What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-02-17 compared with 2020-02-13 · 34 added, 29 removed, 83 unchanged (43% of the section changed)

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The following performance graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Act, except to the extent that we specifically incorporate it by reference into such filing.

On April 1, 2019, we completed the separation, or the Separation, of our soluble guanylate cyclase business, and certain other assets and liabilities, into a separate, independent publicly traded company, Cyclerion Therapeutics, Inc., or Cyclerion.

On April 1, 2019, we completed the separation, or the Separation, of our soluble guanylate cyclase, or sGC, business, and certain other assets and liabilities, into a separate, independent publicly traded company, Cyclerion Therapeutics, Inc., or Cyclerion.

The Separation was effected by means of a distribution of all the outstanding shares of common stock, with no par value, of Cyclerion, through a dividend of Cyclerion’s common stock to our stockholders of record as of the close of business on March 19, 2019.

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Cost and expenses:

Cost of revenues (2)

Cost of revenues, excluding amortization of acquired intangible assets (2)

Write-down of commercial supply and inventory to net realizable value and (settlement) loss on non-cancellable purchase commitments (3)

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Other expense, net

Net income (loss) from continuing operations

Net loss from discontinued operations

Net income (loss)

Net income (loss) per share from continuing operations—basic and diluted

Net loss per share from discontinued operations—basic and diluted

Net income (loss) per share—basic and diluted

Weighted average number of common shares—basic and diluted:

(1) Collaborative arrangements revenue for the year ended December 31, 2019 included approximately $325.4 million related to our share of sales of LINZESS ® (linaclotide) in the U.S., approximately $32.4 million in non-contingent payments from AstraZeneca AB (together with its affiliates), and $10.0 million related to the upfront fee from Astellas Pharma Inc .

Income (loss) from continuing operations

Income tax expense

Income from continuing operations

Loss from discontinued operations, net of income taxes

Net income (loss) and comprehensive income (loss)

Income per share from continuing operations, net of income taxes—basic

Income per share from continuing operations, net of income taxes— diluted

Loss per share from discontinued operations, net of income taxes—basic and diluted

Net income (loss) per share—basic

Net income (loss) per share—diluted

Weighted average shares used in computing net income per share—basic:

Weighted average shares used in computing net income per share— diluted:

(1) Collaborative arrangements revenue for the year ended December 31, 2020 included approximately $368.6 million related to our share of sales of LINZESS ® (linaclotide) in the U.S.

Collaborative arrangements revenue for the year ended December 31, 2019 included approximately $325.4 million related to our share of sales of LINZESS in the U.S., approximately $32.4 million in non-contingent payments from

AstraZeneca AB (together with its affiliates), or AstraZeneca, and $10.0 million related to the upfront fee from Astellas Pharma Inc.

Collaborative arrangements revenue for the year ended December 31, 2018 included approximately $264.2 million related to our share of sales of LINZESS in the U.S., which included an approximately $29.9 million adjustment related to a change in estimate of gross-to-net sales reserves and allowances, primarily associated with governmental and contractual rebates.

Collaborative arrangements revenue for the year ended December 31, 2017 included approximately $256.2 million related to our share of sales of LINZESS in the U.S.

Collaborative arrangements revenue for the year ended December 31, 2016 included approximately $217.7 million related to our share of sales of LINZESS in the U.S.

and $30.0 million related to the receipt of milestone payments.

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Cost of revenues for the year ended December 31, 2019 included approximately $23.9 million related to sales of linaclotide API and finished drug product.

Cost of revenues for the year ended December 31, 2017 included approximately $2.6 million related to ZURAMPIC and DUZALLO product sales.

(3) During the year ended December 31, 2019, we recorded settlements of approximately $3.5 million as write-down of commercial supply to net realizable value and (settlement) loss on non-cancelable purchase commitments related to the reversal of certain previously accrued non-cancelable purchase commitments.

During the year ended December 31, 2018, we wrote down approximately $0.2 million of ZURAMPIC ® commercial supply as a result of revised demand forecasts due to the exit of the exclusive license to develop, manufacture, and commercialize in the U.S.

Cost of revenues for the year ended December 31, 2018 included approximately $31.6 million related to sales of linaclotide API and finished drug product.

Cost of revenues for the year ended December 31, 2017 included approximately $16.5 million related to sales of linaclotide API and finished drug product.

(3) During the year ended December 31, 2019, we recorded settlements of approximately $3.5 million related to the reversal of certain previously accrued non-cancelable purchase commitments.

During the year ended December 31, 2018, we wrote down approximately $0.2 million of ZURAMPIC ® commercial supply as a result of revised demand forecasts due to the termination of our exclusive license to develop, manufacture, and commercialize in the U.S.

products containing lesinurad as an active ingredient, or the Lesinurad License, including ZURAMPIC and DUZALLO ® .

During the years ended December 31, 2017 and 2016, we wrote down approximately $0.3 million and approximately $0.4 million, respectively, of prepaid ZURAMPIC commercial supply primarily as a result of revised demand forecasts.

During the year ended December 31, 2015, we recorded expenses of approximately $17.6 million for the write-down of inventory and an accrual for excess non-cancelable inventory purchase commitments related to linaclotide API.

These charges are more fully described in Note 8, Inventory , to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

(4) Amortization of acquired intangible assets was based on the economic consumption of intangible assets.

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As a result, a gain on fair value remeasurement of contingent consideration of approximately $31.0 million was recorded during the year ended December 31, 2018.

(5) During the year ended December 31, 2019, we recorded a gain on lease modification of approximately $3.2 million related to the modification of our 301 Binney Street lease in April 2019.

(6) During the year ended December 31, 2019, we incurred approximately $3.6 million in restructuring expenses, primarily due to costs associated with the February 2019 workforce reduction.

During the year ended December 31, 2018, we incurred approximately $14.7 million in restructuring expenses, primarily due to costs associated with the workforce reductions in 2018 as a result of our evaluation of the optimal mix of investments for the lesinurad franchise, our subsequent decision to terminate the Lesinurad License and the associated contract termination costs, as well as our intention to separate into two independent publicly traded companies.

(7) Gain (loss) on derivatives consists of the change in fair value of our Convertible Note Hedges and Note Hedge Warrants, which are recorded as derivative assets and liabilities.

The Convertible Note Hedges and the Note Hedge Warrants are recorded at fair value at each reporting period and changes in fair value are recorded in our

consolidated statements of operations.

In connection with the partial repurchase of our 2.25% Convertible Senior Notes due 2022, or the 2022 Convertible Notes, we also terminated the respective portion of our existing Convertible Note Hedges and Note Hedge Warrants.

The Convertible Note Hedges and Note Hedge Warrants are more fully described in Note 7, Fair Value of Financial Instruments , and Note 12, Notes Payable , to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

(8) For the year ended December 31, 2019, we recorded a loss on extinguishment of debt of approximately $31.0 million due to the write-off of unamortized debt issuance costs and debt discount related to the partial repurchase of the 2022 Convertible Notes in August 2019 and the prepayment premium and write-off of the remaining unamortized debt issuance costs and debt discount on the 2026 Notes as part of the redemption of all of the outstanding principal amount of the 8.375% Notes due 2026, or the 2026 Notes, in September 2019.

For the year ended December 31, 2017, we recorded a loss on extinguishment of debt of approximately $2.0 million due to the write-off of remaining unamortized debt issuance costs on the 11% PhaRMA Notes due 2024, or the PhaRMA Notes, as part of the redemption in January 2017.

(5) During the year ended December 31, 2019, we recorded a gain on lease modification of approximately $3.2 million related to the modification of our former headquarters lease.

(6) During the year ended December 31, 2020, we incurred approximately $15.4 million in restructuring expenses, primarily due to severance, benefits, and related costs associated with the September 2020 workforce reduction.

During the year ended December 31, 2019, we incurred approximately $3.6 million in restructuring expenses, primarily due to severance, benefits, and related costs associated with the February 2019 workforce reduction.

During the year ended December 31, 2018, we incurred approximately $14.7 million in restructuring expenses, primarily due to severance, benefits, and related costs associated with the June 2018 and August 2018 workforce reductions.

(7) In June 2015, we issued 2.25% Convertible Senior Notes due June 15, 2022, or the 2022 Convertible 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 period and changes in fair value are recorded in our consolidated statements of operations.

(8) For the year ended December 31, 2019, we recorded a loss on extinguishment of debt of approximately $31.0 million due to the write-off of unamortized debt issuance costs and debt discount related to the partial repurchase of the 2022 Convertible Notes in August 2019 and the prepayment premium and write-off of the remaining unamortized debt issuance costs and debt discount on the 8.375% Notes due 2026 Notes, or the 2026 Notes, as part of the redemption of all of the outstanding principal amount of the 2026 Notes in September 2019.

(9) For the year ended December 31, 2019, we recorded other income of approximately $0.5 million related to a transition services agreement with Cyclerion Therapeutics, Inc., or Cyclerion, in connection with the Separation.

Year Ended December 31,

As of Year Ended December 31,

(in thousands)

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Right-of-use assets (2)

Deferred revenue, including current portion

Current liabilities of discontinued operations (1)

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Total liabilities

Total stockholders’ (deficit) equity

Total stockholders’ equity (deficit)

(1) During the year ended December 31, 2019, we completed the Separation.

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(2) During the year ended December 31, 2019, we implemented Accounting Standards Codification Topic 842, Leases , or ASC 842.

As a result, we recorded right-of-use assets and associated lease liabilities for operating leases on our consolidated balance sheet as of December 31, 2019.

As a result, we recorded right-of-use assets and associated lease liabilities for operating leases on our consolidated balance sheet.

(3) In August 2019, we issued $200.0 million in aggregate principal amount of the 0.75% Convertible Senior Notes due 2024, or the 2024 Convertible Notes, and $200.0 million in aggregate principal amount of the 1.50% Convertible Senior Notes due 2026, or the 2026 Convertible Notes.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity