0001558370-23-012896 | 10-Q | XBRL Viewer | Intercept Pharmaceuticals INC

Current and Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2023


	June 30, 2023

	2026 Convertible Secured Notes		2026 Convertible Notes		2023 Convertible Notes			Total Current Portion of Long-Term Debt		Total Long-Term Debt

	(in thousands)
Principal	$	111,143	$	115,349	$	109,808	$	109,808	$	226,492
Unamortized debt issuance costs		(1,466)		(1,423)		—		—		(2,889)
Net carrying amount	$	109,677	$	113,926	$	109,808	$	109,808	$	223,603

	December 31, 2022

	2026 Convertible Secured Notes		2026 Convertible Notes		2023 Convertible Notes			Total Current Portion of Long-Term Debt		Total Long-Term Debt

	(in thousands)
Principal	$	111,143	$	115,349	$	109,808	$	109,808	$	226,492
Unamortized debt issuance costs		(1,728)		(1,660)		(239)		(239)		(3,388)
Net carrying amount	$	109,415	$	113,689	$	109,569	$	109,569	$	223,104

Schedule of fair value of the convertible notes


	June 30, 2023		December 31, 2022

	(in thousands)
2026 Convertible Secured Notes	$	106,693	$	108,012
2026 Convertible Notes	$	92,240	$	87,307
2023 Convertible Notes	$	109,808	$	107,680

Schedule of initial conversion of convertible debt


	Initial conversion rate	Approximate conversion price
2026 Convertible Secured Notes	47.7612	$20.94
2026 Convertible Notes	9.2123	$108.55
2023 Convertible Notes	5.0358	$198.58

Schedule of interest expenses on convertible debt


	Three Months Ended June 30, 2023								Six Months Ended June 30, 2023
	2026 Convertible Secured Notes		2026 Convertible Notes		2023 Convertible Notes		Total		2026 Convertible Secured Notes		2026 Convertible Notes		2023 Convertible Notes		Total

	(in thousands)
Contractual interest expense	$	972	$	577	$	892	$	2,441	$	1,945	$	1,154	$	1,784	$	4,883
Amortization of debt issuance costs		132		119		120		371		262		237		239		738
Total interest expense	$	1,104	$	696	$	1,012	$	2,812	$	2,207	$	1,391	$	2,023	$	5,621

	Three Months Ended June 30, 2022								Six Months Ended June 30, 2022
	2026 Convertible Secured Notes		2026 Convertible Notes		2023 Convertible Notes		Total		2026 Convertible Secured Notes		2026 Convertible Notes		2023 Convertible Notes		Total

	(in thousands)
Contractual interest expense	$	4,375	$	577	$	913	$	5,865	$	8,750	$	1,154	$	1,837	$	11,741
Amortization of debt issuance costs		569		116		119		804		1,132		232		237		1,601
Total interest expense	$	4,944	$	693	$	1,032	$	6,669	$	9,882	$	1,386	$	2,074	$	13,342

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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-Name Accounting Standards Codification
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-Topic 235
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-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-3

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
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+ Details

Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Measurements

Fair Value Measurements

6. Fair Value Measurements

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

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

●

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

●

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

●

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

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

The Company’s cash deposits, money market funds and U.S. Treasury securities are classified within Level 1 of the fair value hierarchy because they are valued using bank balances or quoted prices from active markets. Commercial paper, corporate debt securities, and U.S. government agency bonds are classified as Level 2 instruments based on market pricing and other observable inputs.

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


			Fair Value Measurements Using
	Total		Level 1		Level 2		Level 3

	(in thousands)
June 30, 2023
Assets
Cash and cash equivalents:
Money market funds	$	15,617	$	15,617	$	—	$	—
Available-for-sale investment debt securities:
Commercial paper		85,820		—		85,820		—
Corporate debt securities		160,531		—		160,531		—
U.S. government agency bonds		16,439		—		16,439		—
U.S. Treasury securities		14,840		14,840		—		—
Total financial assets	$	293,247	$	30,457	$	262,790	$	—

December 31, 2022
Assets
Cash and cash equivalents:
Money market funds	$	27,035	$	27,035	$	—	$	—
Available-for-sale investment debt securities:
Commercial paper		102,203		—		102,203		—
Corporate debt securities		302,877		—		302,877		—
U.S. government agency bonds		23,995		—		23,995		—
U.S. Treasury securities		5,974		5,974		—		—
Total financial assets	$	462,084	$	33,009	$	429,075	$	—

See Note 10 for the carrying amounts and estimated fair values of the Company’s 3.50% Convertible Senior Secured Notes due 2026 (“2026 Convertible Secured Notes”), 2.00% Convertible Senior Notes due 2026 (“2026 Convertible Notes”) and 3.25% Convertible Senior Notes due 2023 (“2023 Convertible Notes”).

The aggregate fair value of all available-for-sale investment debt securities (commercial paper, corporate debt securities, U.S. government agency bonds, municipal bonds and U.S. Treasury securities), by contractual maturity, are as follows:


	Fair Value as of
	June 30, 2023		December 31, 2022

	(in thousands)
Due in one year or less	$	266,127	$	391,488
Due after one year through two years		11,503		43,561
Total investment debt securities	$	277,630	$	435,049

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

- 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

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 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 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

Stock Compensation (Schedule of Share Based Compensation Stock Options Activities) (Details) $ / shares in Units, shares in Thousands, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) $ / shares shares
Stock Compensation
Beginning Outstanding, Number of Shares \| shares	2,087
Granted - Number of Shares \| shares	630
Exercised - Number of Shares \| shares	(1)
Cancelled/forfeited - Number of Shares \| shares	(44)
Expired - Number of Shares \| shares	(108)
Ending Outstanding, Number of Shares \| shares	2,564	2,087
Expected to vest - Number of shares \| shares	1,210
Exercisable - Number of Shares \| shares	1,354
Beginning Outstanding, Weighted Average Exercise Price \| $ / shares	$ 43.51
Granted - Weighted Average Exercise Price \| $ / shares	16.70
Exercised - Weighted Average Exercise Price \| $ / shares	15.16
Cancelled/forfeited - Weighted Average Exercise Price \| $ / shares	19.88
Expired - Weighted Average Exercise Price \| $ / shares	33.77
Ending Outstanding, Weighted Average Exercise Price \| $ / shares	37.75	$ 43.51
Expected to vest - Weighted Average Exercise Price \| $ / shares	18.74
Exercisable - Weighted Average Exercise Price \| $ / shares	$ 54.73
Options Outstanding - Weighted Average Remaining Life	7 years 6 months	7 years 1 month 6 days
Expected to vest - Weighted Average Remaining Term	8 years 9 months 18 days
Exercisable - Weighted Average Remaining Term	6 years 3 months 18 days
Options Outstanding - Aggregate Intrinsic Value \| $	$ 213	$ 4
Exercised aggregate intrinsic value \| $	7
Expected to vest - Aggregate Intrinsic Value \| $	213
Exercisable - Aggregate Intrinsic Value \| $	$ 0

Fair Value Measurements (Narratives) (Details)	Jun. 30, 2023	Aug. 17, 2021	May 14, 2019	Jul. 06, 2016
2026 convertible secured notes
Debt instrument, interest rate, stated percentage	3.50%	3.50%
2026 Convertible Notes
Debt instrument, interest rate, stated percentage	2.00%		2.00%
2023 Convertible Notes
Debt instrument, interest rate, stated percentage	3.25%			3.25%

Net Loss Per Share (Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share) (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share, amount	11,521	29,550	11,328	29,432
Convertible notes
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share, amount	6,923	25,507	6,923	25,510
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share, amount	2,542	2,509	2,486	2,471
Restricted stock units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share, amount	2,056	1,534	1,919	1,451

Stock Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Stock Compensation

Schedule of outstanding option activity

The following table summarizes stock option activity during the six months ended June 30, 2023:


				Weighted
				Average
	Number	Weighted		Remaining	Aggregate
	of Options	Average		Contractual	Intrinsic Value
	(in thousands)	Exercise Price		Term (years)	(in thousands)
Outstanding at December 31, 2022	2,087	$	43.51	7.1	$	4
Granted	630	$	16.70	—	$	—
Exercised	(1)	$	15.16	—	$	7
Cancelled/forfeited	(44)	$	19.88	—	$	—
Expired	(108)	$	33.77	—	$	—
Outstanding at June 30, 2023	2,564	$	37.75	7.5	$	213
Expected to vest	1,210	$	18.74	8.8	$	213
Exercisable	1,354	$	54.73	6.3	$	—

Schedule of estimated the fair value of stock options granted in the periods presented utilizing a Black-Scholes option-pricing model

The Company estimated the fair value of stock options granted in the periods presented utilizing a Black-Scholes option-pricing model utilizing the following assumptions:


	Six Months Ended June 30,
	2023		2022
Volatility	69.5 - 72.6	%	66.4 - 67.7	%
Expected term (in years)	6.0		5.5 - 6.0
Risk-free rate	3.6 - 4.3	%	1.3 - 2.8	%
Expected dividend yield	—	%	—	%

Schedule of aggregate RSU, RSA and PRSU activity

The following table summarizes the aggregate RSU and PRSU activity during the six months ended June 30, 2023:


		Weighted
	Number of	Average Grant Date
	Awards	Fair Value
	(in thousands)
Non-vested awards at December 31, 2022	1,051	$	23.90
Granted	1,192	$	18.76
Vested	(122)	$	21.34
Forfeited	(73)	$	34.81
Non-vested awards at June 30, 2023	2,048	$	20.67

Schedule of stock based compensation expense

Stock-based compensation expense has been reported in the Company’s condensed consolidated statements of operations as follows:


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

					(in thousands)
Selling, general and administrative	$	4,643	$	3,980	$	9,064	$	8,074
Research and development		1,619		1,401		3,062		2,796
Total stock-based compensation	$	6,262	$	5,381	$	12,126	$	10,870

Cash, Cash Equivalents and Investment Debt Securities (Cash, Cash Equivalents and Investments) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Cash and cash equivalents:
Cash and Cash Equivalents, Amortized Cost	$ 136,229	$ 50,517
Cash and Cash Equivalents, Gross Unrealized Losses	0
Cash and cash equivalents, Fair Value	136,229	50,517
Investment Debt Securities Abstract
Total investments, Amortized Cost	278,469	436,706
Total cash and cash equivalents and investment debt securities, Amortized Cost	414,698	487,223
Allowance for Credit Losses	0
Total investments, Gross Unrealized Gains	67	44
Total cash and cash equivalents and investment debt securities, Gross Unrealized Gains	67	44
Total investments, Gross Unrealized Losses	(906)	(1,701)
Total cash and cash equivalents and investment debt securities, Gross Unrealized Losses	(906)	(1,701)
Total investments, Fair Value	277,630	435,049
Total cash and cash equivalents and investment debt securities, Fair Value	413,859	485,566
Commercial paper
Investment Debt Securities Abstract
Total investments, Amortized Cost	85,974	102,379
Allowance for Credit Losses	0
Total investments, Gross Unrealized Gains	0	7
Total investments, Gross Unrealized Losses	(154)	(183)
Total investments, Fair Value	85,820	102,203
Corporate debt securities
Investment Debt Securities Abstract
Total investments, Amortized Cost	161,182	304,234
Allowance for Credit Losses	0
Total investments, Gross Unrealized Gains	65	33
Total investments, Gross Unrealized Losses	(716)	(1,390)
Total investments, Fair Value	160,531	302,877
U.S. government agency bonds
Investment Debt Securities Abstract
Total investments, Amortized Cost	16,475	24,100
Total investments, Gross Unrealized Gains		4
Total investments, Gross Unrealized Losses	(36)	(109)
Total investments, Fair Value	16,439	23,995
U.S Treasury securities
Investment Debt Securities Abstract
Total investments, Amortized Cost	14,838	5,993
Total investments, Gross Unrealized Gains	2
Total investments, Gross Unrealized Losses	0	(19)
Total investments, Fair Value	14,840	5,974
Cash and money market funds
Cash and cash equivalents:
Cash and Cash Equivalents, Amortized Cost	136,229	50,517
Cash and Cash Equivalents, Gross Unrealized Losses	0
Cash and cash equivalents, Fair Value	$ 136,229	$ 50,517

Inventory

6 Months Ended

Jun. 30, 2023

Inventory

Inventory

8. Inventory

Inventories are stated at the lower of cost or market. Inventories consisted of the following:



	June 30, 2023		December 31, 2022

	(in thousands)
Work-in-process	$	6,041	$	6,230
Finished goods		231		232
Inventory	$	6,272	$	6,462

Stock Compensation (Schedule of Share-based Compensation, Restricted Stock Units and Award Activity) (Details) - RSUs, RSAs, and PRSUs shares in Thousands	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award
Outstanding, at beginning period \| shares	1,051
Granted - Shares \| shares	1,192
Vested - Shares \| shares	(122)
Forfeited \| shares	73
Outstanding, at ending period \| shares	2,048
Outstanding - Weighted Average Fair Value, at beginning period \| $ / shares	$ 23.90
Granted - Weighted Average Fair Value \| $ / shares	18.76
Vested - Weighted Average Fair Value \| $ / shares	21.34
Forfeited - Weighted Average Fair Value \| $ / shares	34.81
Outstanding - Weighted Average Fair Value, at ending period \| $ / shares	$ 20.67

Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies.

Commitments and Contingencies

14. Commitments and Contingencies

Legal Proceedings

The Company is involved in various disputes, legal proceedings and litigation in the course of its business, including the matters described below and, from time to time, governmental inquiries and investigations and employment and other litigation. These matters, which could result in damages, fines or other administrative, civil or criminal remedies, liabilities or penalties, are often complex and the outcome of such matters is often uncertain. The Company may from time to time enter into settlements to resolve such matters.

Patent Litigation

In August 2022, the Company received a paragraph IV certification notice letter from Zenara Pharma Private Limited (“Zenara”), a generic drug manufacturer, indicating that it had submitted to the FDA an Abbreviated New Drug Application (“ANDA”) seeking approval to manufacture and sell a generic version of the Company’s 5 mg and 10 mg dosage strengths of Ocaliva® (obeticholic acid) for PBC prior to the expiration of certain patents listed for Ocaliva in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”).

The paragraph IV certification notice alleged that the challenged Orange Book patents were invalid, unenforceable, and/or would not be infringed by the commercial manufacture, use, or sale of the generic products described in Zenara’s ANDA. Within 45 days of receipt of the paragraph IV certification notice, the Company initiated a patent infringement suit against Zenara in the United States District Court for the District of Delaware. Trial is scheduled for July 22, 2024. In June 2023, the Company received an additional paragraph IV certification notice letter from Zenara challenging an additional Orange Book patent. Within 45 days, in June 2023, the Company initiated a patent infringement suit against Zenara in the United States District Court for the District of Delaware. A trial date has not been set for that matter.

Separately, the Company previously settled ANDA litigation with six other generic manufacturers.

Patent litigation is costly and time-consuming, and successful challenges to the Company’s patents or other intellectual property rights could result in the Company losing those rights in the relevant jurisdiction, and could allow third parties to use the Company’s proprietary technologies without a license from the Company or its collaborators. While the Company intends to vigorously defend and enforce its intellectual property rights protecting Ocaliva, the Company can offer no assurances regarding when patent lawsuits such as the Zenara lawsuit will be decided, which side will prevail, or whether a generic equivalent of Ocaliva could be approved and enter the market before the expiration of the Company’s patents without license from the Company.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

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.

Current and Long-Term Debt- Initial conversion of convertible debt (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares
2026 convertible secured notes
Debt Instrument [Line Items]
Initial conversion rate	47.7612
Approximate conversion price	$ 20.94
2026 Convertible Notes
Debt Instrument [Line Items]
Initial conversion rate	9.2123
Approximate conversion price	$ 108.55
2023 Convertible Notes
Debt Instrument [Line Items]
Initial conversion rate	5.0358
Approximate conversion price	$ 198.58

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 835
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482900/835-30-50-1

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 235
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-Name Accounting Standards Codification
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-Paragraph 1
-Subparagraph (SX 210.4-08(f))
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
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-Paragraph 3
-Subparagraph (SX 210.12-04(a))
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-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-3

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/exampleRef
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Reference 8: http://www.xbrl.org/2003/role/exampleRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
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Reference 19: http://www.xbrl.org/2003/role/disclosureRef
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Reference 22: http://www.xbrl.org/2003/role/disclosureRef
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Reference 25: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Current and Long-Term Debt- Narratives (Details) - USD ($) $ / shares in Units, $ in Millions						1 Months Ended
	Aug. 20, 2021	Aug. 17, 2021	Aug. 10, 2021	May 14, 2019	Jul. 06, 2016	Sep. 30, 2022	Aug. 31, 2022	Jun. 30, 2022	Sep. 30, 2021	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Stock issued for services	$ 10.0
Stock issued for services, (in shares)	769,823
Issue price	$ 12.99
Common stock, par value (in dollars per share)										$ 0.001	$ 0.001
Privately negotiated agreements
Debt Instrument [Line Items]
Convertible debt repurchased, face amount									$ 39.9
Convertible debt repurchased									$ 38.1
2023 Convertible Notes
Debt Instrument [Line Items]
Debt, face amount					$ 460.0
Interest rate					3.25%					3.25%
Proceeds from convertible debt					$ 447.6
Cost of debt issued		$ 0.9			$ 12.4
Convertible debt, original debt			$ 306.5
Convertible debt			292.4
Interest rate, effective								3.69%		3.69%
2023 Convertible Notes \| Privately negotiated agreements
Debt Instrument [Line Items]
Convertible debt repurchased, face amount								$ 3.8
Convertible debt repurchased								$ 3.8
2026 Convertible Notes
Debt Instrument [Line Items]
Debt, face amount				$ 230.0
Interest rate				2.00%						2.00%
Proceeds from convertible debt				$ 223.4
Cost of debt issued				$ 6.6
Convertible debt, original debt			114.7
Convertible debt			90.0
Interest rate, effective								2.44%		2.44%
2026 convertible secured notes
Debt Instrument [Line Items]
Debt, face amount		$ 500.0	$ 117.6
Interest rate		3.50%								3.50%
Proceeds from convertible debt		$ 116.7
Convertible debt						$ 219.5	$ 219.5
Convertible debt repurchased, face amount						388.9	388.9
Convertible debt repurchased						$ 258.1	$ 258.1
Common stock issued						11,329,399	11,329,399
Common stock, par value (in dollars per share)						$ 0.001	$ 0.001
Interest rate, effective								4.03%		4.03%

Basis of Presentation

6 Months Ended

Jun. 30, 2023

Basis of Presentation

Basis of Presentation

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.

Current and Long-Term Debt - Interest Expense (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Debt issuance costs	$ 2,889		$ 3,388
Long-term debt
Debt issuance costs			239
Convertible Debt
Interest payable, current	3,500		3,500
Debt Related Commitment Fees and Debt Issuance Costs	8,700
Cash payments for interest	4,900	$ 11,700
2026 Convertible Notes
Debt issuance costs	1,423		1,660
2023 Convertible Notes \| Current portion of long-term debt
Debt issuance costs	$ 0		$ 239

Inventory (Tables)

6 Months Ended

Jun. 30, 2023

Inventory

Schedule of Inventories

Inventories are stated at the lower of cost or market. Inventories consisted of the following:



	June 30, 2023		December 31, 2022

	(in thousands)
Work-in-process	$	6,041	$	6,230
Finished goods		231		232
Inventory	$	6,272	$	6,462

Subsequent Events (Details) - USD ($) $ in Millions			3 Months Ended
Subsequent Events (Details) - USD ($) $ in Millions	Jul. 01, 2023	Jun. 23, 2023	Sep. 30, 2023
Subsequent Events
Percentage of workforce reduction		33.33%
Subsequent Event. \| 2023 Convertible Notes
Subsequent Events
Cash repayment for the total principal	$ 109.8
Payment of the remaining outstanding interest due	$ 1.8
Scenario, Forecast
Subsequent Events
Restructuring charges			$ 16.0
Severance costs			15.0
non-cash stock-based compensation expense related to the vesting of stock-based awards			$ 1.0

Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
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

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital Cumulative effect, period of adoption, adjustment	Additional Paid-In Capital	Accumulated Other Comprehensive Loss, Net	Accumulated Deficit Cumulative effect, period of adoption, adjustment	Accumulated Deficit	Cumulative effect, period of adoption, adjustment	Total
Balance at Dec. 31, 2021	$ 30		$ 2,308,653	$ (2,873)		$ (2,489,772)		$ (183,962)
Balance (in shares) at Dec. 31, 2021	29,573
Stock-based compensation			15,264					15,264
Issuance of common stock under equity plan (in shares)	251
Employee withholding taxes related to stock-based awards			(345)					(345)
Employee withholding taxes related to stock-based awards (in shares)	(26)
Other comprehensive income				325				325
Net loss						(24,812)		(24,812)
Balance at Jun. 30, 2022	$ 30	$ (307,371)	2,016,201	(2,548)	$ 131,068	(2,383,516)	$ (176,303)	(369,833)
Balance (in shares) at Jun. 30, 2022	29,798
Balance at Mar. 31, 2022	$ 30		2,007,684	(3,487)		(2,375,988)		(371,761)
Balance (in shares) at Mar. 31, 2022	29,709
Stock-based compensation			8,544					8,544
Issuance of common stock under equity plan (in shares)	96
Employee withholding taxes related to stock-based awards			(27)					(27)
Employee withholding taxes related to stock-based awards (in shares)	(7)
Other comprehensive income				939				939
Net loss						(7,528)		(7,528)
Balance at Jun. 30, 2022	$ 30	$ (307,371)	2,016,201	(2,548)	$ 131,068	(2,383,516)	$ (176,303)	(369,833)
Balance (in shares) at Jun. 30, 2022	29,798
Balance at Dec. 31, 2022	$ 42		2,238,179	(8,256)		(2,136,888)		93,077
Balance (in shares) at Dec. 31, 2022	41,523
Stock-based compensation			12,126					12,126
Issuance of common stock under equity plan (in shares)	278
Employee withholding taxes related to stock-based awards			(318)					(318)
Employee withholding taxes related to stock-based awards (in shares)	(20)
Net proceeds from exercise of stock options			21					$ 21
Net proceeds from exercise of stock options (in shares)	2							1,000
Other comprehensive income				637				$ 637
Net loss						(37,997)		(37,997)
Balance at Jun. 30, 2023	$ 42		2,250,008	(7,619)		(2,174,885)		67,546
Balance (in shares) at Jun. 30, 2023	41,783
Balance at Mar. 31, 2023	$ 42		2,243,789	(7,623)		(2,169,023)		67,185
Balance (in shares) at Mar. 31, 2023	41,687
Stock-based compensation			6,262					6,262
Issuance of common stock under equity plan (in shares)	98
Employee withholding taxes related to stock-based awards			(49)					(49)
Employee withholding taxes related to stock-based awards (in shares)	(3)
Net proceeds from exercise of stock options			6					6
Net proceeds from exercise of stock options (in shares)	1
Other comprehensive income				4				4
Net loss						(5,862)		(5,862)
Balance at Jun. 30, 2023	$ 42		$ 2,250,008	$ (7,619)		$ (2,174,885)		$ 67,546
Balance (in shares) at Jun. 30, 2023	41,783

Current and Long-Term Debt - Exchange of convertible debt - Narratives (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
Debt Instrument [Line Items]
Debt issuance costs	$ 2,889	$ 3,388
2026 convertible secured notes
Debt Instrument [Line Items]
Debt instrument liability component effective interest rate	4.03%		4.03%
2026 Convertible Notes
Debt Instrument [Line Items]
Debt instrument liability component effective interest rate	2.44%		2.44%
Debt issuance costs	$ 1,423	$ 1,660
2023 Convertible Notes
Debt Instrument [Line Items]
Debt instrument liability component effective interest rate	3.69%		3.69%

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Current and Long-Term Debt

6 Months Ended

Jun. 30, 2023

Current and Long-Term Debt

Current and Long-Term Debt

10. Current and Long-Term Debt

Debt, net of debt issuance costs and discounts, consisted of the following:


	June 30, 2023

	2026 Convertible Secured Notes		2026 Convertible Notes		2023 Convertible Notes			Total Current Portion of Long-Term Debt		Total Long-Term Debt

	(in thousands)
Principal	$	111,143	$	115,349	$	109,808	$	109,808	$	226,492
Unamortized debt issuance costs		(1,466)		(1,423)		—		—		(2,889)
Net carrying amount	$	109,677	$	113,926	$	109,808	$	109,808	$	223,603

	December 31, 2022

	2026 Convertible Secured Notes		2026 Convertible Notes		2023 Convertible Notes			Total Current Portion of Long-Term Debt		Total Long-Term Debt

	(in thousands)
Principal	$	111,143	$	115,349	$	109,808	$	109,808	$	226,492
Unamortized debt issuance costs		(1,728)		(1,660)		(239)		(239)		(3,388)
Net carrying amount	$	109,415	$	113,689	$	109,569	$	109,569	$	223,104

As of June 30, 2023 and December 31, 2022, the net carrying amount of the 2023 Convertible Notes was recorded in Current portion of long-term debt.

The Company has three series of convertible notes outstanding (together, the “Convertible Notes”). All three series are convertible under certain circumstances into cash, shares of the Company’s common stock, or a combination thereof, at the Company’s election.

The 2023 Convertible Notes were issued on July 6, 2016, in the amount of $460.0 million principal, at an interest rate of 3.25%. The Company received net proceeds from their sale of $447.6 million, net of $12.4 million in underwriting discounts, commissions, and estimated offering expenses.

The 2026 Convertible Notes were issued on May 14, 2019, in the amount of $230.0 million principal, at an interest rate of 2.00%. The Company received net proceeds from their sale of $223.4 million, net of $6.6 million in underwriting discounts, commissions, and estimated offering expenses.

On August 10, 2021, the Company entered into privately negotiated exchange and subscription agreements with a limited number of existing “accredited investors” and “qualified institutional buyers” (as defined under Securities Act rules) holding 2023 Convertible Notes and 2026 Convertible Notes to (1) exchange $306.5 million principal of 2023 Convertible Notes for $292.4 million principal of new notes, (2) exchange $114.7 million principal of 2026 Convertible Notes for $90.0 million principal of new notes, and (3) sell $117.6 million principal of new notes for cash. On August 17, 2021, these new notes were issued as 2026 Convertible Secured Notes in the amount of $500.0 million principal, at an interest rate of 3.50%. The Company received cash proceeds from the sale of notes of approximately $116.7 million, net of $0.9 million in issuance costs. The Company also paid its financial advisor $10.0 million in stock for services rendered, in the amount of 769,823 shares, based on the closing price of $12.99 per share on August 20, 2021.

In September 2021, the Company entered into privately negotiated agreements with certain holders of 2023 Convertible Notes to repurchase $39.9 million principal for $38.1 million in cash.

In June 2022, the Company entered into an agreement with a certain holder of 2023 Convertible Notes to repurchase $3.8 million principal for $3.8 million in cash.

In August and September 2022, the Company entered into privately negotiated agreements to repurchase $388.9 million of 2026 Convertible Secured Notes, using a combination of cash and equity. The Company exchanged the existing 2026 Convertible Secured Notes for $258.1 million in cash and 11,329,399 shares of newly issued common stock, par value $0.001 per share. Based on the Company’s closing stock price on the dates of the agreements, the aggregate shares were worth $219.5 million.

The approximate fair value of the Convertible Notes was determined as follows using Level 2 inputs based on quoted market values:


	June 30, 2023		December 31, 2022

	(in thousands)
2026 Convertible Secured Notes	$	106,693	$	108,012
2026 Convertible Notes	$	92,240	$	87,307
2023 Convertible Notes	$	109,808	$	107,680

The Note Indentures

The 2023 Convertible Notes, and the 2026 Convertible Notes, were each issued pursuant to a Base Indenture, dated as of July 6, 2016, between the Company and U.S. Bank National Association (“U.S. Bank”), as trustee, and a First Supplemental Indenture (with respect to the 2023 Convertible Notes) and Second Supplemental Indenture (with respect to the 2026 Convertible Notes), dated July 6, 2016, and May 14, 2019, respectively, each between the Company and U.S. Bank as trustee. The 2026 Convertible Secured Notes were issued pursuant to a Base Indenture and a First Supplemental Indenture, each dated as of August 17, 2021, between the Company and U.S. Bank as trustee and collateral agent. In connection with the issuance of the 2026 Convertible Secured Notes, the Company also entered into a Security Agreement, dated as of August 17, 2021, with U.S. Bank as collateral agent.

Pursuant to these indentures, the 2023 Convertible Notes and 2026 Convertible Notes are senior unsecured obligations, and the 2026 Convertible Secured Notes are senior secured obligations, of the Company. Each indenture provides for customary events of default.

Each series of notes bears a fixed rate of interest as identified above, payable semi-annually in arrears:


	Semi-annual payment dates
	First payment date	First	Second	Maturity date*
2026 Convertible Secured Notes	February 15, 2022	February 15	August 15	February 15, 2026
2026 Convertible Notes	November 15, 2019	May 15	November 15	May 15, 2026
2023 Convertible Notes	January 1, 2017	January 1	July 1	July 1, 2023

* Unless earlier repurchased, redeemed, or converted.

Each of the three series of notes is convertible under certain circumstances. Prior to January 1, 2023 (for the 2023 Convertible Notes), February 15, 2026 (for the 2026 Convertible Notes), and November 15, 2025 (for the 2026 Convertible Secured Notes), holders may convert their notes only under any of the following circumstances:

(i)

During any calendar quarter commencing after the calendar quarter ended on September 30, 2016 (for the 2023 Convertible Notes), June 30, 2019 (for the 2026 Convertible Notes), or December 31, 2021 (for the 2026 Convertible Secured Notes), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the

last trading day of the immediately preceding calendar quarter is at least 130% of the applicable conversion price (as defined in the applicable indenture) on each applicable trading day (the “Stock Price Conversion Condition”).

(ii)

During the five business day period after any five consecutive trading day period in which the trading price (as defined in the applicable indenture) per $1,000 principal amount for each trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate (as defined in the applicable indenture) on each such trading day.

(iii)

If the Company calls any or all of the applicable series of notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date.

(iv)

Upon the occurrence of specified corporate events.

After those dates, holders may convert their notes, regardless of the foregoing circumstances, at any time until immediately preceding the applicable maturity date.

Upon conversion of notes, the Company will pay or deliver cash, shares of common stock (or cash in lieu of fractional shares), or a combination of cash and common stock, at the Company’s election.

The initial conversion rates of the Convertible Notes per $1,000 principal amount, and the approximate conversion price, are as follows:


	Initial conversion rate	Approximate conversion price
2026 Convertible Secured Notes	47.7612	$20.94
2026 Convertible Notes	9.2123	$108.55
2023 Convertible Notes	5.0358	$198.58

These conversion rates are subject to adjustment upon occurrence of certain events but will not be adjusted for accrued and unpaid interest. Also, if certain specified events occur, the conversion rate will be increased for notes converted in connection with such events.

The Convertible Notes are redeemable by the Company in certain circumstances starting July 6, 2021 (for the 2023 Convertible Notes), May 20, 2023 (for the 2026 Convertible Notes), and February 20, 2024 (for the 2026 Convertible Secured Notes). After such dates, the Company may redeem for cash all or any part of the applicable Convertible Notes, at its option, if the last reported sale price of the common stock has been at least 130% of the applicable conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on and including the trading day immediately preceding the date of the applicable notice of redemption. The redemption price is equal to 100% of the principal amount redeemed, plus accrued and unpaid interest to (but excluding) the redemption date.

No sinking fund is provided for any of the Convertible Notes.

If the Company undergoes a fundamental change (as defined in the applicable indenture), noteholders may require the Company to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to (but excluding) the fundamental change repurchase date.

Upon the occurrence of certain corporate events (i.e., a “make-whole fundamental change”, as defined in the applicable indenture), the Company will, under certain circumstances, increase the conversion rate for holders of the Convertible Notes who elect to convert in connection with such corporate events. In addition, with respect to the 2026 Convertible Secured Notes, (1) if the Company elects to redeem all or part of such notes and provides notice of redemption to the holders or (2) if the Stock Price Conversion Condition is satisfied with respect to any calendar quarter commencing after the quarter ended September 30, 2022, the Company will, under certain circumstances, increase the conversion rate

for holders who elect to convert (1) during the related redemption period, or (2) in connection with such Stock Price Conversion Condition. Upon a Company redemption of the 2026 Convertible Secured Notes, holders of notes called for redemption may be eligible to receive a make-whole premium. The Company, at its option, will satisfy the conversion obligation through cash, shares of common stock, or a combination of cash and common stock. The right to redeem the 2026 Convertible Secured Notes requires the Company to specify a date of redemption no earlier than 60 days and no later than 90 days after the notice of redemption is sent. If a holder elects to convert its 2026 Convertible Secured Notes prior to the effective date of a make-whole fundamental change or the date of the redemption notice, then it is not entitled to the increased conversion rate in connection with such make-whole fundamental change or redemption.

Upon certain events of default occurring and continuing, either the indenture trustee or holders of at least 25% in aggregate principal amount of a series of notes then outstanding may declare the entire principal amount of that series of notes, and accrued interest, if any, to be immediately due and payable. Upon events of default involving specified bankruptcy events involving the Company, the Convertible Notes are due and payable immediately.

The 2026 Convertible Secured Notes indenture and security agreement include (1) customary covenants, (2) guarantor provisions, and (3) collateral provisions. The 2026 Convertible Secured Notes may become guaranteed in the future by subsidiaries of the Company that meet certain threshold requirements, with the 2026 Convertible Secured Notes becoming senior obligations of such guarantor. The 2026 Convertible Secured Notes are secured by a first priority security interest in substantially all assets of the Company, and of any guarantors, subject to certain exceptions.

Interest Expense on Convertible Notes

The table summarizes the total interest expense recognized in the periods presented:

Three Months Ended June 30, 2023

Six Months Ended June 30, 2023

2026 Convertible Secured Notes

2026 Convertible Notes

2023 Convertible Notes

Total

2026 Convertible Secured Notes

2026 Convertible Notes

2023 Convertible Notes

Total

(in thousands)