IRONWOOD PHARMACEUTICALS, INC. Forward-Looking Information
The following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the notes to those financial statements appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , which was filed with theSecurities and Exchange Commission onFebruary 18, 2022 , or the 2021 Annual Report on Form 10-K. This discussion contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, such as those set forth under "Note Regarding Forward-Looking Statements" in this Quarterly Report on Form 10-Q and under "Part I, Item 1A-Risk Factors" in our 2021 Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements.
Overview
We are a gastrointestinal, or GI, healthcare company dedicated to advancing the treatment of GI diseases and redefining the standard of care for GI patients. We are focused on the development and commercialization of innovative GI product opportunities in areas of significant unmet need, leveraging our demonstrated expertise and capabilities in GI diseases. LINZESS® (linaclotide), our commercial product, is the first product approved by theUnited States Food and Drug Administration , orU.S. FDA, in a class of GI medicines called guanylate cyclase type C agonists, or GC-C agonists, and is indicated for adult men and women suffering from irritable bowel syndrome with constipation, or IBS-C, or chronic idiopathic constipation, or CIC. LINZESS is available to adult men and women suffering from IBS-C or CIC inthe United States , or theU.S. , andMexico and to adult men and women suffering from IBS-C inJapan andChina . Linaclotide is available under the trademarked name CONSTELLA® to adult men and women suffering from IBS-C or CIC inCanada , and to adult men and women suffering from IBS-C in certain European countries. We have strategic partnerships with leading pharmaceutical companies to support the development and commercialization of linaclotide throughout the world, including with AbbVie Inc. (together with its affiliates), or AbbVie, in theU.S. and all countries worldwide other thanChina (includingHong Kong andMacau ) andJapan ,AstraZeneca AB (together with its affiliates), or AstraZeneca, inChina (includingHong Kong andMacau ) and Astellas Pharma Inc., or Astellas, inJapan . 27 Table of Contents
We also aim to leverage our leading capabilities in GI to bring additional treatment options to GI patients; for example, inNovember 2021 , we entered into a collaboration and license option agreement, or the COUR Collaboration Agreement, withCOUR Pharmaceutical Development Company, Inc. , or COUR, which grants us an option to acquire an exclusive license to research, develop, manufacture and commercialize, in theU.S. , products containing CNP-104, a tolerizing immune modifying nanoparticle, for the treatment of primary biliary cholangitis, or PBC. We are also advancing IW-3300, a GC-C agonist, for the potential treatment of visceral pain conditions, such as interstitial cystitis/bladder pain syndrome, or IC/BPS, and endometriosis. To date, we have dedicated a majority of our activities to the research, development and commercialization of linaclotide, as well as to the research and development of our other product candidates. Prior to the year endedDecember 31, 2019 , we incurred net losses in each year since our inception in 1998. We have generated net income in each year thereafter. For the three and nine months endedSeptember 30, 2022 , we recorded net income of$50.3 million and$126.2 million , respectively. For the three and nine months endedSeptember 30, 2021 , we recorded net income of$55.8 million and$487.1 million , respectively. As ofSeptember 30, 2022 , we had an accumulated deficit of$745.2 million . We are unable to predict the extent of any future losses or guarantee that our company will be able to maintain positive cash flows.
We were incorporated in
Financial Operations Overview
Revenues. Our revenues are generated primarily through our collaborative arrangements and license agreements related to research and development and commercialization of linaclotide.
The majority of our revenues are generated from the sales of LINZESS in theU.S. We record our share of the net profits and losses from the sales of LINZESS in theU.S. less commercial expenses on a net basis and present the settlement payments to and from AbbVie as collaboration expense or collaborative arrangements revenue, as applicable. Net profits or losses consist of net sales to third-party customers and sublicense income in theU.S. less the cost of goods sold as well as selling, general and administrative expenses. Although we expect net sales to increase over time, the settlement payments between AbbVie and us, resulting in collaborative arrangements revenue or collaboration expense, are subject to fluctuation based on the ratio of selling, general and administrative expenses incurred by each party. In addition, our collaborative arrangements revenue may fluctuate as a result of the timing and amount of license fees and clinical and commercial milestones received and recognized under our current and future strategic partnerships as well as timing and amount of royalties from the sales of linaclotide in the European, Canadian, Mexican, Japanese or Chinese markets or any other markets where linaclotide receives approval and is commercialized. Research and Development Expense. The core of our research and development strategy is to leverage our demonstrated expertise and capabilities in GI diseases to bring multiple medicines to patients. Research and development expense consists of expenses incurred in connection with the research into and development of products and product candidates. These expenses consist primarily of compensation, benefits and other employee-related expenses, research and development related facility costs, third-party contract costs relating to nonclinical study and clinical trial activities, development of manufacturing processes, regulatory registration of third-party manufacturing facilities, and licensing fees for our product candidates. Research and development expenses include amounts owed to AbbVie in connection with our collaboration agreement. Linaclotide. Our commercial product, LINZESS, is commercially available in theU.S. for the treatment of IBS-C or CIC in adults. Linaclotide is also available to adult men and women suffering from IBS-C or CIC in certain countries of the world, includingChina ,Japan , and in a number of E.U. countries. We and AbbVie continue to explore ways to enhance the clinical profile of LINZESS by studying linaclotide in additional indications, populations and formulations to assess its potential to treat various conditions. InSeptember 2020 , based on the Phase IIIb data of linaclotide 290 mcg on the overall abdominal symptoms of bloating pain and discomfort in adult patients with IBS-C, theU.S. FDA approved our Supplemental New Drug Application to include a more comprehensive description of the effects of LINZESS in its approved label. 28
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In connection with theU.S. FDA approval of LINZESS, we were required to conduct certain nonclinical and clinical studies including those aimed at further understanding the safety profile of linaclotide. We and AbbVie completed additional studies and determined that: (a) orally administered linaclotide was not detected in breast milk, (b) there is little or no evidence of any potential for antibodies to be developed to linaclotide, and (c) there were no signs or symptoms of an immunogenic response to linaclotide. The results observed do not alter the known safety profile for linaclotide based on the clinical studies and post-marketing experience to-date. In addition, we and AbbVie have established a nonclinical and clinical post-marketing plan with theU.S. FDA to understand the safety and efficacy of LINZESS in pediatric patients. InAugust 2021 , theU.S. FDA approved a revised label for LINZESS based on clinical safety data that had been generated thus far in pediatric studies. The updated label modified the boxed warning for risk of serious dehydration and contraindication against use in children to those less than two years of age. The boxed warning and contraindication previously applied to all children less than 18 years of age and less than 6 years of age, respectively. InSeptember 2022 , we announced positive topline data from a Phase III clinical trial evaluating linaclotide 72 mcg in pediatric patients aged 6-17 with functional constipation. The trial met its primary and secondary endpoints, demonstrating that linaclotide 72 mcg improved frequency of spontaneous bowel movements and stool consistency. Linaclotide was generally well-tolerated, and the safety profile is consistent with previously reported studies with linaclotide in functional constipation and irritable bowel syndrome in pediatric patients. We and AbbVie are planning to file a Supplemental New Drug Application by the end of 2022. There are currently no FDA approved prescription pediatric therapies for functional constipation. The safety and effectiveness of LINZESS in patients less than 18 years of age have not been established. Clinical pediatric programs in IBS-C and functional constipation are ongoing. IW-3718. We were developing IW-3718, a gastric retentive formulation of a bile acid sequestrant, for the potential treatment of refractory gastroesophageal reflux disease, or refractory GERD. InSeptember 2020 , we announced that one of our two identical Phase III trials evaluating IW-3718 in refractory GERD did not meet the pre-specified criteria associated with a planned early efficacy assessment and, based on these findings, we discontinued development of IW-3718. IW-3300. We are developing IW-3300, a GC-C agonist, for the potential treatment of visceral pain conditions, including interstitial cystitis/bladder pain syndrome and endometriosis. IC/BPS affects an estimated 4 to 12 million people in theU.S. , according to theInterstitial Cystitis Association . An estimated 4 million reproductive-age women in theU.S. have been diagnosed with endometriosis, according to a study published in Gynecologic and Obstetric Investigation. Both diseases have a limited number of treatment options available. We successfully completed Phase I studies to evaluate the safety and tolerability of IW-3300 in healthy volunteers and are continuing study start up activities and plan to finalize the Phase II proof of concept study design in IC/BPS by the end of 2022, with patient enrollment expected in early 2023. CNP-104. Through the COUR Collaboration Agreement, we and COUR are developing CNP-104 for the treatment of PBC, a rare autoimmune disease targeting the liver that affects an estimated 133,000 people in theU.S. , according to a study published in Gastroenterology in 2000. If successful, CNP-104 has the potential to be the first approved PBC disease modifying therapy. InDecember 2021 , COUR receivedU.S. Fast Track Designation. COUR has initiated a clinical study for CNP-104 to evaluate the safety, tolerability, pharmacodynamic effects and efficacy of CNP-104 in PBC patients, with a data readout estimated in the second half of 2023. Early research and development. Our early research and development efforts have been focused on supporting our development stage GI programs, including exploring strategic options for further development of certain of our internal programs, as well as evaluating external development-stage GI programs. The following table sets forth our research and development expenses related to our product pipeline for the three and nine months endedSeptember 30, 2022 and 2021, respectively. These expenses relate primarily to compensation, benefits and other employee-related expenses and external costs associated with nonclinical studies and clinical trial costs for our product candidates. We allocate costs related to facilities, depreciation, share-based compensation, research and development support services and certain other costs directly
to
programs.
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Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(in thousands) (in thousands)
Linaclotide(1) $ 4,563 $ 4,922 $ 13,212 $ 15,471
IW-3718 82 339 426 7,643
IW-3300 4,181 3,053 12,334 8,158
CNP-104 273 - 589 -
Early research and development 2,446 2,593
7,258 7,282
Total research and development expenses
(1) Includes linaclotide in all indications, populations and formulations.
The lengthy process of securing regulatory approvals for new drugs requires the expenditure of substantial resources. Any failure by us to obtain, or any delay in obtaining, regulatory approvals would materially adversely affect our product development efforts and our business overall. Given the inherent uncertainties that come with the development of pharmaceutical products, we cannot estimate with any degree of certainty how our programs will evolve, and therefore the amount of time or money that would be required to obtain regulatory approval to market them. As a result of these uncertainties surrounding the timing and outcome of any approvals, we are currently unable to estimate precisely when, if ever, linaclotide's utility will be expanded within its currently approved indications; if or when linaclotide will be developed outside of its current markets, indications, populations or formulations; or when, if ever, any of our other product candidates will generate revenues and cash flows. We invest carefully in our pipeline, and the commitment of funding for each subsequent stage of our development programs is dependent upon the receipt of clear, supportive data. In addition, we intend to access externally discovered drug candidates that fit within our core strategy. In evaluating these potential assets, we apply the same investment criteria as those used for investments in internally discovered assets.
The successful development of our product candidates is highly uncertain and subject to a number of risks including, but not limited to:
? The duration of clinical trials may vary substantially according to the type,
complexity and novelty of the product candidate;
The
and varying requirements on the introduction of therapeutic pharmaceutical
? products, typically requiring lengthy and detailed laboratory and clinical
testing procedures, sampling activities and other costly and time-consuming
procedures;
Data obtained from nonclinical and clinical activities at any step in the
testing process may be adverse and lead to discontinuation or redirection of
? development activity. Data obtained from these activities also are susceptible
to varying interpretations, which could delay, limit or prevent regulatory
approval;
The duration and cost of early research and development, including nonclinical
? studies and clinical trials, may vary significantly over the life of a product
candidate and are difficult to predict;
The costs, timing and outcome of regulatory review of a product candidate may
? not be favorable, and, even if approved, a product may face post-approval
development and regulatory requirements;
There may be substantial costs, delays and difficulties in successfully
? integrating externally developed product candidates into our business
operations; and
? The emergence of competing technologies and products and other adverse market
developments may negatively impact us.
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As a result of the factors discussed above, as well as the factors discussed
under "Note Regarding Forward-Looking Statements" in this Quarterly Report on
Form 10-Q and under "Part I, Item 1A - Risk Factors" in our 2021 Annual Report
on Form 10-K, we are unable to determine the duration and costs to complete
current or future nonclinical and clinical stages of our product candidates or
when, or to what extent, we will generate revenues from the commercialization
and sale of our product candidates. Development timelines, probability of
success and development costs vary widely. We anticipate that we will make
determinations as to which additional programs to pursue and how much funding to
direct to each program on an ongoing basis in response to the data of each
product candidate, the competitive landscape and ongoing assessments of such
product candidate's commercial potential.
We expect to invest in our development programs for the foreseeable future. We
will continue to invest in linaclotide, including the investigation of ways to
enhance the clinical profile within its currently approved indications, and the
exploration of its potential utility in other indications, populations and
formulations. We will continue to invest in our GI-focused product candidates as
we advance them through pre-clinical and clinical trials, in addition to funding
research and development activities under our external collaboration and license
agreements.
Selling, General and Administrative Expense. Selling, general and administrative
expense consists primarily of compensation, benefits and other employee-related
expenses for personnel in our administrative, finance, legal, information
technology, business development, commercial, sales, marketing, communications
and human resource functions. Other costs include legal costs of pursuing patent
protection of our intellectual property, general and administrative related
facility costs, insurance costs and professional fees for accounting, tax,
consulting, legal and other services. As we continue to invest in the
commercialization of LINZESS, we expect our selling, general and administrative
expenses will be substantial for the foreseeable future.
We include AbbVie's collaboration-related commercial costs, expenses, and other
discounts in the calculation of the net profits and net losses from the sale of
LINZESS in the U.S. and present the net payment to or from AbbVie as
collaboration expense or collaborative arrangements revenue, respectively.
Restructuring Expenses. Restructuring expenses pertain to a workforce reduction
and restructuring initiative and are more fully described in Note 17, Workforce
Reductions and Restructuring, to our consolidated financial statements in our
2021 Annual Report on Form 10-K.
Interest Expense. Interest expense consists primarily of cash and non-cash
interest costs related to our convertible senior notes. Prior to the adoption of
ASU 2020-06 on January 1, 2022 , non-cash interest expense consisted of
amortization of the debt discount and debt issuance costs. Following the
adoption of ASU 2020-06 on January 1, 2022 , non-cash interest expense consists
solely of amortization of the debt issuance costs. The adoption of ASU 2020-06
is more fully described in Note 2, Summary of Significant Accounting Policies,
to our condensed consolidated financial statements appearing elsewhere in this
Quarterly Report on Form 10-Q.
Interest and Investment Income. Interest and investment income consists of interest earned on our cash and cash equivalents, as well as significant financing components of payments due from collaboration partners.
Gain (Loss) on Derivatives. InJune 2015 , we issued 2.25% Convertible Senior Notes dueJune 15, 2022 , or the 2022 Convertible Notes, and inAugust 2019 , we issued 0.75% Convertible Senior Notes due 2024, or the 2024 Convertible Notes, and 1.50% Convertible Senior Notes due 2026, or the 2026 Convertible Notes (together with the 2022 Convertible Notes and the 2024 Convertible Notes, the Convertible Senior Notes). In connection with the issuance of our 2022 Convertible Notes, we entered into convertible note hedge transactions, or the Convertible Note Hedges, and separate note hedge warrant transactions, or the Note Hedge Warrants, with certain financial institutions. Gain (loss) on derivatives consists of the change in fair value of the Convertible Note Hedges and Note Hedge Warrants, which are recorded at fair value at each reporting date and changes in fair value are recorded in our condensed consolidated statements of income. The Convertible Note Hedges and Note Hedge Warrants are more fully described in Note 8, Notes Payable, to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. Income Taxes. We prepare our income tax provision based on our interpretation of the income tax accounting rules and each jurisdiction's enacted tax laws and regulations and record our income tax provision by applying our estimated annual effective tax rate to year-to-date pre-tax income, plus adjustments for significant unusual or infrequently occurring items. 31
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Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements prepared in accordance withU.S. generally accepted accounting principles. The preparation of these financial statements requires us to make certain estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the condensed consolidated financial statements, and the amounts of revenues and expenses during the reported periods. We base our estimates on our historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from our estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known.
During the three and nine months ended
Results of Operations
The following discussion summarizes the key factors our management believes are
necessary for an understanding of our condensed consolidated financial
statements.
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(in thousands) (in thousands)
Revenues:Collaborative arrangements revenue$ 108,637 $ 103,747 $ 303,397 $ 295,798 Sale of active pharmaceutical ingredient - -
- 825
Total revenues 108,637 103,747 303,397 296,623
Operating expenses:
Research and development 11,545 10,907 33,819 38,554Selling, general and administrative 28,619 27,742
87,604 82,446
Restructuring expenses - (73) - (44)
Total operating expenses 40,164 38,576 121,423 120,956
Income from operations 68,473 65,171 181,974 175,667
Other (expense) income:
Interest expense (1,524) (7,841) (6,072) (23,199)Interest and investment income 2,807 178
4,055 546
Gain on derivatives 151 2,164 200 1,388
Other expense, net 1,434 (5,499) (1,817) (21,265)
Income before income taxes 69,907 59,672 180,157 154,402
Income tax (expense) benefit (19,590) (3,827) (53,959) 332,672
Net income $ 50,317 $ 55,845 $ 126,198 $ 487,074
Three and nine months ended September 30, 2022 compared to three and nine months
ended September 30, 2021
Revenues
Three Months Ended Nine Months Ended
September 30, Change September 30, Change
2022 2021 $ 2022 2021 $
(in thousands) (in thousands)
Revenues:
Collaborative arrangements revenue $ 108,637 $ 103,747 $ 4,890 $ 303,397 $ 295,798 $ 7,599
Sale of active pharmaceutical ingredient - - - - 825 (825) Total revenues$ 108,637 $ 103,747 $ 4,890 $ 303,397 $ 296,623 $ 6,774 Collaborative Arrangements Revenue. The increase in collaborative arrangements revenue of$4.9 million for the three months endedSeptember 30, 2022 compared to the three months endedSeptember 30, 2021 was primarily related to a$4.8 million increase in our share of net profits from the sale of LINZESS in theU.S. , which was driven by increased prescription demand, partially offset by decreased net price. 32 Table of Contents
The increase in collaborative arrangements revenue of$7.6 million for the nine months endedSeptember 30, 2022 compared to the nine months endedSeptember 30, 2021 was primarily related to a$7.3 million increase in our share of net profits from the sale of LINZESS in theU.S. , which was driven by increased prescription demand, partially offset by decreased net price. Sale of Active Pharmaceutical Ingredient. The decrease in sale of active pharmaceutical ingredient of$0.8 million for the nine months endedSeptember 30, 2022 compared to the nine months endedSeptember 30, 2021 was due to certain non-recurring, insignificant sales during the nine months endedSeptember 30, 2021 . Operating Expenses Three Months Ended Nine Months Ended September 30, Change September 30, Change 2022 2021 $ 2022 2021 $ (in thousands) (in thousands) Operating expenses: Research and development$ 11,545 $ 10,907 $ 638 $ 33,819 $ 38,554 $ (4,735) Selling, general and administrative 28,619 27,742 877 87,604 82,446 5,158 Restructuring expenses - (73) 73 - (44) 44 Total operating expenses$ 40,164 $ 38,576 $
1,588
Research and Development Expense. The increase in research and development
expense of
The decrease in research and development expense of$4.7 million for the nine months endedSeptember 30, 2022 compared to the nine months endedSeptember 30, 2021 was primarily related to a decrease of$5.3 million in external development costs related to IW-3718 and a decrease of$2.3 million in linaclotide costs, partially offset by an increase of$2.8 million in external development costs related to IW-3300. Selling, General and Administrative Expense. Selling, general and administrative expenses increased by$0.9 million for the three months endedSeptember 30, 2022 compared to the three months endedSeptember 30, 2021 , primarily due to an increase in sales and marketing activities. Selling, general and administrative expenses increased by$5.2 million increase for the nine months endedSeptember 30, 2022 compared to the nine months endedSeptember 30, 2021 primarily due to a$2.7 million increase in sales and marketing activities and a$2.5 million increase in compensation, benefits, and other employee-related expenses. Restructuring Expenses. Restructuring expenses for each of the three and nine months endedSeptember 30, 2021 related to costs associated with the workforce reduction resulting from the discontinuation of IW-3718. Other (Expense) Income, Net Three Months Ended Nine Months Ended September 30, Change September 30, Change 2022 2021 $ 2022 2021 $ (in thousands) (in thousands) Other (expense) income: Interest expense$ (1,524) $ (7,841) $ 6,317 $ (6,072) $ (23,199) $ 17,127 Interest and investment income 2,807 178 2,629 4,055 546 3,509 Gain on derivatives 151 2,164 (2,013) 200 1,388 (1,188) Total other (expense) income, net$ 1,434 $ (5,499) $
6,933
Interest Expense. Interest expense decreased by$6.3 million during the three months endedSeptember 30, 2022 compared to the three months endedSeptember 30, 2021 due to a$5.6 million decrease in non-cash interest expense associated with the Senior Convertible Notes following the adoption of ASU 2020-06 onJanuary 1, 2022 and a$0.7 million decrease in coupon interest expense associated with the 2022 Convertible Notes, which were fully repaid upon maturity inJune 2022 . 33
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Interest expense decreased by$17.1 million during the nine months endedSeptember 30, 2022 compared to the nine months endedSeptember 30, 2021 due to a$16.3 million decrease in non-cash interest expense associated with the Senior Convertible Notes following the adoption of ASU 2020-06 onJanuary 1, 2022 and a$0.8 million decrease in coupon interest expense associated with the 2022 Convertible Notes, which were fully repaid upon maturity inJune 2022 .
Interest and Investment Income. Interest and investment income increased by
Interest and investment income increased by
Gain on Derivatives. For the three months endedSeptember 30, 2022 , we recorded a gain on derivatives of$0.2 million resulting from a$0.2 million decrease in the fair value of the Note Hedge Warrants. For the three months endedSeptember 30, 2021 , we recorded a gain on derivatives of$2.2 million resulting from$3.4 million decrease in the fair value of the Convertible Note Hedges and a$5.6 million decrease in the fair value of the Note Hedge Warrants. For the nine months endedSeptember 30, 2022 , we recorded a gain on derivatives of$0.2 million resulting from a$1.1 million decrease in the fair value of the Convertible Note Hedges, which terminated unexercised upon expiry duringJune 2022 , and a$1.3 million decrease in the fair value of the Note Hedge Warrants. For the nine months endedSeptember 30, 2021 , we recorded a gain on derivatives of$1.4 million resulting from a$5.2 million decrease in the fair value of the Convertible Note Hedges and a$6.6 million decrease in the fair value of the Note Hedge Warrants. Income Tax Expense. Income tax expense was recorded during the three and nine months endedSeptember 30, 2022 , as compared to income tax expense for the three months endedSeptember 30, 2021 and an income tax benefit for the nine months endedSeptember 30, 2021 , due to the release of the valuation allowance on the majority of net operating losses and other deferred tax assets during the second quarter of 2021. For the three and the nine months endedSeptember 30, 2022 , we recorded income tax expense of$19.6 million and$54.0 million , respectively. Due to our ability to utilize our net operating losses to offset federal taxable income and taxable income in most states, the majority of our tax provision will be a non-cash expense until our net operating losses have been fully utilized. For the three and nine months endedSeptember 30, 2021 , we recorded income tax expense of$3.8 million and income tax expense benefit$332.7 million , respectively, resulting in a non-cash credit to net income. The income tax benefit primarily pertains to the discrete income tax benefit of$335.2 million related to the release of the valuation allowance on the majority of our tax attributes and other deferred tax assets, partially offset by state income taxes of$1.3 million and$2.6 million during the three and nine months endedSeptember 30, 2021 , respectively, in certain states which have temporarily disallowed or only partially allow the use of net operating losses to offset taxable income.
In
Liquidity and Capital Resources
As ofSeptember 30, 2022 , we had$574.2 million of unrestricted cash and cash equivalents. Our cash equivalents include amounts held in money market funds, repurchase agreements, commercial paper, and corporate bonds. We invest cash in excess of immediate requirements in accordance with our investment policy, which limits the amounts we may invest in certain types of investments and requires all investments held by us to be at least A- rated, with a remaining final maturity when purchased of less than twenty-four months, so as to primarily achieve liquidity and capital preservation objectives. We anticipate our cash balance and our expected net cash inflows from operations to allow us to meet our near-term and long-term cash obligations, which are reflected in our condensed consolidated balance sheets. Our most significant fixed obligations are debt obligations and lease commitments, for which annual payments are disclosed in 34 Table of Contents
Note 8, Notes Payable, and Note 7, Leases, respectively, to our financial statements included elsewhere in this Quarterly Report on Form 10-Q.
We may from time to time seek to retire, redeem or repurchase all or part of our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions, by tender offer or otherwise. Such repurchases, redemptions or exchanges, if any, of our debt will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material. InJune 2022 , we repaid the$120.7 million remaining aggregate principal amount of the 2022 Convertible Notes upon maturity. InMay 2021 , our board of directors authorized a program to repurchase up to$150.0 million of our Class A Common Stock. The program was completed inMay 2022 and the repurchased shares were retired. Additional information regarding the repurchase program is disclosed in Note 10, Share Repurchase Plan, to our financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Sources of Liquidity
Until the year endedDecember 31, 2019 , we had incurred losses since our inception in 1998 and we had an accumulated deficit of$745.2 million as ofSeptember 30, 2022 . We have financed our operations to date primarily through both the private sale of our preferred stock and the public sale of our common stock, debt financings, and cash generated from our operations. As ofSeptember 30, 2022 , our debt is comprised of$400.0 million aggregate principal amount of convertible notes, due at various dates between 2024 and 2026. Refer to Note 8, Notes Payable, to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, for information related to our debt obligations.
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