INTERCEPT PHARMACEUTICALS, INC. You should read the following discussion and analysis together with our condensed consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 (the "Annual Report"). This discussion and analysis contains forward-looking statements, which involve risks and uncertainties. As a result of many factors, such as those described under "Cautionary Note Regarding Forward-Looking Statements," "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report, our actual results may differ materially from those anticipated in these forward-looking statements.
Overview
We are a biopharmaceutical company focused on the development and
commercialization of novel therapeutics to treat progressive non-viral liver
diseases with high unmet medical need utilizing our proprietary bile acid
chemistry. Our first marketed product, Ocaliva® (obeticholic acid or "OCA"), is
a farnesoid X receptor ("FXR") agonist approved in the United States , the United
Kingdom , the European Union and several other jurisdictions for the treatment of
primary biliary cholangitis ("PBC") in combination with ursodeoxycholic acid
("UDCA") in adults with an inadequate response to UDCA or as monotherapy in
adults unable to tolerate UDCA. In addition to commercializing OCA for PBC under
the Ocaliva brand name, we are also currently developing OCA for additional
indications, including nonalcoholic steatohepatitis ("NASH"). We are also
developing product candidates in various stages of clinical and preclinical
development. We believe that OCA and our other product candidates have the
potential to treat orphan and other more prevalent liver diseases such as NASH
for which there are currently limited therapeutic options.
Ocaliva was approved for PBC by the U.S. Food and Drug Administration ("FDA") in
May 2016 under the accelerated approval pathway. We commenced sales and
marketing of Ocaliva in the United States shortly after receiving approval, and
Ocaliva is now available to U.S. patients primarily through a network of
specialty pharmacy distributors. Ocaliva received conditional approval for PBC
from the European Commission in December 2016 and we commenced our commercial
launches across Europe (including the United Kingdom ) in January 2017 . We have
submitted dossiers and obtained, or are otherwise pursuing, pricing
reimbursement from a number of national authorities across Europe . Since January
2017 , Ocaliva has also received regulatory approval in several of our target
markets outside the United States and Europe , including (but not limited to)
Canada , Israel , and Australia , and we continue to pursue marketing approval of
Ocaliva for PBC in our other international target markets. Ocaliva has received
orphan drug designation in both the United States and the European Union for the
treatment of PBC. In addition, we continue to work to execute on our
post-marketing regulatory commitments with respect to Ocaliva in the U.S. and
Europe .
Our lead development product candidate is OCA for the potential treatment of
NASH. In February 2019 , we announced topline results from the planned 18-month
interim analysis of our pivotal Phase 3 clinical trial of OCA in patients with
liver fibrosis due to NASH, known as the REGENERATE trial. In the primary
efficacy analysis, once-daily OCA 25 mg met the primary endpoint agreed with the
FDA of fibrosis improvement by at least one stage with no worsening of NASH at
the planned 18-month interim analysis. Adverse events were generally mild to
moderate in severity and the most common were consistent with the known profile
of OCA. Interim analysis results at 18 months were based on surrogate endpoints
and the impact on clinical outcomes has not been confirmed. The REGENERATE trial
is ongoing and is expected to continue through clinical outcomes for
verification and description of the clinical benefit of OCA. OCA also achieved
the primary endpoint in a Phase 2b clinical trial for the treatment of NASH that
completed in late July 2014 , known as the FLINT trial, which was sponsored by
the U.S. National Institute of Diabetes and Digestive and Kidney Diseases, a
part of the National Institutes of Health . OCA has received breakthrough therapy
designation from the FDA for the treatment of NASH patients with liver fibrosis.
In September 2019 , we submitted a New Drug Application ("NDA") to the FDA
seeking accelerated approval of OCA for liver fibrosis due to NASH. In November
2019 , the FDA accepted our NDA for filing and granted a priority review
designation of OCA for liver fibrosis due to NASH. In December 2019 , we
submitted a Marketing Authorization Application ("MAA") to the European
Medicines Agency (the "EMA") seeking conditional approval of OCA for liver
fibrosis due to NASH. In January 2020 , the EMA completed its technical
validation of our MAA and thereby confirmed that all essential regulatory
elements required for scientific assessment had been included in our MAA prior
to the commencement of the formal review procedure. In June 2020 , we received a
complete response letter ("CRL") from the FDA stating that our NDA for OCA for
the treatment of liver fibrosis due to NASH
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could not be approved in its present form. The CRL indicated that, based on the data the FDA had reviewed, the FDA has determined that the predicted benefit of OCA based on a surrogate histopathologic endpoint remains uncertain and does not sufficiently outweigh the potential risks to support accelerated approval for the treatment of patients with liver fibrosis due to NASH. At that time, the FDA recommended that we submit additional post-interim analysis efficacy and safety data from the ongoing REGENERATE trial in support of potential accelerated approval and that the long-term outcomes phase of the trial should continue. We had our end of review meeting with the FDA inOctober 2020 to discuss theFDA's risk-benefit assessment in the CRL based on its review of the available data, as well as our proposed resubmission of our NDA for the treatment of liver fibrosis due to NASH. The meeting was constructive and the FDA provided us with helpful guidance regarding supplemental data we can provide to further characterize OCA's efficacy and safety profile that could support resubmission based on our Phase 3 REGENERATE 18-month biopsy data, together with a safety assessment from our ongoing studies. As part of our product development activities, we expect to continue to invest in evaluating the potential of OCA in progressive non-viral liver diseases. We are currently conducting a Phase 3 clinical trial in NASH patients with compensated cirrhosis, known as the REVERSE trial. InJanuary 2020 , we announced that we completed enrollment of the REVERSE trial with over 900 patients randomized. We are evaluating the efficacy, safety and tolerability of OCA in combination with bezafibrate in patients with PBC in a Phase 2 study outside ofthe United States , and we have an open Investigational New Drug ("IND") application with the FDA and are in the process of initiating a second Phase 2 study inthe United States , with the longer-term goal of developing and seeking regulatory approval for a fixed dose combination regimen in this indication and potentially may study this combination in other liver diseases. In addition, we have other compounds in early stages of research and development in our pipeline, including our INT-787 compound, an FXR agonist. We have been evaluating INT-787 in preclinical studies, and recently initiated a first-in-human clinical trial.
Recent Developments
Debt Refinancing, Retirement, and
InAugust 2021 , we agreed with a limited number of institutional holders of our 2023 Convertible Notes and our 2026 Convertible Notes maturingMay 15, 2026 , to exchange existing notes of both series at a discount for new 2026 Convertible Secured Notes maturingFebruary 15, 2026 , and secured by a first priority security interest in substantially all assets ofIntercept Pharmaceuticals, Inc. and of any subsidiaries that meet certain threshold requirements to become guarantors. The noteholders (1) exchanged$306.5 million of 2023 Convertible Notes for$292.4 million of new notes, (2) exchanged$114.7 million of 2026 Convertible Notes for$90.0 million of new notes, and also (3) subscribed to buy$117.6 million of new notes for cash. We thereby issued$500.0 million of 2026 Convertible Secured Notes at an interest rate of 3.50%. We received cash proceeds of$117.6 million . We also paid our financial advisory fee by issuing 769,823 new shares of common stock. Further, in connection with the exchange and sale, we bought back approximately 4.5 million shares of common stock for$75.8 million in cash.
In
On account of these transactions, we reduced our 2023 Convertible Notes
outstanding by approximately 75% from
Employee Stock Option Exchange
With the intention to help us motivate and retain non-executive employees, we launched onAugust 16, 2021 , and closed onSeptember 17, 2021 , an offer to exchange eligible out-of-the-money employee stock options for a lesser number of new options with at-the-money strike prices. Following expiration of the exchange offer, out of 703,967 eligible options, we accepted for exchange 612,080 options and exchanged them for 338,848 new options, granted effectiveSeptember 20, 2021 , with a strike price of$15.18 , the closing stock price on that day. The original options have been cancelled. Original options that had already vested were exchanged for new options vesting one year from the new grant date, subject to the employee's continued employment. Original options that had not already vested were exchanged for new options vesting 36
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two years from the new grant date, subject to the employee's continued employment. New options will expire after 6.5 years.
Ocaliva Label Update In 2020 the FDA notified us that, in the course of its routine safety surveillance, in May of that year it began to evaluate a newly identified safety signal, or NISS, regarding liver disorder for Ocaliva which the FDA classified as a potential risk, focused on a subset of the cirrhotic, or more advanced, PBC patientswho have taken Ocaliva. InMay 2021 , the NISS process was concluded and we aligned with the FDA on updated Ocaliva prescribing information inthe United States , and Ocaliva is now contraindicated for patients with PBC and decompensated cirrhosis, a prior decompensation event, or compensated cirrhosis with evidence of portal hypertension, in addition to the existing contraindication for complete biliary obstruction.
OCA for Liver Fibrosis due to NASH
We have had multiple formal interactions with the FDA regarding our NASH development program. While we have made progress, significant work remains and alignment with the FDA is a key dependency for a potential resubmission of our NDA seeking accelerated approval of OCA for the treatment of liver fibrosis due to NASH. We are conducting a comprehensive safety assessment from our ongoing studies and are generating and analyzing biopsy data that will be the subject of upcoming interactions with the FDA, which will inform our decision-making with respect to a potential resubmission. We also continue to work collaboratively with the EMA on its assessment of our MAA, and have received a "clock stop" of the review of OCA for NASH fibrosis in theEuropean Union to allow us to focus on executing on the feedback we have received. As with our NASH program inthe United States , we expect that the safety and efficacy data we are generating and analyzing will inform our regulatory and decision-making process with respect to OCA for NASH inEurope . COVID-19 InMarch 2020 , we announced new initiatives intended to ensure business continuity and support our employees during the coronavirus ("COVID-19") global pandemic, while continuing the critical activities necessary to bring our approved medicines to patients. With respect to our ongoing clinical trials, we are continuing to closely monitor the latest developments regarding the COVID-19 pandemic and together with our contract research organizations, study sites and other partners, have taken measures intended to minimize disruption to these studies. With respect to our supply chain, we have been working with our third-party manufacturers, distributors and other partners to manage our supply chain activities and mitigate disruptions to our product supplies. To protect the health of our employees and their families and communities, and in accordance with guidance issued by theU.S. Centers for Disease Control and Prevention , theWorld Health Organization and local authorities, our global workforce has been largely working remotely and we have leveraged digital communication technologies where appropriate to facilitate interactions with patients, healthcare professionals and our other stakeholders. We are preparing for a return of our workforce to our offices in the coming months and continuing to return to in-person interactions for our salesforce, as local regulations permit and taking into account the latest public health guidance on social distancing, sanitation, and other practices, while maintaining some flexibility for our employees for remote work when appropriate. In addition, we continue to closely evaluate the impact of COVID-19 on our ability to effectively market, sell and distribute Ocaliva for PBC. The long-term effects of COVID-19 are unknown and we cannot presently predict the duration, scope or severity of the potential effects of COVID-19 on our operations, including our clinical trials, regulatory submissions and reviews, supply chain or our ability to generate product sales from Ocaliva or, if approved, OCA for liver fibrosis due to NASH, and any such effects could have a material adverse impact on our business, results of operation and financial condition. See "-Risks Related to the Development and the Regulatory Review and Approval of Our Products and Product Candidates" and "-Risks Related to the Commercialization of Our Products" below. 37 Table of Contents Financial Overview Revenue We commenced our commercial launch of Ocaliva for the treatment of PBC inthe United States inJune 2016 . InDecember 2016 , theEuropean Commission granted conditional approval for Ocaliva for the treatment of PBC and we commenced our European commercial launch inJanuary 2017 . SinceJanuary 2017 , Ocaliva has also received regulatory approval in several of our target markets outsidethe United States andEurope , including (but not limited to)Canada ,Israel , andAustralia . We sell Ocaliva to a limited number of specialty pharmacies which dispense the product directly to patients. The specialty pharmacies are referred to as our customers. Product Revenue, Net
We recognize revenue upon delivery of Ocaliva to our customers. We provide the
right of return to our customers for unopened product for a limited time before
and after its expiration date.
Under Accounting Standards Codification ("ASC") Topic 606, Revenue from
Contracts with Customers ("ASC 606"), we have written contracts with each of our
customers that have a single performance obligation - to deliver products upon
receipt of a customer order - and these obligations are satisfied when delivery
occurs and the customer receives Ocaliva. We evaluate the creditworthiness of
each of our customers to determine whether collection is reasonably assured. We
estimate variable revenue by calculating gross product revenues based on the
wholesale acquisition cost that we charge our customers for Ocaliva, and then
estimating our net product revenues by deducting (i) estimated government
rebates and discounts related to Medicare, Medicaid and other government
programs, (ii) estimated costs of incentives offered to certain indirect
customers including patients and (iii) trade allowances, such as invoice
discounts for prompt payment and customer fees.
We recognized net sales of Ocaliva of $92.8 million and $79.5 million for the
three months ended September 30, 2021 and 2020, respectively and $271.1 million
and $229.4 million for the nine months ended September 30, 2021 and 2020,
respectively.
We have received paragraph IV certification notice letters from several generic
drug manufacturers indicating that each such company has submitted to the FDA an
Abbreviated New Drug Application ("ANDA") seeking approval to manufacture and
sell a generic version of our 5 mg and 10 mg dosage strengths of Ocaliva®
(obeticholic acid) for PBC prior to the expiration of certain patents protecting
Ocaliva. We have initiated patent infringement suits against each of these
generic drug manufacturers in the United States District Court for the District
of Delaware . While we intend to vigorously defend and enforce our intellectual
property rights protecting Ocaliva, we can offer no assurance as to when the
lawsuits will be decided, whether the lawsuits will be successful, or that a
generic equivalent of Ocaliva will not be approved and enter the market before
the expiration of such patents. See Note 17 to our unaudited condensed
consolidated financial statements included elsewhere in this Quarterly Report on
Form 10-Q for more information.
Selling, General and Administrative Expenses
We have incurred and expect to continue to incur significant selling, general and administrative expenses as a result of, among other initiatives, the commercialization of Ocaliva for PBC inthe United States , theUnited Kingdom , theEuropean Union and our other target markets. In addition, we have incurred significant selling, general and administrative expenses and may in the future incur similar expenses in connection with the preparation for the potential commercialization of OCA for liver fibrosis due to NASH, if approved, and our other future approved products, if any, and any maintenance of our general and administrative infrastructure inthe United States and abroad.
Research and Development Expenses
Since our inception, we have focused significant resources on our research and
development activities, including conducting preclinical studies and clinical
trials, pursuing regulatory approvals and engaging in other product development
activities. We recognize research and development expenses as they are incurred.
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We have incurred and expect to continue to incur significant research and development expenses as a result of, among other initiatives, our clinical development programs for OCA for PBC and NASH, our other earlier stage research programs and our regulatory approval efforts.
Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended September 30,
2021 2020
(in thousands)
Revenue:
Product revenue, net $ 92,827 $ 79,521
Total revenue 92,827 79,521
Operating expenses:
Cost of sales 658 1,826
Selling, general and administrative 53,339 70,619
Research and development 45,048 48,858
Restructuring 2 13,381
Total operating expenses 99,047 134,684
Other income (expense):
Interest expense (14,095) (12,091)Gain on extinguishment of debt 16,511
-
Other income, net 172
785
Total other income (expense), net 2,588 (11,306) Net loss $ (3,632)$ (66,469) Revenues Product revenue, net was$92.8 million and$79.5 million for the three months endedSeptember 30, 2021 and 2020, respectively. For the three months endedSeptember 30, 2021 and 2020, product revenue, net was comprised ofU.S. Ocaliva net sales of$66.6 million and$58.6 million , respectively, and ex-U.S. Ocaliva net sales of$26.2 million and$20.9 million , respectively. We commenced our commercial launch of Ocaliva for the treatment of PBC inthe United States and certain European countries inJune 2016 andJanuary 2017 , respectively. SinceJanuary 2017 , Ocaliva has also received regulatory approval in several of our target markets outsidethe United States andEurope , including (but not limited to)Canada ,Israel , andAustralia .
Cost of sales
Cost of sales was
Selling, general and administrative expenses
Selling, general and administrative expenses were$53.3 million and$70.6 million for the three months endedSeptember 30, 2021 and 2020, respectively. The$17.3 million net decrease between periods was primarily driven by decreases in expenses relating to our launch preparation activities associated with the potential approval and commercialization of OCA for liver fibrosis due to NASH. 39 Table of Contents
Research and development expenses
Research and development expenses were$45.0 million and$48.9 million for the three months endedSeptember 30, 2021 and 2020, respectively. The$3.9 million net decrease between periods was primarily driven by lower NASH development costs and personnel costs.
Restructuring expenses
Restructuring expenses were$0.0 million and$13.4 million for the three months endedSeptember 30, 2021 and 2020 respectively. The decrease between periods was driven primarily by the completion of the 2020 Workforce Plan earlier this year.
Interest expense
Interest expense was$14.1 million and$12.1 million for the three months endedSeptember 30, 2021 and 2020, respectively. Interest expense in 2020 and prior toAugust 2021 was based on our original principal amounts outstanding for the 2023 Convertible Notes and 2026 Convertible Notes. In August andSeptember 2021 , we partially retired those notes and issued new 2026 Convertible Secured Notes.
Other income, net
Other income, net was$16.7 million and$0.8 million for the three months endedSeptember 30, 2021 and 2020, respectively. The$15.9 million net increase between periods was primarily driven by the gains on the extinguishment of debt related to the exchange of debt and repurchase of 2023 Convertible Notes.
Income taxes
For the three months endedSeptember 30, 2021 and 2020, no income tax expense or benefit was recognized. Our deferred tax assets are comprised primarily of net operating loss carryforwards. We maintain a full valuation allowance on our deferred tax assets since we have not yet achieved sustained profitable operations. As a result, we have not recorded any income tax benefit since
our
inception.
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Comparison of the Nine Months Ended
Nine Months Ended September 30,
2021 2020
(in thousands)
Revenue:
Product revenue, net $ 271,064 $ 229,422
Total revenue 271,064 229,422
Operating expenses:
Cost of sales 2,086 4,555
Selling, general and administrative 170,265 262,537
Research and development 133,606 139,587
Restructuring (86) 13,381
Total operating expenses 305,871 420,060
Other income (expense):
Interest expense (39,103) (35,801)Gain on extinguishment of debt 16,511
- Other income, net 2,253 3,706 Total other (expense), net (20,339) (32,095) Net loss$ (55,146) $ (222,733) Revenues Product revenue, net was$271.1 million and$229.4 million for the nine months endedSeptember 30, 2021 and 2020, respectively. For the nine months endedSeptember 30, 2021 and 2020, product revenue, net was comprised ofU.S. Ocaliva net sales of$192.1 million and$169.0 million , respectively, and ex-U.S. Ocaliva net sales of$79.0 million and$60.4 million , respectively. We commenced our commercial launch of Ocaliva for the treatment of PBC inthe United States and certain European countries inJune 2016 andJanuary 2017 , respectively. SinceJanuary 2017 , Ocaliva has also received regulatory approval in several of our target markets outsidethe United States andEurope , including (but not limited to)Canada ,Israel , andAustralia .
Cost of sales
Cost of sales was$2.1 million and$4.6 million for the nine months endedSeptember 30, 2021 and 2020, respectively. Our cost of sales for the nine months endedSeptember 30, 2021 and 2020 consisted primarily of packaging, labeling, materials and related expenses.
Selling, general and administrative expenses
Selling, general and administrative expenses were$170.3 million and$262.5 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The$92.2 million net decrease between periods was primarily driven by decreases in expenses relating to our launch preparation activities associated with the potential approval and commercialization of OCA for liver fibrosis due to NASH.
Research and development expenses
Research and development expenses were$133.6 million and$139.6 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The$6.0 million net decrease between periods was primarily driven by lower NASH development costs and lower personnel costs. 41 Table of Contents Restructuring expenses Restructuring expenses were$(0.1) million and$13.4 million for the nine months endedSeptember 30, 2021 and 2020 respectively. The decrease between periods was driven primarily by the completion of the 2020 Workforce Plan earlier this year.
Interest expense
Interest expense was$39.1 million and$35.8 million for the nine months endedSeptember 30, 2021 and 2020, respectively. Interest expense in 2020 and prior toAugust 2021 was based on our original principal amounts outstanding for the 2023 Convertible Notes and 2026 Convertible Notes. In August andSeptember 2021 , we partially retired those notes and issued new 2026 Convertible Secured Notes.
Other income, net
Other income, net was$18.8 million and$3.7 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The$15.1 million net increase between periods was primarily driven by the gains on the extinguishment of debt related to the exchange of debt and repurchase of 2023 Convertible Notes.
Income taxes
For the nine months endedSeptember 30, 2021 and 2020, no income tax expense or benefit was recognized. Our deferred tax assets are comprised primarily of net operating loss carryforwards. We maintain a full valuation allowance on our deferred tax assets since we have not yet achieved sustained profitable operations. As a result, we have not recorded any income tax benefit since our inception.
Liquidity and Capital Resources
Cash Flows
The following table sets forth the significant sources and uses of cash for the
periods indicated:
Nine Months Ended September 30,
2021 2020
(in thousands)
Net cash (used in) provided by:
Operating activities $ (45,492) $ (154,051)
Investing activities 55,398 132,973
Financing activities 2,083 (537)
Effect of exchange rate changes (678) (1,674)
Net increase (decrease) in cash, cash equivalents and
restricted cash $ 11,311 $ (23,289)
Operating Activities. Net cash used in operating activities of approximately
$45.5 million during the nine months ended September 30, 2021 was primarily a
result of our $55.1 million net loss, a net decrease in operating assets and
liabilities of $33.5 million and a gain of $16.5 million on extinguishments of
debt, partially offset by $25.5 million in stock-based compensation, $11.9
million for accretion of the discount on the 2023 Convertible Notes, $7.0
million for accretion of the discount on the 2026 Convertible Notes, $3.0
million for accretion of the discount on the 2026 Convertible Secured Notes,
$4.3 million for non-cash operating lease costs and $2.6 million of
depreciation. Cash flows for the nine months ended September 30, 2021 include
cash receipts of $4.2 million reflecting payments from HMRC for the U.K. R&D tax
credit claims.
Net cash used in operating activities of approximately
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million, partially offset by $44.4 million in stock-based compensation, $12.3
million for accretion of the discount on the 2023 Convertible Notes, $7.0
million for accretion of the discount on the 2026 Convertible Notes $4.6 million
for non-cash operating lease costs and $2.3 million of depreciation. Cash flows
for the nine months ended September 30, 2020 include cash receipts of $20.7
million reflecting payments from HMRC for the U.K. R&D tax credit claims.
Investing Activities. For the nine months ended September 30, 2021 , net cash
provided by investing activities primarily reflects the sales and maturities of
investment debt securities of $334.2 million , partially offset by the purchase
of investment debt securities of $278.4 million .
For the nine months ended September 30, 2020 , net cash provided by investing
activities primarily reflects the sales and maturities of investment debt
securities of $417.6 million , partially offset by the purchase of investment
debt securities of $282.6 million .
Financing Activities. Net cash provided by financing activities in the nine
months ended
Net cash used in financing activities in the nine months endedSeptember 30, 2020 consisted primarily of$1.8 million from payments of employee withholding taxes related to stock-based awards offset by$1.3 million of net proceeds from the exercise of options to purchase common stock.
Future Funding Requirements
As ofSeptember 30, 2021 , we had$428.8 million in cash, cash equivalents, restricted cash and investment debt securities. We currently expect to continue to incur significant operating expenses in the fiscal year endingDecember 31, 2021 . These expenses are planned to support, among other initiatives, the continued commercialization of Ocaliva for PBC inthe United States and our other markets, our continued clinical development of OCA for PBC and NASH and our other earlier stage research and development programs. Although we believe that our existing capital resources, together with our net sales of Ocaliva for PBC, will be sufficient to fund our anticipated operating requirements for the next twelve months following the filing of this report, we may need to raise additional capital to fund our operating requirements beyond that period. While we have retired approximately 75% of our 2023 Convertible Notes, we still have$113.7 million of them scheduled to mature onJuly 1, 2023 , and$615.3 million of convertible notes scheduled to mature in 2026, all of which will need to be paid off or refinanced, if not converted. Furthermore, in light of our receipt of the CRL from the FDA inJune 2020 with respect to our NDA for OCA for liver fibrosis due to NASH and the numerous risks and uncertainties associated with pharmaceutical product development and commercialization, any delays in, or unanticipated costs associated with, our development, regulatory or commercialization efforts could significantly increase the amount of capital required by us to fund our operating requirements. Accordingly, we may seek to access the public or private capital markets whenever conditions are favorable, to issue new securities, or to refinance or repurchase existing securities, even if we do not have an immediate need for additional capital at that time. Our forecasts regarding the period of time that our existing capital resources will be sufficient to meet our operating requirements and the timing of our future funding requirements, both near and long-term, will depend on a variety of factors, many of which are outside of our control. Such factors include, but are not limited to, those factors listed above under "Cautionary Note Regarding Forward-Looking Statements". We have no committed external sources of funding and additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us, we may not be able to make scheduled debt payments on a timely basis, or at all, and may be required to delay, limit, reduce or cease our operations.
Contractual Obligations
Aside from the convertible notes transactions described above, there have been
no material changes to our contractual obligations outside the ordinary course
of business from those disclosed under the heading "Management's Discussion
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and Analysis of Financial Condition and Results of Operations-Contractual
Obligations" in our Annual Report on Form 10-K for the year ended
Our updated contractual obligations for principal and interest payments due on our Convertible Notes as ofSeptember 30, 2021 , are as follows:$23.5 million due in less than 1 year,$156.0 million due in one to three years, and$643.2 million due in three to five years.
Off-Balance Sheet Arrangements
As of
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level ofU.S. interest rates and there have been no material changes to our market risk from that disclosed under the caption "Quantitative and Qualitative Disclosures about Market Risk" in our Annual Report.
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