IRONWOOD PHARMACEUTICALS INC 10-Q

Item 1. Financial Statements (unaudited) ​ ​ ​ Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 ​ 5 ​ Condensed Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2021 and 2020 ​ 6 ​ Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020 ​ 7 ​ Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 ​ 8 ​ Notes to Condensed Consolidated Financial Statements ​ 9 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 30 Item 3. Quantitative and Qualitative Disclosures About Market Risk ​ 40 Item 4. Controls and Procedures ​ 41 ​ ​ ​ ​ ​ ​ ​ ​ ​ PART II — OTHER INFORMATION ​ ​ Item 1A. Risk Factors ​ 41 Item 6. Exhibits ​ 71 ​ ​ ​ ​ ​ Signatures ​ 73 ​ ​ ​ ​ 4 Table of Contents PART I — FINANCIAL INFORMATION Item 1. Financial Statement s Ironwood Pharmaceuticals, Inc. Condensed Consolidated Balance Sheet s (In thousands, except share and per share amounts) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2021 2020 ASSETS ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 438,469 ​ $ 362,564 Accounts receivable, net ​ 87,152 ​ 122,351 Prepaid expenses and other current assets ​ 10,890 ​ 9,189 Restricted cash ​ ​ 1,735 ​ ​ 1,735 Total current assets ​ 538,246 ​ 495,839 Restricted cash, net of current portion ​ 485 ​ 485 Accounts receivable, net of current portion ​ ​ 23,563 ​ ​ 23,401 Property and equipment, net ​ 8,501 ​ 8,929 Operating lease right-of-use assets ​ ​ 16,279 ​ ​ 16,576 Convertible note hedges ​ ​ 11,346 ​ ​ 13,065 Other assets ​ ​ 924 ​ ​ 943 Total assets ​ $ 599,344 ​ $ 559,238 LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 842 ​ $ 661 Accrued research and development costs ​ 1,254 ​ 1,898 Accrued expenses and other current liabilities ​ 18,363 ​ 26,486 Current portion of operating lease liabilities ​ ​ 3,144 ​ ​ 3,128 Total current liabilities ​ 23,603 ​ 32,173 Note hedge warrants ​ ​ 7,979 ​ ​ 12,088 Convertible senior notes ​ ​ 436,078 ​ ​ 430,256 Operating lease obligations, net of current portion ​ ​ 19,862 ​ ​ 20,318 Other liabilities ​ 1,630 ​ 1,763 Commitments and contingencies ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.001 par value, 75,000,000 shares authorized, no shares issued and outstanding ​ — ​ — Class A Common Stock, $ 0.001 par value, 500,000,000 shares authorized and 161,931,012 shares issued and outstanding at March 31, 2021 and 500,000,000 shares authorized and 160,616,675 shares issued and outstanding at December 31, 2020 ​ 162 ​ 161 Additional paid-in capital ​ 1,536,160 ​ 1,528,535 Accumulated deficit ​ ( 1,426,130 ) ​ ( 1,466,056 ) Total stockholders’ equity ​ 110,192 ​ 62,640 Total liabilities and stockholders’ equity ​ $ 599,344 ​ $ 559,238 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 5 Table of Contents Ironwood Pharmaceuticals, Inc. Condensed Consolidated Statements of Income and Comprehensive Income (In thousands, except per share amounts) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2021 2020 Revenues: ​ ​ ​ ​ ​ ​ Collaborative arrangements revenue ​ $ 88,665 ​ $ 74,445 Sale of active pharmaceutical ingredient ​ ​ 180 ​ ​ 5,498 Total revenues ​ 88,845 ​ 79,943 Cost and expenses: ​ ​ ​ ​ ​ ​ Cost of revenues ​ ​ — ​ ​ 2,239 Research and development ​ ​ 15,484 ​ ​ 28,027 Selling, general and administrative ​ ​ 27,652 ​ ​ 36,450 Restructuring expenses ​ ​ 311 ​ ​ — Total cost and expenses ​ 43,447 ​ 66,716 Income from operations ​ 45,398 ​ 13,227 Other (expense) income: ​ ​ ​ ​ ​ ​ Interest expense ​ ​ ( 7,626 ) ​ ​ ( 7,220 ) Interest and investment income ​ ​ 196 ​ ​ 777 Gain (loss) on derivatives ​ ​ 2,390 ​ ​ ( 3,466 ) Other income ​ ​ — ​ ​ 27 Other expense, net ​ ( 5,040 ) ​ ( 9,882 ) Income before income taxes ​ ​ 40,358 ​ ​ 3,345 Income tax expense ​ ​ ( 432 ) ​ ​ — Net income and comprehensive income ​ $ 39,926 ​ $ 3,345 ​ ​ ​ ​ ​ ​ ​ Net income per share—basic ​ $ 0.25 ​ $ 0.02 Net income per share—diluted ​ $ 0.25 ​ $ 0.02 ​ ​ ​ ​ ​ ​ ​ Weighted average shares used in computing net income per share—basic: ​ ​ 160,967 ​ ​ 158,374 Weighted average shares used in computing net income per share—diluted: ​ 162,347 ​ 159,970 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 6 Table of Contents Ironwood Pharmaceuticals, Inc. Condensed Consolidated Statements of Stockholders’ Equity (In thousands, except share amounts) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Class A ​ Additional ​ ​ ​ ​ Total ​ ​ Common Stock ​ paid-in ​ Accumulated ​ Stockholders’ ​ ​ Shares Amount capital deficit equity Balance at December 31, 2020 160,616,675 ​ ​ 161 ​ ​ 1,528,535 ​ ​ ( 1,466,056 ) ​ ​ 62,640 Issuance of common stock related to share-based awards and employee stock purchase plan 1,314,337 ​ ​ 1 ​ ​ 2,229 ​ ​ — ​ ​ 2,230 Share-based compensation expense related to share-based awards and employee stock purchase plan — ​ ​ — ​ ​ 5,396 ​ ​ — ​ ​ 5,396 Net income — ​ ​ — ​ ​ — ​ ​ 39,926 ​ ​ 39,926 Balance at March 31, 2021 161,931,012 ​ $ 162 $ 1,536,160 ​ $ ( 1,426,130 ) ​ $ 110,192 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Class A ​ Additional ​ ​ ​ ​ Total ​ ​ Common Stock ​ paid-in ​ Accumulated ​ Stockholders’ ​ Shares Amount capital deficit deficit Balance at December 31, 2019 157,535,962 ​ $ 158 ​ $ 1,478,823 ​ $ ( 1,572,232 ) ​ $ ( 93,251 ) Issuance of common stock related to share-based awards and employee stock purchase plan 1,832,164 ​ ​ 1 11,984 ​ — ​ ​ 11,985 Share-based compensation expense related to share-based awards and employee stock purchase plan — ​ ​ — ​ ​ 6,364 ​ ​ — ​ ​ 6,364 Net income — ​ — ​ ​ — ​ ​ 3,345 ​ ​ 3,345 Balance at March 31, 2020 159,368,126 ​ $ 159 $ 1,497,171 ​ $ ( 1,568,887 ) ​ $ ( 71,557 ) ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ ​ 7 Table of Contents Ironwood Pharmaceuticals, Inc. Condensed Consolidated Statements of Cash Flow s (In thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2021 2020 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net income ​ $ 39,926 ​ $ 3,345 Adjustments to reconcile net income to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 410 ​ ​ 682 Loss on disposal of property and equipment ​ ​ 17 ​ ​ 16 Share-based compensation expense ​ 5,396 ​ ​ 6,364 Change in fair value of note hedge warrants ​ ​ ( 4,109 ) ​ ​ ( 12,053 ) Change in fair value of convertible note hedges ​ ​ 1,719 ​ ​ 15,519 Non-cash interest expense ​ 5,822 ​ ​ 5,416 Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable and related party accounts receivable, net ​ 35,037 ​ ​ 35,941 Prepaid expenses and other current assets ​ ( 1,681 ) ​ ​ 301 Operating lease right-of-use assets ​ ​ 297 ​ ​ 296 Other assets ​ 19 ​ ​ ( 51 ) Accounts payable, related party accounts payable and accrued expenses ​ ( 7,942 ) ​ ​ ( 11,768 ) Accrued research and development costs ​ ( 644 ) ​ ​ ( 670 ) Operating lease liabilities ​ ​ ( 440 ) ​ ​ 294 Other liabilities ​ ​ ( 133 ) ​ ​ ( 29 ) Net cash provided by operating activities ​ 73,694 ​ 43,603 Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Purchases of property and equipment ​ — ​ ​ ( 1,438 ) Net cash used in investing activities ​ — ​ ( 1,438 ) Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Proceeds from exercise of stock options and employee stock purchase plan ​ 2,211 ​ ​ 11,955 Net cash provided by financing activities ​ 2,211 ​ 11,955 Net increase in cash, cash equivalents and restricted cash ​ 75,905 ​ 54,120 Cash, cash equivalents and restricted cash, beginning of period ​ 364,784 ​ 179,244 Cash, cash equivalents and restricted cash, end of period ​ $ 440,689 ​ $ 233,364 ​ ​ ​ ​ ​ ​ ​ Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 438,469 ​ $ 231,143 Restricted cash ​ ​ 2,220 ​ ​ 2,221 Total cash, cash equivalents, and restricted cash ​ $ 440,689 ​ $ 233,364 ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ ​ 8 Table of Contents ​ ​ Ironwood Pharmaceuticals, Inc. Notes to Condensed Consolidated Financial Statement s (unaudited) ​ 1. Nature of Business ​ Ironwood Pharmaceuticals, Inc. (“Ironwood” or the “Company”) is a gastrointestinal (“GI”) healthcare company dedicated to advancing the treatment of GI diseases and redefining the standard of care for GI patients. The Company is focused on the development and commercialization of innovative GI product opportunities in areas of significant unmet need, leveraging its demonstrated expertise and capabilities in GI diseases. ​ LINZESS ® (linaclotide), the Company’s commercial product, is the first product approved by the United States Food and Drug Administration (the “U.S. FDA”) in a class of GI medicines called guanylate cyclase type C agonists and is indicated for adult men and women suffering from irritable bowel syndrome with constipation (“IBS-C”) or chronic idiopathic constipation (“CIC”). LINZESS is available to adult men and women suffering from IBS-C or CIC in the United States (the “U.S.”) and Mexico and to adult men and women suffering from IBS-C in Japan and China. Linaclotide is available under the trademarked name CONSTELLA ® to adult men and women suffering from IBS-C or CIC in Canada, and to adult men and women suffering from IBS-C in certain European countries. ​ The Company has strategic partnerships with leading pharmaceutical companies to support the development and commercialization of linaclotide throughout the world. The Company and its partner, AbbVie Inc. (together with its affiliates, “AbbVie”) (successor to Allergan plc), began commercializing LINZESS in the U.S. in December 2012. Under the Company’s collaboration for North America with AbbVie , total net sales of LINZESS in the U.S., as recorded by AbbVie , are reduced by commercial costs incurred by each party, and the resulting amount is shared equally between the Company and AbbVie . Additionally, development costs are shared equally between the Company and AbbVie. AbbVie also has an exclusive license from the Company to develop and commercialize linaclotide in all countries other than China (including Hong Kong and Macau), Japan and the countries and territories of North America (the “ AbbVie License Territory”). On a country-by-country and product-by-product basis in the AbbVie License Territory, AbbVie pays the Company a royalty as a percentage of net sales of products containing linaclotide as an active ingredient. In addition, AbbVie has exclusive rights to commercialize linaclotide in Canada as CONSTELLA and in Mexico as LINZESS. ​ Astellas Pharma Inc. (“Astellas”), the Company’s partner in Japan, has an exclusive license to develop and commercialize linaclotide in Japan. In March 2017, Astellas began commercializing LINZESS for the treatment of adults with IBS-C in Japan, and in September 2018, Astellas began commercializing LINZESS for the treatment of adults with chronic constipation in Japan. In August 2019, the Company amended and restated its license agreement with Astellas. Effective in 2020, the Company is no longer responsible for the supply of linaclotide active pharmaceutical ingredient (“API”) to Astellas (Note 4). ​ In October 2012, the Company and AstraZeneca AB (together with its affiliates) (“AstraZeneca”) entered into a collaboration agreement to co-develop and co-commercialize linaclotide in China (including Hong Kong and Macau) (the “AstraZeneca License Territory”). In September 2019, the Company amended and restated its existing collaboration agreement with AstraZeneca whereby AstraZeneca obtained the exclusive right to develop, manufacture, and commercialize products containing linaclotide in the AstraZeneca License Territory (Note 4). In November 2019, AstraZeneca began commercializing LINZESS for the treatment of adults with IBS-C in China. ​ The Company and AbbVie are exploring 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. In September 2020, based on the Phase IIIb data demonstrating efficacy and safety of LINZESS 290 mcg on the overall abdominal symptoms of bloating, pain and discomfort in adult patients with IBS-C, the U.S. FDA approved the Company’s supplemental New Drug Application to include a more comprehensive description of the effects of LINZESS in its approved label. In June 2020 and July 2020, the United States Patent and Trademark Office granted patents covering the formulation of the 72 mcg dose of LINZESS and methods of using the formulation, respectively. The patents are expected to expire in 2031. ​ 9 Table of Contents Additionally, the Company periodically enters into agreements to bolster its salesforce productivity. In August 2019, the Company entered into a disease education and promotional agreement with Alnylam Pharmaceuticals, Inc. (“Alnylam”) for Alnylam’s GIVLAARI ® (givosiran), an RNAi therapeutic targeting aminolevulinic acid synthase 1, for the treatment of acute hepatic porphyria (“AHP”). GIVLAARI was approved by the U.S. FDA in November 2019. Under the agreement, the Company performs disease awareness activities related to AHP and sales detailing activities of GIVLAARI. ​ These and other agreements are more fully described in Note 4, Collaboration, License, Promotion and Other Commercial Agreements , to these condensed consolidated financial statements. ​ On April 1, 2019, Ironwood completed the separation (the “Separation”) of its soluble guanylate cyclase business, and certain other assets and liabilities, into Cyclerion Therapeutics, Inc. (“Cyclerion”). The Separation was effected by means of a distribution of all of the outstanding shares of common stock, with no par value, of Cyclerion through a dividend of all outstanding shares of Cyclerion’s common stock, to Ironwood’s stockholders of record as of the close of business on March 19, 2019. ​ 2. Summary of Significant Accounting Policies ​ Basis of Presentation ​ The accompanying condensed consolidated financial statements and the related disclosures are unaudited and have been prepared in accordance with accounting principles generally accepted in the U.S. Additionally, certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission on February 17, 2021 (the “2020 Annual Report on Form 10-K”). ​ The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all normal recurring adjustments considered necessary for a fair statement of the Company’s financial position as of March 31, 2021, and the results of its operations for the three months ended March 31, 2021 and 2020, its statements of stockholders’ equity for the three months ended March 31, 2021 and 2020, and its cash flows for the three months ended March 31, 2021 and 2020. The results of operations for the three months ended March 31, 2021 and 2020 are not necessarily indicative of the results that may be expected for the full year or any other subsequent interim period. ​ Principles of Consolidation ​ The accompanying condensed consolidated financial statements include the accounts of Ironwood and its wholly-owned subsidiaries as of March 31, 2021, Ironwood Pharmaceuticals Securities Corporation and Ironwood Pharmaceuticals GmbH. All intercompany transactions and balances are eliminated in consolidation. ​ Use of Estimates ​ The preparation of condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles requires the Company’s management to make estimates and judgments that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the amounts of revenues and expenses during the reported periods. On an ongoing basis, the Company’s management evaluates its estimates, judgments and methodologies. Significant estimates and assumptions in the condensed consolidated financial statements include those related to revenue recognition; accounts receivable; useful lives of long-lived assets, impairment of long-lived assets, including goodwill; valuation procedures for right-of-use assets and operating lease liabilities; valuation procedures for the issuance and repurchase of convertible notes; balance sheet classification of convertible notes; fair value of derivatives; income taxes, including the valuation allowance for deferred tax assets; research and development expenses; contingencies and share-based compensation. The Company bases its estimates on 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 these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. 10 Table of Contents Reclassifications ​ Certain prior period amounts have been reclassified to conform to current period presentation. ​ Summary of Significant Accounting Policies ​ The Company’s significant accounting policies are described in Note 2, Summary of Significant Accounting Policies , in the 2020 Annual Report on Form 10-K. During the three months ended March 31, 2021, the Company did not adopt any additional significant accounting policies, except as outlined below. ​ New Accounting Pronouncements ​ From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Except as set forth below, the Company did not adopt any new accounting pronouncements during the three months ended March 31, 2021 that had a material effect on its condensed consolidated financial statements. ​ In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”) , which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective on a prospective basis for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company adopted ASU 2019-12 during the three months ended March 31, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’s financial position and results of operations. ​ In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The amendments in ASU 2020-06 simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Under ASU 2020-06, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. These changes will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was bifurcated under previously existing guidance. The new guidance also requires the if-converted method to be applied for all convertible instruments. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted. Upon adoption, entities may apply the new standard on a modified retrospective or full retrospective basis. The Company is currently evaluating the impact that the adoption of ASU 2020-06 may have on its financial position and results of operations. Other recent accounting pronouncements issued, but not yet effective, are not expected to be applicable to the Company or have a material effect on the condensed consolidated financial statements upon future adoption. ​ ​ ​ ​ ​ ​ 11 Table of Contents 3. Net Income Per Share ​ The following table sets forth the computation of basic and diluted net income per common share (in thousands, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2021 ​ 2020 Numerator: ​ ​ ​ ​ ​ ​ Net income ​ $ 39,926 ​ $ 3,345 Denominator: ​ ​ ​ ​ ​ ​ Weighted average number of common shares outstanding used in computing net income per share — basic ​ 160,967 ​ 158,374 Effect of dilutive securities: ​ ​ ​ ​ ​ ​ Stock options ​ ​ 268 ​ ​ 710 Time-based restricted stock units ​ ​ 957 ​ ​ 647 Performance-based restricted stock units ​ ​ 13 ​ ​ — Restricted stock ​ ​ 136 ​ ​ 134 Shares subject to issuance under Employee Stock Purchase Plan ​ ​ 6 ​ ​ 105 Dilutive potential common shares ​ ​ ​ ​ ​ ​ Weighted average number of common shares outstanding used in computing net income per share — diluted ​ ​ 162,347 ​ 159,970 Net income per share — basic ​ ​ 0.25 ​ ​ 0.02 Net income per share — diluted ​ $ 0.25 ​ $ 0.02 ​ ​ The outstanding securities have been excluded from the computation of diluted weighted average shares outstanding, as applicable, as their effect would be anti-dilutive (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2021 2020 Stock options ​ 10,566 15,647 Restricted stock awards 25 — Shares subject to repurchase ​ — ​ 182 Time-based restricted stock units ​ 407 ​ 4,945 Performance-based restricted stock units ​ 20 ​ 543 Shares subject to issuance under Employee Stock Purchase Plan ​ — ​ 105 Note Hedge Warrants ​ 8,318 ​ 8,318 2022 Convertible Notes ​ 8,318 ​ 8,318 2024 Convertible Notes ​ 14,934 ​ 14,934 2026 Convertible Notes ​ 14,934 ​ 14,934 Total 57,522 67,926 ​ ​ The potentially dilutive impact of the 2022 Convertible Notes, 2024 Convertible Notes and 2026 Convertible notes (together, the “Convertible Senior Notes”) (Note 8) is determined using the treasury stock method. Under this method, no numerator or denominator adjustments arise from the principal and interest components of the Convertible Senior Notes because the Company has the intent and ability to settle the Convertible Senior Notes’ principal and interest in cash. Instead, the Company is required to increase the diluted net income per share denominator by the variable number of shares that would be issued upon conversion if it settled the conversion spread obligation with shares. For diluted net income per share purposes, the conversion spread obligation is calculated based on whether the average market price of the Company’s Class A Common Stock during the reporting period is in excess of the conversion price of the Convertible Senior Notes. There was no calculated spread added to the denominator for three months ended March 31, 2021 or 2020. ​ ​ ​ ​ 12 Table of Contents 4. Collaboration, License, Promotion and Other Commercial Agreements ​ For the three months ended March 31, 2021, the Company had linaclotide collaboration agreements with AbbVie for North America and AstraZeneca for China (including Hong Kong and Macau), as well as linaclotide license agreements with Astellas for Japan and with AbbVie for the AbbVie License Territory. The Company also had an agreement with Alnylam to perform disease awareness activities for AHP and sales detailing activities for GIVLAARI. The following table provides amounts included in the Company’s consolidated statements of income as collaborative arrangements revenue and sale of API primarily attributable to transactions from these arrangements (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, Collaborative Arrangements Revenue ​ 2021 2020 Linaclotide Collaboration and License Agreements: ​ ​ ​ ​ ​ ​ AbbVie (North America) ​ $ 86,499 ​ $ 71,692 AbbVie (Europe and other) ​ ​ 600 ​ ​ 643 AstraZeneca (China, including Hong Kong and Macau) ​ ​ 210 ​ 332 Astellas (Japan) ​ ​ 496 ​ 479 Co-Promotion and Other Agreements: ​ ​ ​ ​ ​ ​ Alnylam (GIVLAARI) ​ ​ 456 ​ ​ 945 Other ​ ​ 404 ​ ​ 354 Total collaborative arrangements revenue ​ $ 88,665 ​ $ 74,445 Sale of API ​ ​ ​ ​ ​ Linaclotide Agreements: ​ ​ ​ ​ ​ ​ AstraZeneca (China, including Hong Kong and Macau) ​ ​ 21 ​ ​ 5,498 Other ​ ​ 159 ​ ​ — Total sale of API ​ $ 180 ​ $ 5,498 ​ ​ ​ Accounts receivable, net, included $ 110.7 million and $ 145.8 million primarily related to collaborative arrangements revenue and sale of API, collectively, as of March 31, 2021 and December 31, 2020, respectively. Accounts receivable, net, included $ 85.6 million and $ 110.9 million due from the Company’s partner, AbbVie, net of $ 3.9 million and $ 4.3 million of accounts payable, as of March 31, 2021 and December 31, 2020, respectively. ​ The Company routinely assesses the creditworthiness of its license and collaboration partners. The Company has not experienced any material losses related to receivables from its license or collaboration partners during the three months ended March 31, 2021 and 2020. ​ Linaclotide Agreements ​ Collaboration Agreement for North America with AbbVie ​ In September 2007, the Company entered into a collaboration agreement with AbbVie to develop and commercialize linaclotide for the treatment of IBS-C, CIC, and other GI conditions in North America. Under the terms of this collaboration agreement, the Company received a non-refundable, upfront licensing fee and shares equally with AbbVie all development costs as well as net profits or losses from the development and sale of linaclotide in the U.S. The Company receives royalties in the mid-teens percent based on net sales in Canada and Mexico. AbbVie is solely responsible for the further development, regulatory approval and commercialization of linaclotide in those countries and funding any costs. The collaboration agreement for North America also includes contingent milestone payments, as well as a contingent equity investment, based on the achievement of specific development and commercial milestones. As of March 31, 2021, $ 205.0 million in license fees and all six development milestone payments had been received by the Company, as well as a $ 25.0 million equity investment in the Company’s capital stock. The Company can also achieve up to $ 80.0 million in a sales-related milestone if certain conditions are met, which will be recognized as collaborative arrangements revenue when it is probable that a significant reversal of revenue would not occur, and the associated constraints have been lifted. 13 Table of Contents During the three months ended March 31, 2021 and 2020, the Company incurred $ 1.8 million and $ 6.6 million, respectively, in total research and development expenses under the linaclotide collaboration for North America. As a result of the research and development cost-sharing provisions of the linaclotide collaboration for North America, the Company incurred $ 2.9 million and $ 0.8 million in research and development costs during the three months ended March 31, 2021 and 2020, respectively, to reflect the obligations of each party under the collaboration to bear 50 % of the development costs incurred. The Company and AbbVie began commercializing LINZESS in the U.S. in December 2012. The Company receives 50 % of the net profits and bears 50 % of the net losses from the commercial sale of LINZESS in the U.S. Net profits or net losses consist of net sales of LINZESS to third-party customers and sublicense income in the U.S. less the cost of goods sold as well as selling, general and administrative expenses. LINZESS net sales are calculated and recorded by AbbVie and may include gross sales net of discounts, rebates, allowances, sales taxes, freight and insurance charges, and other applicable deductions. The Company evaluated its collaboration arrangement for North America with AbbVie and concluded that all development-period performance obligations had been satisfied as of September 2012. However, the Company has determined that there are three remaining commercial-period performance obligations, which include the sales detailing of LINZESS, participation in the joint commercialization committee, and approved additional trials. The consideration remaining includes cost reimbursements in the U.S., as well as commercial sales-based milestones and net profit and loss sharing payments based on net sales in the U.S. Additionally, the Company receives royalties in the mid-teens percent based on net sales in Canada and Mexico. Royalties, commercial sales-based milestones, and net profit and loss sharing payments will be recorded as collaborative arrangements revenue or expense in the period earned, as these payments relate predominately to the license granted to AbbVie. The Company records royalty revenue in the period earned based on royalty reports from its partner, if available, or based on the projected sales and historical trends. The cost reimbursements received from AbbVie during the commercialization period will be recognized as earned in accordance with the right-to-invoice practical expedient, as the Company’s right to consideration corresponds directly with the value of the services transferred during the commercialization period. Under the Company’s collaboration agreement with AbbVie for North America, LINZESS net sales are calculated and recorded by AbbVie and include gross sales net of discounts, rebates, allowances, sales taxes, freight and insurance charges, and other applicable deductions, as noted above. These amounts include the use of estimates and judgments, which could be adjusted based on actual results in the future. The Company records its share of the net profits or net losses from the sales of LINZESS in the U.S. less commercial expenses on a net basis, and presents the settlement payments to and from AbbVie as collaboration expense or collaborative arrangements revenue, as applicable. This treatment is in accordance with the Company’s revenue recognition policy, given that the Company is not the primary obligor and does not have the inventory risks in the collaboration agreement with AbbVie for North America. The Company relies on AbbVie to provide accurate and complete information related to net sales of LINZESS in accordance with U.S. generally accepted accounting principles in order to calculate its settlement payments to and from AbbVie and record collaboration expense or collaborative arrangements revenue, as applicable. The Company recognized collaborative arrangements revenue from the AbbVie collaboration agreement for North America during the three months ended March 31, 2021 and 2020 as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2021 2020 Collaborative arrangements revenue related to sales of LINZESS in the U.S. ​ $ 85,949 ​ $ 71,142 Royalty revenue ​ 550 ​ ​ 550 Total collaborative arrangements revenue ​ $ 86,499 ​ $ 71,692 ​ The collaborative arrangements revenue recognized in the three months ended March 31, 2021 and 2020 primarily represents the Company’s share of the net profits and net losses on the sale of LINZESS in the U.S. ​ 14 Table of Contents The following table presents selling, general and administrative costs related to the sale of LINZESS in the U.S. in accordance with the cost-sharing arrangement with AbbVie for the three months ended March 31, 2021 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2021 2020 Selling, general and administrative costs incurred by the Company (1) ​ $ 7,005 ​ $ 8,674 (1) Excludes $ 0.1 million and $ 0.2 million for the three months ended March 31, 2021 and 2020, respectively, related to patent prosecution and patent litigation costs recognized in connection with the collaboration agreement with AbbVie. ​ In May 2014, CONSTELLA ® became commercially available in Canada and, in June 2014, LINZESS became commercially available in Mexico. The Company records royalties on sales of CONSTELLA in Canada and LINZESS in Mexico in the period earned. The Company recognized $ 0.6 million of combined royalty revenues from Canada and Mexico during each of the three months ended March 31, 2021 and 2020. License Agreement with AbbVie (All countries other than the countries and territories of North America, China (including Hong Kong and Macau), and Japan) In April 2009, the Company entered into a license agreement with Almirall, S.A. (“Almirall”) to develop and commercialize linaclotide in Europe (including the Commonwealth of Independent States and Turkey) for the treatment of IBS-C, CIC and other GI conditions (the “European License Agreement”). In accordance with the European License Agreement, the Company granted Almirall a right to access its U.S. Phase III clinical trial data for the purposes of supporting European regulatory approval. In October 2015, Almirall transferred its exclusive license to develop and commercialize linaclotide in Europe to AbbVie. Additionally, in October 2015, the Company and AbbVie separately entered into an amendment to the European License Agreement relating to the development and commercialization of linaclotide in Europe. Pursuant to the terms of the amendment, (i) certain sales-based milestones payable to the Company under the European License Agreement were modified to increase the total milestone payments such that, when aggregated with certain commercial launch milestones, they could total up to $ 42.5 million, (ii) the royalties payable to the Company during the term of the European License Agreement were modified such that the royalties based on sales volume in Europe begin in the mid-single digit percent and escalate to the upper-teens percent by calendar year 2019, and (iii) AbbVie assumed responsibility for the manufacturing of linaclotide API for Europe from the Company, as well as the associated costs. The Company concluded that the 2015 amendment to the European License Agreement was not a modification to the linaclotide collaboration agreement with AbbVie for North America. In January 2017, the Company and AbbVie entered into an amendment to the European License Agreement (the “2017 Amendment”). The 2017 Amendment extended the license to develop and commercialize linaclotide in all countries other than China (including Hong Kong and Macau), Japan, and the countries and territories of North America. On a country-by-country and product-by-product basis in such additional territory, AbbVie is obligated to pay the Company a royalty as a percentage of net sales of products containing linaclotide as an active ingredient in the upper-single digits for five years following the first commercial sale of a linaclotide product in a country, and in the low-double digits thereafter. The royalty rate for products in the expanded territory will decrease, on a country-by-country basis, to the lower-single digits , or cease entirely, following the occurrence of certain events. The 2017 Amendment did not modify any of the milestones or royalty terms related to Europe. In evaluating the terms of the European License Agreement, as amended, the Company determined that there are no remaining performance obligations as of September 2012. However, the Company continues to be eligible to receive consideration in the form of commercial launch milestones, sales-based milestones, and royalties. The commercial launch milestones, sales-based milestones and royalties under the European License Agreement and the 2017 Amendment relate predominantly to the license granted to AbbVie. The Company records royalties on sales of CONSTELLA in Europe in the period earned based on royalty reports from its partner, if available, or the projected sales and historical trends under the sales-based royalty exception. The commercial launch milestones 15 Table of Contents are recognized as revenue when it is probable that a significant reversal of revenue would not occur and the associated constraint has been lifted. The Company recognized $ 0.6 million of royalty revenue from the Amended European License Agreement during each of the three months ended March 31, 2021 and 2020. License Agreement for Japan with Astellas In November 2009, the Company entered into a license agreement with Astellas, as amended, to develop and commercialize linaclotide for the treatment of IBS-C, CIC and other GI conditions in Japan (the “2009 License Agreement with Astellas”). Astellas is responsible for all activities relating to development, regulatory approval and commercialization in Japan as well as funding the associated costs and the Company was required to participate on a joint development committee over linaclotide’s development period. Under the 2009 License Agreement with Astellas, the Company received an upfront licensing fee of $ 30.0 million and three development milestone payments that totaled $ 45.0 million and has no remaining performance obligations. In April 2017, the Company and Astellas entered into a commercial API supply agreement (the “Astellas Commercial Supply Agreement”). Pursuant to the Astellas Commercial Supply Agreement, the Company sold linaclotide API supply to Astellas at a contractually defined rate and recognized related revenue as sale of API. Under the 2009 License Agreement with Astellas, the Company received royalties which escalated based on sales volume, beginning in the low-twenties percent, less the transfer price paid for the API included in the product sold and other contractual deductions. In August 2019, the Company and Astellas amended and restated the 2009 License Agreement with Astellas (the “Amended Astellas License Agreement”). This amendment to the 2009 License Agreement with Astellas was accounted for as a separate contract. Under the terms of the Amended Astellas License Agreement, the Company is no longer responsible for the supply of linaclotide API to Astellas, and Astellas assumed responsibility for its own supply of linaclotide API in Japan in 2020, other than minimal quantities of API the Company supplied to Astellas in 2020 relating to orders for linaclotide API placed by Astellas in 2019. ​ In connection with the execution of the Amended Astellas License Agreement, Astellas paid the Company a non-refundable, upfront payment of $ 10.0 million in August 2019. Further, Astellas, in lieu of the royalty payment terms set forth in the 2009 License Agreement with Astellas, is required to pay royalties to the Company at rates beginning in the mid-single digit percent and escalating to low-double-digit percent, based on aggregate annual net sales in Japan of products containing linaclotide API. These royalty payments are subject to reduction following the expiration of certain licensed patents and the occurrence of generic competition in Japan. The Company continued to supply linaclotide API for Japan during 2019 and 2020 at a contractually defined rate. Additionally, Astellas reimbursed the Company for the Company’s performance of adverse event reporting services at a fixed monthly rate until such services were terminated in February 2020. ​ The Company identified the following performance obligations under the Amended Astellas License Agreement: ​ ● delivery of the expanded license of intellectual property, including the applicable manufacturing know-how; ● obligation to supply linaclotide API for 2019; and ● adverse event reporting services. ​ The Company allocated the $ 10.0 million upfront payment to the delivery of the expanded license of intellectual property and recognized it as collaborative arrangements revenue at contract inception. The Company allocated the $ 20.4 million in remaining purchase orders for API to the obligation to supply linaclotide API to Astellas for 2019. Consideration for the supply of linaclotide API was recognized over the performance period as linaclotide API is shipped to Astellas. Consideration allocated to the adverse event reporting services was recognized as such services were provided over the performance period based on the amount to which the Company has a right to invoice. ​ 16 Table of Contents Royalties on sales of LINZESS in Japan relate predominantly to the license granted to Astellas. Accordingly, the Company applies the sales-based royalty exception and records royalties on sales of LINZESS in Japan in the period earned based on royalty reports from its partner, if available, or the projected sales and historical trends. ​ The Company recognized $ 0.5 million and $ 0.4 million of royalty revenue during the three months ended March 31, 2021 and 2020, respectively. The Company recognized an insignificant amount of collaborative arrangements revenue related to adverse event reporting services in the three months ended March 31, 2020 prior to the termination of such services. ​ Collaboration Agreement for China (including Hong Kong and Macau) with AstraZeneca In October 2012, the Company entered into a collaboration agreement with AstraZeneca to co-develop and co-commercialize linaclotide in the AstraZeneca License Territory (the “AstraZeneca Collaboration Agreement”). The collaboration provided AstraZeneca with an exclusive nontransferable license to exploit the underlying technology in the AstraZeneca License Territory. The parties shared responsibility for continued development and commercialization of linaclotide under a joint development plan and a joint commercialization plan, respectively, with AstraZeneca having primary responsibility for the local operational execution. In September 2019, the Company and AstraZeneca entered into an amendment and restatement of the AstraZeneca Collaboration Agreement (the “Amended AstraZeneca Agreement”) under which AstraZeneca obtained the exclusive right to develop, manufacture and commercialize products containing linaclotide in the AstraZeneca License Territory (the “AstraZeneca License”). Prior to the execution of the Amended AstraZeneca Agreement, the Company identified the following performance obligations under the AstraZeneca Collaboration Agreement: ● research, development and regulatory services pursuant to the development plan (“R&D Services”); ● Joint Development Committee (“JDC”) services; ● obligation to supply clinical trial material; and ● Joint Commercialization Committee services. Under the original AstraZeneca Collaboration Agreement, the Company shared development costs with AstraZeneca, with AstraZeneca incurring 55 % of the net losses from the development and commercialization of linaclotide in the AstraZeneca License Territory. Payments from AstraZeneca with respect to both research and development and selling, general and administrative costs incurred by the Company prior to the commercialization of linaclotide in the AstraZeneca License Territory were recorded as a reduction in expense. Development costs incurred by the Company that pertained to the joint development plan and subsequent amendments to the joint development plan, as approved by the JDC, were recorded as research and development expense as incurred. Payments to AstraZeneca were recorded as incremental research and development expense. Under the Amended AstraZeneca Agreement, the Company is entitled to receive non-contingent payments totaling $ 35.0 million in three installments through 2024, of which $ 10.0 million was received in January 2021. In addition, AstraZeneca may be required to make milestone payments totaling up to $ 90.0 million contingent on the achievement of certain sales targets and will be required to pay tiered royalties to the Company at rates beginning in the mid-single-digit percent and increasing up to twenty percent based on the aggregate annual net sales of products containing linaclotide in the AstraZeneca License Territory. In connection with the Amended AstraZeneca Agreement, the Company and AstraZeneca entered into a transition services agreement (“AstraZeneca TSA”) and an amended commercial supply agreement (“AstraZeneca CSA”). Under the terms of the AstraZeneca TSA, the Company will provide certain regulatory and administrative services for a term of approximately two years from the date of execution, unless earlier terminated or extended. Services performed are paid at a mutually agreed upon rate. Amounts for AstraZeneca TSA services are recorded as collaborative arrangements revenue. Under the terms of the AstraZeneca CSA, the Company supplied linaclotide API, finished drug product and finished goods for the Licensed Territory through March 31, 2020 at predetermined rates. 17 Table of Contents The Company evaluated the Amended AstraZeneca Agreement and determined that it would be accounted for as a separate contract because it adds a distinct good or service at an amount that reflects standalone selling price. The following performance obligations under the Amended AstraZeneca Agreement were identified: ● delivery of the expanded AstraZeneca License; ● AstraZeneca TSA services; and ● supply of linaclotide API, finished drug product and finished goods under the AstraZeneca CSA. The Company determined that the non-contingent payments should be allocated to the delivery of the expanded AstraZeneca License. The Company determined that the performance obligation related to the transfer of the AstraZeneca License was satisfied as of the execution date of the Amended AstraZeneca Agreement. As a portion of the payments relating to the transfer of the AstraZeneca License are due significantly after the performance obligation was satisfied, the Company adjusted its transaction price for the significant financing component of $ 2.6 million. Accordingly, the Company recognized $ 32.4 million in 2019 relating to the delivery of the AstraZeneca License as collaborative arrangements revenue at contract inception and is recognizing the $ 2.6 million relating to the significant financing component as interest income through 2024 using the effective interest method. Consideration allocated to the AstraZeneca TSA services will be recognized as collaborative arrangements revenue as such services are provided over the performance period based on the amount to which the Company has a right to invoice. Consideration for the supply of linaclotide API, finished drug product and finished goods under the AstraZeneca CSA was recognized over the performance period as linaclotide API, finished drug product and finished goods were shipped to AstraZeneca. During the three months ended March 31, 2021, the Company recognized $ 0.2 million in collaborative arrangements revenue related to the Amended AstraZeneca License, of which $ 0.1 million related to the AstraZeneca TSA services and $ 0.1 million related to royalties. During the three months ended March 31, 2020, the Company recognized $ 0.3 million in collaborative arrangements revenue related to the Amended AstraZeneca License, of which $ 0.2 million related to the AstraZeneca TSA services and $ 0.1 million related to royalties. Additionally, the Company recognized $ 5.5 million in sales of API relating to the supply of linaclotide finished drug product and finished goods under the AstraZeneca CSA during the three months ended March 31, 2020. ​ Co-promotion and Other Agreements ​ Disease Education and Promotional Agreement with Alnylam ​ In August 2019, the Company and Alnylam entered into a disease education and promotional agreement for Alnylam’s GIVLAARI, and this agreement was subsequently amended in December 2020 (the “Alnylam Agreement”). GIVLAARI was approved by the U.S. FDA in November 2019 for the treatment of adult patients with AHP. Under the terms of the Alnylam Agreement, the Company’s sales force is performing disease awareness activities and sales detailing activities for GIVLAARI to gastroenterologists and health care practitioners to whom they detail LINZESS in the first position over the term of the agreement, which is approximately three years. Under the Alnylam Agreement, the Company received service fees, totaling $ 5.5 million for services rendered through December 31, 2020. In connection with the amendment of the Alnylam Agreement, beginning in 2021, the Company no longer receives service fees. The Company is eligible to receive royalties based on a percentage of net sales of GIVLAARI that are directly attributable to the Company’s promotional efforts over the term of the agreement. The Company identified the following performance obligation under the Alnylam Agreement: ● performance of disease education activities for AHP and performance of sales details for GIVLAARI (together “Givosiran Education and Promotion Activities”). The Company allocated the service fees to the performance of Givosiran Education and Promotion Activities and recognized collaborative arrangements revenue through December 31, 2020 as the services were performed based on the amount to which the Company had a right to invoice. Royalties are recognized as collaborative arrangements revenue for Givosiran Education and Promotion Activities based on the amount to which the Company has a right to invoice when the associated constraints have been lifted. 18 Table of Contents During the three months ended March 31, 2020, the Company recognized $ 0.9 million in collaborative arrangements revenue related to the service fees. During the three months ended March 31, 2021 and 2020, the Company recognized $ 0.5 million and an insignificant amount, respectively, in royalty revenue. 5. Fair Value of Financial Instruments ​ The tables below present information about the Company’s assets that are measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize observable inputs such as quoted prices in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are either directly or indirectly observable, such as quoted prices for similar instruments in active markets, interest rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points in which there is little or no market data, which require the Company to develop its own assumptions for the asset or liability. The Company’s investment portfolio may include fixed income securities that do not always trade on a daily basis. As a result, the pricing services used by the Company apply other available information as applicable through processes such as benchmark yields, benchmarking of like securities, sector groupings and matrix pricing to prepare valuations. In addition, model processes are used to assess interest rate impact and develop prepayment scenarios. These models take into consideration relevant credit information, perceived market movements, sector news and economic events. The inputs into these models may include benchmark yields, reported trades, broker-dealer quotes, issuer spreads and other relevant data. The Company validates the prices provided by its third-party pricing services by obtaining market values from other pricing sources and analyzing pricing data in certain instances. The Company also invests in certain reverse repurchase agreements, which are collateralized by Government Securities and Obligations for an amount not less than 102 % of their principal amount. The Company does not record an asset or liability for the collateral as the Company is not permitted to sell or re-pledge the collateral. The collateral has at least the prevailing credit rating of U.S. Government Treasuries and Agencies. The Company utilizes a third-party custodian to manage the exchange of funds and ensure the collateral received is maintained at 102 % of the reverse repurchase agreements principal amount on a daily basis. The following tables present the assets and liabilities the Company has measured at fair value on a recurring basis (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements at Reporting Date Using ​ ​ ​ Quoted Prices in Significant Other Significant ​ ​ ​ ​ ​ ​ Active Markets for ​ Observable ​ Unobservable ​ ​ ​ ​ ​ Identical Assets ​ Inputs ​ Inputs ​ ​ March 31, 2021 ​ ​ (Level 1) ​ (Level 2) ​ (Level 3) Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 422,454 ​ ​ $ 422,454 ​ $ — ​ $ — Restricted cash: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ ​ 2,220 ​ ​ ​ 2,220 ​ ​ — ​ ​ — Convertible note hedges ​ ​ 11,346 ​ ​ ​ — ​ ​ — ​ ​ 11,346 Total assets measured at fair value ​ $ 436,020 ​ ​ $ 424,674 ​ $ — ​ $ 11,346 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Note hedge warrants ​ $ 7,979 ​ ​ $ — ​ $ — ​ $ 7,979 Total liabilities measured at fair value ​ $ 7,979 ​ ​ $ — ​ $ — ​ $ 7,979 ​ 19 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements at Reporting Date Using ​ ​ ​ Quoted Prices in Significant Other Significant ​ ​ ​ ​ ​ ​ Active Markets for ​ Observable ​ Unobservable ​ ​ ​ ​ ​ Identical Assets ​ Inputs ​ Inputs ​ ​ December 31, 2020 ​ ​ (Level 1) ​ (Level 2) ​ (Level 3) Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 349,014 ​ ​ $ 349,014 ​ $ — ​ $ — Restricted cash: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ 2,221 ​ ​ 2,221 ​ — ​ — Convertible note hedges ​ ​ 13,065 ​ ​ ​ — ​ ​ — ​ ​ 13,065 Total assets measured at fair value ​ $ 364,300 ​ ​ $ 351,235 ​ $ — ​ $ 13,065 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Note hedge warrants ​ $ 12,088 ​ ​ $ — ​ $ — ​ $ 12,088 Total liabilities measured at fair value ​ $ 12,088 ​ ​ $ — ​ $ — ​ $ 12,088 ​ There were no transfers between fair value measurement levels during each of the three months ended March 31, 2021 or 2020. ​ Cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued research and development costs, accrued expenses and other current liabilities and current portion of operating lease obligations at March 31, 2021 and December 31, 2020 are carried at amounts that approximate fair value due to their short-term maturities. ​ Convertible Note Hedges and Note Hedge Warrants with Respect to 2022 Convertible Notes ​ The Company’s Convertible Note Hedges and the Note Hedge Warrants are recorded as derivative assets and liabilities, respectively, and are classified as Level 3 measurements under the fair value hierarchy. These derivatives are not actively traded and are valued using the Black-Scholes option-pricing model, which requires the use of subjective assumptions. Significant inputs used to determine the fair value as of March 31, 2021 included the price per share of the Company’s Class A Common Stock, expected terms of the derivative instruments, strike prices of the derivative instruments, risk-free interest rates, and expected volatility of the Company’s Class A Common Stock. Changes to these inputs could materially affect the valuation of the Convertible Note Hedges and Note Hedge Warrants. The following inputs were used in the fair market valuation of the Convertible Note Hedges and Note Hedge Warrants as of March 31, 2021 and December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Year Ended ​ ​ ​ March 31, 2021 ​ December 31, 2020 ​ ​ ​ Convertible Note Hedge ​ Convertible Note Hedge ​ ​ Note Hedges ​ Warrants Note Hedges ​ Warrants Risk-free interest rate (1) ​ ​ 0.1 % ​ 0.1 % ​ 0.1 % ​ 0.1 % Expected term ​ 1.2 ​ 1.8 ​ ​ 1.5 ​ 2.0 ​ Stock price (2) ​ $ 11.18 ​ $ 11.18 ​ $ 11.39 ​ $ 11.39 ​ Strike price (3) ​ $ 14.51 ​ $ 18.82 ​ $ 14.51 ​ $ 18.82 ​ Common stock volatility (4) ​ ​ 48.9 % ​ 45.9 % ​ 46.7 % ​ 50.3 % Dividend yield (5) ​ — % — % — % — % (1) Based on U.S. Treasury yield curve, with terms commensurate with the expected terms of the Convertible Note Hedges and the Note Hedge Warrants. (2) The closing price of the Company’s Class A Common Stock on the last trading days of the quarters ended March 31, 2021 and December 31, 2020, respectively. (3) As per the respective agreements for the Convertible Note Hedges and Note Hedge Warrants. (4) Expected volatility based on historical volatility of the Company’s Class A Common Stock. (5) The Company has not paid and does not anticipate paying cash dividends on its shares of common stock in the foreseeable future; therefore, the expected dividend yield is assumed to be zero . ​ 20 Table of Contents The Convertible Note Hedges and the Note Hedge Warrants are recorded at fair value at each reporting date and changes in fair value are recorded in other (expense) income, net within the Company’s condensed consolidated statements of income. ​ The following table reflects the change in the Company’s Level 3 Convertible Note Hedges and Note Hedge Warrants from December 31, 2020 through March 31, 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Convertible ​ Note Hedge ​ ​ Note Hedges Warrants Balance at December 31, 2020 ​ $ 13,065 ​ $ ( 12,088 ) ​ Change in fair value, recorded as a component of (loss) gain on derivatives ​ ​ ( 1,719 ) ​ ​ 4,109 ​ Balance at March 31, 2021 ​ $ 11,346 ​ $ ( 7,979 ) ​ ​ Convertible Senior Notes ​ In June 2015, the Company issued $ 335.7 million aggregate principal amount of its 2022 Convertible Notes. In August 2019, the Company issued $ 200.0 million aggregate principal amount of its 2024 Convertible Notes and $ 200.0 million aggregate principal amount of its 2026 Convertible Notes, and used a portion of the proceeds from such issuances to repurchase $ 215.0 million aggregate principal amount of its 2022 Convertible Notes. The Company separately accounted for the liability and equity components of each of the 2022 Convertible Notes, 2024 Convertible Notes, and 2026 Convertible Notes, by allocating the proceeds between the liability component and equity component (Note 8). The fair value of the respective convertible senior notes, which differs from their carrying value, is influenced by interest rates, the price of the Company’s Class A Common Stock and the volatility thereof, and the prices for the respective convertible senior notes observed in market trading, which are Level 2 inputs. ​ The estimated fair value of the 2022 Convertible Notes was $ 130.1 million and $ 130.2 million as of March 31, 2021 and December 31, 2020, respectively. The estimated fair value of the 2024 Convertible Notes was $ 220.9 million and $ 222.3 million as of March 31, 2021 and December 31, 2020, respectively. The estimated fair value of the 2026 Convertible Notes was $ 225.9 million and $ 224.1 million as of March 31, 2021 and December 31, 2020, respectively. ​ Capped Calls with Respect to 2024 Convertible Notes and 2026 Convertible Notes ​ In connection with the issuance of the 2024 Convertible Notes and the 2026 Convertible Notes, the Company entered into the Capped Calls with certain financial institutions. The Capped Calls cover 29,867,480 shares of Class A Common Stock (subject to anti-dilution and certain other adjustments), which is the same number of shares of Class A Common Stock that initially underlie the 2024 Convertible Notes and the 2026 Convertible Notes. The Capped Calls have an initial strike price of approximately $ 13.39 per share, which corresponds to the initial conversion price of the 2024 Convertible Notes and the 2026 Convertible Notes, and have a cap price of approximately $ 17.05 per share (Note 8). The strike price and cap price are subject to anti-dilution adjustments generally similar to those applicable to the 2024 Convertible Notes and the 2026 Convertible Notes. These instruments meet the conditions outlined in ASC Topic 815, Derivatives and Hedging (“ASC 815”), to be classified in stockholders’ equity and are not subsequently remeasured as long as the conditions for equity classification continue to be met (Note 8). ​ 21 Table of Contents 6. Accrued Expenses and Other Current Liabilities ​ Accrued expenses and other current liabilities consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2021 December 31, 2020 Accrued incentive compensation ​ $ 3,070 ​ $ 8,719 Accrued vacation ​ ​ 2,612 ​ ​ 2,625 Professional fees ​ 977 ​ 530 Accrued interest ​ 2,105 ​ 301 Salaries ​ ​ 1,408 ​ ​ 627 Other employee benefits ​ ​ 838 ​ ​ 1,442 Restructuring liabilities ​ ​ 5,475 ​ ​ 10,510 Other ​ 1,878 ​ 1,732 Total accrued expenses and other current liabilities ​ $ 18,363 ​ $ 26,486 ​ ​ ​ ​ As of March 31, 2021, other accrued expenses of $ 1.9 million included $ 1.4 million related to uninvoiced vendor liabilities and $ 0.3 million related to state income taxes payable. As of December 31, 2020, other accrued expenses of $ 1.7 million included $ 1.6 million of uninvoiced vendor liabilities. ​ 7. Leases ​ The Company’s lease portfolio for the three months ended March 31, 2021 includes: an office lease for its current headquarters location, a data center colocation lease, vehicle leases for its salesforce representatives, and leases for computer and office equipment. ​ The Company’s office lease and vehicle lease require letters of credit to secure the Company’s obligations under the lease agreements totaling $ 2.2 million and are collateralized by money market accounts recorded as restricted cash on the Company’s condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020. ​ Lease cost is recognized on a straight-line basis over the lease term. The components of lease cost for the three months ended March 31, 2021 and 2020 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ 2021 ​ 2020 ​ Operating lease cost during period, net ​ $ 631 ​ $ 633 ​ Short-term lease cost ​ ​ 214 ​ ​ 372 ​ Total lease cost ​ $ 845 ​ $ 1,005 ​ ​ Supplemental information related to leases for the periods reported is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ ​ 2021 ​ 2020 ​ Cash paid for amounts included in the measurement of lease liabilities (in thousands) ​ ​ $ 773 ​ ​ $ 43 ​ ​ Weighted-average remaining lease term of operating leases (in years) ​ ​ ​ 9.0 ​ ​ ​ 10.0 ​ ​ Weighted-average discount rate of operating leases ​ ​ ​ 5.8 % ​ ​ 5.8 % ​ ​ 22 Table of Contents Future minimum lease payments under non-cancelable operating leases as of March 31, 2021 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ Operating ​ Lease ​ ​ Payments 2021 (1) ​ $ 2,355 2022 ​ ​ 3,129 2023 ​ ​ 3,065 2024 ​ ​ 3,126 2025 ​ 3,189 2026 and thereafter ​ 14,855 Total future minimum lease payments ​ ​ 29,719 Less: present value adjustment ​ ​ ( 6,713 ) Operating lease liabilities at March 31, 2021 ​ ​ 23,006 Less: current portion of operating lease liabilities ​ ​ ( 3,144 ) Operating lease liabilities, net of current portion ​ $ 19,862 (1) For the nine months ending December 31, 2021. ​ Summer Street Lease ​ In June 2019, the Company entered into a non-cancelable operating lease (the “Summer Street Lease”) for approximately 39,000 square feet of office space on the 23 rd floor of 100 Summer Street, Boston, Massachusetts, which began serving as the Company’s headquarters in October 2019, replacing its prior headquarters at 301 Binney Street in Cambridge, Massachusetts. The Summer Street Lease terminates on June 11, 2030 and includes a 2 % annual rent escalation, free rent periods, a tenant improvement allowance, and an option to extend the term of the lease for an additional five years at a market base rental rate. The rent expense, inclusive of the escalating rent payments and lease incentives, is recognized on a straight-line basis over the lease term. ​ At lease inception, the Company recorded a right-of-use asset and a lease liability using an incremental borrowing rate of 5.8 %. At March 31, 2021, the balances of the right-of-use asset and operating lease liability were $ 16.3 million and $ 22.8 million, respectively. At December 31, 2020, the balances of the right-of-use asset and operating lease liability were $ 16.6 million and $ 23.2 million, respectively. ​ Lease costs recorded during each of the three months ended March 31, 2021 and 2020 were $ 0.6 million. ​ ​ ​ 8. Notes Payable 2.25 % Convertible Senior Notes due 2022 In June 2015, the Company issued $ 335.7 million aggregate principal amount of the 2022 Convertible Notes. The Company received net proceeds of $ 324.0 million from the sale of the 2022 Convertible Notes, after deducting fees and expenses of $ 11.7 million. The Company used $ 21.1 million of the net proceeds from the sale of the 2022 Convertible Notes to pay the net cost of the Convertible Note Hedges (after such cost was partially offset by the proceeds to the Company from the sale of the Note Hedge Warrants), as described below. The 2022 Convertible Notes are governed by an indenture (the “2022 Indenture”) between the Company and U.S. Bank National Association, as trustee (the “Trustee”). The 2022 Convertible Notes are senior unsecured obligations and bear cash interest at the annual rate of 2.25 %, payable on June 15 and December 15 of each year. The 2022 Convertible Notes will mature on June 15, 2022, unless earlier converted or repurchased. The Company may settle conversions of the 2022 Convertible Notes through payment or delivery, as the case may be, of cash, shares of the Company’s Class A Common Stock or a combination of cash and shares of Class A Common Stock, at the Company’s option (subject to, and in accordance with, the settlement provisions of the 2022 Indenture). The initial conversion rate for the 2022 Convertible Notes was 60.3209 shares of Class A Common Stock (subject to adjustment as provided for in the 2022 Indenture) per $ 1,000 principal amount of the 2022 Convertible Notes, which was equal to an initial conversion price of $ 16.58 per share and 20,249,665 shares. 23 Table of Contents In connection with the Separation, in April 2019, the conversion rate under the 2022 Indenture was adjusted to equal 68.9172 shares of Class A Common Stock per $ 1,000 principal amount of the 2022 Convertible Notes, which is equal to an adjusted conversion price of $ 14.51 per share and 23,135,435 shares. ​ Holders of the 2022 Convertible Notes may convert their 2022 Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding December 15, 2021 in multiples of $ 1,000 principal amount, only under the following circumstances: ● during any calendar quarter commencing after the calendar quarter ending on September 30, 2015 (and only during such calendar quarter), if the last reported sale price of the Company’s Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price for the 2022 Convertible Notes on each applicable trading day; ● during the five business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in the 2022 Indenture) per $ 1,000 principal amount of the 2022 Convertible Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s Class A Common Stock and the conversion rate for the 2022 Convertible Notes on each such trading day; or ● upon the occurrence of specified corporate events described in the 2022 Indenture. On or after December 15, 2021, until the close of business on the second scheduled trading day immediately preceding June 15, 2022, holders may convert their 2022 Convertible Notes, in multiples of $ 1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. Upon the occurrence of certain fundamental changes, as described in the 2022 Indenture, holders of the 2022 Convertible Notes may require the Company to repurchase for cash all or part of their 2022 Convertible Notes at a repurchase price equal to 100 % of the principal amount of the 2022 Convertible Notes to be repurchased, plus accrued and unpaid interest. If a make-whole fundamental change, as described in the 2022 Indenture, occurs and a holder elects to convert its 2022 Convertible Notes in connection with such make-whole fundamental change, such holder may be entitled to an increase in the conversion rate as described in the 2022 Indenture. The 2022 Indenture does not contain any financial covenants or restrict the Company’s ability to repurchase the Company’s securities, pay dividends or make restricted payments in the event of a transaction that substantially increases the Company’s level of indebtedness. The 2022 Indenture provides for customary events of default. In the case of an event of default with respect to the 2022 Convertible Notes arising from specified events of bankruptcy or insolvency, all outstanding 2022 Convertible Notes will become due and payable immediately without further action or notice. If any other event of default with respect to the 2022 Convertible Notes under the 2022 Indenture occurs or is continuing, the Trustee or holders of at least 25 % in aggregate principal amount of the then outstanding 2022 Convertible Notes may declare the principal amount of the 2022 Convertible Notes to be immediately due and payable. Notwithstanding the foregoing, the 2022 Indenture provides that, upon the Company’s election, and for up to 180 days , the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the 2022 Indenture consists exclusively of the right to receive additional interest on the 2022 Convertible Notes. In accordance with accounting guidance for debt with conversion and other options, the Company separately accounted for the liability and equity components of the 2022 Convertible Notes by allocating the proceeds between the liability component and the embedded conversion option, or equity component, due to the Company's ability to settle the 2022 Convertible Notes in cash, its Class A Common Stock, or a combination of cash and Class A Common Stock at the option of the Company. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated conversion feature. The equity component of the 2022 Convertible Notes was recognized as a debt discount and represents the difference between the gross proceeds from the issuance of the 2022 Convertible Notes and the fair value of the liability component of the 2022 Convertible Notes on their respective dates of issuance. The debt discount is amortized to interest expense using the effective interest method over seven years , or the expected life of the 2022 Convertible Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. 24 Table of Contents ​ In connection with the issuance of the 2024 Convertible Notes and the 2026 Convertible Notes in August 2019, the Company repurchased $ 215.0 million aggregate principal amount of the 2022 Convertible Notes. The 2022 Convertible Notes were repurchased at a premium totaling $ 227.3 million. The Company recognized a loss on extinguishment of debt of $ 23.4 million during the year ended December 31, 2019 related to the prepayment premium and proportional write-off of the 2022 Convertible Notes unamortized debt issuance costs and unamortized debt discount. Additionally, the repurchase resulted in a reduction to additional paid-in capital of $ 27.0 million during the year ended December 31, 2019 related to the equity component of the 2022 Convertible Notes. ​ 0.75 % Convertible Senior Notes due 2024 and 1.50 % Convertible Senior Notes due 2026 ​ In August 2019, the Company issued $ 200.0 million aggregate principal amount of the 2024 Convertible Notes and $ 200.0 million aggregate principal amount of the 2026 Convertible Notes. The Company received net proceeds of $ 391.0 million from the sale of the 2024 Convertible Notes and 2026 Convertible Notes, after deducting fees and expenses of $ 9.0 million. The Company used $ 25.2 million of the net proceeds from the sale of the 2024 Convertible Notes and 2026 Convertible Notes to pay the cost of the Capped Calls, as described below. For purposes of this section, “Notes” refer to the 2024 Convertible Notes and the 2026 Convertible Notes, collectively. ​ The 2024 Convertible Notes and 2026 Convertible Notes were issued by the Company on August 12, 2019, pursuant to separate Indentures, each dated as of such date (each an “Indenture” and together the “Indentures”), between the Company and the Trustee. The 2024 Convertible Notes bear cash interest at the annual rate of 0.75 % and the 2026 Convertible Notes bear cash interest at the annual rate of 1.50 %, each payable on June 15 and December 15 of each year. The 2024 Convertible Notes will mature on June 15, 2024 and the 2026 Convertible Notes will mature on June 15, 2026, unless earlier converted or repurchased. The Company will settle conversions of the 2024 Convertible Notes and 2026 Convertible Notes through payment or delivery, as the case may be, of cash, shares of the Company’s Class A Common Stock or a combination of cash and shares of Class A Common Stock, at the Company’s option (subject to, and in accordance with, the settlement provisions of the applicable Indenture). The initial conversion rate for each of the 2024 Convertible Notes and the 2026 Convertible Notes is 74.6687 shares of Class A Common Stock (subject to adjustment as provided for in the applicable Indenture) per $ 1,000 principal amount of the 2024 Convertible Notes and 2026 Convertible Notes, which is equal to an initial conversion price of $ 13.39 per share. ​ Holders of the 2024 Convertible Notes and 2026 Convertible Notes may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding December 15, 2023, with respect to the 2024 Convertible Notes, and December 15, 2025, with respect to the 2026 Convertible Notes, in multiples of $ 1,000 principal amount, only under the following circumstances: ​ ● during any calendar quarter commencing after the calendar quarter ending on December 31, 2019 (and only during such calendar quarter), if the last reported sale price of Class A Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price for the Notes on each applicable trading day; ​ ● during the five- business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” (as defined in each Indenture) per $ 1,000 principal amount of Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of Class A Common Stock and the conversion rate for the Notes on each such trading day; or ​ ● upon the occurrence of specified corporate events described in each Indenture. ​ On or after December 15, 2023, with respect to the 2024 Convertible Notes, and December 15, 2025, with respect to the 2026 Convertible Notes, until the close of business on the second scheduled trading day immediately preceding the applicable maturity date, the holders of the Notes may convert their Notes, in multiples of $ 1,000 principal amount, regardless of the foregoing conditions. ​ Upon the occurrence of fundamental changes, as described in the Indentures, prior to the maturity date of the respective Notes, holders of such Notes may require the Company to repurchase for cash all or a portion of their Notes at a repurchase price equal to 100 % of the principal amount of the Notes to be repurchased, plus accrued and unpaid 25 Table of Contents interest. If a make-whole fundamental change, as described in the Indentures, occurs and a holder elects to convert its Notes in connection with such make-whole fundamental change, such holder may be entitled to an increase in the conversion rate as described in the Indentures. ​ The Indentures do not contain any financial covenants or restrict the Company’s ability to repurchase the Company’s securities, pay dividends or make restricted payments in the event of a transaction that substantially increases the Company’s level of indebtedness. The Indentures provide for customary events of default. In the case of an event of default with respect to a series of Notes arising from specified events of bankruptcy or insolvency, all outstanding Notes of such series will become due and payable immediately without further action or notice. If any other event of default with respect to a series of Notes under the relevant Indenture occurs or is continuing, the Trustee or holders of at least 25 % in aggregate principal amount of the then outstanding Notes of such series may declare the principal amount of such Notes to be immediately due and payable. ​ In accordance with accounting guidance for debt with conversion and other options, the Company separately accounted for the liability and equity components of the 2024 Convertible Notes and the 2026 Convertible Notes by allocating the proceeds between the liability components and the embedded conversion options, or equity components, due to the Company’s ability to settle the 2024 Convertible Notes and the 2026 Convertible Notes in cash, its Class A Common Stock, or a combination of cash and Class A Common Stock at the option of the Company. The carrying amount of the respective liability components were calculated by measuring the fair value of a similar liability that does not have an associated conversion feature. The respective equity components of the 2024 Convertible Notes and the 2026 Convertible Notes were recognized as a debt discount and represent the difference between the gross proceeds from the issuance of the 2024 Convertible Notes and 2026 Convertible Notes and the fair value of the liability of the 2024 Convertible Notes and 2026 Convertible Notes on their respective dates of issuance. The debt discount is amortized to interest expense using the effective interest method over approximately five and seven years , or the expected life of the 2024 Convertible Notes and the 2026 Convertible Notes, respectively. The respective equity components are not remeasured as long as they continue to meet the conditions for equity classification. ​ The Company’s outstanding balances for the convertible senior notes as of March 31, 2021 and December 31, 2020 consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2021 ​ December 31, 2020 ​ ​ ​ ​ ​ ​ ​ Liability component: ​ ​ ​ ​ ​ ​ Principal: ​ ​ ​ ​ ​ ​ 2022 Convertible Notes ​ $ 120,699 ​ $ 120,699 2024 Convertible Notes ​ ​ 200,000 ​ ​ 200,000 2026 Convertible Notes ​ ​ 200,000 ​ ​ 200,000 Less: unamortized debt discount ​ ​ ( 78,476 ) ​ ​ ( 83,900 ) Less: unamortized debt issuance costs ​ ​ ( 6,145 ) ​ ​ ( 6,543 ) Net carrying amount ​ $ 436,078 ​ $ 430,256 Equity component: ​ ​ ​ ​ ​ ​ 2022 Convertible Notes ​ ​ 19,807 ​ ​ 19,807 2024 Convertible Notes ​ ​ 41,152 ​ ​ 41,152 2026 Convertible Notes ​ ​ 51,350 ​ ​ 51,350 Total equity component ​ $ 112,309 ​ $ 112,309 ​ In connection with the issuance of the 2022 Convertible Notes, the Company incurred $ 11.7 million of debt issuance costs, which primarily consisted of initial purchasers’ discounts and legal and other professional fees. The Company allocated these costs to the liability and equity components based on the allocation of the proceeds. The portion of these costs allocated to the equity components totaling $ 4.0 million were recorded as a reduction to additional paid-in capital upon issuance. The portion of these costs allocated to the liability components totaling $ 7.7 million were recorded as a reduction in the carrying value of the debt on the consolidated balance sheet and are amortized to interest expense using the effective interest method over the expected life of the 2022 Convertible Notes. In connection with the partial repurchase of the 2022 Convertible Notes, the Company recorded a loss on extinguishment of debt of $ 23.4 million, of which $ 2.8 million related to the initial debt issuance costs, during the year ended December 31, 2019. 26 Table of Contents The Company determined the expected life of the 2022 Convertible Notes was equal to their seven-year term. The effective interest rate on the liability components of the 2022 Convertible Notes for the period from the date of issuance through June 30, 2019 was 9.34 %. From the date of the partial repurchase of the 2022 Convertible Notes in August 2019 through March 31, 2021, the effective interest rate on the liability component of the 2022 Convertible Notes was 9.8 %. In connection with the issuance of the 2024 Convertible Notes and the 2026 Convertible Notes, the Company incurred $ 9.0 million of debt issuance costs, which primarily consisted of initial purchaser’s discounts and legal and other professional fees. The Company allocated these costs to the liability and equity components based on the allocation of the proceeds. The portion of these costs allocated to the equity components totaling $ 2.1 million were recorded as a reduction to additional paid-in capital. The portion of these costs allocated to the liability components totaling $ 6.9 million were recorded as a reduction in the carrying value of the debt on the consolidated balance sheet and are amortized to interest expense using the effective interest method over the expected lives of the 2024 Convertible Notes and the 2026 Convertible Notes. ​ The Company determined the expected life of the 2024 Convertible Notes and the 2026 Convertible Notes was equal to their approximately five and seven-year terms, respectively. The effective interest rates on the liability components of the 2024 Convertible Notes and the 2026 Convertible Notes for the period from the date of issuance through March 31, 2021 was 6.3 % and 6.7 %, respectively. ​ The following table sets forth total interest expense recognized related to convertible senior notes during the three months ended March 31, 2021 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ 2021 2020 Contractual interest expense ​ $ 1,804 ​ $ 1,805 Amortization of debt issuance costs ​ ​ 398 ​ ​ 346 Amortization of debt discount ​ ​ 5,424 ​ ​ 5,069 Total interest expense ​ $ 7,626 ​ $ 7,220 ​ Future minimum payments under the convertible senior notes as of March 31, 2021, are as follows (in thousands): ​ ​ ​ ​ 2021 (1) ​ $ 7,216 2022 ​ ​ 126,557 2023 ​ ​ 4,500 2024 ​ ​ 203,750 2025 ​ ​ 3,000 2026 ​ ​ 201,500 Total future minimum payments under the convertible senior notes ​ 546,523 Less: amounts representing interest ​ ​ ( 25,824 ) Less: unamortized debt discount ​ ​ ( 78,476 ) Less: unamortized debt issuance costs ​ ​ ( 6,145 ) Convertible senior notes balance ​ $ 436,078 (1) For the nine months ending December 31, 2021. ​ Convertible Note Hedge and Note Hedge Warrant Transactions with Respect to 2022 Convertible Notes To minimize the impact of potential dilution to the Company's Class A common stockholders upon conversion of the 2022 Convertible Notes, the Company entered into the Convertible Note Hedges covering 20,249,665 shares of the Company’s Class A Common Stock in connection with the issuance of the 2022 Convertible Notes. The Convertible Note Hedges had an initial exercise price of $ 16.58 per share, subject to adjustment upon the occurrence of certain corporate events or transactions, and are exercisable if the 2022 Convertible Notes are converted. In connection with the adjustment to the conversion rate of the 2022 Convertible Notes related to the Separation in April 2019, the exercise price of the Convertible Note Hedges was adjusted to $ 14.51 per share and the number of shares underlying the 27 Table of Contents Convertible Note Hedges was increased to 23,135,435 shares. If upon conversion of the 2022 Convertible Notes, the price of the Company’s Class A Common Stock is above the exercise price of the Convertible Note Hedges, the counterparties are obligated to deliver shares of the Company’s Class A Common Stock and/or cash with an aggregate value equal to the difference between the price of the Company’s Class A Common Stock at the conversion date and the exercise price, multiplied by the number of shares of the Company’s Class A Common Stock related to the Convertible Note Hedge being exercised. Concurrently with entering into the Convertible Note Hedges, the Company sold Note Hedge Warrants to the Convertible Note Hedge counterparties to acquire 20,249,665 shares of the Company’s Class A Common Stock, subject to customary anti-dilution adjustments. The strike price of the Note Hedge Warrants was initially $ 21.50 per share, subject to adjustment, and such warrants are exercisable over the 150 trading day period beginning on September 15, 2022. In connection with the Separation in April 2019, the exercise price was adjusted to $ 18.82 per share and the number of shares underlying the Note Hedge Warrants was increased to 23,135,435 shares. The Note Hedge Warrants could have a dilutive effect on the Class A Common Stock to the extent that the market price per share of the Company’s Class A Common Stock exceeds the applicable strike price of such warrants. The Convertible Note Hedges and the Note Hedge Warrants are separate transactions entered into by the Company and are not part of the terms of the 2022 Convertible Notes. Holders of the Convertible Note Hedges and the Note Hedge Warrants do not have any rights with respect to the 2022 Convertible Notes. The Company paid $ 91.9 million for the Convertible Note Hedges and received $ 70.8 million for the Note Hedge Warrants, resulting in a net cost to the Company of $ 21.1 million. In August 2019, concurrently with the repurchase of $ 215.0 million aggregate principal amount of the 2022 Convertible Notes, the Company terminated the respective portion of the Convertible Note Hedges and Note Hedge Warrants. The Company received $ 3.2 million of termination payments from the counterparties of the Convertible Note Hedges and Note Hedge Warrants. ​ The Convertible Note Hedges and Note Hedge Warrants are accounted for as derivative assets and liabilities, respectively, in accordance with ASC 815, and are remeasured to fair value at each reporting date (Note 5). Capped Calls with Respect to 2024 Convertible Notes and 2026 Convertible Notes ​ To minimize the impact of potential dilution to the Company’s Class A common stockholders upon conversion of the 2024 Convertible Notes and the 2026 Convertible Notes, the Company entered into separate Capped Calls in connection with the issuance of the 2024 Convertible Notes and the 2026 Convertible Notes. The Company paid the counterparties $ 25.2 million to enter into the Capped Calls. ​ The Capped Calls have an initial strike price of $ 13.39 per share, which corresponds to the initial conversion price of the 2024 Convertible Notes and the 2026 Convertible Notes and is subject to anti-dilution adjustments generally similar to those applicable to the 2024 Convertible Notes and the 2026 Convertible Notes. The Capped Calls have a cap price of $ 17.05 per share, subject to certain adjustments. The Capped Calls cover 29,867,480 shares of Class A Common Stock (subject to anti-dilution and certain other adjustments), which is the same number of shares of Class A Common Stock that initially underlie the 2024 Convertible Notes and the 2026 Convertible Notes. ​ The Capped Calls are expected generally to reduce the potential dilution to the Class A Common Stock upon conversion of the 2024 Convertible Notes and the 2026 Convertible Notes in the event that the market price per share of Class A Common Stock is greater than the strike price of the Capped Calls as adjusted pursuant to the anti-dilution adjustments. If, however, the market price per share of Class A Common Stock exceeds the cap price of the Capped Calls, there would nevertheless be dilution upon conversion of the 2024 Convertible Notes and the 2026 Convertible Notes to the extent that such market price exceeds the cap price of the Capped Calls. ​ The Capped Calls are separate transactions entered into by and between the Company and the Capped Calls counterparties and are not part of the terms of the 2024 Convertible Notes or the 2026 Convertible Notes. Holders of the 2024 Convertible Notes and the 2026 Convertible Notes do not have any rights with respect to the Capped Calls. The Company recorded a reduction to additional paid-in capital of $ 25.0 million during the year ended December 31, 2019 related to the premium payments for the Capped Calls. Additionally, the Company recorded an $ 0.2 million reduction to equity related to transaction costs incurred in connection with the Capped Calls during the year ended December 31, 28 Table of Contents 2019. These instruments meet the conditions outlined in ASC 815 to be classified in stockholders’ equity and are not subsequently remeasured as long as the conditions for equity classification continue to be met. ​ 9. Employee Stock Benefit Plans ​ The Company has several share-based compensation plans under which stock options, restricted stock awards, restricted stock units and other share-based awards are available for grant to employees, officers, directors and consultants of the Company. ​ The following table summarizes share-based compensation expense (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ 2021 2020 Research and development ​ $ 1,243 ​ $ 1,396 ​ Selling, general and administrative ​ 4,043 ​ ​ 4,968 ​ Restructuring expenses ​ 110 ​ — ​ ​ ​ $ 5,396 ​ $ 6,364 ​ ​ ​ Restructuring expenses include modifications to share-based awards held by employees impacted by certain workforce reductions (Note 12). ​ 10. Income Taxes The Company recorded income tax expense of $ 0.4 million for the three months ended March 31, 2021. Income tax expense primarily pertains to state income taxes in certain states which have temporarily disallowed the use of net operating losses to offset taxable income. There was no income tax provision for the three months ended March 31, 2020. The income tax provision during interim periods is computed by applying an estimated annual effective income tax rate to year-to-date pre-tax income, plus adjustments for significant unusual or infrequently occurring items, in accordance with ASC 740-270, Income Taxes – Interim Reporting . The income tax provision differs from the U.S. federal statutory rate of 21 % primarily due to the effect the valuation allowance against the Company’s net deferred tax assets, which reduces the Company’s net tax expense. The Company continues to record a full valuation allowance against net deferred tax assets. The Company re-evaluates the positive and negative evidence on a quarterly basis. Based on the Company’s financial performance and its future projections, it may record a reversal of all or a portion of the valuation allowance associated with its deferred tax assets in future periods. However, any such change is subject to actual performance and other considerations that may present positive or negative evidence at the time of the assessment. 11. Related Party Transactions ​ The Company previously reflected balances with Allergan plc prior to its acquisition by AbbVie in May 2020 as related party receivables and payables, as appropriate. Following the acquisition of Allergan plc by AbbVie, the Company determined that AbbVie is not a related party to the Company. ​ In connection with the Separation, the Company executed certain contracts with Cyclerion, whose President and Chief Scientific Officer at the time of the Separation became a member of the Company’s Board of Directors in April 2019. As of December 31, 2020, the Company determined that Cyclerion was no longer considered a related party. The Company incurred $ 1.0 million of research and development expenses under a development agreement with Cyclerion during the three months ended March 31, 2020. Additionally, the Company incurred an insignificant amount of selling, general and administrative expenses for services provided by Cyclerion and recorded an insignificant amount of other income for services provided to Cyclerion during the three months ended March 31, 2020 under transition services agreements, which terminated on March 31, 2020. ​ 29 Table of Contents 12. Workforce Reduction and Restructuring ​ In September 2020, the Company announced that one of its two identical Phase III trials evaluating IW-3718 in refractory GERD did not meet certain criteria, including the study’s primary endpoint of achieving a statistically significant improvement in heartburn severity. Based on these findings, the Company discontinued development of IW-3718. In connection with this decision, the Company reduced its workforce by approximately 100 full-time employees. This workforce reduction affected both field-based and home-office employees, including the relevant general and administrative support functions, and was substantially completed during the fourth quarter of 2020. The Company incurred $ 0.3 million during the three months ended March 31, 2021 in restructuring expenses, primarily for severance, benefits and related costs related to this reduction in force. ​ The following table summarizes the accrued liabilities activity recorded in connection with the reduction in workforce and related restructuring activities during the three months ended March 31, 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts ​ Accrued at ​ ​ ​ ​ ​ ​ ​ ​ ​ Accrued at ​ December 31, 2020 Charges ​ Amount Paid ​ Adjustments ​ March 31, 2021 Employee severance, benefits and related costs $ 10,902 ​ $ 811 ​ $ ( 5,593 ) ​ $ ( 316 ) ​ $ 5,804 Contract related costs ​ 5 ​ ​ 49 ​ ​ ( 47 ) ​ ​ — ​ ​ 7 Total $ 10,907 ​ $ 860 ​ $ ( 5,640 ) ​ $ ( 316 ) ​ $ 5,811 ​ ​ 13. Subsequent Events ​ On May 4, 2021, the Company’s Board of Directors authorized a program to repurchase up to $ 150.0 million of the Company’s common stock. Unless it is terminated or suspended prior to its expiration, the stock repurchase program will remain in effect until December 31, 2022 . The timing and amount of any repurchases will be determined based on market conditions, stock price and other factors. The stock repurchase program may be modified, suspended or discontinued at any time without notice. Repurchases may be made through a variety of methods, including open market purchases, privately negotiated transactions, block trades, exchange transactions, accelerated share repurchase transactions or any combination of such methods. ​