View Filing Data

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2016	Jul. 31, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	INTERCEPT PHARMACEUTICALS INC
Entity Central Index Key	0001270073
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Trading Symbol	icpt
Entity Common Stock, Shares Outstanding		24,726,376
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2016

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 51,701	$ 32,742
Restricted cash	45,000
Investment securities, available-for-sale	387,786	595,313
Prepaid expenses and other current assets	20,781	13,638
Total current assets	505,267	641,693
Fixed assets, net	12,530	10,047
Security deposits	6,377	4,018
Total assets	524,174	655,758
Current liabilities:
Accounts payable, accrued expenses and other liabilities	42,693	45,591
Litigation settlement	55,000
Short-term portion of deferred revenue	4,462	1,782
Total current liabilities	102,155	47,373
Long-term liabilities:
Long-term portion of deferred revenue	5,345	6,236
Total liabilities	107,500	53,609
Stockholders' equity:
Common stock 35,000,000 shares authorized; 24,675,929, and 24,391,430 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively; par value $0.001 per share	25	24
Additional paid-in capital	1,317,412	1,300,008
Accumulated other comprehensive income (loss), net	(1,160)	(2,253)
Accumulated deficit	(899,603)	(695,630)
Total stockholders' equity	416,674	602,149
Total liabilities and stockholders' equity	$ 524,174	$ 655,758

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Common stock, authorized	35,000,000	35,000,000
Common stock, shares, issued	24,675,929	24,391,430
Common stock, shares, outstanding	24,675,929	24,391,430
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Product revenue, net	$ 75		$ 75
Licensing revenue	5,445	$ 445	5,891	$ 1,891
Total revenue	5,520	445	5,966	1,891
Costs and expenses:
Research and development	41,340	28,295	78,753	56,260
General and administrative	42,275	20,974	132,707	34,112
Total costs and expenses	83,615	49,269	211,460	90,372
Other income (expense):
Other income, net	796	930	1,521	1,201
Total other income (expense)	796	930	1,521	1,201
Net loss	$ (77,299)	$ (47,894)	$ (203,973)	$ (87,280)
Net Loss Per Share [Abstract]
Net loss per share, basic and diluted (in dollars per share)	$ (3.14)	$ (1.99)	$ (8.31)	$ (3.78)
Weighted average shares outstanding, basic and diluted	24,611,631	24,014,092	24,553,239	23,100,222

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Comprehensive Loss:
Net loss	$ (77,299)	$ (47,894)	$ (203,973)	$ (87,280)
Unrealized holding gains (losses) arising during the period	305	(895)	2,038	(682)
Reclassification for recognized gains (losses) on marketable investment securities during the period	29		(51)	2
Net unrealized gains (losses) on marketable investment securities	334	(895)	1,987	(680)
Foreign currency translation adjustments	(368)	338	(894)	176
Comprehensive loss	$ (77,333)	$ (48,451)	$ (202,881)	$ (87,784)

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net loss	$ (203,973)	$ (87,280)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation	14,497	16,369
Depreciation	1,544	646
Amortization of investment premium	2,664	2,595
Changes in:
Prepaid expenses, other current assets and security deposits	(9,501)	(3,581)
Accounts payable, accrued expenses, and other current liabilities	(2,898)	8,547
Litigation settlement	55,000
Deferred revenue	1,790	(891)
Net cash used in operating activities	(140,877)	(63,595)
Cash flows from investing activities:
Purchases of investment securities	(35,318)	(524,054)
Sales of investment securities	242,117	96,418
Litigation settlement (Restricted cash)	(45,000)
Purchases of equipment, leasehold improvements, and furniture and fixtures	(4,187)	(4,177)
Net cash provided by (used in) investing activities	157,612	(431,813)
Cash flows from financing activities:
Proceeds from issuance of stock offerings, net of issuance costs		558,930
Proceeds from exercise of options	2,906	4,536
Net cash provided by financing activities	2,906	563,466
Effect of exchange rate changes	(682)	176
Net increase in cash and cash equivalents	18,959	68,234
Cash and cash equivalents - beginning of period	32,742	20,023
Cash and cash equivalents - end of period	$ 51,701	$ 88,257

Overview of Business

6 Months Ended

Jun. 30, 2016

Nature of Business and Basis of Presentation [Abstract]

Nature of Business and Basis of Presentation

	1.	Overview of Business

Intercept Pharmaceuticals, Inc. (“Intercept” or the “Company”) is a biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat non-viral, progressive liver diseases. The Company’s product candidates have the potential to treat orphan and more prevalent liver diseases for which there currently are limited therapeutic solutions. Intercept was incorporated in Delaware in September 2002.

The Company has its principal executive offices in New York, New York. The Company also has administrative offices in San Diego, California and London, United Kingdom.

Basis of Presentation

The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Use of Estimates

The preparation of these financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses, revenues and related disclosures. On an ongoing basis, management evaluates estimates, clinical trial accruals and share-based compensation expense. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies


2.	Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 3 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Revenue Recognition

Product Revenue, Net

Revenue is recognized when the four basic criteria of revenue recognition are met: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. When the revenue recognition criteria are not met, we defer the recognition of revenue by recording deferred revenue on the balance sheet until such time that all criteria are met.

Beginning in June 2016, subsequent to the U.S. Food and Drug Administration (FDA) approval of Ocaliva® (obeticholic acid) for the treatment of primary biliary cirrhosis (PBC) in May 2016, the Company sells Ocaliva in the United States principally to a limited number of specialty pharmacies which dispense the product directly to patients. The specialty pharmacies are referred to as the Company’s customers.

The Company provides the right of return to its customers for unopened product for a limited time before and after its expiration date. Given the Company’s limited sales history for Ocaliva and the inherent uncertainties in estimating product returns, the Company has determined that the shipments of Ocaliva made to its customers thus far do not meet the criteria for revenue recognition at the time of shipment. Accordingly, the Company recognizes revenue when the product is sold through by its customers, provided all other revenue recognition criteria are met. The Company invoices its customers upon shipment of Ocaliva to them and records accounts receivable, with a corresponding liability for deferred revenue equal to the gross invoice price. The Company then recognizes revenue when Ocaliva is sold through as specialty pharmacies dispense product directly to the patients.

The Company recognized net sales of Ocaliva for the second quarter 2016 of $75 thousand pursuant to the product launch in June 2016. The Company also recorded $2.7 million in deferred revenues on its balance sheet, which represents product shipped to distributors, but not sold through as of June 30, 2016.

The Company has written contracts with each of its customers and delivery occurs when the customer receives Ocaliva. The Company evaluates the creditworthiness of each of its customers to determine whether collection is reasonably assured. In order to conclude that the price is fixed and determinable, the Company must be able to (i) calculate its gross product revenues from the sales to its customers and (ii) reasonably estimate its net product revenues. The Company calculates gross product revenues based on the wholesale acquisition cost that the Company charges its customers for Ocaliva. The Company estimates its net product revenues by deducting from its gross product revenues (i) trade allowances, such as invoice discounts for prompt payment and customer fees, (ii) estimated government rebates and discounts related to Medicare, Medicaid and other government programs, and (iii) estimated costs of incentives offered to certain indirect customers including patients.

Trade Allowances

The Company provides invoice discounts on Ocaliva sales to certain of its customers for prompt payment and pays fees for certain distribution services, such as fees for certain data that its customers provide to the Company. The Company deducts the full amount of these discounts and fees from its gross product revenues at the time such discounts and fees are earned by such customers.

Rebates and Discounts

The Company contracts with Centers for Medicare & Medicaid Services (CMS) and other government agencies to make Ocaliva available to eligible patients. As a result, the Company estimates any rebates and discounts and deducts these estimated amounts from its gross product revenues at the time the revenues are recognized. The Company’s estimates of rebates and discounts are based on the government mandated discounts, which are statutorily-defined and applicable to these government funded programs. Government rebates that are invoiced directly to the Company are recorded in accrued liabilities on the condensed consolidated balance sheet. Gross-to-net adjustments were insignificant for the period ended June 30, 2016.

Other Incentives

Other incentives that the Company offers to indirect customers include co-pay assistance cards provided by the Company for PBC patients whom reside in states that permit co-pay assistance programs. The Company’s co-pay assistance program is intended to reduce each participating patient’s portion of the financial responsibility for Ocaliva purchase price to a specified dollar amount. The Company records each period 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.

Significant Agreements

6 Months Ended

Jun. 30, 2016

Significant Agreements [Abstract]

Significant Agreements

Sumitomo Dainippon Pharma Co, Ltd. (Sumitomo Dainippon)

In March 2011, the Company entered into an exclusive license agreement with Sumitomo Dainippon to research, develop and commercialize obeticholic acid (OCA) as a therapeutic for the treatment of primary biliary cirrhosis, recently renamed primary biliary cholangitis (PBC) and nonalcoholic steatohepatitis (NASH) in Japan and China (excluding Taiwan). Under the terms of the license agreement, the Company received an up-front payment from Sumitomo Dainippon of $15.0 million and may be eligible to receive additional milestone payments of up to an aggregate of approximately $30.0 million in development milestones based on the initiation or completion of clinical trials, $70.0 million in regulatory approval milestones and $200.0 million in sales milestones. The regulatory approval milestones include $15.0 million for receiving marketing approval of OCA for NASH in Japan, $10.0 million for receiving marketing approval of OCA for NASH in China, and $5.0 million for receiving marketing approval of OCA for PBC in the United States, which was recently achieved upon the FDA approval of Ocaliva for the treatment of PBC in May 2016. As of June 30, 2016, the Company had achieved $6.0 million of the development milestones under its collaboration agreement with Sumitomo Dainippon. The sales milestones are based on aggregate sales amounts of OCA in the Sumitomo Dainippon territory and include $5.0 million for achieving net sales of $50.0 million, $10.0 million for achieving net sales of $100.0 million, $20.0 million for achieving net sales of $200.0 million, $40.0 million for achieving net sales of $400.0 million and $120.0 million for achieving net sales of $1.2 billion. The Company has determined that each potential future development, regulatory and sales milestone is substantive. In May 2014, Sumitomo Dainippon exercised its option under the license agreement to add Korea as part of its licensed territories and paid the Company a $1.0 million up-front fee. Sumitomo Dainippon has the option to add several other Asian countries to its territory to pursue OCA for additional indications. Sumitomo Dainippon will be responsible for the costs of developing and commercializing OCA in its territories. Sumitomo Dainippon is also required to make royalty payments ranging from the tens to the twenties in percent based on net sales of OCA products in the Sumitomo Dainippon territory.

The Company evaluated the license agreement with Sumitomo Dainippon and determined that it is a revenue arrangement with multiple deliverables, or performance obligations. The Company’s substantive performance obligations under this license include an exclusive license to its technology, technical and scientific support to the development plan and participation on a joint steering committee. The Company determined that these performance obligations represent a single unit of accounting, since, initially, the license does not have stand-alone value to Sumitomo Dainippon without the Company’s technical expertise and steering committee participation during the development of OCA. This development period is currently estimated as continuing through June 2020 and, as such, the up-front payment and payments made in respect of the Korea option are being recognized ratably over this period. During the three months ended June 30, 2016 and 2015, the Company recorded licensing revenue of approximately $5.4 million and $0.4 million, respectively, and during the six months ended June 30 2016 and 2015, the Company recorded revenue of approximately $5.9 million and $1.9 million, respectively.

Leases

In January 2016, Intercept Pharma Europe Ltd. (IPEL), a wholly owned subsidiary of the Company, entered into an underlease with Performing Right Society, Ltd., for additional office space in the King’s Cross area of London, United Kingdom. The Company is the guarantor to the underlease. The underlease provides IPEL with an additional 8,549 square feet of space. The lease term is anticipated to end in May 2024. The annual rent is approximately £726,665 (or approximately $1.0 million), payable quarterly. IPEL is also required to pay value added tax (VAT) on the rent. IPEL will be responsible for a portion of the insurance, certain service charges and taxes for the building based on the floor area rented by them. As security for the underlease, IPEL has provided the landlord with a rent deposit in an amount equal to twelve months’ rent, plus applicable VAT. The underlease is subject to an “upwards only” open market rent review of the market rent with review to take place in June 2019.

In February 2016, the Company entered into a sublease with Restoration Hardware, Inc. for additional office space in New York City. The sublease provides the Company with an additional 10,785 square feet of space. The lease term is anticipated to end in February 2021. The annual rent is approximately $1.0 million payable monthly. The Company is also responsible for its proportionate share of increases in operating expenses beginning January 2017 as well as its proportionate share of increases in real estate taxes over the average of the 2015/2016 and 2016/2017 fiscal years. As security for the sublease, the Company delivered a letter of credit in the amount of approximately $0.3 million in favor of the sublandlord.

Security for these leases is included on the condensed consolidated balance sheets in “Security Deposits.”

Investments

6 Months Ended

Jun. 30, 2016

Investments [Abstract]

Investments

The following table summarizes the Company’s cash, cash equivalents and investments as of June 30, 2016 and December 31, 2015:


	As of June 30, 2016
			Gross		Gross
	Amortized Cost		Unrealized		Unrealized		Fair Value
			Gains		Losses

	(In thousands)
Cash and cash equivalents:
Cash and money market funds	$	51,701	$	-	$	-	$	51,701
Investment securities:
Commercial paper		1,999		-		-		1,999
U.S. government and agency securities		41,841		21		(3)		41,859
Corporate debt securities		343,861		217		(150)		343,928
Total investments		387,701		238		(153)		387,786
Total cash, cash equivalents and investments	$	439,402	$	238	$	(153)	$	439,487


	As of December 31, 2015
			Gross		Gross
	Amortized Cost		Unrealized		Unrealized		Fair Value
			Gains		Losses

	(In thousands)
Cash and cash equivalents:
Cash and money market funds	$	32,742	$	-	$	-	$	32,742
Investment securities:
Commercial paper		1,993		-		(3)		1,990
U.S. government and agency securities		65,854		1		(182)		65,673
Corporate debt securities		529,368		2		(1,720)		527,650
Total investments		597,215		3		(1,905)		595,313
Total cash, cash equivalents and investments	$	629,957	$	3	$	(1,905)	$	628,055

As of June 30, 2016, there were no marketable securities in a continuous unrealized loss position for more than twelve months.

- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References + Details

Income Taxes

6 Months Ended

Jun. 30, 2016

Income Taxes [Abstract]

Income Taxes


	5.	Income Taxes

For the six months ended June 30, 2016 and 2015, no income tax expense or benefit was recognized. The Company’s deferred tax assets are comprised primarily of net operating loss carryforwards (NOLs). The Company maintains a full valuation allowance on its deferred tax assets since it has not yet achieved sustained profitable operations. As a result, the Company has not recorded any income tax benefit since its inception.

As of June 30, 2016 and December 31, 2015, the Company had NOLs for U.S. federal income tax purposes of $472.5 million and $454.4 million, respectively, which expire between 2024 and 2036. The Company also has certain state and foreign NOLs in varying amounts depending on the different state and foreign tax laws. The U.S. federal NOLs include approximately $158.1 million and $151.0 million, respectively, of excess tax benefits related to stock-based payments that are not recognized as a deferred tax asset. The benefit of these deductions will be recognized through additional paid-in capital at the time the tax deduction results in a reduction of current taxes payable.

The Company’s ability to utilize its NOLs may be limited under Section 382 of the Internal Revenue Code due to previous ownership changes. Although the Company believes that these ownership changes have not resulted in material limitations on its ability to use these NOLs, its ability to utilize these NOLs may be limited due to future ownership changes or for other reasons. Additionally, tax laws limit the time during which NOLs and certain other tax attributes may be utilized against future taxes. As a result, the Company may not be able to take full advantage of its carryforwards for federal, state, and foreign tax purposes.

Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Measurements [Abstract]

Fair Value Measurements

The carrying amounts of the Company’s receivables and payables approximate their fair value due to their short maturities.

Accounting principles provide guidance for using fair value to measure assets and liabilities. The guidance includes a three level hierarchy of valuation techniques used to measure fair value, defined as follows:

Unadjusted Quoted Prices — The fair value of an asset or liability is based on unadjusted quoted prices in active markets for identical assets or liabilities (Level 1).

Pricing Models with Significant Observable Inputs — The fair value of an asset or liability is based on information derived from either an active market quoted price, which may require further adjustment based on the attributes of the financial asset or liability being measured, or an inactive market transaction (Level 2).

Pricing Models with Significant Unobservable Inputs — The fair value of an asset or liability is primarily based on internally derived assumptions surrounding the timing and amount of expected cash flows for the financial instrument. Therefore, these assumptions are unobservable in either an active or inactive market (Level 3).

The Company considers an active market as one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Conversely, the Company views an inactive market as one in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers. When appropriate, non-performance risk, or that of a counterparty, is considered in determining the fair values of liabilities and assets, respectively.

The Company’s cash deposits and money market funds are classified within Level 1 of the fair value hierarchy because they are valued using bank balances or quoted market prices. Investments are classified as Level 2 instruments based on market pricing or other observable inputs. None of the Company’s investments are classified within Level 3 of the fair value hierarchy.

Financial assets and liabilities, carried at fair value are classified in the tables below in one of the three categories described above:



			Fair Value Measurements Using
	Total			Level 1		Level 2		Level 3

	(In thousands)
June 30, 2016
Assets:
Money market funds	$	12,500		$	12,500	$	-	$	-
Available for sale securities:									-
Commercial paper		1,999			-		1,999	$	-
Corporate debt securities		41,859			-		41,859		-
U.S. government and agency securities		343,928			-		343,928		-
Total financial assets:	$	400,286		$	12,500	$	387,786	$	-

December 31, 2015
Assets:
Money market funds	$	4,826		$	4,826	$	-	$	-
Available for sale securities:
Commercial paper		1,990			-		1,990		-
Corporate debt securities		527,650			-		527,650		-
U.S. government and agency securities		65,673			-		65,673		-
Total financial assets	$	600,139		$	4,826	$	595,313	$	-

The estimated fair value of marketable debt securities (commercial paper, corporate debt securities and U.S. government and agency securities), by contractual maturity, are as follows:


	Fair Value as of
	June 30, 2016		December 31, 2015

	(In thousands)
Due in one year or less	$	300,527	$	343,758
Due after 1 year through 2 years		87,259		251,555
Total investments in debt securities	$	387,786	$	595,313

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.

Common Stock

As of June 30, 2016 and December 31, 2015, the Company had 35,000,000 authorized shares of common stock, $0.001 par value per share. At the 2016 annual meeting of stockholders held on July 19, 2016, the Company’s stockholders approved an amendment to the Company’s restated certificate of incorporation, as amended, to increase the number of authorized shares of common stock from 35,000,000 shares to 45,000,000 shares.

In February 2015, the Company completed a public offering of 1,150,000 shares of its common stock pursuant to a registration statement on Form S-3. After underwriting discounts and commissions and offering expenses, the Company received net proceeds of approximately $191.6 million.

In April 2015, the Company completed a public offering of 1,330,865 shares of its common stock pursuant to a registration statement on Form S-3. After underwriting discounts and commissions and offering expenses, the Company received net proceeds of approximately $367.1 million.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Stock-Based Compensation

6 Months Ended

Jun. 30, 2016

Stock-Based Compensation [Abstract]

Stock-Based Compensation

The 2012 Equity Incentive Plan (2012 Plan) became effective upon the pricing of the IPO in October 2012. At the same time, the 2003 Stock Incentive Plan (2003 Plan) was terminated and 555,843 shares available under the 2003 Plan were added to the 2012 Plan.

The estimated fair value of the options that have been granted under the 2003 and 2012 Plans is determined utilizing the Black-Scholes option-pricing model at the date of grant. The fair value of restricted stock units (RSUs) and restricted stock awards (RSAs) that have been granted under the 2012 Plan is determined utilizing the closing stock price on the date of grant.

The following table summarizes stock option activity during the six months ended June 30, 2016:


		Weighted
	Number of	Average
	Shares	Exercise Price

Outstanding, December 31, 2015	1,348,000	$	108.49
Granted	392,415	$	105.41
Exercised	(79,179)	$	36.71
Expired	(4,119)		128.3
Forfeited	(17,126)	$	156.92
Outstanding, June 30, 2016	1,639,991	$	110.66

Exercisable, June 30, 2016	747,123	$	71.49

The following table summarizes the aggregate RSU and RSA activity during the six months ended June 30, 2016:


	Number of Shares	Weighted Average Fair Value		Aggregate Intrinsic Value (In thousands)

Non-vested shares outstanding, December 31, 2015	193,164	$	183.19	$	28,849
Granted	244,694	$	109.60	$	34,913
Exercised	(47,004)	$	145.28	$	(6,707)
Forfeited	(8,199)	$	185.98	$	(1,170)
Non-vested shares outstanding, June 30, 2016	382,655	$	140.73	$	54,597

As of June 30, 2016, there was $47.6 million of unrecognized compensation expense related to unvested RSUs and RSAs, which is expected to be recognized over a weighted average of 2.82 years.

The following table summarizes additional information about unvested RSUs and RSAs outstanding:


	Number		Intrinsic Value
	of Shares	Price	(In thousands)
Employees and directors	379,105	$142.68	$	54,091
Consultants	3,550	$142.68		506
Outstanding at June 30, 2016	382,655		$	54,597

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details

Net Loss Per Share

6 Months Ended

Jun. 30, 2016

Net Loss Per Share [Abstract]

Net Loss Per Share



	8.	Net Loss Per Share

The following table presents the historical computation of basic and diluted net loss per share:


	Three Months				Six Months
	Ended June 30,				Ended June 30,
	2016		2015		2016		2015

	(In thousands, except share and per share amounts)
Historical net loss per share
Numerator:
Net loss attributable to common stockholders	$	(77,299)	$	(47,894)	$	(203,973)	$	(87,280)
Denominator:
Weighted average shares used in calculating net loss per share - basic and diluted		24,611,631		24,014,092		24,553,239		23,100,222

Net loss per share:
Basic and diluted	$	(3.14)	$	(1.99)	$	(8.31)	$	(3.78)

The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding:


	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015

	(In thousands)

Options	1,640	1,232	1,640	1,232
Restricted stock units	383	37	383	37
Total	2,023	1,269	2,023	1,269

Recent Accounting Pronouncements	6 Months Ended
Recent Accounting Pronouncements	Jun. 30, 2016
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Recent Accounting Pronouncements	9. Recent Accounting Pronouncements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-2”) which supersedes Topic 840, Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets for all the leases with terms greater than twelve months. Based on certain criteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. ASU 2016-2 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients primarily focused on leases that commenced before the effective date of Topic 842, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unless the lease is modified. The Company is evaluating the impact of the adoption of the standard on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to improve the accounting for share-based payment transactions as part of the FASB’s simplification initiative. The ASU changes certain aspects of the accounting for share-based payment award transactions, including: (1) accounting for income taxes; (2) classification of excess tax benefits on the statement of cash flows; (3) forfeitures; (4) minimum statutory tax withholding requirements; and (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those years for public business entities. The Company is evaluating the impact of the adoption of the standard on its consolidated financial statements. In April 2016, the FASB issued ASU 2016-10, Revenue From Contracts With Customers (Topic 606), which covers principal versus agent considerations. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in the update do not change the core principle of the guidance. The amendments clarify the implementation guidance on principal versus agent considerations. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of update 2014-09, accounting standards update 2015-14 Revenue From Contracts with Customers (Topic 606). The effective date of update 2014-09 was deferred by one year. The Company is evaluating the impact of the adoption of the standard on its consolidated financial statements.

- Definition

The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=6507316

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Direct Effects of a Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=66092750

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=64853466&loc=d3e22583-107794

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Indirect Effects of a Change in Accounting Principle
-URI http://asc.fasb.org/extlink&oid=6515603

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64853466&loc=d3e22580-107794

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.10-01.(b)(6))
-URI http://asc.fasb.org/extlink&oid=27015980&loc=d3e46468-122699

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Accounting Change
-URI http://asc.fasb.org/extlink&oid=6503790

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=64853466&loc=d3e22499-107794

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Retrospective Application
-URI http://asc.fasb.org/extlink&oid=6523989

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section 45
-Paragraph 13
-URI http://asc.fasb.org/extlink&oid=68064558&loc=d3e765-108305

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 270
-SubTopic 10
-Section 45
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=68064558&loc=d3e725-108305

+ Details

Litigation	6 Months Ended
Litigation	Jun. 30, 2016
Litigation [Abstract]
Litigation	10. Litigation On February 21, 2014 and February 28, 2014, purported shareholder class actions, styled Scot H. Atwood v. Intercept Pharmaceuticals, Inc. et al. and George Burton v. Intercept Pharmaceuticals, Inc. et al., respectively, were filed in the United States District Court for the Southern District of New York, naming the Company and certain of its officers as defendants. These lawsuits were filed by stockholders who claim to be suing on behalf of anyone who purchased or otherwise acquired the Company’s securities between January 9, 2014 and January 10, 2014. The lawsuits alleged that the Company made material misrepresentations and/or omissions of material fact in its public disclosures during the period from January 9, 2014 to January 10, 2014, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The alleged improper disclosures relate to the Company’s January 9, 2014 announcement that the FLINT trial had been stopped early based on a pre-defined interim efficacy analysis. Specifically, the lawsuits claimed that the January 9, 2014 announcement was misleading because it did not contain information regarding certain lipid abnormalities seen in the FLINT trial in OCA-treated patients compared to placebo. On April 22, 2014, two individuals each moved to consolidate the cases and a lead plaintiff was subsequently appointed by the Court. On June 27, 2014, the lead plaintiff filed an amended complaint on behalf of the putative class as contemplated by the order of the Court. The lead plaintiff was seeking unspecified monetary damages on behalf of the putative class and an award of costs and expenses, including attorneys’ fees. On August 14, 2014, the defendants filed a motion to dismiss the complaint. Oral arguments on the motion to dismiss were held on February 24, 2015. On March 4, 2015, the defendants’ motion to dismiss was denied by the Court. The defendants answered the amended complaint on April 13, 2015. On July 15, 2015, the plaintiff moved for class certification and appointment of class representatives and class counsel. On September 14, 2015, the defendants opposed the plaintiff’s class certification motion. The plaintiff filed its reply to the defendants’ opposition on October 14, 2015, to which the defendants filed a sur-reply on November 10, 2015. Oral arguments on the class certification motion were held on January 20, 2016. On May 2, 2016, the defendants reached an agreement with the lead plaintiff to seek Court approval of a proposed resolution. The plaintiffs moved for preliminary approval of the proposed settlement on May 5, 2016. On May 23, 2016, the Court entered an order preliminarily approving the settlement. The Court ordered that notice be provided to the class and preliminarily approved the proposed settlement, including the payment of $55 million, of which $10 million was agreed to be funded by the Company’s insurers. The settlement was paid into escrow in June 2016, with distribution to the class to occur after the Court has finally approved the settlement and a plan of allocation of those proceeds. The Court has scheduled a hearing to consider final approval of the proposed settlement on September 8, 2016. The $45 million held in escrow pending the final approval of the settlement by the Court is accounted for as restricted cash and as an accrued liability on the Company’s June 30, 2016 consolidated balance sheet. Under the proposed settlement, the defendants do not admit any liability. The defendants also continue to deny all allegations against them and to maintain that the suit has no merit. It is anticipated that the settlement will not have a material impact on the Company’s business.

Subsequent Events	6 Months Ended
Subsequent Events	Jun. 30, 2016
Subsequent Events [Abstract]
Subsequent Events	11. Subsequent Events On July 6, 2016, the Company issued $460.0 million aggregate principal amount of 3.25% convertible senior notes due 2023 (the “convertible notes”). After deducting the underwriting discount and estimated offering expenses of approximately $12.3 million, we estimate that the net proceeds from the convertible notes offering were approximately $447.7 million. The Company used approximately $38.4 million of the net proceeds from the offering to fund the payment of the cost of the capped call transactions that were entered into in connection with the issuance of the convertible notes. The convertible notes are senior unsecured obligations of the Company. Interest is payable semi-annually on January 1 and July 1 of each year, beginning on January 1, 2017. The convertible notes mature on July 1, 2023, unless earlier repurchased, redeemed or converted. The convertible notes are convertible at the option of holders, under certain circumstances and during certain periods, into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The initial conversion rate of the convertible notes is 5.0358 shares of the Company’s common stock per $1,000 principal amount of convertible notes, which is equivalent to an initial conversion price of approximately $198.58 per share of the Company’s common stock. The conversion rate is subject to adjustment upon the occurrence of certain events. The Company may redeem for cash all or part of the convertible notes, at its option, on or after July 6, 2021, under certain circumstances at a redemption price equal to 100% of the principal amount of the convertible notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The capped call transactions are expected generally to reduce the potential dilution upon conversion of the convertible notes in the event that the market price per share of the Company’s common stock, as measured under the terms of the capped call transactions, is greater than the strike price of the capped call transactions, which initially corresponds to the conversion price of the convertible notes, and is subject to anti-dilution adjustments generally similar to those applicable to the conversion rate of the convertible notes. The cap price of the capped call transactions will initially be $262.2725 per share, and is subject to certain adjustments under the terms of the capped call transactions. If, however, the market price per share of the Company’s common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions, there would nevertheless be dilution upon conversion of the convertible notes to the extent that such market price exceeds the cap price of the capped call transactions. On July 19, 2016, the Company entered into an amendment to its lease agreement with Irvine Eastgate Office II LLC for additional office space in San Diego, California. The amendment provides the Company with an additional 11,177 square feet of space. The lease term is anticipated to end in September 2019. The rent for the first year will be approximately $254,832 and will gradually increase every twelve months throughout the lease term for the additional space. The Company will be responsible for a portion of the insurance, certain service charges and taxes for the building based on the floor area rented by it. The landlord provided the Company with an allowance of approximately $22,354 for improvements to the office space. Pursuant to the terms of the amendment, the Company provided the landlord with an additional letter of credit for $26,679.

Overview of Business (Policy)	6 Months Ended
Overview of Business (Policy)	Jun. 30, 2016
Nature of Business and Basis of Presentation [Abstract]
Nature of Business and Basis of Presentation	Intercept Pharmaceuticals, Inc. (“Intercept” or the “Company”) is a biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat non-viral, progressive liver diseases. The Company’s product candidates have the potential to treat orphan and more prevalent liver diseases for which there currently are limited therapeutic solutions. Intercept was incorporated in Delaware in September 2002. The Company has its principal executive offices in New York, New York. The Company also has administrative offices in San Diego, California and London, United Kingdom. Basis of Presentation The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Use of Estimates	Use of Estimates The preparation of these financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses, revenues and related disclosures. On an ongoing basis, management evaluates estimates, clinical trial accruals and share-based compensation expense. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.

Summary of Significant Accounting Policies (Policy)	6 Months Ended
Summary of Significant Accounting Policies (Policy)	Jun. 30, 2016
Summary of Significant Accounting Policies [Abstract]
Revenue Recognition	Revenue Recognition Product Revenue, Net Revenue is recognized when the four basic criteria of revenue recognition are met: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. When the revenue recognition criteria are not met, we defer the recognition of revenue by recording deferred revenue on the balance sheet until such time that all criteria are met. Beginning in June 2016, subsequent to the U.S. Food and Drug Administration (FDA) approval of Ocaliva® (obeticholic acid) for the treatment of primary biliary cirrhosis (PBC) in May 2016, the Company sells Ocaliva in the United States principally to a limited number of specialty pharmacies which dispense the product directly to patients. The specialty pharmacies are referred to as the Company’s customers. The Company provides the right of return to its customers for unopened product for a limited time before and after its expiration date. Given the Company’s limited sales history for Ocaliva and the inherent uncertainties in estimating product returns, the Company has determined that the shipments of Ocaliva made to its customers thus far do not meet the criteria for revenue recognition at the time of shipment. Accordingly, the Company recognizes revenue when the product is sold through by its customers, provided all other revenue recognition criteria are met. The Company invoices its customers upon shipment of Ocaliva to them and records accounts receivable, with a corresponding liability for deferred revenue equal to the gross invoice price. The Company then recognizes revenue when Ocaliva is sold through as specialty pharmacies dispense product directly to the patients. The Company recognized net sales of Ocaliva for the second quarter 2016 of $75 thousand pursuant to the product launch in June 2016. The Company also recorded $2.7 million in deferred revenues on its balance sheet, which represents product shipped to distributors, but not sold through as of June 30, 2016. The Company has written contracts with each of its customers and delivery occurs when the customer receives Ocaliva. The Company evaluates the creditworthiness of each of its customers to determine whether collection is reasonably assured. In order to conclude that the price is fixed and determinable, the Company must be able to (i) calculate its gross product revenues from the sales to its customers and (ii) reasonably estimate its net product revenues. The Company calculates gross product revenues based on the wholesale acquisition cost that the Company charges its customers for Ocaliva. The Company estimates its net product revenues by deducting from its gross product revenues (i) trade allowances, such as invoice discounts for prompt payment and customer fees, (ii) estimated government rebates and discounts related to Medicare, Medicaid and other government programs, and (iii) estimated costs of incentives offered to certain indirect customers including patients. Trade Allowances The Company provides invoice discounts on Ocaliva sales to certain of its customers for prompt payment and pays fees for certain distribution services, such as fees for certain data that its customers provide to the Company. The Company deducts the full amount of these discounts and fees from its gross product revenues at the time such discounts and fees are earned by such customers. Rebates and Discounts The Company contracts with Centers for Medicare & Medicaid Services (CMS) and other government agencies to make Ocaliva available to eligible patients. As a result, the Company estimates any rebates and discounts and deducts these estimated amounts from its gross product revenues at the time the revenues are recognized. The Company’s estimates of rebates and discounts are based on the government mandated discounts, which are statutorily-defined and applicable to these government funded programs. Government rebates that are invoiced directly to the Company are recorded in accrued liabilities on the condensed consolidated balance sheet. Gross-to-net adjustments were insignificant for the period ended June 30, 2016. Other Incentives Other incentives that the Company offers to indirect customers include co-pay assistance cards provided by the Company for PBC patients whom reside in states that permit co-pay assistance programs. The Company’s co-pay assistance program is intended to reduce each participating patient’s portion of the financial responsibility for Ocaliva purchase price to a specified dollar amount. The Company records each period 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.

Investments (Tables)

6 Months Ended

Jun. 30, 2016

Investments [Abstract]

Schedule of Available-for-sale Securities Reconciliation

The following table summarizes the Company’s cash, cash equivalents and investments as of June 30, 2016 and December 31, 2015:


	As of June 30, 2016
			Gross		Gross
	Amortized Cost		Unrealized		Unrealized		Fair Value
			Gains		Losses

	(In thousands)
Cash and cash equivalents:
Cash and money market funds	$	51,701	$	-	$	-	$	51,701
Investment securities:
Commercial paper		1,999		-		-		1,999
U.S. government and agency securities		41,841		21		(3)		41,859
Corporate debt securities		343,861		217		(150)		343,928
Total investments		387,701		238		(153)		387,786
Total cash, cash equivalents and investments	$	439,402	$	238	$	(153)	$	439,487


	As of December 31, 2015
			Gross		Gross
	Amortized Cost		Unrealized		Unrealized		Fair Value
			Gains		Losses

	(In thousands)
Cash and cash equivalents:
Cash and money market funds	$	32,742	$	-	$	-	$	32,742
Investment securities:
Commercial paper		1,993		-		(3)		1,990
U.S. government and agency securities		65,854		1		(182)		65,673
Corporate debt securities		529,368		2		(1,720)		527,650
Total investments		597,215		3		(1,905)		595,313
Total cash, cash equivalents and investments	$	629,957	$	3	$	(1,905)	$	628,055

Fair Value Measurements (Tables)	6 Months Ended
Fair Value Measurements (Tables)	Jun. 30, 2016
Fair Value Measurements [Abstract]
Fair Value, Marketable Securities Measured on Recurring and Nonrecurring Basis	Financial assets and liabilities, carried at fair value are classified in the tables below in one of the three categories described above: