SEC Filing - Intercept Pharmaceuticals, Inc.

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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 June 30, 2023

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 June 30, 2023 was 41,782,727.

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Intercept Pharmaceuticals, Inc.

INDEX

PART I FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets at June 30, 2023 and December 31, 2022 (Unaudited)	6

	Condensed Consolidated Statements of Operations for the three and six-month periods ended June 30, 2023 and 2022 (Unaudited)	7

	Condensed Consolidated Statements of Comprehensive Loss for the three and six-month periods ended June 30, 2023 and 2022 (Unaudited)	8

	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three and six-month periods ended June 30, 2023 and 2022 (Unaudited)	9

	Condensed Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2023 and 2022 (Unaudited)	11

	Notes to Condensed Consolidated Financial Statements (Unaudited)	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	35

PART II
OTHER INFORMATION

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75

Item 5.	Other Information	75

Item 6.	Exhibits	76

Exhibit Index		77

Signatures		78

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;

●	the safety and efficacy of our approved product, Ocaliva (obeticholic acid or “OCA”) for primary biliary cholangitis (“PBC”), and our product candidates;

●	the timing, acceptance, review, feedback, and potential approval for our regulatory filings with the U.S. Food and Drug Administration (the “FDA”) or other regulators;

●	the commercial prospects of our products or product candidates;

●	our planned corporate restructuring; and

●	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 our products and product candidates;

●	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;

●	any advisory committee recommendation or dispute resolution determination that any of our products or product candidates should not be approved, or should be approved only under certain conditions;

●	any future determination that the regulatory applications and subsequent information that we submit for our products and product candidates do not contain adequate clinical or other data or meet applicable regulatory requirements for approval;

●

conditions that may be imposed by regulatory authorities on our marketing approvals for our products and product candidates, 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 labels of any of our products or product candidates;

●

any potential side effects associated with Ocaliva for PBC or our other products or 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;

●

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 clinical trials;

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●	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 our clinical trial activities;

●	our ability to identify, develop, and successfully commercialize our products and product candidates;

●	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 or our other products or 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 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 our operations, infrastructure, personnel, systems, and controls, including our planned corporate restructuring;

●	our ability to obtain and maintain adequate insurance coverage;

●	the impact of general economic, industry, market, regulatory, or political conditions;

●	how we use our cash on hand, as well as cash equivalents and investment securities;

●

disagreements or legal, operational, or other business problems arising from our ongoing relationship with Advanz Pharma and its affiliates (collectively, “Advanz”), the purchaser of our ex-U.S. business, including the licensing of the ex-U.S. rights to Ocaliva for PBC, our operational separation from our former ex-U.S. commercial operations, and our agreement to supply Advanz with OCA;

●	unexpected tax, regulatory, litigation, or other liabilities;

●	whether we receive any future earn-outs under the transaction documents with Advanz; 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”).

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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 our rights to the fullest extent under applicable law, or that the applicable owner will not assert its rights to these trademarks and trade names.

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PART I

Item 1. Financial Statements.

INTERCEPT PHARMACEUTICALS, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share data)


	June 30,		December 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	136,229	$	50,517
Restricted cash		1,132		5,343
Investment debt securities, available-for-sale		277,630		435,049
Accounts receivable, net of allowance for credit losses of $60 and $54, respectively		29,792		26,862
Prepaid expenses and other current assets		25,986		22,356
Total current assets		470,769		540,127
Fixed assets, net		906		987
Inventory		6,272		6,462
Security deposits		1,276		1,013
Other assets		5,412		5,122
Total assets	$	484,635	$	553,711
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable, accrued expenses and other liabilities	$	73,682	$	116,977
Short-term interest payable		3,532		3,531
Current portion of long-term debt		109,808		109,569
Total current liabilities		187,022		230,077
Long-term liabilities:
Long-term debt		223,603		223,104
Long-term other liabilities		6,464		7,453
Total liabilities	$	417,089	$	460,634
Commitments and contingencies (Note 14)
Stockholders’ equity:
Common stock par value $0.001 per share; 90,000,000 shares authorized; 41,782,727 and 41,523,337 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		42		42
Additional paid-in capital		2,250,008		2,238,179
Accumulated other comprehensive loss, net		(7,619)		(8,256)
Accumulated deficit		(2,174,885)		(2,136,888)
Total stockholders’ equity		67,546		93,077
Total liabilities and stockholders’ equity	$	484,635	$	553,711

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				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022

Revenue:
Product revenue, net	$	83,718	$	71,757	$	151,676	$	130,903
Total revenue		83,718		71,757		151,676		130,903
Operating expenses:
Cost of sales		185		309		407		532
Selling, general and administrative		53,346		39,985		111,003		77,739
Research and development		37,306		44,826		79,017		92,719
Total operating expenses		90,837		85,120		190,427		170,990
Operating loss		(7,119)		(13,363)		(38,751)		(40,087)
Other (expense) income:
Interest expense		(2,812)		(6,669)		(5,621)		(13,342)
Other income (expense), net		4,105		(289)		6,665		(342)
Total other income (expense), net		1,293		(6,958)		1,044		(13,684)
Loss from continuing operations	$	(5,826)	$	(20,321)	$	(37,707)	$	(53,771)
(Loss) income from discontinued operations	$	(36)	$	12,793	$	(290)	$	28,959
Net loss	$	(5,862)	$	(7,528)	$	(37,997)	$	(24,812)

Net income (loss) per common and potential common share (basic and diluted):
Net loss from continuing operations	$	(0.14)	$	(0.68)	$	(0.90)	$	(1.81)
Net (loss) income from discontinued operations	$	—	$	0.43	$	(0.01)	$	0.97
Net loss	$	(0.14)	$	(0.25)	$	(0.91)	$	(0.83)
Weighted average common and potential common shares outstanding:
Basic and diluted		41,731		29,747		41,700		29,721

See accompanying notes to the condensed consolidated financial statements.

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INTERCEPT PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

(In thousands)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022

Net loss	$	(5,862)	$	(7,528)	$	(37,997)	$	(24,812)
Other comprehensive income (loss):
Unrealized gains (losses) on investment debt securities		89		(506)		818		(1,526)
Foreign currency translation (losses) gains		(85)		1,445		(181)		1,851
Other comprehensive income	$	4	$	939	$	637	$	325
Comprehensive loss	$	(5,858)	$	(6,589)	$	(37,360)	$	(24,487)

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)


	Three months ended June 30, 2023

						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Loss, Net		Deficit		Equity
Balance - March 31, 2023	41,687	$	42	$	2,243,789	$	(7,623)	$	(2,169,023)	$	67,185
Stock-based compensation	—		—		6,262		—		—		6,262
Issuance of common stock under equity plan	98		—		—		—		—		—
Employee withholding taxes related to stock-based awards	(3)		—		(49)		—		—		(49)
Net proceeds from exercise of stock options	1		—		6		—		—		6
Other comprehensive income	—		—		—		4		—		4
Net loss	—		—		—		—		(5,862)		(5,862)
Balance - June 30, 2023	41,783	$	42	$	2,250,008	$	(7,619)	$	(2,174,885)	$	67,546

	Six months ended June 30, 2023

						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Loss, Net		Deficit		Equity
Balance - December 31, 2022	41,523	$	42	$	2,238,179	$	(8,256)	$	(2,136,888)	$	93,077
Stock-based compensation	—		—		12,126		—		—		12,126
Issuance of common stock under equity plan	278		—		—		—		—		—
Employee withholding taxes related to stock-based awards	(20)		—		(318)		—		—		(318)
Net proceeds from exercise of stock options	2		—		21		—		—		21
Other comprehensive income	—		—		—		637		—		637
Net loss	—		—		—		—		(37,997)		(37,997)
Balance - June 30, 2023	41,783	$	42	$	2,250,008	$	(7,619)	$	(2,174,885)	$	67,546

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	Three months ended June 30, 2022

						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Loss, Net		Deficit		(Deficit)
Balance - March 31, 2022	29,709		30		2,007,684		(3,487)		(2,375,988)		(371,761)
Stock-based compensation	—		—		8,544		—		—		8,544
Issuance of common stock under equity plan	96		—		—		—		—		—
Employee withholding taxes related to stock-based awards	(7)		—		(27)		—		—		(27)
Other comprehensive income	—		—		—		939		—		939
Net loss	—		—		—		—		(7,528)		(7,528)
Balance - June 30, 2022	29,798	$	30	$	2,016,201	$	(2,548)	$	(2,383,516)	$	(369,833)

	Six months ended June 30, 2022

						Accumulated
				Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Capital		Loss, Net		Deficit		(Deficit)
Balance - December 31, 2021	29,573		30		2,308,653		(2,873)		(2,489,772)		(183,962)
Stock-based compensation	—		—		15,264		—		—		15,264
Issuance of common stock under equity plan	251		—		—		—		—		—
Employee withholding taxes related to stock-based awards	(26)		—		(345)		—		—		(345)
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 income	—		—		—		325		—		325
Net loss	—		—		—		—		(24,812)		(24,812)
Balance - June 30, 2022	29,798	$	30	$	2,016,201	$	(2,548)	$	(2,383,516)	$	(369,833)

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)


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(37,997)	$	(24,812)
Less: (Loss) income from operations of discontinued operations		(290)		28,959
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		12,126		10,870
(Accretion) amortization of (discount) premium on investment debt securities		(4,285)		964
Amortization of deferred financing costs		738		1,601
Write-off of fixed assets		—		2,399
Depreciation		179		411
Non-cash operating lease cost		604		1,219
Gain on extinguishment of debt		—		(21)
Gain on lease termination		—		(1,101)
Provision for allowance on credit losses		6		(7)
Changes in operating assets:
Accounts receivable		(2,936)		828
Prepaid expenses and other current assets		(3,004)		4,845
Inventory		403		215
Security deposits		(262)		3,656
Changes in operating liabilities:
Accounts payable, accrued expenses and other current liabilities		(39,805)		(10,485)
Operating lease liabilities		(593)		(1,449)
Interest payable		1		87
Net cash used in operating activities - continuing operations		(74,535)		(39,739)
Net cash (used in) provided by operating activities - discontinued operations		(364)		34,353
Net cash used in operating activities		(74,899)		(5,386)
Cash flows from investing activities:
Purchases of investment debt securities		(146,287)		(239,422)
Sales and maturities of investment debt securities		308,809		225,155
Purchases of equipment, leasehold improvements, and furniture and fixtures		(98)		(531)
Net cash provided by (used in) investing activities - continuing operations		162,424		(14,798)
Net cash used in investing activities - discontinued operations		(6,155)		—
Net cash provided by (used in) investing activities		156,269		(14,798)
Cash flows from financing activities:
Payments of employee withholding taxes related to stock-based awards		(318)		(345)
Proceeds from exercise of options, net		21		—
Payments for repurchases of convertible senior notes		—		(3,862)
Payments of debt issuance costs		—		(35)
Net cash used in financing activities - continuing operations		(297)		(4,242)
Net cash (used in) provided by financing activities - discontinued operations		—		—
Net cash used in financing activities		(297)		(4,242)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		428		(2,977)
Net increase (decrease) in cash, cash equivalents and restricted cash		81,501		(27,403)
Cash, cash equivalents and restricted cash at beginning of period		55,860		94,409
Cash, cash equivalents and restricted cash at end of period		137,361		67,006
Less: Cash, cash equivalents and restricted cash of discontinued operations		—		1,450
Cash, cash equivalents and restricted cash of continuing operations	$	137,361	$	65,556
Supplemental disclosure of non-cash transactions:
Right-of-use asset obtained in exchange for new operating lease obligations	$	(780)	$	(3,173)
Non-cash investing and financing activities
Net increase in accrued fixed assets	$	—	$	13
Reconciliation of cash, cash equivalents and restricted cash included in the condensed consolidated balance sheets:
Cash and cash equivalents	$	136,229	$	58,019
Restricted cash		1,132		7,537
Total cash, cash equivalents and restricted cash	$	137,361	$	65,556

See accompanying notes to the condensed consolidated financial statements.

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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 rare and serious liver diseases, including primary biliary cholangitis (“PBC”) and severe alcohol-associated hepatitis (“sAH”). The Company currently has one marketed product, Ocaliva (obeticholic acid or “OCA”) for the treatment of PBC.

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 six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2023. 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, 2022, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC.

Use of Estimates

The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.

3. Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 of Notes to Consolidated Financial Statements

included in its Annual Report on Form 10-K for the year ended December 31, 2022. There have been no changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Annual Report.

4. Discontinued Operations

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 (the “Disposition Transaction”) to Advanz Pharma and its affiliates (collectively, “Advanz”). Consideration under the agreements totaled $405 million up front, subject to adjustments including for cash, working capital, and assumed liabilities. The Company is entitled to receive an additional cumulative $45 million from Advanz contingent upon receipt of extensions of orphan drug exclusivity for Ocaliva from the European Medicines Agency (“EMA”) and Medicines and Healthcare products Regulatory Agency (“MHRA”). The Company would also receive royalties on any future net sales of OCA in NASH outside of the U.S., should Advanz obtain marketing authorization for this indication in ex-U.S. regions. The Company continues to be responsible for the manufacturing and supply of OCA globally while Advanz is responsible for packaging, distribution and commercialization of the therapy in all markets outside of the U.S. Under the Sublicense Agreement, the Company agreed to continue to conduct certain post-marketing work and other

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activities with respect to Ocaliva for PBC, including continuing to conduct certain PBC studies (the “PBC Post-Marketing Work”). The Company is being reimbursed by Advanz for a portion of the total R&D costs related to the PBC Post-Marketing Work.

On July 1, 2022, the Company completed the previously announced Disposition Transaction. As a result of this transaction, the Company’s international business was divested and its international commercial and medical infrastructure were transitioned to Advanz. Total cash consideration received upon closing was $366.5 million. Additional consideration of $38.5 million under the Share Purchase Agreement (the “SPA”) was settled in connection with the completion statements (the post-closing statements completing and adjusting the flow of funds from the closing of the Disposition Transaction), which included adjustments for cash, working capital, and assumed liabilities, resulting in a $6.2 million cash payment to Advanz during the six months ended June 30, 2023.

On May 15, 2023, the Company agreed with Advanz affiliates Mercury Pharma Group Limited (“Mercury”) and Advanz Pharma France SAS (“Advanz France”) to settle the responsibility of the Company for the liability of Advanz France to the French government for payback of past amounts received for product sales. Mercury paid the Company approximately $0.1 million, representing the difference between the liability estimated in the SPA and the actual liability agreed between the parties.

The total amount recognized as a reduction to Research & development expenses for a portion of the total R&D costs to be reimbursed by Advanz in relation to the PBC Post-Marketing Work was $2.1 million and $3.7 for the three and six months ended June 30, 2023. Cash inflows were $2.2 million and $3.3 for the three and six months ended June 30, 2023 under the Transitional Services Agreement (the “TSA”) and Sublicense Agreement.

All amounts included in the notes to the unaudited condensed consolidated financial statements relate to continuing operations unless otherwise noted.

As of June 30, 2023 and December 31, 2022, respectively, there were no assets or liabilities classified as discontinued operations.

The following table presents the results of operations related to the discontinued operations for the three and six months ended June 30, 2023 and 2022 respectively:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022

Product revenue, net	$	—	$	28,628	$	—	$	58,065
Cost of sales		—		490		—		1,025
Selling, general and administrative		—		15,194		—		27,447
Research and development		—		55		—		251
Other expense, net		—		(96)		—		(383)
Income from discontinued operations	$	—	$	12,793	$	—	$	28,959
Loss on the sale of the ex-U.S. commercial operations and sublicense		(36)		—		(290)		—
Net (loss) income from discontinued operations	$	(36)	$	12,793	$	(290)	$	28,959

Stock-based compensation expense, included in net income from discontinued operations, was $3.2 million and $4.4 million for the three and six months ended June 30, 2022.

Table of Contents

The following table presents the net cash provided by operating activities for the assets and liabilities classified as discontinued operations for the six months ended June 30, 2023 and 2022 respectively:


	Six Months Ended June 30,
	2023		2022
Net (loss) income from discontinued operations	$	(290)	$	28,959

Adjustment of non-cash activities		—		4,937
Increase in accounts receivable		—		(2,973)
Decrease in prepaid expenses and other current assets		—		881
Decrease in inventory		—		38
Decrease in security deposits		—		1
Increase in accounts payable, accrued expenses and other current liabilities		—		2,510
Reclassification of cash proceeds from sale of business to investing activities		(74)		—
Net cash (used in) provided by operating activities	$	(364)	$	34,353

Net payment of purchase price adjustment for Disposition Transaction		(6,155)		—
Net cash used in investing activities	$	(6,155)	$	—

5. Cash, Cash Equivalents and Investment Debt Securities

The following table summarizes the Company’s cash, cash equivalents and investment debt securities as of June 30, 2023 and December 31, 2022:


	As of June 30, 2023
			Allowance		Gross		Gross
			for Credit		Unrealized		Unrealized
	Amortized Cost		Losses		Gains		Losses		Fair Value

	(in thousands)
Cash and cash equivalents:
Cash and money market funds	$	136,229	$	—	$	—	$	—	$	136,229
Total cash and cash equivalents		136,229		—		—		—		136,229
Investment debt securities:
Commercial paper