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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to                         

Commission file number: 001-35668

INTERCEPT PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

    

22-3868459

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)

305 Madison Avenue,

Morristown, NJ 07960

(Address of Principal Executive Offices and Zip Code)

(646) 747-1000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

ICPT

Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes       No  

The number of shares of the registrant’s common stock outstanding as of September 30, 2022 was 41,417,127.

Table of Contents

Intercept Pharmaceuticals, Inc.

INDEX

PART I
FINANCIAL INFORMATION

   

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets at September 30, 2022 and December 31, 2021 (Unaudited)

6

Condensed Consolidated Statements of Operations for the three and nine-month periods ended September 30, 2022 and 2021 (Unaudited)

7

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine-month periods ended September 30, 2022 and 2021 (Unaudited)

8

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and nine-month periods ended September 30, 2022 and 2021 (Unaudited)

9

Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2022 and 2021 (Unaudited)

11

Notes to Condensed Consolidated Financial Statements (Unaudited)

13

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

44

Item 4.

Controls and Procedures

45

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

46

Item 1A.

Risk Factors

46

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

55

Item 6.

Exhibits

56

Exhibit Index

57

Signatures

58

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we,” “our,” “us” and the “Company” refer, collectively, to Intercept Pharmaceuticals, Inc., a Delaware corporation, and its consolidated subsidiaries.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements, including, but not limited to, statements regarding the progress, timing and results of our clinical trials, including our clinical trials for the treatment of nonalcoholic steatohepatitis (“NASH”), the safety and efficacy of our approved product, Ocaliva (obeticholic acid or “OCA”) for primary biliary cholangitis (“PBC”), and our product candidates, including OCA for liver fibrosis due to NASH, the timing and acceptance of our regulatory filings and the potential approval of OCA for liver fibrosis due to NASH, the review of our New Drug Application (“NDA”) for OCA for the treatment of liver fibrosis due to NASH by the U.S. Food and Drug Administration (the “FDA”), our intent to work with the FDA to address the issues raised in a complete response letter (“CRL”), the potential commercial success of OCA, as well as our strategy, future operations, future financial position, future revenue, projected costs, financial guidance, prospects, plans and objectives.

These statements constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “possible,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and we undertake no obligation to update any forward-looking statement except as required by law. These forward-looking statements are based on estimates and assumptions by our management that, although believed to be reasonable, are inherently uncertain and subject to a number of risks.

The following represent some, but not necessarily all, of the factors that could cause actual results to differ materially from historical results or those anticipated or predicted by our forward-looking statements:

the success of our existing business and operations, including Ocaliva for PBC;
our ability to successfully commercialize Ocaliva for PBC and, if approved, OCA for NASH;
our ability to maintain our regulatory approval of Ocaliva for PBC;
our ability to timely and cost-effectively file for and obtain regulatory approval of our product candidates on an accelerated basis or at all, including OCA for liver fibrosis due to NASH;
our ability to address the issues raised in the complete response letter (“CRL”) received in June 2020 with respect to OCA for NASH;
any advisory committee recommendation or dispute resolution determination that our product candidates, including OCA for liver fibrosis due to NASH, should not be approved or approved only under certain conditions;
any future determination that the regulatory applications and subsequent information we submit for our product candidates, including OCA for liver fibrosis due to NASH, do not contain adequate clinical or other data or meet applicable regulatory requirements for approval;
the progress, timing, and results of our REGENERATE clinical trial, including the safety and efficacy of OCA for liver fibrosis due to NASH, and the use of a consensus panel approach to histology reads;
our pre-submission meeting with the FDA in July 2022 in which we reviewed with the FDA the planned content and the timing of the submission of our NDA for OCA for liver fibrosis due to NASH;
our planned resubmission of an NDA to the FDA for OCA for liver fibrosis due to NASH, and the potential timing, review, acceptance, and approval of the NDA;
conditions that may be imposed by regulatory authorities on our marketing approvals for our products and product candidates, including OCA for liver fibrosis due to NASH, such as the need for clinical outcomes data (and not just results based on achievement of a surrogate endpoint), any risk mitigation programs such as a Risk Evaluation and Mitigation Strategies (“REMS”) program, and any related restrictions, limitations and/or warnings contained in the label of any of our products or product candidates;
any potential side effects associated with Ocaliva for PBC, OCA for liver fibrosis due to NASH or our other product candidates that could delay or prevent approval, require that an approved product be taken off the market, require the inclusion of safety warnings or precautions, or otherwise limit the sale of such product or product candidate, including in connection with our update to the Ocaliva prescribing information in May 2021 contraindicating Ocaliva for

3

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patients with PBC and decompensated cirrhosis, a prior decompensation event, or compensated cirrhosis with evidence of portal hypertension;
the initiation, timing, cost, conduct, progress and results of our research and development activities, preclinical studies and clinical trials, including any issues, delays or failures in identifying patients, enrolling patients, treating patients, retaining patients, meeting specific endpoints, or completing and timely reporting the results of our NASH or PBC clinical trials;
the outcomes of interactions with regulators, including the FDA regarding our clinical trials;
our ability to establish and maintain relationships with, and the performance of, third-party manufacturers, contract research organizations and other vendors upon whom we are substantially dependent for, among other things, the manufacture and supply of our products, including Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH, and our clinical trial activities;
our ability to identify, develop and successfully commercialize our products and product candidates, including our ability to successfully launch OCA for liver fibrosis due to NASH, if approved;
our ability to obtain and maintain intellectual property protection for our products and product candidates, including our ability to cost-effectively file, prosecute, defend and enforce any patent claims or other intellectual property rights;
the size and growth of the markets for our products and product candidates and our ability to serve those markets;
the degree of market acceptance of Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH or our other product candidates among physicians, patients and healthcare payors;
the availability of adequate coverage and reimbursement from governmental and private healthcare payors for our products, including Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH, and our ability to obtain adequate pricing for such products;
our ability to establish and maintain effective sales, marketing and distribution capabilities, either directly or through collaborations with third parties;
competition from existing drugs or new drugs that become available;
our ability to attract and retain key personnel to manage our business effectively;
our ability to prevent or defend against system failures or security or data breaches due to cyber-attacks, or cyber intrusions, including ransomware, phishing attacks and other malicious intrusions;
our ability to comply with data protection laws;
costs and outcomes relating to any disputes, governmental inquiries or investigations, regulatory proceedings, legal proceedings or litigation, including any securities, intellectual property, employment, product liability or other litigation;
our collaborators’ election to pursue research, development and commercialization activities;
our ability to establish and maintain relationships with collaborators with development, regulatory and commercialization expertise;
our need for and ability to generate or obtain additional financing;
our estimates regarding future expenses, revenues and capital requirements and the accuracy thereof;
our use of cash, cash equivalents and short-term investments;
our ability to acquire, license and invest in businesses, technologies, product candidates and products;
our ability to manage the growth of our operations, infrastructure, personnel, systems and controls;
our ability to obtain and maintain adequate insurance coverage;
continuing threats from COVID-19, including additional waves of infections, and their impacts including quarantines and other government actions; delays relating to our regulatory applications; disruptions relating to our ongoing clinical trials or involving our contract research organizations, study sites or other clinical partners; disruptions relating to our supply chain or involving our third-party manufacturers, distributors or other distribution partners; and facility closures or other restrictions; and the impact of the foregoing on our results of operations and financial position;
the impact of general economic, industry, market, regulatory or political conditions;

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how we use the funds received from the sale of our ex-U.S. business to Advanz Pharma;
disagreements or legal, operational, or other business problems arising from our ongoing relationship with Advanz Pharma, including the licensing of the ex-U.S. rights to Ocaliva for PBC and, if approved, OCA for NASH, our operational separation from our former ex-U.S. commercial operations, and our agreement to supply Advanz Pharma with OCA;
unexpected tax, regulatory, litigation, or other liabilities;
whether we receive any future earn-outs or royalties under the Advanz Pharma transaction documents; and
the other risks and uncertainties identified under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q and in our other periodic filings filed with the U.S. Securities and Exchange Commission (the “SEC”), including our most recent Annual Report.

NOTE REGARDING TRADEMARKS

The Intercept Pharmaceuticals® name and logo and the Ocaliva® name and logo are either registered or unregistered trademarks or trade names of the Company in the United States and/or other countries. All other trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q may appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights to these trademarks and trade names.

5

Table of Contents

PART I

Item 1. Financial Statements.

INTERCEPT PHARMACEUTICALS, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share data)

September 30, 

December 31, 

2022

2021

Assets

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

113,195

$

84,709

Restricted cash

6,981

8,119

Investment debt securities, available-for-sale

 

377,656

 

334,980

Accounts receivable, net of allowance for credit losses of $58 and $58, respectively

 

26,168

 

28,337

Prepaid expenses and other current assets

 

21,370

 

21,735

Current assets of discontinued operations

30,138

Total current assets

 

545,370

 

508,018

Fixed assets, net

 

1,276

 

3,281

Inventory

 

6,274

 

7,883

Security deposits

 

1,125

 

4,284

Other assets

 

5,359

 

3,557

Total assets

$

559,404

$

527,023

Liabilities and Stockholders’ Equity (Deficit)

 

  

 

  

Current liabilities:

 

 

  

Accounts payable, accrued expenses and other liabilities

$

109,888

$

103,780

Short-term interest payable

 

2,244

 

8,601

Current portion of long-term debt

109,452

Current liabilities of discontinued operations

55,780

Total current liabilities

 

221,584

 

168,161

Long-term liabilities:

 

 

  

Long-term debt

 

222,856

 

539,782

Long-term other liabilities

 

7,288

 

3,042

Total liabilities

$

451,728

$

710,985

Commitments and contingencies (Note 16)

Stockholders’ equity (deficit):

 

  

 

  

Common stock par value $0.001 per share; 90,000,000 shares authorized; 41,417,127 and 29,572,953 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

 

41

 

30

Additional paid-in capital

 

2,231,667

 

2,308,653

Accumulated other comprehensive loss, net

 

(7,969)

 

(2,873)

Accumulated deficit

 

(2,116,063)

 

(2,489,772)

Total stockholders’ equity (deficit)

 

107,676

 

(183,962)

Total liabilities and stockholders’ equity (deficit)

$

559,404

$

527,023

See accompanying notes to the condensed consolidated financial statements.

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INTERCEPT PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

Revenue:

  

 

 

  

 

  

Product revenue, net

$

77,588

$

66,640

$

208,491

$

192,117

Total revenue

 

77,588

 

66,640

 

208,491

 

192,117

Operating expenses:

 

  

 

  

 

  

 

  

Cost of sales

 

424

 

224

 

956

771

Selling, general and administrative

 

43,274

 

41,271

 

121,013

 

130,255

Research and development

 

44,034

 

44,712

 

136,753

 

132,991

Restructuring

(284)

Total operating expenses

 

87,732

 

86,207

 

258,722

 

263,733

Operating loss

 

(10,144)

 

(19,567)

 

(50,231)

 

(71,616)

Other (expense) income:

 

  

 

  

 

 

  

Interest expense

 

(5,237)

 

(14,095)

 

(18,579)

 

(39,103)

(Loss) gain on extinguishment of debt

(91,759)

16,511

(91,739)

16,511

Other income, net

 

3,053

 

210

 

2,691

 

2,389

Total other (expense) income, net

 

(93,943)

 

2,626

 

(107,627)

 

(20,203)

Loss from continuing operations

$

(104,087)

$

(16,941)

$

(157,858)

$

(91,819)

Income from discontinued operations, net of income taxes

$

371,540

$

13,309

$

400,499

$

36,673

Net income (loss)

$

267,453

$

(3,632)

$

242,641

$

(55,146)

Net income (loss) per common and potential common share (basic and diluted):

 

  

 

  

 

  

 

  

Net loss from continuing operations

$

(3.04)

$

(0.53)

$

(5.05)

$

(2.81)

Net income from discontinued operations

$

10.83

$

0.42

$

12.81

$

1.12

Net income (loss)

$

7.80

$

(0.11)

$

7.76

$

(1.69)

Weighted average common and potential common shares outstanding:

 

 

 

 

Basic and diluted

 

34,293

31,736

31,262

32,679

See accompanying notes to the condensed consolidated financial statements.

7

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INTERCEPT PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(In thousands)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

Net income (loss)

$

267,453

$

(3,632)

$

242,641

$

(55,146)

Other comprehensive loss:

 

  

 

  

 

  

 

  

Net changes related to available-for-sale investment debt securities:

Unrealized losses on investment debt securities

 

(670)

 

(171)

 

(2,196)

 

(538)

Reclassification adjustment for realized gains on investment debt securities included in other income, net

 

 

 

 

2

Net unrealized losses on investment debt securities

$

(670)

$

(171)

$

(2,196)

$

(536)

Foreign currency translation and other

Release of currency translation adjustments associated with sale of business

(7,319)

(7,319)

Foreign currency translation gains

 

2,568

 

72

4,419

 

49

Other comprehensive loss

$

(5,421)

$

(99)

$

(5,096)

$

(487)

Comprehensive income (loss)

$

262,032

$

(3,731)

$

237,545

$

(55,633)

See accompanying notes to the condensed consolidated financial statements.

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INTERCEPT PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

(Unaudited)

(In thousands)

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Accumulated

Stockholders’

Shares

    

Amount

    

Capital

    

Loss, Net

    

Deficit

    

(Deficit) Equity

Balance - June 30, 2022

29,798

$

30

$

2,016,201

$

(2,548)

$

(2,383,516)

$

(369,833)

Stock-based compensation

5,788

5,788

Issuance of common stock under equity plan

269

Employee withholding taxes related to stock-based awards

(9)

(135)

(135)

Net proceeds from exercise of stock options

29

433

433

Issuance of common stock for repurchase of convertible notes

 

11,330

 

11

 

209,380

 

 

 

209,391

Other comprehensive loss

(5,421)

(5,421)

Net income

267,453

267,453

Balance - September 30, 2022

 

41,417

$

41

$

2,231,667

$

(7,969)

$

(2,116,063)

$

107,676

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Accumulated

Stockholders’

Shares

    

Amount

    

Capital

    

Loss, Net

    

Deficit

    

(Deficit) Equity

Balance - December 31, 2021

29,573

$

30

$

2,308,653

$

(2,873)

$

(2,489,772)

$

(183,962)

Stock-based compensation

21,052

21,052

Issuance of common stock under equity plan

520

Employee withholding taxes related to stock-based awards

(35)

(480)

(480)

Net proceeds from exercise of stock options

29

433

433

Issuance of common stock for repurchase of convertible notes

11,330

11

209,380

209,391

Reclassification of the equity components of the Convertible Notes to liability upon adoption of ASU 2020-06

 

 

 

(307,371)

 

 

131,068

 

(176,303)

Other comprehensive loss

(5,096)

(5,096)

Net income

242,641

242,641

Balance - September 30, 2022

 

41,417

$

41

$

2,231,667

$

(7,969)

$

(2,116,063)

$

107,676

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Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Accumulated

Stockholders’

Shares

    

Amount

    

Capital

    

Loss, Net

    

Deficit

    

Deficit

Balance - June 30, 2021

33,201

$

33

$

2,249,497

$

(2,865)

$

(2,449,860)

$

(203,195)

Stock-based compensation

8,616

8,616

Repurchase of common stock

(4,522)

(4)

(75,821)

(75,825)

Extinguishment of allocated costs related to exchange of convertible notes

(37,213)

(37,213)

Extinguishment of allocated costs related to repurchase of convertible notes

(1,933)

(1,933)

Bifurcation of conversion option upon issuance of convertible notes, net of issuance costs

147,458

147,458

Issuance of common stock for services

770

1

9,999

10,000

Proceeds from capped call transactions

57

57

Issuance of common stock under equity plan

112

Employee withholding taxes related to stock-based awards

(14)

(264)

(264)

Other comprehensive loss

(99)

(99)

Net loss

(3,632)

(3,632)

Balance - September 30, 2021

29,547

$

30

$

2,300,396

$

(2,964)

$

(2,453,492)

$

(156,030)

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Comprehensive

Accumulated

Stockholders’

Shares

    

Amount

    

Capital

    

Loss, Net

    

Deficit

    

Deficit

Balance - December 31, 2020

33,016

$

33

$

2,233,937

$

(2,477)

$

(2,398,346)

$

(166,853)

Stock-based compensation

25,483

25,483

Repurchase of common stock

(4,522)

(4)

(75,821)

(75,825)

Extinguishment of allocated costs related to exchange of convertible notes

(37,213)

(37,213)

Extinguishment of allocated costs related to repurchase of convertible notes

(1,933)

(1,933)

Bifurcation of conversion option upon issuance of convertible notes, net of issuance costs

147,458

147,458

Issuance of common stock for services

770

1

9,999

10,000

Proceeds from capped call transactions

57

57

Issuance of common stock under equity plan

353

18

18

Employee withholding taxes related to stock-based awards

 

(70)

(1,589)

(1,589)

Other comprehensive loss

 

 

 

 

(487)

 

 

(487)

Net loss

(55,146)

(55,146)

Balance - September 30, 2021

29,547

$

30

$

2,300,396

$

(2,964)

$

(2,453,492)

$

(156,030)

See accompanying notes to the condensed consolidated financial statements.

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INTERCEPT PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

Nine Months Ended September 30, 

    

2022

    

2021

Cash flows from operating activities:

 

  

 

  

Net income (loss)

$

242,641

$

(55,146)

Less: Income from operations of discontinued operations, net of tax

400,499

36,673

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

Stock-based compensation

 

16,658

 

20,881

Amortization of premium on investment debt securities

 

716

 

3,384

Amortization of deferred financing costs

 

2,242

 

1,990

Write-off of fixed assets

2,400

Depreciation

 

491

 

2,430

Non-cash operating lease cost

1,435

3,541

Accretion of debt discount

 

 

21,885

Loss (gain) on early extinguishment of debt

91,739

(16,511)

Gain on lease termination

(1,101)

Provision for allowance on credit losses

(8)

Changes in operating assets:

 

 

Accounts receivable

 

2,169

 

(518)

Prepaid expenses and other current assets

 

442

 

648

Inventory

 

232

 

190

Security deposits

3,157

345

Other assets

32

Changes in operating liabilities:

 

 

Accounts payable, accrued expenses and other current liabilities

 

13,791

 

(26,003)

Operating lease liabilities

(1,479)

(4,550)

Interest payable

(6,357)

(2,021)

Net cash used in operating activities - continuing operations

(31,291)

(86,136)

Net cash provided by operating activities - discontinued operations

9,317

39,895

Net cash used in operating activities

 

(21,974)

 

(46,241)

Cash flows from investing activities:

 

  

 

  

Purchases of investment debt securities

 

(401,069)

 

(278,438)

Sales and maturities of investment debt securities

 

355,485

 

334,233

Purchases of equipment, leasehold improvements, and furniture and fixtures

 

(865)

 

(397)

Net cash (used in) provided by investing activities - continuing operations

(46,449)

55,398

Net cash provided by investing activities - discontinued operations

363,233

Net cash provided by investing activities

 

316,784

 

55,398

Cash flows from financing activities:

 

  

 

  

Payments for repurchases of convertible senior notes

(261,562)

57

Proceeds from exercise of options, net

433

18

Payments of employee withholding taxes related to stock-based awards

(480)

(1,589)

Payments of debt issuance costs

(35)

Payments for repurchase of common stock

(75,825)

Proceeds from issuance of Notes

117,551

Proceeds from terminations of capped call options

(38,129)

Net cash (used in) provided by financing activities - continuing operations

 

(261,644)

 

2,083

Net cash (used in) provided by financing activities - discontinued operations

Net cash (used in) provided by financing activities

(261,644)

 

2,083

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(7,399)

 

71

Net increase in cash, cash equivalents and restricted cash

 

25,767

 

11,311

Cash, cash equivalents and restricted cash at beginning of period

 

94,409

 

65,654

Cash, cash equivalents and restricted cash at end of period

120,176

76,965

Less: Cash, cash equivalents and restricted cash of discontinued operations

1,622

Cash, cash equivalents and restricted cash of continuing operations

$

120,176

$

75,343

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Supplemental disclosure of non-cash transactions:

Right-of-use asset obtained in exchange for new operating lease obligations

$

(5,654)

$

Non-cash investing and financing activities

Net increase in accrued fixed assets

$

21

$

Reconciliation of cash, cash equivalents and restricted cash included in the condensed consolidated balance sheets:

Cash and cash equivalents

$

113,195

$

68,329

Restricted cash

6,981

7,014

Total cash, cash equivalents and restricted cash

$

120,176

$

75,343

Supplemental non-cash disclosure:

Issuance of common stock to noteholders in connection with repurchase of convertible notes

$

209,391

$

Exchange for existing 2023 and 2026 convertible notes

$

$

(421,200)

Exchange for new 2026 secured convertible notes

$

$

382,400

Issuance of common stock to financial advisor in connection with convertible notes exchange

$

$

10,000

Recognition of conversion option upon issuance of 2026 secured convertible notes

$

$

150,704

Extinguishment of conversion options upon exchange and repurchase of 2023 convertible notes and exchange of 2026 convertible notes

$

$

(39,146)

Supplementary cash flow data:

Income taxes paid

$

455

$

See accompanying notes to the condensed consolidated financial statements.

12

Table of Contents

INTERCEPT PHARMACEUTICALS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.    Overview of Business

Intercept Pharmaceuticals, Inc. (the “Company”) is a biopharmaceutical company founded in 2002 and focused on the development and commercialization of novel therapeutics to treat progressive non-viral liver diseases, including primary biliary cholangitis (“PBC”) and nonalcoholic steatohepatitis (“NASH”). The Company currently has one marketed product, Ocaliva (obeticholic acid or “OCA”).

On May 5, 2022, the Company entered into a series of agreements to sell the Company’s ex-U.S. commercial operations and sublicense the right to commercialize Ocaliva for PBC and, if approved, OCA for NASH outside of the United States to Advanz Pharma and its affiliates (collectively, “Advanz”) (the “Disposition Transaction”). Consideration under the agreements totaled $405 million up front, subject to adjustments including for cash, working capital, and assumed liabilities. On July 1, 2022, the Company completed the Disposition Transaction.

The Company is entitled to receive an additional $45 million from Advanz contingent upon receipt of extensions of orphan exclusivity for Ocaliva from the European Medicines Agency (“EMA”) and Medicines and Healthcare products Regulatory Agency (“MHRA”).

2.    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”). All intercompany balances and transactions have been eliminated in consolidation. Certain information that is normally required by U.S. GAAP has been condensed or omitted in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2022. In the opinion of management, these unaudited condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair presentation of these interim unaudited condensed consolidated financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC.

Reclassifications

Certain amounts in prior periods have been reclassified to reflect the impact of the discontinued operations treatment in order to conform to the current period presentation.