilutive options | 11,404 |
Net (loss) income per share - A
Net (loss) income per share - Anti-dilutive shares (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Options to purchase common stock, RSUs and warrants | ||||
Antidilutive Securities | ||||
Anti-dilutive securities excluded from computation of diluted net loss per share | 3,593,074 | 2,779,257 | 3,593,074 | 3,171,596 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income taxes | ||||
Income tax provision (benefit) | $ 0 | $ 3,789 | $ 0 | $ 3,789 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Inventory | |||
Raw materials | $ 953 | $ 953 | |
Work-in-process | 147 | 147 | |
Finished goods | 2,049 | 2,049 | $ 194 |
Total inventory | 3,149 | 3,149 | $ 194 |
Inventory write downs | $ 0 | $ 0 | |
Finished goods inventory shelf life | 24 months |
Note Payable - Loan and Securit
Note Payable - Loan and Security Agreement (Details) $ in Millions | Jun. 08, 2020 USD ($) |
Loan and Security Agreement, Term Loans | |
Debt instrument | |
Maximum borrowing capacity | $ 80 |
Amount borrowed | $ 10 |
End of term charge as a percent of principal amount | 6.95% |
Prepayment premium, as a percent of principal, between 9 months and 24 months following closing date | 2% |
Prepayment premium, as a percent of principal, 24 months following closing date and before maturity date | 1% |
Loan and Security Agreement, Term Loans | Minimum | |
Debt instrument | |
Interest rate percentage added to variable rate to determine minimum annual interest rate | 10.65% |
Loan and Security Agreement, Term Loans | Prime Rate | |
Debt instrument | |
Interest rate percentage added to variable rate to determine minimum annual interest rate | 10.65% |
Spread on rate (as a percent) | 4.75% |
Loan and Security Agreement, Term Loan, First/Initial Tranche | |
Debt instrument | |
Maximum borrowing capacity | $ 10 |
Loan and Security Agreement, Term Loan, Second Tranche | |
Debt instrument | |
Maximum borrowing capacity | 20 |
Minimum borrowing increments | 10 |
Loan and Security Agreement, Term Loan, Third Tranche | |
Debt instrument | |
Maximum borrowing capacity, term loan advance | 45 |
Minimum borrowing increments | $ 5 |
Note Payable - Carrying Value (
Note Payable - Carrying Value (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Jul. 27, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||||||
Note payable net of discount, long-term | $ 10,004 | |||||
Loss on extinguishment of debt | $ (613) | $ (613) | ||||
Loan and Security Agreement, Term Loans | ||||||
Debt Instrument [Line Items] | ||||||
Pay off amount | $ 10,900 | |||||
End of term charge | 700 | |||||
Prepayment charge | $ 100 | |||||
Loss on extinguishment of debt | (600) | (600) | ||||
Interest expense | $ 100 | $ 300 | $ 700 | $ 1,000 |
Note Payable - Warrants (Detail
Note Payable - Warrants (Details) $ / shares in Units, $ in Millions | Jun. 08, 2020 USD ($) $ / shares shares |
Loan and Security Agreement, Term Loans | |
Warrants | |
Number of warrants (as a percent) | 1% |
Number of warrants issued (in shares) | shares | 5,311 |
Warrant exercise period | 7 years |
Warrants exercise price (in dollars per share) | $ / shares | $ 18.83 |
Warrant registration period | 60 days |
Loan and Security Agreement, Term Loans | Maximum | |
Warrants | |
Warrant registration period | 180 days |
Loan and Security Agreement, Term Loan, First/Initial Tranche | |
Warrants | |
Fair value of warrants | $ | $ 0.1 |
Equity Financings (Details)
Equity Financings (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 69 Months Ended | ||||||
Aug. 25, 2022 | Sep. 30, 2022 | Jul. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Aug. 31, 2022 | Feb. 28, 2021 | |
Equity | ||||||||||
Proceeds from issuance of common stock, net of issuance costs | $ 20,633 | $ 241 | ||||||||
Issuance of common stock, net of costs | $ 20,617 | $ 241 | $ 377,500 | |||||||
2021 Sales Agreement, At-the-Market Offering | ||||||||||
Equity | ||||||||||
Issuance of common stock (in shares) | 7,508 | |||||||||
Proceeds from issuance of common stock, net of issuance costs | $ 200 | |||||||||
2021 Sales Agreement, At-the-Market Offering | Maximum | ||||||||||
Equity | ||||||||||
Aggregate offering price | $ 100,000 | |||||||||
Issuance of common stock, net of costs | $ 400,000 | |||||||||
2022 Sales Agreement, At-the-Market Offering | ||||||||||
Equity | ||||||||||
Issuance of common stock (in shares) | 1,072,310 | |||||||||
Proceeds from issuance of common stock, net of issuance costs | $ 20,800 | |||||||||
2022 Sales Agreement, At-the-Market Offering | Maximum | ||||||||||
Equity | ||||||||||
Aggregate offering price | $ 100,000 |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock-based Compensation activity (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Stock-based Compensation | |
Options granted (in shares) | 329,700 |
Weighted average exercise price - Options granted (in dollars per share) | $ / shares | $ 25.89 |
RSUs | |
Stock-based Compensation | |
RSUs granted during period | 688,300 |
Stock-based Compensation - St_2
Stock-based Compensation - Stock-based compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Stock-based compensation | ||||
Stock-based compensation expense | $ 3,547 | $ 6,706 | $ 10,671 | $ 13,272 |
Cost of product revenue | ||||
Stock-based compensation | ||||
Stock-based compensation expense | 88 | 265 | ||
Research and development expense | ||||
Stock-based compensation | ||||
Stock-based compensation expense | 1,179 | 2,817 | 4,154 | 5,330 |
Selling, general and administrative expense | ||||
Stock-based compensation | ||||
Stock-based compensation expense | $ 2,280 | $ 3,889 | $ 6,252 | $ 7,942 |